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

                                FORM 10-QSB/A
                             (Amendment No. 1)

[X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 for the quarterly period ended June 30, 1996.

[ ]  Transition Report under 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 small business issuer 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, Utah 84111
-----------------------------------------------------------------------------
           (Address of principal executive offices and zip code)

                                 (801) 328-0161
                               -----------------
                           (Issuer's telephone number)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or Section 15(d) of the Exchange Act during the past 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 August 5, 1996, 38,181,146 shares of the issuer's Common Stock, par value
$.0001 per share, were issued and outstanding.

Transitional Small Business Disclosure Format (Check one):  Yes [ ] or No [X] 
 
<PAGE>

                          PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

     The financial statements required by item 310(b) of Regulation S-B
     follow immediately.





















                                       2
<PAGE>
                               fonix corporation
                         [A Development Stage Company]
			
                     CONDENSED CONSOLIDATED BALANCE SHEET 
                                 [Unaudited]              

                                    ASSETS           
                                                    June 30, 
                                                      1996
                                                 --------------
Current assets:			
     Cash and cash equivalents                   $  22,505,455 
     Notes Receivable                                2,396,894 
     Interest receivable                               133,982 
                                                 -------------- 
          Total Current Assets                      25,036,331 
			
Property & Equipment, net of accumulated               
     depreciation of $13,962                           220,712 
			
Intangible assets, net of accumulated          
     amortization of $1,912                             31,740 
                                                 -------------- 
                                                 $  25,288,783
                                                 ==============
			
                    LIABILITIES AND STOCKHOLDERS' EQUITY             

Current liabilities:			
     Notes payable                               $  14,675,458 
     Accounts payable                                  474,235 
     Accrued expenses                                   74,766 
     Unearned interest Revenue                           9,000 
     Convertible debenture                             500,000 
                                                 -------------- 
          Total Current Liabilities                 15,733,459 
                                                 -------------- 
Stockholders' equity:
     Preferred stock                                      -   
     Common stock                                        3,740 
     Additional paid-in capital                     24,078,255 
     Accumulated deficit                           (14,526,671)
                                                 --------------  
          Total stockholders' equity                 9,555,324 
                                                 -------------- 
                                                 $  25,288,783
                                                 ==============

     See accompanying notes to condensed consolidated financial statements

                                       3
<PAGE>
                               fonix corporation
                        [A Development Stage Company]
                                                      
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 [Unaudited]
<TABLE>
<CAPTION>
                                                   
                                                                                                                    October 1, 
                                               Three months ended                       Six months ended               1993
                                                     June 30,                              June 30,               (inception) to
                                          --------------------------------    --------------------------------       June 30,
                                               1996              1995              1996              1995              1996
                                          --------------    --------------    --------------    --------------    --------------
<S>                                       <C>               <C>               <C>               <C>               <C>
Revenues                                  $        -        $        -        $        -        $        -        $        -   
                                          --------------    --------------    --------------    --------------    -------------- 
Expenses:											
   General and administrative                   487,451           279,474           850,653           506,315         6,619,811 
   Research and development                   1,090,877           483,934         1,907,538         1,165,474         8,020,525
                                          --------------    --------------    --------------    --------------    -------------- 
      Total expense                           1,578,328           763,408         2,758,191         1,671,789        14,640,336 
                                          --------------    --------------    --------------    --------------    --------------  
Loss from operations                         (1,578,328)         (763,408)       (2,758,191)       (1,671,789)      (14,640,336)
                                          --------------    --------------    --------------    --------------    --------------
Other income (Expenses):
   Interest income                              361,695            38,185           488,309            70,772           700,507 
   Interest (expense)                          (140,552)          (62,423)         (244,490)         (112,729)         (617,390)
                                          --------------    --------------    --------------    --------------    -------------- 
      Total Other Income (Expenses)             221,143           (24,238)          243,819           (41,957)           83,117 
                                          --------------    --------------    --------------    --------------    --------------  
Loss before income taxes and											
  extraordinary item                         (1,357,185)         (787,646)       (2,514,372)       (1,713,746)      (14,557,219)
											
Current tax expense                                -                 -                 -                 -                 -   
											
Deferred tax expense                               -                 -                 -                 -                 -   
                                          --------------    --------------    --------------    --------------    --------------   
Loss before extraordinary item               (1,357,185)         (787,646)       (2,514,372)       (1,713,746)      (14,557,219)
											
Extraordinary income:											
   Forgiveness of debt, net of taxes               -                 -                 -                 -               30,548 
                                          --------------    --------------    --------------    --------------    --------------    
Net Loss                                  $  (1,357,185)    $    (787,646)    $  (2,514,372)    $  (1,713,746)    $ (14,526,671)
                                          ==============    ==============    ==============    ==============    ==============
Loss per common share:											
   Loss before extraordinary items        $       (0.04)    $       (0.04)    $       (0.07)    $       (0.09)    $       (0.73)
   Extraordinary item                              -                 -                 -                 -                 0.00 
                                          --------------    --------------    --------------    --------------    -------------- 
Loss per common share                     $       (0.04)    $       (0.04)    $       (0.07)    $       (0.09)    $       (0.73)
                                          ==============    ==============    ==============    ==============    ============== 
Weighted average shares                      36,311,941        18,959,891        33,710,102        18,645,352        19,941,396 
                                          ==============    ==============    ==============    ==============    ==============  

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>
                               fonix corporation
                         [A Development Stage Company]
                                                         
