UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended March 31, 2001

[ ]  Transition  Report  pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934 for the transition period from          to           .
                                                        ----------  -----------

                         Commission file number 0-23862

                                Fonix Corporation
             (Exact name of registrant as specified in its charter)

Delaware                                                         22-2994719
---------------------                        -----------------------------------
(State of Incorporation)                    (I.R.S. Employer Identification No.)

                     60 East South Temple Street, Suite 1225
                            Salt Lake City, UT 84111
                           --------------------------
          (Address of principal executive offices, including zip code)

                                 (801) 328-0161
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes   X   or No
    ------     -------

         As of May 14, 2001, 214,284,842 shares of Class A voting common stock,
par value $0.0001 per share, were issued and outstanding.



<PAGE>

                                Fonix Corporation
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>

ASSETS
                                                                                                March 31,         December 31,
                                                                                                  2001               2000
                                                                                             ----------------   ----------------
<S>                                                                                          <C>                <C>
Current assets:
      Cash and cash equivalents                                                              $     2,538,498    $     1,413,627
      Funds held in escrow                                                                                 -          2,151,006
      Accounts receivable, net of allowance for doubtful accounts of $20,000 in 2000                       -            131,872
      Prepaid expenses and other current assets                                                      148,070             55,705
                                                                                             ----------------   ----------------

           Total current assets                                                                    2,686,568          3,752,210

Note receivable                                                                                      200,000                  -

Property and equipment, net of accumulated depreciation of $1,542,822
          and $1,445,288, respectively                                                               810,964            718,711

Intangible assets, net of accumulated amortization of $7,464,442 and
          $6,850,286, respectively                                                                12,327,607         12,941,764

Other assets                                                                                         188,713            104,688
                                                                                             ----------------   ----------------

           Total assets                                                                      $    16,213,852    $    17,517,373
                                                                                             ================   ================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Accounts payable                                                                       $       502,452    $       655,352
      Accrued liabilities                                                                            559,146            553,448
      Accrued liabilities - related parties                                                        1,526,633          1,564,133
      Deferred revenues                                                                              897,816            677,071
      Notes payable - related parties                                                                 77,625             77,625
      Capital lease obligation - current portion                                                      45,340             44,225
                                                                                             ----------------   ----------------

           Total current liabilities                                                               3,609,012          3,571,854

Capital lease obligation, less current portion                                                         8,005             19,767
                                                                                             ----------------   ----------------

           Total liabilities                                                                       3,617,017          3,591,621
                                                                                             ----------------   ----------------

Commitments and contingencies (Notes 3, 5, 7, 8, 9, 11, and 12)

Stockholders' equity:
      Preferred stock, $0.0001 par value;  50,000,000 shares authorized;
           Series A, convertible; 166,667 shares outstanding
              (aggregate liquidation preference of $6,055,012 at March 31, 2001)                     500,000            500,000
           Series D, 4% cumulative convertible; 164,500 shares outstanding in 2000                         -          4,288,178
           Series F, 6% cumulative convertible; 6,073 shares outstanding in 2000                           -            112,438
      Common stock, $0.0001 par value; 300,000,000 shares authorized;
           Class A voting,  212,565,440 and 191,296,988 shares outstanding, respectively              21,256             19,130
           Class B non-voting, none outstanding                                                            -                  -
      Additional paid-in capital                                                                 156,232,331        148,904,860
      Outstanding warrants to purchase Class A common stock                                        3,141,430          3,141,430
      Accumulated deficit                                                                       (147,298,182)      (143,040,284)
                                                                                             ----------------   ----------------

           Total stockholders' equity                                                             12,596,835         13,925,752
                                                                                             ----------------   ----------------

           Total liabilities and stockholders' equity                                        $    16,213,852    $    17,517,373
                                                                                             ================   ================
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       2



<PAGE>

                                Fonix Corporation
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                                March 31,
                                                                     ---------------------------------
                                                                          2001              2000
                                                                     ---------------   ---------------

<S>                                                                  <C>               <C>
Revenues                                                             $      132,713    $       56,447
Cost of revenues                                                              6,999             2,948
                                                                     ---------------   ---------------

     Gross margin                                                           125,714            53,499
                                                                     ---------------   ---------------

Operating expenses:
     Selling, general and administrative                                  2,146,902         3,338,606
     Product development and research                                     1,655,649         1,450,758
     Amortization of goodwill and purchased core technology                 607,137           607,137
     Purchased in-process research and development                                -           474,000
                                                                     ---------------   ---------------

         Total operating expenses                                         4,409,688         5,870,501
                                                                     ---------------   ---------------

Loss from operations                                                     (4,283,974)       (5,817,002)
                                                                     ---------------   ---------------

Other income (expense):
     Interest income                                                         38,249            30,319
     Interest expense                                                        (2,892)          (32,447)
                                                                     ---------------   ---------------

         Total other income (expense), net                                   35,357            (2,128)
                                                                     ---------------   ---------------

Loss before extraordinary item                                           (4,248,617)       (5,819,130)

Extraordinary item:
     Gain on forgiveness of debt                                                  -            31,977
                                                                     ---------------   ---------------

Net loss                                                             $   (4,248,617)   $   (5,787,153)
                                                                     ===============   ===============


Basic and diluted net loss per common share                          $        (0.02)   $        (0.06)
                                                                     ===============   ===============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       3

<PAGE>


                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents


<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                              March 31,
                                                                    ------------------------------
                                                                        2001            2000
                                                                    --------------  --------------
Cash flows from operating activities:
<S>                                                                 <C>             <C>
      Net loss                                                      $  (4,248,617)  $  (5,787,153)
      Adjustments to reconcile net loss to net cash
        used in operating activities:
         Non-cash expense related to issuance of debentures,
           warrants, preferred and common stock                                 -       1,440,658
         Non-cash compensation expense related to issuance
           of stock options                                                     -         842,856
         Depreciation and amortization                                    711,691         794,500
         Extraordinary gain on forgiveness of debt                              -         (31,977)
         Changes in assets and liabilities:
           Accounts receivable                                            131,872         170,667
           Prepaid assets and other current assets                        (92,365)       (149,696)
           Cash held in escrow                                          2,151,006         (24,454)
           Other assets                                                   (84,025)            294
           Accounts payable                                              (152,900)       (309,295)
           Accrued liabilities                                              5,698         (62,675)
           Accrued liabilities - related party                            (37,500)        (62,501)
           Deferred revenues                                              220,745          (3,123)
                                                                    --------------  --------------

         Net cash used in operating activities                         (1,394,395)     (3,181,899)
                                                                    --------------  --------------

Cash flows from investing activities:
      Purchase of property and equipment                                 (189,787)        (10,991)
      Issuance of notes receivable                                       (200,000)              -
                                                                    --------------  --------------

         Net cash used in investing activities                           (389,787)        (10,991)
                                                                    --------------  --------------

Cash flows from financing activities:
      Proceeds from sale of Class A common stock, net                   2,919,700               -
      Principal payments on capital lease obligation                      (10,647)              -
      Proceeds from sale of preferred stock, net                                -       1,750,000
      Advances on issuance of convertible preferred stock                       -       1,250,000
      Proceeds from exercise of stock options                                   -         296,714
                                                                    --------------  --------------

         Net cash provided by financing activities                      2,909,053       3,296,714
                                                                    --------------  --------------

Net increase in cash and cash equivalents                               1,124,871         103,824

Cash and cash equivalents at beginning of period                        1,413,627         232,152
                                                                    --------------  --------------

Cash and cash equivalents at end of period                          $   2,538,498   $     335,976
                                                                    ==============  ==============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>

                                Fonix Corporation
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                               ------------------------------------
Supplemental disclosure of cash flow information:                                    2001               2000
                                                                               ------------------ -----------------

<S>                                                                            <C>                <C>
       Cash paid during the period for interest                                $           1,512  $              -
       Cash paid during the period for income taxes                            $               -  $         27,606
</TABLE>

Supplemental Schedule of Non-cash Investing and Financing Activities:

       For the Three Months Ended March 31, 2001:

     Preferred stock  dividends  of $9,281 were accrued on Series D and Series F
          preferred stock.

