VillageWorld.com Announces Second Quarter and Six-Month Results.

Business & Internet Editors

BOHEMIA, N.Y.--(BUSINESS WIRE)--Aug. 19, 2002

Company records second consecutive profitable quarter;

loss of major customer heightens focus on

uncertain overseas networking projects;

VillageWorld.com, Inc. (OTC BB:VILW), a provider of private label Internet web-sites and secure network solutions to military, commercial and defense industry contractors announced results for the second quarter and six months ended June 30, 2002, reporting profitable and cash-flow positive operations.

Overhanging these favorable developments was the loss of Ultrastar Internet Services, LLC, the Company's largest Internet service customer as well as significant uncertainty regarding the timing and amount of future overseas networking project revenues.

Ultrastar, as disclosed in prior filings by the Company, had previously advised the Company it was considering diversifying its own sources of Internet hosting. Effective June 30, 2002, upon expiration of the requisite 30-day notice period from this customer, the Company's relationship with Ultrastar ended. Ultrastar accounted for 50.7%, and 43.5% of the Company's total sales for the most recent quarterly and six-month periods, respectively, and comprised 33.6% of total sales in fiscal 2001. Historically the Company's Internet service revenues have had a gross margin of approximately 15%. Commenting on the loss of this customer, Chief Executive Officer Peter J. Keenan remarked, "While we are of course sorry to lose such a valued customer, we previously had recognized that the very high costs of servicing such accounts foretold that our Internet hosting would not be the long-term profitability growth vehicle for our Company. We wish Ultrastar well as we intensify our focus on expanding our overseas networking services."

The Company has substantially completed its second overseas networking project as a sub-contractor to a related company, ATTI International Development, Inc. ("AID") pursuant to a verbal contract. AID is pursuing additional projects in Saudi Arabia, on which the Company expects it would again be a sub-contractor, if AID is successful in obtaining the work. In addition, the Company is independently seeking direct networking contracts with and through the Saudi Arabian government. There are many uncertainties involved in obtaining overseas contracts, particularly in that region of the world, and despite the initial success that both AID and the Company have experienced in these endeavors, there is no assurance that any additional overseas projects will be secured.

The Company had record sales and profits for both the three and six-month periods ended June 30, 2002 with total quarterly revenues almost doubling to $1,412,000 and total revenues for the six months increasing by 23% to $2,497,000. However, Chief Financial Officer Celia I. Schiffner cautioned that, "The record results are not indicative of our sales and net margins for the balance of the year and beyond for two reasons: (i) the loss of Ultrastar's Internet subscription revenues is not expected to be made up and (ii) the uncertainties regarding our overseas networking expansion make forecasting very difficult."

Net income for the quarter was $62,000 compared to a loss of $365,000 in the corresponding quarter one year ago. After adjusting for the accounting change regarding goodwill, the improvement was $369,000. Net income for the current six-month period was $101,000 compared to a $679,000 net loss in the prior year. The accounting change-adjusted improvement for the year-to-date period was $662,000.

The Company was moderately cash flow positive for the six months ended June 30, 2002, but its high related party debt, $964,000, and its tight cash position persist and raise the question of the Company's ability to continue as a going concern. Although the Company reduced its working capital deficit by $174,000 during these six months, that deficit is still $1,610,000. CEO Keenan observed, "While a restructuring of our related party debt is clearly critical, realistically it cannot be undertaken until the uncertainties regarding our overseas business are resolved."

In accordance with the recently enacted requirements of The Sarbanes-Oxley Act of 2002, both the Company's Chief Executive and Chief Financial Officer have certified the Company's Form 10-QSB for the period ending June 30, 2002.

About VillageWorld.com

VillageWorld.com designs, supplies, implements, operates and maintains advanced secure high-speed data networks for universities, school systems, the military and business including all related hardware, software and network facilities. The Company also provides Internet/Intranet messaging and security products and chat room, shopping cart, advertising, web hosting and co-location software and services. The Company is a reseller for Cisco Systems (CSCO), Lucent Technologies (LU), Nortel Networks (NT), Sun Microsystems (SUNW), Fore Systems and others in the Network Integration business.

This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties are described in the Company's filings with the SEC.