==============================================================================
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

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

[X]  Annual report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 [Fee Required] for the fiscal year ended December 31, 1995.

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 [No Fee Required] for the transition period from
     ____________ to ____________.

                                   Commission file number 0-23862

                               fonix corporation
                (Name of Small Business Issuer in Its Charter)

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

                       60 East South Temple, Suite 1225
                           Salt Lake City, UT 84111
                   (Address of Principal Executive Offices)

                                (801) 328-0161
               (Issuer's Telephone Number, Including Area Code)

          Securities registered pursuant to Section 12(b) of the Act:
                                      None
          Securities registered pursuant to Section 12(g) of the Act:
                   Common Stock, par value $.0001 per share

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or Section 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 [ ]

     Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]   

     The issuer's revenues for its most recent fiscal year were $0. 

     The aggregate market value of the voting stock held by non-affiliates
(approximately 10,828,281 shares) computed by reference to the price of the
Company's common stock as reported by the NASDAQ Electronic Bulletin Board on
March 11, 1996 was $31,131,307.

     As of March 11, 1996, the total number of shares of the Company's common
stock, par value $.0001 per share, issued and outstanding was 31,768,821. 
This amount excludes 138,389 shares that the Company's former attorney caused
to be issued notwithstanding the lack of consideration or appropriate
authorization for such issuance, and the validity of which the Company
presently disputes.
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<PAGE>

     This Amendment No. 1 to the Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1995 (the "Original Report"), is being filed by fonix
corporation (the "Company") to amend Items 1, 6, 7 and 13 of the Original
Report and to replace such Items in their entirety with the following.

 Item 1.Description of the Business

     fonix Corporation (the "Company") was incorporated under the laws of the
State of Delaware on September 12, 1985.  The original name of the Company was
Taris Inc.; the name was changed to Advanced Sensor Industries, Inc., on March
22, 1994, and then to fonix Corporation on May 13, 1994.  On June 4, 1994, the
Company entered into an Agreement and Plan of Merger with fonix Systems
Corporation, a wholly-owned subsidiary of the Company ("Systems"), and Phonic
Technologies, Inc., a Utah corporation ("PTI"), which provided, among other
things, for the merger of PTI with and into Systems effective June 17, 1994. 
Unless the context clearly requires otherwise, the term "Company" as used
herein shall include, collectively, fonix Corporation and Systems.

     PTI was incorporated in Utah in 1993, and until its acquisition by the
Company, operated as a private development stage corporation engaged in
research and development of certain computer voice recognition of human speech
technologies and the commercial exploitation of any such technologies.  PTI
acquired its rights to certain voice recognition technology from Synergetics,
Inc., a Utah corporation ("Synergetics"), by means of a Product Development
and Assignment Agreement between PTI and Synergetics dated as of October 16,
1993 (the "Synergetics Agreement").  Upon its acquisition of PTI, the Company
succeeded to all of PTI's right, title and interest in and to the computer
voice recognition technology being developed by Synergetics, including PTI's
rights to such technology under the Synergetics Agreement.  On March 30, 1995,
the Company and Synergetics entered into a Re-Stated Product Development and
Assignment Agreement (the "Re-Stated Synergetics Agreement").  Under both the
Synergetics Agreement and the Re-Stated Synergetics Agreement, the Company
must pay a royalty payment in the amount of 10% of total sales in the event of
any sales of any product incorporating the voice recognition technology
developed by Synergetics.  Those agreements also require the Company to
provide financing for research and development of the computer software, data
and hardware related to a voice recognition system permitting users to enter
computer commands by way of human voice commands.  A domestic and
international patent application covering certain of the technology assigned
to the Company by Synergetics has been filed in the name of the inventors. 
That patent application is still pending.

     Before the merger and acquisition of PTI, the Company was an inactive
development stage company controlled by Pat Catizone and certain persons
related to or affiliated with him.  As a result of the merger and the issuance
of additional shares of the Company's common stock in connection with the
merger, a change of control of the Company occurred and the Company now
continues the commercial exploitation of the technologies and the business
previously conducted by PTI.

     The Company has no revenue producing operations at this time.  The
primary business of the Company continues to be research and development
including the production of working prototypes of its voice recognition
technologies through the Synergetics Agreement and the Re-Stated Synergetics
Agreement.  The Company presently anticipates that it will complete alpha
testing and begin beta testing 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
original equipment manufacturing ("OEM") contracts and directly to
distributors. [See Item 6. Management's Plan of Operation]

     Currently, the Company relies on equity and debt financing to finance
its research, development, market development, and general and administrative
requirements.  The Company does not produce any revenue from operations and
will not do so until such time as it either enters into OEM or similar
licensing agreements, or a product incorporating the Company's technologies is
introduced into and becomes commercially viable in the marketplace.

     Most of the Company's operating expenditures are for research,
development and the management of the Company.  At the present time, the
Company has no plans to sell or purchase any significant plant or equipment. 
Assuming that the Company completes the development of its technologies and
appropriate alpha and beta testing of those technologies during 1996, the
Company would then determine whether it will manufacture a product
incorporating its technologies or contract the manufacturing to third parties. 
In the event that, at such time, the Company is able to enter into an
acceptable joint venture or licensing agreement whereby a third party would
assume responsibility for manufacturing the Company's product, the need for
significant amounts of additional capital for marketing and manufacturing may
be alleviated.  Absent such an agreement, however, the Company presently
intends to assume responsibility for the manufacturing and distribution of its
product, which will require significant capital expenditure.  There are no
assurances that the Company will have sufficient funds to complete the
development of its technologies or to manufacture and distribute a product
based on those technologies without obtaining additional funding through
equity or debt financing.

     Except for research, development and the management of the Company, for
the foreseeable future the Company intends to contract with third parties for
most of its ongoing needs, such as corporate and shareholder relations,
accounting and legal services, product packaging and design, manufacturing and
distribution. If and when the Company is able to market and sell a product, it
will determine the number of employees required to provide customer support,
training, sales and other administrative services.  In addition, if it were to
commence the manufacturing and distribution of its product in-house, the
Company may hire a significant number of additional employees.

     Several other companies already have developed and are marketing certain
voice recognition products.  Generally, the presently available voice
recognition technology products may be divided into two primary types.  One
type provides large vocabularies of recognizable words, but is not user
independent and requires the user to pause after speaking each word to allow
the system time to recognize each word as spoken.  The second general type of
product presently available is speaker independent, but has very limited and
primarily single-purpose vocabularies.  The Company anticipates that its voice
recognition technologies will accommodate a large vocabulary, a high degree of
user independence and utility with natural speech patterns without cumbersome
pauses.  The Company is unaware of any other voice recognition product or
technology under development or presently available which could offer the
benefits anticipated from the Company's technologies.  Nevertheless, in light
of the huge potential market for voice recognition products, the Company
expects a high degree of competition for that market, some of which may be
from entities having much greater research, development, manufacturing,
marketing and distribution resources and experience than the Company.

