U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB


                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, l997

Commission file number   333-12979


                                 VOICENET, INC.
                     (Exact name of small business issuer as
                            specified in its charter)

        Delaware                                                  13-3896031
(State or other jurisdiction                                    (IRS Employer
  of incorporation or organization)                          Identification No.)

              Suite 1511, 380 Lexington Avenue, New York, NY 10138
                    (Address of principal executive offices)

                                 (212) 399-6682
                           (Issuer's telephone number)


________________________________________________________________________________
                 (Former name, former address and former fiscal
                       year, if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. 
Yes _X_  No ___.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date: 3,250,750.


<PAGE>


                         PART I - Financial Information


Item 1. Financial Statements.

        See pages FS-1 to FS-6 attached.


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.


General

     The  Company was formed in April 1996.  The Company was  organized  for the
purpose of acquiring and marketing speech  recognition  technologies and systems
(the "Speech Technologies") developed by Southern Group Limited ("Southern"), an
Australian  publicly  traded company listed on the  Australian  Stock  Exchange,
which is the Company's majority  shareholder.  The Company is in the development
stage and its operations are subject to all the problems,  expenses,  delays and
other risks inherent in the establishment of a new business enterprise,  as well
as the problems inherent in developing and marketing a new  product/service  and
in establishing a name and business reputation. The likelihood of the success of
the  Company  must  also be  considered  in  connection  with  the  rapidly  and
continually  changing  technology and the  competitive  environment in which the
Company will operate.  There can be no assurance  that the Company's  operations
will  result  in  its  becoming  or  remaining  economically  viable.  Potential
investors  should be aware of the problems,  delays,  expenses and  difficulties
encountered by any company in a developmental stage, many of which may be beyond
the Company's control.  These include,  but are not limited to, organization and
hiring of sales,  administrative  and  management  personnel,  lack of  customer
acceptance of the Company's  products,  sales and  marketing  problems,  intense
competition,  product quality control, and inadequate  financial resources.  The
Company  has had no revenues  from  operations  to date and,  because it is just
beginning to enter the commercial  stage, it may likely sustain operating losses
for an indeterminate time period. Since its inception in April 1996, the Company
has devoted  substantially  all of its efforts and resources to raising  capital
through an initial public offering of its common stock. During the quarter ended
September 30, 1997, the Company generated an accumulated deficit of $828 and has
a total accumulated deficit of $4,259.

     Statements  included  in this  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations" Section, and in other sections of
this Report and in prior and future  filings by the Company with the  Securities
and Exchange Commission, in the Company's prior


                                        2

<PAGE>


and future press  releases and in oral  statements  made with the approval of an
authorized   executive   which  are  not   historical   or  current   facts  are
"forward-looking  statements" made pursuant to the safe harbor provisions of the
Private  Securities  Litigation  Reform  Act of 1995 and are  subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from those  presently  anticipated  or projected.  The Company wishes to caution
readers not to place  undue  reliance  on any such  forward-looking  statements,
which speak only as of the date made.  There are important  risk factors that in
some cases have  affected and in the future could  affect the  Company's  actual
results and could cause the Company's actual financial and operating performance
to differ materially from that expressed in any expressed in any forward-looking
statement.  The following  discussion and analysis should be read in conjunction
with the  Financial  Statements  and notes thereto  appearing  elsewhere in this
report.

     The Company had no revenues from  continuing  operations in the year ending
December 31, or the quarter ending  September 30, 1997. The Company has incurred
net losses since its inception in 1996.  The  Company's  losses  incurred  since
inception have resulted principally from legal, accounting, priniting, marketing
and travel expenditures incurred in pursuing its capital raising activities, and
to a lesser extent early stage product marketing  expenses.  The Company expects
to incur  operating  costs and possible  losses  therefrom over the next several
years due  primarily to expanded  sales and  marketing  efforts,  including  the
establishment  of  product  sales  office,  the  staffing  of such  office  with
marketing,  administrative  and  management  personnel,  and travel and  related
business  entertainment  expenses  incurred by the sales  personnel as they seek
potential  customers  for the Company's  products.  There can be no assurance of
when and whether the Company will  generate  revenues or become  profitable on a
sustained basis, if at all.  Although the Company  anticipates sales to commence
in 1998, the Company's results of operations may vary significantly from quarter
to  quarter  due to timing of  payments  and other  factors.  The  timing of the
Company's  revenues,  if any,  may not match the  timing of  associated  product
development of other expenses.

     The  Company's  ability to achieve sales and increase its levels of revenue
will  depend  upon its  ability  to  secure  capital  financing  and to sell the
Company's  products.  The Company's ability to generate  significant revenue and
become  profitable  is  dependent  in  large  part  on its  commercializing  the
Company's lead product,  the CourtScript system for digital recording of courts.
There can be no  assurance  that the  operations  of the Company  will  generate
significant revenue or will ever be profitable.




                                        3

<PAGE>



RESULTS OF OPERATIONS FOR THREE MONTHS ENDING SEPTEMBER 30, l997;  COMPARED WITH
SEPTEMBER 30, l996.

     Net losses  increased from $ 256 for the three months ending  September 30,
l996 to $ 828 for the three months ending September 30, l997. The Company had no
revenue or  operating  income for the  quarters  ended  September  30,  l996 and
September 30, l997 from continuing  operations.  The Company has interest income
of $1 for the three months ended  September 30, 1997 and $120 in the  comparable
prior period. Total general, administrative and development expenses were $3,552
for l997 in comparison  to $553 for 1996,  an increase of 643%.  The increase in
these  costs from l996 to l997 was in most  expense  categories.  No salaries or
wages were paid for either the quarters  ended  September  30, 1996 or September
30, 1997.

