Fonix(R) Files December 31, 2000 Annual Report

Company Emerges From 'Development Stage';

Fonix Opens Sales and Marketing Office in Seoul, South Korea



Apr 02, 2001, 01:00 ET from Fonix Corporation

    SALT LAKE CITY, April 2 /PRNewswire/ -- Fonix(R) Corporation
 (OTC Bulletin Board:   FONX) today announced financial results for the year
 ended December 31, 2000.  "Our operating results for 2000 reflect our
 commitment to the marketing and sales efforts initiated in 1999," said Thomas
 A. Murdock, Chairman and CEO.
     Revenues from multiple license fees and product sales were $656,853 for
 the year ended December 31, 2000, compared to $439,507, a 49% increase over
 the year ended December 31, 1999.  Cash generated from contracts in 2000 was
 $1,206,075, a 120% increase over 1999.  In addition, the Company recently
 received the $2 million that had been held in escrow in connection with the
 sale of the HealthCare Solutions Group to Lernout & Hauspie in September 1999.
     As a result of the increases in revenues and the recurring nature of these
 revenues, the Company emerged from the development stage as of December 31,
 2000.
     Increased revenues and cash flows from operating activities in 2000
 indicate the continuing growth of Fonix in its overall transition from its
 research and development focus to sales and marketing activities.  Fonix
 speech technologies are readily distributed through the proprietary FAAST(R)
 (Fonix Accelerated Application Solutions Technologies) framework.  "We are
 finding increased interest in our FAAST development framework among OEM and
 IVR channel partners, and software and application developers who
 speech-enable applications in call centers and voice portals, mobile hand-held
 computing devices, automotive telematics, cell and smart phones, and consumer
 electronic devices such as the Panasonic 2.4 GHZ GigaRange(R) Elite Cordless
 Telephone," explained Mr. Murdock.  "Our focused sales and marketing efforts
 will continue to emphasize the advantages of FAAST in both the server-based
 and embedded markets."
     To expand and accelerate sales revenue, the Company has recently initiated
 a technology and marketing collaboration agreement with Audium (formerly
 Phone2Networks) to integrate FAAST with VoiceXML applications.  Additionally,
 Fonix has opened a sales and marketing office in Seoul, South Korea.  "With
 the dynamic use of FAAST in call center applications, in English as a second
 language learning environments, and in mobile computing devices through our
 embedded solutions, we expect revenue growth in the Asian markets.  Seoul,
 South Korea, is our initial strategic launch," said Mr. Murdock.  "Dr. Kyungho
 Loken-Kim, Vice President, Asia, has worked effectively over the past 12
 months to establish the Fonix brand name, to prepare the Korean market for
 Fonix products, and to establish relationships with key Korean OEM and channel
 partners.  We look forward to begin delivering our products and solutions in
 the Korean market in the next 30 days."
     "We are pleased with our continued progress toward meeting our strategic
 financial objectives by decreasing our cash burn rate from operating
 activities.  Net cash used in operating activities decreased from
 $20.5 million in 1999 to $12.4 million in 2000," said Roger D. Dudley,
 Executive Vice President and CFO.  "We continue to see the effects of our
 successful restructuring of the Company's sales, marketing, and product
 development activities.  The company supports its sales and marketing growth
 with a blend of cash receipts and draws against an equity line of credit.  We
 expect our revenue and cash receipts to cover the Company's operating expenses
 sufficiently to reduce the need to draw on our equity line," explained Mr.
 Dudley.
     Fonix reported a net loss of $22.8 million ($0.16 per common share) for
 2000, compared to a net loss of $21.7 million ($0. 31 per common share) for
 1999.  Cash used in operating activities was $12.4 million for 2000 compared
 with $20.5 for 1999, an improvement of $8.1 million.  The net loss for 1999
 included charges of $2.2 million ($0.03 per common share) related to the
 discontinued operations of the Company's HealthCare Solutions Group.  Losses
 from operations amounted to $18.9 million for 2000, decreasing from
 $19.6 million for 1999.  The decrease is a result of the restructuring of
 sales, marketing, and product development activities.
 