     The Company regards certain of its product designs and related
technologies as proprietary and has attempted in the past and intends to
continue to protect such designs and technologies with patents, trade secret
laws and restrictions on disclosure.  As indicated above, the Company has one
United States patent application pending.  That patent application describes
technology to allow a computer to accurately recognize continuous human speech
from any speaker.  The technology described in the patent application extracts
only the essential components of incoming human speech signals and then
isolates those components in a manner such that the underlying sound
characteristics common to all speakers can be specified and used to accurately
identify the phonetic make-up of the speech signals.  According to the patent
application, this permits the technology to recognize speech utterances from
any speaker of a given language, without requiring the user to first "train or
enroll" the system with specific voice characteristics.  Further, the
technology implements this user independent speech recognition ability in
substantially "real time,"  allowing the user to speak at normal
conversational speeds and without pausing after each word.  Finally, the
technology described in the patent application utilizes various linguistic
processing techniques to translate the identified phonetic sounds into a
corresponding word or phrase of any given language.  There can be no assurance
that the Company will receive a patent for the technology described in the
pending patent application or in any patent application that subsequently may
be filed.

     The Company could find it necessary to spend substantial sums defending
or enforcing its rights to a particular technology or other intellectual
property rights.  Because of the rapid pace of technological change in its
potential markets, the Company believes that legal protection of its
proprietary information is of equal importance to the Company's competitive
position with other factors such as product innovation and response to
evolving industry standards, technical and cost effective manufacturing
expertise, and effective product marketing strategies.  Without legal
protection, it may be possible for unauthorized third parties to commercially
exploit the proprietary aspects of the Company's potential products, if any
result from the Company's ongoing research and development efforts.

     The Company presently is unaware of any governmental or regulatory
approval that must be obtained before it commences manufacturing and
distribution of a prototype  product.  During the last two fiscal years, the
Company has spent or incurred expenses of approximately $10,119,907 on the
research, development and related administrative and management expenses
associated with the development of its voice-recognition technology.  At
December 31, 1995, the Company had two full-time employees (in addition to its
executive officers); as of March 18, 1996, the Company had four such full-time
employees.  It has no part-time employees.

     When used in this Annual Report on Form 10-KSB, 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.

Item 6.   Management's Plan of Operation

     The Company is a development stage business which has been involved in
the research and development of proprietary computer natural language voice
recognition hardware, software and firmware.  Because the Company still is in
the research and development stage of its business, the Company has not yet
marketed or distributed its voice recognition product.  Therefore, the Company
has had no revenue from its operations during the past two fiscal years.

     The Company and Synergetics agreed, by executing the Re-Stated
Synergetics Agreement, that the research and development of the Company's
technology would be conducted by Synergetics but financed by the Company.  The
president of the Company is one of seven members of the board of directors of
Synergetics, and the principals of SCC, who also are executive officers and
directors of the Company own shares of the common stock of Synergetics,
although such share ownership constitutes less than 5% of the total number of
Synergetics common stock issued and outstanding.  Under the Re-Stated
Synergetics 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
Synergetics 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 Synergetics pursuant to the Re-Stated Synergetics Agreement are
determined as Synergetics submits weekly pre-authorized work orders and
budgets, which are then reviewed and approved by the Company.  All funds paid
to Synergetics are accounted for by the Company strictly as research and
development expense, since no product incorporating the voice recognition
technologies has yet been completed.  

     During the fiscal years ended December 31, 1995 and December 31, 1994,
the Company incurred research and development expenses of $2,704,165 and
$2,522,090, respectively.  General and administrative expenses (which consist
primarily of management fees to a related entity and professional fees for
legal and accounting services), were $3,553,665 and $1,339,987, respectively,
for the fiscal years ended December 31, 1995 and December 31, 1994.  Due to
these significant research and development and general and administrative
expenses, the Company has incurred losses from operations of $6,257,830 in
1995 and $3,862,077 in 1994.  At December 31, 1995, the Company had an
accumulated deficit of ($12,012,299) and stockholders' equity of $1,309,734. 
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 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 and other factors prevented
development of the Company's technologies according to that schedule.  The
Company presently anticipates that it will complete alpha testing and begin
beta testing 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 and
directly to distributors.  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 borrowing from related parties and private and other exempt sales of
the Company's equity securities.  At December 31, 1994, the Company had
outstanding debt to related parties in the amount of $490,543.  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.  [See Item 12--Certain Relationships and Related
Transactions.]  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 investor.  At
December 31, 1995, 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 $5,030,547 during fiscal 1995.  Additional equity securities
were issued for service related, non-cash consideration of $4,055,371.

     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 December 31, 1994, the Company had funds
on deposit of $2,143,417 and owed the bank a total of $2,141,639.  As of
December 31, 1995, the Company had funds on deposit of $8,000,000, and the
Company owed $5,617,522 to the bank, which obligation matured February 28,
1996.  The relationship with the bank is re-negotiated every three months.  On
February 28, 1996, the Company and the bank agreed to extend the term of the
relationship for an additional three-month term on comparable competitive
terms.  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 1994 and for 1995, with the exception of the month of
December 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 2% in 1994 and 1995, and at December 31, 1995 was 1%. 
Interest is payable monthly and the principal amount is payable in full at
maturity. 