     164,500  shares of  Series D  preferred  stock  and  related  dividends  of
          $320,949  were  converted  into  13,978,440  shares  of Class A common
          stock.

     6,073 shares of Series F preferred  stock and related  dividends  of $6,853
          were converted into 519,067 shares of Class A common stock.

       For the Three Months Ended March 31, 2000:

     Preferred stock  dividends of $77,493 were accrued on Series D and Series F
          preferred stock.

     217,223  shares of  Series D  preferred  stock  and  related  dividends  of
          $255,600  were  converted  into  15,436,378  shares  of Class A common
          stock.

     290,000  shares of  Series F  preferred  stock  and  related  dividends  of
          $2,773,711,  including $2,750,000 related to the beneficial conversion
          feature  recorded upon issuance,  were converted into 7,764,948 shares
          of Class A common stock.

     600,000 warrants valued at $474,000 were issued to an executive officer and
          director of the Company as consideration for the rights to certain pen
          and voice input technology.

     228,364 shares of Class A common stock were issued to two former  directors
          of  the  Company  upon  the  exercise  of  400,000  options  as  stock
          appreciation rights.

     $3,968,107 of Series C  convertible  debentures  and  related  interest  of
          $290,879  were  converted  into  10,382,901  shares  of Class A common
          stock.

     4,568,569 shares of Class A common  stock were issued upon the  exercise of
          repricing   rights   associated  with  the  common  stock  subject  to
          redemption.

     300,000 shares of Class A common  stock were  issued in  satisfaction  of a
          $45,000 obligation incurred for consulting services performed in 1999.


     See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>

                               FONIX CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited condensed consolidated
financial statements of Fonix Corporation and subsidiaries (collectively, the
"Company" or "Fonix") have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the following disclosures are adequate to make the
information presented not misleading.

These condensed consolidated financial statements reflect all adjustments
(consisting only of normal recurring adjustments) that, in the opinion of
management, are necessary to present fairly the financial position and results
of operations of the Company for the periods presented. The Company's business
strategy is not without risk, and readers of these condensed consolidated
financial statements should carefully consider the risks set forth under the
heading "Certain Significant Risk Factors" in the Company's 2000 Annual Report
on Form 10-K.

Operating results for the three months ended March 31, 2001, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001. The Company suggests that these condensed consolidated financial
statements be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's 2000 Annual Report on Form 10-K.

Net Loss Per Common Share - Basic and diluted net loss per common share are
calculated by dividing net loss attributable to common stockholders by the
weighted average number of shares of common stock outstanding during the period.
As of March 31, 2001 and 2000, there were outstanding common stock equivalents
to purchase 24,931,367 and 22,415,316 shares of common stock, respectively, that
were not included in the computation of diluted net loss per common share as
their effect would have been anti-dilutive, thereby decreasing the net loss per
common share.

The following table is a reconciliation of the net loss numerator of basic and
diluted net loss per common share for the three months ended March 31, 2001 and
2000:

<TABLE>
<CAPTION>
                                                          2001                            2000
                                              ------------------------------   ----------------------------
                                                                    Per                             Per
                                                                   Share                           Share
                                                  Amount           Amount          Amount          Amount
                                              -----------------   ----------   ----------------   ---------
<S>                                           <C>                 <C>          <C>                <C>
Net loss                                      $    (4,248,617)                 $    (5,819,130)
Preferred stock dividends                              (9,281)                      (2,827,492)
                                              ----------------                 ----------------
Net loss from operations attributable to
     common stockholders                           (4,257,898)    $   (0.02)        (8,646,622)   $   (0.06)
Extraordinary item                                            -           -             31,977            -
                                              -----------------   ----------   ----------------   ---------
Net loss attributable to common
     stockholders                             $    (4,257,898)    $   (0.02)   $    (8,614,645)   $   (0.06)
                                              ===============     ==========   ================   ==========
Weighted average common shares
outstanding                                        201,741,921                      143,972,217
                                              ================                 ================
</TABLE>

Reclassifications - Certain reclassifications have been made in the prior period
condensed consolidated financial statements to conform with the current period
presentation.

                                        6

<PAGE>




2. FUNDS IN ESCROW

On March 29, 2001, $2,000,000 plus interest of $176,092 accrued since September
1, 1999, was released from the escrow established in connection with the sale of
the Company's HealthCare Solutions Group to Lernout & Hauspie Speech Products
N.V. in September 1999.

3. NOTE RECEIVABLE

In February 2001, the Company entered into a collaboration agreement with Audium
Corporation ("Audium") to provide an integrated platform for generating Voice
XML solutions for Internet and telephony systems. Audium is a mobile application
service provider that builds and operates mobile applications that allow access
to Internet information and complete online transactions using any telephone.
The collaboration will include integration of Fonix Accelerated Application
Solutions Technology ("FAAST") with Audium's mobile applications development
capability.

In connection with the collaboration agreement, in February 2001, Fonix advanced
$200,000  to Audium as a bridge  loan.  The loan bore  interest  at a rate of 12
percent per year, was due on or before  February 28, 2003,  and was  convertible
into shares of Audium Series A Convertible  Preferred  Stock ("Audium  Preferred
Stock").  On April 11, 2001, the bridge loan,  accrued interest of $2,400 and an
additional  advance of $197,600,  which was  disbursed to Audium on May 1, 2001,
were  aggregated  into a new  note.  The new  note in the  principal  amount  of
$400,000 (the "Audium Note") bears  interest at five percent  annually and has a
term of four  years.  The  Audium  Note is  convertible  into  shares  of Audium
Preferred Stock at a price of $1.46 per share in the event of (i) Audium raising
an  additional  $2,000,000  prior to October 6, 2002,  (ii)  Audium's  merger or
consolidation, (iii) a qualified public offering of Audium common stock, (iv) an
event of default under a note payable from Fonix (see Fonix Note below),  or (v)
Audium's  aggregate gross revenues for the months of July,  August and September
2002  exceed  $750,000.  The Audium  Note is secured  by  Audium's  intellectual
property. Further, at the closing Audium granted Fonix a fully-paid, world-wide,
non- exclusive  license to Audium's software to make,  manufacture,  and use the
software and any derivative works if Audium declares  bankruptcy or ceases to do
business.

