COMPANY NEWS

Jan 2009

Dear BALSI customers,

This is an important update to previous reports that BALSI Audio Video Web is ending discounts on all bi-packs and tri-packs. This means that your monthly bill will increase by whatever cost you are currently discounted.

Our #1 priority is to keep BALSI a company that innovates on behalf of its customers. As with many businesses right now, the economic environment is forcing a change in financial models across our organization. The change to omit our pack discounts is allowing us to maintain the same quality service on all plans for both new and existing clients.

While we’ve made remarkable progress at innovating the costs of our systems, the current climate is forcing us to focus 100% of our energy on getting to profitability.

Why is this happening?

The market for professional network installations has recently been characterized by increased caution meaning that customers’ new investments and expansion plans have been deferred to a future date. This has impacted BALSI’s growth and moderated the pace of the echnology shift for digital awareness which has effectively stunted growth.

BALSI has seen signals from the market during the year, e.g. from the sectors in Europe and the US, where major chains have chosen not to expand as planned. The same trend is also apparent within other customer segments where customers have chosen not to start or continue projects already initiated. Consequently, we have already witnessed more than a dozen of our competitors fall, and we are fully confident that our focus, experience and new business model will prevent us from following this trend.

BALSI's goals remain unchanged despite the current market turmoil and we will continue to strengthen the company’s position as the market leading supplier of network audio, video and web solutions. Thank you for your continued customer support and we hope to serve you for many years to come.

Sincerely,

Peter Grogono
President
peter"at sign"balsi.com

BALSI Audio Video Web
www.balsi.com

2009 Expansion Project
We are currently integrating an upgrade to our entire network that will enhance all our web hosting, audio and video services simultaneously while integrating a robust, expandable and enivronmentally friendly infrastructure for power, monitoring and system wide back-ups.

BALSI has joined the coalition for SEP (Sustainable electric power) which will meet the requirements, challenges and the role of new technologies in the next few years.

In addition, we are also collaborating with other partners and studying research projects that could help to make the our network and the internet more secure; enable a host of new Internet-based applications; expand system and network capabilities while lowering their costs; and bring affordable computing and communications capabilities to our service areas.