VOXWARE INC, S-1/A, 1996-09-04

VOXWARE INC
S-1/A, 1996-09-04
COMPUTER INTEGRATED SYSTEMS DESIGN

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REGISTRATION NO. 333-08393

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1996
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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VOXWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 7373 36-3934824
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION OR INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
ORGANIZATION) CODE NUMBER)

305 COLLEGE ROAD EAST
PRINCETON, NEW JERSEY 08540
(609) 514-4100
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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MICHAEL GOLDSTEIN
VOXWARE, INC.
305 COLLEGE ROAD EAST
PRINCETON, NEW JERSEY 08540
(609) 514-4100
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
PAUL JACOBS, ESQ. GREGORY D. SHEEHAN, ESQ.
FULBRIGHT & JAWORSKI L.L.P. ROPES & GRAY
666 FIFTH AVENUE ONE INTERNATIONAL PLACE
NEW YORK, NEW YORK 10103 BOSTON, MASSACHUSETTS 02110
TEL.: 212-318-3000 TEL.: 617-951-7000

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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, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]

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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>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED SEPTEMBER 4, 1996

4,000,000 SHARES

VOXWARE

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by the
Company. Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently anticipated that the initial public
offering price of the Common Stock will be between $7.00 and $8.00 per share.
See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. It is anticipated that the
Common Stock will be included on the Nasdaq National Market under the symbol
VOXW.

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING
ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.

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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>
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<CAPTION>
Price to Underwriting Proceeds to
Public Discount(1) Company(2)
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<S> <C> <C> <C>
Per Share........................ $ $ $
Total(3)......................... $ $ $
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</TABLE>
(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $750,000.
(3) Certain stockholders of the Company (the "Selling Stockholders") have
granted the Underwriters a 30-day option to purchase up to 600,000
additional shares of Common Stock solely to cover over-allotments, if any.
If the Underwriters exercise this option in full, the Price to Public will
total $ , the Underwriting Discount will total $ , the Proceeds to
Company will total $ and the Proceeds to Selling Stockholders will
total $ . See "Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the office of Montgomery Securities on or about , 1996.

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MONTGOMERY SECURITIES
ALEX. BROWN & SONS
INCORPORATED
OPPENHEIMER & CO., INC.

, 1996
<PAGE>

DESCRIPTION OF PHOTOGRAPH:

Under the caption "Voxware licenses its products broadly to software,
computing and communications companies. The logos of certain of the Company's
licensees are shown below." is a picture consisting of Voxware's logo
(consisting of a graphic of a face with the Company name underneath) in the
middle, surrounded in a circle by the logos of certain of the licensees of the
Company's products. The logos depicted are those of the following licensees:
Netscape Communications Corporation, Microsoft Corporation, Mpath Interactive,
Inc., Andrea Electronics Corporation, VDOnet Corporation Ltd., InterVoice,
Inc., Farallon Computing, Inc., Apple Computer, Inc., and America Online, Inc.

On the left side of a fold out graphic is the caption:

"Voxware's Technology Enables a

New Generation of Speech Enhanced

Products for the Internet and Other

Bandwidth Constrained Environments"

Under the caption is Voxware's logo, consisting of a graphic of a face with
the Company name and "The Voice in Software(TM)" underneath. Emanating from
the mouth of the face in the logo, out to the right, is a bold line divided
into three sections. In the first section, under the caption "compress" are
arcs representing sound waves representing speech. The arcs are reduced to
just the bold line in the second section under the caption "METAVOICE(TM)",
the tradename of the Company's speech coding technology. In the third section,
the bold line is restored to arcs representing sound waves representing speech
under the caption "decompress."

The bold line then leads to the right side of the fold out graphic where it
divides into five bold lines, each leading to a box containing a picture of
persons using an application of the Company's MetaVoice speech coding
technology under a caption describing the application pictured. The five
captions are "Internet Conferencing, Chat, Interactive Games," "Internet
Broadcasting," "Convergence of Internet and Telecommunications," "Wireless
Telecommunications" and "Consumer Electronics/Toys."

On the bottom of the left side of the fold out graphic is the following:

"The applications depicted here include completed products and products
currently under development by the Company and its licensees." See "Business--
Products" and "--Research and Product Development."

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the financial statements and notes
thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated,
all information in this Prospectus (i) gives effect to the automatic conversion
of all outstanding shares of the Company's Series A Convertible Preferred Stock
(the "Series A Preferred Stock") into 6,000,000 shares of Common Stock
effective upon the closing of this offering and (ii) assumes no exercise of the
over-allotment option.

THE COMPANY

Voxware, Inc. (the "Company" or "Voxware") develops, markets, licenses and
supports a comprehensive, integrated set of digital speech processing
technologies which provide the ability to compress, model and transform speech.
MetaVoice(TM), the Company's innovative coding technology, is designed to
reproduce high quality speech while requiring very low communications bandwidth
and processing power. In addition to efficiently compressing speech, MetaVoice
enables a broad array of voice transformation capabilities. Voxware's
technologies enable its customers to create a new generation of speech-enhanced
communications and interactive products for the Internet and other bandwidth-
constrained environments. The Company licenses its technologies, including
speech coder/decoders ("codecs") and application programming interfaces, to
software, computing and communications companies and distributes its end-user
application software to consumers and businesses.

Digital speech technologies are increasingly being integrated into a variety
of applications including voice-enabled Web pages, Internet telephony and
conferencing, Internet broadcasting, interactive games, voice messaging,
wireless and satellite communications, multimedia computing and voice-enabled
devices. Speech applications on the Internet and in other environments in which
these speech applications are implemented are often constrained by a
combination of low bandwidth, low processing power, network congestion and
inconsistent data delivery. Voxware's speech coding and transmission quality
management technologies are designed to address these challenges and deliver
superior speech quality for a wide variety of applications.

To accelerate adoption of its technologies, the Company seeks to broadly
license its products and establish strategic relationships with market leaders.
The Company has established a strategic relationship with Netscape
Communications Corporation ("Netscape"). Netscape uses Voxware's speech coding
technology as a part of its LiveMedia(TM) multimedia framework to provide low
bandwidth speech functions with version 3.0 of Netscape Navigator(TM),
currently in beta release. Navigator is the most widely used software
application for the World Wide Web. Netscape has also made a minority equity
investment in the Company.

In addition to Netscape, the Company has licensed its products to America
Online, Inc., Andrea Electronics Corporation, Apple Computer, Inc., Farallon
Computing, Inc., InterVoice, Inc., Microsoft Corporation, Mpath Interactive,
Inc., Tribal Voice and VDOnet Corporation Ltd., among others.

Intel Corporation ("Intel") has made a minority equity investment in the
Company. Intel provides consulting support to Voxware for the optimization of
the Company's technologies on Intel processor platforms, consults with Voxware
on standards issues of mutual interest and supplies the Company with pre-
release versions of its advanced processors for development of the Company's
products.

Voxware was incorporated in Delaware in 1993. Its executive offices are
located at 305 College Road East, Princeton, New Jersey 08540, and its
telephone number is (609) 514-4100. Voxware's home page is located at
www.voxware.com on the World Wide Web.

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THE OFFERING

Common Stock offered by the Company... 4,000,000 shares

21,895,000 shares(1)
Common Stock to be outstanding after
the offering....................

Use of proceeds....................... For general corporate purposes,
including working capital and capital
expenditures.

Proposed Nasdaq National Market VOXW
symbol...............................

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(AUGUST 20, 1993) YEAR ENDED JUNE 30,
TO JUNE 30, -----------------------
1994 1995 1996
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<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues..................... $ -- $ -- $ 1,607,038
Gross profit....................... -- -- 1,561,624
Total operating expenses........... 215,508 1,233,720 4,560,793
Operating loss..................... (215,508) (1,233,720) (2,999,169)
Net loss........................... (215,508) (1,168,780) (2,867,312)
Pro forma net loss per share....... $ (0.16)
Shares used in computing pro forma
net loss per share(2)............. 17,583,980
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
PRO FORMA
PRO FORMA(3) AS ADJUSTED(4)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 3,836,836 $30,986,836
Working capital.................................... 3,887,338 31,037,338
Total assets....................................... 5,336,453 32,486,453
Stockholders' equity............................... 4,862,847 32,012,847
</TABLE>
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(1) Based on shares outstanding as of June 30, 1996. Excludes (i) 1,770,000
shares of Common Stock reserved for issuance upon the exercise of
outstanding warrants at an exercise price of $0.75 per share, (ii)
2,522,300 shares of Common Stock issuable upon exercise of outstanding
options and (iii) 2,197,700 shares reserved for future grants under the
Company's 1994 Stock Option Plan. See "Management--1994 Stock Option Plan"
and "Description of Securities--Warrants."
(2) See Note 1 of "Notes to Financial Statements" for an explanation of the
determination of the number of shares and share equivalents used in
computing the pro forma per share amount.
(3) Reflects the conversion of all the outstanding shares of the Company's
Series A Preferred Stock into Common Stock upon the closing of this
offering.
(4) Represents the pro forma data as adjusted to give effect to the sale of
4,000,000 shares of Common Stock offered by the Company at an assumed
initial public offering price of $7.50 per share (after deducting
underwriting discounts and commissions and estimated offering expenses) and
the application of the estimated net proceeds therefrom. See
"Capitalization" and "Use of Proceeds."

Voxware(TM), the Voxware logo, MetaVoice(TM), Telephony Network Toolkit(TM),
TeleVox(TM), ToolVox(TM) and VoiceFonts(TM) are trademarks of Voxware, Inc.
This Prospectus also contains trademarks and tradenames of other companies.

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RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered in evaluating the Company and its business before
purchasing the Common Stock hereby. This Prospectus contains, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially. Factors
that could cause or contribute to such differences include, but are not
limited to, those discussed below as well as those discussed elsewhere in this
Prospectus.

LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; EARLY STAGE OF DEVELOPMENT

The Company was founded in August 1993 and commenced shipment of its initial
products in July 1995. Accordingly, the Company has only a limited operating
history upon which an evaluation of the Company and its prospects can be
based. As of June 30, 1996, the Company had an accumulated deficit of
$4,258,563. The Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in an early
stage of development, particularly companies in new and rapidly evolving
industries. To address these risks and achieve profitability and increased
sales levels, the Company must, among other things, establish and increase
market acceptance of its products, respond effectively to competitive
pressures, introduce on a timely basis products incorporating its technologies
and enhancements to its products and successfully market and support its
products and enhancements. There can be no assurance that the Company will
achieve or sustain significant sales or profitability in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

UNCERTAINTY OF PRODUCT ACCEPTANCE IN DEVELOPING MARKETS; NEW PRODUCT
DEVELOPMENT RISKS

The markets for the Company's products have only recently begun to develop,
are rapidly evolving and are characterized by an increasing number of market
entrants who have introduced or developed products for enhancing and
facilitating the use of speech in new and existing applications, particularly
for the Internet. In addition, the Company's products are new and based on
novel technologies. As is typical in the case of new and rapidly evolving
industries, demand and market acceptance for recently introduced products are
subject to a high level of uncertainty. Virtually all of the Company's
products are based upon MetaVoice, its core speech compression technology.
Broad acceptance of the Company's products by customers and end users is
critical to the Company's success and ability to generate revenues. Acceptance
of the Company's products will be highly dependent on the functionality and
performance of the products and particularly on the success of the initial
implementation of its products. In addition, the Company's products must be
adapted in certain instances to meet the specific requirements of the customer
hardware or software in which it is to be integrated. The adaptation process
can be time consuming and costly to both the Company and its customers and the
acceptance of the end product may depend, to a substantial extent, on the
success of the adaptation. The Company is in the process of porting its
technologies to different platforms to meet customer needs and, in certain of
its license agreements, successful porting is a condition to the continuation
of the agreement and the receipt of fees and royalties. There can be no
assurance that the Company will be successful in obtaining market acceptance
of its products. Failure to successfully port products to desired platforms
for customers or to otherwise gain market acceptance of its products would
have a material adverse effect on the Company's business, operating results
and financial condition.

Furthermore, products offered by the Company may contain undetected errors
or defects when first introduced or as new versions are released. Introduction
by the Company of products with reliability, quality or compatibility problems
could result in reduced revenues, uncollectible accounts receivable, delays in
collecting accounts receivable and additional costs. There can be no assurance
that, despite testing by the Company or by its customers, errors will not be
found in the Company's products after commencement of commercial deployment,
resulting in product redevelopment costs and loss of, or delay in, market
acceptance. In addition, there can be no assurance that the Company will not
experience significant product returns in the future. Any

5
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such event could have a material adverse effect on the Company's business,
operating results and financial condition. See "Business--Products" and "--
Research and Product Development."

DEPENDENCE ON NETSCAPE

The Company is substantially dependent on its relationship with Netscape to
achieve widespread distribution and acceptance of its products and
technologies. During the year ended June 30, 1996, Netscape accounted for 31%
of the Company's revenues. Although the Company has entered into a software
license agreement with Netscape (the "Netscape License Agreement") in which it
has licensed certain of its products and technologies for use in Netscape's
products, Netscape is not obligated to use the Company's products or
technologies in Netscape's products and, therefore, there can be no assurance
that Netscape will include the Company's products and technologies in its
products in the future. Further, there can be no assurance that Netscape will
not choose to use other speech processing technologies, available either from
the Company's competitors or in the public domain, in its products. The
Netscape License Agreement may be terminated by Netscape for any reason at any
time prior to July 31, 1996 on 180 days notice and after July 31, 1996 on 90
days notice. In addition, Netscape has the right to terminate the Netscape
License Agreement upon a material default by the Company of its material
obligations under the Netscape License Agreement unless the default is
remedied within 30 days after notice of the default. If Netscape terminates
the Netscape license agreement or does not incorporate and distribute the
Company's products and technologies in its own products, the Company's
business, operating results and financial condition will be materially
adversely affected. The success of the Company is dependent on Netscape's
ability to continue to achieve widespread distribution and acceptance of
Netscape's products in the Internet market. Any failure by Netscape to
continue to achieve widespread distribution and acceptance of its products, or
any material decrease in Netscape's market share in the Internet market, may
have a material adverse effect on the Company's business, operating results
and financial condition. See "Business--Strategic Relationships and
Licensees."

UNCERTAIN ADOPTION OF INTERNET AS A MEDIUM FOR VOICE COMMUNICATIONS

The Company has targeted development of products and technologies for the
Internet as a strategic focus. Critical issues concerning the commercial use
of the Internet (including reliability, cost, security, ease of use and access
and quality of service) remain unresolved and may impact the growth of
Internet use. While the Company believes that its products potentially offer
significant advantages for voice communication over the Internet, it is
difficult to predict the future growth rate, if any, and size of this market.
There can be no assurance that the markets for the Company's products will
develop, that the Company's products will be adopted, or that personal
computer users in business or at home will use the Internet for voice
communication. In addition, the adoption of the Internet for telephony and
teleconferencing will require the acceptance by users of a new way of
conducting telephonic communications. If the market fails to develop, develops
more slowly than expected or becomes saturated with competitors, the Company's
business, operating results and financial condition will be materially
adversely affected. See "Business--Industry Background."

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

Significant annual and quarterly fluctuations in the Company's results of
operations may be caused by, among other factors, the timing and structure of
license agreements entered into with the Company's customers, the volume of
sales and revenue of the Company's licensees from sales of products
incorporating the Company's products and technologies, the mix of distribution
channels used by the Company, the timing of new product announcements and
releases by the Company and its competitors, and general economic conditions.
There can be no assurance that the level of sales and gross profits, if any,
achieved by the Company in any particular fiscal period will not be
significantly lower than in other, including comparable, fiscal periods. The
Company's expense levels are based, in part, on its expectations as to future
revenues. As a result, if future revenues are below expectations, net income
or loss may be disproportionately affected by a reduction in revenues as any
corresponding reduction in expenses may not be proportionate to the reduction
in revenues. As a result, the

6
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Company believes that period-to-period comparisons of its results of
operations may not necessarily be meaningful and should not be relied upon as
indications of future performance. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

ABILITY TO MANAGE GROWTH

The Company has been rapidly expanding and expects to continue to expand its
management, research and development, testing, quality control, marketing,
sales and customer service and support operations, as well as its financial
and accounting controls, all of which has and is expected to continue to place
a significant strain on the Company. The Company has grown from 12 employees
at June 30, 1995 to 58 employees at June 30, 1996. Failure to integrate new
personnel on a timely basis could have an adverse effect on the Company's
operations. Furthermore, the expenses associated with expanding the Company's
management team and hiring new employees have been and are being incurred
prior to the generation of any significant revenues. If the Company's
management is unable to manage growth effectively, the quality of the
Company's products, its ability to retain key personnel and its business,
operating results and financial condition could be materially adversely
affected.

RELIANCE ON THIRD PARTIES TO GENERATE RECURRING REVENUES

The Company's products are licensed primarily to software, computing and
communications companies which incorporate the Company's products and
technologies into their products. The Company's revenues derived from these
licensing arrangements will be based in large part upon the sale of these
products. The success of the Company will therefore be dependent to a
substantial degree on the efforts of these third parties in developing and
marketing products incorporating the Company's products and technologies. The
Company has entered into approximately 15 license agreements through June 30,
1996 which provide for recurring payments. Although the Company's revenues for
the year ended June 30, 1996 include a significant amount of recurring revenue
from these agreements, to date the Company has not received any royalty fees
based upon sales of its licensees' products. There can be no assurance that
any product incorporating the Company's products and technologies will be
marketed successfully by the Company's licensees. In addition, none of the
Company's licensees are contractually obligated to use the Company's products.
Furthermore, licensees of the Company may develop their own speech processing
products or technologies that compete with the Company's products and
technologies. There can be no assurance that these licensees will not replace
the Company's products with, or give higher priority to the sales of these
competitive products or technologies. See "Business--Competition."

HIGHLY COMPETITIVE INDUSTRY

The market for voice processing software products and services is intensely
competitive. The Company expects competition to persist, intensify and
increase in the future. Many of the Company's current and potential
competitors have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than the Company. The Company's competition for voice processing
products is primarily emerging from two sources: developers of speech
compression algorithms and developers of software applications that
incorporate speech. Direct competitors include DSP Group, Inc., Lernout &
Hauspie Speech Products N.V. and Lucent Technologies Inc. in the speech coding
market and Electric Magic Co., FreeTel Communications, Inc., Macromedia, Inc.,
Netspeak Corp., PGP Inc., Progressive Networks, Inc., Quarterdeck Corporation,
Third Planet Publishing Inc., VocalTec, Ltd. and Xing Technology Corporation
in the Internet applications market. Several of these companies are developing
new products or enhancing existing products specifically to operate in low
bandwidth environments. Companies that have developed low bit rate parametric
speech compression technologies but do not currently compete with the Company
directly include Texas Instruments, Incorporated and Digital Voice Services,
Inc. The competition in the market for Internet telephony products, in
particular, is intense. Many companies, including for example Intel,
distribute free Internet telephony applications offering basic functionality.
The availability of such free Internet telephony applications may increase
pricing pressure on such applications, including the Company's TeleVox
products. In addition to

7
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the Company's current competitors, the Company expects other established
companies, including large software companies, such as Microsoft, and
telecommunications companies, such as interexchange carriers (for example,
AT&T Corp. and MCI Telecommunications), regional Bell operating companies and
cable companies, to compete in the markets for speech compression technologies
and digital speech applications, including Internet telephony. The ability of
certain of the Company's competitors to bundle other services and products
with voice products could put the Company at a competitive disadvantage.

NECESSITY TO DEVELOP AND INTRODUCE NEW AND ENHANCED PRODUCTS; RISKS OF RAPID
TECHNOLOGICAL CHANGE

The markets for the Company's products are characterized by rapidly changing
technology. The introduction of products incorporating new technologies could
render the Company's products obsolete and unmarketable and could exert price
pressures on existing products. Further, the markets for the Company's
products and, in particular, the market for voice and multimedia over the
Internet, are characterized by evolving industry standards and specifications.
As new standards or specifications are adopted, the Company may be required to
devote substantial time and expense in order to adapt its products. The
Company's ability to anticipate changes in technology and industry standards
and successfully develop and introduce new and enhanced products, as well as
additional applications for existing products, in each case in a cost
effective and timely manner, will be a critical factor in the Company's
ability to grow and be competitive. There can be no assurance that the Company
will successfully develop new or enhanced products, that any new or enhanced
products will achieve market acceptance, that the Company will be able to
adapt its products to comply with new standards or specifications, or that the
introduction of new products or technologies by others will not render the
Company's products obsolete. See "Business--Products" and "--Research and
Product Development."

The Company's technology and products have been developed and optimized to
operate in environments with low point-to-point bandwidth such as the
Internet. Current and potential Internet service providers ("ISPs"), including
telecommunications companies, cable companies, traditional ISPs and others,
are seeking to substantially increase the bandwidth of Internet access
connections and network infrastructure. Companies building network
infrastructure in other markets, such as wireless communications, are also
seeking to substantially increase available bandwidth. As the bandwidth of the
Internet and other communications networks increases, demand for the Company's
technologies and products may decrease substantially, which could have a
material adverse effect on the Company's business, operating results and
financial condition.

RISK OF GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

In the United States, there are currently few laws or regulations directly
applicable to communications and speech on the Internet or to access to, or
commerce on, the Internet generally. However, changes in the regulatory
environment, particularly in regulations relating to the telecommunications
industry, could have an adverse effect on the Company's business. Increased
acceptance of speech communications over the Internet could result in
intervention by governmental regulatory agencies in the United States or
elsewhere in the world under existing or newly enacted legislation and in the
imposition of fees or charges on users and providers of products and services
in this area. There can be no assurance that government intervention or
imposition of fees or charges would not have a material adverse impact upon
the acceptance of and growth in the market for Internet voice communications.
Additionally, legislative proposals from international, federal and state
government bodies could impose additional regulations and obligations upon
online service providers. The growing popularity and use of the Internet has
generally led to increased public awareness and could lead to increased
pressure on legislatures to impose regulations and fees. For example, several
states and municipalities have imposed taxes on Internet access services.

A Petition for Declaratory Ruling, Special Relief and Institution of a
Rulemaking (the "Petition") was filed by America's Carriers Telecommunications
Association with the Federal Communications Commission (the "FCC"). The
Petition alleges that providers of Internet telephone software are operating
as telecommunications carriers and, as such, should be subject to the FCC
regulatory framework applicable to traditional telecommunications companies.
The Petition seeks a declaratory ruling establishing the FCC's authority over
interstate and international communications using the Internet and an order
directing that persons providing

8
<PAGE>

Internet phone software comply with the regulatory requirements of The
Communication Act of 1934. Finally, the Petition urges the FCC to initiate a
rulemaking proceeding to consider rules governing the use of the Internet for
the provision of telecommunications services. The FCC issued a public notice
seeking comments with respect to the Petition. There can be no assurance that,
given the substantial investment by telecommunications providers in
traditional telephony infrastructure and services, these providers will not
pursue other avenues to regulate, restrict or increase the cost of Internet
telephony and other applications of voice on the Internet. The Company cannot
predict the likelihood that any future legislation will be enacted or that the
FCC or any other regulatory agency will not issue regulations directly
affecting the Company's business. There can be no assurance that any such
future regulations will not have a material adverse effect upon the Company's
business, operating results and financial condition.

RISKS OF INTERNET DISTRIBUTION

The Company distributes products through, among other channels, the
Internet. Distributing the Company's products through the Internet makes the
Company's software products more susceptible to unauthorized copying and use
than distribution through conventional means. The Company has allowed, and
currently intends to continue to allow, potential customers to electronically
download basic versions of its software for free over the Internet, in order
for them to become familiar with the Company's products and subsequently order
enhanced and other existing or future products. There can be no assurance
that, upon receiving orders for its enhanced products, the Company will be
able to collect payment from users that retain a copy of the Company's
enhanced and other existing or future products.

DEPENDENCE ON KEY PERSONNEL

The Company's performance is substantially dependent on the performance of
its executive officers and key employees, particularly Michael Goldstein, the
Company's President and Chief Executive Officer, and J. Gerard Aguilar, the
Company's Vice President, Research and Development. Given the Company's early
stage of development, the Company is dependent on its ability to retain and
motivate high quality personnel, especially its management and skilled
development teams. The loss of the services of any of its executive officers
or other key employees could have a material adverse effect on the Company's
business, operating results and financial condition. The Company's future
success also depends on its continuing ability to attract and retain
additional highly qualified technical personnel, in particular, speech coding
personnel. Competition for qualified personnel is intense and there can be no
assurance that the Company will be able to attract, assimilate or retain
qualified personnel in the future. The inability to attract and retain the
necessary technical and other personnel could have a material adverse effect
upon the Company's business, operating results and financial condition. See
"Business--Research and Product Development" and "--Employees" and
"Management."

UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS

The Company's success will depend in part on its ability to obtain patent
protection for its products, preserve its trade secrets and operate without
infringing the proprietary rights of other parties. There can be no assurance
that patent applications to which the Company holds rights will result in the
issuance of patents, or that any issued patents will provide commercially
significant protection to the Company's technology and products. In addition,
there can be no assurance that others will not independently develop
substantially equivalent proprietary information not covered by patents to
which the Company owns rights or obtain access to the Company's know-how, or
that others will not claim to have or will not be issued patents which may
prevent the sale of one or more of the Company's products. In particular, Elk
Industries, Inc. ("Elk Industries") has asserted in two letters to Voxware
that Voxware's "Internet-based streaming audio systems" infringe U.S. Patent
No. 4,124,773 owned by Elk Industries, and Elk Industries has offered Voxware
the opportunity to purchase a license. The Company does not believe that its
products infringe Elk Industries' patent because its technology is distinct
from and dissimilar to the claims contained in Elk Industries' patent.
Litigation, which could be costly and time consuming, may be necessary to
determine the scope and validity of others' proprietary rights, including Elk
Industries', or to enforce any patents issued to the Company, in either case,
in judicial or administrative proceedings. An adverse outcome could subject
the Company to significant liabilities to third

9
<PAGE>

parties, require the Company to obtain licenses from third parties or require
the Company to cease any related research and development activities or
product sales. There can be no assurance that a license from Elk Industries or
any licenses required under any other third-party patents or proprietary
rights would be made available on acceptable terms, if at all. In addition,
the laws of certain countries may not protect the Company's intellectual
property.