Also on April 11,  2001,  the Company  closed a stock  purchase  agreement  with
Audium,  wherein Fonix agreed to purchase up to  $2,800,000 of Audium  Preferred
Stock at a price of $1.46 per share.  At closing,  Fonix paid $200,000 cash, and
gave Audium a note (the "Fonix Note") for the remaining  $2,600,000,  payable in
13 monthly  installments  of $200,000  beginning on June 1, 2001. The Fonix Note
bears no  interest  unless an event of default  occurs,  in which case the Fonix
Note will bear interest at 12 percent per year.  Also at closing,  Audium issued
14 share  certificates,  each for 136,986  shares of Audium  Preferred  Stock to
Fonix,  and  delivered  one  certificate  for 136,986  shares in exchange  for a
payment  of  $200,000.  The  remaining  certificates  will be held by  Audium as
collateral  for the Fonix Note under the  security  agreement.  For each monthly
payment of $200,000,  Audium will release to Fonix one  certificate  for 136,986
shares of Audium  Preferred  Stock.  Each  share of  Audium  Preferred  Stock is
convertible into one share of Audium's common stock. Holders of Audium Preferred
Stock  are  entitled  to  eight  percent  cumulative  dividends,  a  liquidation
preference equal to two times the original  purchase price plus any declared but
unpaid  dividends,   anti-dilution  rights,  and  voting  rights  equal  to  the
corresponding  number of common  shares.  The stock purchase  agreement  between
Audium and Fonix also  entitles  Fonix to elect one member of Audium's  board of
directors. Dr. Afarin Bellisario, a vice president of Fonix, presently serves as
the Fonix representative on the Audium board of directors.

The Company also entered into a registration rights agreement with Audium which
allows Fonix, after waiting 180 days after the closing of a qualified public
offering by Audium, to request that Audium register the resale of the shares of
common stock underlying the Audium Preferred Stock held by Fonix. Audium agreed
to pay the expenses related to preparing and filing the registration statement.
However, Fonix will be responsible for any brokers' commissions or other
sales-related fees for any shares of common stock Fonix sells.


4. INTANGIBLE ASSETS


                                        7

<PAGE>



Intangible assets consist of purchased core technology and goodwill arising from
the acquisition of the Papyrus companies (collectively "Papyrus") and AcuVoice,
Inc., and direct costs incurred by the Company in applying for patents covering
its technologies. Amortization is computed on a straight-line basis over the
estimated useful lives ranging from five to eight years. Total accumulated
amortization was $7,464,442 and $6,850,286 at March 31, 2001 and December 31,
2000, respectively.

The carrying values of the Company's long-lived assets is reviewed for
impairment whenever events or changes in circumstances indicate that they may
not be recoverable. If such an event occurred, the Company would project
undiscounted cash flows to be generated from the use of the asset and its
eventual disposition over the remaining life of the asset. If projections
indicate that the carrying value of the long-lived asset would not be
recoverable, the discounted carrying value would be reduced by the estimated
excess of the carrying value over the projected discounted cash flows. As of
March 31, 2001, management of the Company does not consider any of the Company's
long-lived assets to be impaired. However, should the Company's marketing and
sales plan not materialize in the near term, the realization of the Company's
intangible assets could be severely and negatively impacted. The accompanying
condensed consolidated financial statements have been prepared based on
management's estimates of realizability, which estimates may change due to
factors beyond the control of the Company.

5.  RELATED-PARTY NOTES PAYABLE

The Company had unsecured demand notes payable to former Papyrus stockholders in
the aggregate amount of $77,625 outstanding as of March 31, 2001. During 2000,
certain holders of these notes made demand for payment. The Company is
attempting to negotiate a reduced payoff of these notes.

6.  PREFERRED STOCK

Series D Preferred Stock -During the three months ended March 31, 2001, the
remaining 164,500 shares of Series D Preferred Stock and related dividends were
converted into 13,978,440 shares of Class A common stock.

Series F Preferred Stock - During the three months ended March 31, 2001, the
remaining 6,073 shares of Series F Preferred Stock and related dividends were
converted into 519,067 shares of Class A common stock.

7. EQUITY LINE OF CREDIT

On August 8, 2000, the Company entered into a Private Equity Line Agreement
("Equity Line") with a private investor ("Equity Line Investor"), which gives
the Company the right to draw up to $12,500,000 for operations and other
purposes, through a mechanism of draws and puts of stock. The Company is
entitled to draw funds and to "put" to the Equity Line Investor shares of Class
A common stock in lieu of repayment of the draw. The number of shares issued is
determined by dividing the dollar amount of the draw by 90 percent of the
average of the two lowest closing bid prices of Class A common stock over the
seven trading-day period following the date the Company tenders the put notice.
The Equity Line Investor funds the amounts requested by the Company within two
trading days after the seven trading-day period.

During the year ended December 31, 2000, draws taken under the Equity Line
amounted to $3,973,508 and were converted to 12,492,680 shares of Class A common
stock. During the three months ended March 31, 2001, draws taken under the
Equity Line in the amounted to $3,010,000 and were converted into 6,770,945
shares of Class A common stock. Subsequently, an additional draw of $500,000 was
converted into 1,709,402 shares of Class A common stock and another draw of
$500,000 has been requested but has not been converted pending completion of the
valuation period and resulting calculation of the conversion rate. As of May 14,
2001, $4,516,492 remains available to be drawn on the Equity Line.


8.  COMMON STOCK AND STOCK OPTIONS

Class A Common Stock - During the three months ended March 31, 2001, 21,268,452
shares of Class A common stock were issued in connection with conversions of
preferred stock (see Note 6) and draws on the equity line (see

                                        8

<PAGE>



Note 7). No shares of Class A common stock were issued as a result of the
exercise of stock options, stock appreciation rights or warrants during the same
period.

Stock Options - During the three months ended March 31, 2001, the Company
granted options to purchase 1,559,000 shares of Class A common stock at exercise
prices ranging from $0.30 to $0.73 per share. Options granted during this
three-month period vest over the three years following issuance and expire if
not exercised within  ten years from the date of grant. As of March 31, 2001,
the Company had a total of 21,294,700 options to purchase Class A common shares
outstanding.

The Company's option plans provide for stock appreciation rights that allow the
grantee to receive shares of the Company's Class A common stock equivalent in
value to the difference between the designated exercise price and the fair
market value of the Company's stock at the date of exercise. As of March 31,
2001, there are options to purchase 516,339 shares of Class A common stock
outstanding which provide for stock appreciation rights. Of these options,
126,669 have an exercise price of $6.50 per share, 13,000 have an exercise price
of $3.66 per share and 376,671 have an exercise price of $1.00 per share.

9.  RELATED-PARTY  TRANSACTIONS

Advocast, Inc. - In July 1997, the Company entered into an arrangement with
Advocast, Inc. ("Advocast"), an Internet research and development entity,
whereby Advocast assisted the Company in development of technologies to create
and locate searchable databases on the Internet through the use of interactive
video and voice technologies. Under the terms of the arrangement the Company
paid $816,750 in 1998 and $705,005 in 1997 for Advocast research and development
efforts.

On November 25, 1998, Advocast issued 60,200 shares of Advocast Series A 6%
convertible preferred stock ("Advocast Preferred Stock") to the Company. The
Advocast Preferred Stock, if converted to Advocast common stock, represent less
than 20 percent of the total outstanding shares of Advocast voting common stock.
Advocast is a development stage company with minimal operations and no market
for its stock. As a result, there is substantial uncertainty as to the value of
the Advocast Preferred Stock. The Company has not recorded a value for the
Advocast shares in the accompanying consolidated financial statements. The chief
executive officer of the Company is a director of Advocast.