     On October 23, 1995, the Company entered into the Private Investment
Agreement.  Under the terms of the Private Investment Agreement, a private
investor agreed to fund the Company with $6,050,000 (the "Funding Commitment")
over an eleven-month period, in return for which the Company would issue to
the investor a total of 11,729,167 shares of the Company's common stock,
including 166,167 shares of Series A Preferred Stock described below which may
be converted to common stock at the discretion of the investor.  $500,000 of
the Funding Commitment was paid to the Company on October 23, 1995 as
consideration for the issuance of a Series A Subordinated Convertible
Debenture, due on October 23, 1996, with an annual interest rate of 5%.  This
debenture may be converted into Series A Preferred Stock at a conversion rate
of $3.00 per share at any time after the Company's shareholders and board of
directors authorize the issuance of the Company's Series A Preferred Stock but
before the maturity date of the Debenture.  The balance of the Funding
Commitment, $5,550,000, was to be paid as consideration for the issuance by
the Company of 11,562,500 shares of common stock.  $1,040,000 of such balance
was paid at the closing of the Private Investment Agreement on October 23,
1995, in exchange for which the Company issued 2,166,667 shares of common
stock.  As of December 31, 1995, the investor has funded a total of $1,605,000
of the remaining balance of the Funding Commitment, in exchange for which the
Company has issued 3,343,750 shares of common stock.  As of March 21, 1996,
the investor had funded an additional $1,200,000, in exchange for which the
Company issued 2,500,000 additional shares of common stock.  The remaining
balance of the Funding Commitment is payable by the investor in specified
amounts at specified times through August 1996 subject to the Company
completing certain technology development milestones.  Additional amounts of
common stock will continue to be issued in amounts corresponding to the
amounts of installment payments made by the investor.  Under the terms of the
Private Investment Agreement, if the Company does not achieve the milestones
which are specified in the contract, the investor is not obligated to continue
the funding.  If the investor stops funding because of the Company's failure
to achieve a specified milestone, the investor will receive a number of shares
commensurate to the total funding invested.  

     Presently, as a result of the Private Investment 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 Private Investment 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 development of the Company's voice recognition technologies and 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 recently hired seven engineers and presently has a need for
four additional engineers with specific scientific expertise in linguistic
processing and neural net development.  These persons will be hired as
technology milestones are achieved and additional funding is received under
the Private Investment Agreement or otherwise.  In addition, if and when the
Company completes the alpha and beta testing of its technologies,
approximately thirty more employees will be initially required for sales and
marketing and customer support services.

     The Company has no plans to purchase any new plants or expand any
existing facility.  However, new testing equipment is required and will be
purchased as sufficient capital is raised for its acquisition.


Item 7.   Financial Statements

     Financial statements, with the report of the Company's auditors,
Pritchett, Siler & Hardy, P.C., follow immediately and are listed in Item 13
of Part III of this Form 10-KSB. 


                             PART III
                                 
Item 13. Exhibits, Financial Statement Schedules and Report on Form 8-K

(a) Documents filed as part of Form 10-KSB:

     1.  Financial Statements (included in Part II, Item 7):Page Number

         Independent Auditors' Report                                     F-1

         Consolidated Balance Sheet as of December 31, 1995               F-2

         Consolidated Statements of Operations for the Years 
         Ended December 31, 1995 and December 31, 1994 and 
         from inception on October 1, 1993 through December 
         31, 1995                                                         F-3

         Consolidated Statement of Stockholders' Equity from 
         inception on October 1, 1993 through December 31, 1995           F-4
    
         Consolidated Statement of Cash Flows for the Years 
         Ended December 31, 1995 and December 31, 1994 and 
         from inception on October 1, 1993 through December 
         31, 1995                                                         F-7

         Notes to Consolidated Financial Statements                       F-9

     2.   Regulation S-B Exhibits

         (2)  Agreement and Plan of Merger dated as of 
              June 6, 1994, by and among fonix corporation, 
              fonix systems corporation (a wholly-owned 
              subsidiary of fonix) and Phonic Technologies, 
              Inc. (including schedules thereto) which is 
              incorporated by reference from the Company's 
              Current Report on Form 8-K dated as of June 17, 
              1994                                                        --

         (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                                          --

              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                                     --

              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)(ii)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)  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                           --

         (9)  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                                   --

              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 Original Report                          --

         (10) Material Contracts

              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                                                    --

              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                                     --

              Independent Consulting Agreement dated as of 
              June 22, 1994, between the Company and Studdert 
              Companies Corp., which is incorporated by reference 
              from the Company's Annual Report for the Fiscal 
              Year Ended December 31, 1994 on Form 10-KSB                 --

              Securities Purchase Agreement (referred to 
              herein as the Private Investment Agreement) by
              and among the Company, Beesmark Investments, L.C., 
              and Alan C. Ashton dated as of October 23, 1995,
              which is incorporated by reference from the 
              Company's Current Report on Form 8-K dated as 
              of October 23, 1995                                         --

         (16) Letter on Changes in Certifying Accountant, which 
              is incorporated by reference from the Company's 
              Annual Report for the Fiscal Year Ended December 
              31, 1994 on Form 10-KSB, as amended                         --

         (21) List of the Company's subsidiaries, the states 
              of incorporation of those subsidiaries and the 
              names under which the subsidiaries do business, 
              which is incorporated by reference from the 
              Company's Annual Report for the Fiscal Year 
              Ended December 31, 1994 on Form 10-KSB, as 
              amended                                                     --

         (27) Financial Data Schedule                                Attached

(b) Reports on Form 8-K:  During the fourth quarter of fiscal year 1995, the
    Company filed one current report on Form 8-KSB, dated as of October 23,
    1995.  The purpose of that current report was to disclose a change in
    control resulting from the closing of the Private Investment Agreement.

<PAGE>
                                         SIGNATURES

    In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the registrant has caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized:

    fonix Corporation

    


By: /s/ Stephen M. Studdert                Date:   April 14, 1997
   --------------------------------             ----------------------------
    Stephen M. Studdert, Chairman, CEO

    In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:

    

 /s/ Thomas A. Murdock                     /s/ Alan C. Ashton
----------------------------------      ---------------------------------- 
 Thomas A. Murdock, President, COO,     Alan C. Ashton, Ph.D, Director
   Director

Date: April 14, 1997                     Date: April 11, 1997
     -----------------------                  --------------------------


 /s/ Roger D. Dudley                       /s/ Joseph Verner Reed
----------------------------------       ------------------------------------- 
 Roger D. Dudley, Executive Vice         Joseph Verner Reed, Director
   President, Director
Date:   April 14, 1997                   Date: April 14, 1997
      -----------------------                 -----------------------


   
----------------------------------
James B. Hayes, Director

Date:
      ------------------------
<PAGE>
                              









                        fonix corporation
                                
                CONSOLIDATED FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 AND 1994


























                 PRITCHETT, SILER & HARDY, P.C.
                  CERTIFIED PUBLIC ACCOUNTANTS

                                 

<PAGE>

                        fonix corporation
                  [A Development Stage Company]
                                
                                
                                
                                
                            CONTENTS

                                                          PAGE

        -  Independent Auditors' Report                  F - 1


        -  Balance Sheet, December 31, 1995              F - 2


        -  Statements of Operations, for the years ended
             December 31, 1995 and 1994 and from
             inception on October 1, 1993 through
             December 31, 1995                           F - 3


        -  Statement of Stockholders' Equity, from
             inception on October 1, 1993 through
             December 31, 1995                           F - 4


        -  Statements of Cash Flows for the years ended
             December 31, 1995 and 1994 and from
             inception on October 1, 1993 through
             December 31, 1995                           F - 7


        -  Notes to Financial Statements                 F - 9






<PAGE>
                  INDEPENDENT AUDITORS' REPORT




To the Board of Directors
fonix corporation
Salt Lake City, Utah


We  have  audited the accompanying consolidated balance sheet  of
fonix corporation and subsidiary [a development stage company] as
of  December 31, 1995, and the related consolidated statements of
operations,  stockholders' equity and cash flows  for  the  years
ended December 31, 1995 and 1994, and for the period from October
1,  1993  (date  of  inception)  to  December  31,  1995.   These
consolidated financial statements are the responsibility  of  the
Company's  management.   Our  responsibility  is  to  express  an
opinion on these financial statements based on our audits.