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
								
               Increase (Decrease) in Cash and Cash Equivalents
                                  [Unaudited]
<TABLE>
<CAPTION>
                                                                           
                                                                                                      October 1, 
                                                                        Six months ended                 1993
                                                                            June 30,                (inception) to
                                                                --------------------------------       June 30,
                                                                     1996              1995              1996
                                                                --------------    --------------    --------------
<S>                                                             <C>               <C>               <C>
Cash flows from operating activities:								
   Net loss                                                     $  (2,514,372)    $  (1,713,746)    $ (14,526,671)
   Adjustments to reconcile net loss                                                
     to net cash used in operations:                                                
       Common stock issued for services                                  -                 -            2,705,650 
       Write-off of assets received in acquisition                       -                 -                1,281 
       Depreciation and amortization                                   14,656               354            15,874 
       Non cash forgiveness of debt income                               -                 -              (30,548)
       Changes in assets and liabilities:                                       
          (Increase) in interest receivable                          (107,758)           (4,861)         (133,982)
          Increase (decrease) in accounts payable                     (51,819)          617,997         2,109,504 
          Increase (decrease) in unearned interest revenue              9,000              -                9,000 
          Increase (decrease) in accrued expenses                      43,770            21,941           166,684 
                                                                --------------    --------------    -------------- 
       Net cash used in operating activities                       (2,606,523)       (1,078,315)       (9,683,208)
                                                                --------------    --------------    -------------- 
Cash flows from investing activities:								
       Purchase of equipment                                         (185,932)             -             (234,675)
       Investment in intangible assets                                 (9,598)          (24,053)          (33,651)
       Investment in notes receivable                              (3,160,000)             -           (3,196,894)
       Payment of notes receivable                                    800,000              -              800,000 
                                                                --------------    --------------    --------------
          Net cash used in investing activities                    (2,555,530)          (24,053)       (2,665,220)
                                                                --------------    --------------    -------------- 
Cash flows from financing activities:								
    Proceeds  from notes payable                                    9,057,936         1,577,078        17,027,125 
    Payment of notes payable                                             -             (382,567)       (1,779,806)
    Proceeds from debenture                                              -                 -              500,000
    Proceeds from issuance of                                                
      common stock                                                 10,759,962         1,024,623        19,106,564 
                                                                --------------    --------------    --------------  
          Net cash provided by financing activities                19,817,898         2,219,134        34,853,883 
                                                                --------------    --------------    -------------- 
Net increase in cash and cash equivalents                          14,655,845         1,116,766        22,505,455 
								
Cash and cash equivalents at beginning of period                    7,849,610         2,145,889              -   
                                                                --------------    --------------    -------------- 
Cash and cash equivalents at end of period                      $  22,505,455     $   3,262,655     $  22,505,455
                                                                ==============    ==============    ==============
</TABLE>

                                  [Continued]

                                       5
<PAGE>
                               fonix corporation
                         [A Development Stage Company]
                                                         
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
								
               Increase (Decrease) in Cash and Cash Equivalents
                                  [Unaudited]
<TABLE>
<CAPTION>
                                                                           
                                                                                                                October 1, 
                                                                                  Six months ended                 1993
                                                                                      June 30,                (inception) to
                                                                          --------------------------------       June 30,
                                                                               1996              1995              1996
                                                                          --------------    --------------    --------------
<S>                                                                       <C>               <C>               <C>
Supplemental disclosure of cash flow information:                                                         
     Cash paid during the year for:                                                           
										
          Interest paid                                                   $     200,720     $      90,789     $     450,884 
										
          Income taxes paid                                               $        -        $        -        $        -   

Supplemental Schedule of Non-cash Investing and Financing Activities:										
										
     For the six months ended June 30, 1996: 
     The Company issued 220,000 shares of common stock for finders fees valued at $597,520.
										
     The Company issued 200,000 shares of common stock for finders fees valued at $304,000.
										
     For the year ended December 31, 1995:                                                          
     The Company was forgiven of related party notes payable of $286,493 and $135,368 with accrued interest
     of $65,715 and $19,298, respectively.  These items have been accounted for as capital contributions
     to additional paid in capital in the amount of $506,874.  The Company was also forgiven of various accounts
     payable in the amount of $30,548.                                                              
                                                                
     The Company issued 231,630 shares of common stock to cancel $187,621 in accounts payable.
                                                                
     The Company issued 3,700,000 warrants to purchase common stock, to a related company controlled by the
     majority shareholders of the Company, in payment of accrued management fees of $122,100 included in
     accounts payable.                                                        
                                                                
     The Company issued 3,700,000 shares of common stock upon the conversion of warrants for non-cash
     cancellation of $1,295,000 in accounts payable.                                                        
									
     The Company issued 285,000 shares of  common stock for services rendered valued at $167,750.
</TABLE>


         See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation - The accompanying financial statements have been
     prepared by the Company without audit.  In the opinion of management, all
     adjustments (which included only normal recurring adjustments) necessary
     to present fairly the financial position, results of operations and cash
     flows for all periods presented, have been made.

     Certain information and footnote disclosures normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted in the accompanying
     interim financial statements.  It is suggested that these condensed
     consolidated financial statements be read in conjunction with the
     financial statements and notes thereto included in the Company's December
     31, 1995 audited financial statements.  The results of operations for the
     three months and six months ended June 30, 1996 and 1995 are not
     necessarily indicative of the operating results for the full year.