The software market has traditionally experienced widespread unauthorized
reproduction of products in violation of manufacturers' intellectual property
rights. Such activity is difficult to detect and legal proceedings to enforce
manufacturers' intellectual property rights are often burdensome and involve a
high degree of uncertainty and costs. The Company's success is also dependent
upon unpatented trade secrets which are difficult to protect. To help protect
its rights, the Company requires employees and consultants to enter into
confidentiality agreements that prohibit disclosure of the Company's
proprietary information and require the assignment to the Company of their
ideas, developments, discoveries and inventions. There can be no assurance
that these agreements will provide adequate protection for the Company's trade
secrets, know-how, or other proprietary information in the event of any
unauthorized use or disclosures. See "Business--Patents and Proprietary
Information."

CONCENTRATION OF STOCK OWNERSHIP

Upon completion of this offering, the present directors, executive officers
and their respective affiliates will beneficially own approximately 49.2% of
the Common Stock. As a result, these stockholders will be able to exercise
significant influence over all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. The concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company. See "Principal
Stockholders."

CERTAIN ANTI-TAKEOVER PROVISIONS

After this offering, the Board of Directors will have the authority to issue
up to 10,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights of those
shares without any further vote or action by the stockholders. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. The Company has no
present plans to issue shares of Preferred Stock. In addition, subject to, and
upon the consummation of, the offering, the Company's Certificate of
Incorporation will be amended to provide that directors of the Company shall
be divided into three classes. Furthermore, the Company is subject to the
anti-takeover provisions of Section 203 of the Delaware General Corporation
Law, which will prohibit the Company from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
the business combination is approved in a prescribed manner. The previously
described amendment to the Certificate of Incorporation and Delaware General
Corporation Law provision could deter, or make difficult, a merger or other
acquisition of the Company. See "Description of Securities--Preferred Stock"
and "--Delaware Anti-Takeover Law and Charter Provisions."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market for
the Common Stock will develop or be sustained after the offering. The initial
public offering price will be determined by negotiation between the Company
and the Representatives of the Underwriters based upon several factors. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. The market price of the Company's Common
Stock is likely to be highly volatile and could be subject to wide
fluctuations in response to quarterly variations in

10
<PAGE>

operating results, losses of significant customers, announcements of
technological innovations or new products by the Company or its competitors,
changes in financial estimates by securities analysts, or other events or
factors, including the risk factors described herein. In addition, the stock
market has experienced significant price and volume fluctuations that have
particularly affected the market prices of equity securities of many high
technology companies and that often have been unrelated to the operating
performance of such companies. In the past, following periods of volatility in
the market price of a company's securities, securities class action litigation
has often been instituted against such a company. Such litigation could result
in substantial costs and a diversion of management's attention and resources,
which would have a material adverse effect on the Company's business,
operating results and financial condition. See "Underwriting."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of the Company's Common Stock could
have the effect of depressing the prevailing market price of its Common Stock.
Upon completion of this offering, the Company will have a total of 21,895,000
shares of Common Stock outstanding, assuming no exercise of stock options or
warrants after June 30, 1996. The Company believes that substantially all of
the warrants to purchase 1,770,000 shares of Common Stock outstanding as of
June 30, 1996 will be exercised prior to or promptly following the closing of
this offering. Of the 21,895,000 shares outstanding, the 4,000,000 shares of
Common Stock offered hereby will be freely tradeable without restriction under
the Securities Act of 1933, as amended (the "Securities Act"), by persons
other than "affiliates" of the Company, as defined under the Securities Act.
The remaining 17,895,000 shares of Common Stock outstanding are "restricted
shares" as that term is defined by Rule 144 as promulgated under the
Securities Act. None of these 17,895,000 shares will be immediately saleable
in the public market following the date of this Prospectus. Beginning 180 days
after the date of this Prospectus (or earlier with the written consent of
Montgomery Securities, on behalf of the Underwriters), 17,731,000 shares of
Common Stock will become eligible for sale upon the expiration of lock-up
agreements between the Underwriters and the holders of such shares, subject to
compliance with Rule 144 or Rule 701 of the Securities Act. See "Shares
Eligible for Future Sale."

As of June 30, 1996, options to purchase a total of 2,522,300 shares of
Common Stock were outstanding and there were 2,197,700 shares of Common Stock
available for future option grants under the Company's 1994 Stock Option Plan.
1,835,000 of the shares issuable pursuant to outstanding options are subject
to lock-up restrictions for a period of 180 days as described above. In
addition, the Company has warrants outstanding as of June 30, 1996 to purchase
an aggregate of 1,770,000 shares of Common Stock for $0.75 per share, of which
1,735,000 shares are subject to the lock-up restrictions for a period of 180
days as described above. See "Management--1994 Stock Option Plan,"
"Description of Securities--Warrants," "Underwriting" and "Note 4 of "Notes to
Financial Statements."'

MANAGEMENT DISCRETION IN APPLICATION OF PROCEEDS

The Company has not designated any specific use for the net proceeds from
the sale by the Company of Common Stock, offered hereby. Rather, the Company
intends to use the net proceeds primarily for general corporate purposes,
including working capital and potential acquisitions and strategic
investments. See "Use of Proceeds."

BENEFITS OF OFFERING TO PRINCIPAL STOCKHOLDERS

The Company's principal stockholders will benefit from this offering as a
result of the creation of a public market for the shares of Common Stock
beneficially owned by them. The Company's principal stockholders currently own
11,218,000 shares of Common Stock for which they paid an aggregate of
approximately $6.126 million, or an average of $0.55 per share. These shares
would have a value of $84.135 million at the initial public offering price of
$7.50 per share for an aggregate unrealized gain of approximately $78.0
million. All of the Company's principal stockholders have agreed not to sell
shares of Common Stock in connection with this

11
<PAGE>

offering, including in the over-allotment option. All of these principal
stockholders have agreed not to offer to sell, sell or otherwise dispose of
any shares of Common Stock prior to the expiration of 180 days from the date
of this Prospectus without the consent of the Underwriters. Thereafter,
approximately 5,158,000 shares held by such stockholders, with an aggregate
value of $38.685 million at the initial public offering price of $7.50 per
share, will be available for sale in the public market subject to compliance
with Rule 144 under the Securities Act. See "Dilution," "Principal
Stockholders" and "Shares Eligible for Future Sale."

DILUTION

Purchasers of the Common Stock offered hereby will suffer an immediate and
substantial dilution, in the amount of $6.04 per share, in the pro forma as
adjusted net tangible book value per share as of June 30, 1996, from the
initial public offering price. To the extent outstanding options and warrants
to purchase Common Stock are exercised, there will be further dilution. See
"Dilution."

USE OF PROCEEDS

The net proceeds to the Company from the sale of 4,000,000 shares of Common
Stock offered by the Company hereby at an assumed initial public offering
price of $7.50 per share hereby are estimated to be $27,150,000 after
deducting the estimated underwriting discount and estimated offering expenses.
The Company currently anticipates that its available cash resources combined
with the net proceeds of the offering and funds from operations will be
sufficient to meet its working capital and capital expenditure requirements
for at least the next 18 months.

The principal purposes of the offering are to increase the Company's equity
capital, to create a public market for the Company's Common Stock, to
facilitate future access by the Company to public equity markets and to
enhance the ability of the Company to use its Common Stock as a means of
attracting and retaining key employees.

The Company currently intends to use the net proceeds of this offering for
working capital and other general corporate purposes, including expanding its
sales and marketing operations and funding greater levels of research and
product development and capital expenditure. Furthermore, from time to time
the Company expects to evaluate possible acquisitions of or investments in
businesses, products and technologies that are complementary to those of the
Company, for which a portion of the net proceeds from this offering may be
used. While the Company engages from time to time in discussions with respect
to potential investments or acquisitions, the Company has no plans,
commitments, or agreements with respect to any such investments or
acquisitions. Pending the foregoing uses, the Company intends to invest the
net proceeds of this offering in investment grade, interest-bearing
instruments. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."

DIVIDEND POLICY

The Company has not paid any cash or stock dividends and does not expect to
declare or pay any cash or stock dividends in the foreseeable future, but
instead intends to retain all earnings, if any, to invest in the Company's
operations. The payment of future dividends is within the discretion of the
Board of Directors and will depend upon the Company's future earnings, if any,
its capital requirements, financial condition and other relevant factors.

12
<PAGE>

CAPITALIZATION

The following table sets forth as of June 30, 1996 (i) the actual
capitalization of the Company; (ii) the pro forma capitalization after giving
effect to the automatic conversion of all outstanding shares of the Company's
Series A Preferred Stock into Common Stock upon the closing of this offering;
and (iii) the pro forma capitalization as adjusted to give effect to the sale
of 4,000,000 shares of Common Stock offered by the Company (at an assumed
initial public offering price of $7.50 per share and after deducting the
underwriting discount and estimated offering expenses) and the application of
the net proceeds therefrom. The table should be read in conjunction with the
financial statements and the related notes appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Redeemable Series A Convertible Pre-
ferred Stock........................... $ 5,938,325 $ -- $ --
----------- ----------- -----------
Stockholders' equity (deficit):
Preferred Stock, $.001 par value,
10,000,000 shares authorized;
6,000,000 Redeemable Series A
Convertible shares (actual); no
shares (pro forma); no shares (pro
forma as adjusted) issued and
outstanding.......................... -- -- --
Common Stock, $.001 par value,
40,000,000 shares authorized;
11,895,000 shares (actual);
17,895,000 shares (pro forma);
21,895,000 shares (pro forma as
adjusted) issued and outstanding(1).. 11,895 17,895 21,895
Additional paid-in capital............ 3,171,190 9,103,515 36,249,515
Accumulated deficit................... (4,258,563) (4,258,563) (4,258,563)
----------- ----------- -----------
Total stockholders' equity (defi-
cit)............................... (1,075,478) 4,862,847 32,012,847
----------- ----------- -----------
Total capitalization.............. $ 4,862,847 $ 4,862,847 $32,012,847
=========== =========== ===========
</TABLE>
- --------
(1) Based on shares outstanding as of June 30, 1996. Excludes (i) 1,770,000
shares of Common Stock reserved for issuance upon the exercise of
outstanding warrants at an exercise price of $0.75 per share, (ii)
2,522,300 shares of Common Stock issuable upon exercise of outstanding
stock options and (iii) 2,197,700 shares reserved for future grants under
the Company's 1994 Stock Option Plan. The weighted average exercise price
of all outstanding options is $1.33 per share.

13
<PAGE>

DILUTION

At June 30, 1996, the pro forma net tangible book value of the Common Stock
was $4,862,847 or $0.27 per share after giving effect to the automatic
conversion of the Company's Series A Preferred Stock into Common Stock upon
the closing of this offering. Pro forma net tangible book value per share is
equal to the Company's total tangible assets less total liabilities divided by
the total number of shares of Common Stock outstanding on a pro forma basis.
After giving effect to the sale of the 4,000,000 shares of Common Stock
offered by the Company hereby (at an assumed initial public offering price of
$7.50 per share and after deducting the underwriting discount and estimated
offering expenses) and the application of the estimated net proceeds
therefrom, the pro forma as adjusted net tangible book value of the Common
Stock at June 30, 1996 would have been $32,012,847, or $1.46 per share. This
represents an immediate increase in the pro forma net tangible book value of
$1.19 per share to existing stockholders and an immediate dilution of $6.04
per share to purchasers in this offering. The following table illustrates this
per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price.............................. $7.50
Pro forma net tangible book value before the offering............ $0.27
Increase per share attributable to new investors................. 1.19
-----
Pro forma as adjusted net tangible book value per share after the
offering.......................................................... 1.46
-----
Dilution per share to new investors(1)............................. $6.04
=====
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock purchased from the Company, the total
cash consideration paid to the Company and the average price per share paid by
existing stockholders and by new investors in this offering based on an
assumed initial public offering price of $7.50 per share.

<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
------------------ ------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders(2)........ 17,895,000 81.7% $ 9,121,410 23.3% $0.51
New investors................... 4,000,000 18.3 30,000,000 76.7 7.50
---------- ----- ----------- -----
Total......................... 21,895,000 100.0% $39,121,410 100.0%
========== ===== =========== =====
</TABLE>
- --------
(1) If all exercisable options and warrants to purchase Common Stock
outstanding as of June 30, 1996 with exercise prices less than the assumed
initial public offering price of $7.50 per share were to be exercised, the
pro forma net tangible book value per share after this offering would be
$34,185,936 and dilution per share to new investors in this offering would
be $6.12.
(2) Includes 6,000,000 shares of Common Stock issuable upon conversion of
outstanding shares of the Company's Series A Preferred Stock which will be
converted upon the closing of this offering.

14
<PAGE>

SELECTED FINANCIAL DATA

The selected statement of operations data for the period from Inception
(August 20, 1993) to June 30, 1994 and the two years ended June 30, 1996 and
the selected balance sheet data as of June 30, 1995 and 1996 have been derived
from the financial statements of the Company, which have been audited by
Arthur Andersen LLP, independent public accountants, included elsewhere in
this Prospectus. The selected balance sheet data as of June 30, 1994 has been
derived from the Company's audited financial statements not included herein.
The selected statement of operations data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and notes thereto
included elsewhere in the Prospectus.

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(AUGUST 20, 1993) YEAR ENDED JUNE 30,
TO JUNE 30, ------------------------
1994 1995 1996
----------------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Product revenues................ $ -- $ -- $ 1,494,075
Service revenues................ -- -- 112,963
--------- ----------- -----------
Total revenues............... -- -- 1,607,038
--------- ----------- -----------
Cost of revenues:
Cost of product revenues........ -- -- 17,285
Cost of service revenues........ -- -- 28,129
--------- ----------- -----------
Total cost of revenues....... -- -- 45,414
--------- ----------- -----------
Gross profit................. -- -- 1,561,624
--------- ----------- -----------
Operating expenses:
Research and development........ 93,372 536,581 2,496,717
Sales and marketing............. 9,158 331,728 1,084,280
General and administrative...... 112,978 365,411 979,796
--------- ----------- -----------
Total operating expenses..... 215,508 1,233,720 4,560,793
--------- ----------- -----------
Operating loss............... (215,508) (1,233,720) (2,999,169)
Interest income................... -- 64,940 131,857
--------- ----------- -----------
Net loss.......................... $(215,508) $(1,168,780) $(2,867,312)
========= =========== ===========
Pro forma net loss per share...... $ (0.16)
===========
Shares used in computing pro forma
net loss per share(1)............ 17,583,980
===========
</TABLE>

<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------
1996
----------------------
PRO
1994 1995 ACTUAL FORMA(2)
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......... $307,297 $1,523,054 $3,836,836 $3,836,836
Working capital.................... 254,828 1,417,964 3,887,338 3,887,338
Total assets....................... 358,700 1,666,827 5,336,453 5,336,453
Redeemable Series A Convertible
Preferred Stock................... -- -- 5,938,325 --
Stockholders' equity (deficit)..... 306,231 1,556,297 (1,075,478) 4,862,847
</TABLE>
- --------
(1) See Note 1 of "Notes to Financial Statements" for an explanation of the
determination of the number of shares and share equivalents used in
computing the pro forma per share amount.
(2) Reflects the conversion of all the outstanding shares of the Company's
Series A Preferred Stock into Common Stock upon the closing of this
offering.

15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

From Inception (August 20, 1993) to June 30, 1995, the Company's operating
activities related primarily to performing research and development,
recruiting personnel, raising capital and purchasing operating assets. The
Company commenced product releases in July 1995 and, for accounting purposes,
emerged from development stage commencing in July 1995. Since Inception, the
Company has raised an aggregate of $8,838,440, net of offering costs, through
private placements.

The Company generates revenues from two sources: fees from product licenses
and fees for services provided. Product revenues account for a majority of the
Company's revenues. The Company's products are licensed primarily to software,
computing and communications companies who incorporate the Company's products
and technologies into their products. The Company generally negotiates
contract terms with customers on a case by case basis, with arrangements that
have historically included a combination of initial license fees, annual
license fees or royalties. The Company expects a significant portion of its
future revenues to be in the form of royalties or other recurring payments
based on the sale by licensees of products that incorporate the Company's
products. To date, the Company has entered into approximately 18 license
agreements which provide for recurring payments. It is the intention of the
Company to continue to pursue license opportunities that include a recurring
revenue component. Service revenues consist of customer support and
engineering fees. Customer support services include providing updates and
technical support to licensees of the Company's products. Engineering services
include providing technical resources to support customer specific development
efforts or porting the Company's technologies to specific customer platforms.

Software product revenues are generally recognized upon shipment, provided
that there are no significant post-delivery obligations and that payment is
due within one year. If an acceptance period is required, revenues are
recognized upon customer acceptance. Royalty revenues are recognized in the
period of customer shipment. To date, no royalty revenues have been
recognized. Customer support revenues, including amounts bundled with license
fees, are recognized over the term of the support period, which is typically
one year. Engineering fees are recognized upon customer acceptance or over the
period in which services are provided if customer acceptance is not required.
All research and development costs expended to date for development of new
software products and enhancements to existing software products have been
expensed as incurred. As a result, cost of product revenues do not include
amortization of capitalized software development costs. See Note 1 of "Notes
to Financial Statements."

The Company has only a limited operating history upon which an evaluation of
the Company and its prospects can be based. As of June 30, 1996, the Company
had an accumulated deficit of $4,258,563. Although the Company has experienced
revenue growth in recent periods, the limited operating history of the Company
makes the prediction of future results of operations impossible and,
therefore, the Company's recent revenue growth should not be taken as
indicative of the rate of revenue growth, if any, that can be expected in the
future. In addition, the Company's operating results may fluctuate
significantly in the future as a result of a variety of factors, including the
level of usage of the Internet, the budgeting cycles of potential customers,
the volume of, and revenues derived from, sales of products by the Company's
licensees that incorporate the Company's products, the amount and timing of
capital expenditures and other costs relating to the expansion of the
Company's operations, the introduction of new products or services by the
Company or its competitors, pricing changes in the industry, technical
difficulties with respect to the use of products developed by the Company and
general economic conditions. See "Risk Factors--Limited Operating History;
Accumulated Deficit; Early Stage of Development," "--Dependence on Netscape,"
"--Uncertain Adoption of Internet as a Medium for Voice Communications," "--
Potential Fluctuations in Operating Results," "--Highly Competitive Industry,"
"--Risks of Internet Distribution" and "--Reliance on Third Parties to
Generate Recurring Revenues."

16
<PAGE>

PERIOD TO PERIOD COMPARISONS

The following table presents selected financial information for the periods
indicated. This information has been derived from the Company's unaudited
financial statements which, in the opinion of management, reflect all
adjustments necessary to fairly present this information when read in
conjunction with the financial statements and notes thereto included elsewhere
in this Prospectus. The results of operations for any period are not
necessarily indicative of the results to be expected for any future period.

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS ENDED
(AUGUST 20, 1993) -----------------------------------------------------------------
TO JUNE 30, 1995 SEPTEMBER 30, 1995 DECEMBER 31, 1995 MARCH 31, 1996 JUNE 30, 1996
----------------- ------------------ ----------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Product revenues...... $ -- $ 92,616 $ 107,705 $ 503,761 $ 789,993
Service revenues...... -- 91 681 2,335 109,856
----------- --------- --------- --------- -----------
Total revenues....... -- 92,707 108,386 506,096 899,849
----------- --------- --------- --------- -----------
Cost of Revenues:
Cost of product reve-
nues................. -- 3,109 3,109 3,397 7,670
Cost of service reve-
nues................. -- 1,655 3,310 4,508 18,656
----------- --------- --------- --------- -----------
Total cost of reve-
nues................ -- 4,764 6,419 7,905 26,326
----------- --------- --------- --------- -----------
Gross profit......... -- 87,943 101,967 498,191 873,523
----------- --------- --------- --------- -----------
Operating Expenses:
Research and develop-
ment................. 629,953 248,749 324,140 630,184 1,293,644
Sales and marketing... 340,886 107,449 198,801 331,489 446,541
General and adminis-
trative.............. 478,389 74,205 165,496 298,014 442,081
----------- --------- --------- --------- -----------
Total operating
expenses............ 1,449,228 430,403 688,437 1,259,687 2,182,266
----------- --------- --------- --------- -----------
Operating loss....... (1,449,228) (342,460) (586,470) (761,496) (1,308,743)
Interest income........ 64,940 17,330 16,342 50,782 47,403
----------- --------- --------- --------- -----------
Net loss............... $(1,384,288) $(325,130) $(570,128) $(710,714) $(1,261,340)
=========== ========= ========= ========= ===========
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------
SEPTEMBER 30, 1995 DECEMBER 31, 1995 MARCH 31, 1996 JUNE 30, 1996
------------------ ----------------- -------------- -------------
<S> <C> <C> <C> <C>
AS A PERCENTAGE OF
REVENUES:
Revenues:
Product revenues...... 100% 99% 99% 88%
Service revenues...... -- 1 1 12
---- ---- ---- ----
Total revenues....... 100 100 100 100
---- ---- ---- ----
Cost of Revenues:
Cost of product reve-
nues................. 3 3 1 1
Cost of service reve-
nues................. 2 3 1 2
---- ---- ---- ----
Total cost of reve-
nues................ 5 6 2 3
---- ---- ---- ----
Gross profit......... 95 94 98 97
---- ---- ---- ----
Operating Expenses:
Research and develop-
ment................. 268 299 124 143
Sales and marketing... 116 183 65 50
General and adminis-
trative.............. 80 153 59 49
---- ---- ---- ----
Total operating ex-
penses.............. 464 635 248 242
---- ---- ---- ----
Operating loss....... (369) (541) (150) (145)
Interest income........ 18 15 10 5
---- ---- ---- ----
Net loss............... (351)% (526)% (140)% (140)%
==== ==== ==== ====
</TABLE>

17
<PAGE>

RESULTS OF OPERATIONS

Revenues

The Company had no revenues during the period from Inception to June 30,
1995. Total revenues for the year ended June 30, 1996 were $1,607,038,
consisting of $92,707, $108,386, $506,096 and $899,849 for the quarters ended
September 30, 1995, December 31, 1995, March 31, 1996 and June 30, 1996,
respectively. The quarter ended September 30, 1995 was the first full quarter
in which the Company's products and services were made commercially available.
The Company's largest customer accounted for 31% of total revenues in the year
ended June 30, 1996. Revenues increased each quarter from the quarter ended
September 30, 1995 through the quarter ended June 30, 1996 as the Company
entered into license agreements providing customers with the right to use the
Company's products and related services.

Product revenues accounted for 93% of total revenues in the year ended June
30, 1996, consisting of $92,616, $107,705, $503,761 and $789,993 for the
quarters ended September 30, 1995, December 31, 1995, March 31, 1996 and June
30, 1996, respectively. Product revenues increased each quarter from the
quarter ended September 30, 1995 through the quarter ended June 30, 1996
primarily due to the increased volume of licenses of the Company's products to
new customers.

Service revenues accounted for 7% of total revenues in the year ended June
30, 1996, consisting of $91, $681, $2,335 and $109,856 for the quarters ended
September 30, 1995, December 31, 1995, March 31, 1996 and June 30, 1996,
respectively. Services revenues were primarily attributable to customer
support and fees for engineering services.

Cost of Revenues

Cost of product revenues consists primarily of the cost of product media and
duplication, manuals and packaging materials. Cost of product revenues was
$17,285 in the year ended June 30, 1996, consisting of $3,109, $3,109, $3,397
and $7,670 for the quarters ended September 30, 1995, December 31, 1995, March
31, 1996 and June 30, 1996, respectively. For the year ended June 30, 1996,
cost of product revenues was 1% of product revenues.

Cost of service revenues consists primarily of the expenses associated with
the staffing of a customer support group and engineering services, which
consist primarily of employee compensation and equipment depreciation. Cost of
service revenues was $28,129 in the year ended June 30, 1996, consisting of
$1,655, $3,310, $4,508 and $18,656 for the quarters ended September 30, 1995,
December 31, 1995, March 31, 1996 and June 30, 1996, respectively. For the
year ended June 30, 1996, cost of service revenues was 25% of service
revenues. The dollar increase in cost of service revenues from the quarter
ended September 30, 1995 to the quarter ended June 30, 1996 was primarily
attributable to increased staffing of the Company's customer support and
engineering groups.

Operating Expenses

The Company's operating expenses have increased significantly since
Inception. This trend reflects the costs associated with the development of
infrastructure, rapid growth and increased efforts to commercialize the
Company's products and services. The Company believes that continued expansion
of its operations is essential to enhance the Company's products and services
and distribute them in targeted markets and expand the Company's installed
user base. As a consequence, the Company intends to continue to increase
expenditures in all operating areas.

Research and development expenses primarily consist of employee compensation
and equipment depreciation. Research and development expenses were $629,953
for the period from Inception to June 30, 1995 and $2,496,717 for the year
ended June 30, 1996, consisting of $248,749, $324,140, $630,184 and $1,293,644
for the quarters ended September 30, 1995, December 31, 1995, March 31, 1996
and June 30, 1996, respectively.

18
<PAGE>

The dollar increase in research and development expenses for the period from
Inception to June 30, 1995 compared to the year ended June 30, 1996 and from
quarter to quarter in fiscal 1996 was primarily due to increasing the research
and development staff from 6 at June 30, 1995 to 33 at June 30, 1996 and the
costs associated with developing and enhancing the functionality of the
Company's family of products. All research and development costs have been
expensed as incurred. The Company believes that significant investments in
research and development are required to establish and maintain competitive
advantage. As a consequence, the Company intends to increase the absolute
dollar level of research and development expenditures in future periods.