We  conducted  our  audits in accordance with generally  accepted
auditing  standards.  Those standards require that  we  plan  and
perform  the  audit to obtain reasonable assurance about  whether
the  financial statements are free of material misstatement.   An
audit  includes  examining, on a test basis, evidence  supporting
the  amounts  and  disclosures in the financial  statements.   An
audit also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

In  our  opinion,  the  financial statements  referred  to  above
present  fairly,  in  all  material  respects,  the  consolidated
financial  position  of  fonix  corporation  and  subsidiary   (a
development  stage  company) as of December  31,  1995,  and  the
results  of their operations and their cash flows for  the  years
ended  December 31, 1995 and 1994 and for the period from October
1,  1993  (date of inception) to December 31, 1995, in conformity
with generally accepted accounting principles.

The  accompanying  consolidated financial  statements  have  been
prepared  assuming  that the Company will  continue  as  a  going
concern.   As discussed in Note 10 to the consolidated  financial
statements, the Company is still in the development stage and has
suffered recurring losses which raise substantial doubt about its
ability  to continue as a going concern.  Management's  plans  in
regard  to  these  matters are also described in  Note  10.   The
consolidated financial statements do not include any  adjustments
that might result from the outcome of this uncertainty.





March 4, 1996, except as to Note 12
 as to which the date is March 28, 1997

                                 F-1

<PAGE>

                        fonix corporation
                  [A Development Stage Company]

                   CONSOLIDATED BALANCE SHEET

                             ASSETS
                                                    December 31,
                                                        1995
                                                 ______________
CURRENT ASSETS:
   Cash and cash equivalents                       $  7,849,610
   Notes receivable                                      36,894
   Interest receivable                                   26,224
                                                 ______________
       Total Current Assets                           7,912,728

EQUIPMENT, net of accumulated
 depreciation of $155                                    48,587

INTANGIBLE ASSETS, net of accumulated
 amortization of $1,062                                  22,991
                                                 ______________
                                                   $  7,984,306
                                                 ______________
                                
                  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Notes payable                                    $ 5,617,522
   Accounts payable                                     526,054
   Accrued expenses                                      30,996
   Convertible Debenture                                500,000
                                                 ______________
       Total Current Liabilities                      6,674,572
                                                 ______________
STOCKHOLDERS' EQUITY:
   Preferred stock, $.0001 par value, 
    100,000,000 shares authorized, 
    no shares issued and outstanding                          -
   Common stock, $.0001 par value, 100,000,000
    shares authorized, 29,405,321 issued shares
    and outstanding                                       2,941
   Additional paid-in capital                        13,319,092
   Deficit accumulated during the 
    development stage                               (12,012,299)
                                                 ______________
       Total stockholders' Equity                     1,309,734
                                                 ______________
                                                   $  7,984,306
                                                 ______________






  See accompanying notes to consolidated financial statements.

                             F-2

<PAGE>

                        fonix corporation
                  [A Development Stage Company]


              CONSOLIDATED STATEMENTS OF OPERATIONS

                                                          From Inception
                                    For the Year ended    on October 1,
                                       December 31,        1993 through
                            ______________________________  December 31,
                                    1995         1994          1995
                              _________________________ _____________
REVENUES                       $       -    $      -     $       -
                              _________________________ _____________
EXPENSES:
   General and administrative     3,553,665   1,339,987     5,769,158
   Research and development       2,704,165   2,522,090     6,112,987
                              _________________________ _____________
       Total Expenses             6,257,830   3,862,077    11,882,145
                              _________________________ _____________
LOSS FROM OPERATIONS            (6,257,830) (3,862,077)  (11,882,145)
                              _________________________ _____________
OTHER INCOME (EXPENSES):
   Interest income                 191,929      20,269       212,198
   Interest (expense)             (279,996)    (72,531)     (372,900)
                              _________________________ _____________
 Total Other Income(Expenses):     (88,067)    (52,262)     (160,702)
                              _________________________ _____________
LOSS BEFORE INCOME TAXES AND
       EXTRAORDINARY ITEM       (6,345,897) (3,914,339)  (12,042,847)

CURRENT TAX EXPENSE                       -           -             -

DEFERRED TAX EXPENSE                      -           -             -
                              _________________________ _____________
LOSS BEFORE EXTRAORDINARY ITEM  (6,345,897) (3,914,339)  (12,042,847)

EXTRAORDINARY INCOME:
   Forgiveness of debt, 
    net of taxes                    30,548           -        30,548
                              _________________________ _____________
NET LOSS                      $ (6,315,349)$(3,914,339) $(12,012,299)
                              _________________________ _____________
LOSS PER COMMON SHARE:
   Loss before extraordinary 
    item                      $       (.30)  $    (.28) $       (.71)
   Extraordinary item                 (.00)       (.00)         (.00)
                              _________________________ _____________
LOSS PER COMMON SHARE         $       (.30)  $    (.28) $       (.71)
                              _________________________ _____________

WEIGHTED AVERAGE SHARES          21,343,349  14,095,000    16,894,381
                              _________________________ _____________



  See accompanying notes to consolidated financial statements.

