mPhase Technologies Announces Interim Private Equity Financing.

Business/Technology Editors

NORWALK, Conn.--(BUSINESS WIRE)--Jan. 25, 2001

Company Receives $3.75 Million; Institutional Ownership Increases

mPhase Technologies, Inc. (OTC BB: XDSL), the leading designer of broadcast digital television and high-speed data solutions for the telecommunications industry, announced today that it has completed a private common equity financing of $3.75 million with institutional investors. The proceeds will primarily be used to help fund production and deployment of its groundbreaking flagship technology, the mPhase Traverser DVDDS (Digital Video and Data Delivery System). Funding will support the Company's selling and marketing efforts, as well as to continue investment in its television content effort, via mPhaseTelevision (the previously announced joint venture with AlphaStar International).

The Traverser DVDDS provides telcos with the ability to offer digital television programming, broadband-speed Internet access and POTS (Plain Old Telephone Service), all over existing copper telephone lines. mPhase utilizes RADSL (Rate Adaptive Digital Subscriber Line) technology and a patented delivery and access system to provide a bundled solution to telcos and their customers.

"We are pleased that these investors understand the potential of our Traverser technology to penetrate the video over DSL marketplace and felt confident enough to invest despite difficult market conditions, particularly in the DSL marketplace", said mPhase President & CEO Ronald A. Durando. "We are confident that this infusion of equity capital, along with growing cash flow from our DSL Components Line sales, will assure that we are able to make the necessary investments to execute our plan".

The terms of the agreement call for mPhase to issue 1.875 million common shares; in addition, the investors will receive warrants that, if exercised, could result in the issuance of an additional 1.875 million additional shares and produce $5.625 million in additional proceeds for mPhase.

Mr. Durando concluded, "an added benefit from the financing is an increase in institutional ownership of mPhase stock. We believe as we move forward with our strategic plan, we will attract additional interest from the institutional community."

About mPhase Technologies, Inc.

Utilizing Rate Adaptive Digital Subscriber Line (RADSL) technology and its proprietary Traverser Digital Video and Data Delivery System (DVDDS), mPhase Technologies, Inc. (OTC BB: XDSL) develops solutions that allow telephone companies to cost-effectively and reliably transmit up to 400 channels of broadcast (real time) digital television programming, high-speed Internet access and traditional telephone service over existing copper telephone lines. The comprehensive package offered by mPhase and mPhaseTelevision provides telcos with turnkey systems that couple technology with content, thereby enhancing their revenue opportunities. More information is available at www.mPhaseTech.com or by calling 1.877.mPhaseTV. Investors may obtain additional information and subscribe to notification services by referring to the Investor Information section at the mPhase Web site, by calling the mPhase 24-hour toll-free Investor Hotline at 1.877.411.XDSL or by calling the Investor Relations Department at 203.854.1343.

Any statements contained in this press release that do not describe historical facts may constitute forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties. The factors that could cause actual future results to differ materially from current expectations include the following: fluctuations in customer demand; the Company's ability to manage its growth; the risk of new product introductions and customer acceptance of new products; the rapid technological change which characterizes the Company's markets; the risks associated with competition; the risks associated with international sales as the Company expands its markets; and the ability of the Company to compete successfully in the future, as well as other risks identified in the Company's Securities and Exchange Commission filings, including but not limited to those appearing under the caption `Risk Factors' in the Company's 10-K and 10-Q federal filings.