     Research and Development - All monies that go to the unaffiliated research
     and development entity are considered research and development costs and
     are charged to research and development expense as incurred.  None of
     these costs are capitalized since the Company does not have a product that
     meets the capitalization requirements.  

NOTE 2 - NOTES RECEIVABLE / PAYABLE

     At June 30, 1996 the Company had an unsecured note receivable in the
     amount of $1,160,000 which bears interest at 12% per annum and is due on
     demand.  There was no accrued interest on the note receivable at June 30,
     1996.  A loan fee in the amount of $78,700  was received and recorded as
     interest income.  Subsequent to June 30, 1996 the Company increased this
     note receivable from $1,160,000 to $1,900,000 and obtained collateral
     security for the repayment thereof.

     At June 30, 1996 the Company had a note receivable in the amount of
     $36,894 which bears interest at 18% per annum and was due March 31, 1996. 
     Subsequent to June 30, 1996 a principal payment in the amount of $18,000
     was received, reducing the principal balance to $18,894.  The Company is
     taking measures to have the balance paid in full.  Accrued interest on the
     note receivable amounted to $180 at June 30, 1996.

     At June 30, 1996 the Company had an unsecured note receivable in the
     amount of $1,200,000 which bears interest at 12% per annum and is due
     September 1, 1996 with options to be extended through December 1, 1996. 
     At June 30, 1996 accrued interest on the

                                       7
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - NOTES RECEIVABLE / PAYABLE(Continued)

     note receivable amounted to $12,800.  Subsequent to June 30, 1996 the full
     principal amount and accrued interest on this note receivable were paid
     in full.

     At June 30, 1996 the Company has a revolving note payable in the amount
     of $14,675,458 to a bank at an interest rate of 5.95%.  This note payable
     was due August 12, 1996, and is secured by a certificate of deposit in the
     amount of $20,000,000.  On August 12, 1996, similar terms were negotiated,
     extending the note to November 7, 1996.

NOTE 3 - CONVERTIBLE DEBENTURES

     In connection with a funding agreement entered into during October 1995,
     the Company issued a Series A Subordinated Convertible Debenture in
     consideration for funds received in the amount of $500,000 on October 23,
     1995.  The debenture is due October 23, 1997, has an annual interest rate
     of 5% and may be converted to Series A Preferred Stock or into common
     stock [See Note 4]. 

NOTE 4 - CAPITAL STOCK

     Preferred Stock - Pursuant to entering into a funding agreement, the
     Company has agreed to amend its certificate of incorporation to authorize
     the issuance of Series A Preferred Stock.  As of June 30, 1996 the
     Company's board of directors and shareholders had not yet authorized the
     issuance of preferred stock or determined the dividend rate, liquidation
     preferences, participation rights, or redemption requirements of the
     Series A Preferred Stock into which the $500,000 debenture is convertible. 
     The Company has agreed that it will use its best efforts to cause its
     shareholders to authorize the issuance of the preferred stock no later
     than the first special or annual shareholder's meeting held after December
     31, 1996 [See Note 3].

     Funding Agreement - In October 1995, the Company entered into a funding
     arrangement with a private investment entity.  Under terms of the
     agreement, the private investment entity agreed to fund the Company with
     $6,050,000 ("Funding Commitment") over an 11 month period in exchange for
     the Company's issuance of a total of 11,562,500 shares of the Company's
     common stock, and a $500,000 Series A Subordinated Convertible Debenture
     (the "Debenture") which is convertible into 166,167 shares of Series A
     Preferred Stock (described above) or into the same number of shares of
     common stock.  The preferred stock, assuming it is authorized and issued,
     may be converted to common stock at the discretion

                                       8
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - CAPITAL STOCK(Continued)

     of the investor on a one for one basis. The first $1,540,000 of the
     Funding Commitment was paid to the Company on October 23, 1995 as
     consideration for the issuance of the Debenture and the issuance of
     2,166,667 shares of common stock [See Note 3].  The balance of the Funding
     Commitment, $4,510,000 is to be paid as consideration for the issuance by
     the Company of 9,395,833 shares of common stock.  As of June 30, 1996 the
     private investment entity had paid a total of $3,550,000 in exchange for
     which the Company has issued 7,395,833 shares of common stock.  On July
     25, 1996 an additional $375,000 was received by the Company in exchange
     for which the Company issued 781,250 shares of common stock.  The
     remaining balance of the Funding Commitment of $1,625,000 is payable by
     the private investment entity through September 1996 subject to the
     Company completing certain technology development milestones.  The balance
     of the shares of common stock (3,385,417) due the investor, will be issued
     proportionately upon receipt of the remaining installment payments made
     by the investor.

     Common Stock Transactions - During the six months ended June 30, 1996, the
     Company issued a total of 7,994,575 shares of common stock for net cash
     proceeds of $10,759,962 at prices ranging from $.48 to $3.38 per share. 
     Included in these issuances were 420,000 shares issued as a finders fee,
     valued at $901,520 and 4,052,083 shares issued as part of a funding
     arrangement [See Note 4, 2nd paragraph].