Sales and marketing expenses consist primarily of employee compensation
(including direct sales commissions), travel expenses, trade shows and costs
of promotional materials. Sales and marketing expenses were $340,886 for the
period from Inception to June 30, 1995 and $1,084,280 for the year ended June
30, 1996, consisting of $107,449, $198,801, $331,489 and $446,541 for the
quarters ended September 30, 1995, December 31, 1995, March 31, 1996 and June
30, 1996, respectively. The dollar increase in sales and marketing expenses
for the period from Inception to June 30, 1995 compared to the year ended June
30, 1996 and from quarter to quarter in fiscal 1996 was primarily due to the
creation and expansion of the Company's direct sales force from 3 at June 30,
1995 to 8 at June 30, 1996 and increased expenses associated with the
promotion and marketing of the Company's products and services. The Company
intends to continue to intensify and expand its direct and tele-sales efforts
and, as a result, intends to increase the absolute dollar level of sales and
marketing expenses in future periods.

General and administrative expenses consist primarily of employee
compensation and fees for insurance, rent, office expenses and professional
services. General and administrative expenses were $478,389 for the period
from Inception to June 30, 1995 and $979,796 for the year ended June 30, 1996,
consisting of $74,205, $165,496, $298,014 and $442,081 for the quarters ended
September 30, 1995, December 31, 1995, March 31, 1996 and June 30, 1996,
respectively. The Company intends to increase the absolute dollar level of
general and administrative expenses in future periods.

Income Taxes

As of June 30, 1996, the Company had approximately $3,500,000 of federal net
operating loss carryforwards which will begin to expire in 2009 if not
utilized. Under the Tax Reform Act of 1986, the amounts of and the benefits
from net operating loss carryforwards may be impaired in certain
circumstances. Events which may cause such limitations in the amount of net
operating losses that the Company may utilize in any one year include, but are
not limited to, a cumulative ownership change of more than 50% over a three
year period. As of June 30, 1996, the effect of any limitation, if imposed, is
not expected to be material. As of June 30, 1996, the Company has provided a
full valuation allowance on the deferred tax asset because of the uncertainty
regarding realizability of these deferred assets, primarily as a result of
considering such factors as the Company's limited operating history, the
volatility of the market in which it competes, the operating losses incurred
to date and the operating losses anticipated in future periods. See Note 5 of
"Notes to Financial Statements."

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1996, the Company had $3,836,836 in cash and cash
equivalents. Since Inception, the Company has primarily financed its
operations through the sale of equity securities. Cash of $1,268,152 and
$3,273,714 was used to fund operations for the period from Inception to June
30, 1995 and the year ended June 30, 1996, respectively. For the period from
Inception to June 30, 1995 and the year ended June 30, 1996, cash used in
investing activities was $149,379 and $586,366, respectively, and was
primarily related to purchases of office equipment. For the period from
Inception to June 30, 1995, cash provided by financing activities of
$2,940,585 was primarily attributable to two separate private placements of
equity securities. For the year ended June 30, 1996, cash provided by
financing activities of $6,173,862 was primarily attributable to the sale of
Series A Preferred Stock. All Series A Preferred Stock will convert into
Common Stock upon the closing of the offering.

19
<PAGE>

The Company has no material commitments other than those under normal
building and equipment operating leases. The Company anticipates a substantial
increase in its capital expenditures and operating lease arrangements in the
year ending June 30, 1997 consistent with its anticipated growth. The Company
anticipates major capital expenditures in the year ending June 30, 1997
primarily for additions to the Company's internal networking and computing
infrastructure. The Company believes that the net proceeds from this offering
and current cash balances will be sufficient to fund its working capital and
capital expenditures requirements, exclusive of cash required for possible
acquisitions of or investments in businesses, products and technologies, for
at least the next 18 months. For a discussion of factors that could cause
actual results to vary from this forward-looking statement, see "Risk
Factors."

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") which established financial accounting and
reporting standards for stock based employee compensation plans. Companies are
encouraged, rather than required, to adopt a new method that accounts for
stock compensation awards based on their fair value using an option pricing
model. Companies that do not adopt this new standard will have to make pro
forma disclosures of net income (loss) as if the fair value based method of
accounting established by this standard had been applied. The Company will
adopt SFAS No. 123 effective July 1, 1996. The Company has elected to adopt
the disclosure requirement of this pronouncement. The adoption of the
pronouncement is expected to have no impact on the Company's financial
position or results of operations.

20
<PAGE>

BUSINESS

OVERVIEW

Voxware develops, markets, licenses and supports a comprehensive, integrated
set of digital speech processing technologies which provide the ability to
compress, model and transform speech. MetaVoice, the Company's innovative
coding technology, is designed to reproduce high quality speech while
requiring very low communications bandwidth and processing power. In addition
to efficiently compressing speech, MetaVoice enables a broad array of voice
transformation capabilities. Voxware's technologies enable its customers to
create a new generation of speech-enhanced communications and interactive
products for the Internet and other bandwidth-constrained environments. The
Company licenses its technologies, including speech codecs and application
programming interfaces, to software, computing and communications companies
and distributes its end-user application software to consumers and businesses.

To accelerate adoption of its technologies, the Company seeks to broadly
license its products and establish strategic relationships with market
leaders. The Company has established a strategic relationship with Netscape.
Netscape uses Voxware's speech coding technology as a part of its LiveMedia
multimedia framework to provide low bandwidth speech functions with version
3.0 of Netscape Navigator, currently in beta release. Navigator is the most
widely used software application for the World Wide Web. Netscape has also
made a minority equity investment in the Company.

Intel Corporation has made a minority equity investment in the Company.
Intel provides consulting support to Voxware for the optimization of the
Company's technologies on Intel processor platforms, consults with Voxware on
standards issues of mutual interest and supplies the Company with pre-release
versions of its advanced processors for development of the Company's products.

INDUSTRY BACKGROUND

Due to the emergence of powerful low-cost processors and the growth of the
Internet and other digital networks, the markets for digital speech
technologies are rapidly expanding beyond conventional telephony. Digital
speech technologies are increasingly being integrated into a variety of
applications, including voice-enabled Web pages, Internet telephony and
conferencing, Internet broadcasting, interactive games, voice messaging,
wireless and satellite communications, multimedia computing and voice-enabled
devices.

Voice on the Internet

The Internet is a collection of thousands of computer networks and millions
of computer connections that enables individuals, businesses and institutions
worldwide to communicate and to access and share information. Any computer
using the open standard Internet Protocol can communicate with any other
computer on the Internet. The universal, open connectivity of the Internet
enables computer users to communicate using a variety of digital data types,
including text, graphics, voice and video.

A combination of significant technological trends has led to the widespread
adoption of the Internet by a growing number of individuals and business
users. The proliferation of communication-enabled multimedia

21
<PAGE>

personal computers, the availability of intuitive, graphical Web browsers and
an increasingly robust network infrastructure, have allowed widespread access
to the Internet and have increased the use of the World Wide Web (the "Web")
by a large number of users for a broader range of applications. The Web
enables users to find, retrieve and link information on the Internet through a
consistent graphical interface that makes the underlying complexities
transparent to the user. In addition, the Web is an interactive environment,
which facilitates the exchange of multimedia-rich information and
entertainment content among users worldwide. As a result, the Web is changing
the way in which people exchange information and communicate with each other.
International Data Corporation ("IDC") has estimated that the number of
Internet users was approximately 38 million at the end of 1995 and is expected
to reach 199 million by the end of 1999.

The Company believes that adding voice communication capabilities to
existing text and graphic applications for the Internet can broaden and enrich
Internet users' communications. As multimedia and communications capabilities
become standard components of personal computer systems, a market for voice,
audio and video products for the Internet is emerging. Examples of emerging
Internet voice applications are multimedia Web pages incorporating pre-
recorded voice, point-to-point and multi-party telephony, telephony gateways
linking Internet users to public and private telephone networks, broadcasting
of live and pre-recorded content, voice messaging integrated with e-mail and
Web pages and multiplayer games which allow participants to speak to one
another.

The development of voice applications for the Internet is part of a larger
trend resulting in the convergence of standard voice communications and data
networks. Lowering of federal regulatory barriers to competition across
traditionally distinct sectors of the telecommunications industry has opened
new markets for and increased competitive pressures upon traditional
telecommunications companies. In response to these factors, major
telecommunications companies have begun to establish a presence in Internet
services, including online voice services. The Company believes that
telecommunications companies will require advanced digital speech processing
technology in order to provide high quality Internet voice services.

Voice in Other Markets

Given the natural preference for speech as a medium for communication and
expression, voice capabilities are being added to a wide array of products.
The rapidly declining cost and increasing power of digital signal processors
("DSPs") enable high quality voice using a fraction of the memory or bandwidth
historically required at prices that are acceptable for a range of business
and consumer applications.

Multimedia Productions. Multimedia productions involve the use of personal
computers to combine audio playback capabilities with some combination of
text, graphics, animation, video and data. Examples of primary multimedia
applications include packaged software for interactive entertainment and
information (i.e. games, education programs, reference works) and software
tools designed to allow users to create their own multimedia presentations.

Voice-Enabled Devices. The increasing power of low cost DSPs makes it
possible to record and transform voice for a wide variety of products aimed at
the consumer and business markets such as telephone answering machines,
personal electronic organizers and voice-enabled toys.

Wireless Communication. The growth of cellular telephony and improvements in
radio and satellite technology have enabled the development of new wireless
services. These services include voice paging systems, which are designed to
deliver voice messages directly to a paging device without the need for a user
to call in to receive a message, and hand-held satellite telephone systems,
which are designed to allow mobile telephone service to and from remote
locations.

THE CHALLENGE: HIGH QUALITY SPEECH PRODUCTS AND SERVICES

The Internet was originally designed for conventional text data applications
such as e-mail and file transfers. These applications can generally tolerate
the low effective bandwidth, network congestion and inconsistent data

22
<PAGE>

delivery characteristic of the Internet. By contrast, real-time speech
applications, which consume substantially higher bandwidth and suffer in the
presence of delays or gaps, must address these challenges to deliver high
quality speech over the Internet. Addressing these challenges effectively
requires a high degree of compression. Speech compression approaches, however,
are limited by the constraints of available processing power and represent a
trade-off between speech quality and the bandwidth required.

Effective bandwidth on the Internet is limited to the lowest bandwidth
component of the pathway taken by the data. Most individual users are limited
by the transmission rates of their modems, typically 14.4 kilobits per second
("kbps") or 28.8 kbps. Even on higher capacity connections, the effective
bandwidth is often reduced by the need to share available capacity across many
users. In addition, emerging multimedia applications on the Internet typically
comprise simultaneous voice, video and data streams, which must share the
available capacity, reducing the effective bandwidth available to voice data.

The design of the Internet is fundamentally different from the architecture
of conventional voice networks. The Internet is a "packet-switched" network
which breaks down data into a series of smaller, discrete "packets" for
transmission. Each packet of data travels independently through the network to
the destination address, where application software reassembles the packets to
recreate the original data set. Due to the tremendous growth of Internet usage
and the higher bandwidth demands of multimedia applications, congestion occurs
routinely on the Internet. As currently designed, the Internet handles
congestion by discarding or delaying packets or by sending packets from the
same source along different pathways, which can result in packets sent in
sequence arriving out of order. If the data packets represent a real-time
speech stream, the listener may perceive a gap or "choppiness" as a result of
missing, late-arriving or out-of-sequence packets.

In part, these challenges can be addressed by compressing the speech signal,
which decreases the number of bits required to encode and transmit the signal.
Reducing the effective bandwidth required to transmit the speech data
decreases the impact of congestion and inconsistent packet delivery. However,
speech compression technologies represent a trade-off between the quality of
speech delivered and the amount of bandwidth utilized. On the one hand,
technologies that achieve high speech quality generally require high
bandwidth, which can introduce unacceptable delays in delivery and make the
speech playback vulnerable to choppiness. On the other hand, technologies that
attempt to reduce bandwidth utilized typically offer unacceptable speech
quality or require the use of high power or specialty microprocessors. Speech
compression technologies are also limited by the constraints of the available
processing power, which in the case of typical Internet users consists of
general purpose microprocessors such as Intel's 486 and Pentium platforms.

Although the Internet is one of the fastest growing markets for speech
applications, several other significant markets also demand high-quality, very
low bandwidth speech. Diverse applications such as voice pagers, satellite
communications and low-cost electronic recording devices share many of the
same speech coding challenges as the Internet.

THE VOXWARE SOLUTION

Voxware has developed a comprehensive, integrated set of speech coding
technologies specifically to address the challenges associated with real-time
speech communication over the Internet and other low bandwidth media. The
Company's innovative MetaVoice coding technology is designed to alter the
trade-off between quality and bandwidth. MetaVoice is designed to deliver high
quality speech in a fraction of the bandwidth generally required by
conventional speech compression solutions and within the constraints of
available processing power. These characteristics are designed to make
MetaVoice a preferred solution for speech communications in environments such
as the Internet, wireless telephony and consumer and business products and
devices where transmission bandwidth, processing power and storage capacity
are limited. MetaVoice is designed to easily operate on a broad range of
application platforms and processors. Voxware's technologies enable its
customers to add new speech capabilities to their existing products and to
create a new generation of integrated speech-enabled products.

23
<PAGE>

TYPICAL COMMUNICATION BANDWIDTH REQUIREMENTS

<TABLE>
<CAPTION>
APPROXIMATE BANDWIDTH
APPLICATION REQUIRED (KBPS)
----------- ---------------------
<S> <C>
CD-Quality Audio (16 bits, 44.1 KHz sampling
rate) 706.0
Uncompressed Speech (16 bits, 8 KHz sampling
rate) 128.0
Ordinary Telephone (8 bits, 8 KHz sampling rate) 64.0
Modem Internet Access < 28.8
Voxware MetaVoice (RT24) 2.4
</TABLE>

The MetaVoice codec uses a complex mathematical model that can accurately
reproduce human speech based on a finite number of descriptive parameters.
MetaVoice is currently capable of compressing speech data from a rate of 128
kbps to 2.4 kbps, enabling the creation of very small packets which are
capable of flowing through the network more easily in the presence of
congestion and low bandwidth.

For Internet speech applications, Voxware's technologies exhibit the
following attributes, among others, relative to traditional technologies:

. More graceful handling of lost, delayed or out-of-sequence packets
through the Company's innovative transmission quality management
technologies.

. Enabling teleconferencing and other multiple voice stream applications
in a way that does not require mixing at a central distribution point,
resulting in lower cost and improved quality of service.

. Requiring very low processing power which permits operation on general
purpose microprocessors (e.g. Intel 486).

. Enhancing the ability to combine real-time speech with video and data
streams by permitting more bandwidth to be allocated to non-speech data
transmission.

The Company believes that the low bandwidth and processing requirements of
MetaVoice potentially have significant advantages in a variety of other
markets, such as wireless telephony and certain consumer and business
products. For instance, the efficient compression of MetaVoice could enable
telecommunications providers to expand the capacity of their network systems.
In addition, embedding MetaVoice on a wide variety of DSP chips could expand
memory for digital answering machines, personal data assistants, voice-enabled
toys and other products.

MetaVoice also incorporates powerful capabilities for speech manipulation
and special effects unique to its model of human speech. Based on these
additional characteristics, the Company is developing technologies for
manipulation of voice to modify voice identity, modulate pitch and alter
playback speed.

CORE TECHNOLOGY

MetaVoice Coding Technology

Voxware's innovative approach to speech coding, MetaVoice, is designed to
achieve high speech quality with very low bandwidth and processing power
requirements. The MetaVoice codec uses a mathematical model that can
accurately reproduce human speech based on a finite number of descriptive
parameters. To encode a speaker's voice, MetaVoice uses sophisticated
mathematical algorithms which analyze input speech and extract accurate
estimates of the model parameters. These parameters are converted into
discrete values which can be compressed to relatively few "bits" of
information for transmission. The receiving application converts these bits
back to model parameters which MetaVoice's speech synthesis model uses to
reconstruct a close perceptual

24
<PAGE>

approximation of the original speech. MetaVoice is currently capable of
compressing speech data from 128 kbps to 2.4 kbps while still maintaining good
quality speech.

Two principal design choices, in combination, underlie MetaVoice's ability
to produce high quality speech at low bandwidth:

. Speech specific vs. general audio coding--MetaVoice is designed
specifically to encode speech signals rather than music or other general
audio signals. Speech signals typically contain only one voice at a
time, whereas music and other general audio signals may contain dozens
of simultaneous "voices"--both human and instrumental. Also, as compared
to music signals, the rate at which speech signals change is limited by
the human vocal apparatus. MetaVoice exploits these characteristics of
speech to achieve greater compression than is generally achievable with
general audio coding technologies.

. Parametric vs. waveform coding--MetaVoice is a parametric codec, whereas
most conventional speech codecs are waveform codecs which use linear
prediction techniques to reduce the amount of information necessary to
represent the input speech signal. When the number of bits used to
represent the waveform is reduced below critical limits as the
compression is increased, the linear prediction approach can no longer
reproduce an accurate waveform, resulting in poor speech quality. At low
bit rates, a properly engineered parametric codec such as MetaVoice is
capable of delivering speech quality superior to that of a waveform
codec.

Despite the above advantages, few companies have developed or marketed a
commercial speech-specific parametric compression system because of the
technical challenge it presents. MetaVoice is designed (i) to operate within
the processing and memory constraints of standard personal computers and
embedded devices, (ii) to address real world challenges including variations
in microphones, sound cards and room acoustics and the presence of background
noise and (iii) to faithfully reproduce the widest possible range of voice
types. The Company believes MetaVoice is the first 2.4 kbps speech codec to
achieve widespread distribution on the Internet.

In addition, MetaVoice technology is highly tolerant of lost data packets,
making it well suited to Internet transmission. The codec is designed to
predict successive information segments. If a packet is lost, the codec
automatically interpolates across the information it has available, reducing
the perceptual impact of the missing information.

Transmission Quality Management

The Company has also developed an application programming interface suitable
for development of applications for transmission of high quality voice over
the Internet. This interface incorporates flow and error control, which
manages the incoming data from the codec, handles lost or late packets and
reorders out of sequence packets. Based on continuously updated measurements
of network performance, Voxware's transmission quality management technologies
adjust how data is "packetized" for transmission and decoded and played back
after reception.

When the Internet is congested and is losing or delaying a relatively high
percentage of packets, these technologies add error correction information
into each outgoing packet. At the point of reception, playback buffers are
dynamically shortened or lengthened and speech synthesis is manipulated to
minimize delay and reduce the perception of choppiness.

VoiceFonts(TM) and Voice Effects Technologies

MetaVoice's proprietary approach to coding the perceptually relevant
attributes of the human voice are being developed for use in transforming
voice attributes including pitch, timbre and timing. The three broad voice-
effects technologies the Company is developing are (i) VoiceFonts, a
technology to create a wide range of

25
<PAGE>

naturalistic voices, as well as creating "character" or "cartoon" voices; (ii)
technology to shift the pitch of singing or speech, preserving and/or
improving the naturalness, attractiveness and clarity of the original
articulation; and (iii) technology to speed up or slow down recorded speech
without distortion while preserving the original voice pitch and timbre.

THE VOXWARE STRATEGY

The Company's objective is to establish its core technologies as the
preferred solutions for speech communications in its target markets. The
Company's strategy incorporates the following key elements:

Extend Technological Leadership

The Company has been a leader in delivering low bandwidth speech compression
on the Internet. The Company intends to continue to extend the functionality
and uses of its core technologies. By continuing to invest in research and
development, the Company believes that it can further improve its
technologies, allowing it to deliver compression performance that is
meaningfully superior to competing technologies. In addition, the Company
intends to deepen its product offerings for its current applications and to
develop new applications in diverse areas such as voice effects.

Accelerate Adoption of Technology Through Strategic Relationships

The Company plans to establish and extend strategic relationships with
market leaders in order to rapidly achieve market penetration. The Company
believes these strategic relationships broaden the Company's user base and
accelerate adoption of the Company's core technologies. In the Internet
market, the Company has established a strategic relationship with Netscape,
which uses Voxware's RT24 codec as part of its LiveMedia multimedia framework
to provide low bandwidth speech capabilities with version 3.0 of Netscape
Navigator, currently in beta release.

Deepen Market Penetration Through Broad Licensing Program

The Company seeks to broadly license its MetaVoice technology in market
segments where complementary applications incorporating speech can benefit
from MetaVoice's low bandwidth and processing requirements. Markets in which
the Company is licensing its technology include Internet conferencing,
interactive games and consumer chat applications. The Company intends to
leverage the low bandwidth and processing requirements of its technologies to
address a variety of applications beyond the Internet, such as wireless
telephony, voice pagers, digital answering machines, voice-enabled toys,
satellite communications and low-cost electronic recording devices.

Develop High Value-Added Software Applications in Key Market Segments

The Company focuses its internal development resources on developing high
value-added integrated software products for market segments that the Company
believes have significant potential for growth and that leverage its core
speech competencies. The Company has identified voice-enabled Web pages and
Internet telephony as its initial target product segments and has developed
two products, ToolVox and TeleVox, to address these markets.

Build Multiple Distribution Channels

The Company has established multiple channels for the distribution of its
products to a wide variety of targeted market segments. The Company's direct
sales force combines field sales and telemarketing to reach software,
computing and communications companies. Bundling agreements with OEMs serve as
indirect marketing channels. In addition, the Company engages in Internet-
based distribution via its Web site.

26
<PAGE>

Develop Recurring Revenue Through Royalty-Based Licensing

The Company expects a significant portion of its future revenues to be in
the form of royalties or other recurring payments based upon the sales of
products by the Company's licensees which incorporate the Company's
technologies. The Company has entered into license agreements providing for
recurring payments and it is the intention of the Company to continue to
pursue license opportunities that include a recurring revenue component.

PRODUCTS

The Company has three product groups: MetaVoice codecs, application
programming interfaces ("APIs") and applications.

VOXWARE PRODUCTS GRAPHIC

Applications........... ToolVox
........... TeleVox
High Level APIs........ TNT
MetaVoice Codecs....... RT24
....... HQ Codec Family
....... Multimedia Codec

MetaVoice Codecs

The Company currently offers three codecs incorporating its MetaVoice
technology. These codecs offer differing levels of functionality, as follows:

. RT24--The RT24 codec is a real-time voice codec compressing speech data
to 2.4 kbps. It is Voxware's "entry-level" codec, designed to utilize
minimal processing power, making it suitable for use on low-end personal
computers (e.g. 486 processors) and low-cost electronic devices such as
voice-enabled toys where processing power is limited. Netscape is using
the RT24 codec to provide low bandwidth speech capabilities with the
beta version of Netscape Navigator version 3.0.

. HQ Codec Family--The HQ codec family consists of a series of codecs
which are targeted at high end processors such as the Pentium or Power
PC as well as DSP chips. These codecs are designed to achieve higher
speech quality than RT24. The codecs in this family include VR12HQ and
VR15HQ which are variable rate codecs averaging 1.2 and 1.5 kbps,
respectively, as well as RT24HQ and RT29HQ which are fixed rate codecs
operating at 2.4 and 2.977 kbps, respectively.

. Multimedia Codec--The multimedia codec was Voxware's first product
incorporating the Company's MetaVoice technology. It is optimized for
wideband output (11 KHz and 22 KHz playback) and extremely low playback
processing load. The Company's multimedia codec has been incorporated
into several software applications including Microsoft's Bookshelf 96.

The Company licenses its MetaVoice codecs to third parties for use in their
products. The codecs are generally delivered to licensees in the form of
software developer kits which provide a high level interface that simplifies
integration of the codec into the licensee's application. The licensee of a
codec receives an encoder to convert the audio files into the appropriate
format and a player to reconstruct the original speech.

27
<PAGE>

Voxware's codecs operate on a wide range of processors, such as Intel's 486,
Pentium, Pentium Pro and MMX; Motorola's PowerPC and 68040; SPARC; Digital's
Alpha; and other general purpose processors. The Company is currently porting
its codecs to popular DSP processors. Voxware's software developer kits
provide a uniform environment for most popular operating systems, including
Microsoft Windows 3.x, 95 and NT, Mac OS and several Unix platforms. The time
required for a licensee to incorporate the Company's codecs into its product
varies from as little as a few minutes in the case of preexisting software
applications using standard interfaces, to several weeks in the case of
devices requiring porting to new platforms or other adaptation of the codecs.

High-Level APIs

The Company is currently developing and has provided to developers of
Internet software the Telephony Network Toolkit ("TNT"). TNT is an Internet
telephone application programmer interface designed to simplify the
development of sophisticated Internet telephony applications. TNT provides a
standardized programming interface which provides a flexible session
management framework that can be used to implement a comprehensive list of
Internet telephony features. TNT is being developed to provide the following
benefits to developers of Internet software products:

. Reduces the time required to develop Internet telephony applications by
eliminating the need to create low-level audio and networking code.
These components are pre-packaged in component "building blocks" that
may be combined to implement basic connectivity and advanced telephony
features.

. Provides a migration path to emerging industry communication standards
such as Netscape's LiveMedia specification and the H.323 standard,
eliminating the need for applications developers to build and maintain
their own implementations of these standards.

. Incorporates error and delay handling procedures which maximize the
capabilities of Voxware's MetaVoice technology used in the RT24 and
RT29HQ codecs. These procedures are being designed to provide optimal
speech quality among TNT-based phones.

The Company licenses TNT on a limited basis to independent software vendors
who wish to incorporate Internet telephony into their products. The Company
uses TNT to develop new versions of TeleVox.

Applications

The Company has developed two applications which utilize MetaVoice
technology for communication on the Internet: ToolVox, an application for one-
way streaming audio recording and playback of speech files, and TeleVox, an
Internet telephone application.

