VOICENET INC, SB-2/A, 1997-04-16

VOICENET INC
SB-2/A, 1997-04-16
PREPACKAGED SOFTWARE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 1997

REGISTRATION NO. 333-12979
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

AMENDMENT NO. 2

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

VOICENET, INC.
(Exact names of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7372 13-3896031
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employee
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>

380 LEXINGTON AVENUE
NEW YORK, NEW YORK 10168
(212) 399-6688
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

MR. FRANK CARR
VOICENET, INC.
380 LEXINGTON AVENUE, SUITE 517
NEW YORK, NEW YORK 10168
(212) 399-6688

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------

COPIES TO:

<TABLE>
<S> <C>
DAVID E. FLEMING, ESQ. ANDREW J. BECK, ESQ.
Epstein, Becker & Green, P.C. Haythe & Curley
250 Park Avenue 237 Park Avenue
New York, New York 10177 New York, New York 10017
(212) 351-4925 (212) 880-6010
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/
--------------------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER UNIT(1) OFFERING PRICE(1)
<S> <C> <C> <C>
Common Stock, $.01 par value................ 1,875,000 $8.00 $15,000,000
Underwriter's Warrants to purchase Shares
(2)....................................... 187,500 $.01 $1,875
Common Stock, $.01 par value (3)............ 187,500 $8.80 $1,650,000
Total....................................... 2,250,000

TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common Stock, $.01 par value................ $4,545.46
Underwriter's Warrants to purchase Shares
(2)....................................... $0.57
Common Stock, $.01 par value (3)............ $500.03
Total....................................... $5,046.03*
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(b).

(2) Together with such indeterminate number of additional securities as may be
issued pursuant to the anti-dilution provisions of the Underwriter's
Warrants pursuant to Rule 416(a).

(3) Issuable upon exercise of the Underwriter's Warrants.

* Previously paid
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>

VOICENET, INC.

A MINIMUM OF 750,000 SHARES UP TO
A MAXIMUM OF 1,875,000 SHARES OF COMMON STOCK

---------------------

Voicenet, Inc., a Delaware corporation (the "Company"), hereby offers a
minimum of 750,000 Shares ("Minimum Offering") up to a maximum of 1,875,000
Shares ("Maximum Offering") (the "Shares") of Common Stock, par value $.01 per
share (the "Common Stock") for a price of $8.00 per Share. Grady and Hatch &
Company, Inc. will act as the underwriter (the "Underwriter") on behalf of the
selected dealers (the "Underwriting Syndicate") on a "best efforts", 750,000
Shares or none basis.

Prior to this offering, there has been no public market for the Common Stock
and there can be no assurance that such a market will develop for any of such
securities after the completion of this offering. The offering price of the
Common Stock has been arbitrarily determined by the Company and the Underwriter,
and bears no relationship to the Company's assets, book value, or other
generally accepted criteria of value. The Shares are being offered on a "best
efforts", 750,000 Shares or none basis by the Company through the Underwriting
Syndicate. In the event that a minimum of 750,000 Shares are not subscribed and
sold by 90 days plus 10 business days following the date of this Prospectus (the
"Offering Period"), then no Shares will be sold. The maximum number of Shares
that may be sold is 1,875,000 Shares. For additional information regarding the
factors considered in determining the initial public offering price of the
Common Stock, see "Risk Factors" and "Underwriting." Upon completion of this
offering, the Company anticipates that the Common Stock will be quoted on the
NASDAQ SmallCap Market under the symbol "VNET."

------------------------

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" (PAGE 6) AND "DILUTION."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
SELLING PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2)(3)
<S> <C> <C> <C>
Per Share................................................ $8.00 $0.72 $7.28
Minimum Offering (750,000 Shares)........................ $6,000,000 $540,000 $5,460,000
Maximum Offering (1,875,000 Shares)...................... $15,000,000 $1,350,000 $13,650,000
</TABLE>

(1) Does not include additional compensation to the Underwriter in the form of a
non-accountable expense allowance equal to 2 1/2% of the gross proceeds of
this offering. For indemnification arrangements with the Underwriting
Syndicate and additional compensation payable to the Underwriter, see
"Underwriting."

(2) Before deducting estimated offering expenses, including the Underwriter's
2 1/2% non-accountable expense allowance of $583,315 payable by the Company.

(3) Used as a basis for calculating the selling commissions with respect to the
Shares.

The Shares are being offered by the Underwriting Syndicate on a "best
efforts", 750,000 Shares or none basis, subject to prior sale, when, as and if
delivered to and accepted by the Underwriter, and subject to its right to
withdraw, cancel or modify this offering and to reject any order in whole or in
part. In the event that the Minimum Offering of 750,000 Shares has not been sold
by the end of the Offering Period, then none of the Shares will be sold. It is
expected that delivery of certificates will be made at the offices of Grady and
Hatch & Company, Inc., New York, New York on or about , 1997.
------------------------

GRADY AND HATCH & COMPANY, INC.

INTERNATIONAL ADVISORS:
FAI INSURANCES LIMITED

MCDERMID ST. LAWRENCE SECURITIES, INC.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS
PROSPECTUS. EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS
REFLECTS A 2,500-FOR-1 SPLIT OF THE COMMON STOCK OF THE COMPANY EFFECTED ON
SEPTEMBER 17, 1996. INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION SET
FORTH IN THIS PROSPECTUS UNDER THE HEADING "RISK FACTORS."

THE COMPANY

Voicenet, Inc. (the "Company" or "Voicenet"), a Delaware corporation, was
recently established for the marketing and distribution of high vocabulary,
continuous speech, voice recognition systems and of digital audio reporting,
transcription, storage, archiving and retrieval systems (collectively, the
"Voice Systems"). The products and technologies to be marketed by the Company
are the result of research and development conducted by Southern Group Limited
("Southern") and Philips Electronics, N.V. ("Philips"). Southern is a publicly
owned Australian corporation listed on the Australian Stock Exchange. Philips is
a multi-national corporation based in the Netherlands which has traditionally
been in the forefront of the dictation and recording markets world-wide.

The Company has recently acquired from Southern pursuant to a Technology
Transfer Agreement dated as of August 1, 1996 (the "Technology Transfer
Agreement") the exclusive rights for the North, Central and South American
markets (the "Territory") to the latest version of the technology developed by
Southern relating to the voice products and the Voice Systems, including the
right to manufacture and market Southern's latest version of (i) digital audio
reporting, transcription, archiving and retrieval systems known as
COURTSMART-TM-, COURTSCRIPT-TM- and VOICESCRIPT-TM- for the court recording
industry (collectively the "Court Reporting Systems"); (ii) high vocabulary,
continuous speech, voice recognition digital recording, transcription, archiving
and retrieval for voice-to-text recordkeeping in the medical industry known as
RADTALK-TM-, MEDTALK-TM- and PSYCHTALK-TM- (collectively the "Medical
Recordkeeping Systems"); (iii) digital audio products and technologies for the
broadcasting industry; and (iv) Southern's current and future digital
voice-to-text audio products developed to exploit the markets for continuous,
speech recognition and automatic transcription technology (collectively, the
"Technology").

Pursuant to the terms of the Technology Transfer Agreement, Southern
transferred the Technology and related rights to the Company for the purchase
price of $4,500,000. The Company paid the purchase price by issuing its
Promissory Note in the amount of $4,500,000, which is payable as follows: (a)
$2,500,000 upon the earlier of October 31, 1997 or the completion of this
Offering by the Company, (b) $1,000,000 upon the earlier of October 31, 1997 or
the installation of the first COURTSMART-TM- system by the Company in the United
States, and (c) $1,000,000 on October 31, 1997. Southern currently holds a
controlling interest and will continue after this offering to hold a controlling
interest in the Company. Additionally the Company's President and Chief
Executive Officer is also the Managing Director and Chief Executive of Southern.
See "Business--Technology Transfer Agreement; "Management".

The Technology and products acquired by the Company under the Technology
Transfer Agreement embrace two main voice technologies: (i) digital voice
compression, storage and retrieval, and (ii) speech recognition.

Philips has developed a large vocabulary (i.e., having a 64,000 word
capacity), continuous speech (i.e., unbroken speech) recognition engine (the
"Philips Engine") which can process speech from normal parlance. Southern is the
developer of proprietary continuous digital voice compression, storage and
retrieval systems and speech recognition systems and software which incorporate
the Philips Engine. In April and October, 1996, Southern signed technology
licensing and development agreements with Philips for the product development,
integration, marketing and distribution by Southern of a large vocabulary
continuous speech recognition system using the Philips Engine.

2
<PAGE>

Although there can be no assurance, the advances facilitated by the
amalgamation of the Technology developed by Southern utilizing the Philips
Engine are expected by the Company to have a significant impact on the
interactivity aspect of the computer industry, where continuous large vocabulary
speech can such be processed and transcribed by voice activation. The Company
believes using such Technology both the audio and transcribed material will be
archived and retrieved on and from the same storage medium in a totally
synchronous manner.

While speech recognition technology has been available for several years in
various limited applications, the Company believes two of the major limitations
of speech recognition technology to date have been (i) that the speech
recognition systems could only facilitate "discrete" speech (i.e., pauses are
required between the words spoken) and (ii) speaker dependence whereby there is
a requirement for each individual user to train the system to ensure an
acceptable level of recognition. The Company believes that these limitations
have made the adoption of the speech recognition technology slow and isolated.
Although management believes that there is great potential for the use of speech
recognition not only as an enhancement for traditional applications such as in
the court reporting and medical recordkeeping contexts, but also as an enabling
technology for new applications such as immediate transcription of voice-to-text
for the hearing impaired or for individual personal computer users, these
earlier limitations of the technology severely hindered the feasibility and
effectiveness and, consequently, the market penetration of speech recognition.
Although there can be no assurance, the Company believes that the implications
of such a continuous speech recognition system are (i) the significantly greater
market penetration through higher levels of acceptance of the technology, and
(ii) new markets, for which discrete speech systems are too limiting, opening up
the market for speech recognition applications.

The Company's objective is to become a leader in the marketing of the Voice
Systems. The Company's strategy is to (i) establish a sales force to market the
Court Reporting Systems to court administrators, (ii) obtain marketing partners
and distributors which already have a significant presence in the field for the
marketing of its Medical Recordkeeping Systems to hospitals, physicians and
physician practice management groups and (iii) obtain marketing partners and
licensees for the sales and distribution of its voice systems to other
applications and field of use.

RISK FACTORS

The shares of Common Stock offered hereby involve a high degree of risk,
including but not limited to the Company's lack of operating history, early
stage product commercialization; dependence on new products and technologies;
uncertainty of market acceptance of its products; conflicts of interest between
the Company and Southern, the transferor of the Technology and the payee of the
$4.5 million Promissory Note, and conflicts between Mr. Frank Carr who is the
President and Chief Executive Officer of the Company and the Managing Director
of Southern whose employment agreement with the Company, having an annual salary
of $180,000, will commence upon the closing of the offering and does not
obligate him to devote his full time to the Company; dependence on marketing
partners; potential adverse effect of competition and technological change;
limited manufacturing experience; dependence on a sole source supplier;
dependence on patents, trade secrets and proprietary rights; future capital
needs and uncertainty of additional financing; dependence upon key personnel;
product liability exposure and potential unavailability of insurance; control by
existing stockholders; anti-takeover provisions; broad discretion in application
of proceeds; no prior public market for the Common Stock; substantial number of
shares eligible for future sale; potential adverse impact on future market price
from sales of shares; absence of dividends; principal shareholders, officers and
directors of the Company and their affiliates may purchase up to 10% of the
Offering in order to attain the Minimum Offering of 750,000 shares; and dilution
to investors. See "Risk Factors" for a more complete discussion of risk factors
which should be considered by potential investors.

The Company's principal business address is 380 Lexington Avenue, Suite 517,
New York, New York 10168, and its telephone number is (212) 399-6682.

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock being Offered...... A minimum of 750,000 Shares ($6,000,000) and a maximum of
1,875,000 Shares ($15,000,000).

Price Per Share................. $8.00 Per Share.

Common Stock to be Outstanding
after Offering(1)............. 4,375,000 shares of Common Stock if the Maximum Offering
is sold and 3,250,000 Shares of Common Stock if the
Minimum Offering is sold.

Use of Proceeds................. For payment of Promissory Note issued to Southern upon the
Technology acquisition, for working capital, management
consulting services, general corporate purposes and for
sales and marketing. See "Use of Proceeds."

Terms of Offering............... Offering Proceeds will be deposited by the Underwriter and
held in escrow at Chase Manhattan Bank, N.A., until the
earlier of the closing of the offering or the termination
of the Offering Period. If a minimum of $6,000,000 of the
offering is not subscribed during the Offering Period, all
funds received will be promptly be refunded to subscribers
without deduction therefrom and without interest thereon.
See "Underwriting."

Proposed NASDAQ SmallCap Market
System Symbol................. VNET
</TABLE>

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(1) Does not include (a) up to 187,500 Shares issuable upon exercise of the
Underwriter's Warrants for a price of $8.80 per Share, or (b) shares of
Common Stock issuable upon the exercise of director's options issued to each
director to acquire 50,000 shares of Common Stock for a price of $1.00 per
share exercisable over a period ending December 31, 2002.

4
<PAGE>
SUMMARY FINANCIAL INFORMATION

Voicenet, Inc. was organized on April 2, 1996. The Company is a development
stage company and has no revenues or operating history. The summary financial
information set forth below should be read in conjunction with the Company's
financial statements and accompanying notes, appearing elsewhere in this
Prospectus. The Company's fiscal year ended December 31.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------
<S> <C>
Revenue.......................................................... --
Income (Loss) from Operations.................................... $(725)
Net Income (Loss)................................................ $(725)
Income (Loss) Per Share.......................................... $.00
Weighted Average Shares Outstanding.............................. 2,500,000
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------
ACTUAL
------------ AS ADJUSTED (3)
--------------------------------
MAXIMUM (2)
MINIMUM (1) 1,875,000
750,000 SHARES SHARES
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current Assets.................................................. $ 8,970 $ 385,655 $ 8,350,655
Total Assets.................................................... $ 4,623,324 $ 5,000,009 $ 12,965,009
Current Liabilities............................................. $ 4,599,029 $ 99,029 $ 99,029
Stockholders' Equity............................................ $ 24,295 $ 4,900,980 $ 12,865,980
</TABLE>

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(1) Gives effect to the sale of the 750,000 shares of Common Stock offered
hereby at the initial public offering price of $8.00 per share, and initial
application of the estimated net proceeds of $4,876,685.

(2) Gives effect to the sale of the 1,875,000 shares of Common Stock offered
hereby at the initial public offering price of $8.00 per Share, and initial
application of the estimated net proceeds of $12,841,685.

(3) After the payment of all estimated offering expenses, (including the
Representative's 2 1/2% non-accountable expense allowance) and payment of
the Promissory Note in the amount of $4,500,000 due on account of the
purchase of the Technology under the Technology Transfer Agreement. See "Use
of Proceeds". Assumes no exercise of the Underwriter's Warrants. See
"Underwriting."

5
<PAGE>
RISK FACTORS

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING, BUT
NOT LIMITED TO, THE SEVERAL FACTORS DESCRIBED BELOW. THESE SECURITIES SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD A LOSS OF THEIR ENTIRE INVESTMENT.
INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS INHERENT IN AND
AFFECTING THE BUSINESS OF THE COMPANY AND THIS OFFERING IN EVALUATING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY.

NEW VENTURE--NO OPERATING HISTORY, SUBSTANTIAL DOUBT ABOUT ABILITY TO CONTINUE
AS GOING CONCERN WITHOUT FINANCING FROM THIS OFFERING

Voicenet, Inc. is a development stage company, incorporated on April 2, 1996
in the State of Delaware. Its proposed operations are subject to all the
problems, expenses, delays and other risks inherent in the establishment of a
new business enterprise without an operating history, as well as the problems
inherent in developing and marketing a new product/service and in establishing a
name and business reputation. The likelihood of the success of the Company must
also be considered in connection with the rapidly and continually changing
technology and the competitive environment in which the Company will operate.
The planned commencement of operations is dependent upon the proceeds of this
offering. See "Business" and "Financial Statements." There can be no assurance
that the Company's operations will result in its becoming or remaining
economically viable. Potential investors should be aware of the problems,
delays, expenses and difficulties encountered by any company in a developmental
stage, many of which may be beyond the Company's control. These include, but are
not limited to, unanticipated regulatory compliance, marketing problems and
intense competition that may exceed current estimates. The Company has had no
revenues to date and, as a result of the start-up nature of the Company's
business and the fact that it has not yet commenced operations, the Company will
likely sustain operating losses for an indeterminate time period. As discussed
in the report of the Company's independent auditors included in this Prospectus,
unless the Company is able to generate revenues or obtain financing through this
offering or another means in the near future, the operations of the Company in
its development phase raise substantial doubt about the ability of the Company
to continue as a going concern. There can be no assurance that the operations of
the Company will ever be competitive or profitable.