                                F-3

<PAGE>

                        fonix corporation
                  [A Development Stage Company]

         CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                FROM INCEPTION ON OCTOBER 1, 1993
                                
                    THROUGH DECEMBER 31, 1995


                         Common Stock     Additional
                    _____________________  Paid-in  Accumulated
                        Shares    Amount   Capital    Deficit    Total
                    ______________________________________________________
BALANCE, December 31, 
 1992(as previously 
 reported)           37,045,000 $ 3,704  $ 136,659  $ (29,495) $ 110,868

Reverse stock split
 One share for 
 ninety shares      (36,633,389) (3,663)     3,663          -          -

Restatement for 
 reverse acquisition 
 of fonix Corporation 
 by Phonic Technology, 
 Inc.                 9,983,638     999   (141,362)    29,495   (110,868)
                    ______________________________________________________
BALANCE, October 1993,
(date of inception)  10,395,249   1,040     (1,040)         -          -

Net loss for the 
 period October 1,
 1993 (date of 
 inception) through 
 December 31, 1993            -       -          - (1,782,611) (1,782,611)
                    ______________________________________________________
BALANCE, December 
 31, 1993            10,395,249   1,040     (1,040)(1,782,611) (1,782,611)

Acquisition of Taris, 
 Inc.                   411,611      41      1,240          -       1,281

Shares issued for 
 services at $.14 
 per share            1,100,000     110    149,890          -     150,000

Shares issued for 
 services at $.25 
 per share               20,000       2      4,998          -       5,000

Shares issued for 
 services at $.18 
 per share              550,000      55     99,945          -     100,000






                           [Continued]

                               F-4

<PAGE>
 
                        fonix corporation
                  [A Development Stage Company]

         CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                FROM INCEPTION ON OCTOBER 1, 1993
                                
                    THROUGH DECEMBER 31, 1995


                           Common Stock    Additional
                      ____________________  Paid-in  Accumulated
                        Shares    Amount    Capital   Deficit      Total
                    ______________________________________________________

Shares issued for 
 conversion of notes 
 payable and interest
 payable at $.04 
 per share          3,900,000       390      156,515        -     156,905

Shares issued for 
 cash at $1.19 per 
 share less offering 
 costs of $50,000     421,936        42      449,958        -     450,000

Shares issued for 
 cash at $1.96 per 
 share less offering 
 costs of $78,000     397,357        39      701,961        -     702,000

Shares issued for 
 cash at $1.50 per 
 share less offering 
 costs of $30,000     200,000        20      269,980        -     270,000

Shares issued for 
 cash at $2.33 per 
 share less offering 
 costs of $116,665    500,000        50    1,049,940        -   1,049,990

Shares issued for 
 cash at $3.13 less 
 offering costs of 
 $93,785              300,000        30      844,035        -     844,065

Net loss for the year 
 ended December 31, 
 1994                    -            -         -  (3,914,339) (3,914,339)
                    ______________________________________________________
BALANCE, December 31,
 1994              18,196,153     1,819   3,727,422(5,696,950) (1,967,709)

Shares issued during
 the year for cash, 
 at $.45 to $2.50 per
 share less offering 
 costs of $267,714  6,442,538       645   4,509,542         -  4,510,187

Shares issued during 
 the year for non-cash 
 services rendered
 at $.55 to $1.55 
 per share            285,000        29    167,721          -    167,750


                           [Continued]
                                 F-5

<PAGE>
 
                        fonix corporation
                  [A Development Stage Company]

         CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                FROM INCEPTION ON OCTOBER 1, 1993
                                
                    THROUGH DECEMBER 31, 1995


                          Common Stock     Additional
                    _____________________   Paid-in  Accumulated
                        Shares    Amount    Capital    Deficit     Total
                    ______________________________________________________
Shares issued during 
 the year for non-
 cash cancellation of
 accounts payable, 
 at $.81 per share     231,630       23     187,598        -      187,621

Warrants issued 
 during the year for 
 non-cash cancellation 
 of accounts payable, 
 at $.033 per warrant        -        -     122,100        -      122,100

Shares issued during 
 the year upon 
 conversion of warrants
 for non-cash 
 cancellation of
 accounts payable, 
 at $.35 per share 
 (additional compensation
 expense of $2,282,900 
 or $.62 per share was 
 recorded in accordance
 with APB Opinion 
 No. 25)              3,700,000     370    3,577,530        -   3,577,900

Shares issued during 
 the year upon conversion 
 of warrants for cash, 
 at $.50 to $1.00 per
 share                  550,000      55     474,945          -    475,000

Warrants issued during 
 the year for cash, at 
 $.0033 to $.10 per
 warrant less offering 
 costs of $5,040              -       -      45,360          -     45,360

Forgiveness of debt by 
 an affiliated company, 
 accounted for as an equity
 contribution                 -       -     506,874          -     506,874

Net loss for the year 
 ended December 31, 1995      -       -           -  (6,315,349)(6,315,349)
                    ______________________________________________________
BALANCE, December   
 31, 1995            29,405,321 $ 2,941 $13,319,092$(12,012,299)$1,309,734
                    ______________________________________________________

  See accompanying notes to consolidated financial statements.
                                F-6

<PAGE>
 
                        fonix corporation
                  [A Development Stage Company]

              CONSOLIDATED STATEMENT OF CASH FLOWS
                                
        Increase (Decrease) in Cash and Cash Equivalents

                                                           From Inception
                                     For the Year ended    on October 1,
                                        December 31,        1993 through
                             ______________________________  December 31,
                                     1995       1994            1995
                                  ______________________________________
Cash flows from operating 
 activities:
  Net loss                     $(6,315,349) $(3,914,339)   $(12,012,299)
  Adjustments to reconcile 
   net loss to net cash 
   used in operations:
   Common stock issued for 
    non-cash                     2,450,650      255,000       2,705,650
     Write-off of assets 
      received in acquisition            -        1,281           1,281
     Depreciation and 
      amortization                   1,218            -           1,218
     Non cash forgiveness of 
      debt income                  (30,548)           -         (30,548)
     Changes in assets and 
      liabilities:
      (Increase) in interest 
        receivable                 (21,827)      (4,397)        (26,224)
      Increase (decrease) in 
       accounts payable            682,551      705,272       2,161,323
      Increase (decrease) in 
       accrued expenses             50,136       52,405         122,914
      (Decrease) in cash overdraft       -           (6)              -
                                ________________________________________
      Net cash (used) by 
       operating activities     (3,183,169)  (2,904,784)     (7,076,685)
                                ________________________________________
Cash flows from investing
 activities:
  Purchase of equipment            (48,743)           -         (48,743)
  Investment in intangible assets  (24,053)           -         (24,053)
  Investment in notes receivable   (36,894)           -         (36,894)
                                  ______________________________________
      Net cash (used) by investing 
       activities                 (109,690)           -        (109,690)
                                  ______________________________________
Cash flows from financing 
 activities:
  Proceeds from notes payable    4,443,851    2,536,606       7,969,189
  Payments on notes payable       (977,818)    (801,988)     (1,779,806)
  Proceeds from debenture          500,000            -         500,000
  Proceeds from issuance of
    common stock                 5,030,547    3,316,055       8,346,602
                                 _______________________________________
      Net cash provided by 
       financing activities      8,996,580    5,050,673      15,035,985
                                 ________________________________________
Net Increase in Cash and Cash 
  Equivalents                    5,703,721    2,145,889       7,849,610

