fonix Adds Handwriting Recognition With the Acquisition of Papyrus Companies; fonix Suite of Products Expands.

SALT LAKE CITY--(BUSINESS WIRE)--Nov. 5, 1998--fonix corporation (NASDAQ: FONX), the innovation leader in human computer interaction technology, today announced it has completed the acquisition of the award-winning Papyrus group of companies of Cambridge, Massachusetts.

Papyrus develops and markets award-winning printing and cursive handwriting recognition software for PDAs, mobile phones and pen tablets. Papyrus customers include Philips, Hitachi, Olivetti/Oracle Research Lab, NuvoMedia, ARM, Amstrad, Purple Software, and Digital Equipment. The Papyrus handwriting recognizer is an integral part of Psion PDA, the market leader in Europe.

Papyrus is an expanding systems integration provider with specific expertise and intellectual property in embedded systems and enhanced Internet applications. Papyrus has an ongoing partnership with E-Travel that resulted in the first corporate travel management Web-browser client software system. This product is now shipping to prestigious customers including Fidelity Investments, ADP, Travel One, Coca Cola, Time Inc., and Unisys.

"Papyrus adds immediate revenues and a rapidly growing customer base, and when combined with the expanding fonix suite of products expands both vertical and horizontal market opportunities for fonix. This acquisition is good for fonix shareowners and good for our product market strategy," said Stephen M. Studdert, Chairman and CEO of fonix.

"With the completion of this acquisition, the people of Papyrus are looking forward to immediately implementing the fonix vision of making human interaction with computers more simple and convenient," said Bill Kania, president of Papyrus. "Our expertise in handwriting recognition and systems integration combined with fonix' strengths will position us to penetrate the fast growing Internet and embedded systems markets."

Papyrus' Allegro handwriting recognition software provides nearly 100 percent accuracy, is easy to learn and easy to use. Unlike other recognizers, Allegro does not require users to memorize a new alphabet. Unlike voice recognition, handwritten input is private and allows the user to listen or converse while taking notes.

"With the acquisition of Papyrus, the fonix suite of products now delivers an even broader range of multi-modal human computer interactions in key markets," said Studdert. "Papyrus' proprietary handwriting recognition technology is for use in Personal Digital Assistants (PDAs) and pen tablets, both large and growing industry segments. According to International Data Corp. (IDC), total global market for PDAs is estimated at $3.4 billion for 1999, and total global market for Pen Tablets is estimated at $1.6 billion for 1999."

Papyrus shareowners received promissary notes valued at $1.710 million, and 3.1 million fonix shares. There was no cash involved in the transaction closing.

About fonix corporation

fonix corporation, based in Salt Lake City, Utah, with offices in Boston and Silicon Valley, provides solutions to make human interaction with computers and other intelligent appliances more simple and convenient. The fonix suite of products and services, including speech recognition, speech synthesis, handwriting recognition, text-to-speech and intelligent Internet agents, provides natural, intuitive solutions that allow people and their technological tools to speak to and interact with each other in human terms. fonix technology produces and enhances products offered by fonix and its OEM partners and is included in computer and Internet based systems and devices for consumer, professional and industrial markets.

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 expectation, hopes, intentions, and strategies for the future. Investors are cautioned that forward-looking statements invoke 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.