POSSIBLE NEED FOR ADDITIONAL FINANCING

The Company is dependent on and intends to use the proceeds of this offering
to implement its proposed product introduction and expansion. Based on currently
proposed plans and assumptions relating to its operations, the Company
anticipates that the proceeds of this offering, together with projected cash
flow from operations and available cash resources, will be sufficient to satisfy
its contemplated cash requirements for at least twelve months following the
consummation of this offering. However, if only the Minimum Offering is raised,
after payment of the $4,500,000 Promissory Note, no amount is allocated for
working capital. In the event that the Company's assumptions change or prove to
be inaccurate or if the proceeds of this offering, cash flow and available cash
resources prove to be insufficient to fund operations (due to unanticipated
expenses, difficulties, problems or otherwise), the Company may be required to
seek additional financing or curtail its expansion activities. The Company may
in the future determine, depending upon the opportunities available to it, to
seek additional debt or equity financing to fund the cost of continuing
expansion. To the extent that the Company obtains equity financing or finances
an acquisition with equity securities, any such issuance of equity securities
could result in dilution to the interests of the Company's stockholders.
Additionally, to the extent that the Company incurs additional indebtedness or
issues debt securities in connection with an acquisition, the Company will be
subject to risks associated with incurring substantial additional indebtedness
including the possibility that cash flow may be insufficient to pay principal
and interest on any such indebtedness. There can be no assurance that additional
financing will be available to the Company on acceptable terms, or at all. See
"Use of Proceeds."

6
<PAGE>
SUBSTANTIAL PORTION OF PROCEEDS ALLOCATED FOR REPAYMENT OF INDEBTEDNESS AND
GENERAL CORPORATE AND WORKING CAPITAL PURPOSES

Approximately 35% if the Maximum Offering is sold and 92% if the Minimum
Offering is sold of the estimated proceeds from the sale of the Shares has been
allocated for repayment of $4,500,000 the Promissory Note to Southern by the
Company, and approximately 35% if the Maximum Offering is sold and 0% if the
Minimum Offering is sold, of the estimated net proceeds from the sale of the
Shares has been allocated to general corporate and working capital purposes.
Proceeds allocated to general corporate and working capital purposes may be
utilized at the discretion of the Board of Directors. As a result, investors
will not know in advance how such proceeds will be utilized by the Company. See
"Use of Proceeds."

EARLY STAGE OF MARKET DEVELOPMENT

The speech technology market is at a relatively early stage of development.
To date, the speech technology products that will be manufactured and marketed
by the Company have only been incorporated in commercially available products on
a limited basis. Acceptance of these technologies on a commercial basis will be
dependent upon the development of the speech technology markets, the performance
and price of the Company's products and customer reaction to these products.
There can be no assurance that the speech technology market will develop further
or that the Company's products will achieve any or significant market
acceptance. See "Business--Industry Comparison of Technology."

DEPENDENCE ON ACCEPTANCE BY COURT ADMINISTRATORS

Sales of the Company's Court Reporting System products on a commercial basis
will be substantially dependent on acceptance by the court community. It is
anticipated that court reporters which are generally unionized government
employees will resist the introduction and implementation of electronic court
reporting systems such as COURTSMART-TM-, COURTSCRIPT-TM- and VOICESCRIPT-TM-.
There can be no assurance that the Company's proposed Court Reporting System
products will be accepted in the court community, and the Company is unable to
estimate the length of time it would take to gain such acceptance. See
"Business."

UNCERTAINTY OF MARKET ACCEPTANCE--LACK OF MARKETING ARRANGEMENTS

The Company has only recently commenced significant marketing activities,
primarily through hiring sales personnel, and the distribution of promotional
materials. Achieving market acceptance for the Company's products will require
substantial marketing efforts and the expenditure of significant funds. There is
no assurance that the Company will be able to create a successful marketing
program, or that the Company's products can be sold in a manner that will permit
the Company to achieve long range profitability, if ever. See "Business."

LIMITATIONS OF SCOPE FOR THE COMPANY'S PRODUCT LINE

The Company intends to engage in the marketing and distribution of speech
recognition systems and of Court Reporting Systems and Medical Recordkeeping
Systems. The Company's success will be totally dependent on its ability to
market its product line. The Company's current plans do not include any other
potential sources of revenue. See "Business".

POSSIBLE PRODUCT OBSOLESCENCE

The Company expects technological developments to continue at a rapid pace
in the computer and communications industries, and there can be no assurance
that technological developments will not cause the Company's Technology to be
rendered obsolete. The Company's future success, if any, will be dependent upon
its ability to remain competitive with others involved in the development,
manufacture and marketing of similar products and technologies through its
continued capability to design high quality products in a cost efficient and
timely manner, of which there can be no assurance. See "Business."

7
<PAGE>
NO ASSURANCE AS TO PROTECTION OF INTELLECTUAL PROPERTY; DEPENDENCE ON
INTELLECTUAL PROPERTY

Patents have been applied for by Southern in relation to the COURTSMART-TM-
system and its components. No patents have, as yet, been issued but it is
expected that patents will be issued. However, the Company's ability to compete
effectively with other companies will depend, in part, on its ability to
maintain the proprietary nature of its technologies. The Company also intends to
rely on unpatented proprietary information and know-how, and there can be no
assurance that others will not develop such information and know-how
independently or otherwise obtain access to the Company's technology. Also, no
assurance can be given that the Company's products will not infringe upon the
patents of others, licenses to which may not be available to the Company. The
computer software source codes which are essential elements of the Company's
products, are proprietary trade secrets of the Company. The Company has
attempted to protect the proprietary nature of this technology by reliance upon
copyright laws, patents applied for, and contractual arrangements with its
employees and customers, although it is questionable whether computer software
and technology can be adequately protected by such means. In the event of any
misappropriation, the Company may be without an effective legal remedy. There
can be no assurance that the Company's competitors will not independently
develop comparable or superior technologies. In the future, third parties may
assert that the Company's or its licensor's products infringe their proprietary
rights. Should litigation with respect to any such claims commence, such
litigation could be extremely expensive and time consuming and could materially
and adversely affect the Company's results of operations regardless of the
outcome of the litigation. There can be no assurance that Southern will defend,
or will be in a financial position to defend against third party infringements
on their proprietary rights. See "Business--Intellectual Property."

DEPENDENCE UPON KEY PERSONNEL AND POSSIBLE CONFLICT OF INTEREST

The success of the Company is substantially dependent upon existing
management, all of whom devote only a portion of their time to the Company.
These individuals may have conflicts between their responsibilities to the
Company and to other entities with which they are affiliated. The directors or
affiliates of the Company may in the future seek to exploit opportunities which
the Company is not able to undertake because of limited capital. Frank Carr, the
President, Chief Executive Officer and Chief Financial Officer will devote only
a portion of his time to the Company as set forth in his Employment Agreement.
Mr. Carr is also the Managing Director and Chief Executive Officer of Southern,
which is the transferor of the Technology, and the payee of $4,500,000
Promissory Note. Mr. Carr's employment agreement with the Company having an
annual salary of $180,000, will commence upon the closing of the offering. The
loss of the services of Mr. Carr, as well as other key personnel, or any
inability to attract and retain qualified personnel, may adversely affect the
Company's business. The Company has not applied for key man life insurance on
the life of Frank Carr and does not intend to. See "Management." Because of the
nature of its business, the Company will be dependent upon its ability to
attract and retain qualified personnel, including competition from companies
with substantially greater resources than the Company. There is no assurance
that the Company will successfully recruit or retain personnel of the requisite
technical caliber or in adequate numbers to enable it to conduct its business as
proposed. Mr. Carr may also have conflicts of interest if a dispute were to
arise under the Technology Transfer Agreement or in connection with the payment
of the Promissory Note. See "Management--Potential Conflict of Interest."

INITIAL RELIANCE ON SOLE MANUFACTURER AND SUPPLIER.

The Company does not own or operate any manufacturing or production
facilities. Southern, an Australian company which owns 63% of the Company,
causes or provides for the manufacturing of three of the components required for
the operation of the Voice Systems, including the Court Reporting Systems and
Medical Recordkeeping Systems. Further, approximately 30% of the proceeds of the
Maximum Offering and 75% of the Minimum Offering is being paid to Southern for
the acquisition of the Technology from Southern. Should Southern terminate its
relationship with the Company, there can be no assurance that the Company could
obtain a satisfactory arrangement with another manufacturer on the same terms,
i.e., price and credit terms. See "Business--Technology Transfer Agreement."

8
<PAGE>
NO FEASIBILITY AND MARKETING STUDIES

The Company's planned commencement of operations is being undertaken
primarily on the basis of management's evaluation of market potential regarding
its proposed operations in North, Central and South America.

PRODUCT DEVELOPMENT AND INTEGRATION

The development of the Company's technology for its customers has required,
and will continue to require, significant technical innovations. Once the
Company has products such as the Court Reporting Systems or Medical
Recordkeeping Systems, the Company must adapt that product to meet the specific
requirements of the customer hardware or software in which it is to be
integrated. There can be no assurance that the Company will be successful in
developing new products or enhancing the performance of its existing products
for customer use on a timely basis or within budget, if at all. Any such failure
could materially and adversely affect the Company's technology and its business
and prospects.

MANAGEMENT OF CHANGING BUSINESS

Due to the level of technical and marketing expertise necessary to support
its anticipated new customers, the Company must attract and retain highly
qualified and well-trained personnel. There are a limited number of persons with
the requisite skills to serve in these positions, and it may become increasingly
difficult for the Company to hire such personnel. There can be no assurance that
the Company will be able to have such personnel, and if so, on favorable terms.
The Company's expansion may also significantly strain the Company's management,
financial and other resources. The Company believes that improvements in
management and operational controls and operations, financial and management
information systems are needed to manage future growth, should it occur. The
failure to implement such improvements could have a material adverse effect upon
the Company. See "Management."

PRODUCTS RELIABILITY

Most applications incorporating the Company's technologies are being
developed or have only recently been introduced to the market. As a result of
the limited period of use and the controlled environment in which most of the
Company's technologies have been tested and used to date, there can be no
assurance that they will meet their performance specifications under all
conditions or for all applications. If any of the Company's technologies fail to
meet such expectations, the Company may be required to enhance or improve that
technology, and there can be no assurance that the Company would be able to do
so on a timely basis, if at all. Any significant reliability problems could have
a material adverse effect on the Company's business and prospects.

RAPID TECHNOLOGICAL CHANGE

The market for speech technology products has been characterized by rapid
technological change, frequent product introductions and evolving industry
requirements. The Company believes that these trends will continue into the
foreseeable future. The Company's success will depend, among other matters, upon
its ability to enhance its existing products being acquired pursuant to the
Technology Transfer Agreement and to successfully develop new products that meet
increasing customer requirements and gain market acceptance. Achieving these
goals will require continued substantial investment by the Company in product
development and marketing. There can be no assurance that the Company will have
sufficient resources to make these investments, that the Company will be
successful in developing product enhancements or new products on a timely basis,
if at all, or that the Company will be able to successfully market these
enhancements and new products once developed. Further, there can be no assurance
that the Company's products will not be rendered obsolete by new industry
standards or changing technology. See "Business--Industry Comparison of
Technology."

9
<PAGE>
PRODUCTS LIABILITY AND OTHER CLAIMS

The Company may be subject to substantial products liability costs if claims
arise out of problems associated with the Company's products. The Company will
seek to maintain products liability coverage for the benefit of the Company to
protect the Company against such liabilities, but there can be no assurance that
such arrangements can be made, or if made, will be effective to insulate the
assets of the Company from such claims. The Company will attempt to maintain
insurance against such contingencies, in scope and amount which it believes to
be adequate; prior to selling its first products. However, there can be no
assurance that such product liability insurance will be available, or if
available, that it will adequately insure against such claim.

COMPETITION

Competition in the continuous speech, voice recognition systems and digital
audio technology market is intense. The Company faces competition from many
companies in the United States and abroad, including a number of large companies
and firms specialized in the development and production of systems. Most of the
Company's competitors have substantially greater resources, greater operating
experience, greater research and development and marketing capabilities and
greater production capabilities than those of the Company. There can be no
assurance that the Company's competitors will not develop voice recognition
technologies and products that are more effective or less expensive than the
Company's or which would render the Company's technology and products obsolete
and noncompetitive.

Although the Company is of the opinion that the speech recognition systems
and Southern's latest revision of the Court Reporting Systems and Medical
Recordkeeping Systems are at the forefront of their respective fields at the
present time, there is no assurance that other companies with greater resources
than the Company may not enter the field. The speech technology markets are
extremely competitive and rapidly changing. A number of companies have already
developed or are expected to develop speech technology products that will
compete with the Company's products in North America. In particular,
International Business Machines Corp. ("IBM") has recently introduced a voice
recognition system for medical recordkeeping which has continuous voice
recognition abilities and a reported 20,000 word vocabulary. Another such
company, Karri Technologies Corp., is a licensee of Southern of the earlier
version of certain components of COURTSMART-TM- in North America, which also has
the non-exclusive right to use the name COURTSMART-TM- in connection with those
components in North America. Many other competitors and potential competitors,
including AT&T, Apple Computer, Inc., IBM, Microsoft Corporation, NEC Corp.,
Dictaphone, Philips, N.V., Texas Instruments Incorporated and Lernout and
Hauspie, Inc. have substantially greater resources than the Company. The Company
also competes with other smaller companies which have developed advanced speech
technology products. Further, although the Company will have the exclusive right
to the Technology from Southern in the Company's Territory, the Company does not
have the exclusive right to the Philips Engine in such Territory. Consequently,
it is possible that Philips or another Philips licensee could develop a combined
product similar to Southern's Voice System Technology and market such voice
recognition product in the areas encompassed by the Company's Territory from
Southern. In addition, current and potential competitors have established or may
establish cooperative relationships among themselves or with other parties to
increase the abilities of their speech technology products to address the needs
of the Company's prospective customers. Accordingly, it is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. There is no assurance that the Company will be able to
compete successfully. See "Business--Competition."

GENERAL ECONOMIC CONDITIONS

The operations of the Company are subject to general economic conditions,
particularly relating to government agency spending and payment practices. The
risks would include governmental appropriations and budgeting, any potential
restrictions imposed by governmental authorities, changes in federal, state, or
local tax laws applicable to the Company, availability of skilled labor,
availability of capital for future

10
<PAGE>
needs, purchasing habits and trends, etc. The Company may not have sufficient
capitalization to survive lack of market acceptance and economic exigencies in
general.

CONTROL TO BE RETAINED BY PRESENT SHAREHOLDERS

Following the offering, the Company's present shareholders, together will
have a majority of the Company's outstanding Common Stock and the ability to
elect the Company's directors and to determine the outcome of corporate actions
requiring shareholder approval. This concentration of ownership may have the
effect of delaying or preventing a change in control of the Company. Southern,
who has sold the Technology to the Company and is the payee of the $4.5 million
Promissory Note, owns, and after this offering, will continue to own, a
controlling interest in the Company. Further, Mr. Frank Carr, the Company's
President, Chief Executive Officer and Chief Financial Officer is also the
Managing Director and Chief Executive Officer of Southern. Numerous conflicts of
interest could arise in the enforcement of the Technology Transfer Agreement and
regarding payment of the Promissory Note between Southern and the Company in
light of Southern's controlling interest in the common stock of the Company and
Mr. Carr's dual roles as Chief Executive Officer of both companies. Accordingly,
no person should purchase any of the Common Stock offered hereby unless he is
willing to entrust existing management with all decision-making for the Company.
Further, there is nothing to preclude any officer or director from resigning at
any time and withdrawing from active participation in the business of the
Company. The Company's Amended and Restated Certificate of Incorporation
authorizes the Board of Directors to issue up to 1,000,000 shares of so-called
"blank check" preferred stock, which, among other things, could allow the Board
of Directors upon issuance to adversely affect the voting power of the holders
of Common Stock. The Company has no plans, arrangements, understandings or
commitments to issue preferred stock. See "Management"; "Principal Stockholders"
and "Description of Securities."

