Dauphin Releases Set-Top Box Contract Details Sales Totaling $500 Million.

Business Editors

PALATINE, Ill.--(BUSINESS WIRE)--April 5, 2000

Dauphin Technology, Inc. (OTC.BB:DNTK) today announced supplementary information pertaining to the Set-Top Box (STB) contract first announced on February 17, 2000. Today's release contains detailed information about the project and size of the contract, including a full description of the functionality of Dauphin's STB.

In the February 17, 2000 announcement, Dauphin stated that it anticipated to fully release all necessary specifics pertaining to its contract and overall project within the next 30 to 45 days. At the request of Dauphin's EU client, certain disclosures regarding other participants, as well as the name of the client, shall continue to remain confidential until further notice. As soon as it is appropriate for Dauphin to disclose such information, it will do so promptly. According to the client, a project of this magnitude involving many participants entails time-consuming details and documentation prior to disclosure. Therefore, in order to be timely in disclosing information regarding Dauphin's contract, the client has authorized the Company to release details of its contract.

According to the multi-year agreement, Dauphin shall supply a minimum of 2.5 million Set-Top Boxes to its client starting in the fourth quarter of the year 2000. By the end of 2000, a total of 200,000 STBs are scheduled for shipment. Each year thereafter, 500,000 units are to be delivered annually through the beginning of 2005. Total revenue from the STBs, based on the scheduled deliveries described above, will exceed $500 million.

Dauphin is the client's exclusive supplier of STBs and has retained the right to market it in other parts of the world without any restrictions or

stipulations. Additionally, in the event of any unforeseen changes in economic or technological conditions, both companies have the right to consider price adjustments after delivery of the first 1.2 million STBs. However, Dauphin has been granted the first right of refusal to produce the balance of the order totaling 2.5 million units. Gross profit margins of the unit are very favorable to Dauphin, exceeding industry standard ranges, inclusive of shipping and exporting expenses.

Development costs have been secured by the funds raised recently through the private placement. Production costs for the initial 200,000 units are expected to be secured shortly by means of a large investment group.

The product will be manufactured at RMS, Dauphin's manufacturing facility in McHenry, Illinois. The plant's capacity is more than sufficient to produce the necessary quantities in accordance with the required delivery schedule. Staffing of the RMS facility will be increased as deemed appropriate in the near future. These are management's current plans for manufacturing the STB, although the Company has the privilege to manufacture it anywhere in the world in order to increase its profit margin, as long as delivery dates are met.

Dauphin's STB incorporates an integrated modular design approach to address present and future technological innovations. It is an ADSL/VDSL access unit that has the capability to provide Video on Demand/TV, Video-Telephone services, voice telephony and Access to the Internet, using a Computer. The Set-Top box will connect to a gigabit fiber optic backbone infrastructure to provide ultra high speed communication services to users including; residential, commercial, civil, educational institutions, government facilities and others.

The unit includes an ADSL/VDSL modem, which will connect to the client's infrastructure, an antenna connector for external interfacing, a TV-out connector for TV hook-up (NTSC/PAL), Ethernet option for a PC connection and one set of RCA audio connectors (R+L). Additionally, the unit will include a universal power supply for 110/230V operation and a set of batteries (up to 6 hours of Telephone operation), in case of a power failure. The first version of the STB will be using Windows CE as its operating system.

The STB will connect into an ADSL DSLAM, which in turn will connect to the client's fiber optics backbone infrastructure. Switches/Routers/Gateways will be in place to direct/re-direct the data/voice/video traffic. Certain dedicated gateways will inter-connect the client's infrastructure with other telephone companies in order to direct the telephone traffic and any other desired traffic. The client's state of the art Video on Demand servers will provide a first class library of movies, along with live local and international TV channels, public interest programs and entertainment.

Dauphin's multi-purpose STB, in conjunction with the wide bandwidth infrastructure, will render advanced Internet capabilities, as well as a wide span of conveniences, including cost savings and many other benefits. Following is a more detailed description of the various capabilities, which will be offered to the client's customers.

Internet Access, ADSL/VDSL Bandwidth: Digital subscriber lines, (xDSL), are emerging as the new trend in the "Bandwidth Wars" among the bandwidth providers. Dauphin's STB is designed in such a way that it can adapt to any of the existing communication standards and further offer the allocated bandwidth to the user.

Regardless of what technology or communications medium is used, one fact remains undisputed, the end user will have more bandwidth available than any time in the past. The customer will have the ability to connect directly to the Set-Top box and with the available bandwidth will be able to accommodate Web hosting, Web browsing, email, eCommerce, voice/video conferencing and VoD, from the same box, very economically.

Video Telephone: The bandwidth of the client's fiber optics backbone infrastructure will permit its users to view each other while talking on their telephone. More important, the users will be able to use this feature at a minimum cost. Because of the bandwidth pre-allocation, even at peak times, this functionality will be flawless. Whether the user selects to use a TV set as the display or a video-telephone, the STB will display the users on either device. This service is not new, it has been around for some time, however it has been very cost-prohibitive to the general public.

Voice Communications, Telephone: The STB will provide users with the ability to use an already familiar device, the telephone. Users can take advantage of the information superhighway to communicate with each other anywhere in the world, less expensively. They will do this without losing any of the existing telephone functionality, while receiving additional features. The client's super servers with very large storage capacity will offer customers crystal clear messaging services. Their SS7 gateways will offer flawless communication to the outside world. Dauphin's client will provide unlimited options, capabilities and services to their users. Most new future capabilities will be provided via software upgrades only, rather than major hardware replacements.

Video On Demand and Near Video on Demand: Dauphin's STB, with all the appropriate drivers and streaming protocols, will provide the client with the option to offer full Video on Demand (VoD) or even the less expensive Near Video on Demand (NVoD) services. This functionality, when video on demand services are available, will offer the user the ability to choose any of the available movies in the client's extensive library. They will be able to view the movie the same way as if it was played in their VCR. Pause, Forward, Rewind and many other functions will be possible. Remote control for the STB is provided with the unit. Using the NVoD option the system will be used in a similar manner as a cable box. Whichever way the system will be used, VoD or NVoD, it will be decided by the client. Dauphin's system will support both TV viewing standards, the European PAL and the US standard, NTSC. Two SCART connectors will also be part of the system.

Certain additional functionality, interfacing options and technologies incorporated in Dauphin's Set-Top Box shall remain confidential at this time, for competitive reasons and to further protect the interests of the client.

Dauphin Technology, Inc., a Palatine, IL based company with it's manufacturing facility in McHenry, IL, RMS & Associates, develops, manufactures and markets hand-held computers and accessories including it's flagship product, the Orasis.

Certain matters discussed in this news release are forward-looking statement involving certain risks and uncertainties including, without limitations, changes in product demand, the availability of products, change in competition, economic conditions, various risks due to changes in market conditions and other risks detailed in the Company's Securities and Exchange Commission filings and reports.