On February 26, 2001, Fonix agreed to provide to Advocast an additional $100,000
of financing under the terms of a six percent convertible debenture. Fonix
advanced $57,498 under the debenture subsequent to March 31, 2001. The debenture
is due February 26, 2002, and is secured by the intellectual property and other
assets of Advocast. The debenture is convertible into shares of Advocast common
stock at a rate of $8.62 per share at the option of Fonix. Furthermore, Fonix
has the right to convert its Advocast Preferred Stock into additional principal
under the debenture at a rate of $25 per share of Advocast Preferred Stock. If
converted, the resulting balance due under the debenture is subject to the same
terms of conversion into Advocast common stock or becomes due and payable six
months following the original due date of the convertible debenture.

Advocast and Fonix also entered into an agreement whereby Advocast will provide
consulting services to Fonix for development of Internet applications of the
Company's NUI technologies. The term of the agreement is three months and may be
renewed at the Company's option for an additional three months. Fonix will pay
Advocast $10,000 per month for these consulting services. To date, Fonix has
paid $30,000 to Advocast pursuant to the consulting agreement.

10.  PRODUCT DEVELOPMENT AND RESEARCH

IMC2 - In March 1998, the Company entered into a professional services agreement
with IMC2 Corporation ("IMC2") a research and development entity, to assist in
the continuing development of specific automated speech recognition
technologies. The professional services agreement was for a term of 36 months
and required the Company to make monthly payments of $22,000. The original term
of the agreement expired in February 2001, but has been extended on a
month-to-month basis. Under the terms of the agreement, the Company expended a
total of $66,000 in each of the three-month periods ended March 31, 2001 and
2000.


                                        9

<PAGE>



11. LITIGATION

On August 28, 1998, John R. Clarke and Perpetual Growth Fund, a company
affiliated with Clarke, commenced an action against Fonix in federal court for
the Southern District of New York. Clarke and Perpetual Growth asserted claims
for breach of contract relating to certain financing received by the Company
during 1998 and thereafter. Fonix filed a motion to dismiss based upon the
court's lack of personal jurisdiction over Fonix. The court granted Fonix's
motion to dismiss. Clarke and Perpetual Growth thereafter appealed the decision
of the New York court to the United States Court of Appeals for the Second
Circuit. The Court of Appeals affirmed the decision of the trial court. In the
interim, Fonix filed a suit against Clarke and Perpetual Growth in federal court
for the Central District of Utah seeking a declaratory judgment that it did not
owe any money to Clarke and Perpetual Growth. The case was tried in the Utah
federal district court in March 2001, after which the court ruled in favor of
Fonix and determined that Clarke and Perpetual Growth had no claims for
"trailing fees" with regard to the financings which were the subject of the
suit. Clarke and Perpetual Growth have appealed the decision of the Utah federal
district court to the United States Court of Appeals for the Tenth Circuit. The
Company believes that the claims of Clarke and Perpetual Growth are without
merit and will continue to vigorously oppose those claims.

12. SUBSEQUENT EVENTS

Second Equity Line of Credit - On April 6, 2001, the Company entered into a
second equity line agreement (the "Second Equity Line") with the Equity Line
Investor. Under the Second Equity Line, the Company has the right to draw up to
$20,000,000 through a method of draws and puts of stock similar to those under
the initial Equity Line. The Second Equity Line entitles the Company to put to
the Equity Line Investor shares of the Company's Class A common stock in lieu of
repayment of the funds drawn. The number of shares to be issued is determined by
dividing the amount of the draw by 90 percent of the average of the two lowest
closing bid prices of the Company's Class A common stock over the seven trading
days after the put notice is tendered. The Equity Line Investor is required to
remit the funds drawn within two trading days after the end of the
seven-trading-day period.

In connection with the Second Equity Line, Fonix granted registration rights to
the Equity Line Investor. On May 3, 2001, Fonix filed a registration statement
with the Securities and Exchange Commission covering the resale of the Company's
Class A common stock to be issued under the Second Equity Line. Additionally,
the Company is obligated to use its best efforts to cause the registration
statement to be declared effective by July 2, 2001. If the registration
statement is not declared effective by July 2, 2001, the Equity Line Investor
may terminate the Second Equity Line.

Expansion Activities - In April 2001, Fonix began doing business in Korea
through a wholly-owned subsidiary known as Fonix Korea, Sales Group, Ltd.
("Fonix Korea"). Fonix Korea will sell and market Fonix products and solutions
in the embedded and server-based markets to Korean manufacturers of
microprocessor chips and consumer electronics, and through value-added resellers
for retail distribution.

                                       10

<PAGE>



ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

This quarterly report on Form 10-Q contains, in addition to historical
information, forward-looking statements that involve substantial risks and
uncertainties. Actual results could differ materially from the results the
Company anticipates and which are discussed in the forward-looking statements.
Factors that could cause or contribute to such differences are discussed in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.

Overview
Since inception, the Company has devoted substantially all of its resources to
research, development and acquisition of software technologies that enable
intuitive human interaction with computers, consumer electronics, and other
intelligent devices. In 2000, the Company continued a transition of its
strategic focus from technology research, development and acquisition into
marketing, sales, and product delivery. The transition continues while the
Company works to upgrade its technology to maintain distinct competitive
advantages.

As markets for natural-user interface ("NUI") technologies expand, the demand
for rapid development of quality solutions and applications increases. The
Company has responded to these increasing demands through release and
development of Fonix Accelerated Application Solutions Technologies ("FAAST"), a
proprietary development framework. FAAST provides developers with a speech
application framework that facilitates rapid development of NUI applications
that can be integrated quickly and efficiently into products. FAAST has been
released in versions for both server-based and embedded markets. The FAAST
development framework is recognized by the Company's customers as a key
ingredient to successful launch of speech solutions.

Fonix will focus marketing and product delivery efforts through a partner
program that will be introduced in the second quarter of 2001. The "Powered by
Fonix" partner program is designed to assist the Company's channel partners in
adopting and integrating FAAST and Fonix NUI technologies. This program will
offer distinct advantages to Fonix developer, reseller and corporate partners.

Fonix marketing and sales efforts are also focused toward delivering products
and applications in specific industry market segments that present opportunities
for highlighting unique advantages in both server-based and embedded
applications. Server-based markets present immediate opportunities for
text-to-speech ("TTS") technology in interactive voice response and website
reader applications and future opportunities for automated speech recognition
("ASR") and TTS technologies in Internet voice portals and network system
command and control applications. Embedded markets present opportunities for
ASR, TTS and handwriting recognition in personal digital assistants, consumer
electronics, cellular phones and automotive telematics. FAAST enables chip
manufacturers, operating system developers, software developers and resellers
and product manufacturers to rapidly integrate the needed NUI technology from
whatever source they desire. The Company has also developed consumer
applications of NUI technologies for retail sale through websites and resellers.

Results of Operations

Three months ended March 31, 2001, compared with three months ended March 31,
2000

During the three months ended March 31, 2001, the Company recorded revenues of
$132,713, reflecting an increase of $76,266 over the same period in the previous
year. Revenues in 2001 and 2000 were generated through sales and licensing of
Fonix products and technologies.