POSSIBLE DELISTING OF SECURITIES FROM NASDAQ SMALLCAP MARKET SYSTEM

Upon completion of this offering it is expected that the Company's Common
Stock will be approved for listing on the NASDAQ SmallCap Market. In order to
continue to qualify for listing on the NASDAQ SmallCap Market, however a company
must have, among other things, at least $2,000,000 in total assets, $1,000,000
in capital and surplus and a minimum bid price for its common stock of $1.00 per
share. NASDAQ SmallCap Market has recently proposed new maintenance criteria
which, if implemented, would eliminate the exception to the $1.00 per share
minimum bid price and require, among other things, $2,000,000 in net tangible
assets, $1,000,000 market value of the public float and adherence to certain
corporate governance provisions. Upon completion of the offering, if the Company
is thereafter unable to continue to satisfy the listing criteria under the
NASDAQ rules, any listed security will be subject to delisting. In such an
event, the Common Stock may not be eligible for continued listing on the NASDAQ
SmallCap Market. If as a result of delisting, trading, if any, in the securities
would be conducted on the over-the-counter market in what are commonly referred
to as the "pink sheets," or in the "OTC Bulletin Board." If such result occurs,
an investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, the Common Stock.

In addition, if the Company's securities are not listed on NASDAQ SmallCap
they are subject to a rule that imposes additional sales practice requirements
on broker-dealers which sell such securities to persons other than established
customers and accredited investors (generally persons with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). If the Common Stock were delisted from the NASDAQ SmallCap Market, and
the Company's stock price should fall below $5.00 per share and no other
exclusion from the definition of "penny stock" under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") is available, then the Company's Common
Stock would be deemed "penny stock" and transactions in the Common Stock would
be subject to the penny stock regulations which impose significant sales
practice requirements on broker dealers, including (a) delivering to customers
the Commission's standardized disclosure statement about "penny stocks", (b)
providing to customers current bid and ask prices for the stock, (c) disclosing
to customers the broker-dealer's and sales representative's compensation with
respect to trades in the stock, and (d) providing to

11
<PAGE>

customers monthly account statements reflecting the stock's then current price.
For transactions covered by this rule, the broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to purchase. Consequently, the rule may
restrict the ability of broker-dealers to sell the Company's securities and may
affect the ability of stockholders to sell their securities in the secondary
market. The loss of continued listing in the NASDAQ SmallCap Market System may
also cause a decline in share price, loss of news coverage of the Company and
difficulty in obtaining subsequent financing.

ISSUANCE OF ADDITIONAL SHARES.

The Company is currently authorized to issue up to a total of 10,000,000
shares of Common Stock and 1,000,000 shares of preferred stock. There are
currently 2,500,000 shares of Common Stock outstanding.

The Company's Board of Directors is authorized to issue preferred stock in
one or more series and to fix the voting powers and the designations,
preferences and relative, participating, optional or other rights and
restrictions thereof. Accordingly, the Company may further issue a series of
preferred stock in the future that will have preference over the Common Stock
with respect to the payment of dividends and proceeds from the Company's
liquidation, dissolution or winding up or have voting or conversion rights which
could adversely affect the voting power and percentage ownership of the holders
of the Common Stock. The Company has no plans, arrangements, understandings or
commitments to issue any preferred stock. However, the ability of the Company to
issue such additional shares and the possible exercise of the Representative's
Warrants may prove to be a hindrance to future financings by the Company since
the holders of such Warrants may be expected to exercise them at a time when the
Company would otherwise be able to obtain additional equity capital on terms
more favorable to the Company. Also, rights granted to future holders of
preferred stock could be used to restrict the Company's ability to merge with,
or sell its assets to, a third party, and the ability of the Board of Directors
to issue preferred stock could discourage, delay or prevent a takeover of the
Company, thereby preserving control of the Company by the current shqreholders.
See "Description of Securities--Preferred Stock."

SHARES ELIGIBLE FOR FUTURE SALE.

All of the 2,500,000 shares of Common Stock outstanding as of the date of
this Prospectus are "restricted securities," as that team is defined under Rule
144 promulgated under the Securities Act of 1933, as amended (the "Securities
Act"). None of the 2,500,000 outstanding shares will be eligible for resale
until April 1997, unless they are registered or another exemption from
registration is available. In general, under Rule 144 as recently modified,
subject to the satisfaction of certain other conditions, a person (or persons
whose shares are aggregated under the terms of Rule 144), including an affiliate
of the Company, who has owned restricted shares of Common Stock beneficially for
at least one year, is entitled to sell, within any three-month period, a number
of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class, or the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the sale, as reported
by all national securities exchanges on which the Common Stock is traded and/or
the automated quotation system of a registered securities association, or an
approved consolidated transaction reporting system. A person who has not been an
affiliate of the Company for at least the three months immediately preceding the
sale and who has beneficially owned shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to the
volume limitations described above. No prediction can be made as to the effect,
if any, that sales of shares of Common Stock or the availability of shares for
sale will have on the market prices prevailing from time to time. The
possibility that substantial amounts of Common Stock may be sold in the public
market in the future may adversely affect prevailing market prices for the
Common Stock and could impair the Company's ability to raise capital through the
sale of its equity securities. See "Shares Eligible for Future Sale."

12
<PAGE>
NO ASSURANCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING PRICE; LACK
OF PUBLIC MARKET FOR SECURITIES

Prior to this offering, there has been no public market for the shares of
Common Stock. The initial public offering price of the Shares has been
arbitrarily determined by negotiations between the Company and the Underwriter
and bears no relationship to such established valuation criteria such as assets,
book value or prospective earnings.

IMMEDIATE SUBSTANTIAL DILUTION; DISPARITY OF CONSIDERATION

This offering involves an immediate and substantial dilution of $7.88 per
share if the Minimum Offering is sold and $6.12 if the Maximum Offering is sold,
the respective differences between the pro forma net tangible book value per
share after the offering of $.12 if the Minimum Offering is sold, and $1.88 if
the Maximum Offering is sold at the initial public offering price of $8.00 per
Share of Common Stock . The existing stockholders of the Company, including an
affiliate of certain of its executive officers and directors, acquired their
shares of Common Stock at prices substantially lower than the initial public
offering price and, accordingly, new investors will bear substantially all of
the risks inherent in an investment in the Company. See "Dilution."

ANTI-TAKEOVER PROVISIONS.

Certain provisions of Delaware law, the Certificate of Incorporation and the
Company's By-laws, as amended (the "By-laws"), could have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of the Company. These provisions and the
prohibition against certain business combinations could have the effect of
delaying, deferring or preventing a change in control or the removal of existing
management of the Company. See "Description of Securities."

SERVICE OF PROCESS IN AUSTRALIA.

Certain of the Company's officers and directors are residents of Australia,
and Southern Group Limited, the transferor of the Technology, is incorporated
and has its principal place of business under the laws of Australia.
Consequently, it might be difficult for investors or the Company to effect
service of process within the United States upon such persons, or to enforce
against them judgments obtained in United States courts predicated upon the
civil liability provisions of the Securities Act, or any other U.S. or
individual state's laws or regulations. There is also substantial doubt whether
an action could be brought in Australia in the first instance on the basis of
liability predicated upon such law.

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS.

This Prospectus contains certain forward-looking statements regarding the
plans and objectives of management for future operations, including plans and
objectives relating to the development of the Company. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based
on a successful execution of the Company's expansion strategy and assumptions
that the Company will be profitable, that the industry will not change
materially or adversely, and that there will be no unanticipated material
adverse change in the Company's operations or business. Assumptions relating to
the foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that its
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could prove inaccurate and, therefore, there can be no assurance
that the forward-looking statements included in this Prospectus will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, particularly in view of the
Company's early stage operations, the inclusion of such information should not
be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.

13
<PAGE>
DIVIDENDS

The Company has never had income or earnings and has never paid cash
dividends and it does not anticipate that it will pay cash dividends on its
Common Stock or alter its dividend policy in the foreseeable future. The payment
of dividends on the Common Stock by the Company will depend on its earnings and
financial condition and such other factors as the Board of Directors of the
Company may consider relevant. The Company currently intends to retain its
earnings to assist in financing the development of its business. Investors who
anticipate the need for dividends on their investments should refrain from
purchasing any of the shares of Common Stock offered hereby.

NO FIRM COMMITMENT.

This is a "best efforts" offering and there is no firm commitment on the
part of anyone to purchase all or any part of this offering, and no assurance
that any part of the offering will be sold. If the Minimum Offering is not sold
during the Offering Period, the offering will terminate and any monies received
from subscribers will be returned without interest thereon or deduction
therefrom. In such event, subscribers will have lost the use of and interest on
their funds during such Offering Period. Additionally, in order to reach the
Minimum Offering of 750,000 shares, the principal shareholders, officers and
directors of the Company and their affiliates may purchase up to 10% of the
Offering. See "Underwriting."

FOR ALL OF THE FOREGOING REASONS AND OTHERS SET FORTH IN THIS PROSPECTUS.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. ANY PERSON
CONSIDERING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF
THESE AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE
COMPANY.

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Common
Stock offered hereby, after deducting offering expenses payable by the Company,
are estimated at $4,876,685 if the Minimum Offering is subscribed ranging up to
$12,841,685 if the Maximum Offering is subscribed. The Company presently intends
to use the net proceeds over the 12 month period following this offering as
follows:

<TABLE>
<CAPTION>
APPLICATION OF PROCEEDS MINIMUM PROCEEDS MAXIMUM PROCEEDS
- -------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Payment of Technology Note(1)............................................. $ 4,500,000 $ 4,500,000
Marketing activities and personnel........................................ 200,000 1,980,000
Technical Consultants..................................................... 100,000 450,000
Facilities management and office administrations.......................... 51,685 180,000
Warehouse assembly plant.................................................. 0 100,000
Purchase of components(2)................................................. 0 160,000
Corporate purposes(3)..................................................... 25,000 100,000
Working capital........................................................... 0 5,371,685
------------------ ------------------
Total..................................................................... $ 4,876,685 $ 12,841,685
</TABLE>

The allocation of the net proceeds of the offering set forth above
represents the Company's best estimate based upon its present plans. If any of
these plans change, the Company may find it necessary or advisable to reallocate
some of the proceeds within the above-described categories or to other purposes.

- ------------------------

(1) Payment of Promissory Note to Southern under Technology Transfer Agreement.
See "Certain Transactions."

(2) Components for initial inventory of systems.

(3) Includes anticipated audit and legal costs.

14
<PAGE>
DIVIDEND POLICY

To date, the Company has not declared or paid any dividends on its Common
Stock and does not expect to declare or pay any cash dividends in the
foreseeable future. The payment of dividends, if any, in the future is within
the discretion of the Board of Directors and will depend upon the Company's
earnings, if any, its capital requirements and financial condition and other
relevant factors.

15
<PAGE>
CAPITALIZATION

Set forth below is the capitalization of the Company as of December 31, 1996
(i) on an actual basis, and (ii) on an as adjusted basis to give effect on the
net proceeds from the sale of the Minimum Offering and Maximum Offering after
deduction of the estimated selling commissions and offering expenses payable by
the Company.

<TABLE>
<CAPTION>
AS ADJUSTED
AFTER THIS OFFERING(1)
------------------------------------------------
OUTSTANDING ON MAXIMUM
DECEMBER 31, MINIMUM 1,875,000
1996(1) 750,000 SHARES SHARES
--------------- -------------- ---------------
<S> <C> <C> <C>
Long Term Indebtedness......................................... $ 4,500,000 0 0
Common Stock, $.01 par value(1) 10,000,000 shares authorized
2,500,000 shares issued and outstanding....................... $ 25,000 $ 32,500 $ 43,750
Additional Paid in Capital..................................... $ 20 $ 4,869,205 $ 12,747,955
Deficit accumulated during the development stage............... (725) (725) (725)
--------------- -------------- ---------------
Total Capitalization........................................... $ 24,295 $ 4,900,980 $ 12,865,980
--------------- -------------- ---------------
</TABLE>

- ------------------------

(1) The actual and adjusted information excludes (i) up to 187,500 shares
issuable upon exercise of the Underwriter's Warrants for a price of $8.80
per share, and (ii) shares of Common Stock issuable upon the exercise of
director's options issued to each director to acquire 50,000 shares of
Common Stock for a price of $1.00 per share exercisable over a period ending
December 31, 2002.

15
<PAGE>
DILUTION

On June 9, 1996 the Company issued 2,500,000 shares of its Common Stock to
the founders of the Company, Southern, to an affiliate of the Underwriter, and
to others for $.01 per share. See "Principal Shareholders" and "Certain
Transactions."

As of December 31, l996 the net tangible book value of the outstanding
2,500,000 shares of the Company's Common Stock was $(4,590,059) or approximately
($1.84) per share, which negative values are primarily due to the $4,500,000
Promissory Note due to Southern but without any corresponding tangible assets
reflected as patents and intellectual property such as the Technology are
treated as intangible assets. Net tangible book value per share of Common Stock
represents the tangible assets of the Company less all liabilities and further
reduced by the liquidation rights of the holders of preferred stock, if any
outstanding, divided by the number of shares of Common Stock outstanding.
Dilution represents the difference between the price per share of Common Stock
paid by the purchasers of Shares in this offering ("New Investors") and the net
tangible book value per share of Common Stock after the offering.

The pro forma net tangible book value of the Common Stock at December 31,
1996, as adjusted above, would have been $400,980 or $.12 per share if the
Minimum Offering is sold (i.e., $400,980 DIVIDED BY 3,250,000 shares),
$8,251,626 or $1.88 per share if the Maximum Offering is sold (i.e.,
$8,251,626 DIVIDED BY 4,375,000 shares). The following table illustrates this
dilution on a per share basis:

<TABLE>
<CAPTION>
ASSUMING 750,000 MINIMUN OFFERING SOLD
<S> <C> <C>
Price Per Share............................................. $ 8.00
Net Tangible Book Value Per Share Before Offering........... $ (1.84)
Pro forma Net Tangible Book Value After Offering............ $ .12
---------
Dilution of Net Tangible Book Value Per Share to New
Investors.................................................. $ 7.88
---------
---------
</TABLE>

ASSUMING 1,875,000 MAXIMUM OFFERING SOLD

<TABLE>
<S> <C> <C>
Price Per Share............................................. $ 8.00
Net Tangible Book Value Per Share Before Offering........... $ (1.84)
Pro forma Net Tangible Book Value After Offering............ $ 1.88
---------
Dilution of Net Tangible Book Value Per Share to New
Investors.................................................. $ 6.12
---------
---------
</TABLE>

The following tables summarize, as of December 31, 1996 the number of shares of
Common Stock purchased from the Company by, the total consideration received by
the Company from, and the average price per share of the shares purchased by,
(a) the New Investors of the 750,000 Minimum Offering and, alternately, the
1,875,000 Maximum Offering hereby (without deduction for offering expenses or
selling commissions) and (b) the Initial Holders.

ASSUMING SALE OF MINIMUM OFFERING OF SHARES
OF COMMON STOCK*

<TABLE>
<CAPTION>
TOTAL AVERAGE
COMMON SHARES CONSIDERATION PRICE PER
PURCHASED NUMBER PERCENT AMOUNT PERCENT SHARE
---------------- --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Initial Holders 2,500,000 76.9 $ 25,000 .41% $ .01
New Investors 750,000 33.1 $ 6,000,000 99.58 $ 8.00
---------------- --------- ------------- ---------
3,250,000 100.0% $ 6,025,000 100.0%
---------------- --------- ------------- ---------
---------------- --------- ------------- ---------
</TABLE>

ASSUMING SALE OF MAXIMUM OFFERING OF SHARES
OF COMMON STOCK*

<TABLE>
<CAPTION>
TOTAL AVERAGE
COMMON SHARES CONSIDERATION PRICE PER
PURCHASED NUMBER PERCENT AMOUNT PERCENT SHARE
---------------- --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Initial Holders 2,500,000 57.1 $ 25,000 0.17% $ .01
New Investors 1,875,000 42.9 $ 15,000,000 99.83 $ 8.00
---------------- --------- ------------- ---------
4,375,000 100.0 $ 15,025,000 100.0%
---------------- --------- ------------- ---------
---------------- --------- ------------- ---------
</TABLE>

* No effect is given for the possible exercise of the Underwriter's Warrants.