     Stock Options and Warrants - On April 30, 1996 the directors approved a
     directors' stock option plan, under which the aggregate number of shares
     available for issuance is 5,400,000.  The plan is administered by a
     committee consisting of two or more directors of the Company.  The plan
     provides that each director shall receive options to purchase 200,000
     shares of common stock for services rendered as a director for each
     calendar year or portion of a calendar year in excess of six months.  The
     exercise price of such options is 100% of the closing market price of the
     stock on the date the options are granted.  The option term is ten years
     from the date of grant.  On April 30, 1996, 4,400,000 options were granted
     to the Company's current directors under the plan.  Of that amount,
     options to acquire 2,000,000 shares were granted to certain incumbent
     directors for prior years' service, which options vested on the date of
     grant and are exercisable at any time after six months from the date of
     grant.  The remaining options to purchase 2,400,000 shares granted on
     April 30, 1996 shall vest at the rate of 200,000 shares per calendar year
     or portion of a calendar year in excess of 6 months during which the
     option holder serves as a director, starting with calendar 1996.  The
     vesting date  for such options shall be January 1 following the year
     during which the service was rendered commencing on January 1, 1997.  The
     exercise price of the options

                                       9
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - CAPITAL STOCK(Continued)

     granted on the plan adoption date is $4.0625 per share of common stock,
     which is equal to the closing market price of the Company's common stock
     on April 30, 1996.  None of these options have been exercised. 

     On April 30, 1996 the directors approved an employee stock option plan,
     under which, the aggregate number of shares available for issuance  is
     900,000 shares.  The plan is administered by a committee consisting of two
     or more disinterested directors of the Company.  Employee plan options 
     may be granted to officers, key employees and to other 
     key individuals at the discretion of the plan committee.  The term of the
     plan is 10 years.  No options will be granted under this plan after April
     30, 2006.  As of June 30, 1996 no options had been granted under the
     employee plan.  On July 30, 1996, certain key employees were granted an
     aggregate of 130,000 stock options under the Company's employee stock
     option plan.  The exercise price for 119,000 of these stock options was
     $3.66 per share and the exercise prices for the remaining 11,000 stock
     options that were granted range from $5.06 to $8.50 per share.  These
     options are subject to a three year vesting schedule, pursuant to which
     one-third of the total number of options granted may be exercised
     commencing one year from the grant date, and an additional one-third may
     be exercised each year thereafter until three years from the grant date,
     at which time all options will be fully vested.  These options expire July
     30, 2006.  None of these options have been exercised. 

     On April 10, 1996, the Company granted 100,000 warrants to an individual
     to purchase 100,000 shares of the Company's common stock.  These warrants
     were granted in lieu of cash for services rendered the Company.  The
     100,000 outstanding warrants have an exercise price of $3.24 per share and
     expire April 10, 1999.  None of these warrants have been exercised.

     On April 3, 1995 three unrelated  individuals were offered and purchased
     120,000 warrants for restricted common stock  in connection with a stock
     purchase agreement.  The warrants were purchased at $.0033 per share with
     an exercise price of $2.00 per share.  The warrants are exercisable
     anytime prior to April 3, 1998.    

     In April 1995, all of the disinterested directors of the Company approved
     the issuance of warrants to purchase 3,700,000 shares of common stock to
     an entity controlled by the majority shareholders of the Company with the
     right to convert accrued management fees due from the Company to that
     entity for the purchase of 3,700,000 warrants and the exercise price of
     the warrants.  The warrants were offered in April 1995, purchased on  July
     31, 1995

                                      10
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - CAPITAL STOCK(Continued)
     
     for a  purchase price of $.033 per warrant and were then exercised on
     August 11, 1995 at $.35 per share.  The related entity controlled by the
     majority shareholders of  the Company canceled invoices for $1,417,100 in
     management fees due from the Company as consideration for the warrants and
     the exercise price of the warrants.  The exercise price was less than the
     market price of the Company's common stock because, among other reasons,
     the shares issued upon exercise of the warrants are restricted shares
     pursuant to Rule 144 and to assist the Company in relieving debt and
     preserving limited cash reserves by converting payables to restricted
     common stock.

     In November 1994, the Company granted the right to purchase warrants for
     the purchase of an aggregate of 155,000 shares of restricted common stock
     to certain individuals, including warrants for 30,000 shares to three
     directors.  In October 1995, certain of these individuals were granted the
     right to purchase warrants to purchase an additional 185,000 shares of
     restricted common stock.  In order to preserve the Company's limited cash
     , warrants were granted in lieu of cash for services rendered to the
     Company.  The  warrants can be purchased for $.033 per share of common
     stock and can be exercised at $.50 per share of common stock.  On October
     30, 1995, one of these individuals exercised 50,000 of these warrants for
     a price of $.50 per share.  None of the other warrants have been
     purchased.  The warrants, as well as the right to purchase the warrants,
     expire April 24, 1998 and October 23, 1998, respectively.

     In October 1994, the Company granted 150,000 warrants to purchase
     restricted common stock.  Due to the limited cash funds of the Company,
     these warrants were granted in lieu of cash for previous and future
     services.  The 150,000 outstanding warrants have an exercise price of
     $2.00 per share and expire in December 1997.

     As part of a September 30, 1994 restated stock purchase agreement, the
     Company granted a shareholder the right to purchase 500,000 warrants for
     the purchase of  common stock under Regulation S, each warrant entitling
     the holder thereof to purchase one share of common stock.  The total
     purchase price for the 500,000 warrants is $50,000, $.10 per warrant.  In
     December 1995 the 500,000 warrants were purchased for $50,000.  At the
     time of the purchase of such warrants, the warrant holder's rights
     thereunder were assigned to two foreign entities which purchased the
     500,000 shares of common stock underlying the warrants, 166,667 and
     333,333, respectively.  $500,000 was received as consideration for the
     exercise of all 500,000  warrants at an exercise price of $1.00 per share
     of common stock.

