CORRECTING and REPLACING Fonix Reports First Quarter 2004 Results.Business Editors/High-Tech Writers CORRECTION...by Fonix Corp. SALT LAKE CITY--(BUSINESS WIRE)--May 7, 2004 In BW6043 issued May 6, 2004: Third graph, second sentence of release dated May 6, 2004 should read: As a result of the acquisition of LecStar and equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. completed during the quarter ended March 31, 2004, shareholder equity at March 31, 2004 is $6,245,000 compared to a shareholder deficit of $10,397,000 at Dec. 31, 2003 (sted As a result of the acquisition of LecStar and equity financing completed during the quarter ended March 31, 2004, shareholder equity at March 31, 2004 is $6,245,000 compared to a shareholder deficit of $10,397,000 at Dec. 31, 2004.) The corrected release reads: FONIX REPORTS FIRST QUARTER 2004 RESULTS Fonix Corp. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: FNIX), an industry leader in delivering conversational speech solutions to consumer systems and devices for everyday use through its Fonix Speech Group Fonix Speech, Inc., offers “voice technology solutions” for mobile phone and wireless devices, interactive video games, toys, appliances, computer telephony systems and vehicle telematics. , and a provider of telephone and data services through its new subsidiaries LecStar Telecom Inc. and LecStar DataNet (LecStar), announces financial results for the quarter ended March 31, 2004. Fonix revenues were $1,925,000 for the quarter ended March 31, 2004 compared to $590,000 for the same period in 2003. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , exclusive of non-cash amortization of $593,000, decreased by $822,000 from $3,952,000 in the first quarter of 2003 to $3,130,000 in the first quarter of 2004. Net loss was $2,342,000 ($0.08 per common share) for the first quarter in 2004 compared to $4,270,000 ($0.30 per common share) for the same period in 2003. The first quarter results reflect the consolidation of the LecStar operations from March 1 through March 31, 2004 and the Fonix Speech Group for the entire quarter. During the quarter ended March 31, 2004, the company reduced accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. payroll and other compensation-related expenses by $2,241,000 and accounts payable by $752,000. As a result of the acquisition of LecStar and equity financing completed during the quarter ended March 31, 2004, shareholder equity at March 31, 2004 is $6,245,000 compared to a shareholder deficit of $10,397,000 at Dec. 31, 2003. "Our financial results for the first quarter primarily reflect the synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. of our combined business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets ," said Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs A. Murdock, Fonix chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We expect further improvement in revenue and cost management as we leverage the operating advantages of both LecStar and the Fonix Speech Group." "We are encouraged by the results of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and redirection Diverting data from their normal destination to another; for example, to a disk file instead of the printer, or to a server's disk instead of the local disk. See virtual directory, symbolic link, shortcut, redirector and DOS redirection. 1. of our business model," said Roger D. Dudley, Fonix executive vice president and CFO See Chief Financial Officer. . "Our improving operations provide a solid base for future growth. By significantly reducing combined operating expenses, less non-cash amortization, by 21 percent, we believe the company will continue to improve its operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: on increasing revenue." The consolidated pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Fonix revenue including LecStar revenue for the full quarter ended March 31, 2004 was $5,029,000. Consolidated pro forma operating expenses, exclusive of non-cash amortization of $593,000, were $6,114,000. Pro forma net loss was $3,842,000 ($0.10 per common share). About Fonix Fonix Corp. is an industry leader in delivering conversational speech solutions to consumer systems and devices for everyday use. Manufacturers and developers incorporate Fonix's award-winning technology to provide their customers with an easy, convenient, and reliable user experience. Fonix currently offers voice technology for mobile/wireless devices; computer telephony See CTI, VoIP and IP telephony. Computer Telephony - Computer Telephone Integration systems; game consoles See video game console. , toys and appliances; the assistive market and automobiles. Fonix recently acquired LecStar Telecom Inc., a rapidly growing Atlanta-based regional provider of integrated communications services to businesses and consumers. LecStar offers a full array of wireline voice, data, long distance and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the services to business and residential customers throughout BellSouth's Southeastern operating territory. LecStar's solid customer base offers a unique direct marketing and distribution channel for Fonix speech technologies and solutions. Visit www.fonix.com for an introduction to Fonix's complete suite of speech solutions, or contact a Fonix representative at 801-553-6600 and say "Sales." Statements released by Fonix that are not purely historical are forward looking within the meaning of the "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements regarding the company's expectations, hopes, intentions and strategies for the future. Investors are cautioned that forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involve risk and uncertainties that may affect the company's business prospects and performance. The company's actual results could differ materially from those in such forward-looking statements. Risk factors include 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.
Fonix Corp.
Consolidated Statement of Operations
Three Months Ended
March 31, March 31,
2004 2003
----------- ------------
Revenues $1,925,000 $590,000
Cost of revenues (792,000) (80,000)
----------- ------------
Gross profit 1,133,000 510,000
Expenses:
Selling, general and administrative 2,924,000 2,277,000
Product development and research 799,000 1,675,000
----------- ------------
Total expenses 3,723,000 3,952,000
Loss from operations (2,590,000) (3,442,000)
Total other income (expense) 248,000 (828,000)
Loss from operations before equity in net
loss of affiliate (2,342,000) (4,270,000)
----------- ------------
Equity in net income (loss) of affiliate - (112,000)
Net loss (2,342,000) (4,382,000)
=========== ============
Basic and diluted net loss per common share $(0.08) $(0.30)
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Consolidated Balance Sheets
As of As of
March 31, Dec. 31,
2004 2004
----------- ------------
Assets 29,691,000 3,173,000
Liabilities 23,446,000 13,570,000
Stockholders' equity (deficit) 6,245,000 (10,397,000)
Fonix Corp.
Pro Forma Consolidated Statement of Operations
Three Months Ended
March 31, 2004
--------------
Revenues $5,029,000
Cost of revenues (2,313,000)
------------
Gross profit 2,716,000
Expenses:
Selling, general and administrative 5,908,000
Product development and research 799,000
------------
Total expenses 6,707,000
Loss from operations (3,991,000)
Total other income 149,000
Net loss $(3,842,000)
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Basic and diluted net loss per common share $(0.10)
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