Selling,  general and administrative expenses were $2,146,902 and $3,338,606 for
the three  months ended March 31, 2001 and 2000,  respectively.  The decrease of
$1,191,704 is primarily the result of certain  non-cash  charges incurred in the
three  months ended March 31,  2000,  that were not repeated in 2001,  including
$816,667  of  compensation-related  charges  related  to the  exercise  of stock
appreciation rights and revaluation of options previously granted,  and $966,658
of consulting  expenses  related to the issuance of warrants to consultants  and
advisors.  This  decrease  was  offset,  in part,  by  increases  of $200,452 in
travel-related   expenses  resulting  from  increased   strategic   development,
marketing and sales activity, $193,119 in compensation-related  expenses related
to the addition of senior marketing and sales  personnel,  $112,629 in legal and
professional fees resulting from recent filings with the Securities and

                                       11

<PAGE>



Exchange Commission, litigation activity, and other matters relating to the
development of the Company's business strategy and expansion, and $63,565 in
other promotional and advertising expenses related to increased sales and
marketing activities.

Product development and research expenses were $1,655,649 and $1,450,758 for the
three months ended March 31, 2001 and 2000, respectively. The increase of
$204,891 resulted primarily from an increase of $386,753 in compensation-related
expenses related to product application and development activities, offset, in
part, by a payment of $160,000 received in settlement of claims made by the
Company related to a previous consulting agreement .

Liquidity and Capital Resources

From inception, the Company's principal source of capital has been private and
other exempt sales of its debt and equity securities. The Company will continue
to raise additional funds in like manner to satisfy cash operating requirements
for the foreseeable future because of insufficient revenue from operations.
There can be no assurance that the Company will be able to secure this funding
or that the terms of such financing will be favorable to the Company.
Furthermore, the issuance of equity or debt securities which are or may become
convertible into the Company's equity securities may result in substantial
dilution to its stockholders.

The Company had negative working capital of $922,444 at March 31, 2001, compared
to positive working capital of $180,356 at December 31, 2000. Current assets
decreased by $1,065,642 to $2,686,568 from December 31, 2000, to March 31, 2001.
Current liabilities increased by $37,158 to $3,609,012 during the same period.
The change in working capital from December 31, 2000 to March 31, 2001, was
primarily attributable to the timing of payments on operating obligations and
receipts of funding under the Company's equity line of credit. Total assets were
$16,213,852 at March 31, 2001, compared to $17,517,373 at December 31, 2000.

Preferred Stock

During the three months ended March 31, 2001, 164,500 shares of Series D
convertible preferred stock and related accrued dividends were converted into
13,978,440 shares of Class A common stock. As of March 31, 2001, there are no
shares of Series D preferred stock outstanding.

During the three months ended March 31, 2001, 6,073 shares of Series F
convertible preferred stock and related accrued dividends were converted into
519,067 shares of Class A common stock. As of March 31, 2001, there are no
shares of Series F preferred stock outstanding.

Equity Lines of Credit

During the three months ended March 31, 2001, draws against the initial equity
line of credit in the amount of $3,010,000 were converted into 6,770,945 shares
of Class A common stock. Subsequent to March 31, 2001, additional draws of
$500,000 were converted into 1,709,402 shares of Class A common stock and
another $500,000 put has been tendered for which the related number of shares to
be issued has not yet been determined. As of May 14, 2001, $4,516,492 remains
available to be drawn on the initial equity line.

On April 6, 2001, the Company entered into a second equity line agreement (the
"Second Equity Line") with the same investor as the initial equity line ("Equity
Line Investor"). Under the Second Equity Line, the Company has the right to draw
against an equity line of credit up to $20 million through a method of draws and
puts of stock similar to those under the initial equity line. This agreement
entitles the Company to put to the Equity Line Investor shares of the Company's
Class A common stock in lieu of repayment of the funds drawn. The number of
shares to be issued is determined by dividing the amount of the draw by 90% of
the average of the two lowest closing bid prices of the Company's Class A common
stock over the seven trading days after the put notice is tendered. The Equity
Line Investor is required to remit the funds drawn within two trading days after
the end of the seven-trading- day period.

In connection with the Second Equity Line, Fonix granted registration rights to
the Equity Line Investor. On May 3, 2001, Fonix filed a registration statement
with the Securities and Exchange Commission covering the resale of the Company's

                                       12

<PAGE>



Class A common stock to be issued under the Second Equity Line. Additionally,
the Company is obligated to use its best efforts to cause the registration
statement to be declared effective by July 2, 2001. If the registration
statement is not declared effective by July 2, 2001, the Equity Line Investor
may terminate the Second Equity Line.

Stock Options

During the three months ended March 31, 2001, options to purchase 1,559,000
shares of Class A common stock at exercise prices ranging from $0.30 to $0.73
per share were granted. Options granted during this three-month period vest over
the three years following issuance and expire if not exercised withing ten years
from the date of grant. As of March 31, 2001, a total of 21,294,700 options to
purchase Class A common shares were outstanding.

The Company's option plans provide for stock appreciation rights that allow the
grantee to receive shares of the Company's Class A common stock equivalent in
value to the difference between the designated exercise price and the fair
market value of the Company's stock at the date of exercise. As of March 31,
2001, there are options to purchase 516,339 shares of Class A common stock
outstanding which provide for stock appreciation rights. Of these options,
126,669 have an exercise price of $6.50 per share, 13,000 have an exercise price
of $3.66 per share and 376,671 have an exercise price of $1.00 per share.

Other

In April 2001, the Company began doing business in Korea, through a wholly-owned
subsidiary known as Fonix Korea, Sales Group, Ltd. ("Fonix Korea"). Fonix Korea
will sell and market Fonix products and solutions in the embedded and
server-based markets to Korean manufacturers of microprocessor chips and
consumer electronics, and through value-added resellers.

The Company presently has no other plans to purchase new research and
development or office facilities.

                                     Outlook

The Company's objective is for its ASR, TTS and handwriting technologies and
FAAST products become the platform for the next generation of NUI applications
and products. Most speech recognition products offered by other companies are
based on technologies that are largely in the public domain and represent
nothing particularly "new" or creative. The Fonix core technologies and products
are based on proprietary, patented technology. Management believes the Company's
NUI technologies provide a superior competitive advantage compared to other
technologies available in the marketplace. In order to accomplish this
objective, the Company intends to proceed as follows:

         Substantially Increase Marketing and Sales Activities. The Company
         intends to hire additional sales and marketing personnel, both
         domestically and internationally, who will focus on the server-based
         and embedded markets. To address global opportunities, the Company will
         continue to develop or acquire additional NUI products and technologies
         for foreign languages and dialects. The Company will also make a
         significant investment in the "Powered by Fonix" Partner Program in
         order to build sales and marketing opportunities with software
         developers, resellers and corporate partners.

         Expand Strategic Relationships. The Company has a number of strategic
         collaboration and marketing arrangements with developers and VARs. The
         Company intends to expand such relationships and add additional similar
         relationships, specifically in the mobile communications, PDA, IVR and
         Internet portal markets. Because FAAST is increasingly recognized as a
         dynamic development platform, the Company expects FAAST to be the
         product around which many of these relationships are structured.
         Further, when the Company is able to identify "first mover" NUI
         applications in which it can integrate its core technologies, the
         Company intends to investigate investment opportunities in order that
         it can obtain preferred or priority collaboration rights.


                                       13

<PAGE>



         Continue to Develop and Enhance the Core Technologies. The Company
         plans to continue to invest significant resources in the development
         and acquisition of NUI technologies, developer tools and development
         frameworks in order to maintain its competitive advantages.

