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                 KURZWEIL APPLIED INTELLIGENCE, INC.
                      STATEMENTS OF OPERATIONS

                            (unaudited)
                 (in thousands, except for per share data)

                          3 Months Ended Jan. 31,  12 Months Ended Jan. 31,
                          1997            1996     1997            1996

Revenues                  $2,193          $2,096   $8,547        $9,360
Operating costs and
 expenses:
 Cost of product and
  maintenance revenue      1,158           1,521    3,937         4,777
 Sales and marketing       1,168             878    4,057         3,582
 Research and development    818             578    3,066         2,340
 General and administrative  512             454    1,752         1,503

Total operating costs
 and expenses              3,656           3,431   12,812        12,202

Operating loss            (1,463)         (1,335) (4,265)        (2,842)
Interest expense                               2       3             12
Interest income               38              46     115            196
Other (expense) income,
 net                                           9      13             72
Net loss                 ($1,425)        ($1,282) ($4,140)      ($2,586)

Net loss per common
  share                   ($0.16)         ($0.19)  ($0.50)       ($0.38)

Weighted average number of
 common shares
 outstanding           9,060,555       6,766,466 8,342,157     6,755,779