16
<PAGE>
SELECTED FINANCIAL DATA

Voicenet, Inc. was organized on April 2, 1996. The Company is a development
stage company and has no revenues, income or operating history. The selected
financial information set forth below should be read in conjunction with the
Company's financial statements and accompanying notes, appearing elsewhere in
this Prospectus. The Company's fiscal year will end December 31.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------
<S> <C>
INCOME STATEMENT DATA:
Revenue.................................................................. --
Income (Loss) from Operations............................................ ($725)
Net Income (Loss)........................................................ ($725 )
Income (Loss) Per Share.................................................. $.00
Weighted Average Shares Outstanding...................................... 2,500,000
</TABLE>

- ------------------------

17
<PAGE>
BUSINESS

THE COMPANY

Voicenet, Inc., a Delaware corporation, was recently established for the
marketing and distribution of high vocabulary, continuous speech, voice
recognition systems and of digital audio reporting, transcription, archiving and
retrieval systems. The products and technologies to be marketed by the Company
are the result of research and development conducted by Southern Group Limited
and Philips Electronics, N.V. Southern is a publicly owned Australian
corporation listed on the Australian Stock Exchange. Philips is a multi-national
corporation based in the Netherlands which has traditionally been in the
forefront of the dictation and recording markets world-wide.

The Company has recently acquired from Southern pursuant to a Technology
Transfer Agreement dated as of August 1, 1996 the exclusive rights for the
Territory to the latest version of the technology developed by Southern relating
to the voice products and the digital audio reporting, transcription, archiving
and retrieval systems, including the right to manufacture and market Southern's
latest version of (i) digital audio reporting, transcription, archiving and
retrieval systems known as COURTSMART-TM-, COURTSCRIPT-TM- and VOICESCRIPT-TM-
for the court recording industry (collectively, the "Court Reporting Systems");
(ii) high vocabulary, continuous speech voice recognition digital recording,
transcription, archiving and retrieval for the medical industry known as
RADTALK-TM- MEDTALK-TM- AND PSYCHTALK-TM- (collectively the "Medical
Recordkeeping Systems"); (iii) digital audio products and technologies for the
broadcasting industry; and (iv) Southern's current and future digital audio
products developed to exploit the markets for continuous, speech recognition and
automatic transcription technology (collectively, the "Technology").

Pursuant to the terms of the Technology Transfer Agreement, Southern
transferred the Technology and related rights to the Company for the purchase
price of $4,500,000. The Company paid the purchase price by issuing its
Promissory Note in the amount of $4,500,000, which is payable as follows: (a)
$2,500,000 upon the earlier of October 31, 1997 or the completion of this
Offering by the Company, (b) $1,000,000 upon the earlier of October 31, 1997 or
the installation of the first COURTSMART-TM- system by the Company in the United
States, and (c) $1,000,000 on October 31, 1997. The primary basis for
establishing the purchase price under the Technology Transfer Agreement was the
evaluation prepared by Gorey & Sinclair, Chartered Accountants, of Perth,
Australia. See "Business of the Company--Technology Transfer Agreement".
Southern currently holds a controlling interest and will continue after this
initial public offering to hold a controlling interest in the Company.
Additionally the Company's President and Chief Executive Officer is also the
Managing Director and Chief Executive of Southern. See "Business of the
Company--Technology Transfer Agreement."

The Technology and products acquired by the Company under the Technology
Transfer Agreement embrace two main voice technologies: (i) digital voice
compression/transmission and (ii) speech recognition.

Philips has developed a large vocabulary (i.e., having a 64,000 word
capacity), continuous speech (i.e. unbroken speech) recognition engine (the
"Philips Engine") which can process speech from normal parlance. Southern is the
developer of proprietary continuous digital voice compression, storage and
retrieval systems and speech recognition systems and software which incorporates
the Philips Engine. In April and October 1996, Southern signed a technology
licensing and development agreements with Philips for the product development,
integration, marketing and distribution by Southern of a large vocabulary
continuous speech recognition system using the Philips Engine.

Although there can be no assurance, the advances facilitated by the
amalgamation of the technology developed by Southern utilizing the Philips
Engine are expected by the Company to have a significant

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impact on the interactivity aspect of the computer industry, where continuous
large vocabulary speech can be processed and transcribed by voice activation.
The Company believes using its Technology both the audio and transcribed
material will be archived and retrieved on and from the same storage medium in a
totally synchronous manner.

While speech recognition technology has been available for several years in
various limited applications, two of the major limitations of speech recognition
technology to date have been (i) that the speech recognition systems could only
facilitate discrete speech (i.e., pauses are required between the words spoken)
and (ii) speaker dependence whereby there is a requirement for each individual
user to train the system to ensure an acceptable level of recognition. The
Company believes that these limitations have made the adoption of the speech
recognition technology slow and isolated. Although the management of the Company
believes that there is great potential for the use of speech recognition not
only as an enhancement for traditional applications such as in the court
reporting and medical recordkeeping contexts, but also as an enabling technology
for new applications such as immediate transcription of voice to text for the
hearing impaired; these two earlier limitations severely hindered the
feasibility and effectiveness and, consequently, the market penetration of
speech recognition. Although there can be no assurance, the Company believes
that the implication of such a continuous speech recognition system are (i) the
significantly greater market penetration through higher levels of acceptance of
the technology, and (ii) new markets, for which discrete speech systems are too
limiting, opening up the market for speech recognition applications.

Management believes that the market for large vocabulary, continuous speech
technology and systems will grow significantly within the next decade. The
Company's objective is to become a leader in the development and marketing of
large vocabulary, continuous speech technology and systems.

Although there can be no assurance, the Company believes that the latest
version of the Technology has many other applications such as for use in
hospitals, law enforcement agencies, surveillance authorities, conference
services, security agencies, capital markets, universities, schools and banks.

STRATEGY

The Company's objective is to become a leader in the marketing of the Voice
Systems. Implementing the Company's strategies involves the following
activities:

- EMPHASIZE HIGH VOCABULARY, CONTINUOUS SPEECH, VOICE RECOGNITION SYSTEMS
PRODUCT LINE. The Company intends to emphasize the continued development
of its state-of-the-art high vocabulary, continuous speech, voice
recognition systems product line, which product line management
anticipates will lead to the development of new products and product
enhancements. Examples of such products are the Company's soon to be
released third generation of Court Reporting System and first generation
of a Medical Recordkeeping System in the Territory, a high vocabulary,
continuous speech, voice recognition digital recording, transcription,
archiving and retrieval for the medical industry which is currently being
tested by medical professionals.

- TARGET AND EXPAND COURT REPORTING MARKET. The Company intends to establish
a sales force to market its Court Reporting Systems featuring large
vocabulary, continuous speech technology to court systems, legislative
bodies and administrative agencies within the Territory. Southern has
tested its Court Reporting Systems in courts within the Territory and has
experienced positive results and inquiries from governments that have
heard about the Court Reporting Systems. Management believes that use of
the Court Reporting Systems will result in lower costs and more efficient
and accurate court reporting.

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- PENETRATE MEDICAL RECORDKEEPING MARKET. The Company intends to market its
Medical Recordkeeping Systems to hospitals, medical groups and other
medical and scientific research applications within the Territory.
Southern is testing its Medical Recordkeeping Systems in a large hospital
in Sydney with positive results, and will be testing it in a leading New
York hospital in mid-1997. Management believes that use of the Medical
Recordkeeping Systems will result in lower costs and more efficient and
accurate medical recordkeeping.

- PURSUE MARKET THROUGH MARKETING PARTNER AND DISTRIBUTOR RELATIONSHIPS. The
Company intends to market some of its products, such as the Medical
Recordkeeping Systems, within the Territory by entering into strategic
distribution agreements. The Company believes that systems like those
developed by the Company have not been previously available to users
distributors may reach.

- FURTHER DEVELOP STRATEGIC ALLIANCES. The Company will support most of its
internal development and marketing efforts with strategic alliances. To
date, the Company has established significant product development
relationships with Southern and indirectly with Philips. The Company
believes that its collaborative relationships with these companies will
expand the breath of opportunities for the Company's technology. The
Company intends to continue to enhance the established strategic alliances
and it believes the relationships will further enhance the Company's
development and marketing efforts.

SOUTHERN GROUP LIMITED AND DEVELOPMENT OF THE TECHNOLOGY

Southern is a research and development company whose developments and
products have concentrated on digital signal processing and applications. In
1989, Southern developed one of the world's first digital audio mass storage
system ("DAMS-TM-") for the broadcasting industry. The system permitted, for the
first time, the facility for radio broadcasters to digitally store, and
instantaneously access from a simple in-studio system control panel, all
broadcast material from archives which could be saved on hard disk or CD Rom.

In 1992, Southern was commissioned by Auscript (a division of the Australian
Federal Attorney General's department) to develop a digital system for
recording, reporting and archiving court proceedings. The result of that
commission was the development of a system code named DART-TM-. On completion
and sale to Auscript of the DART-TM-, Southern continued to research and develop
the application, and through its subsidiary in the United States, Karri
Technology, Inc., ("KTI") with the assistance of the Los Angeles County Superior
Court Division, which permitted the use of four of its courts as a test site for
a twelve month period, completed an earlier version of the COURTSMART-TM- Court
Reporting System of digital audio recording and transcription. Earlier versions
of the COURTSMART-TM- system have been sold by Southern to courts in Canberra
(the Australian Capital Territory), Hong Kong, and, by a non-exclusive licensee
in North America, Karri Technologies Corp., in Pennsylvania, California and
Maryland. Newer versions of the Court Reporting System are currently being
marketed by Southern and others in various other countries around the world.
While Karri Technologies Corp. has non-exclusive license rights to use certain
components of the earlier version of the COURTSMART-TM- system and to use the
name COURTSMART-TM- in connection therewith in North America, Southern's
subsidiary KTI ceased operation in 1994 in the United States. The Company
anticipates that its newer version of Court Reporting Systems, some of which
will incorporate continuous, voice-to-text ability, may be also marketed under
the names COURTSCRIPT-TM- and VOICESCRIPT-TM-.

Southern has recently signed technology licensing agreements with Philips
for the product development, marketing and distribution of its continuous
speech, large vocabulary recognition system. Although there can be no assurance,
the advances facilitated by the amalgamation of the large vocabulary continuous
digital voice recognition and compression technology developed by Southern are
expected by management to have a significant impact on the interactivity aspect
of the computer industry, where, for the first time,

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continuous large vocabulary speech can be processed, transcribed, stored and
printed. Both the audio and transcribed material can be archived and retrieved
on and from the same storage medium in a synchronous manner.

TECHNICAL SUMMARY OF COURT REPORTING SYSTEM, CONTINUOUS SPEECH RECOGNITION
ENGINE AND MEDICAL RECORDKEEPING SYSTEM

The Technology and products acquired by the Company under the Technology
Transfer Agreement embrace two main voice technologies: digital voice
compression/transmission and speech recognition.

The proprietary hardware and software utilized in Southern's Court Reporting
System has been designed, developed and manufactured by Southern and its
subsidiaries. The main hardware components of the Court Reporting System are a
mixer and encoder/decoder cards. The mixer receives 16 channels of analogue
audio, mixes it into 4 channels of 4 lines and sends it to the encoder card
which digitizes and compresses the audio using ADPCM compression. The current
mixer also performs Automatic Gain Control ("AGC"). The Court Reporting System
uses a choice of 8/4, 8/3, or 8/2 rates of compression which is sampled at 8kHz
using 8 bytes per sample for excellent voice grade audio quality. The system
currently operates over a Microsoft-TM- network.

The second generation of the Court Reporting System that is being acquired
by the Company will include an encoder card that will make the external analogue
mixer redundant as the encoder card will input directly 16 channels of analogue
audio, perform AGC, mix the audio into 4 channels and digitize with a choice of
using either ADPCM or MPEG for compression facilitating audio quality ranging
from voice grade to broadcast grade as required. This new encoder card will also
have an in-built wide area network ("WAN") capability.

The main barrier for processing speech continuously has been computer
processing power. Even with rapid developments in personal computer ("PC")
technology, management believes that not even the currently fastest Intel
Pentium-TM- microprocessor can process speech continuously. Hence, a special
accelerator board has recently been developed by Philips to increase the
processing of continuous speech by approximately ten fold, which along with
proprietary software embodies the Philips Engine. The methodology embraced in
utilizing this continuous speech recognition technology is heavily speech
context orientated. The reason is that to process continuous speech, you not
only need acoustical models for comparison computation, but a statistical
language model that can calculate the probability of word sequences in this
context. This is an integral part of achieving high speech recognition rates.
The Philips Engine performs these comparisons by using feature vectors. A
feature vector is a mathematical representation of phonemes (the smallest unit
of speech) that is created from the input speech to compare with a library of
feature vectors to identify the correct interpretation with the aid of Hidden
Markov Modelling. The accelerator board acts as a pre-processor (i.e., it
performs the computationally intensive numerical calculations). The board's
principal function is to compare feature vectors created from the input speech
with the feature vectors in the known context (vocabulary) and output the
required distance value between the vectors for the voice recognition engine to
process quickly, without this initial computational overhead.

The Medical Recordkeeping System combines the digital voice compression
storage and retrieval technology of Southern with the Philips Engine into a new
product that is capable of continuous high vocabulary voice recognition and
virtually immediate digital conversion of the voice-to-text.

INDUSTRY COMPARISON OF TECHNOLOGY

Southern's technology licensing agreement with Philips for product
development, integration, marketing and distribution, and in turn the transfer
of this latest version of the Technology from Southern under

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the Technology Transfer Agreement to the Company, is for its large vocabulary,
continuous speech recognition systems. This is to be distinguished from speech
technology that has been available for several years in various limited
applications, which have had two major limitations (i) that the speech
recognition systems could only facilitate "discrete" speech (i.e., distinct
pauses are required between the words spoken for the computer to recognize the
individual words) and (ii) speaker dependence whereby there is a requirement for
each individual user to train or custom program the system to ensure an
acceptable level of recognition of the speaker's voice. These previous
limitations have made the adoption of the speech recognized technology slow and
isolated in use. Examples of these speech recognition systems currently
available are (i) speaker dependent and "discrete" speech systems such as
developed by Dragon Systems, Inc.; (ii) application specific systems such as
developed by Kolvox; and (iii) "command and control" systems such as those
developed by Lernout & Hauspie.

Because there are many voice recognition ("VR") technology providers in the
market today, it is important to compare these other systems to the Company's
technology. The three principal bases typically used in the VR industry are (i)
continuous versus discrete speech; (ii) large versus small vocabulary; and (iii)
speaker dependent versus speaker independent. There is a relationship between
the size of the vocabulary which determines the effectiveness of its recognition
factor, i.e. the smaller the vocabulary, the easier it is for recognition and
conversely, the larger the vocabulary, the more difficult it is to achieve
recognition.

The specific use contexts can also be broken down into three main
categories: (i) dictation, (ii) telephony, and (iii) "command & control". The
Company intends to operate in a dictation context. Each use context needs to be
benchmarked in a manner consistent with the baselines set for the applicable
use, (e.g., the baseline for large vocabulary in the telephony context means
2,000 words). It is not uncommon for telephony or "command & control" VR
developers to provide a "continuous speech" facility because they are used
solely for small vocabularies which address basic telephony application
interaction (i.e. continuous digit recognition for credit card details or
limited phrases for action commands such as phone number retrieval or
progressive information steps).

However, in the dictation context the baseline for "large vocabulary" is
considered to be greater than 20,000 words. Moreover, a continuous and active
large vocabulary dictation context is even more technically challenging. The
speech recognition technology to be marketed by the Company is the only
technology in the dictation context which can process very large active
vocabulary (64,000 words) with continuous voice recognition in a dictation
context. IBM has recently introduced a continuous voice recognition system with
a reported vocabulary of 20,000 words for the medical recordkeeping industry.
From their examinations of the market, Southern and the Company believe that
there are currently no other voice recognition systems close to its 64,000 word
vocabulary level of speech recognition technology.