As the Company proceeds to implement its strategy and to reach its objectives,
the Company anticipates further development of complementary technologies, added
product and applications development expertise, access to market channels and
additional opportunities for strategic alliances in other industry segments. The
strategy the Company has adopted is not without risk and stockholders and others
interested in Fonix and the Company's Class A common stock should carefully
consider the risks set forth under the heading "Certain Significant Risk
Factors" in the Company's 2000 Annual Report on Form 10-K, Item 1, Part I.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

On August 28, 1998, John R. Clarke and Perpetual Growth Fund, a company
affiliated with Clarke, commenced an action against Fonix in federal court for
the Southern District of New York. Clarke and Perpetual Growth asserted claims
for breach of contract relating to certain financing received by the Company
during 1998 and thereafter. Fonix filed a motion to dismiss based upon the
court's lack of personal jurisdiction over Fonix. The court granted Fonix's
motion to dismiss. Clarke and Perpetual Growth thereafter appealed the decision
of the New York court to the United States Court of Appeals for the Second
Circuit. The Court of Appeals affirmed the decision of the trial court. In the
interim, Fonix filed a suit against Clarke and Perpetual Growth in federal court
for the Central District of Utah seeking a declaratory judgment that it did not
owe any money to Clarke and Perpetual Growth. The case was tried in the Utah
federal district court in March 2001, after which the court ruled in favor of
Fonix and determined that Clarke and Perpetual Growth had no claims for
"trailing fees" with regard to the financings which were the subject of the
suit. Clarke and Perpetual Growth have appealed the decision of the Utah federal
district court to the United States Court of Appeals for the Tenth Circuit. The
Company believes that the claims of Clarke and Perpetual Growth are without
merit and will continue to vigorously oppose those claims.

Item 2.  Changes in Securities

c.   Unregistered  sales of equity  securities during the quarter (other than in
     reliance on Regulation S).

Recent Sales of Unregistered Securities. During the three months ended March 31,
2001, the Company issued equity securities that were not registered under the
Securities Act of 1933, as amended (the "1933 Act"), other than unregistered
sales in reliance on Regulation S under the Act, as follows:

         Between January 1, 2001 and March 31, 2001, in connection with the
         Equity Line Agreement, the Company received $3,010,000 in funds drawn
         under the Equity Line Agreement and issued 6,770,945 shares of Class A
         common stock to the Equity Line Investor. The shares were issued
         without registration under the 1933 Act in reliance on Section 4(2) of
         the 1933 Act and the rules and regulations promulgated thereunder. The
         resales of the shares were subsequently registered under a registration
         statement on Form S-2 which was declared effective September 5, 2000
         and amended and declared effective April 25, 2001.

         Subsequent to March 31, 2001, in connection with the Equity Line
         Agreement, the Company received $500,000 in funds drawn under the
         Equity Line Agreement and issued 1,709,402 shares of Class A common
         stock to the Equity Line Investor. The shares were issued without
         registration under the 1933 Act in reliance on Section 4(2) of the 1933
         Act and the rules and regulations promulgated thereunder. The resales
         of the shares were subsequently registered under a registration
         statement on Form S-2 which was declared effective September 5, 2000
         and amended and declared effective April 25, 2001.



Item 6.  Exhibits and Reports on Form 8-K

a.   Exhibits:  The following Exhibits are filed with this Form 10-Q pursuant to
     Item 601(a) of Regulation S-K:

                                       14

<PAGE>



         Exhibit No.       Description of Exhibit

         (2)(i)     Agreement  and Plan of  Reorganization  among  the  Company,
                    Fonix  Acquisition  Corporation  and  AcuVoice  dated  as of
                    January  13,  1998,   incorporated  by  reference  from  the
                    Company's Current Report on Form 8-K, filed March 20, 1998

         (2)(ii)    Agreement  and  Plan  of  Merger  among  Fonix,   Articulate
                    Acquisition  Corporation,  and Articulate,  dated as of July
                    31,  1998,  incorporated  by  reference  from the  Company's
                    Current Report on Form 8-K, filed September 17, 1998

         (2)(iii)   Agreement   and  Plan  of  Merger   among   Fonix,   Papyrus
                    Acquisition Corporation, and Papyrus Associates, Inc., dated
                    as of September 10, 1998, incorporated by reference from the
                    Company's  Current  Report on Form 8-K,  filed  November 13,
                    1998

         (3)(i)     Articles  of   Incorporation   of  the  Company   which  are
                    incorporated  by reference  from the Company's  Registration
                    Statement on Form S-18 dated as of September 12, 1989

         (3)(ii)    Certificate  of Amendment of  Certificate  of  Incorporation
                    dated  as of  March  21,  1994,  which  is  incorporated  by
                    reference  from the  Company's  Annual Report for the Fiscal
                    Year Ended December 31, 1994 on Form 10-KSB

         (3)(iii)   Certificate  of Amendment of  Certificate  of  Incorporation
                    dated as of May 13, 1994, which is incorporated by reference
                    from the  Company's  Annual Report for the Fiscal Year Ended
                    December 31, 1994 on Form 10-KSB

         (3)(iv)    Certificate  of Amendment of  Certificate  of  Incorporation
                    dated as of September  24, 1997,  which is  incorporated  by
                    reference from the Company's  Quarterly  Report on Form 10-Q
                    for the period ended September 30, 1997

         (3)(v)     The Company's Bylaws, as amended,  which are incorporated by
                    reference  from the  Company's  Annual Report for the Fiscal
                    Year Ended December 31, 1994 on Form 10-KSB

         (4)(i)     Description   of  the  Company's   common  stock  and  other
                    securities  and  specimen  certificates   representing  such
                    securities  which are  incorporated  by  reference  from the
                    Company's  Registration  Statement  on Form S-18 dated as of
                    September 12, 1989, as amended

         (4)(ii)    Certificate  of  Designation  of Rights and  Preferences  of
                    Series A Preferred Stock,  filed with the Secretary of State
                    of Delaware on September 24, 1997,  which is incorporated by
                    reference from the Company's  Quarterly  Report on Form 10-Q
                    for the period ended September 30, 1997

         (4)(iii)   Certificate  of  Designation  of Rights and  Preferences  of
                    Series  B  Convertible   Preferred  Stock,  filed  with  the
                    Secretary of State of Delaware on October 27, 1997, which is
                    incorporated  by  reference  from  the  Company's  Quarterly
                    Report on Form 10-Q for the period ended September 30, 1997

         (4)(iv)    Certificate of  Designation of Rights and  Preferences of 5%
                    Series  C  Convertible   Preferred  Stock,  filed  with  the
                    Secretary of State of Delaware on October 24, 1997, which is
                    incorporated  by  reference  from  the  Company's  Quarterly
                    Report on Form 10-Q for the period ended September 30, 1997

         (4)(v)     Certificate  of  Designation  of Rights and  Preferences  of
                    Series D 4%  Convertible  Preferred  Stock,  filed  with the
                    secretary of State of Delaware on August 27, 1998, which

                                       15

<PAGE>



                    is  incorporated  by reference from the Company's  Quarterly
                    Report on Form 10-Q for the period ended September 30, 1998

         (4)(vi)    Certificate  of  Designation  of Rights and  Preferences  of
                    Series E 4%  Convertible  Preferred  Stock,  filed  with the
                    secretary of State of Delaware on October 15, 1998, which is
                    incorporated  by  reference  from  the  Company's  Quarterly
                    Report on Form 10-Q for the period ended September 30, 1998

         (9)(i)     Voting Trust  Agreement dated as of December 10, 1993 by and
                    among Phonic Technologies, Inc., Stephen M. Studdert, Thomas
                    A. Murdock and Roger D.  Dudley,  which is  incorporated  by
                    reference  from the  Company's  Current  Report  on Form 8-K
                    dated as of June 17, 1994