TOOLVOX

The ToolVox system consists of an encoder, incorporating either the RT24 or
the RT29HQ codecs, which compresses recorded speech files into the ".vox" file
format and a player which decodes the speech data to reproduce the original
speech. The ToolVox system allows Web content providers to incorporate pre-
recorded voice as part of their multimedia Web pages. The player is designed
as a Netscape Navigator or Microsoft Internet Explorer(TM) plug-in (i.e. an
add-in application which supplements the basic browser functionality) and as a
helper application with other Web browsers. When configured as a plug-in, the
player receives streaming audio data from the Web server and begins playback
as soon as a small buffer is received, typically within a few seconds. In
addition, ToolVox can play back music transmitted in MIDI format. Speech and
MIDI data can stream simultaneously, allowing background music effects with
narration.

ToolVox delivers the following benefits to Web content providers and users:

BENEFITS TO CONTENT PROVIDERS

. No special server hardware or software required. Most standard Web
servers are adequate for streaming the low bandwidth data produced by
the RT24 or the RT29HQ codecs.

. Less access bandwidth required. Over a 1.5 Mbps T1 line, ToolVox is
designed to support over 400 simultaneous users, compared with competing
technologies which typically support 70-100 simultaneous listeners.

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<PAGE>

BENEFITS TO USERS

. Faster start-up of playback and reduced gaps or pauses when used over
international links or in the presence of Internet congestion.

. Increased capacity to receive text, data and graphics simultaneously
with minimal impact on responsiveness.

. Operates through security "firewalls" that often block competing
products.

The Company is distributing version 1.0 of the "Basic" ToolVox encoder,
currently in beta release. The Basic encoder incorporates the RT24 codec and
operates on the Windows 3.x, 95 and NT and Mac OS platforms. The Basic version
of the encoder is currently available for free download from the Company's Web
site.

A "Gold" version (version 2.0) of the ToolVox encoder is currently available.
The Gold encoder has all of the capabilities of the Basic version, plus the
RT29HQ codec, voice and sound effects capabilities and the ability to process
multiple audio files automatically. The Company plans to license the Gold
encoder to Web developers.

The ToolVox 2.0 player will play the output of either the Basic or the Gold
encoder. It is available free of charge from the Company's Web site and the
Company makes it available to licensees for bundling with their products.

TELEVOX

TeleVox, the Company's Internet telephone system, allows users to carry on
real-time, full-duplex audio conversations using their personal computers.
TeleVox, in addition to the benefits inherent in MetaVoice, offers (i) full-
duplex or half-duplex, hands free operation, (ii) directory and connection
services via an easy-to-use "chat" server and (iii) simultaneous file transfer
and text-chat capability. The Company currently distributes a beta version of
TeleVox over the Internet at no charge.

The Company is currently developing a "Gold" version of TeleVox with
additional features to be sold to end users. The Gold version is expected to
incorporate multi-person conferencing capabilities, the advanced RT29HQ codec
and enhanced VoiceFonts technology for voice and sound effects. Pricing has not
yet been determined.

The Company plans to provide interoperability between TeleVox and Netscape's
LiveMedia framework for real-time communication over the Internet. The Company
demonstrated a prototype TeleVox system interoperating with Netscape's
LiveTalk(TM) and Apple's QuickTime Conferencing(TM) based on the LiveMedia
framework in May 1996. The Company currently intends to distribute TeleVox over
the Internet and via bundling agreements with OEMs.

RESEARCH AND PRODUCT DEVELOPMENT

The Company believes that continued timely development and introduction of
new products are essential to establishing, maintaining and increasing its
competitive position. The Company currently conducts most of its product
development effort in-house. The Company also employs independent contractors
to assist with certain product development and testing activities. The Company
has aggressively expanded its Research and Development group from 6 engineers
as of June 30, 1995 to 33 engineers as of June 30, 1996. Total spending on
research and development has grown from $536,581 in fiscal 1995 to $2,496,717
in fiscal 1996. The Company intends to continue to emphasize core research and
development.

The Company has recently strengthened its speech coding research group with
the addition of Robert J. McAulay, Ph.D. who joined the Company in August 1996
as Senior Scientist. From 1967 until July 1996, Dr. McAulay was with the
Massachusetts Institute of Technology's Lincoln Laboratory where he directed
research in Speech Systems Technology. Since 1984 he has focused on the
development and application of the Sinusoidal Speech Model. Dr. McAulay has
received numerous professional honors including the Carlton Award for the best
paper published in IEEE Transactions on Aerospace and Electronics, and the IEEE
Signal Processing Society award for the paper "Speech/Analysis Synthesis,"
based on a Sinusoidal representation.

29
<PAGE>

The Company has several products under development as follows:

Future Codecs

The Company is developing enhanced implementations of its MetaVoice
technology which are designed to achieve speech quality equivalent to its
existing codecs at lower bandwidth. The Company is also developing other
implementations that deliver higher speech quality at slightly higher
bandwidth than its existing codecs.

Gateways between the Internet and the Public Switch Telephone Network (PSTN)

The Company believes that as telecommunication service providers enter the
market for voice services via packet-switched networks, there will be a
growing market for connectivity between PC-based Internet telephone software
such as TeleVox and the public telephone network or corporate PBX systems. For
example, a call could be placed from a user on a personal computer connected
to the Internet and complete the long-distance segment of the connection via
the Internet. By connecting through a gateway server, the call could be
connected to any ordinary telephone in the world accessible by such a server
for the price of a local call. The Company has begun a development effort with
hardware and software vendors to develop such systems.

Enhanced VoiceFonts

The Company will be releasing an enhanced implementation of VoiceFonts with
the ToolVox Gold encoder. Future versions of TeleVox will also incorporate
this technology. The Company is investing resources in further enhancing and
extending the VoiceFonts technology and expects to provide increasingly
powerful voice modification tools to consumers, Web developers and audio
engineers.

STRATEGIC RELATIONSHIPS AND LICENSEES

The Company plans to establish and extend strategic relationships with
market leaders in order to rapidly achieve market penetration. The Company
believes these strategic relationships will broaden the Company's user base
and accelerate adoption of the Company's core technologies. The Company
believes that such strategic relationships can provide early insight into and
influence on future industry standards, offer access to leading edge
technology and support optimization of the Company's technology on key
computing platforms.

The Company and Netscape are parties to a software license agreement
pursuant to which Netscape has a license to use and distribute certain of
Voxware's products, including the RT24 codec. Netscape is using Voxware RT24
codec as part of its Livemedia multimedia framework to provide low bandwidth
speech capabilities with Netscape Navigator 3.0, currently in beta release.
The Company believes that its technologies will achieve market penetration
faster than would be possible without the Netscape relationship. The two
companies consult each other on areas of common interest including standards
setting, future product development, enhancements to existing technologies and
joint product development. Netscape has also made a minority equity investment
in the Company and has a representative on the Company's board.

The Netscape License Agreement provides for Netscape to pay quarterly
license fees to the Company for certain "basic" products. The Netscape License
Agreement further provides Netscape with access to certain enhanced products
of the Company. In the event Netscape ships products containing the Company's
enhanced products, Netscape will pay volume-based royalties to the Company.
During the year ended June 30, 1996, license fees paid by Netscape accounted
for 31% of the Company's revenues. The Netscape License Agreement may be
terminated by Netscape at any time prior to July 31, 1996 on 180 days notice
and after July 31, 1996 on 90 days notice. See "Risk Factors--Dependence on
Netscape," "Management" and "Principal Stockholders."

Intel has also made a minority equity investment in the Company. Intel
provides consulting support to Voxware in the optimization of the Company's
technologies on Intel platforms, consults with Voxware on

30
<PAGE>

standards issues of mutual interest and supplies the Company with pre-release
versions of its advanced processors for development. See "Principal
Stockholders."

The Company broadly licenses its codecs and bundles its applications with the
products of independent software vendors, computing companies and
communications companies. The Company generally seeks to obtain a combination
of initial payments and recurring revenue payments from licensees. The amount
and structure of these payments are dependent on many factors including the
licensed codec or application, the licensee's intended application and target
market. A majority of the Company's most recent license agreements provide for
a royalty payment or other recurring revenue stream to the Company. While the
Company has derived its revenue principally from initial and annual licensing
fees on software licensing agreements and the Company has not received any
royalties to date, the Company believes that developing a recurring revenue
stream will be a key to the Company's financial success. Whether a recurring
revenue stream develops will depend on many factors, including the success of
the Company's licensees in selling products which incorporate the Company's
technologies.

The following table sets forth certain companies that have entered into
license agreements with Voxware during the last twelve months:
<TABLE>
<S> <C> <C>
America Online, Inc. LifeCycle Systems, Inc. USFI, Inc.
Andrea Electronics Corporation Luckman Interactive, Inc. VDOnet Corporation Ltd.
Apple Computer, Inc. Microsoft Corporation Velocity, Inc.
Eidos, plc Mpath Interactive, Inc. Vienna Systems Corporation
Farrallon Computing, Inc. PC Roar, Inc. White Pine Software, Inc.
GameTek, Inc. Tribal Voice Zoll Medical Corporation

InterVoice, Inc. Twin Sun, Inc.
</TABLE>

SALES, MARKETING AND DISTRIBUTION

The Company sells its codecs and TNT directly to independent software vendors
and computing and communications companies. The Company's direct sales force
combines field and telemarketing personnel who focus on major Internet software
developers, hardware OEMs, as well as Internet and telecommunication service
providers and semiconductor manufacturers.

As of June 30, 1996, the Company had 11 direct sales and marketing personnel.
Codec licensing is handled primarily through the direct field sales force and
is supported by telemarketing personnel. The Company intends to increase its
direct sales force as part of the expansion of its sales and marketing program.
Sales and marketing activities include, in addition to direct sales calls,
participation in trade shows.

CUSTOMER SUPPORT

The Company believes that customer support and engineering services are
important competitive factors for its business. Customer support services
include providing updates and technical support to licensees of the Company's
products. Engineering services include providing technical resources to support
customer specific development efforts or porting the Company's technologies to
specific customer platforms. The Company provides those services, along with
product demonstration software, evaluation software and application notes via
its customer support group and research and development group located in
Princeton, New Jersey. See "Business--Research and Product Development."

COMPETITION

31
<PAGE>

greater financial, technical and marketing resources than the Company. The
Company's competition for voice processing software products and services is
primarily emerging from two sources: developers of speech compression
algorithms and developers of software applications that incorporate speech.
Direct competitors include DSP Group, Inc., Lernout & Hauspie Speech Products
N.V. and Lucent Technologies Inc in the speech coding market and Electric
Magic Co., FreeTel Communications, Macromedia, Netspeak Corp., PGP Inc.,
Progressive Networks, Quarterdeck Corporation, Third Planet Publishing Inc.,
VocalTec, Ltd., Inc. and Xing Technology Corporation in the Internet
applications market. Several of these companies are developing new products or
enhancing existing products specifically to operate in low bandwidth
environments. Companies that have developed low bit rate parametric speech
compression technologies but do not currently compete with the Company
directly include Texas Instruments, Incorporated and Digital Voice Services,
Inc. The competition in the market for Internet telephony products, in
particular, is intense. Many companies, including for example Intel,
distribute free Internet telephony applications offering basic functionality.
The availability of such free Internet telephony applications may increase
pricing pressure on such applications, including the Company's TeleVox
products. In addition to the Company's current competitors, the Company
expects other established companies, including large software companies, such
as Microsoft, and telecommunications companies, such as interexchange carriers
(for example, AT&T Corp. and MCI Telecommunications), regional Bell operating
companies and cable companies, to compete in the markets for speech
compression technologies and digital speech applications, including Internet
telephony. The ability of certain of the Company's competitors to bundle other
services and products with voice products could put the Company at a
competitive disadvantage.

PATENTS AND PROPRIETARY INFORMATION

To date, the Company has applied for three patents relating to the MetaVoice
voice coding technology. Several additional patent applications are being
prepared and the Company expects to routinely file patent applications as
deemed appropriate. The Company's success will depend in part on its ability
to obtain patent protection for its products, preserve its trade secrets and
operate without infringing the proprietary rights of other parties. There can
be no assurance that patent applications to which the Company holds rights
will result in the issuance of patents, or that any issued patents will
provide commercially significant protection to the Company's technology,
products and processes. In addition, there can be no assurance that others
will not independently develop substantially equivalent proprietary
information not covered by patents to which the Company owns rights or obtain
access to the Company's know-how or that others will not claim to have or will
not be issued patents which may prevent the sale of one or more of the
Company's products. In particular, Elk Industries has asserted in two letters
to Voxware that Voxware's "Internet-based streaming audio systems" infringe
U.S. Patent No. 4,128,773 owned by Elk Industries, and Elk Industries has
offered Voxware the opportunity to purchase a license. The Company does not
believe that its products infringe Elk Industries' patent because its
technology is distinct from and dissimilar to the claims contained in Elk
Industries' patent. Litigation, which could be costly and time consuming, may
be necessary to determine the scope and validity of others' proprietary rights
including Elk Industries', or to enforce any patents issued to the Company, in
either case, in judicial or administrative proceedings. An adverse outcome
could subject the Company to significant liabilities to third-parties, require
the Company to obtain licenses from third-parties, or require the Company to
cease any related research and development activities or product sales. There
can be no assurance that a license for Elk Industries or any licenses required
under any third-party patents or proprietary rights would be made available on
acceptable terms, if at all. In addition, the laws of certain countries may
not protect the Company's intellectual property. The software market has
traditionally experienced widespread unauthorized reproduction of products in
violation of manufacturers' intellectual property rights. Such activity is
difficult to detect and legal proceedings to enforce the manufacturers'
intellectual property rights are often burdensome and involve a high degree of
uncertainty and costs. The Company's success is also dependent upon unpatented
trade secrets which are difficult to protect. To help protect its rights, the
Company requires employees and consultants to enter into confidentiality
agreements that prohibit disclosure of the Company's proprietary information
and requires the assignment to the Company of their ideas, developments,
discoveries and inventions. There can be no assurance, however, that these
agreements will provide adequate protection for the Company's trade secrets,
know-how, or other proprietary information in the event of any unauthorized
use or disclosures.

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<PAGE>

EMPLOYEES

As of June 30, 1996, the Company had 58 full-time employees consisting of 11
in sales and marketing, 33 in research and development, 3 in customer support
and 11 in administration and finance. None of the Company's employees is
represented by a labor union or is subject to a collective bargaining
agreement. The Company believes that its employee relations are good.

FACILITIES

The Company leases its principal facility, which contains approximately
18,000 square feet of office space in Princeton, NJ. The initial term of the
lease for the Company's current office space will expire on May 31, 2003. The
Company believes that existing facilities are adequate for its current needs
through approximately the next nine months and anticipates that it will likely
need additional space at that time. The Company believes that any such
additional space will be available as needed.

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<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Executive Officers and Directors of the Company and their respective
ages and positions are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael Goldstein....... 42 President, Chief Executive Officer and Director
Kenneth H. Traub........ 35 Executive Vice President, Chief Financial Officer,
Secretary and Director
J. Gerard Aguilar....... 29 Vice President, Research and Development and
Director
Steven J. Ott........... 36 Vice President, Sales
Stuart R. Patterson..... 39 Vice President, Telephony Business
Kenneth W. Whittington.. 43 Vice President, Product Development
Nicholas Narlis......... 36 Controller, Chief Accounting Officer and Treasurer
Jordan S. Davis......... 34 Director
Andrew I. Fillat(1)(2).. 48 Director
William J. Geary(1)(2).. 37 Director
David J. Roux(1)........ 39 Director
Richard M. Schell, 45 Director
Ph.D...................
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of Audit Committee.

Michael Goldstein has served as President and Chief Executive Officer and as
a Director of the Company since January 1994. From April 1993 to December
1993, Mr. Goldstein served as Vice President of Business Development of
Donovan Data Systems, Inc., a data processing service provider. From 1986 to
March 1993, Mr. Goldstein was a consultant with McKinsey & Company, Inc.,
where he was an advisor to technology companies. From 1983 to July 1986, Mr.
Goldstein served as Vice President of Macmillan Software Company, a scientific
software publisher and division of Macmillan, Inc. Mr. Goldstein holds an
M.B.A. from the Harvard Graduate School of Business Administration and a Sc.B.
from Brown University.

Kenneth H. Traub is a co-founder of Voxware and has served as Executive Vice
President, Chief Financial Officer and Secretary and as a Director of the
Company since February 1995. From 1989 to January 1995, Mr. Traub held various
management positions, including Corporate Vice President, with Trans-
Resources, Inc., a diversified, multinational company, where Mr. Traub was
responsible for acquisitions, financings and strategic planning. From January
1992 to January 1995, Mr. Traub was also President of Conservation Securities
Corp., an investment company affiliated with Trans-Resources, Inc. Mr. Traub
holds an M.B.A. from the Harvard Graduate School of Business Administration
and a B.A. from Emory University.

J. Gerard Aguilar is a co-founder of Voxware and has served as Vice
President, Research and Development since January 1994 and as a Director of
the Company since its incorporation in August 1993. Mr. Aguilar served as the
Company's President and Secretary from its incorporation through January 1994
and Treasurer from its incorporation in August 1993 through June 1996. Prior
thereto, Mr. Aguilar had been independently developing certain of the
Company's technologies since 1991. Mr. Aguilar holds an M.S.E.E. and a
B.S.E.E. from the Florida Institute of Technology.

Steven J. Ott has served as Vice President, Sales of the Company since
October 1994. From 1989 to September 1994, Mr. Ott held various executive
positions with Legent Corporation ("Legent"), a systems management software
company, most recently as Vice President, Corporate Development. Prior to his
appointment as Vice President, Corporate Development, Mr. Ott served as
Director, North American Sales Programs and Regional Manager Northeast Sales
for Legent. From 1987 to 1989, Mr. Ott served as District Sales Manager for
Business Software Technology, Inc., a developer of systems management
software. From 1982 to

34
<PAGE>

1987, Mr. Ott served as Area Sales Manager for DBMS, Inc., a database and data
administration software company. Mr. Ott holds a B.S. from Quinnipiac College.

Stuart R. Patterson has served as Vice President, Telephony Business of the
Company since May 1996 and prior to that as a member of the Company's Board of
Advisors since August 1993. From 1987 to May 1996, Mr. Patterson served as
President and Chief Executive Officer of Vicorp Interactive Systems, Inc.
("VIS"), a software developer for large-scale voice processing and information
gateway services. From 1986 to 1987, Mr. Patterson served as International
Marketing Manager for the Vicorp Group in Dusseldorf, Germany. From 1985 to
December 1986, Mr. Patterson worked for Hewlett-Packard Company in Grenoble,
France. Mr. Patterson holds an M.P.P.M. from the Yale School of Management and
a B.A. from Harvard College.

Kenneth W. Whittington has served as Vice President, Product Development of
the Company since August 1995. From 1990 to July 1995, Mr. Whittington held
various development management positions at Central Point Software, Inc.
("CPS") and Symantec Corporation ("Symantec") (which acquired CPS in 1994).
From May 1994 to July 1995, Mr. Whittington was a Director of Development at
Symantec responsible for development of client/server and enterprise products.
From 1990 through May 1994, Mr. Whittington served as a Senior Systems
Architect and then Development Manager in charge of CPS's product, PC
Tools.(TM)

Nicholas Narlis has served as Controller and Chief Accounting Officer of the
Company since March 1996 and as Treasurer since June 1996. From 1992 to March
1996, Mr. Narlis served in various capacities at Dendrite International, Inc.,
a sales force automation software and service company, including most recently
as Director of Finance. Previously, from 1983 to May 1992, Mr. Narlis worked
for KPMG Peat Marwick where he served as a Senior Manager from 1989 to May
1992 in the New Jersey Audit Practice Unit. Mr. Narlis holds a B.S. from Rider
University and is a Certified Public Accountant.

William J. Geary has served as a Director of the Company since July 1996.
Mr. Geary has been a Principal of North Bridge Venture Partners, L.P. ("North
Bridge") since March 1994 and a General Partner of Hambro International Equity
Partners since 1990. Mr. Geary also serves as a director of several private
technology companies. Mr. Geary holds a B.S. from Boston College and is a
Certified Public Accountant.

Jordan S. Davis is a co-founder of Voxware and has served as a Director of
the Company since January 1994. Since May 1992, Mr. Davis has been employed by
KBL Healthcare, Inc., a private merchant banking and venture capital firm,
most recently serving as a Managing Director. From November 1992 to August
1994, Mr. Davis served as Vice President, Secretary and a director of KBL
Healthcare Acquisition Corp., a publicly held acquisition fund which Mr. Davis
co-founded. From 1991 to May 1992, Mr. Davis served as Corporate Vice
President of D. Blech and Company, Incorporated, a private merchant bank.
Previously, from 1986 to 1990, Mr. Davis held various financial advisory
positions with Morgan Stanley & Co., Incorporated. Mr. Davis holds an M.M.
from the J.L. Kellogg Graduate School of Management at Northwestern University
and a B.A. from the State University of New York at Binghamton.

Andrew I. Fillat has served as a Director of the Company since December
1995. In 1989, Mr. Fillat joined Advent International Corporation ("Advent")
where he currently serves as a Senior Vice President. Mr. Fillat is also a
Director of Advanced Radio Telecom Corp., Interlink Computer Sciences, Inc.
and Lightbridge, Inc. as well as several other private companies. Mr. Fillat
holds an M.S. and a B.S. from M.I.T. and an M.B.A. from the Harvard Graduate
School of Business Administration.

David J. Roux has served as a Director of the Company since March 1994.
Since March 1996, Mr. Roux has been Executive Vice President and from
September 1994 through February 1996, he was Senior Vice President, in each
case in charge of business development at Oracle Corporation. From April 1992
to June 1994, Mr. Roux was Senior Vice President of Central Point Software.
From 1987 to April 1992, Mr. Roux served in various senior executive
capacities at Lotus Development Corporation ("Lotus"), including most recently
as Senior Vice President. In 1984, Mr. Roux co-founded Datext, Inc., a CD-Rom
database publishing business, where he served as Chief Executive Officer until
it was sold to Lotus in 1987. Mr. Roux holds an M.B.A. from

35
<PAGE>

the Harvard Graduate School of Business Administration, a M.Phil. from
Cambridge University and an A.B. from Harvard College.

Richard M. Schell, Ph.D. has served as a Director of the Company since
August, 1995. Since March 1996, Dr. Schell has served as Senior Vice President
of Product Development and from October 1994 to February 1996 as Vice
President of Engineering of Netscape. Dr. Schell currently leads client,
server, tool and commercial applications development for Netscape. From
January 1993 to October 1994, Dr. Schell was a senior executive of Symantec,
most recently serving as Vice President and General Manager of the Central
Point Division (formerly Central Point Software, Inc.). From March, 1989 to
December 1992, Dr. Schell served as Vice President in charge of Languages and
dBase of Borland International, Inc. Prior thereto, he held various management
positions at Sun Microsystems, Inc. and Intel Corporation. Dr. Schell holds a
Ph.D., M.S. and B.A. from the University of Illinois.

Each of Messrs. Fillat, Geary and Schell serves on the Board of Directors
pursuant to a voting agreement among certain stockholders of the Company. This
agreement will terminate upon consummation of this offering.

Mr. Davis and Mr. Aguilar are brothers-in-law.

Subject to, and upon the consummation of, the offering, the Company's
Certificate of Incorporation will be amended to provide that directors of the
Company shall be divided into three classes, as nearly equal in number as
possible. The initial term of office of the first class shall expire on the
day of the first annual meeting of stockholders following the end of the 1997
fiscal year (the "1997 Annual Meeting"); the initial term of office of the
second class shall expire on the day of the annual meeting of stockholders
next succeeding the 1997 Annual Meeting; and the initial term of office of the
third class shall expire on the day of the second annual meeting of
stockholders succeeding the 1997 Annual Meeting. At each annual meeting of
stockholders, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election. Thus, after consummation of this
offering and effective upon the amendment of the Certificate of Incorporation,
directors will stand for election only once in three years. Effective upon the
amendment of the Certificate of Incorporation, Messrs. Davis, Traub and Fillat
are expected to serve as Class I directors, Messrs. Roux, Schell and Geary are
expected to serve as Class II directors, and Messrs. Aguilar and Goldstein are
expected to serve as Class III directors.

In accordance with the amendment, the affirmative vote of the holders of at
least 66 2/3% of the outstanding shares of capital stock of the Company
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, change, amend, repeal, or adopt any
provision inconsistent with, the provisions of the Certificate of
Incorporation providing for the classified Board of Directors.

BOARD COMMITTEES

The Audit Committee consists of Messrs. Geary and Fillat and the
Compensation Committee consists of Messrs. Geary, Fillat and Roux. The Audit
Committee reviews the adequacy of the Company's internal control systems and
financial reporting procedures, reviews the general scope of the annual audit,
reviews and monitors the performance of non-audit services by the Company's
independent public accountants and reviews interested transactions between the
Company and any of its affiliates. The Compensation Committee administers the
Company's 1994 Stock Option Plan and makes recommendations to the Board of
Directors concerning salaries and non-stock compensation for the Company's
officers and employees.

BOARD OF ADVISORS

The Board of Advisors advises the Company regarding technological and
commercial issues concerning the Company's areas of interest. The Company's
practice has been, and is expected to continue to be, to consult with members
of the Board of Advisors on an individual basis as needed. All of the members
of the Board of Advisors have entered into confidentiality agreements with the
Company, and subject to this constraint, the members of the Board of Advisors
are entitled to accept employment with, or provide consulting services to,
others, including competitors or potential competitors of the Company.