DEVELOPMENT AND USE OF COURTSMART-TM- COURT REPORTING SYSTEM

The earlier version of the COURTSMART-TM- system was developed and was
installed by Southern's subsidiary, Karri Technology, Inc., as a test site, in
December 1993 in a courtroom operated for the Los Angeles County Superior Court
Division. During that period, the information received from the Los Angeles
Superior Court administration on the operation of the COURTSMART-TM- system was
instrumental in determining the final characteristics of the subsequent versions
of the system.

The COURTSMART-TM- system, and other Court Reporting Systems using computer
and other shelf and proprietary hardware with proprietary software, operates as
follows: (1) microphones within the courtroom are combined and processed with
other relevant communication channels and employ automation and control
techniques that normally do not require a local operator to be in attendance;
(2) speech is then recorded directly to a combination of digital storage media
which provide the optimum mix of both instant access and archived storage in a
secure and efficient manner. During this process several levels of

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automated "tagging" are available, to both users and operators so that sections
of text can be readily recalled and identified at a later time; and (3) the
voice recordings once stored digitally, are made available in rapidly accessible
and reusable format through a local network, to any number of workstations for
transcription purposes. Each workstation can take any part of any recording and
in any required length. The text thus produced using any one of several popular
word processing packages, is then automatically merged and stored in association
with the voice recording. The network can then at any time print text, replay
the audio or archive material in any required format. Non-active material is
archived to DDS (Digital Data Storage) tape providing storage densities far
greater than any analogue system, and can be easily reloaded at any subsequent
time.

The Company believes that its version of the Court Reporting System
introduces three major advances over other currently available systems: the
first is the delivery of recorded audio direct from the court to the
transcription operator via computer network negating all physical handling of
recordings (present tape based systems are labor intensive); the second is the
ability to tag direct to incoming audio providing Transcription Staff with fault
free recognition of a particular speaker; and the third is the ability to search
many hours of recorded audio rapidly (random access), based on the permanently
stored time and date stamp or text tag attached to each one second of audio.

All facilities provided by the latest version of the Court Reporting System
are aimed at increasing the overall efficiency of the recording and
transcription operation, thus ultimately being reflected in a reduction in the
cost per page of transcript generated.

MARKETS

MEDICAL RECORDKEEPING

Medical recordkeeping is the verbatim transcription of the spoken word into
the written word, generally by a doctor or a member of a medical or scientific
research staff, recording such things as the condition of a patient, directions
to assistants and nurses, or the results of an experiment, x-ray or test. The
industry is dividend into many sectors, the largest of which is hospitals. In
most hospitals, there is currently no technology equipped to record all the
different information required, and have it quickly and accurately accessible to
the parties who need it. Many records are kept in the form of handwritten charts
or reports.

The Company believes that the greatest initial demand for its Medical
Recordkeeping System will come from (i) radiologists who are constantly reading
patients x-rays, CAT scans and magnetic resonance imaging ("MRI") scans and must
keep a written record of their findings; (ii) operating room personnel, and
(iii) psychiatrists.

The Company intends to market and distribute the Medical Recordkeeping
Systems to hospitals initially. Tests are currently being conducted in a large
hospital in Sydney, and more will be conducted in a major New York hospital in
mid-1997. Although there can be no assurance, the Company believes that the cost
and benefit of its system in light of the technology currently available to
service the medical community will convince hospital administrators to begin
using its Medical Recordkeeping System.

COURT REPORTING

Court reporting is the verbatim transcription of the spoken word into the
written word, generally from shown legal testimony. The industry is divided into
two distinct sectors--the recording of proceedings in court, or "official" court
reporting, and all other court reporting. Official court reporting is performed
by civil servant court reporters employed by municipal, state, or federal
courts. All other court reporting is

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performed outside the courtroom by free-lance court reporters, who may be either
self-employed, or employees of independent contractors affiliated with a court
reporting agency.

Although there are no independently verified statistics with respect to the
number of court reporters, there are approximately 20,000 members of the
National Court Reporting Association ("NACRA"), the only national professional
association in the industry, and an additional 13,000 student members. The
Company estimates that there are approximately 40,000 court reporters in the
United States.

Court reporting requires trained professional capable of transcribing speech
usually by steno type machine, which generally approximates 200 words per
minute, using shorthand symbols. The shorthand notes are translated from the
paper or magnetic medium, then edited to produce a final transcript.

The Company intends to market and distribute the COURTSMART-TM- and,
COURTSCRIPT-TM- systems to courts initially. It can be anticipated, however,
that court reporters, which are generally unionized government employees, may
resist the introduction and implementation of electronic court reporting
systems. Although there can be no assurance, the Company believes, however, that
the cost and benefit of its system in comparison to court reporters will
convince court administrators to begin using its Court Reporting Systems. The
Company also intends to market its Court Reporting Systems to parliamentary and
legislative bodies. The Company may use the name VOICESCRIPT-TM- in connection
with such systems.

MARKETING STRATEGY

The Company plans to seek an ongoing relationship with a distributor or
distributors that have a strong foothold in the medical marketplace to market
the Medical Recordkeeping Systems. The Company's initial focus for the
distributors will be on major hospitals and medical centers within the
Territory.

The Company plans to market the Court Reporting Systems by appointing up to
eleven sales representatives for the United States, who will operate as
independent contractors and primarily be compensated on a commission basis,
which represents one for each of the eleven Federal Court Circuits. The Company
to date has appointed the sales manager for the Company and intends to appoint
sales representatives for the circuits after the completion of this offering at
the rate of one per month. The Company intends to appoint three sales
representatives for Canada, covering the provinces of Ontario, Quebec and
British Columbia.

The Company has had marketing material prepared by an advertising agency
including a professional video of approximately 7 minutes duration which covers
(a) the existing court system; (b) cost benefit analysis; (c) the Court
Reporting System; and (d) how its Court Reporting System functions.

Upon completion of the offering, the Company anticipates hiring the sales
and marketing force of up to eleven persons. Sales and marketing activities to
be conducted by the Company will consist of direct sales calls, participation in
trade shows, publication of articles and advertisements in trade journals. The
Company believes it will need to provide a high level of customer support to
assist in the integration of the Company's products into the customer's
application and use.

Pursuant to the Company's agreement with Southern, all potential and
executory contracts being negotiated by Southern within North America will be
transferred to the Company upon successful closing of the Offering.

COMPETITION

Competition in the continuous speech, voice recognition systems and digital
audio technology market is intense. The Company believes that its principal
competitors in the field of voice recognition are IBM, AT&T, Microsoft, Kurz
Weil, Philips Electronics, N.V., Dragon Systems, Inc., Kolvox, Fonix, Voice
Control

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Systems, Inc., Voice Processing Corporation, Lernout & Hauspie, Inc. and Karri
Technologies Corp., one of Southern's non-exclusive licensees of the earlier
version of certain components of the COURTSMART-TM- which has the non-exclusive
right to also use the name COURTSMART-TM- in connection with such components in
North America. In particular, IBM has recently introduced a voice recognition
system for the medical industry which has continuous voice recognition abilities
and a reported 20,000 word vocabulary. Further, although the Company will have
the exclusive right to the Technology from Southern, the Company does not have
the exclusive right to the Philips Engine in its Territory. Consequently, it is
possible that Philips or another Philips licensee could develop a combined
product similar to Southern's voice system and Technology and market such voice
recognition product in the areas encompassed by the Company's Territory from
Southern. Lernout & Hauspie is involved in "command and control" aspects of
speech recognition technology and while continuous speech is applicable, it is
on the basis of individual single word recognition within a sentence and based
on small vocabulary: Kolvox and Dragon Dictate systems have large vocabulary
capacity but believed to be restricted to discrete speech. In the case of Fonix,
while claiming a vocabulary of 64,000 words, the active vocabulary available to
the user at any one time is limited. Voice Control Systems, Inc. and Voice
Processing Corporation seem to be principally involved in speech recognition in
telephony applications such as voice verification over telephone fields of
"command and control", continuous digit recognition and alpha-numerics. There
can be no guarantee that these companies or other new entrants into the market
segments or similar technologies will not succeed in developing similar or more
effective competitive products or technologies.

Many of the Company's competitors are large established companies with
greater resources, greater marketing and operating experience, greater research
and development and greater production capabilities than those of the Company.

The Company's competitive position will also depend upon its ability to
attract and retain qualified personnel, obtain patent protection or otherwise
develop proprietary products or processes and secure sufficient resources for
the marketing and servicing of its products. There is no assurance that the
Company will be able to compete successfully.

TECHNOLOGY TRANSFER AGREEMENT

The Company has acquired from Southern pursuant to a Technology Transfer
Agreement dated as of August 1, 1996 the exclusive rights for the North, Central
and South American markets to the Technology developed by Southern relating to
the voice products and the digital audio reporting, transcription, archiving and
retrieval systems, including the right to manufacture and market the latest
version of digital audio reporting, transcription, archiving and retrieval
systems for the court recording industry; high vocabulary; continuous voice
recognition and digital voice-to-text recording; storage and retrieval for the
medical industry; digital audio products and technologies for the broadcasting
industry; and the digital audio products developed to exploit the markets for
continuous speech recognition and automatic transcription technology. Pursuant
to the terms of the Technology Transfer Agreement, Southern transferred the
Technology and related rights for the purchase price of $4,500,000, which was
paid by the Company issuing its non-interest bearing Promissory Note in such
amount. The note is payable as follows: (a) $2.5 million upon the earlier of
October 31, 1997 or the successful closing of the Company's offering, (b) $1
million upon the earlier of October 31, 1997 or the first signed installation
contract for a COURTSMART-TM- system in the United States of at least $30,000
and (c) $1 million on October 31, 1997. The Company has granted to Southern, as
collateral, a security interest in all assets of the Company.

The Company commissioned Gorey & Sinclair, an independent Australian
chartered accounting firm to prepare a valuation report of the latest version of
the COURTSMART-TM- system in the United States. In the opinion of Gorey &
Sinclair, based upon certain assumptions, the COURTSMART-TM- system for the
United States has a potential value between $23.7 million and $32 million upon
full commercialization. The Company relied on this report as its primarily basis
for determining the purchase price of the

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Technology from Southern. The report by Gorey & Sinclair is necessarily based
upon a number of estimates, assumptions and forecasts that, while they are
considered reasonable by the Company, assuming the Company has adequate
financing, are inherently subject to significant material business, economic,
and competitive uncertainties and contingencies which are beyond the control of
the Company, and upon assumptions with respect to future sales which may never
develop. Accordingly, there can be no assurance that these results will be
achieved or that the value estimated by Gorey & Sinclair will ever be realized.
The prospective financial valuation presented in the Gorey & Sinclair report
will vary from actual results, and these variations may be material. The
inclusion of such information in the Gorey & Sinclair report should not be
regarded as a representation by the Company or any other person that these
results or estimates will be ever obtained. It is merely an estimation of
potential if the underlying assumptions are realized. Prospective investors in
the offering are cautioned not to place undue reliance on this information.

MANUFACTURING AND SUPPLY OF PRODUCTS

The Company has no manufacturing facilities and plans to rely upon Southern
and other contract manufacturers to manufacture its proposed products. Except
for one small hardware component and two software components, all of the
remaining components utilized in the latest version of the Court Reporting
Systems and the Medical Recordkeeping Systems, are readily available and can be
purchased from numerous sources in the United States and abroad. The one
hardware component and the two software components that contain the proprietary
technology developed by Southern which incorporates the Philips Engine will be
acquired from Southern. Southern has agreed to manufacture the one hardware
component and the two software components of the system in Australia and sell
them to the Company at prices which shall not be greater than the prices at
which Southern sells the components to unaffiliated parties, less a minimum
discount of 10%.

INTELLECTUAL PROPERTY

The Company does not own any patents, trademarks or trade secrets. Under the
Technology Transfer Agreement for the COURTSMART-TM- system and related
technology, the Company is granted the exclusive right to manufacture, market,
sell and distribute the latest version of the COURTSMART-TM- system and other
digital voice systems developed by Southern in North, Central and South America
under Southern's trademarks. Southern developed the systems, and has copyrighted
the computer software used in the Court Reporting System and it has applied for
a patent on the hardware component that it developed. Pending the issuance of
any patents, which cannot be assured, Southern intends to rely on unpatented
proprietary technology and technical know-how. Accordingly, because the Company
will only receive under the Technology Transfer Agreement such intellectual
property rights as may be owned by Southern, the Company will similarly rely on
unpatented proprietary technology and technical know-how. Philip owns and has
patented the technology comprising the Philips Engine. Southern is a licensee of
the Philips Engine. The Company's composite product which is Southern's patented
and proprietary digital cardio recording, storage, archiving and retrieval
technology integrated with the Philips Engine. The Company does not have an
exclusive right from Philips to the Philips Engine in the Territory. No
assurance can be given that others will not independently develop substantially
equivalent technology, knowledge and techniques or otherwise gain access to
Southern's technology, or use the Philips Engine to make a similar product, or
that Southern or the Company can meaningfully protect its rights in such
unpatented proprietary technology or know-how.

EMPLOYEES

Upon completion of the offering, the Company will have three full time
employees including its principal officers. Of that number, one is engaged in
administrative functions, and two are engaged in the technical and sales aspects
of the business of the Company.

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PROPERTY

The Company subleases approximately 500 sq. ft. of office space on a
month-to-month basis from an affiliated landlord, Ridgewood Group International,
Ltd., which is owned by Mr. William Potter, a director, at Suite 517, 380
Lexington Avenue, New York, New York 10168. The base rent is $10,000 per year.
Upon completion of the offering, the Company intends to lease additional space
for its sales and technical support personnel as needed and believes such space
is readily available from unaffiliated lessors. The current premises are
adequate for the Company's needs for the short-term future.

The Company's principal business address is 380 Lexington Avenue, Suite 517,
New York, New York 10168, and its telephone number is (212) 399-6682.

LEGAL PROCEEDINGS

The Company knows of no litigation or other legal proceedings pending or
threatened to which it is, or may become, a party.

27
<PAGE>
MANAGEMENT

The following table sets forth information with respect to each executive
officer and director of the Company. Each executive officer or director has been
appointed as of this year to serve for a term of one year.

<TABLE>
<CAPTION>
DIRECTORS AND
EXECUTIVE OFFICERS AGE POSITION
- ------------------------------------------ --- -------------------------------------------

<S> <C> <C>
James Sim................................. 75 Chairman of the Board
Frank Carr................................ 48 President, Director, Chief Executive
Officer and Chief Financial Officer
Jason Beever.............................. 26 Vice President, Speech Technologies
William J. Potter......................... 47 Director and Secretary
John Gilbert.............................. 69 Director
</TABLE>

JAMES SIM, CHAIRMAN OF THE BOARD

Mr. Sim has been the Company's Chairman of the Board since 1996. Mr. Sim has
spent his career in banking, retiring as Director and General Manager (Area
North) and a member of the Court of Directors of the Bank of Ireland. Since his
retirement, he has been appointed by the British Government as its
representative to the board of directors of several companies, including that of
Short Bros. Aircraft. He was the Founding Chairman of the Northern Island
Co-Ownership Housing Association ("NICHA"). NICHA is an initiative of Her
Majesty's Government, funded by the British Department of the Environment, by
which families are assisted to purchase their own homes in a part buy/part rent
scheme. In the 15 years of its operation it has provided funding in excess of
US$1 billion. He was also vice-Chairman of the Progressive Building Society
(assets in excess of US$500m). He is a Member of the Institute of Bankers in the
United Kingdom and a Fellow of the Institute of Directors.

FRANK CARR, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

Mr. Carr has been a director, President and Chief Executive Officer of the
Company since its inception in 1996. Mr. Carr was also appointed Chief Financial
Officer in 1997. He has been the Chief Executive Officer of Southern, a public
company listed on the Australia Stock Exchange Limited, for 5 years. He has been
involved in company management and direction for 25 years and in 1986 was
jointly awarded the Australian Business Entrepreneur of the Year Award for his
work in establishing and developing a waste disposal business and, in the same
year, his company was awarded the marketing award by the Australian Marketing
Institute. Mr. Carr was elected to Fellowship of the Institute of Directors in
the U.K. in 1981 and to Fellowship of the Australian Institute of Management in
1986.

JASON BEEVER, VICE PRESIDENT, SPEECH TECHNOLOGIES

Mr. Beever has been Vice President, Speech Technologies of the Company since
1996. Mr. Beever is Southern Group's General Manager for its speech recognition
products and technologies. Formerly a computer programmer, he has for three
years been responsible for the successful development, marketing and sale of
such products; systems integration of voice recognition products; and the
design, development and implementation of interactive voice response systems. He
has most recently completed a certification program on the large vocabulary
continuous speech technology with Philips Dictation Systems at Vienna, Austria.
Mr. Beever graduated from Curtin University of Technology in Western Australia
with a Bachelor of Science degree in computer science and marketing.