         (9)(ii)    Amendment  of  Voting  Trust  Agreement  by  and  among  the
                    Company,  Stephen M. Studdert,  Thomas A. Murdock,  Roger D.
                    Dudley,  Beesmark  Investments,   L.C.,  Studdert  Companies
                    Corporation,  and Thomas A. Murdock as Trustee,  dated as of
                    October  23,  1995,   incorporated  by  reference  from  the
                    Company's Current Report on Form 8-K dated as of October 23,
                    1995

         (9)(iii)   Second  Amendment of Voting Trust Agreement by and among the
                    Company,  Stephen M. Studdert,  Thomas A. Murdock,  Roger D.
                    Dudley,  Beesmark  Investments,   L.C.,  Studdert  Companies
                    Corporation,  and Thomas A. Murdock as Trustee,  dated as of
                    July 2,  1996,  incorporated  by  reference  from the Annual
                    Report on Form 10-KSB for the fiscal year ended December 31,
                    1996

         (9)(iv)    Third  Amendment of Voting Trust  Agreement by and among the
                    Company,  Stephen M. Studdert,  Thomas A. Murdock,  Roger D.
                    Dudley,  Beesmark  Investments,   L.C.,  Studdert  Companies
                    Corporation,  and Thomas A. Murdock as Trustee,  dated as of
                    September  20,  1996,  incorporated  by  reference  from the
                    Annual  Report on Form  10-KSB  for the  fiscal  year  ended
                    December 31, 1996

         (9)(v)     Fourth  Amendment of Voting Trust Agreement by and among the
                    Company,  Stephen M. Studdert,  Thomas A. Murdock,  Roger D.
                    Dudley,  Beesmark  Investments,   L.C.,  Studdert  Companies
                    Corporation,  and Thomas A. Murdock as Trustee,  dated as of
                    September  20,  1996,  incorporated  by  reference  from the
                    Annual  Report on Form  10-KSB  for the  fiscal  year  ended
                    December 31, 1996

         (10)(i)    Product  Development  and Assignment  Agreement  dated as of
                    October 16,  1993  between  Phonic  Technologies,  Inc.  and
                    Synergetics,  Inc.,  which is incorporated by reference from
                    the  Company's  Current  Report on Form 8-K dated as of June
                    17, 1994

         (10)(ii)   Re-Stated Product Development and Assignment Agreement dated
                    as  of  March  30,  1995,   between  Fonix  Corporation  and
                    Synergetics,  Inc.,  which is incorporated by reference from
                    the  Company's  Annual  Report  for the  Fiscal  Year  Ended
                    December 31, 1994 on Form 10-KSB

         (10)(iii)  Memorandum of  Understanding  dated as of March 13, 1997, by
                    and among the Company,  Synergetics, Inc. and C. Hal Hansen,
                    which is incorporated by reference from the Company's Annual
                    Report on Form 10-KSB for the fiscal year ended December 31,
                    1996

         (10)(iv)   Employment  Agreement by and between the Company and Stephen
                    M.  Studdert,  which is  incorporated  by reference from the
                    Company's  Annual  Report on Form 10-KSB for the fiscal year
                    ended December 31, 1996


                                       16

<PAGE>



         (10)(v)    Employment  Agreement  by and between the Company and Thomas
                    A.  Murdock,  which is  incorporated  by reference  from the
                    Company's  Annual  Report on Form 10-KSB for the fiscal year
                    ended December 31, 1996

         (10)(vi)   Employment Agreement by and between the Company and Roger D.
                    Dudley,   which  is   incorporated  by  reference  from  the
                    Company's  Annual  Report on Form 10-KSB for the fiscal year
                    ended December 31, 1996

         (10)(vii)  Restated Master  Agreement for Joint  Collaboration  between
                    the  Company  and  Siemens,  dated  November  14,  1997,  as
                    revised,   which  is  incorporated  by  reference  from  the
                    Company's  Annual  Report  on Form  10-K for the year  ended
                    December 31, 1997

         (10)(viii) Restated  First  Statement  of Work  and  License  Agreement
                    between the Company and Siemens, dated February 11, 1998, as
                    revised,   which  is  incorporated  by  reference  from  the
                    Company's  Annual  Report  on Form  10-K for the year  ended
                    December 31, 1997

         (10)(ix)   Master  Technology   Collaboration   Agreement  between  the
                    Company  and  OGI,   dated   October  14,  1997,   which  is
                    incorporated  by reference from the Company's  Annual Report
                    on Form 10-K for the year ended December 31, 1997

         (10)(x)    Common stock  Purchase  Agreement  among the Company and JNC
                    Opportunity  Fund Ltd. and Diversified  Strategies Fund, LP,
                    dated  as  of  March  9,  1998,  which  is  incorporated  by
                    reference from the Company's  Annual Report on Form 10-K for
                    the year ended December 31, 1997

         (10)(xi)   Common  stock  Purchase  Agreement  between  the Company and
                    Thomson Kernaghan & Co., dated as of March 9, 1998, which is
                    incorporated  by reference from the Company's  Annual Report
                    on Form 10-K for the year ended December 31, 1997

         (10)(xii)  Royalty   Modification   Agreement  among  the  Company  and
                    Synergetics,   dated  as  of  April   6,   1998,   which  is
                    incorporated  by reference from the Company's  Annual Report
                    on Form 10-K for the year ended December 31, 1997

         (10)(xiii) Purchase  Agreement  with John  Oberteuffer  and the Company
                    dated April 9, 1998, which is incorporated by reference from
                    the Company's  Annual Report on Form 10-K for the year ended
                    December 31, 1997

         (10)(xiv)  Employment  Agreement by and between the Company and John A.
                    Oberteuffer,  which is  incorporated  by reference  from the
                    Company's  Annual  Report  on Form  10-K for the year  ended
                    December 31, 1997

         (10)(xv)   First Amendment to Master Agreement for Joint  Collaboration
                    between the Company and  Siemens,  dated  February 13, 1998,
                    which is incorporated by reference from the Company's Annual
                    Report on Form 10-K for the year ended December 31, 1997

         (10)(xvi)  Second Amendment to Master Agreement for Joint Collaboration
                    between the Company and Siemens, dated March 13, 1998, which
                    is  incorporated  by  reference  from the  Company's  Annual
                    Report on Form 10-K for the year ended December 31, 1997

         (10)(vii)  Series D  Convertible  Preferred  Stock  Purchase  Agreement
                    Among  Fonix   corporation,   JNC  Opportunity  Fund,  Ltd.,
                    Diversified  Strategies Fund,  L.P.,  Dominion Capital Fund,
                    Ltd.,  Sovereign  Partners,  LP, Canadian  Advantage Limited
                    Partnership and Thomson  Kernaghan & Co. (as agent) dated as
                    of August  31,  1998,  incorporated  by  reference  from the
                    Company's Quarterly Report on Form 10-Q for the period ended
                    September 30, 1998


                                       17

<PAGE>



         (10)(xviii)Series E Convertible  Preferred  Stock Exchange and Purchase
                    Agreement among Fonix corporation,  Sovereign  Partners,  LP
                    and Dominion  Capital Fund,  Ltd., dated as of September 30,
                    1998, incorporated by reference from the Company's Quarterly
                    Report on Form 10-Q for the period ended September 30, 1998

