C-Phone Corporation Announces Results for First Fiscal Quarter 2001; Gross Profit Increases; 51 Percent Decrease in Net Loss

Business Wire,  July 17, 2000  

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Business Editors

WILMINGTON, N.C.--(BUSINESS WIRE)--July 17, 2000

C-Phone Corporation (NASDAQ: "CFON") today announced unaudited results of operations for its first quarter of fiscal 2001, ended May 31, 2000. Net revenues were $381,409 in the quarter, compared with $385,870 in the same quarter of last year.

The Company reported gross profit for the first quarter of $129,180, compared with $8,019 for the same quarter of last year. The Company's net loss decreased 51% to ($483,693), or ($0.05) per share, in the first quarter of fiscal 2001 from ($986,329), or ($0.12) per share, in the same quarter of last year.

Paul Albritton, President and CEO, stated, "The decrease in our net loss is the result of improved margins and a reduction in expenses resulting from our previously announced restructuring. The restructuring, along with our focus on larger customers, produced a reduction in our selling, general and administrative expenses of 42% from the same quarter of last year and 20% from the quarter ended February 29, 2000. The challenge now will be to increase revenues, while maintaining acceptable margins and holding our expenses in line. We are hopeful that our recent initiatives of targeting major customers with existing market channels will help us reach these goals."

C-Phone Corporation provides state-of-the-art video communications products for general business and the security, education and healthcare markets. Affordable and easy to use, the Company's products deliver high quality, real time video, voice and data for conferencing and remote monitoring applications. The Company's technology is compatible with all industry standards and connects through a wide variety of telephone company and private communications networks, including the Internet.

The Company's products are marketed throughout the world and are in use by a diverse group of corporate, institutional and governmental customers. Information on the Company and its products can be found at www.cphone.com.

(Tables to follow)

Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements are made based on management's belief as well as assumptions made by, and information currently available to, management pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors, including among others those identified in the Company's Annual Report on Form 10-KSB for the fiscal year ended February 29, 2000 and the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended May 31, 2000, as well as factors such as future economic conditions, acceptance by customers of the Company's products, changes in customer demand, legislative, regulatory and competitive developments in markets in which the Company operates and other circumstances affecting revenues and costs. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of other unanticipated events.

This release and prior releases are available on the KCSA Public Relations Worldwide website at www.kcsa.com

Summary Financial Information
                                          Three Months Ended
                                          ------------------
                                       May 31,           May 31,
                                       ------            ------
                                        2000              1999
                                        ----              ----
                                    (unaudited)       (unaudited)

Total Revenues                        $ 381,409         $ 385,870
Cost of Revenue                         252,229           377,851
Gross Profit                            129,180             8,019
Selling, General and
 Administrative Expense                 486,180           845,258
Research, Development and
 Engineering Expense                    156,036           191,778
Operating Loss                         (513,036)       (1,029,017)
Net Loss                               (483,693)         (986,329)

Net Loss Per Share                    $   (0.05)        $   (0.12)

Weighted Average Shares Outstanding   8,989,331         7,978,605


BALANCE SHEET

                                       May 31,        February 29,
                                       ------         -----------
                                        2000              2000
                                        ----              ----
                                    (unaudited)

Cash & Investments                 $  1,978,396      $  2,517,633
Other Current Assets                  1,420,177         1,351,990
Total Assets                          3,483,302         3,974,739
Current Liabilities                     464,173           496,292
Total Liabilities                       464,173           496,292
Shareholders' Equity                  3,019,129         3,478,447

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