Cash and Cash Equivalents at 
  Beginning of Period            2,145,889            -               -
                                ________________________________________
Cash and Cash Equivalents at 
  End of Period                $ 7,849,610  $ 2,145,889      $7,849,610
                                ________________________________________
                                
                                
                           [Continued]

                              F-7

<PAGE>
                        fonix corporation
                  [A Development Stage Company]

              CONSOLIDATED STATEMENT OF CASH FLOWS
                                
  Increase (Decrease) in Cash and Cash Equivalents [Continued]

Supplemental disclosure of cash flow information
   Cash paid during the year for:
                                                          From Inception
                                    For the Year ended     on October 1,
                                        December 31,       1993 through
                                ________________________   December 31,
                                      1995         1994        1995
                                ______________________________________
           Interest paid        $    229,039  $   21,125  $   250,164
                                ______________________________________
           Income taxes paid    $          -  $        -  $         -
                                ______________________________________

Supplemental disclosure of non-cash financial information
  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 payables.
   
   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

  For the year ended December 31, 1994:
   During  1994, the Company converted $150,000 of notes  payable
   and  $6,905  of accrued interest payable to restricted  common
   stock.

   On  June  17, 1994, Taris, Inc., issued 10,395,249  shares  of
   common  stock  in  exchange for all of  the  issued  stock  of
   Phonic  Technologies, Inc.  Inasmuch as the 10,395,249  shares
   of  common  stock  is  in excess of 90 percent  of  the  total
   outstanding  stock  Phonic Technologies, Inc.,  is  deemed  to
   have  acquired  Taris,  Inc.  Taris, Inc.  had  the  following
   assets and liabilities at the transaction date:

           Total assets:                         $  1,281
           Net assets purchased:                 $  1,281
           Fair value of common stock issued:    $  1,281
                                
  See accompanying notes to consolidated financial statements.
                                F-8

<PAGE>

                        fonix corporation
                  [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
  Organization  -  fonix corporation formerly Taris,  Inc.,  (the
  Company)  was organized under the laws of the state of Delaware
  on  September 12, 1985. Prior to June 17, 1994, the Company had
  a  reverse  stock  split of one share for ninety  shares.   The
  financial  statements have been adjusted to reflect  the  stock
  split  as though it had happened January 1, 1993.  On June  17,
  1994,  the Company entered into a merger agreement whereby  the
  Company  issued 10,395,249 shares of its common stock  for  all
  of   the   issued  and  outstanding  common  shares  of  Phonic
  Technologies,  Inc. ("PTI").  Concurrent with  the  closing  of
  the  merger,  the Company changed its name to fonix corporation
  (fonix).   Upon  completion  of the  merger,  PTI  shareholders
  owned  in excess of 90 percent of the outstanding common  stock
  of  fonix.   The  transaction is accounted  for  as  a  reverse
  acquisition  as  though  PTI  acquired  fonix.   The  financial
  statements,  therefore, reflect the operations of  fonix  since
  the  acquisition  on June 17, 1994 and PTI,  since  October  1,
  1993  (date  of  inception).  Pro forma  financial  information
  reflecting  the  operations of fonix  as  though  it  had  been
  consolidated  for the entire year of 1994 have  been  presented
  (see  note 7).  The Company has not commenced planned principal
  operations.  The Company proposes to use the proceeds from  the
  sale  of  stock and other sources of capital for  research  and
  development  of  its  proprietary voice recognition  technology
  which,  in  the  opinion of management, will  be  in  the  best
  interest of the Company.  Further, the Company is considered  a
  development  stage  Company as defined  in  SFAS  No.  7.   The
  Company  has,  at the present time, not paid any dividends  and
  any  dividends that may be paid in the future will depend  upon
  the  financial  requirements of the Company and other  relevant
  factors.
  
  Consolidation   -   The  accompanying  consolidated   financial
  statements  include  the  accounts  of  the  Company  and   its
  subsidiary.    All   significant  intercompany   accounts   and
  transactions have been eliminated in consolidation.
  
  Cash  and  Cash Equivalents - For purposes of the statement  of
  cash  flows,  the  Company considers  all  highly  liquid  debt
  instruments with a maturity of three months or less to be  cash
  equivalents.
  
  Equipment  -  Equipment  is  stated at  cost.  Depreciation  is
  computed  for  financial statement purposes on a  straight-line
  basis  over  the  estimated useful lives of  the  assets  which
  range  from three to five years. Depreciation expense  for  the
  years  ended  December  31, 1995 and  1994  was  $155  and  $0,
  respectively.
  
  Intangible  Assets - Intangible assets consist  of  the  direct
  cost  of  the  Company  acquiring patents for  its  technology.
  Amortization is computed for financial statement purposes on  a
  straight-line basis over the patent's estimated useful life  of
  seventeen  years.   Amortization expense for  the  years  ended
  December 31, 1995 and 1994 was $1,062 and $0, respectively.
  
  Loss  Per Share - Loss per share is calculated by dividing  net
  loss  by the weighted average number of shares of common  stock
  outstanding  during the period.  Common stock equivalents  were
  not  included  in the loss per share calculation  as  they  are
  antidilutive.

                               F-9

<PAGE>

                        fonix corporation
                  [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
  
  Concentration  of Credit Risks - The Company is  a  development
  stage   business  and  has  not  commenced  principal  business
  operations.  It has no sales or receivables.
  
  The  Company's  cash is pledged as collateral  on  a  revolving
  note  [See  Note 2] and is maintained in bank deposit  accounts
  which  exceed  federally insured limits.  The Company  has  not
  experienced any losses in such accounts and believes it is  not
  exposed  to  any  significant credit  risk  on  cash  and  cash
  equivalents.
  
  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 [See Note 6].
  
NOTE 2 - NOTES RECEIVABLE / PAYABLE
  
  At  December  31, 1995 the Company had one note  receivable  in
  the  amount of $36,894 which is due on March 31, 1996 and bears
  interest  at  18%  per  annum.  Accrued interest  on  the  note
  receivable amounted to $845 at December 31, 1995.
  
