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Portions of Kurzweil AI 10-K filed May 1, 1997

Five Year Financial Summaries

                                                             (In thousands, except for per share amounts)

                                                                              Fiscal Year
                                                 --------------------------------------------------------------------
                                                    1993         1994          1995          1996            1997
                                                 ---------   -----------   -----------   ------------    ------------

Statement of Operations
Revenues
       Product and license revenue                $10,772        $9,157       $11,174         $7,680           6,686
       Maintenance revenue                            348           970         1,188          1,680           1,861
                                                 ---------   -----------   -----------   ------------    ------------
Total revenues                                     11,120        10,127        12,362          9,360           8,547
Operating costs and expenses:
       Cost of product and maintenance revenue      4,103         6,490         5,689          4,777           3,937
       Cost of contract revenue                       366           --           --             --              --
       Inventory write-down                           --            800          --             --              --
       Sales and marketing                          5,825         6,488         5,882          3,582           4,057
       Research and development                     1,549         2,742         2,587          2,341           3,066
       General and administrative                   1,489         4,226         2,316          1,503           1,752
                                                 ---------   -----------   -----------   ------------    ------------
Total operating costs and expenses                 13,332        20,746        16,474         12,203          12,812
                                                 ---------   -----------   -----------   ------------    ------------
Operating loss                                     (2,212)      (10,619)       (4,112)        (2,843)         (4,265)
Interest expense                                      129           161            19             12               4
Interest income                                        41           174           219            197             115
Other income (expense), net                            16           (10)          (30)            72              14
Settlement of stockholders' lawsuit                   --           --           7,250            --              --
                                                 ---------   -----------   -----------   ------------    ------------
Loss before income taxes                           (2,284)      (10,616)      (11,192)        (2,586)         (4,140)
Provision for income taxes                              9          --            --              --              --
                                                 ---------   -----------   -----------   ------------    ------------
Net loss                                          ($2,293)     ($10,616)     ($11,192)       ($2,586)        ($4,140)
                                                 =========   ===========   ===========   ============    ============
Per common share:
       Net loss                                   ($18.48)       ($3.99)       ($2.13)        ($0.38)         ($0.50)
       Weighted average number of common
               shares outstanding                     124         2,661         5,248          6,756           8,342
                                                 =========   ===========   ===========   ============    ============

                                                             January 31,
                                                 --------------------------------------------------------------------
                                                    1993         1994          1995          1996            1997
                                                 ---------   -----------   -----------   ------------    ------------
Balance Sheet
Working capital                                      $775        $7,643        $3,717           $660            ($97)
Total assets                                        6,945        18,364        13,041          8,864           8,173
Long-term debt                                      2,100          --            --              --               --
Capital lease obligations                             412            79           142             29              --
Stockholders' equity                                1,653         9,328         5,327          2,888           2,787

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