                                      11
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - RELATED PARTY TRANSACTIONS

     The Company recorded the following expenses for services rendered and
     recorded the following balances which were payable to a company owned by
     the majority shareholders for the three months ended, and six months
     ended, June 30, 1996:

                                        Three months ended    Six  months ended
                                            June 30, 1996        June 30 1996
                                           ---------------      --------------
           Expenses:
               
               Management fees expense      $     50,000         $   200,000
               Rent expense                       10,952              16,952   


           Payables:
               Accounts payable             $    339,793          $  339,793   
     
     The Company has rented office space from a company owned by the majority
     shareholders under a month-to-month lease for $2,000 per month.  In May
     1996 the month-to-month base lease increased to Approximately $4,476 per
     month. 

     In October 1995, a note payable to an officer and shareholder of the
     Company in the amount of $286,493 and accrued interest thereon of $65,715,
     were forgiven and were accounted for as a contribution to additional paid
     in capital.

     In October 1995, a note payable to a company owned by the majority
     shareholders  in the amount of $135,368 and accrued interest thereon of
     $19,298, were forgiven by the related company, and were accounted for as
     a contribution to additional paid in capital.

NOTE 6 - RESEARCH AND DEVELOPMENT

     On or about October 16, 1993, the Company entered into an agreement with
     a research and development entity ("R&D Entity"), whereby the R&D Entity
     is developing certain technology related to the Company's voice-activated
     computer hardware and software (the "VoiceBox Technology").  The president
     of the Company is one of seven members of the board of directors of the
     R&D Entity, and the executive officers and directors of the Company
     collectively own less than five percent of the common stock of  the R&D
     Entity.  Under the terms of  the agreement, the Company owns the
     intellectual property rights, all technology and technology rights that
     are developed by the entity with respect to the VoiceBox Technology.  The
     Company agreed to provide all funding necessary for the R&D

                                      12
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - RESEARCH AND DEVELOPMENT (Continued)

     Entity to develop a commercially viable product.  There is no minimum
     requirement or limit with respect to the amount of the funding to be
     provided by the Company.  However, under the terms of the agreement the
     Company is obligated to use its best efforts in raising the necessary
     funding for the development, manufacturing and marketing of the VoiceBox
     Technology.  The Company has not yet completed the research and
     development of its product, and consequently, has not recorded any
     revenues from sales.  Under the terms of the agreement, the Company paid
     $1,090,877 to the R&D Entity for research and development for the three
     months ended June 30, 1996 and $1,907,538 for the six months ended June
     30, 1996.  If and when the Company completes the development of the
     VoiceBox Technology and develops a commercially viable product based
     thereon, and assuming  sales of such a product commence, the Company will
     be obligated to pay the unaffiliated R&D Entity a royalty fee amounting
     to ten percent (10%) of the sales price of each commercial unit sold. 

NOTE 7 - CONTINGENCIES

     The Company is involved in various litigation as part of its normal
     business operations.  In management's opinion, the ultimate resolution of
     such litigation, individually and collectively,  will not have a material
     adverse effect on the Company's financial position.

     A former attorney of the Company caused the transfer agent to issue a
     certificate for 138,389 shares of common stock.  The Company never
     properly  authorized the issuance of  this certificate or the shares
     represented by the certificate, nor received consideration for the shares. 
     At the direction of the Company, the Company's transfer agent has canceled
     these shares and these shares are not included as issued and outstanding
     shares in the accompanying financial statements.
       
NOTE 8 - INCOME TAXES

     The Company's income taxes are recorded in accordance with Statement of
     Financial Accounting Standards No. 109, Accounting for Income Taxes [FASB
     109].  FASB 109 requires the Company to provide a net deferred tax asset
     or liability equal to the expected future tax benefit or expense of
     temporary reporting differences between book and tax accounting and any
     available operating loss or tax credit carryforwards.  At June 30, 1996
     the total of all deferred tax assets is approximately $5,400,000 and the
     total of the deferred tax liabilities is approximately $1,000.  The amount
     of and ultimate realization of the benefits from the deferred tax assets
     for income tax purposes is dependent, in part, upon the

                                      13
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INCOME TAXES (Continued)

     tax laws in effect, the Company's future earnings, and other future
     events, the effects of which cannot be determined.  Because of the
     uncertainty surrounding the realization of the loss carryforwards the
     Company has established a valuation allowance of approximately $5,400,000
     as of June 30, 1996.  The net change in the valuation allowance is
     approximately $500,000 for the three months ended June 30, 1996 and
     approximately $2,800,000 for the six months ended June 30, 1996.

     The Company has available at June 30, 1996, unused operating loss
     carryforwards of  approximately $14,500,000, which may be applied against
     future taxable income and which expire in various years beginning in 2000
     through 2010. 

NOTE 9 - GOING CONCERN

     The accompanying consolidated financial statements of fonix  corporation
     have been prepared on a going-concern basis, which contemplates profitable
     operations and the satisfaction of liabilities in the normal course of
     business.  There are uncertainties that raise substantial doubt about the
     ability of the Company to continue as a going concern.  As shown in the
     consolidated statements of operations, the Company has not yet achieved
     operations and continues to report operating losses including  losses of
     $1,578,328 for the three months ended June 30, 1996 and $2,758,191 for the
     six months ended June 30, 1996.  As of June 30, 1996, the Company has
     working capital of $9,302,872 which may not be adequate to finish the
     development of the technology.  These items raise substantial doubt about
     the ability of the Company to continue as a going concern. 