36
<PAGE>

Vladimir Cuperman, Ph.D. is Professor of Electrical Engineering at Simon
Fraser University, Vancouver, B.C., Canada and specializes in the fields of
digital signal processing, speech coding, speech recognition and digital
communications. He was Editor for Speech Processing, IEEE Transactions of
Communications from 1988 to 1991 and has co-edited two books and published
numerous papers on speech coding and recognition. From 1984 to 1986 he was
Managing Director of CALLTALK, Ltd., a precursor company to the DSP Group,
Inc. Previously, Dr. Cuperman had been employed by Tadiran Limited of Tel
Aviv, Israel as Chief Scientist in the Digital Communications Division from
1983 to 1984 and as Project and Group Leader from 1974 to 1980. Dr. Cuperman
holds a Ph.D. and an M.S.E.E. from the University of California, Santa Barbara
("UCSB") and an M.S.E.E. from the Polytechnic of Bucharest.

Francis X. Dzubeck is President and Chief Executive Officer of
Communications Network Architects, Inc. ("CNA"), an international consulting
firm he founded in 1973. CNA's clients include commercial and government
users, communications carriers, computer and communications vendors, the
venture capital and investment banking communities and public relations firms.
Mr. Dzubeck holds an M.S.E.E. from Columbia University and a B.S.E.E. from the
New Jersey Institute of Technology.

Ira Fuchs is Vice President for Computing and Information Technology at
Princeton University, Princeton, New Jersey, where he leads the University's
efforts in academic and administrative computing. Mr. Fuchs has been involved
in the creation of a high speed telecommunications infrastructure for the
University. In 1981, Mr. Fuchs founded the BITNET Network, an academic
telecommunications network. Mr. Fuchs also presently serves as Chief Scientist
for the Journal Storage project (JSTOR), a project designed to create a
digital library for out-of-print scholarly journals, for the Andrew W. Mellon
Foundation. Mr. Fuchs has previously served as Vice Chancellor for University
Systems at The City University of New York. Mr. Fuchs holds an M.S. and B.S.
from Columbia University.

Allen Gersho, Ph.D. has been a Professor of Electrical and Computer
Engineering at UCSB since 1980. Dr. Gersho's work is primarily in the field of
speech coding. Dr. Gersho and his UCSB research staff were pioneers in the
application of vector quantization to signal compression and several of the
coding techniques developed by his group have become widely used in speech
coding algorithms and in national and international standards. Dr. Gersho has
authored or co-authored over 250 research papers, more than a dozen of which
are reprinted in various books of collected benchmark papers in signal
processing, communications and quantization. From 1963 to 1980, Dr. Gersho
served as a member of the technical staff at AT&T Bell Laboratories. Dr.
Gersho holds Ph.D. and M.S.E.E. degrees from Cornell University and a B.S.E.E.
from M.I.T.

Martin Mazner has been Vice President and General Manager of the BookMaker
division of the ForeFront Group, Inc. since June 1996. From June 1992 to June
1996, Mr. Mazner was President and Chief Executive Officer of BookMaker
Corporation. From 1990 to 1992, Mr. Mazner served as Vice President of
Marketing for PowerUp Software Corporation. Prior thereto, from 1986 to 1990,
Mr. Mazner served as Publisher of MacUser Magazine, a division of Ziff Davis
Publishing Company. Mr. Mazner holds a B.A. degree from California State
University, Northridge.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company formed a Compensation Committee in December 1995. The
Compensation Committee currently consists of Messrs. Geary, Fillat and Roux,
none of whom is an employee of the Company. In December 1995, the Company sold
2,000,000 shares of Series A Preferred Stock to certain entities managed by
Advent International Corporation and 2,000,000 shares of Series A Preferred
Stock to certain entities managed by North Bridge for a purchase price of
$1.00 per share. Mr. Geary is a Principal of North Bridge and Mr. Fillat is a
Senior Vice President of Advent. See "Certain Transactions."

37
<PAGE>

EXECUTIVE COMPENSATION

The following table provides information concerning compensation paid to or
earned by the Chief Executive Officer of the Company for the years ended June
30, 1996 and 1995 and the period from Inception (August 20, 1993) to June 30,
1994 and the next four most highly compensated Executive Officers of the
Company for such periods (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION PERIOD BASE SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- --------------------------- ------ ----------- ------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael Goldstein ...... 1996 $117,500 $30,000 $ -- -- $3,567
President and Chief 1995 $101,458 $ -- $ -- 40,000 $3,317
Executive Officer 1994 $ 33,333 $ -- $30,000 625,000 $3,095
Kenneth H. Traub........ 1996 $100,000 $25,000 $ -- -- $ 250
Executive Vice Presi- 1995 $ 41,667 $ -- $17,015 150,000 $ --
dent, Chief 1994 $ -- $ -- $ -- -- $ --
Financial Officer and
Secretary
J. Gerard Aguilar....... 1996 $ 70,000 $20,000 $ -- -- $ --
Vice President, Re- 1995 $ 60,833 $15,000 $ -- -- $ --
search and 1994 $ 20,000 $ -- $ -- -- $ --
Development
Steven J. Ott .......... 1996 $136,476 $ -- $13,766 -- $ --
Vice President, Sales 1995 $ 65,000 $ -- $ -- 400,000 $ --
1994 $ -- $ -- $ -- -- $ --
Kenneth W. Whittington.. 1996 $ 96,551 $15,000 $ -- -- $ --
Vice President, Product 1995 $ -- $ -- $ -- 150,000 $ --
Development 1994 $ -- $ -- $ -- -- $ --
</TABLE>
- --------

(1) Other Annual Compensation consists solely of relocation payments.

(2) All Other Compensation consists of life and disability insurance premiums
of $3,095, $3,317 and $3,567 paid on behalf of Mr. Goldstein in 1994,
1995, and 1996, respectively, and $250 paid on behalf of Mr. Traub in
1996.

EMPLOYMENT AGREEMENTS

Michael Goldstein, President and Chief Executive Officer of the Company, has
a three-year employment agreement with the Company which commenced in January
1994. Mr. Goldstein currently receives an annual base salary of $140,000 and
is entitled to bonuses for each fiscal year if the Company achieves certain
financial and other benchmarks which the Company and Mr. Goldstein will
endeavor to establish each fiscal year. At the time he began his employment
with the Company, Mr. Goldstein purchased 125,000 shares of Common Stock from
the Company and 375,000 shares of Common Stock from a stockholder of the
Company for an aggregate purchase price of $6,000. In the event that Mr.
Goldstein's employment agreement is terminated prior to January 3, 1997, the
Company and the above-referenced stockholder shall have the option to
repurchase 31,250 and 93,750 shares of Common Stock, respectively, from Mr.
Goldstein at an aggregate purchase price of $375 and $1,125, respectively (the
"Purchase Option"). Notwithstanding the foregoing, in the event Mr.
Goldstein's employment agreement is terminated (i) by the Company without
Cause (as defined in the employment agreement) based upon a determination by
the Company's Board of Directors that Mr. Goldstein's performance has not been
satisfactory for any reason, or (ii) by Mr. Goldstein because of an uncured
material breach of the employment agreement by the Company, the Purchase
Option shall immediately expire.

Kenneth H. Traub, Executive Vice President, Chief Financial Officer and
Secretary of the Company, has a three-year employment agreement with the
Company which commenced in February 1995. Mr. Traub currently receives an
annual base salary of $115,000.

38
<PAGE>

J. Gerard Aguilar, Vice President, Research and Development of the Company,
has a five-year employment agreement with the Company which commenced in
February 1994. Mr. Aguilar currently receives an annual base salary of
$90,000.

Steven J. Ott, Vice President, Sales of the Company, has a four-year
employment agreement with the Company which commenced in August 1994. Mr. Ott
currently receives an annual base salary of $80,000 and commissions on sales
on terms negotiated between the Company and Mr. Ott.

Kenneth W. Whittington, Vice President, Product Development of the Company,
has a three-year employment agreement with the Company which commenced in
April 1995. Mr. Whittington receives an annual base salary of $110,000.

All of the foregoing employment agreements are automatically renewable for
successive one-year terms unless terminated by either party.

Under the employment agreements for each of Messrs. Goldstein, Traub,
Aguilar, Ott and Whittington, if any of them, respectively, is dismissed for
any reason other than Cause (as defined in their respective employment
agreements), death or disability, or in the case of Messrs. Goldstein and
Traub if the employment agreement is not extended at the end of the Term (as
defined in their respective employment agreements), he shall be entitled to
receive an amount equal to, in the case of Messrs. Goldstein, Traub and
Whittington, nine months salary at his then current rate, in the case of Mr.
Ott six months salary at his then current rate, and in the case of Mr.
Aguilar, his salary at his then current rate for the shorter of (i) nine
months or (ii) the remainder of his then current Term.

All of the employment agreements grant to the Company the rights to any
information created, discovered or developed by the executive which is related
to or useful in the business of the Company. The employment agreements
prohibit the executive from disclosing the Company's proprietary information
and contains certain covenants by the executive not to compete with the
Company.

1994 STOCK OPTION PLAN

On January 3, 1994, the Board of Directors of the Company adopted and the
stockholders of the Company approved, the 1994 Stock Option Plan (the "1994
Plan"), as amended. The 1994 Plan permits the granting of options to purchase
an aggregate of 4,700,000 shares of the Company's Common Stock to key
employees of, and consultants to, the Company as well as to directors of the
Company whether or not employees. Options granted under the 1994 Plan may be
either incentive stock options ("ISOs") or options which do not qualify as
ISOs ("non-ISOs").

The 1994 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors, which currently consists of Messrs.
Fillat, Geary and Roux. Subject to the provisions of the 1994 Plan, the Board
of Directors or the Committee has the authority to determine the individuals
to whom stock options will be granted, the number of shares to be covered by
each option, the option price, the type of option, the option period, the
vesting restrictions, if any, with respect to the exercise of the option, the
terms for the payment of the option price and other terms and conditions.
Payment for shares acquired upon exercise of an option may be made in cash
and/or such other form of payment as may be permitted under the applicable
option agreement, including without limitation, previously owned shares of
Common Stock.

The exercise price for shares covered by an ISO may not be less than 100% of
the fair market value of the Common Stock on the date of grant (110% in the
case of a grant to an employee who owns 10% or more of the total combined
voting power of all classes of stock of the Company or any subsidiary (a "10%
Stockholder")). The exercise price for shares covered by a non-ISO may not be
less than the par value of the Common Stock at the date of grant. Unless
otherwise approved by the Board of Directors or the Committee, an option may
not be exercised during the first six months after the date of its grant. All
options must expire no later than ten years (five years in the case of an ISO
granted to a 10% Stockholder) from the date of grant. In general, no option
may

39
<PAGE>

be exercised more than three months after the termination of the optionee's
service with the Company and any of its subsidiaries. However, the three month
period is extended to one year if the optionee's service is terminated by
reason of disability or death. No individual may be granted ISOs that become
exercisable for the first time in any calendar year for Common Stock having a
fair market value at the time of grant in excess of $100,000.

Unless otherwise determined by the Committee in an option agreement with
respect to any particular option, if any event constituting a "Change in
Control of the Company" (as defined in the 1994 Plan) shall occur, all options
granted under the 1994 Plan which are outstanding at the time a Change in
Control of the Company shall occur shall immediately become exercisable.

Options may not be transferred during the lifetime of an optionee. Subject
to certain limitations set forth in the Plan and applicable law, the Board of
Directors may amend or terminate the Plan. By its own terms, the Plan will
terminate on January 2, 2004.

Option Exercises and Fiscal Year Values

None of the Named Executive Officers exercised options during the fiscal
year ended June 30, 1996. The following table provides information regarding
the number of shares covered by both exercisable and unexercisable stock
options as of June 30, 1996 and the values of "in-the-money" options as of
that date. An option is "in-the-money" if the per share fair market value of
the underlying stock exceeds the option exercise price per share.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael Goldstein.......... 547,812 117,188 $3,570,778 $ 761,722
Kenneth H. Traub........... 84,375 65,625 $ 569,531 $ 442,969
J. Gerard Aguilar.......... -- -- -- --
Steven J. Ott.............. 203,125 196,875 $1,421,875 $1,378,125
Kenneth W. Whittington..... -- 150,000 -- $1,012,500
</TABLE>
- --------
(1) Based on the difference between the option exercise price and the assumed
initial public offering price of $7.50 share.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Delaware General Corporation Law (the "Delaware Law"),
the Company's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Company or its
stockholders for monetary damages for breach of their fiduciary duty to the
maximum extent permitted by the Delaware Law. The Delaware Law does not permit
liability to be eliminated (i) for any breach of a director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions, as provided in Section 174 of the Delaware Law, or (iv) for any
transaction from which the director derived an improper personal benefit. The
provision does not apply to claims against a director for violations of
certain laws, including federal securities laws. In addition, as permitted in
Section 145 of the Delaware Law, the Certificate of Incorporation and By-Laws
of the Company provide that the Company shall indemnify its directors and
officers to the fullest extent permitted by the Delaware Law, including those
circumstances in which indemnification would otherwise be discretionary,
subject to certain exceptions. The By-Laws also provide that the Company shall
advance expenses to directors and officers incurred in connection with an
action or proceeding as to which they may be entitled to indemnification,
subject to certain exceptions.

40
<PAGE>

Each of the Employment Agreements with Messrs. Goldstein, Traub, Aguilar,
Ott and Whittington provides for indemnification to the maximum extent
permitted by applicable law. The Company will enter into indemnification
agreements with each of its directors and executive officers that provide the
maximum indemnification allowed to directors and executive officers by the
Delaware Law, subject to certain exceptions, as well as certain additional
procedural protections. In addition, the indemnification agreements will
provide generally that the Company will advance expenses incurred by directors
and executive officers in any action or proceeding as to which they may be
entitled to indemnification, subject to certain exceptions.

The indemnification provisions in the Company's Certificate of
Incorporation, By-Laws, the indemnification agreements to be entered into
between the Company and its directors and executive officers and each of the
Employment Agreements with Messrs. Goldstein, Traub, Aguilar, Ott and
Whittington, may permit indemnification for liabilities arising under the
Securities Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised 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.

The Company currently expects to carry director and officer liability
insurance following this offering.

CERTAIN TRANSACTIONS

From August 1993 to January 1994, the Company sold an aggregate of 6,245,000
shares of Common Stock to various officers, directors, advisors and other
persons for an aggregate of $33,507, including 3,480,000 to J. Gerard Aguilar,
840,000 to each of Jordan S. Davis, Mitchell Davis and Kenneth H. Traub,
125,000 shares to Michael Goldstein and 120,000 shares to Dr. Allen Gersho.

In March 1994, the Company sold an aggregate of 2,000,000 units at a price
of $0.25 per unit, each unit consisting of one share of Common Stock and one
warrant to purchase one share of Common Stock at a purchase price of $0.75 per
share. David J. Roux, Abel Aguilar, J. Gerard Aguilar's father, Edward
Goldstein, Michael Goldstein's father, William and Sheila Davis, Jordan Davis'
parents, and Steven J. Bier, Burton and Elaine Traub, Gary Traub, Paul Traub
and George and Lorraine Zimmerman, Kenneth H. Traub's brother-in-law, parents,
brother, brother, and father-in-law and mother-in-law, respectively, purchased
80,000, 80,000, 60,000, 35,000, 30,000, 20,000, 10,000, 10,000 and 10,000
units, respectively, on the same terms as all of the other purchasers of
units. See "Description of Securities--Warrants."

From November 1994 through February 1995, the Company sold an aggregate of
3,300,000 shares of Common Stock at a price of $0.75 per share. Edward
Goldstein, Steven J. Bier and Burton and Elaine Traub purchased 50,000, 30,000
and 10,000 shares of Common Stock, respectively, on the same terms as all of
the other purchasers of shares.

In December 1995, the Company sold 2,000,000 shares of Series A Preferred
Stock to entities of which Advent is a general partner and 2,000,000 shares of
Series A Preferred Stock to North Bridge at a price of $1.00 per share. Each
of Messrs. Fillat, a Senior Vice President of Advent, Geary, a Principal of
North Bridge, and Schell serves on the Board of Directors pursuant to a voting
agreement entered into in connection with the sale of the Series A Preferred
Stock. See "Management."

In March 1996, the Company sold 1,000,000 shares of Series A Preferred Stock
to Netscape at a price of $1.00 per share. Richard M. Schell, a Director of
the Company, is Vice President, Engineering of Netscape. Further, the Company
and Netscape are parties to a software license agreement pursuant to which
Netscape has a license to use and distribute certain of Voxware's products,
including the RT24 codec. The Netscape License Agreement provides for Netscape
to pay quarterly license fees to the Company for certain "basic" products. See
"Business--Strategic Relationships and Licensees." During the fiscal year
ended June 30, 1996 the

41
<PAGE>

Company derived $500,000 of its revenues from Netscape pursuant to the
Netscape License Agreement, representing approximately 31% of the Company's
revenues during the fiscal year.

In March 1996, the Company sold 1,000,000 shares of Series A Preferred Stock
to Intel at a price of $1.00 per share.

Each share of Series A Preferred Stock will automatically convert into one
share of Common Stock effective upon the closing of this offering. The holders
of Series A Preferred Stock will, however, be entitled to certain registration
rights with respect to the shares of Common Stock issuable upon the conversion
of the Series A Preferred Stock. See "Description of Securities--Registration
Rights."

42
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 30, 1996 and as adjusted to
reflect the sale of shares offered hereby, by (i) each person or entity who is
known by the Company to own beneficially more than five percent of the
Company's Common Stock, (ii) each of the Company's directors and (iii) all
executive officers and directors as a group. Unless indicated otherwise, the
address of each of these persons is c/o Voxware, Inc., 305 College Road East,
Princeton, New Jersey 08540.

<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENTAGE OF SHARES
OWNED (1)(2) BENEFICIALLY OWNED
-------------------- ----------------------
PRIOR TO THE AFTER THE
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OFFERING OFFERING
- ------------------------------------ -------------------- ------------ ---------
<S> <C> <C> <C>
J. Gerard Aguilar.................. 3,005,000 16.8% 13.7%
Advent International Group(3)...... 2,000,000 11.2 9.1
101 Federal Street
Boston, MA 02110
North Bridge Venture Management, 2,000,000 11.2 9.1
L.P.(4)...........................
404 Wyman Street, Suite 365
Waltham, MA 02154
Michael Goldstein(5)............... 1,041,875 5.6 4.6
Netscape Communications Corpora- 1,000,000 5.6 4.6
tion(6)...........................
501 East Middlefield Road
Mountain View, CA 94043
Intel Corporation(6)............... 1,000,000 5.6 4.6
2200 Mission College Boulevard
Santa Clara, CA 95052
Kenneth H. Traub(7)................ 893,750 5.2 4.1
Jordan S. Davis and Maria T. Davis 818,000 4.6 3.7
JTWROS............................
David J. Roux(8)................... 227,486 1.3 1.0
Steven J. Ott(9)................... 225,000 1.2 1.1
Richard M. Schell(10).............. 60,000 * *
Kenneth W. Whittington(11)......... 37,500 * *
Stuart R. Patterson(12)............ 12,000 * *
Andrew I. Fillat(13)............... 7,857 * *
William J. Geary(4)................ -- -- --
Nicholas Narlis.................... -- -- --
All Directors and Executive Offi-
cers as a group (12 persons)...... 11,320,611 59.6 49.2
</TABLE>
- --------

* Less than 1% of outstanding shares of Common Stock.

(1) Number of shares beneficially owned is determined by assuming that options
that are held by such person (but not those held by any other person) and
which are exercisable or convertible within 60 days have been exercised or
converted. Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock beneficially owned by them.

(2) If the Underwriters' over-allotment option is exercised in full, 56
Selling Stockholders will sell an aggregate of 600,000 shares of Common
Stock. No officer, director, principal stockholder or affiliate of the
Company is a Selling Stockholder. Mitchell Davis (2.6%) and Voice Tech
Ventures (2.3%) are the

43
<PAGE>

only Selling Stockholders who will own more than one percent (1%) of the
shares outstanding after the offering. The maximum number of shares to be
sold by any Selling Stockholder is 114,328 shares, consisting of less than
1% of the outstanding shares of Common Stock. To the extent that the
Underwriters' over-allotment option is not exercised in full, the Selling
Stockholders will each be entitled to sell a pro rata number of the shares
sought to be included in the over-allotment option.

(3) Includes the ownership by the following venture capital funds managed by
Advent International Corporation: 5,000 shares owned by Advent
International Investors II Limited Partnership, 500,000 shares owned by
Adtel Limited Partnership, 800,000 shares owned by Advent Crown Fund
C.V., 350,000 shares owned by Adwest Limited Partnership, 27,025 shares
owned by Advent Israel (Bermuda) Limited Partnership, 222,975 shares
owned by Advent Israel Limited Partnership and 95,000 shares owned by
Advent Partners Limited Partnership. In its capacity as manager of these
funds, Advent International Corporation exercises sole voting and
investment power with respect to all shares held by these funds. Advent
International Corporation exercises its voting and investment power
through a group of three persons none of whom may act independently and a
majority of whom must act in concert to exercise voting or investment
power over the beneficial holdings of such entity. Therefore, no
individual in this group is deemed to share voting or investment power.

(4) Includes 2,000,000 shares of Common Stock issuable upon the conversion of
shares of Series A Preferred Stock held by North Bridge Venture Partners,
L.P., of which North Bridge Venture Management, L.P. is the general
partner. Mr. Geary is a Principal of North Bridge Venture Partners, L.P.
North Bridge Venture Management, L.P. has three general partners, none of
whom may act independently and their unanimous consent is required to
exercise voting or investment power over the beneficial holdings of such
entity. Therefore, no individual in this group is deemed to share voting
or investment power.

(5) Includes 125,000 shares and 375,000 shares of Common Stock owned by Mr.
Goldstein which may be repurchased by the Company and another stockholder
of the Company, respectively, in the event Mr. Goldstein's employment
agreement with the Company shall be terminated at any time prior to
January 3, 1997. Includes 586,875 shares of Common Stock issuable upon
the exercise of stock options. See "Management--Employment Agreements."

(6) Consists of 1,000,000 shares of Common Stock issuable upon conversion of
1,000,000 shares of Series A Preferred Stock.
(7) Includes 93,750 shares of Common Stock issuable upon the exercise of
stock options.
(8) Includes 67,486 shares of Common Stock issuable upon the exercise of
stock options and 80,000 shares of Common Stock issuable upon the
exercise of warrants.
(9) Includes 225,000 shares of Common Stock issuable upon the exercise of
stock options.

(10) Richard M. Schell is not deemed to have shared voting or investment power
over the shares owned by Netscape. The shares owned by Netscape are voted
by its President and Chief Executive Officer or his designee.

(11) Includes 37,500 shares of Common Stock issuable upon the exercise of
stock options.

(12) Includes 12,000 shares of Common Stock issuable upon the exercise of
stock options.

(13) Includes 7,857 shares which are indirectly owned as a limited partner of
Advent Partners Limited Partnership. Mr. Fillat is a Senior Vice
President of Advent International Corporation, the venture capital firm
which is the manager of the funds affiliated with the Advent
International Group. Mr. Fillat disclaims beneficial ownership of the
remaining shares held by the Advent International Group.

44
<PAGE>

DESCRIPTION OF SECURITIES

COMMON STOCK

The authorized capital stock of the Company includes 40,000,000 shares of
Common Stock, par value $.001 per share. At June 30, 1996, there were
11,895,000 shares of Common Stock outstanding, held by 174 stockholders of
record. Holders of Common Stock are entitled to one vote for each share held
of record on all matters submitted to a vote of the stockholders. Holders of
Common Stock are not entitled to cumulative voting rights. Holders of Common
Stock are entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor, subject to any
preferential dividend rights of outstanding Preferred Stock. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities, subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive rights and no right to convert
their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock. All the outstanding
shares of Common Stock are, and the shares to be sold in this offering will
be, when issued and paid for, validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 10,000,000 shares of preferred stock in one or more
series and to fix the relative rights, preferences and limitations of the
shares within each series, including the dividend rights, voting rights,
redemption and sinking fund provisions, liquidation preferences, conversion
rights and preemptive rights and the number of shares constituting any series.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could
adversely affect the voting and other rights of holders of Common Stock and,
under certain circumstances, make it more difficult or costly for a third
party to acquire, or discourage a third party from attempting to acquire,
control of the Company. The Company has no present plans to issue any shares
of preferred stock.

WARRANTS

The Company has issued warrants to purchase 2,000,000 shares of Common Stock
of the Company, of which 1,770,000 were outstanding as of June 30, 1996. The
Warrants entitle a registered holder thereof to purchase at a price of $0.75,
subject to adjustment in certain circumstances, at any time prior to the close
of business on March 23, 1999, one share of Common Stock. In lieu of paying
cash upon the exercise of the Warrants, the holders of Warrants have the right
to have the Company convert, without the payment of cash, all or a portion of
the Warrants into shares of Common Stock at a rate of two Warrants for each
share of Common Stock. Upon the consummation of this offering, the Warrants
will become redeemable at a price of $0.01 per Warrant at any time on not less
than 30 days prior notice from the Company.

The exercise price of the Warrants and the number and kind of shares of
Common Stock or other securities and property issuable upon exercise of the
Warrants are subject to adjustment in certain circumstances, including a stock
split of, stock dividend on, or subdivision of the Common Stock. Additionally,
except in the case of a Qualified Transaction, an adjustment will be made upon
a merger, consolidation, sale of all or substantially all of the assets of the
Company, or recapitalization or other similar transaction in order to enable
holders of Warrants to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable in such event by a
holder of the number of shares of Common Stock that might otherwise have been
purchased upon exercise of the Warrants.

