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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 13, 1998
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Fonix Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
0-23862 22-2994719
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(Commission file number) (I.R.S. Employer Identification No.)
1225 Eagle Gate Tower, 60 East South Temple Street
Salt Lake City, Utah 84111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 328-8700
Not Applicable
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(Former name or former address, if changed since last report)
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EXPLANATORY NOTE
On March 30, 1998, Fonix Corporation, a Delaware corporation (the
"Company" or "Fonix"), filed a Current Report on Form 8-K dated as of March 13,
1998, and pertaining to the Merger of AcuVoice, Inc., a California corporation
with and into Fonix Acquisition Corporation, a wholly-owned subsidiary of the
Company. On May 21, 1998, the Company filed Amendment No. 1 to the Current
Report to submit the audited and unaudited financial statements of AcuVoice,
Inc., and certain pro forma financial information required by Item 7 of Form
8-K. This Amendment No. 2 is filed to provide revised pro forma financial
information and related notes to reflect the revised valuation of purchased
in-process research and development. Because the audited and unaudited financial
statements filed with Amendment No. 1 did not change, the Company is not
refiling the audited or unaudited financial statements.
Item 7. Financial Statements and Exhibits. Page
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(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidating
Statements of Operations For the Year Ended
December 31, 1997.............................................P-1
Unaudited Pro Forma Condensed Consolidating
Statements of Operations for the Three Months Ended
March 31, 1998................................................P-2
Notes to Unaudited Pro Forma Condensed Consolidating
Statements of Operations......................................P-3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Fonix Corporation
By:
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Douglas L. Rex
Chief Financial Officer
Date: June 18, 1999
2
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Fonix Corporation and Subsidiaries
[A Development Stage Company]
Unaudited Pro Forma Condensed Consolidating Statements of Operations
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Fonix AcuVoice, Inc. Adjustments Consolidated
Corporation (Note 1) (Note 2) Pro Forma
----------------- ------------------ ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues $ - $ 766,627 $ - $ 766,627
----------------- ------------------ ---------------- -----------------
Expenses:
Research and development 7,066,294 332,809 - 7,399,103
General and administrative 12,947,112 242,289 2,002,750 (a) 15,192,151
----------------- ------------------ ---------------- -----------------
Total expenses 20,013,406 575,098 2,002,750 22,591,254
----------------- ------------------ ---------------- -----------------
Income (loss) from operations (20,013,406) 191,529 (2,002,750) (21,824,627)
----------------- ------------------ ---------------- -----------------
Other income (expense):
Interest income 1,199,610 4,716 - 1,204,326
Interest expense (2,758,288) (38,057) - (2,796,345)
----------------- ------------------ ---------------- -----------------
Total other expense, net (1,558,678) (33,341) - (1,592,019)
----------------- ------------------ ---------------- -----------------
Net income (loss) before extraordinary item (21,572,084) 158,188 (2,002,750) (23,416,646)
Dividends on preferred stock 2,721,991 - - 2,721,991
----------------- ------------------ ---------------- -----------------
Net income (loss) applicable to common
stockholders before extraordinary items $ (24,294,075) $ 158,188$ (2,002,750) $ (26,138,637)
================= ================== ================ =================
Basic and diluted net loss per common share
before extraordinary items $ (0.57) $ (0.58)
================= =================
Weighted average common shares outstanding 42,320,188 2,692,216 (b) 45,012,404
================= ================ =================
</TABLE>
P-1
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Fonix Corporation and Subsidiaries
[A Development Stage Company]
Unaudited Pro Forma Condensed Consolidating Statements of Operations
For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Pro Forma
Fonix AcuVoice, Inc. Adjustments Consolidated
Corporation (Note 1) (Note 2) Pro Forma
--------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,295,785 $ 50,808 $ (4,073) (c) $ 1,342,520
--------------- ----------------- --------------- ---------------
Expenses:
Purchased in-process research and development 9,315,000 - (9,315,000) (d) -
Research and development 2,701,203 60,774 (18,762) (c) 2,743,215