     Although there has been substantial progress in the development of the
     Company's voice-activated computer hardware and software,  the Company
     does not have a viable product,  has not had any sales, and there can be
     no assurance that the Company will develop a viable product or have any
     sales.  Management plans to continue financing the development of the
     Company's technology  through additional loans and/or sales of the
     Company's equity securities.

     The Company's continuation as a going concern is dependent upon its
     ability to satisfactorily meet its debt obligations, meet its product
     development goals, secure adequate new financing and generate sufficient
     cash flows from operations.  The financial statements do not include any
     adjustments that might result from the outcome of these uncertainties.

                                      14
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 10 - SUBSEQUENT EVENTS
     
     Issuance of Stock and Stock Options - Subsequent to June 30, 1996, an
     additional $375,000 was received in connection with the funding
     arrangement with a private investment entity, in exchange for which the
     Company issued 781,250 shares of common stock.
     
     On July 30, 1996, an agreement was entered into whereby certain employees
     were granted an aggregate of 46,000 stock options as signing incentives. 
     Of these 46,000 stock options, 25,000 have an exercise price of $2.97,
     11,000 an exercise price of $3.66  and 10,000 have an exercise price of
     $9.31.  These options are exercisable at any time beginning six months
     after the date of grant and expire July 30, 2006.
    
     On July 30, 1996, certain key employees were granted an aggregate of
     130,000 stock options under the Company's employee stock option plan.  The
     exercise price for 119,000 of these stock options was $3.66 per share and
     the exercise price for the remaining 11,000 stock options that were
     granted range from $5.06 to $8.50 per share.  These options are subject
     to a three year vesting schedule, pursuant to which one-third of the total
     number of options granted may be exercised commencing one year from the
     grant date, and an additional one-third may be exercised each year
     thereafter until three years from the grant date, at which time all
     options will be fully vested.  These options expire July 30, 2006. 

     Issuance of notes receivable - Subsequent to June 30, 1996 the Company
     issued a note receivable in the amount of $1,000,000 which bears interest
     at 12% per annum and is due 30 days after demand.
     
     At June 30, 1996 the Company had an unsecured note receivable in the
     amount of $1,160,000 which bears interest at 12% per annum and is due on
     demand.  Subsequent to June 30, 1996 the Company increased this note
     receivable from $1,160,000 to $1,900,000 and obtained collateral security
     for the repayment thereof.

     Operating Lease - On July 17, 1996, the Company entered into a lease
     agreement for a 25,600 square foot office facility.  The lease commences
     October 15, 1996 with a lease term of eight years and an option to extend
     for an additional five years.  The base rent is $2,725,376 over the next
     eight years, and is based on 25,600 rentable square feet.  The first
     year's base rent is $304,640 which is $25,387 monthly.  The base rent
     increases 3.5% annually for years two through five and 2% annually for
     years six through eight and for the five year option period. The Company
     has the right to terminate the lease after five years if the Landlord
     cannot accommodate the Company's expansion needs, if any.

                                      15
<PAGE>
                              fonix  corporation
                         [A Development Stage Company]

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - RESTATEMENT OF FINANCIAL STATEMENTS

     As discussed in Note 4, the company issued 3,700,000 shares of common
     stock to an affiliated corporation upon exercise of stock warrants.  The
     exercise price was paid for through the cancellation of debt which had
     previously been accrued for management fees by the corporation.  In
     retrospect, Management believes that the provisions of APB Opinion No. 25,
     which applies to stock issued to employees for services, should be
     extended to cover this transaction.  Accordingly, the Company has recorded
     an additional compensation expense of $2,282,900 and adjusted additional
     paid in capital on the financial statements for 1995.  The affiliated
     company also forgave debt and related interest in the amount of $506,874
     which has been accounted for as a contribution to additional paid in
     capital.  Management believes these adjustments are necessary to be
     consistent with current attitudes and policies in effect in subsequent
     years.  These adjustments have no effect on total stockholders' equity but
     do result in an increase to net loss in 1995.

                                      16
<PAGE>
ITEM 2.  MANAGEMENT'S PLAN OF OPERATION

     The Company is a development stage business which is involved in the
research and development and production of natural language voice recognition
technologies, using specific-speech knowledge, proprietary modeling, neural
networks and a linguistic process to recognize natural language speech.  Because
the Company still is in the development stage of its business, the Company has
not yet marketed or distributed any product based on its voice-recognition
technology.  Therefore, the Company has had no revenue from its operations.

     In October 1993 the Company entered into an agreement with an independent
research and development entity ("R&D Entity"), and on March 31, 1995, the
Company and the R&D Entity entered into a Re-Stated Development Agreement ("the
Restated Development Agreement").  The terms of the Restated Development
Agreement specify  that the research and development  of the Company's
technology would be conducted by the R&D Entity but financed by the Company. 
The president of the Company is one of seven members of the board of directors
of the R&D Entity, and the executive officers and directors of the Company own
shares of the common stock of the R&D Entity, however, such share ownership
constitutes less than 5% of the total number of the R&D Entity's common stock
issued and outstanding.  Under the Re-Stated Development Agreement, the Company
is responsible for providing all of the funding for the development of the voice
recognition technology and any products resulting therefrom.  There is no
minimum requirement or limit with respect to the amount of funding the Company
must provide under the Re-Stated Development Agreement.  However, the Company
is obligated to use its best efforts in raising all of the necessary funding for
the development, manufacturing and marketing of the voice recognition
technology.  The amounts of payments to the R&D Entity pursuant to the Re-Stated
Development Agreement are determined as the R&D Entity submits weekly pre-
authorized work orders and budgets, which are then reviewed and approved by the
Company.  Since no product incorporating the voice recognition technologies has
yet been completed all funds paid to the R&D Entity by the Company are not
capitalized, rather, they are accounted for strictly as research and development
expense.  