REGISTRATION RIGHTS

After this offering, the holders of 6,000,000 shares of outstanding Common
Stock will have the right at any time after the six month period following the
closing of the offering to require the Company to register their

45
<PAGE>

shares of Common Stock under the Securities Act. In addition, the holders of
those shares have certain "piggy-back" registration rights and rights to
require the Company to register all or a portion of their shares on Form S-3
to the extent that form is available to the Company for registration of
shares. In addition, the Company has an obligation to register up to 3,300,000
shares of Common Stock (the "Second Placement Shares"), which were sold by the
Company in a private placement between November 1994 and February 1995, within
12 months following the closing of the offering; provided, that the Company
will not be obligated to register Second Placement Shares for any holder who
could then sell all of his, her or its holding of Second Placement Shares
under Rule 144. The Company believes that nearly all holders of Second
Placement Shares will be able to sell all of their shares under Rule 144
within 12 months after the offering and therefore the registration obligation
will apply to few, if any, Second Placement Shares. Registration and sale of
shares of Common Stock could have an adverse effect on the trading price of
the Common Stock.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER PROVISIONS

Upon the consummation of the offering, the Company will be subject to the
provisions of Section 203 of the Delaware Law (the "Anti-Takeover Law")
regulating corporate takeovers. The Anti-Takeover Law prevents certain
Delaware corporations from engaging, under certain circumstances, in a
"business combination" with any "interested stockholder" (defined generally as
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 time that such stockholder became an "interested
stockholder." A Delaware corporation may "opt out" of the Anti-Takeover Law
with an express provision in its original certificate of incorporation or an
express provision in its certificate of incorporation or bylaws resulting from
a stockholder's amendment approved by at least a majority of the outstanding
voting shares. The Company has not "opted out" of the provisions of the Anti-
Takeover Law. The existence of this provision would be expected to have the
effect of discouraging takeover attempts, including attempts that might result
in a premium over the market price for the shares of Common Stock held by
stockholders. In addition, the Certificate of Incorporation, as amended,
provides that upon the closing of the offering, the stockholders of the
Company may consent in writing to an action in lieu of an annual or special
meeting of stockholders only by the consent of the holders of all of the
outstanding stock of the Company. Subject to, and upon the consummation of,
the offering, the Company's Certificate of Incorporation will be amended to
provide that directors of the Company shall be divided into three classes, as
nearly equal in number as possible. See "Management--Executive Officers and
Directors."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.

46
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of the Company's Common Stock could
have the effect of depressing the prevailing market price of its Common Stock.
Upon completion of this offering, the Company will have a total of 21,895,000
shares of Common Stock outstanding, assuming no exercise of stock options and
warrants after June 30, 1996. The Company believes that substantially all of
the warrants to purchase 1,770,000 shares of Common Stock outstanding as of
June 30, 1996 will be exercised prior to or promptly following the closing of
this offering. Of the 21,895,000 shares outstanding, the 4,000,000 shares of
Common Stock offered hereby will be freely tradeable without restriction under
the Securities Act by persons other than "affiliates" of the Company, as
defined under the Securities Act. The remaining 17,895,000 shares of Common
Stock outstanding are "restricted shares" as that term is defined by Rule 144
as promulgated under the Securities Act. None of these 17,895,000 shares will
be immediately saleable in the public market following the date of this
Prospectus. Beginning 180 days after the date of this Prospectus (or earlier
with the written consent of Montgomery Securities, on behalf of the
Underwriters), 17,731,000 shares of Common Stock will become eligible for sale
upon the expiration of lock-up agreements between the Underwriters and the
holders of such shares, subject to compliance with Rule 144 or Rule 701 of the
Securities Act.

As of June 30, 1996, options to purchase a total of 2,522,300 shares of
Common Stock were outstanding, and there were 2,197,700 shares of Common Stock
available for future option grants under the Company's 1994 Stock Option Plan.
1,835,000 of the shares issuable pursuant to outstanding options are subject
to lock-up restrictions for a period of 180 days as described above. In
addition, the Company has warrants outstanding to purchase an aggregate of
1,770,000 shares of Common Stock for $0.75 per share, of which 1,735,000
shares are subject to lock-up restrictions for a period of 180 days as
described above. See "Management--1994 Stock Option Plan," "Description of
Securities--Warrants," "Underwriting" and "Note 4 of "Notes to Financial
Statements."'

Rule 701 under the Securities Act provides that, beginning 90 days after the
date of this Prospectus, shares of Common Stock acquired upon the exercise of
outstanding options may be resold by persons other than affiliates subject
only to the manner of sale provisions of Rule 144 and by affiliates subject to
all provisions of Rule 144 except its two-year minimum holding period. The
Company intends to file a Registration Statement on Form S-8 under the
Securities Act to register shares of Common Stock subject to stock options
which will permit the resale of such shares, subject to the Rule 144 volume
limitations applicable to affiliates, vesting restrictions with the Company
and lock-up agreements between the optionholders and the Underwriters.

Prior to this offering, there has been no public trading market for the
Common Stock. The possibility that substantial amounts of Common Stock may be
sold in the public market may adversely affect prevailing prices for the
Common Stock and could impair the Company's ability to raise additional
capital through the sale of its equity securities.

47
<PAGE>

UNDERWRITING

The underwriters named below (the "Underwriters"), represented by Montgomery
Securities, Alex. Brown & Sons Incorporated and Oppenheimer & Co., Inc. (the
"Representatives"), have severally agreed, subject to the terms and conditions
set forth in the Underwriting Agreement, to purchase from the Company the
number of shares of Common Stock indicated below opposite their respective
names at the initial public offering price less the underwriting discount set
forth on the cover page of this Prospectus. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent and that the Underwriters are committed to purchase all
of such shares, if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Montgomery Securities .............................................
Alex. Brown & Sons Incorporated....................................
Oppenheimer & Co., Inc.............................................
---------
Total............................................................ 4,000,000
=========
</TABLE>

The Representatives have advised the Company that the Underwriters initially
propose to offer the Common Stock to the public on the terms set forth on the
cover page of this Prospectus. The Underwriters may allow to selected dealers
a concession of not more than $ per share; and the Underwriters may allow,
and such dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the initial public offering, the offering price
and other selling terms may be changed by the Representatives. The Common
Stock is offered subject to receipt and acceptance by the Underwriters, and to
certain other conditions, including the right to reject orders in whole or in
part.

The Selling Stockholders have granted an option to the Underwriters,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to a maximum of 600,000 additional shares of Common Stock to cover
over-allotments, if any, at the same price per share as the initial 4,000,000
shares to be purchased by the Underwriters. To the extent that the
Underwriters exercise this option, each of the Underwriters will be committed,
subject to certain conditions, to purchase such additional shares in
approximately the same proportion as set forth in the above table. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with this offering.

Each director and officer of the Company and certain other holders of Common
Stock prior to this offering have agreed, subject to certain limited
exceptions, not to sell or offer to sell or otherwise dispose of any shares of
Common Stock currently held by them, any right to acquire any shares of Common
Stock or any securities exercisable for or convertible into any shares of
Common Stock for a period of 180 days after the date of this Prospectus
without the prior written consent of Montgomery Securities. Montgomery
Securities may, in its sole discretion and at any time without notice, release
all or any portion of the securities subject to these lock-up agreements. In
addition, the Company has agreed that for a period of 180 days after the date
of this Prospectus it will not, without the prior written consent of
Montgomery Securities, issue, offer, sell, grant options to purchase or
otherwise dispose of any equity securities or securities convertible into or
exchangeable for equity securities except for shares of Common Stock offered
hereby and shares issued pursuant to outstanding options and warrants. See
"Management--1994 Stock Option Plan" and "Description of Securities--
Warrants."

The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters and their controlling persons
against liabilities, including civil liabilities under the Securities Act, or
will contribute to payments the Underwriters may be required to make in
respect thereof.

The Representatives have advised the Company that they do not intend to
confirm sales to any accounts over which they exercise discretionary authority
in excess of 5% of the number of shares of Common Stock offered hereby.

48
<PAGE>

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price will be determined
through negotiations between the Company and the Representatives. Among the
factors to be considered in such negotiations will be the history of, and
prospects for, the Company and the industry in which it competes, an
assessment of the Company's management, the Company's past and present
operations and financial performance, its past and present earnings and the
trend of such earnings, the prospects for future earnings of the Company, the
present state of the Company's development, the general condition of the
securities markets at the time of the offering and the market prices of
publicly traded common stocks of comparable companies in recent periods.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Fulbright & Jaworski L.L.P., New York,
New York. Ropes & Gray, Boston, Massachusetts will pass upon certain legal
matters relating to the offering for the Underwriters. Attorneys at Fulbright
& Jaworski L.L.P. own 140,000 shares of Common Stock of the Company and
warrants to purchase 20,000 shares of Common Stock.

EXPERTS

The financial statements of the Company included in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said report.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement on Form S-1
(together with all amendments thereto, the "Registration Statement"), under
the Securities Act with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules filed therewith, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. With
respect to each contract, agreement or other document referred to in this
prospectus and which is filed as an exhibit to the Registration Statement,
reference hereby is made to the exhibit for a more complete description of the
matter involved and each such statement shall be deemed qualified in its
entirety by such reference. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and exhibits and schedules thereto. The Registration
Statement filed by the Company, including exhibits and schedules thereto, may
be inspected without charge at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Midwest Regional Office of the Commission
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material, when filed, may also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
upon payment of certain fees prescribed by the Commission. The Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by its independent public accountants
and quarterly reports containing unaudited financial information for each of
the first three quarters of each fiscal year.

49
<PAGE>

On February 6, 1996, the Company engaged Arthur Andersen LLP as its
independent public accountants and dismissed the Company's former auditors.
The decision to change accountants was recommended by the Audit Committee of
the Board of Directors and approved by the Board of Directors. The financial
statements of the Company as of June 30, 1994, 1995 and 1996 and for the
period from Inception (August 20, 1993) to June 30, 1994 and for the years
ended June 30, 1995 and 1996, have been audited by Arthur Andersen LLP. The
former auditors were retained by the Company since its Inception. The former
auditor's reports for the period from Inception to May 31, 1994 and the year
ended May 31, 1995, did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. In connection with the audits of the Company's
financial statements for the period from Inception (August 20, 1993) to May
31, 1994 and for the year ended May 31, 1995 and in the subsequent interim
period prior to the dismissal, there were no disagreements with the former
auditors on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which, if not resolved
to the former auditor's satisfaction, would have caused them to make reference
to the subject matter in their report. Prior to retaining Arthur Andersen LLP,
the Company did not consult with Arthur Andersen LLP regarding the application
of accounting principles to a specified transaction, the type of audit opinion
that might be rendered on the Company's financial statements or any other
matter.

50
<PAGE>

VOXWARE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Public Accountants.................................. F-2
Balance Sheets............................................................ F-3
Statements of Operations.................................................. F-4
Statements of Redeemable Convertible Preferred Stock and Stockholders'
Equity (Deficit)......................................................... F-5
Statements of Cash Flows.................................................. F-6
Notes to Financial Statements............................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Voxware, Inc.:

We have audited the accompanying balance sheets of Voxware, Inc. (a Delaware
corporation) as of June 30, 1995 and 1996 and the related statements of
operations, redeemable convertible preferred stock and stockholders' equity
(deficit) and cash flows for the period from Inception (August 20, 1993) to
June 30, 1994 and for the two years ended June 30, 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 audits.

We conducted our audits 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
statement presentation. We believe that our audits provide 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 Voxware, Inc. as of June
30, 1995 and 1996 and the results of its operations and its cash flows for the
period from Inception (August 20, 1993) to June 30, 1994 and for the two years
ended June 30, 1996, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
July 12, 1996

F-2
<PAGE>

VOXWARE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
JUNE 30, EQUITY
------------------------ JUNE 30, 1996
1995 1996 (UNAUDITED)
----------- ----------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............ $ 1,523,054 $ 3,836,836
Accounts receivable, net of allowance
for doubtful accounts of $25,000 at
June 30, 1996....................... -- 469,750
Prepaid expenses..................... 5,440 54,358
----------- -----------
Total current assets............... 1,528,494 4,360,944
Property and equipment, net............ 128,769 610,973
Other assets, net...................... 9,564 364,536
----------- -----------
$ 1,666,827 $ 5,336,453
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable..................... $ 110,530 $ 193,944
Accrued compensation and benefits.... -- 109,875
Other accrued expenses............... -- 60,664
Deferred revenues.................... -- 109,123
----------- -----------
Total current liabilities.......... 110,530 473,606
----------- -----------
Redeemable Series A Convertible
Preferred Stock....................... -- 5,938,325 $ --
----------- ----------- -----------
Commitments and contingencies (Note 6)
Stockholders' equity (deficit):
Preferred stock, $.001 par value,
10,000,000 shares authorized;
6,000,000 Redeemable Series A
Convertible shares issued and
outstanding in 1996; no shares
issued and outstanding pro forma.... -- -- --
Common stock, $.001 par value,
40,000,000 shares authorized;
11,545,000 and 11,895,000 shares
issued and outstanding; 17,895,000
shares issued and outstanding pro
forma............................... 11,545 11,895 17,895
Additional paid-in capital........... 2,929,040 3,171,190 9,103,515
Accumulated deficit.................. (1,384,288) (4,258,563) (4,258,563)
----------- ----------- -----------
Total stockholders' equity
(deficit)......................... 1,556,297 (1,075,478) 4,862,847
----------- ----------- -----------
$ 1,666,827 $ 5,336,453 $ 5,336,453
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>

VOXWARE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(AUGUST 20, 1993) YEAR ENDED JUNE 30,
TO JUNE 30, ------------------------
1994 1995 1996
----------------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Product revenues................ $ -- $ -- $ 1,494,075
Service revenues................ -- -- 112,963
--------- ----------- -----------
Total revenues................ -- -- 1,607,038
--------- ----------- -----------
Cost of revenues:
Cost of product revenues........ -- -- 17,285
Cost of service revenues........ -- -- 28,129
--------- ----------- -----------
Total cost of revenues........ -- -- 45,414
--------- ----------- -----------
Gross profit.................. -- -- 1,561,624
--------- ----------- -----------
Operating expenses:
Research and development........ 93,372 536,581 2,496,717
Sales and marketing............. 9,158 331,728 1,084,280
General and administrative...... 112,978 365,411 979,796
--------- ----------- -----------
Total operating expenses...... 215,508 1,233,720 4,560,793
--------- ----------- -----------
Operating loss................ (215,508) (1,233,720) (2,999,169)
Interest income................... -- 64,940 131,857
--------- ----------- -----------
Net loss.......................... $(215,508) $(1,168,780) $(2,867,312)
========= =========== ===========
Pro forma net loss per share
(unaudited)...................... $ (0.16)
===========
Shares used in computing pro forma
net
loss per share (unaudited)....... 17,583,980
===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

VOXWARE, INC.

STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT)

<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------------
REDEEMABLE
SERIES A COMMON STOCK ADDITIONAL
CONVERTIBLE ------------------ PAID-IN ACCUMULATED
PREFERRED STOCK SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------------- ---------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sale of common stock
to founding
stockholders......... $ -- 6,000,000 $ 6,000 $ 24,567 $ -- $ 30,567
Sale of common stock.. -- 2,245,000 2,245 488,927 -- 491,172
Net loss.............. -- -- -- -- (215,508) (215,508)
---------- ---------- ------- ---------- ----------- -----------
Balance, June 30, 1994.. -- 8,245,000 8,245 513,494 (215,508) 306,231
Sale of common stock.. -- 3,300,000 3,300 2,415,546 -- 2,418,846
Net loss.............. -- -- -- -- (1,168,780) (1,168,780)
---------- ---------- ------- ---------- ----------- -----------
Balance, June 30, 1995.. -- 11,545,000 11,545 2,929,040 (1,384,288) 1,556,297
Sale of Redeemable
Series A Convertible
Preferred Stock...... 5,931,362 -- -- -- -- --
Exercise of common
stock warrants....... -- 230,000 230 172,270 -- 172,500
Exercise of common
stock options........ -- 120,000 120 69,880 -- 70,000
Accretion of
redemption premium on
Redeemable Series A
Convertible Preferred
Stock................ 6,963 -- -- -- (6,963) (6,963)
Net loss.............. -- -- -- -- (2,867,312) (2,867,312)
---------- ---------- ------- ---------- ----------- -----------
Balance June 30, 1996... $5,938,325 11,895,000 $11,895 $3,171,190 $(4,258,563) $(1,075,478)
========== ========== ======= ========== =========== ===========
Pro forma balance after
conversion of
Redeemable Series A
Convertible Preferred
Stock into common stock
(Note 1) (unaudited)... $ -- 17,895,000 $17,895 $9,103,515 $(4,258,563) $ 4,862,847
========== ========== ======= ========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

VOXWARE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(AUGUST 20, 1993) YEAR ENDED JUNE 30,
TO JUNE 30, ------------------------
1994 1995 1996
----------------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss.......................... $(215,508) $(1,168,780) $(2,867,312)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization.... 3,951 16,659 104,162
Provision for doubtful accounts.. -- -- 25,000
Changes in assets and
liabilities:
Accounts receivable............ -- -- (494,750)
Prepaid expenses............... -- (5,440) (48,918)
Other assets................... (6,534) (3,030) (354,972)
Accounts payable............... 52,469 58,061 83,414
Accrued compensation and
benefits...................... -- -- 109,875
Other accrued expenses......... -- -- 60,664
Deferred revenues.............. -- -- 109,123
--------- ----------- -----------
Net cash used in operating
activities.................. (165,622) (1,102,530) (3,273,714)
--------- ----------- -----------
Investing activities:
Purchases of property and
equipment....................... (48,820) (100,559) (586,366)
--------- ----------- -----------
Financing activities:
Sale of Redeemable Series A
Convertible Preferred Stock..... -- -- 5,931,362
Proceeds from exercise of common
stock warrants.................. -- -- 172,500
Proceeds from exercise of common
stock options................... -- -- 70,000
Proceeds from sale of common
stock........................... 521,739 2,418,846 --
--------- ----------- -----------
Net cash provided by
financing activities........ 521,739 2,418,846 6,173,862
--------- ----------- -----------
Increase in cash and cash
equivalents....................... 307,297 1,215,757 2,313,782
Cash and cash equivalents,
beginning of period............... -- 307,297 1,523,054
--------- ----------- -----------
Cash and cash equivalents, end of
period............................ $ 307,297 $ 1,523,054 $ 3,836,836
========= =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

VOXWARE, INC.

NOTES TO FINANCIAL STATEMENTS

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company

Voxware, Inc. (the "Company") develops, markets, licenses and supports a
comprehensive set of digital speech processing technologies which provide the
ability to compress, model and transform speech. The Company licenses its
products to leading software, computing and communication companies.

The market for the Company's products is characterized by rapidly changing
technology and evolving industry standards. The introduction of products
incorporating new technology and the emergence of new industry standards could
render the Company's products obsolete and unmarketable and could exert price
pressures on existing products. The Company's ability to anticipate changes in
technology and industry standards and successfully develop and introduce new
and enhanced products, as well as additional applications for existing
products, in each case on a timely basis, will be a critical factor in the
Company's ability to grow and to be competitive. The Company has only a
limited operating history upon which an evaluation of the Company and its
prospects can be based. The Company's prospects must be considered in light of
the risks, expenses and difficulties frequently encountered by companies in
the early stage of development, particularly companies in new and rapidly
evolving markets. As of June 30, 1996, the Company had an accumulated deficit
of $4,258,563. In addition, the Company's operating results may fluctuate
significantly in the future as a result of a variety of factors, many of which
are outside the Company's control. These factors include the level of usage of
the Internet, the budgeting cycles of potential customers, the amount and
timing of capital expenditures and other costs relating to the expansion of
the Company's operations, the introduction of new products or services by the
Company or its competitors, pricing changes in the industry, technical
difficulties with respect to the use of products developed by the Company,
general economic conditions and economic conditions specific to the Internet.
However, the Company believes that adequate capital resources will be
available to fund the Company's operations for the year ending June 30, 1997.

The Company was incorporated in the State of Delaware on August 20, 1993 as
Advanced Communication Technologies, Inc. and changed its name to Voxware,
Inc. in May 1994. For accounting purposes, the Company emerged from
development stage commencing July 1995.

Unaudited Pro Forma Stockholders' Equity

In conjunction with the proposed initial public offering of the Company's
common stock (the "Offering"), all of the outstanding shares of Redeemable
Series A Convertible Preferred Stock will convert into common stock effective
upon the closing of the Offering. The unaudited pro forma stockholders' equity
at June 30, 1996 reflects the assumed conversion of the Redeemable Series A
Convertible Preferred Stock into 6,000,000 shares of common stock (see Note
3).

Summary of Significant Accounting Policies

USE OF ESTIMATES

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.

REVENUE RECOGNITION

The Company generates revenues from two sources: fees from product licenses
and fees for services provided. Product licenses include a combination of
initial license fees, annual license fees or royalties. Service revenues
consist of customer support and engineering fees. Product revenues are
generally recognized upon shipment, provided there are no significant post
delivery obligations, the payment is due within one year and

F-7
<PAGE>

VOXWARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

collection of the resulting receivable is deemed probable. Certain agreements
provide for per unit royalties to be paid to the Company based on shipments by
customers of units utilizing the Company's products. Royalty revenues are
recognized at the time of shipment by the customer. No royalty revenues have
been recognized through June 30, 1996. Service revenues from customer support,
including amounts bundled with initial or annual license fees, are recognized
ratably over the term of the support period, which is typically one year.
Revenues from engineering fees are recognized upon customer acceptance or over
the period in which services are provided if customer acceptance is not
required.

RESEARCH AND DEVELOPMENT

Research and development expenditures are charged to operations as incurred.
Pursuant to Statement of Financial Accounting Standards No. 86, "Accounting
for the Cost of Computer Software to be Sold, Leased or Otherwise Marketed",
development costs incurred in connection with the research and development of
software products and enhancements to existing software products are expensed
when incurred unless technological feasibility has been established. Based on
the Company's product development process, technological feasibility is
established upon completion of a working model. Costs incurred by the Company
between completion of the working model and the point at which the product is
ready for general release have been insignificant. All research and
development costs have been expensed.

PRO FORMA NET LOSS PER SHARE (UNAUDITED)

Pro forma net loss per share was calculated by dividing net loss by the
weighted average number of common shares outstanding for the respective
periods adjusted for the dilutive effect of common stock equivalents, which
consist of stock options using the treasury stock method. Pursuant to the
requirements of the Securities and Exchange Commission, common stock issued by
the Company during the twelve months immediately preceding the initial public
offering, plus the number of common equivalent shares which became issuable
during the same period pursuant to the grant of common stock options, have
been included in the calculation of the shares used in computing pro forma net
loss per share as if they were outstanding for all periods presented (using
the treasury stock method and the estimated initial public offering price of
$7.50 per share). Pursuant to the policy of the Securities and Exchange
Commission the calculation of shares used in computing pro forma net loss per
share also includes the Redeemable Series A Convertible Preferred Stock which
will convert into 6,000,000 shares of common stock effective upon the closing
of the Offering.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of investments in highly liquid short-term
instruments, with original maturities of three months or less.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed on a
straight-line basis over the useful lives of the assets ranging from three to
seven years. Maintenance, repairs and minor replacements are charged to
expense as incurred.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash balances and trade receivables. The
Company invests its excess cash with highly liquid investments (short-term
bank deposits). The Company's customer base principally comprises companies
within the software, computer and telecommunications industries. The Company
does not require collateral from its customers.

F-8
<PAGE>

VOXWARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

MAJOR CUSTOMERS

The Company derived approximately 31% of its revenues in the year ended June
30, 1996 from one customer which is a related party (see Note 7).

STOCK BASED COMPENSATION

In October 1995, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") which establishes financial accounting and
reporting standards for stock based employee compensation plans. Companies are
encouraged, rather than required to adopt a new method that accounts for stock
compensation awards based on their fair value using an option pricing model.
Companies that do not adopt this method will have to make pro forma
disclosures of net income as if the fair value based method of accounting
required by this standard had been applied. The Company is required to adopt
SFAS No. 123 effective July 1, 1996. The Company has elected to adopt the
disclosure requirement of the pronouncement.

2. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
JUNE 30,
-------------------
1995 1996
-------- ---------
<S> <C> <C>
Equipment............................................. $139,817 $ 409,425
Leasehold improvements................................ -- 50,000
Furniture and fixtures................................ 9,562 276,320
-------- ---------
149,379 735,745
Less--Accumulated depreciation........................ (20,610) (124,772)
-------- ---------
$128,769 $ 610,973
======== =========
</TABLE>

Depreciation expense was $3,951, $16,659 and $104,162 for the periods ended
June 30, 1994, 1995 and 1996, respectively.

3. REDEEMABLE SERIES A CONVERTIBLE PREFERRED STOCK:

As of June 30, 1996, the Company had 10,000,000 shares of preferred stock
authorized of which 6,000,000 were designated, issued and outstanding as
$0.001 par value Redeemable Series A Convertible Preferred Stock ("Series A
Preferred Stock"). The 6,000,000 shares of Series A Preferred Stock were sold
to investors in fiscal 1996 for $1.00 per share resulting in net proceeds to
the Company of $5,931,362.

Each share of Series A Preferred Stock is convertible into one share of the
Company's common stock. In addition, effective upon the closing of an initial
public offering of the Company's common stock, as defined, all shares of the
Series A Preferred Stock will automatically convert into common stock on a
one-for-one basis, subject to certain adjustments. Each preferred stockholder
is entitled to one vote per share, registration rights, as defined, and
dividends when and if declared. No dividends have been declared on the Series
A Preferred Stock.

Subsequent to December 15, 2000, the Series A Preferred Stock is redeemable
at the option of a majority of the holders at $1.00 per share plus accrued but
unpaid dividends, if any, payable in twelve equal quarterly installments. The
Series A Preferred Stock is being accreted to its redemption value.