         (10)(xix)  Securities  Purchase  Agreement among Fonix  Corporation and
                    JNC Strategic  Fund,  dated  December 21, 1998 for 1,801,802
                    shares of common stock and Repricing Rights, incorporated by
                    reference from Amendment No. 1 to Registration  Statement on
                    Form S-3 (File No. 333-67573)

         (10)(xx)   Securities  Purchase  Agreement among Fonix  Corporation and
                    the investors  identified therein dated January 29, 1999, as
                    supplemented   on  March  3,  1999,   concerning   sales  of
                    $6,500,000  principal  amount  of  Series  C 5%  Convertible
                    Debentures,  incorporated  by reference from Amendment No. 1
                    to Registration Statement on Form S-3 (File No. 333- 67573)

         (10)(xxi)  Asset Purchase  Agreement - Acquisition of Certain Assets of
                    Fonix  Corporation  and Fonix/ASI  Corporation  by Lernout &
                    Hauspie  Speech  Products  N.V.,  dated as of May 19,  1999,
                    which  is  incorporated  by  reference  from  the  Company's
                    Current  Report on Form 8-K,  filed with the  Commission  on
                    September 16, 1999 (therein designated as Exhibit 10(a))

         (10)(xxii) Escrow  Agreement,  dated as of September 1, 1999,  which is
                    incorporated by reference from the Company's  Current Report
                    on Form 8-K, filed with the Commission on September 16, 1999
                    (therein designated as Exhibit 10(b))

         (10)(xxiii)Technology Option Agreement, dated as of May 19, 1999, which
                    is  incorporated  by reference  from the  Company's  Current
                    Report on Form 8-K,  filed with the  Commission on September
                    16, 1999 (therein designated as Exhibit 10(c))

         (10)(xxiv) Assignment and Assumption  Agreement,  dated as of September
                    1,  1999,  which  is  incorporated  by  reference  from  the
                    Company's  Current  Report  on  Form  8-K,  filed  with  the
                    Commission  on September  16, 1999  (therein  designated  as
                    Exhibit 10(d))

         (10)(xxv)  License Agreement by and between  Fonix/ASI  Corporation and
                    Lernout & Hauspie Speech Products N.V.,  dated as of May 19,
                    1999,  which is incorporated by reference from the Company's
                    Current  Report on Form 8-K,  filed with the  Commission  on
                    September 16, 1999 (therein designated as Exhibit 10(e))

         (10)(xxvi) Loan  Agreement,  dated  as of  April  22,  1999,  which  is
                    incorporated by reference from the Company's  Current Report
                    on Form 8-K, filed with the Commission on September 16, 1999
                    (therein designated as Exhibit 10(f))

         (10)(xxvii)Amendment to Loan Agreement, dated as of May 12, 1999, which
                    is  incorporated  by reference  from the  Company's  Current
                    Report on Form 8-K,  filed with the  Commission on September
                    16, 1999 (therein designated as Exhibit 10(g))

         (10)(xxviii)Second  Amendment to Loan  Agreement,  dated  as of May 19,
                    1999,  which is incorporated by reference from the Company's
                    Current  Report on Form 8-K,  filed with the  Commission  on
                    September 16, 1999 (therein designated as Exhibit 10(h))

         (10)(xxix) Loan  Agreement,   dated  as  of  May  19,  1999,  which  is
                    incorporated by reference from the Company's  Current Report
                    on Form 8-K, filed with the Commission on September 16, 1999
                    (therein designated as Exhibit 10(i))

         (10)(xxx)  First  Amendment to Loan  Agreement,  dated as of August 12,
                    1999, which is

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                    incorporated by reference from the Company's  Current Report
                    on Form 8-K, filed with the Commission on September 16, 1999
                    (therein designated as Exhibit 10(j))

         (10)(xxxi) Agreement,  dated as of July 31, 1999, which is incorporated
                    by reference from the Company's  Current Report on Form 8-K,
                    filed with the  Commission  on September  16, 1999  (therein
                    designated as Exhibit 10(k))

         (10)(xxxii)Series F Convertible  Preferred  Stock  Purchase  Agreement,
                    Among Fonix Corporation,  Sovereign  Partners,  LP, Dominion
                    Capital Fund, LTD.,  Dominion Investment Fund, LLC, Canadian
                    Advantage, L.P., and Queen LLC, dated as of February 1, 2000

         (10)(xxxiii)Amended and Restated Series F Convertible  Preferred  Stock
                    Purchase Agreement among Fonix Corporation and the investors
                    identified therein dated May 22, 2000, which is incorporated
                    by reference  from the  Company's  Rule 424(b)  Registration
                    Statement on Form S-2, filed with the Commission on June 16,
                    2000 (therein designated as Exhibit 99.3)

         (10)(xxxiv)Equity Line Agreement  between Fonix  Corporation  and Queen
                    LLC,  dated  August  8,  2000,   which  is  incorporated  by
                    reference from the Company's  Registration Statement on Form
                    S-2,  filed with the  Commission on August 10, 2000 (therein
                    designated as Exhibit 99.4)

         10(xxxv)   Audium Stock Purchase  Agreement  between Fonix  Corporation
                    and Audium  Corporation,  dated as of April 5,  2001,  filed
                    with the Commission on April 17, 2001

         10(xxxvi)  Certificate  of  Designation  of Audium  Series A  Preferred
                    Stock, filed with the Commission on April 17, 2001.

         10(xxxvii) Form of  Promissory  Note from Fonix  Corporation  to Audium
                    Corporation for $2,600,000, dated as of April 5, 2001, filed
                    with the Commission on April 17, 2001.

         10(xxxviii)Security  Agreement  between Fonix Corporation as the Debtor
                    and Audium  Corporation  as the Secured  Party,  dated as of
                    April 5, 2001, filed with the Commission on April 17, 2001.

         10(xxxix)  Registration  Rights Agreement between Fonix Corporation and
                    Audium  Corporation,  dated as of April 5, 2001,  filed with
                    the Commission on April 17, 2001.

         10(xl)     Security  Agreement between Audium Corporation as the Debtor
                    and Fonix  Corporation  as the  Secured  Party,  dated as of
                    April 5, 2001, filed with the Commission on April 17, 2001.

         10(xli)    Form of  Promissory  Note from Audium  Corporation  to Fonix
                    Corporation for $400,000, filed with the Commission on April
                    17, 2001.

         10(xlii)   License  Agreement  between  Fonix  Corporation  and  Audium
                    Corporation,  dated  as of  April 5,  2001,  filed  with the
                    Commission on April 17, 2001.

         10(xliii)  Second   Private   Equity  Line   Agreement   between  Fonix
                    Corporation  and Queen LLC, dated April 6, 2001,  filed with
                    the Commission on April 17, 2001.

         10(xliv)   Registration  Rights Agreement between Fonix Corporation and
                    Queen LLC, dated April 6, 2001, filed with the Commission on
                    April 17, 2001.


(B) Reports filed on Form 8-K during the three-month period ended March 31,
2001:

                                       19

<PAGE>



No reports on Form 8-K were filed during the three-month period ended March 31,
2001. On April 17, 2001, the Company filed a Current Report on Form 8-K to
announce the purchase of Audium preferred shares, effective April 11, 2001 and
the execution of the Second Equity Line Agreement, effective April 6, 2001.




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                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    Fonix Corporation



Date: May 15, 2001                  /s/ Roger D. Dudley
     ----------------------         --------------------------------------------
                                    Roger D. Dudley, Executive Vice President,
                                    Chief Financial Officer


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