     The Company incurred research and development expenses of $1,090,877 and
$483,934 for the three months ended June 30, 1996 and June 30, 1995,
respectively.  General and administrative expenses were $487,451 and $279,474,
respectively, for the periods ended June 30, 1996 and June 30, 1995.  Due to
these significant research and development and general and administrative
expenses, the Company has incurred losses of $1,357,185 and $787,646 for the
three months ended June 30, 1996 and June 30, 1995, respectively.  At June 30,
1996, the Company had an accumulated deficit of $14,526,671 and stockholders'
equity of $9,555,324.  The Company anticipates similar losses in the future as
it continues the development of its voice recognition technology and expects
such losses to continue until such time as a commercially viable product
incorporating the Company's technology is completed and significant sales
revenues are realized.  However, there can be no assurance that the Company will
complete a product incorporating its technologies, or that sufficient revenues
will be generated from sales of such product to allow the Company to operate
profitably.

     Although the Company previously had anticipated that it would complete a
working prototype incorporating its technology by the end of the second quarter
of 1995 and planned to finish the alpha and beta testing of the product sometime
in the third quarter of 1995, limited amounts of operating capital prevented

                                      17
<PAGE>
development of the Company's technologies according to that schedule.  The
Company presently anticipates that it will begin production of its voice
recognition technologies sometime during the second half of 1996.  Assuming and
after completion of such alpha and beta testing in that time frame, the Company
presently intends to begin manufacturing and marketing a product incorporating
those technologies through OEM contracts, independent software vendors and
value-added developers and resellers.  Significant amounts of capital will be
necessary to complete the alpha testing and to begin the beta testing of the
Company's technologies prior to the manufacturing and marketing of a product
based on those technologies.  Accordingly, the Company expects to incur
significant losses at least through the end of 1996.

     From its inception, the Company's principal source of operating capital
has been private and other exempt sales of the Company's equity securities and
borrowing from related parties.  At June 30, 1995, the Company had outstanding
debt to related parties in the amount of $702,861.  Pursuant to an investment
agreement between the Company and a private investment entity dated October 23,
1995 (the "Private Investment Agreement"), $506,874 of a total of $656,874 of
then outstanding debt to related parties was forgiven by the related parties. 
This transaction occurred at the request of the private investment entity to,
among other things, alleviate the Company's debt obligations and to make the
arrangement more attractive for the private investment entity.  At June 30,
1996, there was no outstanding debt owed to related parties.  Private and other
exempt sales of the Company's securities resulted in net cash proceeds of
$8,166,199 for the three months ended June 30, 1996.  Additional equity
securities were issued during that period for service related, non-cash
consideration of $901,520.

     The Company has a relationship with a local bank pursuant to which the
Company has entered into an agreement allowing it to borrow against its own
funds on deposit with the bank.  At June 30, 1995, the Company had funds on
deposit of $3,568,800 and owed the bank a total of $3,065,000.  As of June 30,
1996, the Company had funds on deposit of $20,000,000, and the Company owed
$14,675,458 to the bank, which obligation matures August 12, 1996.  The
relationship with the bank is re-negotiated every three months.  The interest
rate received for the funds on deposit and the interest rate paid for the funds
borrowed against the Company's funds on deposit was a net difference of 2% for
the period ended June 30, 1995.  On December 1, 1995 the Company and the bank
negotiated a new interest rate that yielded a net difference between the rates
of interest paid and received by the Company of 1%.  Therefore, the net cost to
the Company for this arrangement was 1% for the period ended June 30, 1996. 
Interest is payable monthly and the principal amount is payable in full at
maturity. 

     In October 1995, the Company entered into a funding arrangement with a
private investment entity.  Under terms of the agreement, the private investment
entity agreed to fund the Company with $6,050,000 ("Funding Commitment") over
an 11 month period in exchange for the Company's issuance of a total of
11,562,500 shares of the Company's common stock, and a $500,000 Series A
Subordinated Convertible Debenture (the "Debenture") which is convertible into
166,167 shares of Series A Preferred Stock or into the same number of shares of
common stock.  The preferred stock, assuming it is authorized and issued, may
be converted to common stock at the discretion of the investor on a one for one
basis. The first $1,540,000 of the Funding Commitment was paid to the Company
on October 23, 1995 as consideration for the issuance of the Debenture and the
issuance of 2,166,667 shares of common stock.  The balance of the Funding
Commitment, $4,510,000 is to be paid as consideration for the issuance by the
Company of 9,395,833 shares of common stock.  As of June 30, 1996 the private

                                      18
<PAGE>
investment entity had paid a total of $3,550,000 in exchange for which the
Company has issued 7,395,833 shares of common stock.  On July 25, 1996 an
additional $375,000 was received by the Company in exchange for which the
Company issued 781,250 shares of common stock.  The remaining balance of the
Funding Commitment of $1,625,000 is payable by the private investment entity
through September 1996 subject to the Company completing certain technology
development milestones.  The balance of the shares of common stock (3,385,417)
due the investor, will be issued proportionately upon receipt of the remaining
installment payments made by the investor.  Under the terms of the agreement,
if the Company does not achieve the milestones which are specified in the
contract, the private investment entity is not obligated to continue the
funding.  If the private investment entity stops funding because of the
Company's failure to achieve a specified milestone, the private investment
entity will receive a number of shares commensurate to the total funding
invested.  