F-9
<PAGE>

VOXWARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. STOCKHOLDERS' EQUITY:

Stock Option Plans

Pursuant to the 1994 Stock Option Plan (the "Plan"), the Company may grant
to eligible individuals incentive stock options as defined in the Internal
Revenue Code and nonqualified stock options. An aggregate of 4,700,000 shares
of common stock have been reserved for issuance under the Plan. The exercise
price for incentive stock options may not be less than 100% (110% for holders
of 10% or more of the combined voting power of all classes of stock of the
Company) of the fair value of the shares on the date of grant and at least par
value for nonqualified stock options. The period during which an option may be
exercised will be fixed by the Board of Directors up to a maximum of ten years
(five years in case of incentive stock options granted to holders of 10% or
more of the combined voting power of all classes of stock of the Company) and
vest at the discretion of the Board of Directors.

The Company has granted a total of 140,000 options at prices ranging from
$0.50 to $1.00 outside of the 1994 Stock Option Plan (Outside Options).

Information relative to the 1994 Stock Option Plan and the Outside Options
is as follows:

<TABLE>
<CAPTION>
PRICE
SHARES PER SHARE
--------- ------------
<S> <C> <C>
Granted......................................... 755,000 $0.25--$1.50
---------
Outstanding at June 30, 1994...................... 755,000 $0.25--$1.50
Granted......................................... 1,168,000 $0.50--$0.75
---------
Outstanding at June 30, 1995...................... 1,923,000 $0.25--$1.50
Granted......................................... 842,300 $0.75--$5.40
Exercised....................................... (120,000) $0.25--$0.75
Canceled........................................ (123,000) $0.75--$1.20
---------
Outstanding at June 30, 1996...................... 2,522,300 $0.25--$5.40
=========
</TABLE>

As of June 30, 1996, there were 1,090,232 options exercisable at an
aggregate price of $845,589. In addition as of June 30, 1996, there were
2,197,700 additional options to purchase common stock available for grant
under the 1994 Stock Option Plan.

Warrants

In March 1994, the Company sold 2,000,000 shares of common stock and
warrants ("Warrants") to purchase an aggregate of 2,000,000 shares of common
stock for $0.75 per share, subject to adjustment in certain circumstances. In
lieu of paying cash upon the exercise of the Warrants, the Warrant holders
have the right to have the Company convert all or a portion of the Warrants
into shares of common stock at a rate of two Warrants for each share of common
stock. Immediately upon the closing of an initial public offering, as defined,
the Warrants will become redeemable at a price of $0.01 per Warrant at any
time on not less than 30 days prior written notice from the Company. In June
1996, warrants to purchase 230,000 shares of Common Stock were exercised.

5. INCOME TAXES:

As of June 30, 1996, the Company had approximately $3,500,000 of federal net
operating loss carryforwards for tax reporting purposes available to offset
future taxable income; such carryforwards begin to expire in 2009. Under the
Tax Reform Act of 1986, the amounts of and benefits from net operating losses
carried forward may be impaired or limited in certain circumstances. Events
which may cause limitations in the amount of net operating losses that the
Company may utilize in any one year include, but are not limited to, a
cumulative

F-10
<PAGE>

VOXWARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

ownership change of more than 50% over a three year period. As of June 30,
1996, the effect of such limitations, if imposed, is not expected to be
material.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amounts used for income tax purposes. As of June 30, 1996, the Company
had deferred tax assets of approximately $1,645,000 relating primarily to net
operating loss carryforwards. The net deferred tax asset has been fully offset
by a valuation allowance.

6. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facility and certain equipment under operating
leases with remaining noncancelable lease terms generally in excess of one
year. Rent expense was $3,000, $19,500 and $64,182 for the periods ended June
30, 1994, 1995 and 1996, respectively. Future minimum rental payments as of
June 30, 1996 are as follows:

<TABLE>
<S> <C>
Year Ending June 30,
1997.............................. $ 193,525
1998.............................. 322,350
1999.............................. 383,400
2000.............................. 383,400
2001.............................. 383,400
2002 and thereafter............... 734,850
----------
$2,400,925
==========
</TABLE>

The Company has a $300,000 letter of credit outstanding in connection with
the Company's facility lease. Included in other assets as of June 30, 1996 is
a $300,000 certificate of deposit which is required to be held as collateral
for the letter of credit.

From time to time the Company is involved in certain legal actions arising
in the ordinary course of business. In the opinion of management, the outcome
of such actions will not have a material adverse effect on the Company's
financial position or results of operations.

The Company has employment and severance agreements with five officers, the
terms of which range from three to five years. The agreements provide for
minimum salary levels, adjusted annually at the discretion of the board of
directors.

7. RELATED-PARTY TRANSACTIONS:

The Company derived approximately 31% of its revenues for the year ended
June 30, 1996 from Netscape Communications Corporation, which owns 1,000,000
shares of the Series A Preferred Stock (see Note 3).

8. SEGMENT INFORMATION:

The Company conducts its business within one industry segment. For the year
ended June 30, 1996, revenues included $183,989 of sales to customers outside
the United States.

F-11
<PAGE>

[VOXWARE LOGO]
<PAGE>

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

No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this Prospectus and, if given or made,
such information or representations must not be relied upon as having been au-
thorized by the Company or any of the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any securi-
ties other than the shares of Common Stock to which it relates or an offer to,
or a solicitation of, any person in any jurisdiction where such offer or so-
licitation would be unlawful. 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 or that the information
contained herein is correct as of any time subsequent to the date hereof.

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

TABLE OF CONTENTS

-------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Capitalization........................................................... 13
Dilution................................................................. 14
Selected Financial Data.................................................. 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 21
Management............................................................... 34
Certain Transactions..................................................... 41
Principal Stockholders................................................... 43
Description of Securities................................................ 45
Shares Eligible for Future Sale.......................................... 47
Underwriting............................................................. 48
Legal Matters............................................................ 49
Experts.................................................................. 49
Additional Information................................................... 49
Index to Financial Statements............................................ F-1
</TABLE>

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

Until , 1996 (25 days after the date of this Prospectus), all dealers ef-
fecting transactions in the Common Stock, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as Underwriters
and with respect to their unsold allotments or subscriptions.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

4,000,000 SHARES

VOXWARE

COMMON STOCK

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

PROSPECTUS

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

MONTGOMERY SECURITIES

ALEX. BROWN & SONS
Incorporated

OPPENHEIMER & CO., INC.

, 1996

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the Company's estimates (other than the SEC
registration fee and the NASD filing fee) of the expenses in connection with
the issuance and distribution of the shares of Common Stock being registered,
other than underwriting discounts and commissions:

<TABLE>
<S> <C>
SEC registration fee............................................... $ 12,690
NASD filing fee.................................................... 4,180
Nasdaq National Market listing fee................................. 50,000
Printing and engraving expenses.................................... 125,000
Legal fees and expenses............................................ 225,000
Accounting fees and expenses....................................... 120,000
Blue sky fees and expenses......................................... 20,000
Transfer agent and registrar fees.................................. 4,000
Directors and officers insurance fees.............................. 180,000
Miscellaneous expenses............................................. 9,130
--------
Total............................................................ $750,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may, in advance of the final disposition of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or
agent in defending such action, provided that the director or officer
undertakes to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the corporation. A corporation may
indemnify such person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses (including attorneys' fees) which he
actually and reasonably incurred in connection therewith. The indemnification
provided is not deemed to be exclusive of any other rights to which an officer
or director may be entitled under any corporation's by-law, agreement, vote or
otherwise.

The Company's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Company or its
stockholders for monetary damages for breach of their fiduciary duty to the
maximum extent permitted by the DGCL. The DGCL does not permit liability to be
eliminated (i) for any breach of a director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases or redemptions,
as provided in Section 174 of the DGCL, or (iv) for any transaction

II-1
<PAGE>

from which the director derived an improper personal benefit. In addition, as
permitted in Section 145 of the DGCL, the Certificate of Incorporation and By-
Laws of the Company provide that the Company shall indemnify its directors and
officers to the fullest extent permitted by the DGCL, including those
circumstances in which indemnification would otherwise be discretionary,
subject to certain exceptions. The By-Laws also provide that the Company shall
advance expenses to directors and officers incurred in connection with an
action or proceeding as to which they may be entitled to indemnification,
subject to certain exceptions.

Each of the Employment Agreements with Messrs. Goldstein, Traub, Aguilar,
Ott and Whittington provides for indemnification to the maximum extent
permitted by applicable law. The Company will enter into indemnification
agreements with each of its directors and executive officers that provide the
maximum indemnification allowed to directors and executive officers by the
DGCL, subject to certain exceptions, as well as certain additional procedural
protections. In addition, the indemnification agreements will provide
generally that the Company will advance expenses incurred by directors and
executive officers in any action or proceeding as to which they may be
entitled to indemnification, subject to certain exceptions.

The Company currently expects to carry director and officer liability
insurance following this offering.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, the following shares were sold by the Company
without registration under the Securities Act of 1933, as amended (the "Act").
All references to shares of the Company's Common Stock give effect to a sixty
thousand for one share stock split effected on December 8, 1993.

(a) From August 1993 to January 1994, an aggregate of 6,245,000 shares of
the Company's Common Stock were sold by the Company for an aggregate of
$33,507, as follows:

<TABLE>
<CAPTION>
SHAREHOLDER NUMBER OF SHARES
----------- ----------------
<S> <C>
J. Gerard Aguilar........................................... 3,480,000
Jordan S. and Maria T. Davis ............................... 840,000
Mitchell Davis.............................................. 840,000
Kenneth H. Traub............................................ 840,000
Michael Goldstein........................................... 125,000
Allen Gersho................................................ 120,000
---------
6,245,000
=========
</TABLE>

The Company relied on the exemption from registration set forth in Section
4(2) of the Act. No fees were paid in connection with the foregoing sales of
securities.

II-2
<PAGE>

(b) In March 1994, the Company sold an aggregate of 2,000,000 units, each
unit consisting of one share of Common Stock and one warrant to purchase one
share of Common Stock at a purchase price of $0.75 per share. The Company sold
units to the following persons at a price of $0.25 per unit.

<TABLE>
<CAPTION>
UNITHOLDER NUMBER OF UNITS
---------- ---------------
<S> <C>
Lester Youner................................................. 40,000
Stuart P. Milsten............................................. 35,000
William R. Davis and Sheila Davis............................. 35,000
Igor Stenmark................................................. 40,000
Peter W. Ryan................................................. 30,000
Arie Genger................................................... 100,000
Herbert Goldstein............................................. 60,000
David J. Roux................................................. 80,000
Paul Jacobs................................................... 60,000
Lawrence A. Spector........................................... 20,000
Edward Goldstein.............................................. 60,000
Eric Schreiber................................................ 20,000
Mitchell Napack............................................... 30,000
Peter M. Wood................................................. 100,000
Steven Bier................................................... 30,000
Lois B. Hoffner............................................... 30,000
Voice Tech Ventures........................................... 280,000
Abel Aguilar.................................................. 80,000
Alec Gindis................................................... 200,000
Burton and Elaine Traub....................................... 20,000
George and Lorraine Zimmerman................................. 10,000
Alan Gelband.................................................. 60,000
Alan Gelband Co. Defined Contribution Pension Plan & Trust.... 60,000
Richard W. Kates.............................................. 20,000
John M. McMahon............................................... 40,000
Terrence L. Mealy............................................. 20,000
Dr. Gary S. Traub............................................. 10,000
Paul Traub.................................................... 10,000
Marvin Haas................................................... 110,000
John Bendik................................................... 40,000
Harry Krensky and Linda Krensky............................... 20,000
Michael Bernstein............................................. 10,000
Bohemond Corp................................................. 100,000
David Handler................................................. 20,000
Stanley Davis and Silvia Davis................................ 10,000
Thomas Hardy.................................................. 110,000
---------
2,000,000
=========
</TABLE>

The Company relied on the exemption from registration set forth in Section
4(2) of the Act. No fees were paid in connection with the foregoing sales of
securities.

II-3
<PAGE>

(c) From November 1994 through February 1995, the Company sold an aggregate
of 3,300,000 shares of Common Stock to the following persons at a price of
$0.75 per share:

<TABLE>
<CAPTION>
SHAREHOLDER NUMBER OF SHARES
----------- ----------------
<S> <C>
Diego and Irene Alvarez..................................... 20,000
Hormozan Aprin, M.D. and Mahmaz Aprin....................... 100,000
Robert E. and Debra A. Balducci............................. 10,000
John E. Bendik.............................................. 51,000
Ennius E. Bergsman.......................................... 40,000
Steven J. Bier.............................................. 30,000
Mark A. and Maribeth Brostowski............................. 30,000
Joel A. and Karen Ann Budin................................. 50,000
John F. Burton.............................................. 100,000
Capital Express, L.L.C...................................... 100,000
James A. and JoAnn A. Cohen................................. 100,000
Joseph Coler DC............................................. 14,000
Kevin Collins............................................... 10,000
Smith Barney, Inc. IRA Custodian FBO J. Douglas Cox......... 40,000
Kathryn A. and J. Douglas Cox............................... 34,000
Kathryn A. Cox M.D. PC Retirement Trust..................... 26,000
Keith Eisenstark and Mary Beth Walsh........................ 10,000
Leonard G. Epstein.......................................... 35,000
Sheryl Fischer.............................................. 4,000
Mark H. Folit............................................... 20,000
Wayne J. and Deborah R. Friedman............................ 67,000
Jeffrey Garber.............................................. 10,000
David Gardner............................................... 20,000
Scott M. Gibson............................................. 10,000
Louis M. Gidding............................................ 10,000
Alec Gindis................................................. 100,000
Daniel Paul Goldman......................................... 20,000
Michael Goldman............................................. 20,000
Edward Goldstein............................................ 50,000
Steven J. Golub............................................. 50,000
Ira A. Gomberg.............................................. 40,000
Richard L. Green............................................ 14,000
Harlan T. Greenman.......................................... 7,000
Natalie J. Greenman......................................... 7,000
Steven M. Grossman.......................................... 20,000
Eugene and Joan Gyesky...................................... 20,000
Dhananjay Hajela............................................ 60,000
Thomas Hardy................................................ 70,000
Paul D. Harris.............................................. 70,000
Glenn H. Hutchins........................................... 50,000
Darlynn L. Johnson.......................................... 26,000
Beth Kaplan................................................. 50,000
Richard W. Kates............................................ 67,000
Gary H. and Cindy S. Katz................................... 7,000
Edward Klimerman............................................ 42,000
Joseph Korff................................................ 50,000
Carolyn H. Kornblau......................................... 20,000
Harry F. and Linda M. Krensky............................... 51,000
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
SHAREHOLDER NUMBER OF SHARES
----------- ----------------
<S> <C>
Charles T. and Nina A. Langpaul............................. 20,000
Alicia Latkovski............................................ 14,000
David A. Leff, D.O.......................................... 10,000
Lengfeld S.A................................................ 15,000
Marc N. and Pamela Levin.................................... 30,000
Fred and Cindi Brandt Levin................................. 8,000
Mark and Rachel Lipschutz................................... 8,000
Gregory G. Mario............................................ 100,000
Mark Mazzonelli............................................. 50,000
Michael L. and Cynthia G. McEachern......................... 30,000
Terrence L. Mealy........................................... 20,000
Edwin L. Miller............................................. 50,000
Stuart P. Milsten........................................... 10,000
Daniel S. Mintz............................................. 100,000
Richard and Maria Molinsky.................................. 33,000
Mario M. Morino............................................. 100,000
Michael Moskowitz........................................... 50,000
James Mossman............................................... 50,000
William J. Murray........................................... 30,000
Guarantee & Trust Co. TTEEFBO Philip Musicant............... 20,000
Fred T. and Elyce L. Perlstadt.............................. 20,000
Richard E. and Selena Lynn Pickering........................ 15,000
Gabriel Politzer............................................ 10,000
John G. Powers.............................................. 10,000
Renwick Alpha Fund.......................................... 100,000
Michael J. Reilly........................................... 40,000
Chris K. Richey............................................. 16,500
Mark Rosenblatt and Sarah M. Stern.......................... 50,000
Joseph and Sydell Roth...................................... 10,000
Andrea R. Ryan.............................................. 10,000
Robert Schiller............................................. 20,000
Geoffrey G. G. Sharp........................................ 10,000
Meyar Sheik................................................. 10,000
Jesse and Rochelle E. Shereff............................... 20,000
Howard Siegel............................................... 10,000
Simon Family Associates..................................... 10,000
Richard L. Smith............................................ 87,500
Bruce Todd Spector.......................................... 10,000
Robin Lee Steinfeld......................................... 10,000
Alan Stupell................................................ 20,000
Sarah Swiatycki............................................. 10,000
Charles and Roseann Terzano................................. 10,000
Burton H. and Elaine Traub.................................. 10,000
Laurence Usdin.............................................. 20,000
Voice Compression Associates................................ 121,000
Lauren S. Youner............................................ 4,000
Lester W. Youner and Sherry Youner.......................... 26,000
Ronald L. Zander............................................ 10,000
---------
3,300,000
=========
</TABLE>

II-5
<PAGE>

The Company relied on the exemption afforded from registration set forth in
Section 4(2) of the Act and Regulation D promulgated thereunder. No fees were
paid in connection with the foregoing sales of securities.

(d) In December 1995, the Company sold a total of 4,000,000 shares of Series
A Preferred Stock. The Company sold the shares of Series A Preferred Stock to
the following persons at a price of $1.00 per share.

<TABLE>
<CAPTION>
SHARES OF SERIES A
SHAREHOLDER PREFERRED STOCK
----------- ------------------
<S> <C>
Advent International Investors II Limited Partnership.... 5,000
Adtel Limited Partnership................................ 500,000
Advent Crown Fund C.V.................................... 800,000
Adwest Limited Partnership............................... 350,000
Advent Israel (Bermuda) Limited Partnership.............. 27,025
Advent Israel Limited Partnership........................ 222,975
Advent Partners Limited Partnership...................... 95,000
North Bridge Venture Partners, L.P....................... 2,000,000
---------
4,000,000
=========
</TABLE>

The Company relied on the exemption from registration set forth in Section
4(2) of the Act. No fees were paid in connection with the foregoing sales of
securities.

(e) In March 1996, the Company sold 1,000,000 shares of Series A Preferred
Stock to Intel Corporation and 1,000,000 shares of Series A Preferred Stock to
Netscape Communications Corporation at a price of $1.00 per share. The Company
relied on the exemption from registration set forth in Section 4(2) of the
Act. No fees were paid in connection with the foregoing sales of securities.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

<TABLE>
<S> <C>
1. Form of Underwriting Agreement.**
3.1 Certificate of Incorporation, as amended.**
3.2 Bylaws.**
4.1 Specimen Common Stock Certificate.*
4.2 Form of Warrant to Purchase Shares of Common Stock.**
5. Opinion of Fulbright & Jaworski L.L.P.*
10.1 Voxware, Inc. 1994 Stock Option Plan.**
10.2 Form of Voxware, Inc. Stock Option Agreement.**
10.3 Form of Indemnification Agreement.**
10.4 Series A Preferred Stock Purchase Agreement, dated December 19, 1995, as amended.**
10.5 Employment Agreement dated January 3, 1994, with Michael Goldstein, as amended.**
10.6 Employment Agreement dated February 1, 1995, with Kenneth H. Traub.**
10.7 Employment Agreement dated August 15, 1995, with Kenneth Whittington.**
10.8 Employment Agreement dated February 28, 1994, with J. Gerard Aguilar.**
10.9 Employment Agreement dated August 15, 1994, with Steven J. Ott.**
10.10 Technology Transfer Agreement Effective May 19, 1995, between Suat Yeldener Ph.D.
and Voxware, Inc.**+
10.11 Software License Agreement, dated January 31, 1996, with Netscape Communications
Corporation.**+
10.12 License Agreement, dated June 28, 1996 with America Online, Inc.**+
10.13 License Agreement, dated September 26, 1995 with Microsoft Corporation.**+
10.14 License Agreement, dated June 28, 1996 with USFI, Inc.**+
</TABLE>

II-6
<PAGE>

<TABLE>
<S> <C>
10.15 License Agreement, dated March 29, 1996 with VDOnet Corporation Ltd.**+
10.16 License Agreement, dated June 28, 1996 with Vienna Systems Corporation.**+
10.17 Lease, dated April 10, 1996, between College Road Associates, Limited Partnership and
the Company.**
10.18 Acquisition Agreement, dated January 30, 1996, with K & F Software.**
10.19 Stockholders Agreement, dated December 19, 1995, as amended.
11. Computation of Per Share Earnings.**
16. Letter from Ernst & Young LLP respecting change in certifying accountant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Fulbright & Jaworski L.L.P. (contained in Exhibit 5)*.
24. Power of Attorney.**
27. Financial Data Schedule.**
</TABLE>
- --------
*To be filed by amendment.

+A request for confidential treatment has been made for portions of such
document.

**Previously Filed.

(b) Financial Statement Schedules.

Not Applicable.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes that:

(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, 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.

(2) For purposes of determining any liability under the Securities Act of
1933, as amended, 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.

(3) For the purpose of determining any liability under the Securities Act
of 1933, as amended, 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-7
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PRINCETON
AND STATE OF NEW JERSEY ON THE 3RD DAY OF SEPTEMBER 1996.

Voxware, Inc.

/s/ Michael Goldstein
By: _________________________________
Michael Goldstein
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:

/s/ Michael Goldstein President and Chief
- ------------------------------------- Executive Officer September 3,
MICHAEL GOLDSTEIN and Director 1996
(principal
executive officer)

/s/ Kenneth H. Traub Executive Vice
- ------------------------------------- President, Chief September 3,
KENNETH H. TRAUB Financial Officer, 1996
Secretary and
Director (principal
financial officer)

Director
/s/ J. Gerard Aguilar* September 3,
- ------------------------------------- 1996
J. GERARD AGUILAR

Director
/s/ William J. Geary* September 3,
- ------------------------------------- 1996
WILLIAM J. GEARY

Director
/s/ Jordan S. Davis* September 3,
- ------------------------------------- 1996
JORDAN S. DAVIS

Director
/s/ Andrew I. Fillat* September 3,
- ------------------------------------- 1996
ANDREW I. FILLAT

/s/ David Roux* Director September 3,
- ------------------------------------- 1996

DAVID ROUX

/s/ Richard M. Schell* Director September 3,
- ------------------------------------- 1996

RICHARD M. SCHELL

Controller, Chief
/s/ Nicholas Narlis* Accounting Officer September 3,
- ------------------------------------- and Treasurer 1996
NICHOLAS NARLIS (principal accounting
officer)

*By /s/ Kenneth H. Traub
----------------------------------

(Kenneth H. Traub as attorney-in-fact for each
of the persons indicated)
II-8
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGE
EXHIBIT DESCRIPTION OF DOCUMENT NUMBER
NUMBER ----------------------- ------
<S> <C> <C>
1. Form of Underwriting Agreement.**
3.1 Certificate of Incorporation, as amended.**
3.2 Bylaws.**
4.1 Specimen Common Stock Certificate.*
4.2 Form of Warrant to Purchase Shares of Common Stock.**
5. Opinion of Fulbright & Jaworski L.L.P.*
10.1 Voxware, Inc. 1994 Stock Option Plan.**
10.2 Form of Voxware, Inc. Stock Option Agreement.**
10.3 Form of Indemnification Agreement.**
10.4 Series A Preferred Stock Purchase Agreement, dated December 19, 1995, as amended.**
10.5 Employment Agreement dated January 3, 1994, with Michael Goldstein, as amended.**
10.6 Employment Agreement dated February 1, 1995, with Kenneth H. Traub.**
10.7 Employment Agreement dated August 15, 1995, with Kenneth Whittington.**
10.8 Employment Agreement dated February 28, 1994, with J. Gerard Aguilar.**
10.9 Employment Agreement dated August 15, 1994, with Steven J. Ott.**
10.10 Technology Transfer Agreement Effective May 19, 1995, between Suat Yeldener Ph.D.
and Voxware, Inc.**+
10.11 Software License Agreement, dated January 31, 1996, with Netscape Communications
Corporation.**+
10.12 License Agreement, dated June 28, 1996 with America Online, Inc.**+
10.13 License Agreement, dated September 26, 1995 with Microsoft Corporation.**+
10.14 License Agreement, dated June 28, 1996 with USFI, Inc.**+
10.15 License Agreement, dated March 29, 1996 with VDOnet Corporation Ltd.**+
10.16 License Agreement, dated June 28, 1996 with Vienna Systems Corporation.**+
10.17 Lease, dated April 10, 1996, between College Road Associates, Limited Partnership and
the Company.**
10.18 Acquisition Agreement, dated January 30, 1996, with K & F Software.**
10.19 Stockholders Agreement, dated December 19, 1995, as amended.
11. Computation of Per Share Earnings.**
16. Letter from Ernst & Young LLP respecting change in certifying accountant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Fulbright & Jaworski L.L.P. (contained in Exhibit 5)*.
24. Power of Attorney.**
27. Financial Data Schedule.**
</TABLE>
- --------

*To be filed by amendment.

+A request for confidential treatment has been made for portions of such
document.

**Previously Filed.

<PAGE>

SHAREHOLDERS' AGREEMENT

AGREEMENT, made as of the 19th day of December, 1995, by and among Voxware,
Inc., a Delaware corporation (the "Company"), those persons listed on Schedule 1
----------
hereto (the "Current Shareholders") and those persons listed on Schedule 2
----------
hereto (the "Investors" and, with the Current Shareholders, the "Shareholders").

WHEREAS, the Investors are acquiring an aggregate of 4,000,000 shares of
Series A Convertible Preferred Stock, par value $.001 per share (the "Series A
Preferred Stock"), of the Company, pursuant to the terms of a Series A Preferred
Stock Purchase Agreement dated as of December 19th, 1995 between the Company,
the Investors and the Managers listed therein (the "Purchase Agreement"); and

WHEREAS, it is a condition to the obligations of the Current Shareholders
and the Investors under the Purchase Agreement that this Agreement be executed
by the parties hereto, and the parties are willing to execute this Agreement and
to be bound by the provisions hereof.