 
                               Fonix Corporation
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                        For the Year Ended For the Year Ended
                                          December 31, 2000 December 31, 1999
      Revenues                                  $656,853         $439,507
      Cost of revenues                            27,436           24,932
       Gross margin                              629,417          414,575
      Expenses:
       Selling, general and administrative    10,722,313        9,498,753
       Product development and research        5,871,414        7,909,228
       Amortization of intangible assets       2,457,829        2,588,896
       Purchased in-process research
        and development                          474,000               --
 
      Total expenses                          19,525,556       19,996,877
 
      Loss from operations                   (18,896,139)     (19,582,302)
 
      Total other expenses, net                3,991,348        3,698,789
      Loss from operations
       before tax benefit                    (22,887,487)     (23,281,091)
 
      Income tax benefit                          76,810        3,331,895
      Loss from continuing operations        (22,810,677)     (19,949,196)
 
      Discontinued operations                         --       (2,187,080)
      Extraordinary items                         49,448          473,857
 
      Net loss                              $(22,761,229)    $(21,662,419)
 
      Net loss per common share                   $(0.16)         $(0. 31)
 
 
                       CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                                 As of              As of
                                          December 31, 2000 December 31, 1999
 
      Assets                                 $17,517,373      $ 19,173,147
      Liabilities                             $3,591,621       $11,086,788
      Stockholders' equity                   $13,925,752        $8,086,359
 
 
     About Fonix Corporation
     Fonix Corporation (OTC Bulletin Board:   FONX) is a leading provider of
 natural-user-interface technology and solutions for wireless and mobile
 devices, Internet and telephony systems, and vehicle telematics.  Leading chip
 manufacturers, independent software and hardware vendors, and Internet content
 and service providers incorporate Fonix technology to provide their customers
 with an easier and more convenient user experience.  Fonix products, including
 Text-To-Speech (TTS), Automatic Speech Recognition (ASR), and Handwriting
 Recognition (HWR), can be implemented easily on multiple microprocessors and
 operating systems, and provide the most natural communication solutions
 available.  For more information visit www.fonix.com or call (801) 553-6600.
 
     Note:  The statements released by Fonix Corporation that are not purely
 historical are forward-looking within the meaning of the "Safe Harbor"
 provisions of the Private Securities Litigation Reform Act of 1995, including
 statements regarding the Company's expectations, hopes, intentions, and
 strategies for the future.  Investors are cautioned that forward-looking
 statements involve risk and uncertainties that may affect the Company's
 business prospects and performance.  It is important to note that the
 Company's actual results could differ materially from those in such forward-
 looking statements.  Risk factors including general economic, competitive,
 governmental, and technological factors as discussed in the Company's filings
 with the SEC on Forms 10-K, 10-Q and 8-K.  The Company does not undertake any
 responsibility to update the forward-looking statements contained in this
 release.
 
 

SOURCE Fonix Corporation
    SALT LAKE CITY, April 2 /PRNewswire/ -- Fonix(R) Corporation
 (OTC Bulletin Board:   FONX) today announced financial results for the year
 ended December 31, 2000.  "Our operating results for 2000 reflect our
 commitment to the marketing and sales efforts initiated in 1999," said Thomas
 A. Murdock, Chairman and CEO.
     Revenues from multiple license fees and product sales were $656,853 for
 the year ended December 31, 2000, compared to $439,507, a 49% increase over
 the year ended December 31, 1999.  Cash generated from contracts in 2000 was
 $1,206,075, a 120% increase over 1999.  In addition, the Company recently
 received the $2 million that had been held in escrow in connection with the
 sale of the HealthCare Solutions Group to Lernout & Hauspie in September 1999.
     As a result of the increases in revenues and the recurring nature of these
 revenues, the Company emerged from the development stage as of December 31,
 2000.
     Increased revenues and cash flows from operating activities in 2000
 indicate the continuing growth of Fonix in its overall transition from its
 research and development focus to sales and marketing activities.  Fonix
 speech technologies are readily distributed through the proprietary FAAST(R)
 (Fonix Accelerated Application Solutions Technologies) framework.  "We are
 finding increased interest in our FAAST development framework among OEM and
 IVR channel partners, and software and application developers who
 speech-enable applications in call centers and voice portals, mobile hand-held
 computing devices, automotive telematics, cell and smart phones, and consumer
 electronic devices such as the Panasonic 2.4 GHZ GigaRange(R) Elite Cordless
 Telephone," explained Mr. Murdock.  "Our focused sales and marketing efforts
 will continue to emphasize the advantages of FAAST in both the server-based
 and embedded markets."
     To expand and accelerate sales revenue, the Company has recently initiated
 a technology and marketing collaboration agreement with Audium (formerly
 Phone2Networks) to integrate FAAST with VoiceXML applications.  Additionally,
 Fonix has opened a sales and marketing office in Seoul, South Korea.  "With
 the dynamic use of FAAST in call center applications, in English as a second
 language learning environments, and in mobile computing devices through our
 embedded solutions, we expect revenue growth in the Asian markets.  Seoul,
 South Korea, is our initial strategic launch," said Mr. Murdock.  "Dr. Kyungho
 Loken-Kim, Vice President, Asia, has worked effectively over the past 12
 months to establish the Fonix brand name, to prepare the Korean market for
 Fonix products, and to establish relationships with key Korean OEM and channel
 partners.  We look forward to begin delivering our products and solutions in
 the Korean market in the next 30 days."
     "We are pleased with our continued progress toward meeting our strategic
 financial objectives by decreasing our cash burn rate from operating
 activities.  Net cash used in operating activities decreased from
 $20.5 million in 1999 to $12.4 million in 2000," said Roger D. Dudley,
 Executive Vice President and CFO.  "We continue to see the effects of our
 successful restructuring of the Company's sales, marketing, and product
 development activities.  The company supports its sales and marketing growth
 with a blend of cash receipts and draws against an equity line of credit.  We
 expect our revenue and cash receipts to cover the Company's operating expenses
 sufficiently to reduce the need to draw on our equity line," explained Mr.
 Dudley.
     Fonix reported a net loss of $22.8 million ($0.16 per common share) for
 2000, compared to a net loss of $21.7 million ($0. 31 per common share) for
 1999.  Cash used in operating activities was $12.4 million for 2000 compared
 with $20.5 for 1999, an improvement of $8.1 million.  The net loss for 1999
 included charges of $2.2 million ($0.03 per common share) related to the
 discontinued operations of the Company's HealthCare Solutions Group.  Losses
 from operations amounted to $18.9 million for 2000, decreasing from
 $19.6 million for 1999.  The decrease is a result of the restructuring of
 sales, marketing, and product development activities.
 