     Presently, as a result of the agreement described above and additional
domestic and offshore sales of its equity and debt securities, and assuming that
the Company is able to achieve the developmental milestones prescribed under the
agreement, the Company anticipates that it will be able to satisfy its cash
requirements during the next 12 months.  Nevertheless, the research and
development associated with the completion of the Company's voice recognition
technologies and the manufacturing and marketing of any product incorporating
such technologies will continue to require large amounts of capital.  Since the
Company has no revenue from operations, the Company intends to continue to rely
primarily on financing through the sale of its equity and debt securities to
satisfy future capital requirements.  If and when the Company successfully
completes the development of a product incorporating its voice recognition
technologies, the Company will seek to enter into either OEM or licensing
agreements pursuant to which royalty or other payments by third parties could
provide a significant amount of the financing necessary to manufacture and
market such a product.  Such funds might alleviate the need for financing
through additional sales of the Company's debt or equity securities.  Absent
such OEM or licensing agreements, however, the Company anticipates it will need
a significant amount of additional capital investment to finance the
manufacturing, distribution and marketing of a product incorporating its
technologies.  There can be no assurance that the Company will receive the
necessary financing to develop and market its product from either OEM or
licensing contracts or by the offer and sale of the Company's debt or equity
securities.

     The Company will hire additional engineers as technology milestones are
achieved and additional funding is received.  In addition, if and when the
Company completes the testing of its technologies, approximately thirty more
employees will be initially required for sales and marketing and customer
support services.

     On July 17, 1996, the Company entered into a lease agreement for a 25,600
square foot office facility.  The lease commences October 15, 1996 with a lease
term of eight years and an option to extend for an additional five years.  The
base rent is $2,725,376 over the next eight years, and is based on 25,600
rentable square feet.  The first year's base rent is $304,640 which is $25,387
monthly.  The base rent increases 3.5% annually for years two through five and
2% annually for years six through eight and for the five year option period. The
Company anticipates that this building will be adequate office space for the
Company's needs over the next year.  In addition, new testing equipment is
required and will be purchased as needed and as sufficient capital is raised for
its acquisition.

                                      19
<PAGE>
     When used in this Quarterly Report on Form 10-QSB, the words "believes",
"anticipates", "expects" and similar expressions are intended to identify
forward-looking statements.  Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected.  Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.  The Company
undertakes no obligation to publicly release the results of any revisions to
these forward looking statements that may be made to reflect events or
circumstances after the date of this Report or to reflect the occurrence of
unanticipated events.

                   PART II--OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

     None.

ITEM 2.CHANGES IN SECURITIES

     None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted for the vote of security holders during the
period covered by this report.

ITEM 5.OTHER EVENTS

      a.  Modification of stock Purchase Agreement with Beesmark Investments,
          L.C.

     fonix corporation, a Delaware corporation (the "Company"), has entered
into an agreement with Beesmark Investments, L.C., a Utah limited liability
company affiliated with Dr. Alan C. Ashton which is the Company's single largest
shareholder ("Beesmark"), pursuant to which the Company, Beesmark and Dr. Ashton
agreed to modify the Securities Purchase Agreement dated as of October 23, 1995
(the "Purchase Agreement").  Under the Purchase Agreement, Beesmark agreed to
provide financing to the Company in return for which the Company agreed to issue
up to 11,562,500 shares of the Company's common stock and a Series A Convertible
Subordinated Debenture ("Debenture") that is convertible into up to 166,667
shares of common stock or, at the option of Beesmark, 166,667 shares of the
Company's  Series A Convertible Preferred stock, provided that the issuance of
suck preferred stock is approved by the Company's shareholders.  The Debenture
has a principal amount of $500,000, a term of 1 year, and bears interest at the
rate of 5% per annum.

                                      19
<PAGE>

     The modification agreement specifies that the Debenture shall be amended
to extend its term for an additional year until October 23, 1997, and to require
interest payments on each anniversary of the issue date of the Debenture. 
Additionally, the modification agreement extends the time period within which
the Company must seek shareholder approval of the issuance of the preferred
stock until the next annual or special meeting of shareholders to be conducted
after December 31, 1996.

      b.  Modification of Voting Trust Agreement.

     The Voting Trust Agreement by and among the Company, Beesmark, Stephen M.
Studdert, Thomas A. Murdock, Roger D. Dudley, Studdert Companies Corp., a Utah
corporation, and Thomas A. Murdock as trustee, last amended on October 23, 1995,
was amended by agreement of all parties thereto.  Under the Voting Trust
Agreement as last amended, the Voting Trust expired its terms, if, among other
conditions, the Company's common stock traded at $10.00 per share for 15
consecutive trading days.  The amendment to the Voting Trust Agreement provides
that the Voting Trust will expire pursuant to such condition only if the market
price of the Company's common stock exceeds $15.00 per share for the prescribed
15 consecutive trading day period.




                                      20
<PAGE>


                                  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:    April 10, 1997                     /s/ Roger D. Dudley
      --------------------------          ----------------------------------  
                                          Roger D. Dudley
                                          Chief Financial Officer