NOW, THEREFORE, in consideration of the foregoing, the agreements set forth
below, and the parties' desire to provide for continuity of ownership of the
Company to further the interests of the Company and its present and future
shareholders, the parties hereby agree with each other as follows:

1. Definition of Shares. As used in this Agreement, "Shares" shall mean
--------------------
and include all shares of the Series A Preferred Stock, or the Common Stock, par
value $.001 per share (the "Common Stock"), of the Company now owned or
hereafter acquired by an Investor and all shares of Common Stock now owned or
hereafter acquired by a Current Shareholder. Other terms used as defined terms
herein and not otherwise defined shall have the meanings set forth in the
Purchase Agreement.

2. Prohibited Transfers. No Current Shareholder shall sell, assign,
--------------------
transfer, pledge, hypothecate, mortgage, encumber or dispose of all or any of
his Shares except in compliance with the terms of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, (a) any
Current Shareholder may transfer without the necessity of prior approval all or
any of his Shares by way of gift to his spouse, to any of his lineal descendants
or ancestors, or to any trust for the benefit of any one or more of such Current
Shareholder, his spouse or his lineal descendants or ancestors and (b) any
Current Shareholder may transfer all or any of his Shares by will or the laws of
descent and distribution; provided that any such transferee under clause (a) or
(b) of this Section 2 shall agree in writing with the Company and the other
Shareholders, as a condition to such transfer, to be bound by all of the
provisions of this Agreement to the same extent as if such transferee were the
Current Shareholder transferring such Shares.
<PAGE>

3. Right of First Refusal on Dispositions.
--------------------------------------

(a) If at any time a Current Shareholder (a "Selling Current
Shareholder") desires to sell or otherwise transfer more than twenty percent
(20%) of the aggregate number of Shares owned by him or, in the case of a
Selling Current Shareholder who is also a director, officer, consultant, manager
or employee of the Company (collectively, an "Insider"), more than ten percent
(10%) of the aggregate number of Shares owned by him, pursuant to a bona fide
offer from a third party (the "Proposed Transferee"), the Selling Current
Shareholder shall submit a written offer (the "Offer") by delivering the Offer
to the Company and the Investors, to sell such Shares (the "Offered Shares") to
the Investors on terms and conditions, including price, not less favorable than
those on which the Selling Current Shareholder proposes to sell such Offered
Shares to the Proposed Transferee. The Offer shall disclose the identity of the
Proposed Transferee, the number of Offered Shares proposed to be sold, the total
number of Shares owned by the Selling Current Shareholder, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Offer shall further state (i) that the
Investors may acquire, in accordance with the provisions of this Agreement, any
of the Offered Shares for the price and upon the other terms and conditions set
forth therein (ii) that if all such Offered Shares are not purchased by the
Investors, the Investors may exercise their rights provided pursuant to Section
4 hereof and (iii) that if all such Offered Shares are not purchased by the
Investors, the Company may acquire, in accordance with the provisions of this
Agreement, all of the remaining Offered Shares for the price and upon the other
terms and conditions set forth therein.

(b) Each Investor shall have the right to purchase that number of
Offered Shares as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
then owned by such Investor (including shares issuable upon conversion of
Preferred Stock held by such person) and the denominator of which shall be the
aggregate number of shares of Common Stock (including shares issuable upon
conversion of Preferred Stock) then owned by all of the Investors who elect to
purchase the Offered Shares. The amount of such Offered Shares that each
Investor is entitled to purchase under this Section 3(b) shall be referred to as
its "Pro Rata Fraction".

(c) The Investors shall have a right of oversubscription such that if
any Investor fails to accept the Offer as to its full Pro Rata Fraction, the
remaining Investors shall, among them, have the right to purchase up to the
balance of such Offered Shares not so purchased. Other Investors may exercise
such right of oversubscription by accepting the Offer as to more than their Pro
Rata Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of the Offered Shares available in respect of such oversubscription
privilege, the oversubscribing Investors shall be cut back with respect to over
subscriptions on a pro rata basis in accordance with their respective Pro Rata
Fractions or as they may otherwise agree among themselves.

-2-
<PAGE>

(d) Those Investors who desire to purchase all or any part of the
Offered Shares shall communicate in writing their election to purchase to the
Selling Current Shareholder, which communication shall state the number of
Offered Shares said Investors desire to purchase and shall be provided to the
Selling Current Shareholder within 15 days of the date the Offer was made. Such
communication shall, when taken in conjunction with the Offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of such Offered Shares (subject to the aforesaid limitations as to the
right of the Investors to purchase more than their Pro Rata Fraction). Sales of
such Offered Shares to be sold to the Investors pursuant to this Section 3 shall
be made at the offices of the Company within 60 days following the date the
Offer was made.

(e) If the Investors do not purchase all of the Offered Shares, the
Selling Current Shareholder shall offer to sell such remaining Offered Shares to
the Company on terms and conditions, including price, not less favorable than
those on which the Selling Current Shareholder proposes to sell such Offered
Shares to the Investors and the Proposed Transferee. If the Company desires to
purchase all of the Offered Shares it shall communicate in writing its election
to purchase to the Selling Current Shareholder, which communication shall be
provided to the Selling Current Shareholder within 20 days of the date the Offer
was made. Such communication shall, when taken in conjunction with the Offer,
be deemed to constitute a valid, legally binding and enforceable agreement for
the sale and purchase of such Offered Shares.

(f) If the Company does not purchase the remaining Offered Shares, the
remaining Offered Shares may be sold by the Selling Current Shareholder at any
time within 120 days after the date the Offer was made, subject to the
provisions of Section 4. Any such sale shall be to the Proposed Transferee, at
not less than the price and upon other terms and conditions, if any, not more
favorable to the Proposed Transferee than those specified in the Offer. Any
remaining Offered Shares not sold within such 120-day period shall continue to
be subject to the requirements of a prior offer pursuant to this Section 3. If
Offered Shares are sold pursuant to this Section 3 to any purchaser who is not a
party to this Agreement, the purchaser of such Offered Shares shall execute a
counterpart of this Agreement as a precondition of the purchase of such Offered
Shares and any Offered Shares sold to such purchaser shall continue to be
subject to the provisions of this Agreement.

4. Right of Participation in Sales.
-------------------------------

(a) If at any time a Shareholder (a "Selling Shareholder") desires to
sell or transfer more than twenty percent (20%) of the aggregate number of
Shares owned by him or, in the case of a Selling Shareholder who is also an
Insider, more than ten percent (10%) of the aggregate number of Shares owned by
him, to a Proposed Transferee, and, if applicable, those Shares to be
transferred have not been purchased by the Investors under Section 3, each of
the Shareholders (other than those Investors who have elected to purchase Shares
pursuant to Section 3) shall have the right to sell to the Proposed Transferee,
as a condition to such sale by the Selling Shareholder, at

-3-
<PAGE>

the same price per share and on the same terms and conditions as involved in
such sale by the Selling Shareholder, a pro rata portion of the amount of Shares
--- ----
proposed to be sold to the Proposed Transferee. The "pro rata portion" of
--- ----
Shares which a Shareholder shall be entitled to sell to the Proposed Transferee
shall be that number of Shares as shall equal the number of Offered Shares
proposed to be sold to the Proposed Transferee multiplied by a fraction, the
numerator of which is the aggregate of all shares of Common Stock (including
shares issuable upon conversion of Preferred Stock held by such person) which
are then held by the Shareholder, and the denominator of which is the aggregate
of all shares of Common Stock (including shares issuable upon conversion of
Preferred Stock) which are then held by the Selling Shareholder and all
Shareholders wishing to participate in any sale under this Section 4.

(b) Each Selling Shareholder who wishes to make a sale to a Proposed
Transferee which is subject to this Section 4 shall, after complying with the
provisions of Section 3 (if applicable), give to each Shareholder notice of such
proposed sale, and, if applicable, stating that all Offered Shares were not
purchased pursuant to the Offer as discussed in Section 3. Such notice shall be
given at least 20 days prior to the date of the proposed sale to the Proposed
Transferee. Each Shareholder wishing to so participate in any sale under this
Section 4 shall notify the Selling Shareholder in writing of such intention
within 15 days after such Shareholder's receipt of the notice described in the
preceding sentence.

(c) The Selling Shareholder and each participating Shareholder shall
sell to the Proposed Transferee all, or at the option of the Proposed
Transferee, any part of the Shares proposed to be sold by them at not less than
the price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those in the notice provided by the Selling Shareholder
under subparagraph (b) above; provided, however, that any purchase of less than
-------- -------
all of such Shares by the Proposed Transferee shall be made from the Selling
Shareholder and each participating Shareholder pro rata based upon the relative
--- ----
number of the Shares that the Selling Shareholder and each participating
Shareholder is otherwise entitled to sell pursuant to Section 4(a).

(d) If any Shares are sold pursuant to this Section 4 to any purchaser
who is not a party to this Agreement, the purchaser of such Shares shall execute
a counterpart of this Agreement as a precondition to the purchase of such Shares
and such Shares shall continue to be subject to the provisions of this
Agreement.

5. Election of Directors. At each annual meeting of the shareholders of
---------------------
the Company, and at each special meeting of the shareholders of the Company
called for the purpose of electing directors of the Company, and at any time at
which shareholders of the Company shall have the right to, or shall, vote for
directors of the Company, then, and in each event, the Shareholders shall vote
all Shares owned by them for the election of a Board of Directors consisting of
not more than eight directors, designated in the manner designated below.

-4-
<PAGE>

(a) two directors shall be designated by the Investors (which
designees shall initially be Andrew I. Fillat and Richard D'Amore); and

(b) six directors shall be designated by the holders of a majority of
the Common Stock (which designees shall be Michael Goldstein, Kenneth H. Traub
and J. Gerard Aguilar to serve for at least as long as required by their
respective employment agreements and such other persons as shall be selected by
the majority of the Common Stock held by the Current Shareholders).

6. Compensation Committee. There shall be established at the time of the
----------------------
Closing of the Purchase Agreement (as defined therein) and thereafter at all
times during the term of this Agreement, a Compensation Committee of the Board
of Directors (the "Compensation Committee") which shall be comprised of three
directors each of whom shall not be an employee of the Company, shall have
expertise in the Company's business or related business and shall be reasonably
acceptable to the Investors (which persons initially shall be Richard D'Amore,
Andrew I. Fillat and David Roux). The Compensation Committee will determine the
compensation of all senior employees and consultants of the Company (including
salary, bonus, equity participation and benefits). The compensation of senior
employees and consultants shall be reviewed by the Compensation Committee on an
annual basis, and the decision by a majority of the members of the Compensation
Committee will control the Committee's actions.

7. Operations Committee. There shall be established at the time of the
--------------------
Closing of the Purchase Agreement (as defined therein) and thereafter at all
times during the term of this Agreement, an Operations Committee of the Board of
Directors (the "Operations Committee") which shall be comprised of four
directors as follows: two of whom shall be the directors designated under
Section 5(a); one of whom shall be the Chief Executive Officer of the Company
(whom shall be Michael Goldstein until such time as his successor may be named
by the Board of Directors); and one of whom shall be the Chief Financial Officer
of the Company (whom shall be Kenneth H. Traub until such time as his successor
may be named by the Board of Directors). Additional directors may be named to
Operations Committee from time to time as determined by the Board of Directors.
The Operations Committee shall consult with the Company's management from time
to time on financial matters and day to day operations of the Company.

8. Audit Committee. There shall be established at the time of the Closing
---------------
of the Purchase Agreement (as defined therein) and at all times thereafter
during the term of this Agreement, an Audit Committee of the Board of Directors
(the "Audit Committee") which shall be initially comprised of the two directors
designated under Section 5(a). The Audit Committee will have the duties and
responsibilities of reviewing the Company's internal audit procedures, controls,
and financial management practices, reviewing audit reports and recommendations
made by the Company's internal audit staff and its independent auditors, and
meeting and consulting with the Company's independent auditors.

-5-
<PAGE>

9. Term. This Agreement shall terminate immediately prior to (a) the
----
consummation of the first Qualified Public Offering or (b) the tenth anniversary
of the date of this Agreement, whichever occurs first.

10. Failure to Deliver Shares. If a Current Shareholder becomes obligated
-------------------------
to sell any Shares to another Shareholder under this Agreement and fails to
deliver such Shares in accordance with the terms of this Agreement, such other
Shareholders may, at their option, in addition to all other remedies they may
have, send to the defaulting Current Shareholder the purchase price for such
Shares as is herein specified. Thereupon, the Company, upon written notice to
the defaulting Current Shareholder, (a) shall cancel on its books the
certificate or certificates representing the Shares to be sold and (b) shall
issue, in lieu thereof, in the name of such other Shareholder, a new certificate
or certificates representing such Shares, and thereupon all of the defaulting
Current Shareholder's rights in and to such Shares shall terminate.

11. Specific Enforcement. Each Shareholder expressly agrees that the
--------------------
other Shareholders and the Company may be irreparably damaged if this Agreement
is not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by any Shareholder, the other
Shareholders and the Company shall, in addition to all other remedies, each be
entitled to apply for a temporary or permanent injunction, and/or a decree for
specific performance, in accordance with the provisions hereof.

12. Legend. Each certificate evidencing any of the Shares now owned or
------
hereafter acquired by the Current Shareholders shall bear a legend substantially
as follows:

"Any sale, assignment, transfer or other disposition of the shares
represented by this certificate is restricted by, and subject to, the
terms and provisions of a certain Shareholders' Agreement dated as of
December 19th, 1995. A copy of said Agreement is on file with the
Secretary of the Corporation."

13. Notices. Notices given hereunder shall be deemed to have been duly
-------
given on the date of personal delivery or on the date of postmark if mailed by
certified or registered mail, return receipt requested, to the party being
notified at his or its address specified on the applicable schedule hereto or
such other address as the addressee may subsequently notify the other parties of
in writing.

14. Entire Agreement and Amendments. This Agreement constitutes the
-------------------------------
entire agreement of the parties with respect to the subject matter hereof and
neither this Agreement nor any provision hereof may be waived, modified, amended
or terminated except by a written agreement signed by the parties hereto;

provided, however, that Investors owning at least a majority of the Shares owned
- -------- -------
by all Investors may effect any such waiver, modification, amendment or
termination on behalf of all

-6-
<PAGE>

of the Investors and the Current Shareholders owning at least a majority of the
Shares owned by all Current Shareholders may effect any such waiver,
modification, amendment or termination on behalf of all of the Current
Shareholders. Each of the Shareholders represents that he or it is not a party
to any other agreement which would prevent him or it from performing his or its
obligations hereunder. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.

15. Governing Law; Successors and Assigns. This Agreement shall be
-------------------------------------
governed by the internal laws of the State of Delaware without giving effect to
the conflicts of laws principles thereof and, except as otherwise provided
herein, shall be binding upon the heirs, personal representatives, executors,
administrators, successors and assigns of the parties.

16. Severability. If any provision of this Agreement shall be held to be
------------
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.

17. Captions. Captions are for convenience only and are not deemed to be
--------
part of this Agreement.

18. Counterparts. This Agreement may be executed in two or more
------------
counterparts, by telecopier, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

-7-
<PAGE>

FIRST AMENDMENT TO, AND
AGREEMENT TO BE BOUND BY,
THE
SHAREHOLDERS' AGREEMENT

This First Amendment to, and Agreement to be Bound by, the
Shareholders' Agreement (this "Amendment"), dated as of December 19, 1995 (the
"Shareholders' Agreement"), is made as of the 19th day of March, 1996, by and
among Voxware, Inc., a Delaware corporation (the "Company"), the Shareholders,
as defined in the Shareholders' Agreement and listed on Schedules 1 and 2
thereto, Netscape Communications Corporation, a Delaware corporation, and Intel
Corporation, a Delaware corporation. Capitalized terms not defined herein shall
have such meaning as provided in the Shareholders' Agreement.

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Company and the Shareholders entered into the
Shareholders' Agreement, pursuant to which, inter alia, the Shareholders agreed
----- ----
to certain courses of conduct with respect to securities of the Company owned by
them;

WHEREAS, on the date hereof Netscape Communications Corporation
("Netscape") and Intel Corporation ("Intel" and, together with Netscape, the
"New Investors") are each purchasing 1,000,000 shares of the Company's Series A
Convertible Preferred Stock, $.001 par value (the "Series A Preferred Stock"),
pursuant to an Amendment No. 1 to the Series A Preferred Stock Purchase
Agreement ("Amendment No. 1 to the Purchase Agreement");

WHEREAS, pursuant to Amendment No. 1 to the Purchase Agreement, it is
a condition to such purchase that the New Investors agree to be bound by the
terms and conditions of the Shareholders' Agreement; and

WHEREAS, the parties further desire to amend the terms of the
Shareholders' Agreement in certain respects in connection with the transactions
contemplated by Amendment No. 1 to the Purchase Agreement on the terms and
conditions hereinafter set forth;

NOW, THEREFORE, the parties hereto agree
as follows:

1. Effective upon consummation of the sale of the Series A Preferred
Stock to the New Investors in accordance with Amendment No. 1 to the Purchase
Agreement, the Shareholders' Agreement shall be and hereby is amended as
follows:

(i) Section 5(a) of the Shareholders' Agreement is amended by deleting
such Section in its entirety and substituting therefor the following:

-8-
<PAGE>

(a) two directors shall be designated by the Investors (other
than Netscape Communications Corporation ("Netscape") and Intel
Corporation ("Intel")) (which designees shall initially be Andrew I.
Fillat and Richard D'Amore); and

(ii) Section 5(b) of the Shareholders' Agreement is amended by
deleting such Section in its entirety and substituting therefor the
following:

(b) five directors shall be designated by the holders of a
majority of the Common Stock (which designees shall be Michael
Goldstein, Kenneth H. Traub and J. Gerard Aguilar to serve for at
least as long as required by their respective employment agreements,
and such other persons as shall be selected by the majority of the
Common Stock held by the Current Shareholders); provided that, at such
-------- ----
time as Netscape is no longer entitled to designate a director in
accordance with Section 5(c) below, then the holders of a majority of
the Common Stock shall be entitled to designate six directors; and

(iii) Section 5 of the Shareholders' Agreement shall be and hereby is
amended by adding a new Section 5(c) immediately following Section 5(b) of
the Shareholders' Agreement, which Section 5(c) shall read in its entirety
as follows:

(c) one director (the "Netscape Designee") shall be designated by
Netscape (which designee shall initially be Richard Schell) for so
long as Netscape owns at least 1,000,000 shares of the Series A
Preferred Stock, as adjusted to reflect any stock dividend, stock
split or other form of recapitalization occurring after the date
hereof. Notwithstanding anything herein or in the Purchase Agreement
or the Certificate of Designation to the contrary, the Netscape
Designee shall not be deemed "a director designated by the Purchasers"
or "a director designated by the holders of the Series A Preferred
Stock" for any purpose under the Purchase Agreement, or "a director
designated by the holders of the Preferred Stock" for any purpose
under the Certificate of Designation.

(iv) Section 5 of the Shareholders' Agreement shall be and hereby is
amended by adding a new Section 5(d) immediately following Section 5(c) of
the Shareholders' Agreement, which Section 5(d) shall read in its entirety
as follows:

(d) All designees for directors of the Company provided for in
Sections 5(a), 5(b) and 5(c) above, other than Messrs. Fillat,
D'Amore, Goldstein, Traub, Davis, Aguilar, Roux and Schell, shall be
reasonably acceptable to the Company.

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<PAGE>

(v) Section 5 of the Shareholders' Agreement shall be and hereby is
amended by adding a new Section 5(e) immediately following Section 5(d) of
the Shareholders' Agreement, which Section 5(e) shall read in its entirety
as follows:

(e) For so long as Intel owns at least 1,000,000 shares of Series
A Preferred Stock (as adjusted to reflect any stock dividend, stock
split or other form of recapitalization occurring after the date
hereof), Intel shall have the right to designate one individual (the
"Representative"), which Representative shall be reasonably acceptable
to the Company, to attend meetings of the Company's Board of Directors
as a non-voting observer. The Company shall notify the Representative
of each meeting of the Board and the Representative shall receive all
materials furnished to members of the Company's Board of Directors in
their capacities as such. The Representative shall recuse himself
from specific Board discussions and meetings as deemed reasonably
appropriate by the Board in light of the subject matter to be
addressed in such discussions or meetings.

(vi) Section 14 of the Shareholders' Agreement is amended by deleting
such Section in its entirety and substituting therefor the following:

14. Entire Agreement and Amendments. This Agreement constitutes
-------------------------------
the entire agreement of the parties with respect to the subject matter
hereof. This Agreement may be amended only by written instruments
signed by (i) the Company, (ii) Current Shareholders owning at least a
majority of the Shares owned by all Current Shareholders and (iii)
Investors owning at least a majority of the Shares owned by all
Investors (calculated as if the outstanding shares of Series A
Preferred Stock had been fully converted). Notwithstanding anything
herein to the contrary, Section 5(c) may not be waived, modified,
amended or terminated except with the written consent of Netscape, and
Section 5(a) may not be waived, modified, amended or terminated except
with the written consent of Investors (other than Netscape and Intel)
owning at least a majority of the Shares owned by all Investors (other
than Netscape and Intel) (calculated as if the outstanding shares of
Series A Preferred Stock held by such Investors had been fully
converted).

2. Each New Investor, severally and not jointly, hereby agrees to
bound by the Shareholders' Agreement as if such New Investor had executed the
Shareholders' Agreement as an Investor (as defined therein) on the date of the
Shareholders' Agreement, and, except as otherwise specified in the Shareholders'
Agreement, as amended by this Amendment, each New Investor shall hereafter be
deemed an Investor for all purposes under the Shareholders' Agreement, as
amended by this Amendment, as if such person had been a signatory thereto as of
the date thereof.

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<PAGE>

3. The Shareholders' Agreement, as amended hereby, shall continue in
full force and effect as the binding obligation of the parties thereto
(including the New Investors) and any reference in the Purchase Agreement or any
other agreement to the Shareholders' Agreement shall mean the Shareholders'
Agreement as amended by this Amendment.

4. All notices, requests, consents and other communications to the
New Investors under the Shareholders' Agreement shall be provided to such New
Investors in accordance with the Shareholders' Agreement at its address set
forth below.

5. This Amendment may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.

IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to the Shareholders' Agreement as of the date first above written.

VOXWARE, INC.

By: /s/ Kenneth H. Traub
_________________________________

CURRENT SHAREHOLDERS:

/s/ Michael Goldstein /s/ J. Gerard Aguilar
________________________ _______________________________
Michael Goldstein J. Gerard Aguilar

/s/ Mitchell Davis /s/ Jordan S. Davis
________________________ _______________________________
Mitchell Davis Jordan S. Davis

/s/ Kenneth H. Traub
__________________________
Kenneth H. Traub

INVESTORS:

ADVENT INTERNATIONAL INVESTORS ADTEL LIMITED PARTNERSHIP
II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner By: Advent International Corporation,
General Partner

/s/ Andrew I. Fillat /s/ Andrew I. Fillat
By: _________________________________ By: _______________________________
Name: Andrew I. Fillat Name: Andrew I. Fillat
Title: Senior Vice President Title: Senior Vice President

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<PAGE>

Signature Page to First Amendment to, and
Agreement to be Bound by, the Shareholders' Agreement

ADVENT CROWN FUND C.V. ADWEST LIMITED PARTNERSHIP

By: Advent International Limited By: Advent International Limited
Partnership, General Partner Partnership, General
Partner

By: Advent International Corporation, By: Advent International Corporation,
General Partner General Partner

By: /s/ Andrew I. Fillat By: /s/ Andrew I. Fillat
----------------------------- ---------------------------
Name: Andrew I. Fillat Name: Andrew I. Fillat
Title: Senior Vice President Title: Senior Vice President

ADVENT ISRAEL (BERMUDA) ADVENT ISRAEL LIMITED
LIMITED PARTNERSHIP PARTNERSHIP

By: Advent International Limited By: Advent International Limited
Partnership, General Partner Partnership, General
Partner

By: Advent International Corporation, By: Advent International Corporation,
General Partner General Partner

NORTH BRIDGE VENTURE ADVENT PARTNERS LIMITED
PARTNERS, L.P. PARTNERSHIP

By: North Bridge Venture Management, By: Advent International Limited
L.P., General Partner Partnership, General
Partner

By: Advent International Corporation,
General Partner

By: /s/ Richard D'Amore By: /s/ Andrew I. Fillat
----------------------------- ---------------------------
Name: Richard D'Amore Name: Andrew I. Fillat
Title: General Partner Title: Senior Vice President

-12-
<PAGE>

Signature Page to First Amendment to, and
Agreement to be Bound by, the Shareholders' Agreement

NEW INVESTORS:

NETSCAPE COMMUNICATIONS INTEL CORPORATION
CORPORATION

By: /s/ Peter Curry By: /s/ Arvind Sodhani
--------------------------------- ----------------------------------
Name: Peter Curry Name: Arvind Sodhani
Title: Title: Vice President and Treasurer

Address: 501 East Middlefield Road Address: 2200 Mission College Blvd.
Mountain View, CA 94043 Santa Clara, CA 95052

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<PAGE>

EXHIBIT 16

[LETTERHEAD OF ERNST AND YOUNG LLP]

July 30, 1996

Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Gentlemen:

We have read the third paragraph under the caption Additional Information of
Voxware, Inc.'s Registration Statement on Form S-1 dated July 18, 1996. We are
in agreement with the fourth, fifth and sixth sentences in the third paragraph
under the caption Additional Information. In addition, we have no basis to agree
or disagree with any other statements of the registrant contained in the third
paragraph under the caption Additional Information of the above referenced
filing.

/s/ ERNST AND YOUNG LLP

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
and all references to our firm included in or made part of this registration
statement.

/s/ Arthur Andersen LLP
Arthur Andersen LLP

Philadelphia, Pa.,

August 27, 1996