HEADLINES

C-PHONE CORPORATION ENTERS INTO LETTER OF INTENT TO SELL VIDEOCONFERENCING ASSETS TO MOTION MEDIA FOR $1 MILLION

Wilmington, NC – January 8, 2001 -- C-Phone Corporation (NASDAQ: "CFON") today announced that it has entered into a Letter of Intent with Motion Media Technology Inc. ("Motion Media") for the sale of C-Phone's videoconferencing assets for $1 million.  Motion Media is a subsidiary of Motion Media PLC Group (London Stock Exchange). 

As the transaction must be approved by C-Phone shareholders, the earliest the transaction could close would be in several months.  Until the closing, C-Phone must maintain operations, which will result in continuing operating deficits.  Motion Media initially will purchase some of C-Phone's component inventory and acquire a non-exclusive license for a recently developed POTS-only product design, which has not yet been put into production.  This initial transaction will provide C-Phone with funds which should enable it to continue its operations until the closing; however, the total purchase price of the videoconferencing assets will be reduced by these advance payments.

 Paul Albritton, President and CEO, stated "We have attempted to find a purchaser for our Company and/or our business for the past several months and the proposed transaction with Motion Media has been the best that we have been able to obtain.  Shareholder approval of the transaction will be required under applicable law.  The cost of maintaining our business while seeking such approval, along with the associated cost of preparing proxy materials and holding a shareholders' meeting, will significantly reduce the net proceeds to be received. 

While we are still seeking a possible business combination for the remainder of our Company without its videoconferencing business, the likelihood of success in this endeavor is remote.  Therefore, we intend to voluntarily withdraw our appeal of the delisting of our common stock on the Nasdaq SmallCap Market.  In the event our proposed transaction with Motion Media is approved by our shareholders, the funds remaining for eventual distribution to our shareholders may be as much as $0.05 per share.  If the Motion Media transaction is not approved by our shareholders, then, in all likelihood, C-Phone will cease its operations, in which event it is unlikely that any funds will available for distribution to our shareholders."  

 Mr. Albritton further stated "We are pleased that Motion Media will be taking over our videoconferencing business.  They have the technical expertise, background and financial wherewithal to provide the right products to service our customers."

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