Fonix Announces Corporate Re-structuring Plan and Focus on Speech Solutions in Five Market Segments
February 05, 2003 1:30:00 PM ET
Rolf-Juergen Bruess Joins Executive Management Team Re-structuring Plan to Address the Company's Capital, and Ability to Meet Operating Requirements and Accrued Liabilities
S-2 Registration Statement for the $20 Million Equity-Line Now Effective Employees Approve Compensation Plan - Up to 40% in Stock Company Will Seek Shareholder Approval of a Reverse Split of Its Common Stock
SALT LAKE CITY, Feb. 5 /PRNewswire-FirstCall/ -- Fonix Corporation (OTC Bulletin Board: FONX), a leading provider of speech interface solutions, announced today a significant corporate re-structuring program to enable the Company to continue to deliver its premier speech solutions and support its revenue growth trends. Based on the Company's access to a $20 million equity line of credit and the Company's growing quarterly revenue trends (see table below), Fonix has re-structured its operations, market focus, and speech solutions and intends to seek shareholder approval for a reverse split of its common shares.
New appointments were also announced: Rolf-Juergen Bruess has been named president, Fonix International and Strategic Marketing, and Brandon T. O'Brien, has been named vice president finance.
Mr. Bruess has 20 years senior and executive management experience in semiconductors, communications, consumer and automotive electronics and strategic technical marketing/sales with Siemens AG and Mannesmann VDO. He has managed 1,500 world-wide engineering and sales teams achieving $750 million in annual sales.
Mr. Bruess will work directly with the executive management team to implement strategic marketing and development initiatives, and standardize speech solutions. "Fonix has real speech solutions that can be used in multiple markets and products. We are just starting to see Fonix leverage its rich technology IP into revenue generating channels," said Bruess.
Brandon T. O'Brien, CPA, has joined the Fonix team as vice president, finance. Mr. O'Brien has over 7 years experience as a senior auditor with a major independent accounting firm, consultant, and controller and as the financial reporting manager at Iomega Corp. He is experienced with product line profitability analysis, cash flow projection models, budgetary projection models, the preparation and review of all SEC reports and the processes and procedures for revenue recognition peculiar to high tech companies. Mr. O'Brien received his BS in accounting from Utah State University and his MBA from the University of Utah.
Thomas A. Murdock, president and CEO, said, "After the past 18 months of a close association with Mr. Bruess, we are pleased to have him join the executive team. His experience and drive have resulted in the market definition that will enhance revenue visibility and growth. Fonix is pleased to benefit from his professional expertise in our emerging markets. Likewise, we welcome Brandon and know Fonix will benefit from his accounting and financial reporting experience."
Mr. Murdock continued, "The restructuring plan enables Fonix to support its revenue growth trends, maximize product and market deliverables, and create a more attractive investment opportunity for current and potential investors. Our employees and vendors stuck by us for six months while we resolved the issues relating to our primary source of financing -- an equity line of credit. We are pleased that the Securities and Exchange Commission has now declared effective our registration statement for the new $20 million equity line. During this challenging period, our employees have been remarkably committed to delivering Fonix speech solutions that have resulted in increasing quarterly revenues. We expect these revenue trends to continue."
Revenue Growth
The Company's revenues increased during every quarter of 2002 and when measured against revenues during the same quarter in 2001:
Quarter & Year ending Revenue % Increase over Same
Period, Prior Year
March 31(1) $298,785 125%
June 30(1) $679,196 535%
September 30(1) $834,076 213%
December 31(2) $1,273,137 852%
2002(2) $3,101,145 410%
(1) Actual
(2) Estimated
Recent Cost-cutting Initiatives
During the past few months, the Company has achieved and implemented the following:
1. A head-count reduction of 40%. The Company currently has
97 employees.
2. Reduced total operating costs by approximately 50%.
3. Approval of a new compensation plan that allocates approximately 60%
of current salary levels to cash payroll and the deferral of the
remaining 40% for 6 months, which deferred amounts, may be converted
to common stock. The compensation plan also provides for the payment
of the accrued payroll to current employees (totaling approximately
$3,500,000) to begin no later than May 2003 and continue over a
24-month period. This plan will also allow current employees to
convert in the future all or a portion of the accrued payroll to
common stock.
Regarding past-due wages to former employees, the Company is working out the specific details with the regulatory agencies to pay the past due wages over a 24 month period beginning no later than May 2003. Under the proposed plan, former Fonix employees will receive the past due wages over a 24 month period beginning no later than May 2003.
Accounts payable will be paid, as cash is available, on terms agreed to by the Company's vendors.
Reverse Split of Common Stock
The Company's board of directors has approved a reverse split of the Company's common stock in a range of 25:1 to 40:1. Fonix intends to ask its shareholders to approve such a reverse spilt, as will be described in a proxy statement to be filed with the Securities and Exchange Commission. If the shareholders approve the proposal, the Fonix board of directors will have the authority to determine the eventual amount of the reverse split.
Market Segment Focus
Newly streamlined and focused operations have resulted in delivery of Fonix speech solutions in five primary market segments:
-- Wireless /Mobile devices and Game consoles: (cell phones, PDA's, PDA's
with PhoneEditions, and Xbox).
-- Telephony Applications: (Speak@Me and 511 Information System)
-- Assistive and Language Learning Interface Tools
-- End-2-End -- Distributive speech solutions.
-- Automotive in-dash and after market voice controlled electronic
functions.
"The combination of increasing revenues, operating reductions, strong market focus and the availability of working capital from revenue and the equity line of credit will assist the Company to meet its operating requirements and pay its accrued liabilities," said Roger D. Dudley, executive vice president and CFO. "We are sincerely appreciative of the employees that have diligently delivered speech solutions to the market during the last six months. We acknowledge our vendors that have worked with us. We are eager to move forward and continue to deliver the kind of voice solutions that will enable Fonix to become profitable," said Dudley.
About Fonix Corporation
Fonix Corporation (OTC Bulletin Board: FONX) is a leading provider of natural-user interface technology 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 provider's incorporate Fonix technology to provide their customers with an easier and more convenient user experience.
For more information visit www.Fonix.com or call (801) 553-6600
Media Information
mediarel@Fonix.com
Investor Information
Michelle Aamodt (801) 553-6600
invrel@Fonix.com
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.
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