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Technology Stocks : Fonix:Voice Recognition Product (FONX) -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Bob who wrote (2148)	1/29/1999 9:51:00 PM
From: john harris	Read Replies (1) \| Respond to of 3347

Another clue is that the company appears to be waiting to the last minute to get themselves out of the negative cash flow financial hole (often it is not by design that they wait; it is because the financiers are holding out for the best deals as the company's cash disappears). Check out the balance sheet for propped up assets. That is, you see a fairly large total amount of assets on the balance sheet. But when looking at each individual asset, you see a corresponding offsetting liability for that very asset. They are simply borrowing against such an asset. In the example of FONX, they borrowed their own money with the bank and still borrow to the hilt against a $20M deposit. They have "Cash and Cash Equivalents" of $20.053M as of 9/30/98, but also have a liability item of $20.035M which was their borrowing against the bank deposit. If you have a business opportunity in which you believe, you get your money and spend it on that business opportunity. You do not put that money in the bank and borrow against it creating a guaranteed negative cash flow unless you are interested in propping up your balance sheet for cosmetic purposes. The following post is from July, 1997: exchange2000.com Anybody want to guess on the figures for the cash burn this past quarter, 6/30/97? Remember, this is the quarter when FONX paid Stu, Mu, and Du for the capital gains taxes on their exercise of 3.7M warrants in 1995. Total amount paid in June for the boys' 1995 taxes? A whopping $2,058,000. Exactly 50% of your shareholder equity in a one-time payment to help these boys pay their taxes. It's no wonder why FONX needed that quick $3 million the other day from the "private investor". Also, how much deeper in the hole can FONX go with the bank it has $20M with? FONX as of 3/31/97 had an outstanding debit amount of $18,269,888 borrowed against the $20 million. This was up from $16,377,358 at 1996 year end. These numbers have the result of pumping up assets on the balance sheet, but every homeowner who needs cash and takes out a second mortgage on his house knows what FONX management is now experiencing. A dwindling net worth. Make no mistake about it, this company is desperate for cash. PS: Another clue is to watch for little special footnote bennies that are given to the managers of the company. Egregiously financially self indulgent managers are very symptomatic of future failed investments. The tax deal was such a case. And finally, once a manager is caught in such an act, get out as fast as you can, regardless of the prospects of the technology. You wouldn't work as a business partner with such a person who many believe to be sneaky, underhanded, and self indulgent. So don't invest with one. They are the caretakers of your hard earned money. Trust is of the utmost importance. There are just too many other credible investments out there, thousands.