 
                               Fonix Corporation
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                        For the Year Ended For the Year Ended
                                          December 31, 2000 December 31, 1999
      Revenues                                  $656,853         $439,507
      Cost of revenues                            27,436           24,932
       Gross margin                              629,417          414,575
      Expenses:
       Selling, general and administrative    10,722,313        9,498,753
       Product development and research        5,871,414        7,909,228
       Amortization of intangible assets       2,457,829        2,588,896
       Purchased in-process research
        and development                          474,000               --
 
      Total expenses                          19,525,556       19,996,877
 
      Loss from operations                   (18,896,139)     (19,582,302)
 
      Total other expenses, net                3,991,348        3,698,789
      Loss from operations
       before tax benefit                    (22,887,487)     (23,281,091)
 
      Income tax benefit                          76,810        3,331,895
      Loss from continuing operations        (22,810,677)     (19,949,196)
 
      Discontinued operations                         --       (2,187,080)
      Extraordinary items                         49,448          473,857
 
      Net loss                              $(22,761,229)    $(21,662,419)
 
      Net loss per common share                   $(0.16)         $(0. 31)
 
 
                       CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                                 As of              As of
                                          December 31, 2000 December 31, 1999
 
      Assets                                 $17,517,373      $ 19,173,147
      Liabilities                             $3,591,621       $11,086,788
      Stockholders' equity                   $13,925,752        $8,086,359
 
 
     About Fonix Corporation
     Fonix Corporation (OTC Bulletin Board:   FONX) is a leading provider of
 natural-user-interface technology and solutions for wireless and mobile
 devices, Internet and telephony systems, and vehicle telematics.  Leading chip
 manufacturers, independent software and hardware vendors, and Internet content
 and service providers incorporate Fonix technology to provide their customers
 with an easier and more convenient user experience.  Fonix products, including
 Text-To-Speech (TTS), Automatic Speech Recognition (ASR), and Handwriting
 Recognition (HWR), can be implemented easily on multiple microprocessors and
 operating systems, and provide the most natural communication solutions
 available.  For more information visit www.fonix.com or call (801) 553-6600.
 
     Note:  The statements released by Fonix Corporation that are not purely
 historical are forward-looking within the meaning of the "Safe Harbor"
 provisions of the Private Securities Litigation Reform Act of 1995, including
 statements regarding the Company's expectations, hopes, intentions, and
 strategies for the future.  Investors are cautioned that forward-looking
 statements involve risk and uncertainties that may affect the Company's
 business prospects and performance.  It is important to note that the
 Company's actual results could differ materially from those in such forward-
 looking statements.  Risk factors including general economic, competitive,
 governmental, and technological factors as discussed in the Company's filings
 with the SEC on Forms 10-K, 10-Q and 8-K.  The Company does not undertake any
 responsibility to update the forward-looking statements contained in this
 release.
 
 SOURCE  Fonix Corporation