Fonix Corp – ‘8-K’ for 2/24/04 – EX-99

On:  Thursday, 3/4/04, at 6:20pm ET   ·   As of:  3/5/04   ·   For:  2/24/04   ·   Accession #:  1010924-4-24   ·   File #:  0-23862

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         4     19K 
 2: EX-2        Exhibit 2.1                                           68    218K 
 3: EX-2        Exhibit 2.2                                            7     37K 
 4: EX-2        Exhibit 2.3                                           11     44K 
 5: EX-2        Exhibit 2.4                                            7     27K 
 6: EX-2        Exhibit 2.5                                           20     81K 
 7: EX-3        Exhibit 3.1                                            6     26K 
 8: EX-99       Miscellaneous Exhibit                                  3     14K 

EX-99   —   Miscellaneous Exhibit

EX-99
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Press Release Source: Fonix Corp.                                               

Fonix Completes Acquisition of LecStar Telecom                                  
Thursday February 26, 4:59 pm ET                                                

Acquisition  Provides  Fonix  with  Substantial  New  Revenue  and  Distribution
Channels for Its Speech Solutions                                               

SALT LAKE CITY--(BUSINESS  WIRE)--Feb. 26,  2004--Fonix(R)Corp.  (OTC BB: FNIX -
News),  an industry  leader in  delivering  conversational  speech  solutions to
consumer  systems and  devices for  everyday  use,  announced  today that it has
completed  the  acquisition  of LTEL  Holdings  Corp.  and its two wholly  owned
operating subsidiaries, LecStar Telecom Inc., an Atlanta-based competitive local
exchange  carrier,  and its sister company,  LecStar Datanet Inc., a provider of
Internet services to business and residential customers.  The all stock and debt
transaction involves payment of consideration valued at $33 million.            

The LecStar acquisition significantly accelerates Fonix's growth strategy by    
providing a recurring revenue stream, a growing customer base and new marketing 
channels. LecStar's customer base -- which is growing at an annual rate of 60   
percent -- will provide a predictable revenue stream and reduce Fonix's cost of 
capital.                                                                        

LecStar's customers also offer a unique direct marketing and distribution       
channel for Fonix's speech technologies and solutions. This combination will    
give Fonix immediate access to LecStar's growing customer base, enabling Fonix  
to bundle its telephony and mobile/wireless speech interface solutions with     
LecStar's telecommunications services. In addition, LecStar's utility           
partnerships offer significant opportunities to expand Fonix's marketing        
channel.                                                                        

"The acquisition of LecStar begins a compelling new chapter at Fonix," said     
Thomas A. Murdock, Fonix president and CEO. "This transaction significantly     
accelerates our ability to generate revenues and will help fund continued       
efforts in sales, market channel expansion and product development, which are   
key growth drivers in the evolving speech technology and solution industry. In  
addition, the acquisition will immediately enable Fonix to pursue strategic     
opportunities to acquire other local exchange carriers to further expand the    
existing customer base, providing Fonix with substantial additional value-added 
offerings and services to telephone customers."                                 

"LecStar is very excited about the added benefits and services that this        
transaction makes available to our customers," said W. Dale Smith, LecStar      
Telecom president and CEO. "Our customers will continue to receive the same high
level of service and support and, in addition, will have the opportunity to take
advantage of proven, ready-to-use speech solutions. The stronger balance sheet  
and accelerated growth afforded by this transaction will be valuable to LecStar 
customers as well as our utility and channel partners. We look forward to       
leveraging Fonix's award-winning technology to introduce new advanced solutions 
to our customers and partners."                                                 

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Roger D. Dudley, Fonix executive vice president and CFO, added, "LecStar is     
unique among its carrier peers: It has continued to grow its business throughout
the downturn in the telecom industry. The result is a company with solid        
fundamentals, a growing customer base, robust service and product offerings, and
a deep, talented management team with significant experience in the             
telecommunications industry. We expect this cashless transaction to be accretive
to Fonix shareholders."                                                         

In addition to LecStar's stable and growing revenue, Fonix will continue to     
advance its market-leading position on Microsoft platforms such as Xbox(R),     
PocketPC and SmartPhone mobile/wireless devices, and Symbian devices. Fonix will
continue its integrated corporate collaborations with Electronic Arts,          
PlayStation(R)2, Motorola, Intel, Hitachi, Renesas, Oracle(R) and Seiko Epson.  

LecStar will operate as a wholly owned subsidiary of Fonix and will retain its  
current management team. Financial statements will be consolidated beginning    
March 2004.                                                                     

For additional company information, including management biographies, visit     
www.fonix.com.                                                                  

About Fonix                                                                     

Fonix Corp. is an industry leader in delivering conversational speech solutions 
to consumer systems and devices for everyday use. Manufacturers and developers  
incorporate Fonix's award-winning technology to provide their customers with an 
easy, convenient, and reliable user experience. Fonix currently offers voice    
technology for mobile/wireless devices, computer telephony systems, the         
assistive market and automobiles. Fonix recently acquired LecStar Telecom Inc., 
a rapidly growing Atlanta-based regional provider of integrated communications  
services to businesses and consumers. LecStar offers a full array of wireline   
voice, data, long distance and Internet services to business and residential    
customers throughout BellSouth's Southeastern operating territory. LecStar's    
solid customer base offers a unique direct marketing and distribution channel   
for Fonix speech technologies and solutions. Visit www.fonix.com for an         
introduction to Fonix's complete suite of speech solutions, or contact a Fonix  
representative at 801-553-6600 and say "Sales."                                 

Investor contact:                                                       
The Abernathy MacGregor Group                                           
Winnie Lerner, wal@abmac.com                                            
Loren Iati, lai@abmac.com                                               
212-371-5999                                                            

The 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                                

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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.                                           

Seiko Epson is a registered trademark of Seiko Epson Corp. Japan. Oracle is a   
registered trademark of Oracle Corp. and/or its affiliates. "PlayStation" is a  
registered trademark of Sony Computer Entertainment Inc. "Xbox" is a registered 
trademark of Microsoft Corp. in the United States and/or other countries.       

--------------------------------------------------------------------------------
Contact:                                                                        
Fonix Corp., Salt Lake City                                           
Elizabeth Sweeten, 801-553-6600                                       
mediainfo@fonix.com                                                   

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
Filed as of:		3/5/04							S-2
Filed on:		3/4/04							S-2
		2/26/04		1
For Period End:		2/24/04							8-K/A
									List all Filings