28
<PAGE>
WILLIAM J. POTTER, SECRETARY AND DIRECTOR

Mr. Potter has been Secretary and a Director of the Company since 1996. Mr.
Potter is president of the Ridgewood Group International, Inc., a New York based
investment bank, and Ridgewood Capital Funding, Inc., a NASD securities
broker-dealer. Prior to establishing and owning the Ridgewood Capital Funding,
Inc. and Ridgewood Partners, Ltd. in 1989, Mr. Potter was Managing Director for
International Investment Banking at Prudential-Bache Securities Inc. and
Director of Prudential-Bache Securities Canada Ltd. He was previously a senior
executive with Barclays Bank PLC, and Toronto Dominion Bank. Mr. Potter received
a Bachelor of Arts degree from Colgate University and a Master of Business
Administration from the Harvard Business School.

Mr. Potter is currently Finance Committee Chairman of the National Foreign
Trade Council; a director of Impulsora del Fondo Mexico, SA de CV; First
Australia Fund; First Australia Prime Income Fund Inc.; First Australia Prime
Income Co., Inc.; International Panorama Resources, Inc.; First Commonwealth
Fund; Battery Technologies, Inc.; Alexandria Bancorp; Compuflex Systems, Inc.
and serves as a consultant to the Guardian Capital Group Ltd.

JOHN GILBERT, DIRECTOR

The Rt. Honorable Dr. John Gilbert has been a Director of the Company since
1996. The Rt. Honorable Dr. John Gilbert has been a Member of the United Kingdom
Parliament since 1970. He is the Senior Opposition Member of the Committee on
Intelligence & Security, and has been Privy Councillor since 1978. He is the
Chairman of John Gilbert & Associates, and is a director of Edmund Nuttal
Limited, Kyle Stewart Limited, the American Heritage Fund, the International
Jewelers Block & Fine Arts Insurance Services, Inc., and A.B.S. Hovercraft
Limited. He is also an Advisor to Jardine Insurance Services Ltd.

From 1987 to 1992, he served as the Senior Opposition Member of Select
Committee on Trade and Finance. From 1979 to 1987, Dr. Gilbert served as the
Senior Opposition Member of Select Committee on Defence.

Dr. Gilbert received his Bachelor of Arts degree with honors in Politics,
Philosophy and Economics from Oxford University in 1951. He received a Doctorate
of Philosophy from the Graduate School of Business Administration, New York
University, in 1968. In 1958, he was Qualified as Chartered Accountant in
Canada. In 1963 he received the Advanced Certificate, American Institute of
Banking.

Dr. Gilbert is a Member of the Trilateral Commission, the Royal Institute of
International Affairs, the International Institute for Strategic Studies, the
Institute for Fiscal Studies, the Council for Arms Control, the Centre for
European Defence Studies, the Royal United Services Institute, the British
American Parliamentary Group, and numerous other groups and organizations.

REMUNERATION

Prior to the date of this Prospectus, no officer or director of the Company
has received any cash compensation for services performed in these
capacities.Upon completion of this Offering, Directors shall receive a fee of
$10,000 per year per director for serving in such capacity. Additionally, each
director shall receive options to acquire 50,000 shares of Common Stock for a
price of $1.00 per share, exercisable over a period of five years, which options
shall vest after 12 months of service as a director ("Directors' Options").

The Company intends to retain Frank Carr as its President, Chief Executive
Officer and Chief Financial Officer under an employment contract at a fee of
$180,000 per year for a three year term commencing on the completion of this
offering.

29
<PAGE>

The Company intends to retain James Sim as its Chairman under a management
contract at a fee of $30,000 per year for a three year term commencing with the
month following the completion of this offering. Mr. Sim agreed to be available
for consulting up to 4 days per month.

The Company intends to retain Ridgewood Group International, Ltd., of which
Mr. William J. Potter, a director and Secretary of the Company, is President and
the major shareholder, as management advisor to the Company at a fee of $8,000
per month for a three year term commencing the month following the completion of
this offering.

Except as set forth above, no director or executive officer of the Company
is currently a director with any other Company with a class of securities
registered pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of such act or any investment company registered
under the Investment Company Act of 1940.

ELECTION OF DIRECTORS AND OFFICERS; COMMITTEES

The Company's bylaws provide for a Board of Directors consisting of not less
than three nor more than nine members who are elected annually by the
shareholders. The officers of the Company are elected by the Board of Directors
from time to time.

The Company currently has no committees of its Board of Directors, but it is
anticipated that standing audit and compensation committees will be established
following the offering. It is expected that the audit committees will consist of
members of the Board, a majority of whom are not otherwise affiliated with the
Company.

All directors hold office until the next annual meeting of stockholders and
the election and qualification of their successors. Directors receive no
compensation for serving on the Board of Directors other than the reimbursement
of reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board.

No family relationships exist among any of the named directors or the
Company's officers. No arrangement or understanding exists between any such
director or officer and any other person pursuant to which any director or
officer was elected as a director or officer of the Company. There are no
agreements or understandings for any officer or director of the Company to
resign at the request of another person and none of the officers or directors of
the Company are acting on behalf of, or will act at the direction of, any other
person.

Other than as set forth in this Prospectus, no other relationships exist
between and among management stockholders and non-management stockholders.
Moreover, there are no arrangements, agreements or understandings between
non-management stockholders and management under which non-management
stockholders may directly or indirectly participate in or influence the
management of the Company's affairs. The Company has no knowledge of whether or
not non-management stockholders will exercise their voting right to continue to
elect the current directors to the Company's board. See "Conflicts of Interest."

STOCK OPTION PLAN

In 1996 the Company adopted a Non-Qualified Stock Option Plan (the "Plan").
An aggregate of 500,000 shares of Common Stock are authorized for issuance under
the Plan. The Plan provides that incentive and non-qualified options may be
granted to officers and directors and consultants to the Company for the purpose
of providing an incentive to those persons to work for the Company. The Plan may
be administered by either the Board of Directors or a committee of three
directors appointed by the Board ("Committee"). The Board or Committee
determines, among other things, the persons to whom stock options are granted,
the number of shares subject to each option, the date or dates upon which each
option may be exercised and the exercise price per share.

30
<PAGE>
Options granted under the Plan are exercisable for a period of up to ten
years from the date of grant. Options terminate upon the optionee's termination
of employment or consulting arrangement with the Company, except that under
certain circumstances an optionee may exercise an option within the three-month
period after such termination of employment. An optionee may not transfer any
options except that an option may be exercised by the personal representative of
a deceased optionee within the three-month period following the optionee's
death. Incentive options granted to any employee who owns more than 10% of the
Company's outstanding Common Stock immediately before the grant must have an
exercise price of not less than 110% of the fair market value of all underlying
stock on the date of the grant and the exercise term may not exceed five years.
The aggregate fair market value of Common Stock (determined at the date of
grant) for which any employee may exercise incentive options in any calendar
year may not exceed $100,000. In addition, the Company will not grant a
non-qualified option with an exercise price less than 85% of the fair market
value of the underlying Common Stock on the date of the grant. No options have
been granted to date.

The Directors have received 50,000 stock options each which have an exercise
price of $1.00 per share, which amount was not less than 85% of the fair market
value of the underlying Common Stock on the date of the grant.

INDEMNIFICATION AND EXCULPATION PROVISIONS

The Company's Amended and Restated Certificate of Incorporation limit the
liability of its directors to the fullest extent permitted by the Delaware
Business Corporation Law. Specifically, directors of the Company will not be
personally liable for monetary damages for breach of fiduciary duty as
directors, except for liability for (i) any breach of the duty of loyalty to the
Company or its shareholders, (ii) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) acts falling
under Section 174 of the General Corporation Law of the State of Delaware, or
(iv) any transaction from which the director derives an improper personal
benefit. Liability under federal securities law is not limited by the Restated
Certificate.

The Delaware Business Corporation Law requires that the Company shall
indemnify any director, officer or employee made or threatened to be made a
party to a proceeding, by reason of the former or present official capacity of
the person, against judgments, penalties, fines, settlements and reasonable
expenses incurred by the person in connection with the proceeding if certain
statutory standards are met. "Proceeding" means a threatened, pending or
completed civil, criminal, administrative, arbitration or investigative
proceeding, including a derivative action in the name of the Company. Reference
is made to the detailed terms of the Delaware indemnification statute for a
complete statement of such indemnification rights. The Company's Restated Bylaws
require the Company to provide indemnification to the fullest extent of the
Indemnification statute.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company is aware that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

CONFLICTS OF INTEREST

31
<PAGE>

personnel, or an inability to attract and retain qualified personnel, may
adversely affect the Company's business. The Company has not applied for key man
life insurance on the life of Frank Carr and does not intend to. Further,
although it is contemplated that upon completion of the offering they will
become full-time employees of the Company, many of the individuals serving in
management positions with the Company are also currently employed by Southern, a
majority shareholder in the Company and the transferor of the Technology to the
Company. Because of the nature of its business, the Company will be dependent
upon its ability to attract and retain technologically qualified personnel,
particularly computer engineers. There is substantial competition for qualified
personnel, including competition from companies with substantially greater
resources than the Company. There is no assurance that the Company will
successfully recruit or retain personnel of the requisite engineering caliber or
in adequate numbers to enable it to conduct its business as proposed.

CERTAIN TRANSACTIONS

All of the existing shareholders acquired the outstanding 2,500,000 shares
of the Company's common stock for $.01 per Share.

In connection with the acquisition of the Technology from Southern, the
Company has agreed to pay Southern $4,500,000. This obligation is evidenced by a
Promissory Note in the amount of $4,500,000, which bears no interest, secured by
a first security interest collateral pledge of the Technology to Southern. The
Promissory Note is payable as follows: (a) $2.5 million upon the earlier of
October 31, 1997 or the completion of this offering, (b) $1 million upon the
earlier of October 31, 1997 or the Company signing its first installation
contract for a COURTSMART-TM- System in the United States, and (c) $1 million on
October 31, 1997.

The Company has entered into a one year oral agreement with Ridgewood Group
International, Inc. for its office space and various associated office and
administrative services, including telephones, postage, fax, courier, beverage;
accounting personnel; and other miscellaneous overhead expenses, at 105% of cost
to Ridgewood, payable monthly. Payments vary from month to month, but currently
are approximately $3,000.

32
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial
ownership of the Common Stock as of the date hereof, as adjusted to reflect the
sale of the Common Stock by the Company pursuant to this offering, and by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding Common Stock; (ii) each director of the Company, and (iii) all
officers and directors as a group. Except as otherwise indicated below, each of
the entities or persons named in the table has sole voting and investment powers
with respect to all shares of Common Stock beneficially owned by it or him as
set forth opposite its or his name. This table excludes all outstanding
Directors' Stock Options.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OWNED PERCENT OWNED
NAME AND ADDRESS OWNED PRIOR TO OFFERING AFTER OFFERING
- ------------------------------------------------------------------- ----------- ----------------- ---------------
<S> <C> <C> <C>
Southern Group(1).................................................. 1,580,000 63.2% 42.1%
72 Kings Park Road
West Perth, Australia 6005
Frank Carr(1)...................................................... -0- -0- -0-
72 Kings Park Road
West Perth Australia 6005
James Sim.......................................................... -0- -0- -0-
20 Trench Road
Comber, Nthn Ireland
William J. Potter(2)............................................... 100,000 4.0% 2.67%
380 Lexington Avenue
New York, NY
Quartern Holdings, Ltd............................................. 290,000 11.6% 7.73%
George Street
Cayman Islands
F.D. Costa(3)...................................................... 290,000 11.6% 7.73%
Ovation Enterprises Ltd............................................ 156,000 6.24% 4.16%
32 Athol Street
Douglas IM1 1JB
Isle of Man
John H. Webster(4)................................................. 156,000 6.24% 4.16%
Karilla of Waterford Ltd........................................... 156,000 6.24% 4.16%
c/o Georgam S.A.M.
17 Ave de la Costa
MC-98000 Monaco
Sylvia H. Goldsmith(5)............................................. 156,000 6.24% 4.16%
All officers and directors as a group (2 persons).................. 305,400 12.2% 8.14%
</TABLE>

- ------------------------

(1) Reflects shares indirectly owned by Mr. Frank Carr who owns a majority of
the shares in a private corporation which owns approximately 13% of
Southern, a publicly owned Australian corporation. Mr. Carr is also Managing
Director and Chief Executive Officer of Southern. Mr. Carr does not directly
own any shares of the Company. By reason of his interest in and ability to
control Southern, he will be able to elect all of the directors and
otherwise control the Company.

(2) Mr. Potter, a Director of the Company, beneficially owns these shares as the
President and majority shareholder of Ridgewood Group International, Inc.,
which directly owns 100,000 shares of the Company's common stock.

(3) Includes 290,000 shares owned by Quartern Holdings, Ltd. Mr. Costa is an
officer, director and principal shareholder of Quartern Holdings, Ltd., and
through such position is an indirect beneficial owner of the designated
shares of the Company.

33
<PAGE>
(4) Includes 156,000 shares owned by Ovation Enterprises, Ltd. Mr. Webster is an
officer, director and principal shareholder of Ovation Enterprises, Inc.,
and through such position is an indirect beneficial owner of the designated
shares of the Company.

(5) Includes 156,000 shares owned by Karilla of Waterford, Ltd. Mrs. Goldsmith
is an officer, director and principal shareholder of Karilla of Waterford,
Ltd., and through such position is an indirect beneficial owner of the
designated shares of the Company.

(6) Unless otherwise noted, the Company believes that each person named in the
table has sole voting and investment power with respect to all shares of
Common Stock beneficially owned by him or it.

(7) Assumes no exercise of the Underwriter's Warrants. See "Underwriting."

Except as described, the officers and directors of the Company have no other
direct or indirect beneficial ownership of shares of Common Stock of the
Company.

34
<PAGE>
DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue 10,000,000 shares of Common Stock, par
value $.01 per share. As of the date of this Prospectus, 2,500,000 shares of
Common Stock are outstanding, held of record by seven persons. The holders of
Common Stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. There is no cumulative voting with
respect to the election of directors, with the result that the holders of more
than 50% of the shares voting for the election of directors can elect all of the
directors. The holders of Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors out of the funds legally available
therefor. In the event of the liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining available for distribution after payment of liabilities and after
provision has been made for each class of stock, if any, having preference over
the Common Stock. Holders of shares of Common Stock, as such, have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are, and the shares of Common Stock to be issued in this offering,
when issued against payment therefor, will be, validly authorized and issued,
fully paid and nonassessable.

PREFERRED STOCK

The Company's Amended and Restated Certificate of Incorporation authorizes
the issuance of 1,000,000 shares of "blank check" preferred stock, par value
$.01 per share (the "Preferred Stock"), with such designations, powers,
preferences, rights, qualifications, limitations and restrictions and in such
series as the Board of Directors, subject to the laws of the State of Delaware,
may determine from time to time. Accordingly, the Board of Directors is
empowered, without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of Common Stock. No shares of
Preferred Stock are currently outstanding. The Company currently has no plan,
arrangement, understandings or commitments to issue Preferred Stock in the
future. Although the Company does not currently intend to issue any additional
shares of Preferred Stock, there can be no assurance that the Company will not
do so in the future.

DELAWARE ANTI-TAKEOVER LAW

Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws may have the effect of preventing, discouraging or
delaying any change in the control of the Company and may maintain the
incumbency of the Board of Directors and management. The authorization of
undesignated preferred stock makes it possible for the Board of Directors to
issue preferred stock with voting or other rights or preferences that could
impede the success of any attempt to change control of the Company.

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Antitakeover Law") regulating corporate takeovers.
The Antitakeover Law prevents certain Delaware corporations, including those
whose securities are authorized for quotation on The NASDAQ Stock Market (which
includes the NASDAQ SmallCap Market), from engaging, under certain
circumstances, in a "business combination" (which includes a merger or sale or
more than 10% of the corporation's assets) with any "interest stockholder" (a
stockholder who acquired 15% or more of the corporation's outstanding voting
stock without the prior approval of the corporation's Board of Directors) for
three years following the date that such stockholder became an "interested
stockholder." A Delaware corporation may "opt out" of the Antitakeover Law with
an express provision in its original certificate of incorporation or bylaws
resulting from a stockholders' amendment approved by at least a majority of the
outstanding voting shares. The Company has not "opted out" of the application of
the Antitakeover Law.