General and administrative 1,478,863 76,115 401,993 (a) 2,037,357
(19,614) (c)
--------------- ----------------- --------------- ---------------
Total expenses 13,495,066 236,889 (8,951,383) 4,780,572
--------------- ----------------- --------------- ---------------
Loss from operations (12,199,281) (186,081) 8,947,310 (3,438,052)
--------------- ----------------- --------------- ---------------
Other income (expense):
Interest income 271,477 7,766 - 279,243
Interest expense (311,924) (7,941) - (319,865)
--------------- ----------------- --------------- ---------------
Total other expense, net (40,447) (175) - (40,622)
--------------- ----------------- --------------- ---------------
Net loss (12,239,728) (186,256) 8,947,310 (3,478,674)
Dividends on preferred stock 131,660 - - 131,660
--------------- ----------------- --------------- ---------------
Net loss applicable to common stockholders $ (12,371,388) $ (186,256) $ 8,947,310 $ (3,610,334)
=============== ================= =============== ===============
Basic and diluted net loss per common share $ (0.27) $ (0.08)
=============== ===============
Weighted average common shares outstanding 45,740,942 2,153,773 (b) 47,894,715
=============== =============== ===============
</TABLE>
P-2
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Fonix Corporation and Subsidiaries
[A Development Stage Company]
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATING
STATEMENTS OF OPERATIONS
Note 1. Basis of Presentation
The Company established a wholly owned subsidiary for the purpose of acquiring
AcuVoice, Inc., a California corporation, in a merger transaction. After the
acquisition, the subsidiary, which was the surviving entity, changed its name to
fonix/AcuVoice, Inc. ("fonix/AcuVoice"). fonix/AcuVoice develops and markets
text-to-speech or speech synthesis technologies and products directly to
end-users, systems integrators and original equipment manufacturers for use in
the telecommunications, multi-media, education and assistive technology markets.
The acquisition was completed on March 13, 1998. The Company exchanged 2,692,216
shares of restricted common stock (having a market value of $16,995,972 on that
date) and a cash payment of approximately $8,000,000 for all of the then
outstanding common shares of AcuVoice, Inc. The AcuVoice, Inc. acquisition was
accounted for as a purchase.
The excess of the purchase price over the estimated fair market value of the
acquired tangible net assets of AcuVoice, Inc. was $25,339,840, of which
$11,192,000 was capitalized as purchased core technology, $4,832,840 was
capitalized as goodwill and $9,315,000 was expensed as purchased in-process
research and development.
The accompanying unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1997 and the three months ended March
31, 1998, present the results of operations of the Company as if the acquisition
of AcuVoice, Inc. had occurred on January 1, 1997. AcuVoice, Inc.'s fiscal year
ended November 30 and fonix corporation's fiscal year ended December 31. The pro
forma results have been prepared for illustrative purposes only and do not
purport to be indicative of the results which would have occurred had the
acquisition been effected on January 1, 1997, nor are they indicative of actual
or future operating results. These unaudited pro forma condensed consolidated
statements of operations should be read in conjunction with the condensed
consolidated financial statements and the notes thereto included in the
Company's Quarterly Report on Form 10-Q for the three months ended March 31,
1998 and the historical financial statements of AcuVoice, Inc. and the notes
thereto included elsewhere in this report on Form 8-K/A.
Note 2. Pro Forma Adjustments
(a) Amortization of $11,192,000 in purchased core technology and
$4,832,840 in goodwill, which are being amortized on a
straight-line basis over eight years.
(b) Issuance of 2,692,216 shares of restricted common stock in
connection with the acquisition. The change in the weighted
average number of common shares outstanding for the three
months ended March 31, 1998, is the incremental increase for
the period through the date of acquisition.
(c) The historical operations of fonix/AcuVoice for the period
from March 14, 1998 to March 31, 1998 are included in the
operating results of fonix corporation for the three months
ended March 31, 1998. The results of this 18-day period are
eliminated from the pro forma condensed consolidated statement
of operations for the three months ended March 31, 1998, so as
not to be duplicative when consolidating with the results from
the three-month period of AcuVoice, Inc.
(d) Purchased in-process research and development in the amount of
$9,315,000 was expensed at the date of the acquisition. This
expense is a non recurring charge directly attributable to the
acquisition and is therefore eliminated from the pro forma
condensed consolidating statement of operations for the three
months ended March 31, 1998.
P-3
