Fonix Reports First-Quarter 2005 Highlights and Results.

SALT LAKE CITY -- Fonix Corp. (OTCBB: FNIX), an integrated communications carrier providing telecommunications services and value-added speech technologies, announces financial results for the quarter ended March 31, 2005.

First-quarter company highlights include:

--Fonix Corp. realigns its business segments into three revenue-centric operating groups: Fonix Speech (providing value-added speech interface technologies), Fonix Telecom (providing facilities-based, VoIP and BPL telephone services) and LecStar Telecom (a re-seller of traditional local/long distance telephone services).

--Fonix Telecom offers telecom voice and broadband service to enterprise and corporate customers ranging from single offices to multioffice, multistate installations via its Fonix Fone(SM) VoIP solution.

--Fonix Speech sees the launch of Casio handheld electronic dictionaries in Japan, which feature the Fonix Language Learning Speech Solution, designed to teach users correct pronunciation of foreign words in U.S. and U.K. English, French, German and Spanish using Fonix DECtalk(TM) text-to-speech technology.

--Fonix Speech's award-winning Fonix VoiceDial(TM) solution, which allows hands-free access to mobile phone contacts, is upgraded to include Italian speech recognition.

--Fonix Speech sees the first NovaLogic videogame titles to ship with Fonix voice technology. NovaLogic Inc. releases the Xbox(R) and PlayStation(R)2 versions of Delta Force(R) - Black Hawk Down(R), which feature Fonix VoiceIn(R) for speech-enabled command and control in videogames.

"Fonix's financial results for the first quarter reflect the merit of realigning our business operations," said Thomas A. Murdock, Fonix chairman and CEO. "We expect further improvement in revenue and cost management as we leverage the operating advantages of LecStar Telecom, Fonix Telecom and The Fonix Speech Group."

Fonix revenues were $4,223,000 for the quarter ended March 31, 2005, an increase of $2,298,000 compared to $1,925,000 for the same period in 2004. Operating expenses, exclusive of non-cash amortization of $1,586,000, decreased by $805,000 from $3,935,000 in the first quarter of 2004 to $3,130,000 in the first quarter of 2005. Net loss was $4,080,000 ($0.03 per common share) for the first quarter in 2005 compared to $2,342,000 ($0.08 per common share) for the same period in 2004. During the quarter ended March 31, 2005, the company reduced accrued payroll and other compensation-related expenses by $445,000. First-quarter results reflect a full quarter of operations for LecStar Telecom and a partial quarter for Fonix Telecom.

"We are encouraged by the results of the restructuring and redirection of our business," said Roger D. Dudley, Fonix executive VP and CFO. "We have reduced combined operating expenses, less non-cash amortization, by 20 percent, and we believe Fonix will continue to improve its operating margin and increase revenue as we implement aggressive sales and marketing plans, on both the telecom and speech sides of the business."

About Fonix

Fonix Corp., based in Salt Lake City, is an innovative communications and technology company that provides integrated telecommunications services and value-added speech technologies through Fonix Telecom Inc., LecStar Telecom Inc. and The Fonix Speech Group. The combination of interactive speech technology and integrated telecommunications services allows Fonix to provide customers with comprehensive cost-effective solutions to enhance and expand their communications needs.

Statements released by Fonix 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. 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
                                          Mar 31, 2005    Mar 31, 2004
                                          -------------   ------------

Revenues                                  $  4,223,000   $  1,925,000
Cost of revenues                            (2,187,000)      (792,000)
                                          -------------   ------------

    Gross profit                             2,036,000      1,133,000

Expenses:
  Selling, general and administrative        3,415,000      2,331,000
  Amortization of intangible assets          1,586,000        593,000
  Product development and research             520,000        799,000
                                          -------------   ------------

        Total expenses                       5,521,000      3,723,000

Total other income (expense)                  (595,000)       248,000

Net loss                                    (4,080,000)    (2,342,000)
Preferred stock dividends                     (297,000)    (2,986,000)
                                          -------------   ------------

Loss attributable to common stockholders    (4,377,000)    (5,328,000)

Basic and diluted net loss per common
 share                                    $      (0.03)  $      (0.08)
                                          =============   ============


                     Consolidated Balance Sheets

                                              As of          As of
                                          Sep 30, 2004    Dec 31, 2004
                                          -------------   ------------

Assets                                    $ 17,557,000   $ 19,000,000
Liabilities                               $ 20,948,000   $ 21,058,000
Stockholders' deficit                     $ (3,391,000)  $ (2,058,000)