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                       KURZWEIL APPLIED INTELLIGENCE, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                    Unaudited
                  (in thousands, except for per share amounts)

                                                         Three Months Ended
                                                              April 30,
                                                    ----------------------------
                                                        1997           1996
                                                    -------------  -------------
Revenues:
       Product and license revenue                        $2,006         $1,238
       Maintenance revenue                                   443            472
                                                    -------------  -------------
Total revenues                                             2,449          1,710
                                                    -------------  -------------
Operating costs and expenses:
       Cost of product, license and maintenance              991            880
        revenue
       Sales and marketing                                   940            950
       Research and development                              733            678
       General and administrative                            350            532
                                                    -------------  -------------
Total operating costs and expenses                         3,014          3,040
                                                    -------------  -------------
Operating loss                                              (565)        (1,330)
Interest income                                               12             30
Other income, net                                                             6
                                                    -------------  -------------
Net loss                                                   ($553)       ($1,294)
                                                    =============  =============
       Net loss per common share                          ($0.06)        ($0.19)
                                                    =============  =============
       Weighted average number of common
          shares outstanding                           9,069,930      6,774,430
                                                    =============  =============

     The accompanying notes are an integral part of the condensed financial
                                   statements.