35
<PAGE>
TRANSFER AGENT, REGISTRAR AND WARRANT AGENT

The transfer and registrar agent for the Common Stock and the Warrant Agent
for the Underwriter's Warrants is American Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, the Company will have 4,375,000
shares of Common Stock outstanding if the Maximum Offering is sold. Of these
shares, the 1,875,000 Shares sold by the Company in this offering (750,000
Shares if the Minimum Offering is sold) will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by an "affiliate" of the Company (as defined in the Securities
Act and the rules and regulations thereunder) which will be subject to the
limitations of Rule 144 promulgated under the Securities Act. All of the
remaining 2,500,000 shares are deemed to be "restricted securities", as that
term is defined under Rule 144 promulgated under the Securities Act, as such
shares were issued in private transactions not involving a public offering. None
of such shares are eligible for sale under Rule 144 until April 1997.

In general, under Rule 144 as recently amended, subject to the satisfaction
of certain other conditions, a person, including an affiliate of the Company (or
persons whose shares are aggregated), who has beneficially owned the restricted
shares of Common Stock to be sold for at least one year is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of the same class or, if
the Common Stock is quoted on an exchange or NASDAQ, the average weekly trading
volume during the four calendar weeks preceding the sale. A person who has not
been an affiliate of the Company for at least the three months immediately
preceding the sale and who has beneficially owned the shares of Common Stock to
be sold for at least two years is entitled to sell such shares under Rule 144
without regard to any of the limitations described above.

Prior to this offering, there has been no market for the Common Stock, and
no prediction can be made as to the effect, if any, that market sales of
restricted shares of Common Stock or the availability of such shares for sale
will have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market would likely adversely affect prevailing market prices for the Common
Stock and could impair the Company's ability to raise capital through the sale
of its equity securities.

UNDERWRITING

The Company has entered into an underwriting agreement (the "Underwriting
Agreement") with Grady and Hatch & Company, Inc., to act as the Underwriter of
this offering and with FAI Insurances Limited and McDermid St. Lawrence
Securities, Inc., the International Advisors. Pursuant to the Underwriting
Agreement, the Underwriter will serve as the exclusive agent for the Company to
sell on a "best efforts," 750,000 Shares all or none basis, a minimum of 750,000
Shares and a maximum of 1,875,000 Shares. The Shares will be offered to the
public through the Underwriter and participating selected dealers at the public
offering price of $8.00 per Share. It has agreed to use its best efforts to find
purchasers for the Shares within the Offering Period. The offering price and the
maximum underwriting discounts and commissions payable to the International
Advisors shall be no greater than that paid to the U.S. Underwriter.

All proceeds from subscriptions for the first 750,000 Shares will be
deposited promptly into a non-interest bearing account (the "Escrow Account")
with Chase Manhattan Bank, N.A., as Escrow Agent, pursuant to an escrow
agreement among the Company, the Underwriter and Escrow Agent. Funds will be
transmitted to the Escrow Agent for deposit in the Escrow Account no later than
noon of the business day following receipt. All checks must be made payable to
"Chase Manhattan Bank, N.A., as Escrow Agent for Voicenet, Inc." In the event
that 750,000 Units are not sold within the Offering Period and funds are not
cleared within ten business days thereafter, during which time no subscriptions
will be accepted, or the Company and the Underwriter agree to terminate the
offering prior to the end of the Offering Period

36
<PAGE>
before the minimum number of Shares have been sold, funds will be refunded
promptly to subscribers in full without deduction therefrom or interest thereon.
During the Offering Period, no subscriber will be entitled to a refund of any
subscription. No funds will be released from the Escrow Account until the
minimum number of Shares offered hereby are sold and paid for or the offering is
terminated because of failure to sell the minimum number of Shares within the
Offering Period. If 750,000 Shares are sold and paid for prior to the end of the
Offering Period, the additional 1,125,000 Shares will be offered for sale on a
"best efforts" basis until the earlier of the sale of all such securities and
the termination of the offering by agreement between the Company and the
Underwriter. In no event will the offering extend beyond the Offering Period.

The Company and/or its principal stockholders and their associates
anticipate providing the Underwriter with the names of persons whom they believe
may be interested or who may have contacted the Company with interest in
purchasing the Shares. The Underwriter may sell the Shares to such persons if
they reside in a state in which the Shares may be sold and in which the
Underwriter is permitted to sell the Shares. The Underwriter is not obligated to
sell Shares to any such persons.

The Underwriter has advised the Company that it proposes to offer the Shares
to the public at an offering price of $8.00 per Share and that it may allow
certain dealers who are members of the National Association of Securities
Dealers, Inc. (the "NASD"), a concession as it may determine but such concession
shall not exceed 10% of the Share Offering Price. The Underwriter will not use
its discretionary powers to sell any Shares to accounts over which it has
discretion.

In order to facilitate the closing of at least the Minimum Offering, up to
10% of the number of shares which must be purchased to complete the Minimum
Offering (75,000 Shares) may be purchased by officers, directors, principal
shareholders or affiliates of the Company.

The Company has agreed to pay to the Underwriter a non-accountable expense
allowance of 2 1/2% of the total gross proceeds of the offering, and the
Underwriter's Warrants entitling them to purchase an amount of shares of Common
Stock equal to 10% of the number of Shares sold through their efforts up to a
maximum of 187,500 Shares of Common Stock for a period of four years at an
exercise price of $8.80 which will commence one year from the date of this
Prospectus. In addition to the Underwriter's commissions and expense allowance,
the Company is required to pay the costs of qualifying the Shares under federal
and state securities laws, together with legal and accounting fees, printing and
other costs in connection with this offering.

The Underwriter's Warrant will not be transferable prior to its exercise
date except to officers of the Underwriter, and members of the selling group and
officers and partners thereof. It will contain anti-dilution provisions
providing for appropriate adjustment in the event of any recapitalization,
reclassification, stock dividend, stock split or similar transaction. It will
not entitle the holder to any rights as a shareholder of the Company until it is
exercised and Shares are purchased thereunder.

The Underwriter's Warrant and the underlying securities issuable upon the
exercise thereof may not be offered for sale except in compliance with the
applicable provisions of the Securities Act. The Company has included the
Underwriter's Warrant and the underlying securities in the Registration
Statement in order to permit the public sale of these securities which, in any
event, may not be sold prior to one year after the date hereof. It is
anticipated that these securities, when available for sale, may be sold by the
Underwriter at prevailing market prices. The Company has also agreed that in the
event it files another registration statement, or an offering statement under
Regulation A, with the Commission, the Underwriter and/or the holders of the
Underwriter's Warrant and/or the underlying securities shall have the right
during the life of the Underwriter's Warrant to include in such registration
statement or offering statement the Underwriter's Warrant and/or securities
issuable upon its exercise at no expense to the Underwriter. Additionally, the
Company has agreed that, upon written request by the Underwriter or its
specifically duly authorized designee and holders of a 50% interest in the
Underwriter's Warrant, on one occasion, to register the Underwriter's Warrant
and/or any underlying securities, at the Company's expense.

37
<PAGE>
For the exercise period during which the Underwriter's Warrant is
exercisable, the holder or holders will have the opportunity to profit from a
rise in the market value of the Company's Common Stock, with a resulting
dilution in the interests of the other shareholders of the Company. The holder
or holders of the Underwriter's Warrant can be expected to exercise it at a time
when the Company would, in all likelihood, be able to obtain any needed capital
from an offering of its unissued Common Stock on terms more favorable to the
Company than those provided for in the Underwriter's Warrant. Such facts may
adversely effect the terms on which the Company can obtain additional financing.
To the extent that the Underwriter realizes any gain from the resale of the
Underwriter's Warrant or the securities issuable thereunder, such gain may be
deemed additional underwriting compensation under the Securities Act.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act.

The International Advisors have agreed under the Underwriting Agreement that
in connection with the underwriting they shall not make offers or sales of the
Shares to "United States Persons" as defined in the regulations promulgated
under the Securities Act of 1933, as amended.

The foregoing is a brief summary of certain provisions of the Underwriting
Agreement and does not purport to be a complete statement of its terms and
conditions. A copy of the Underwriting Agreement is on file with the Commission
as an exhibit to the Registration Statement of which this Prospectus is a part.
See "Additional Information."

LEGAL MATTERS

The legality of the securities being registered by the Registration
Statement of which this Prospectus is a part is being passed upon by Epstein
Becker & Green, P.C., 250 Park Avenue, New York, New York. Haythe & Curley, 237
Park Avenue, New York, New York has acted as counsel for the Underwriter in
connection with this offering. Mr. David Fleming, a member of Epstein Becker &
Green, P.C., owns beneficially 25,000 shares of Common Stock of the Company.

EXPERTS

The financial statements included in this Prospectus have been audited by
Marcum & Kliegman LLP, independent certified public accountants, to the extent
and for the period set forth in their report appearing elsewhere herein, and is
included in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") under the
Securities Act with respect to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and this
offering, reference is made to the Registration Statement, including the
exhibits and schedules filed therewith. A copy of the Registration Statement may
be inspected without charge at the Commission's principal office in Washington,
D.C., and copies of all or any part of the Registration Statement may be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, upon payment of certain fees prescribed by the
Commission. In addition, the Commission maintains a Web site (http://
www.sec.gov) that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
through the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR").
The Registration Statement of which this Prospectus forms a part has been filed
electronically through EDGAR and may be retrieved through the Commission's Web
site on the Internet. Descriptions contained in this Prospectus as to the
contents of any agreement or other documents

38
<PAGE>
filed as an exhibit to the Registration Statement are not necessarily complete
and each such description is qualified by reference to such agreement or
document.

Upon consummation of this offering, the Company will become subject to the
reporting requirements
of the Exchange Act and in accordance therewith will file reports, proxy
statements and other information with the Commission. The Company intends to
furnish its stockholders with annual reports containing audited financial
statements and such other reports as the Company deems appropriate or as may be
required by law.

39
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Voicenet, Inc.
New York, New York

We have audited the accompanying balance sheet of Voicenet, Inc., (a
development stage company), as of December 31, 1996, and the related statements
of operations, changes in stockholders' equity, and cash flows for the period
April 2, 1996 (date of inception) through December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion, on these financial statements based on
our audit.

We conducted our audit 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Voicenet, Inc. as of
December 31, 1996, and the results of its operations and its cash flows for the
period April 2, 1996 (inception) through December 31, 1996, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As disclosed in Note 1 to the
financial statements, the Company is in the development stage and there is
substantial doubt that, without additional financing, it will be able to carry
out its business plan and continue as a going concern. Management's plans in
regard to this matter also are described in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Marcum & Kliegman LLP

January 22, 1997, except
for Note 6, as to which the date
is March 7, 1997

F-1
<PAGE>
VOICENET, INC.

BALANCE SHEET

DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................................... $ 8,970
---------
Total current assets...................................................... 8,970
Deferred offering costs......................................................... 112,654
Organization costs, net......................................................... 1,700
Intangible Asset (Note 3)....................................................... 4,500,000
---------
$4,623,324
---------
---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................................. $ 74,029
Due to parent company (Note 4)................................................ 25,000
Note Payable, parent company (Note 3)......................................... 4,500,000
Total current liabilities................................................. 4,599,029
Stockholders' equity: (Notes 1,2 and 6)
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares
outstanding................................................................. -0-
Common stock, $.01 par value, 10,000,000 shares authorized, 2,500,000 shares
issued and outstanding...................................................... 25,000
Additional paid-in-capital.................................................... 20
Deficit accumulated during the development stage.............................. (725)
---------
Total Stockholders' Equity 24,295
---------
Total liabilities and stockholders' equity................................ $4,623,324
---------
---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-2
<PAGE>
VOICENET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 2, 1996
(DATE OF INCEPTION) THROUGH DECEMBER 31, 1996

<TABLE>
<S> <C>
Interest Income................................................................. $ 106
---------
Amortization.................................................................... 300
New York State and City Franchise Tax........................................... 528
Bank Charges.................................................................... 3
---------
Total Expenses.................................................................. 831
Loss from operations............................................................ (725)
---------
Net loss........................................................................ $ (725)
---------
---------
Loss per share.................................................................. $ .00
---------
---------
Weighted average number of shares of Common Stock outstanding during the
period......................................................................... 2,500,000
---------
---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>
VOICENET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD APRIL 2, 1996
(DATE OF INCEPTION) THROUGH DECEMBER 31, 1996

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
----------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------------ --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Initial issuance of shares (Note 2)................. 1,000 $ 1 $ 25,019 $ 25,020

Stock Split (Note 2)................................ 2,499,000 24,999 (24,999) -0-

Net loss for the period ended December 31, 1996..... $ (725) (725)
------------ --------- ----------- ----- ---------
2,500,000 $ 25,000 $ 20 $ (725) $ 24,295
------------ --------- ----------- ----- ---------
------------ --------- ----------- ----- ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>
VOICENET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 2, 1996
(DATE OF INCEPTION) THROUGH DECEMBER 31, 1996

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.......................................................................... $ (725)
---------
Adjustments to reconcile net loss to net cash provided by operating activities:
Increase in accounts payable.................................................... 74,029
Amortization expense............................................................ 300
---------
Total adjustments........................................................... 74,329
Net cash provided by operating activities......................................... 73,604
---------
Cash flows used in investing activities:
Payments for organization costs................................................. (2,000)
---------
Net cash used for investing activities............................................ (2,000)
---------
Cash flows from financing activities:
Proceeds from issuance of stock................................................. 25,000
Additional paid-in-capital...................................................... 20
Advances from parent company.................................................... 25,000
Payments for deferred offering costs............................................ (112,654)
---------
Net cash used in financing activities............................................. (62,634)
---------
Net increase in cash and cash equivalents......................................... 8,970
Cash and cash equivalents, beginning of period.................................... -0-
---------
Cash and cash equivalents, end of period.......................................... $ 8,970
---------
---------
</TABLE>

Supplemental Disclosure of Noncash Financing Activities:

During the period April 2, 1996 (inception) through December 31, 1996, the
Company purchased technology from its parent company and incurred a note payable
of $4,500,000.

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>
VOICENET, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Voicenet, Inc. (the "Company"), a Delaware corporation, was incorporated on
April 2, 1996. The Company was established for the marketing and distribution of
continuous speech and voice recognition systems and of digital audio reporting,
transcription, archiving and retrieval systems in North America, Central America
and South America. The Company has not commenced operations and is considered a
development stage company in accordance with Statement of Financial Accounting
Standards No. 7. The Company is majority-owned (63%) by Southern Group Limited
("Southern"), an Australian company.

GOING CONCERN UNCERTAINTY

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and there is substantial doubt that, without additional financing, it will
be able to continue as a going concern. The continuation of the Company as a
going concern is dependent on its ability to obtain additional financing as
contemplated by the Company's initial public offering (see Note 6). The
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.

NET LOSS PER SHARE

Net loss per share is computed based on the weighted average number of
shares of common stock outstanding during the period April 2, 1996 (inception)
through December 31, 1996. Pursuant to the Securities and Exchange Commission's
Staff Accounting Bulletins, common stock issued at prices below the anticipated
public offering price during the 12-month period to offering have been included
in the calculation as if they were outstanding for the entire period presented.

DEFERRED OFFERING COSTS

Costs incurred in connection with the proposed offering of securities have
been deferred and will be offset against the proceeds of the offering, or
expensed if the offering is not effected.

ORGANIZATION COSTS

Organization costs have been capitalized and are being amortized over five
years using the straight-line method.

INTANGIBLE ASSET

The intangible asset related to the purchase of technology (see Note 3) will
be amortized using the straight-line method of twenty-five (25) years commencing
when the Company begins generating revenue.

STATEMENT OF CASH FLOWS

For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.

F-6
<PAGE>
VOICENET, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due.

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NOTE 2 - STOCKHOLDERS' EQUITY

At inception, the Company authorized 3,000 shares of $.001 par value common
stock and issued 1,000 of these shares for $25,000.

On September 15, 1996 the Company increased its number of authorized Common
Shares to 10,000,000 and changed its par value of these shares to $.01 per
share. In addition, the Company authorized 1,000,000 shares of Preferred Stock,
par value $.01 per share.

