[Fonix vs. Amati]
These companies are very similar to each other with respect to the fact tat they are both start ups with patentable technology. A huge difference is the way that management reacts to assults on thier stock and corporate image. Fonix goes after people like a pitbull goes after a raw steak. Amati sits and wimpers. I own both stocks. I beleive in both technologies. I like the way that Fonix supports its shareholders a whole lot better than Amati.
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March 31, 1997
Dear Shareholders:
Bloomberg News Service today (Monday) carried a story which once again is factually in error and, more importantly, slants the facts of a planned audit
transition in what appears to be an intentionally misleading manner. We are amazed that Bloomberg, a respected news organization, would allow its West
Coast correspondent to sensationalize in a false and defamatory way what is normal, customary, and sound business conduct, resulting in the economic
detriment to fonix shareholders.
The story's author, Mr. David Evans, wrongly asserts three times in his story that fonix "fired" its outside auditors. This is simply untrue. fonix did not
"fire" its auditing firm, as he erroneously states in his story.
In furtherance of what appears to be his personal vendetta against fonix corporation, Mr. Evans has attempted to manufacture news and imply that
something was amiss in connection with fonix's routine announcement that it has transitioned from its current auditors, a local Salt Lake City firm, to a prominent international "Big Six" accounting firm, Deloitte & Touche LLP. This is just another example of Mr. Evan's unfounded, mean spirited, and
baseless attempts to damage fonix, its shareholders and principals.
As we announced in the annual shareholders meeting in July 1996, as the company matures from an R&D entity to a technology vendor it has been our
corporate intent to move from a regional accounting firm to an international "Big Six" accounting firm. We had not expected to make this transition at this
time, but when approached by Deloitte & Touche LLP three weeks ago it was determined that the time had come to make the transition.
The regional accounting firm of Pritchett, Siler & Hardy, P.C., with whom we have been fully satisfied, performed all prior audits, and has completed the
1996 audit on schedule. In this necessary transition to an international audit firm, Pritchett, Siler & Hardy, P.C. is coordinating with Deloitte & Touche LLP
the on-time filing of the 1996 audit.
This earlier-than-planned transition is to support the technology and for the essential business purpose of preparing the company for potential strategic
partnering, the next step in the planned evolution of fonix. The filing of the 12-31-96 10-KSB will be timely by SEC standards. The company has filed the
appropriate and customary documents with the SEC to remain in full compliance with on-time public disclosure.
Mr. Evans also draws attention to what he characterized as a "caution" by the audit firm in its earlier audits regarding the company's prior financial
statements. The supposed "caution" was normal and customary language for any development-stage company, as defined by the Generally Accepted
Accounting Principles (GAAP) issued by the Financial Accounting Standards Board.
We are astounded at what we perceive as the continuing irresponsibility of Mr. David Evans of Bloomberg News Service. His repeated disregard for facts
is outside the bounds of responsible journalism. As a corporation we view his conduct as questionable, but his continuing disregard for facts has become
economically damaging to some fonix shareholders. On several prior occasions we have advised Bloomberg of what appears to be his intentional
misstatement of facts and disregard for factual accuracy. We regret that Bloomberg has failed to ensure that its correspondent, Mr. Evans, is accurate in
fact and implication. Their failure to adequately supervise Mr. Evans has resulted in apparent monetary damage to fonix shareholders.
Due to the high market volatility that his story presumably caused, we are sensitive and concerned that shareholders may have sold shares based on this
factually incorrect information. In less than ten minutes of the posting of his story on the Bloomberg News Service, some fonix shareholders suffered up to
a fifteen percent loss.
Further, we have received broker inquiry regarding the highly suspect nature of such a story being issued at the end of a trading session on the last day of
a quarter. It appears to create a buying opportunity in order to cover a short position and show profitability at the end of a quarter. We have today asked
the appropriate regulators to investigate the circumstances surrounding the release and timing of this story.
In our unwavering commitment to fonix shareholders, we invite any shareholders to comment on E-mail to Invrel@fonix.com, or through our FAQ section
of our Web site.
Sincerely,
Stephen M. Studdert
Chairman & Chief Executive Officer |