  The  Company  has a  revolving note payable  in the  amount  of
  $5,617,522 to a bank at an interest rate of 5.75%.   This  note
  payable  is  due  February  28,  1996,  and  is  secured  by  a
  certificate   of   deposit  in  the   amount   of   $8,000,000.
  Subsequent  to year end, the note payable was extended  through
  May   24,  1996  and  was  further  secured  by  an  additional
  certificate of deposit in the amount of $2,600,000.

  At  December  31,  1994 the Company had a note  payable  to  an
  officer  and  shareholder of the Company totaling  $320,793  in
  principal  and  $48,616 in accrued interest.  In  October  1995
  this  note  payable  had a principal balance  of  $286,493  and
  accrued  interest  balance of $65,715.   Interest  expense  for
  this  note  totaled  $17,098  and $29,546  for  1995  and  1994
  respectively.   In  October 1995 the note payable  of  $286,493
  along  with  the accrued interest of $65,715, were forgiven  by
  the  officer and shareholder of the Company, and were accounted
  for  as  capital  contributions to additional paid  in  capital
  from forgiveness of debt to the Company.
  
  At  December  31,  1994 the Company had a  note  payable  to  a
  company  owned  by  the majority shareholders  of  the  Company
  totaling   $110,918  in  principal  and  $10,216   in   accrued
  interest.   In October 1995 this note payable had  a  principal
  balance  of  $285,368 and accrued interest balance of  $19,298.
  Interest  expense for this note totaled $8,881 and $10,066  for
  1995  and 1994 respectively.  In October 1995, $150,000 of  the
  note  payable  was  paid  by  the Company,  and  the  remaining
  principal  amount  of $135,368 along with accrued  interest  of
  $19,298,  were  forgiven by the related company  owned  by  the
  majority  shareholders,  and  were  accounted  for  as  capital
  contributions  to  additional paid in capital from  forgiveness
  of debt to the Company.

                             F-10

<PAGE>


                        fonix corporation
                  [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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, 1996, 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  articles  of
  incorporation to authorize the issuance of Series  A  Preferred
  stock.   As  of  December  31,  1995  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 [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 investor  agreed  to  fund  the
  Company  with  $6,050,000  ("Funding Commitment")  over  an  11
  month  period for a total of 11,562,500 shares of the Company's
  common  stock,  including $500,000 for  a  debenture  which  is
  convertible  into  166,667 Series A Preferred Stock  (described
  above).   The preferred stock may be converted to common  stock
  at  the  discretion of the investor. The first $500,000 of  the
  Funding Commitment was paid to the Company on October 23,  1995
  as  consideration for the issuance of a Series  A  Subordinated
  Convertible  Debenture  [See Note 3].  This  debenture  may  be
  converted  to Series A Preferred Stock at $3.00 per  share  any
  time  after  the Company's shareholders and board of  directors
  authorize  the  issuance of the Company's  Series  A  Preferred
  Stock  but  before  the maturity date of  the  Debenture.   The
  balance  of the Funding Commitment, $5,550,000 will be paid  as
  consideration  for  the issuance by the Company  of  11,562,500
  shares  of  common stock.  As of December 31,  1995  $1,605,000
  has  been  received, in exchange for which the  Company  issued
  3,343,750  shares  of common stock.  In January,  February  and
  March  of  1996 an additional $340,000, $350,000  and  $510,000
  was  received by the Company, in exchange for which the Company
  issued  708,333, 729,167 and 1,062,500 shares of common  stock,
  respectively.  The remaining balance of the Funding  Commitment
  of  $2,745,000 for the common stock is payable by the  investor
  through  August 1996 subject to the Company completing  certain
  technology  development milestones.  The balance of the  shares
  of  common  stock  (5,718,750) will be  issued  proportionately
  upon receipt of the remaining installment payments made by  the
  investor.

                                F-11

<PAGE>

  
                        fonix corporation
                  [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  
NOTE 4 - CAPITAL STOCK [Continued]
  
  
  Common Stock Transactions - During the year ended December  31,
  1995,  the  Company  issued a total  of  11,209,168  shares  of
  common  stock.  Of these, 6,662,538 shares were issued for  net
  cash  proceeds  of $4,510,187 at prices ranging  from  $.45  to
  $2.50  per  share.  A total of 516,630 shares were  issued  for
  non-cash  consideration including cancellation of  $187,621  of
  accounts  payable  and  $167,750 for  services  rendered.   The
  shares   for  non-cash  consideration  were  issued  at  prices
  ranging  from  $.55  to $1.55 per share.   Also  included  were
  3,700,000  shares issued upon exercise of warrants (see  below)
  and  3,343,750  issued  as part of a funding  arrangement  (see
  above).
  
  Stock  Options  and  Warrants - On April  3,  1995  three  non-
  related   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, 1996.
  
  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  that  entity's accrued management fees  due  from  the
  Company  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 for a  purchase  price
  of  $.033  per  warrant and were then exercised on  August  11,
  1995  at  $.35  per share of common Stock.  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.  In addition,  the
  exercise price was offered as an incentive to help 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 underlying 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 in December 1997.
  
  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 option price of $2.00  per  share
  and expire in December 1997.

                                F-12

<PAGE>

                        fonix corporation
                  [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - CAPITAL STOCK [Continued]
  
  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
  restricted  by 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  said  warrants,
  the   rights  were  assigned  to  two  foreign  entities  which
  purchased   the   500,000   shares,   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 restricted by Regulation S.
  

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
  1995 and 1994:
  
                                      1995        1994
                                _________________________
      Expenses:
        Management fees expense  $  600,000 $    600,000
        Interest expense              8,881       10,066
        Rent expense                 24,000       24,000
  
      Payables:
        Accounts payable         $  260,825  $ 1,231,005
        Accrued interest payable          -       10,417
        Notes payable                     -      110,919
  
  The  Company  rents office space from a company  owned  by  the
  majority  shareholders under a month-to-month lease for  $2,000
  per month.
  
  In  October  1995, a note payable to an officer and shareholder
  of  the  Company  in  the  amount of $286,493  along  with  the
  accrued  interest of $65,715, were forgiven and were  accounted
  for  as  capital  contributions  to additional  paid in capital
  from forgiveness of debt  to  the Company [See Note 2].
  
  In  October  1995,  a note payable to a company  owned  by  the
  majority  shareholders  in the amount of  $135,368  along  with
  accrued  interest  of  $19,298, were forgiven  by  the  related
  company,  and  were accounted for as capital  contributions  to
  additional  paid in capital from forgiveness  of  debt  to  the
  Company [See Note 2].

