Winfire Achieves Subscriber Gross Margin Profitability.

Business Editors

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Nov. 14, 2000

Winfire, provider of high-speed Internet access and FreeDSL, achieved subscriber gross margin profitability for the first time since the company launched its DSL service in April 2000.

The company also disclosed progress on its third round of funding attracting $17 million from strategic investors. In addition, Winfire announced its entrance into the B2B space for the first time by offering to license its proprietary Network Operating System (NOS) technology.

"Winfire continues to execute its mission and implementation strategies with a two-pronged business model. With our consumer ISP, we have achieved subscriber gross margin profitability in 75 percent of our active markets," said Chad Steelberg, chairman and CEO, Winfire. "Now with our expansion into the B2B market by licensing Winfire's Network Operating System, we are positioned to rapidly deploy our technology and maximize our revenue potential."

Entering B2B Market: Licensing Proprietary Technology

Winfire's Network Operating System enables partners -- broadband ISPs, CLECs, and LECs -- to offer personalized broadband and value-added service packages to their customers, the end-users.

"The Winfire NOS is an excellent solution for dial-up ISPs looking for a turnkey solution to offer complete broadband services to their existing subscribers," noted Steelberg.

The Network Operating System includes a network management console, Winfire Studio, and the Winfire Toolbar which acts as the consumer access operating system.

By licensing the NOS, partners can now offer their customers Winfire's patent pending Bandwidth-on-Demand service, allowing broadband users to purchase instant increased speed on a minute-by-minute basis with one click directly from their desktop. This enables customers who have basic DSL speeds to instantly upgrade to the fastest DSL speed available to them.

Partners, who license the NOS can integrate Winfire's Automated Provisioning Wizard, which provides self-install, "no-touch" DSL line activation and service initiation. This allows partners and their end users to speed through the entire service provisioning process, from Web-based registration to line order qualification to service activation.

"Continuing Winfire's heritage as a technology innovator, we've developed a proprietary solution that helps overcome the time constraint in delivering DSL," said Steelberg. "The Automated Provisioning Wizard accelerates the ability to get users online, and speeds deployment of DSL service on a nationwide basis."

The NOS offers a turnkey package that enables narrowband ISPs to participate in the broadband market with minimal hardware deployment or networking knowledge by utilizing Winfire's proprietary software services. The Winfire NOS benefits to the licensee include zero cost network deployment and a national DSL network. Winfire is last mile provider-independent and last mile technology agnostic for DSL, cable and wireless.

Achieving Gross Margin Positive Profitability

Gross margin profitability means that the average revenue per subscriber now exceeds the incremental cost of supplying the DSL service in most markets.

"The catalysts for reaching this objective so quickly have been: first, our success in upgrading customers from FreeDSL into monthly subscription packages; second, our success in launching value-added network services -- like Bandwidth-on-Demand -- which provide additional revenue for little or no incremental cost, and third, our ability to negotiate favorable prices with our LEC partners in exchange for our provisioning volume," added Richard Shields, Winfire's chief financial officer.

In early 2001, Winfire anticipates launching additional value-added network products including: virtual private networks, network based firewalls and security, Net-Nanny functionality, and fixed IP addresses that will increase revenue per user without adding a significant expense load.

Since launching in January 2000, Winfire's ISP has secured more than 1 million registrants and currently registers users at a rate of more than 1,300 per day. There are presently 60,500 line orders in place and 33,000 lines confirmed.

Winfire offers consumer advertising-supported FreeDSL service as well as several DSL upgrade packages with speeds ranging from 384 Kbps for $19.95 per month up to 1.54 Mbps for $34.95 per month. More than 60 percent of Winfire's subscribers select an upgrade package.

Another revenue stream is derived from advertising. In addition to traditional banner ads, Winfire's rich media streaming video product (VIVA) Very Interactive Video Ad, has garnered an average of seven percent click-through rate, which is a 14-fold increase over the 0.5 average click-through typically seen with traditional banner ads.

Winfire intends to expand its current geographical coverage of 27 cities in the United States by the end of 2000. To this end the company has ordered additional circuits and facilities sufficient to service up to 42 markets by the end of this year. When in place, this will provide coverage of approximately 51% of the U.S. population. This increases Winfire's ability to have access to more than 23 million households, based on the industry average of 50 percent DSL availability nationwide.

About Winfire Inc.

Winfire is a premier broadband content and access network. The company's flagship FreeDSL service delivers broadband content and high-speed Internet access utilizing DSL technology.

Winfire's DSL service has already become available in 27 major metropolitan areas including Atlanta, Austin, Boston, Charlotte, Chicago, Dallas, Ft. Lauderdale, Ft. Worth, Fresno, Houston, Los Angeles, Miami, New Orleans, Oakland, Orange County, Calif., Orlando, Raleigh, San Antonio, San Diego, San Jose, San Francisco and Tulsa. Winfire intends to roll out service in Cleveland, Denver, Kansas City, Minneapolis, Phoenix, St. Louis and other areas by the close of Q4 2000.

With a mission to create the premier broadband consumer network, Winfire is playing a key role in fostering the delivery of rich-media content, including video-on-demand, streaming audio, online gaming, software-on-demand and IP telephony to Web users. Winfire has headquarters in Newport Beach. Corporate information can be found at www.winfire.com.

Although Winfire Inc. is a privately held corporation and not yet required to register any of its securities under the Securities Act of 1933, the company would like the same ground rules to apply to disclosures made today as would apply under that Act. Accordingly: as many of the matters described in this news release relate to future financial results, future products, and other events and circumstances that have not yet occurred, Winfire would like to underline that the words "anticipates," "believes," "expects," "intends," "may," and "plans," and similar expressions are intended to identify forward-looking statements.

These forward-looking statements reflect the company's views as of the date they are made with respect to future events, but are subject to many risks and uncertainties, including those relating to the company's ability to: (i) obtain sufficient financing to maintain and grow the company's planned operations; (ii) grow its user base, and revenue; (iii) generate profit and positive cashflow from operations; (iv) Winfire's dependence on third parties for connectivity; and (v) the increasingly competitive and constantly changing environment for broadband services. Much of the technology described in this news release does not currently result in revenue to Winfire.

Although the company believes that the forward-looking statements contained herein are reasonable, actual results may differ materially from results predicted, and Winfire does not undertake to update forward-looking statements. Reported financials should not be considered as an indication of future performance.

NOTE TO EDITORS: FreeDSL is a service mark of Winfire Inc.