On September 15, 1996 the board of directors of the Company declared a
2,500-for-1 stock split. The financial statements have been adjusted to reflect
this transaction.

On September 15, 1996, the Company adopted a non-qualified stock option plan
(the "Plan"). An aggregate of 500,000 shares of Common Stock are authorized for
issuance under the Plan. The Plan provides that all regular employees of the
Company except for directors who are members of the administrative committee are
eligible to participate in the Plan. No options may be granted subsequent to
September 15, 2006. There are no options issued and outstanding at December 31,
1996.

NOTE 3 - PURCHASE OF TECHNOLOGY

On August 1, 1996 the Company entered into a Technology Sales and Purchase
Agreement (the "Technology Agreement") with Southern to acquire certain
exclusive rights and ownership with respect to the development, use, marketing,
sales and distribution of a continuous computer based digital voice compression,
recognition and recording technology. The term of the agreement is for the
longer of twenty-five (25) years or the life of any patents and extensions
granted under the patent applications. The rights acquired are for territories
including North America, Central America and South America. These rights were
purchased for $4,500,000 in the form of a noninterest-bearing promissory note,
further described below.

On August 31, 1996, as amended effective November 1, 1996 and December 31,
1996, the Company executed a $4,500,000 promissory note payable to Southern in
conjunction with the above agreement. The note is noninterest-bearing and
payable as follows: (a) $2.5 million upon the earlier of October 31, 1997 or the
successful closing of the Company's public securities offering, (b) $1 million
upon the earlier of October 31, 1997 or the first signed installation contract
for a COURTSMART-TM- system in the United

F-7
<PAGE>
VOICENET, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 - PURCHASE OF TECHNOLOGY (CONTINUED)
States of at least $30,000, and (c) $1 million on October 31, 1997. The Company
has granted to Southern, as collateral, a security interest in all assets of the
Company.

NOTE 4 - DUE TO PARENT COMPANY

The Company was advanced $25,000 by Southern in 1996 for start-up purposes.
Such amount is noninterest-bearing and has no definitive repayment terms.

NOTE 5 - INCOME TAXES

The Company has no taxable income to date; therefore, no provision for
federal income taxes has been made. The minimum state and local franchise taxes
have been provided for the accompanying financial statements.

NOTE 6 - SUBSEQUENT EVENT

On March 7, 1997, the Company entered into an underwriting agreement (the
"Agreement") in which the underwriter agreed, on a "best efforts" basis, to sell
and obtain purchasers for a minimum of 750,000 shares and a maximum of 1,875,000
shares of common stock in conjunction with the Company's Initial Public Offering
(the "Offering"). The shares will be offered to the public through the
underwriter and participating selected dealers at the public offering price of
$8.00 per share.

Since the Offering is being conducted on a "best efforts" basis, there is no
assurance that the Offering can be successfully completed. Unless a minimum of
$6,000,000 in gross proceeds of common stock is sold within 90 days of the
effective date of the Offering, all funds received will be promptly refunded
without deductions for commissions and expenses.

The Company has agreed to indemnify the underwriter against certain
liabilities in conjunction with the Offering. The underwriter shall be paid a
nonaccountable expense allowance of 2 1/2% of the total gross proceeds, subject
to conditions set forth in the Agreement. In addition, the underwriter has been
granted warrants to purchase an amount of common stock to equal 10% of the
number of shares sold, up to a maximum of 187,500 shares. These warrants are
exercisable at $8.80 per share for a period of four years, commencing one year
after the effective date of the Offering.

F-8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF ANY OFFER TO BUY, BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR ANY SUCH PERSON TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER,
SOLICITATION OR SALE MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THE PROSPECTUS.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 2
The Company.................................... 2
Risk Factors................................... 6
Use of Proceeds................................ 14
Dividend Policy................................ 14
Capitalization................................. 15
Dilution....................................... 16
Selected Financial Data........................ 17
Business....................................... 18
Management..................................... 28
Certain Transactions........................... 32
Principal Shareholders......................... 33
Description of Securities...................... 35
Shares Eligible for Future Sale................ 36
Underwriting................................... 36
Legal Matters.................................. 38
Experts........................................ 38
Additional Information......................... 38
Financial Statements........................... F-1
</TABLE>

------------------------

UNTIL 25 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

VOICENET, INC.

A MINIMUM OF 750,000 SHARES OF
COMMON STOCK UP TO A MAXIMUM
OF 1,875,000 SHARES OF
COMMON STOCK

---------------------

PROSPECTUS

---------------------

GRADY AND HATCH & COMPANY, INC.

INTERNATIONAL ADVISORS:
FAI INSURANCES LIMITED
MCDERMID ST. LAWRENCE
SECURITIES, INC.

APRIL 18, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Voicenet, Inc. (the "Company") is incorporated in Delaware. Under Section
145 of the General Corporation Law of the State of Delaware, a Delaware
corporation has the power, under specified circumstances, to indemnify its
directors, officers, employees and agents in connection with actions, suits or
proceedings brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such directors,
officers, employees or agents, against expenses incurred in any action, suit or
proceeding. Article Tenth of the Certificate of Incorporation and Article III of
the Bylaws of the Company provide for indemnification of directors and officers
to the fullest extent permitted by the General Corporation Law of the State of
Delaware. Reference is made to the Certificate of Incorporation of the Company,
filed as Exhibit 3.1 hereto.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. Article Ninth of the Company's Certificate of
Incorporation contains such a provision.

The Underwriting Agreement filed herewith as Exhibit 1.1 contains provisions
by which each Underwriter severally agrees to indemnify the Company, any person
controlling the Company within the meaning of Section 15 of the Securities Act
of 1933 or Section 20 of the Securities Exchange Act of 1934, each director of
the Company, and each officer of the Company who signs this Registration
Statement with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter expressly for use in the
Registration Statement.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.

<TABLE>
<S> <C>
Filing Fee--Securities and Exchange Commission................. $ 7,315.00
Filing Fee--National Association of Securities Dealers, Inc.... 2,500.00
Fees and Expenses of Accountants............................... 25,000.00
Fees and Expenses of Counsel................................... 250,000.00
Printing and Engraving Expenses................................ 100,000.00
Blue Sky Fees and Expenses..................................... 30,000.00
Transfer and Warrant Agent fees................................ 3,500.00
Miscellaneous Expenses......................................... 15,000.00
----------
Total...................................................... $433,315.00
----------
----------
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

In April 1996, the Company sold to seven separate purchasers 1,000 shares of
Common Stock (which became 2,500,000 shares on account of the 2,500-for-1 split
effected on September 17, 1996) for $2,500,

II-1
<PAGE>
which was paid in full at the time, in a private placement transaction in which
no commissions were paid. Each of the purchasers represented to the Company that
they were "Accredited Investors" as that term is defined under Regulation D
promulgated by the Commission under the Securities Act. The persons who acquired
the private placement shares are Southern Group Limited, William Potter,
Quartern Holdings, Ltd., David Fleming, Ovation Enterprises, Ltd., and Karilla
of Waterford, Ltd. To the Company's knowledge, none of these investors, nor any
of their affiliates, was, at the time of their investment in the Company, or
currently is, affiliated or associated with any of the Underwriting Syndicate,
or any other broker-dealer. The Company issued all such securities in reliance
upon the exemption from the registration requirements of the Securities Act
contained in Section 4(2) thereof.

ITEM 27. EXHIBITS.

<TABLE>
<C> <C> <C> <S>
** 1.1 -- Form of Underwriting Agreement, as amended.
** 1.2 -- Form of International Advisory Agreement
** 1.3 -- Form of Selected Dealer Agreement
** 3.1 -- Certificate of Incorporation.
** 3.2 -- Amended and Restated Certificate of Incorporation.
** 3.3 -- Bylaws of the Company.
** 4.1 -- Form of Common Stock Certificate.
** 4.2 -- Form of Underwriter's Warrant Agreement, as amended.
** 4.3 -- Form of Underwriter's Warrant, as amended (included in Exhibit
4.2).
** 4.6 -- Form of Subscription Agreement.
5.1 -- Opinion of Epstein, Becker & Green, P.C.
** 5.2 -- Technology Evaluation of Gorey & Sinclair, Chartered Accountants.
** 10.1 -- Form of Escrow Agreement for proceeds from sale of Shares.
** 10.2 -- Technology Transfer Agreement between Southern Group Limited and
the Company.
** 10.3 -- Form of Note and Security Agreement between Southern Group Limited
and the Company.
** 10.4 -- Amendment to Technology Transfer Agreement and Security Agreement.
** 10.5 -- Employment Agreement between the Company and Frank Carr.
** 10.6 -- Management Agreement between the Company and James Sim.
** 10.7 -- Advisory Agreement between the Company and Ridgewood Group
International.
** 10.8 -- Second Amendment to Technology Transfer Agreement and Security
Agreement.
23.1 -- Consent of Marcum & Kliegman LLP (Included at page II-8).
23.2 -- Consent of Epstein, Becker & Green, P.C. (Included in Exhibit 5).
** 23.3 -- Consent of Gorey & Sinclair, Chartered Accountants.
** 24 -- Power of Attorney (Included at page II-7).
** 27 -- Financial Data Schedule.
</TABLE>

- ------------------------

** Previously filed.

* To be filed by Amendment.

ITEM 28. UNDERTAKINGS.

The undersigned small business issuer hereby undertakes:

(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

II-2
<PAGE>
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) For determining liability under the Securities Act, treat each
post-effective amendment as new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.

(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.

(d) The undersigned small business issuer hereby undertakes to provide
to the underwriters at the closing specified in the placement agreements,
certificates in such denominations and registered in such names as required
by the underwriters to permit prompt delivery to each purchaser.

(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(f) The undersigned registrant hereby undertakes that:

(i) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.

(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing this Amendment to Form SB-2 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 16th day of April 1997.

VOICENET, INC.

By: /s/ FRANK CARR
-----------------------------------------
Frank Carr
PRESIDENT, CHIEF EXECUTIVE OFFICER &
CHIEF FINANCIAL OFFICER

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

* Chairman of the Board
- ------------------------------ April 16, 1997
James Sim

/s/ FRANK CARR President, Treasurer,
- ------------------------------ Director
Frank Carr Principal Executive April 16, 1997
Officer and Principal
Accounting Officer

* Secretary & Director
- ------------------------------ April 16, 1997
William J. Potter

* Director
- ------------------------------ April 16, 1997
John Gilbert

*/s/ FRANK CARR
- ------------------------------
Frank Carr
Attorney in Fact

II-4
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Voicenet, Inc.

New York, New York

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated January 22, 1997 except for Note 6,
as to which the date is March 7, 1997, relating to the financial statements of
Voicenet, Inc., which are contained in that Prospectus.

We also consent to the reference to us under the caption "Experts" in the
Prospectus.

Woodbury, New York
MARCUM & KLIEGMAN LLP

April 16, 1997

II-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS PAGES
- ----------- ------------------------------------------------------------------------------------------- -------------
<C> <S> <C>

**1.1 -- Form of Underwriting Agreement, as amended..............................................

**1.2 -- Form of International Advisory Agreement................................................

**1.3 -- Form of Selected Dealer Agreement.......................................................

**3.1 -- Certificate of Incorporation............................................................

**3.2 -- Amended and Restated Certificate of Incorporation.......................................

**3.3 -- Bylaws of the Company...................................................................

**4.1 -- Form of Common Stock Certificate........................................................

**4.2 -- Form of Underwriter's Warrant Agreement, as amended.....................................

**4.3 -- Form of Underwriter's Warrant, as amended (included in Exhibit 4.2).....................

**4.6 -- Form of Subscription Agreement..........................................................

5.1 -- Opinion of Epstein, Becker & Green, P.C. ...............................................

**5.2 -- Technology Evaluation of Gorey & Sinclair, Chartered Accountants........................

**10.1 -- Form of Escrow Agreement for proceeds from sale of Shares...............................

**10.2 -- Technology Transfer Agreement between Southern Group Limited and the Company............

**10.3 -- Form of Note and Security Agreement between Southern Group Limited and the Company......

**10.4 -- Amendment to Technology Transfer Agreement and Security Agreement.......................

**10.5 -- Employment Agreement between the Company and Frak Carr..................................

**10.6 -- Management Agreement between the Company and James Sim..................................

**10.7 -- Advisory Agreement between the Company and Ridgewood Group International................

**10.8 -- Second Amendment to Technology Transfer Agreement and Security Agreement................

23.1 -- Consent of Marcum & Kliegman LLP (Included at page II-8)................................

23.2 -- Consent of Epstein, Becker & Green, P.C. (Included in Exhibit 5)........................

**23.3 -- Consent of Gorey & Sinclair, Chartered Accountants......................................

**24 -- Power of Attorney (Included at page II-7)...............................................

**27 -- Financial Data Schedule.................................................................
</TABLE>

- ------------------------

** Previously filed.

* To be filed by Amendment.

<PAGE>
EPSTEIN BECKER & GREEN, P.C.
250 PARK AVENUE
NEW YORK, NEW YORK 10177

April 15, 1997

Viocenet, Inc.
380 Lexington Avenue
Suite 517
New York, New York 10168

Re: Registration Statement of Form SB-2
VOICENET, INC.

Ladies and Gentlemen:

We have acted as counsel to Voicenet, Inc. (the "Company") in connection
with the Company's registered public offering (the "Public Offering") of
shares of the Company's $.01 per value common stock ("Common Stock"),
pursuant to a Registration Statement dated September 27,1996 and Amendments
Nos. 1 and 2 thereto dated March 12, 1997 and April 15, 1997, respectively
(Registration No. 333-12979)(the "Registration Statement") and the Prospectus
dated April 15, 1997 (the "Prospectus") filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), relating to

1. a minimum of 750,000 shares of Common Stock (the "Minimum Shares")
up to a maximum of 1,875,000 shares of Common Stock ("the Maximum Shares"),
which will be sold by Grady and Hatch & Company, Inc. on a "best efforts",
750,000 shares of Common Stock or none basis;

2. up to 187,000 Underwriter's Warrants to purchase shares of Common
Stock; and

3. up to 187,000 shares of Common Stock, issuable upon the exercise of
the Underwriter's Warrants set forth in 2, at $8.80 per share.

<PAGE>

Voicenet, Inc.
April 15, 1997
Page 2

We have examined copies of said Registration Statement and the exhibits
thereto under the Securities Act of 1933, as amended. We have conferred with
officers of the Company and have examined the originals, or photostatic,
certified or conformed copies, of such records of the Company, certificates
of officers of the Company, certificates of public officials, and such other
documents as we have deemed relevant and necessary, as a basis for the
opinions set forth herein. In connection with such examinations, we have
assumed the authenticity of all documents submitted to us as originals or
duplicate originals, the conformity to original documents of all document
copies, the authenticity of the respective originals of such latter
documents, and the correctness and completeness of such certificates.
Finally, we have obtained from officers of the Company such assurances as we
have considered necessary for the purposes of this opinion.

On the basis of the of foregoing, and such other matters of fact and
questions of law as we have deemed relevant in the circumstances, and in
reliance thereon, it is our opinion that:

1. The authorized capital of the Company consists of 10,000,000 shares
of Common Stock, $.01 par value, and 1,000,000 shares of Preferred Stock,
$.01 par value.

2. Up to the Maximum Shares, up to 187,500 Underwriter's Warrants and
up to 187,500 shares of Common Stock issuable upon the exercise of the
Underwriter's Warrants have been duly authorized by the Board of Directors of
the Company, and upon issuance of the shares of Common Stock which are
subscribed for during the Offering Period (as defined in the Prospectus)
after payment in full of the subscription price in accordance with the terms
set forth in the Prospectus, and upon issuance of the shares of Common Stock
which are issuable upon exercise of the Underwriter's Warrants in accordance
with their terms after payment of the exercise price, such shares of Common
Stock will be validly issued, fully paid and non-assessable.

The undersigned hereby consent to the use of their name in the
Registration Statement and the Prospectus forming a part of the Registration
Statement, and to references to this opinion contained therein under the
caption of the Prospectus entitled "Legal Matters."

This opinion is limited to the matters herein, and may not be relied upon
by any other person or for any other purpose other than in connection with
the corporate authority for the issuance of the securities described above.

Very truly yours,

EPSTEIN BECKER & GREEN, P.C.

By: /s/ David E. Fleming
-------------------------------
David E. Fleming