                                 F-13

<PAGE>
                                
                        fonix corporation
                  [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 majority shareholders of the  Company
  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.   The
  Company  agreed to provide all funding necessary  for  the  R&D
  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 $2,704,165 to the R&D  Entity  for
  research and development in 1995, and $2,522,090 in 1994.

  The  Company presently anticipates that it will complete  alpha
  testing  and begin beta testing of its voice-activated computer
  hardware and software sometime during the second half of  1996.
  Following  sufficient  time  for beta  testing  results  to  be
  collected   and  appropriate  adjustments  made,  the   Company
  presently  projects that a viable product  will  be  ready  for
  market  introduction by the end of 1996.  If and when sales  of
  such  a product commence, the Company will 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 - PROFORMA FINANCIAL INFORMATION
  
  Proforma  condensed financial information assuming that  PTI
  and  fonix had been consolidated since October 1, 1993 (date
  of  inception) through December 31, 1993 and  for  the  year
  ended December 31, 1994, is as follows:
  
                                   For the       For the
                                  Year Ended   Period Ended
                                 December 31,  December 31,
                                     1994          1993
                                ___________________________
          Revenues - interest   $    20,811   $         -
          Expenses                4,268,436     1,782,844
                                ___________________________
              Net loss          $(4,247,625)  $(1,782,844)
                                ___________________________
              Loss per share    $      (.30)  $      (.17)
                                ___________________________
    
                              F-14

<PAGE>

                           fonix corporation
                    [A Development Stage Company]
  
           NOTES TO CONSOLIDATED 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  December  31,
  1995  and  1994,  the  total of all  deferred  tax  assets  was
  $3,429,451  and  $1,937,000 and the total of the  deferred  tax
  liabilities  was $845,569 and $0.  The amount of  and  ultimate
  realization  of the benefits from the deferred tax  assets  for
  income  tax purposes is dependent, in part, upon the  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  $2,583,882 and $1,937,000 for  the  years  ended
  December  31,  1995 and 1994.  The net change in the  valuation
  allowance  was  $646,882 and $1,331,000  for  the  years  ended
  December 31, 1995 and 1994, respectively.
  
  The   Company  has  available  at  December  31,  1995,  unused
  operating   loss  carryforwards  of  approximately  $9,268,786,
  which  may  be applied against future taxable income and  which
  expire in various years beginning in 2000 through 2010.

  The   components   of  income  tax  expense   from   continuing
  operations  for  the years ended December  31,  1995  and  1994
  consist of the following:
  
                                           1995         1994
                                     _________________________
  Current income tax expense:
   Federal                           $        -   $       -
   State                                      -           -
                                     _________________________
     Current tax expense             $        -   $       -
                                     _________________________
  Deferred tax expense (benefit)
    arising from:
   Excess of tax over financial
        accounting depreciation      $      844   $       -
   Excess of tax over financial
     accounting amortization                 52           -
   Excess of financial accounting
      over tax compensation-APB 25      844,673           -
   Net operating loss carryforwards  (1,492,451) (1,331,000)
   Valuation allowance                  646,882   1,331,000
                                     _________________________
      Net deferred tax expense       $        -   $       -
                                     _________________________
  
  Deferred   income  tax  expense  results  primarily  from   the
  reversal  of  temporary  timing  differences  between  tax  and
  financial statement income.

                                F-15

<PAGE>
  
                           fonix corporation
                    [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 8 - INCOME TAXES [Continued]
  
  A   reconciliation  of  income  tax  expense  at  the   federal
  statutory   rate  to  income  tax  expense  at  the   company's
  effective rate is as follows:
  
                                        1995      1994
                                  _________________________
    Computed tax at the expected
      statutory rate                   34.00%       -%
    Depreciation                         .05        -
    Compensation - APB 25              48.31        -
    Net operating loss carryover      (85.36)       -
    State and local income taxes,  
     net of federal benefit             3.00        -
                                  _________________________
      Income tax expense                0.00%       -%
                                  _________________________
  
  The  temporary differences and carryforwards gave rise  to  the
  following deferred tax asset (liability) at December  31,  1995
  and 1994:
  
                                         1995        1994
                                     __________   __________
  Excess of book over tax accounting
    depreciation                    $     (844)   $        -
  State NOL carryforwards           $      (52)   $        -
  Compensation - APB 25             $ (844,673)   $        -
  Federal NOL carryforwards         $3,429,451    $1,937,000

NOTE 9 - CONTINGENCIES
  
  The Company from time to time is involved in litigation as part
  of its normal business operations.   In  management's  opinion,
  the ultimate resolution of these cases will not have a material
  adverse effect on the Company's financial position.
  
  Prior  to the merger, the 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.   The
  Company  is attempting to resolve this problem with its  former
  attorney.   These  shares  are  not  included  as  issued   and
  outstanding in the accompanying financial statements.
  
                                F-16

<PAGE>

                           fonix corporation
                    [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - 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  profitable operations and  continues  to  report
  operating  losses including a loss of $6,315,349  during  1995.
  As  of  December 31, 1995, the Company has working  capital  of
  $1,238,156,   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.
  
  Management presently believes that the Company is in the  final
  development stage of its voice-activated computer software  and
  hardware.  Although there has been substantial progress in  the
  development  of this technology, the Company does  not  have  a
  viable product, and 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.
  
NOTE 11 - SUBSEQUENT EVENTS
  
  Issuance  of  Stock  -  Subsequent to December  31,  1995,  the
  Company issued an additional 726,000 shares of common stock  to
  private   investors   pursuant  to   various   stock   purchase
  agreements  for net cash proceeds of $1,393,763.  In connection
  with  the  726,000  shares issued, the Company  issued  200,000
  shares of common stock valued at $304,000 in finders fee.
  
  The  Company  also received in January, February and  March  of
  1996   an   additional  $340,000,  $350,000  and  $510,000   in
  connection  with  the  funding  arrangement  with   a   private
  investment  entity  [See  Note 4], in exchange  for  which  the
  Company issued 708,333, 729,167 and 1,062,500 shares of  common
  stock, respectively.

                                F-17

<PAGE>

                           fonix corporation
                    [A Development Stage Company]
  
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - 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  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.  Management believes  these  adjustments
  are  necessary  to  be  consistent with current  attitudes  and
  policies   in  effect  in  subsequent  years.   The  affiliated
  Company  also forgave debt and related interest in  the  amount
  of  $506,874 which now has been accounted for as a contribution
  to additional paid in capital.  These adjustments have  no 
  effect on  total stockholders' equity but do result in an 
  increase  to net loss in 1995.  The accompanying financial
  statements and notes to financial statements have been updated
  to reflect these items.
  


                                  F-18
  
<PAGE>