     At September 30, l996, the Company had total assets of  $4,609,075,  and at
September 30, 1997, the Company had total assets of  $4,783,753,  an increase of
$174,678.   At  September  30,  1996,  the  Company  had  total  liabilities  of
$4,584,587,  and at  September  30, 1997 the Company  had total  liabilities  of
$4,762,992.  At September 30, 1997 the Company had an total stockholders' equity
of  $20,761  in  comparison  to a total  stockholders'  equity of $24,487 at the
comparable date in 1996.


                         LIQUIDITY AND CAPITAL RESOURCES


     The  Company had a negative  working  capital as of  September  30, 1997 of
$4,759,618 in  comparison $ 4,590,059 as of September 30, l996.  The Company had
an  accumulated  deficit  of $533 for the period  ended  September  30,  l996 in
comparison to an accumulated  deficit of $4,259 for the comparable  1997 period.
The  increase in the  accumulated  deficit is  primarily  related to  continuing
operating  costs  without  any  operating  income.  For the three  months  ended
September 30, l997 the Company's cash  requirements were satisfied from the cash
reserves in its operating and investment  accounts and from unsecured loans made
by the Company's majority  shareholder,  Southern Group Limited,  which totalled
$120,500 at September 30, 1997.

     On November 5, 1997, the Company  successfully  completed an initial public
offering of its common stock. In the public  offering,  562,500 shares of common
stock  were  issued  to  Southern  at a  conversion  price of $8.00 per share in
payment and satisfaction of a $4.5 million promissory note which the Company had
executed  and  delivered  to Southern in August 1996  pusuant to the purchase of
digital  technology  from Southern under a Technology  Purchase  Agreement dated
August 1, 1996, and 188,250 shares of common stock were sold to new shareholders
at the price of $8.00 per share.  After the underwriters  selling commission and
discount, the Company had net proceeds of approximately $1,365,000. In addition,
the Company incurred  approximately  $430,000 in transaction costs in connection
with the offering,  including  filing fees,  attorneys fees,  accountants  fees,
printing  costs,  tranfser  agent's  fees,  travel  expenses and other costs and
expenses.


                                        4

<PAGE>


The Company does not  currently  possess a bank source of financing  and has not
had any  revenues.  The Company  cannot be certain that its existing  sources of
cash will be adequate to meet its liquidity requirements. Therefore, the Company
is considering the following options to meet its liquidity requirements:

     (a)  attempting  to raise  additional  funds  through  the  sale of  equity
securities  to persons or entities  who are not  presently  stockholders  of the
Company;

     (b) attempting to obtain a bank line of credit; and

     (c) should  insufficient  funds be available  from the  foregoing  sources,
reducing the  Company's  present  rate of  expenditures  which might  materially
adversely affect the ability of the Company to produce competitive  products and
services and to market them effectively.


     The Company believes that its existing cash and cash  equivalents  together
with the  approximately  $1 million of net proceeds after offering  expenses and
costs resulting from the closing of its initial public  offering,  excluding any
potential  cash flow from  operating  revenues,  will be  sufficient to meet its
operating expenses and capital expenditures requirements for at least the next 6
months.  The Company's  future  capital  requirements,  however,  will depend on
numerous factors,  including (i) the effectiveness of product  commercialization
activities and marketing activities,  including the creation and progress of its
sales and marketing operations,  (ii) the effect of competing  technological and
market  developments,  from  competitors  that have greater  resources  than the
Company. However, if operating expenses are higher than expected or if cash flow
from  operations is lower than  anticipated,  there can be no assurance that the
Company will have sufficient capital resources to be able to continue as a going
concern.

     Unless  the  Company  is able to  generate  revenues  or obtain  additional
financing in the future,  the continuing  losses  incurred by the Company in its
development  phase  raise  substantial  doubt  about the  Company's  ability  to
continue as a going  concern.  Therefore,  the Company's  ability to continue in
business  as a going  concern  depends  upon its  ability to sell  products,  to
generate  fees from the sale of its services,  to conserve  liquidity by setting
marketing  and other  priorities  and  reducing  expenditures,  to  obtain  bank
financing and to obtain additional funds through offering of its securities. The
Company's  ability to obtain funds through an offering of its debt securities is
limited by its lack of revenue.  In any event,  there is no  assurance  that any
expenditure  reductions,  financings  or other  measures that the Company may be
able to effect will enable it to meet its working capital requirements.


                                        5

<PAGE>


                           PART II - Other Information

Item 5. Other Information.

     On November 5, 1997, the Company  successfully  completed an initial public
offering of its common stock. In the public  offering,  562,500 shares of common
stock  were  issued  to  Southern  at a  conversion  price of $8.00 per share in
payment and satisfaction of a $4.5 million promissory note which the Company had
executed  and  delivered  to Southern in August 1996  pusuant to the purchase of
speech  technology  from Southern under a Technology  Purchase  Agreement  dated
August 1, 1996, and 188,250 shares of common stock were sold to new shareholders
at the price of $8.00 per share.  After the underwriters  selling commission and
discount, the Company had net proceeds of approximately $1,365,000. In addition,
the Company incurred  approximately  $430,000 in transaction costs in connection
with the offering,  including  filing fees,  attorneys fees,  accountants  fees,
printing  costs,  tranfser  agent's  fees,  travel  expenses and other costs and
expenses.


                                        6

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

                                 VOICENET, INC.

Balance Sheet at December 31, l996
 (audited) and September 30, l997 (unaudited) ..............................   8

Statement of Income (Loss) for the three and nine
 months ended September 30, l996 and l997 (unaudited) ......................   9

Statement of Cash Flows for the three and nine months ended
 September  30, 1996  and 1997 (unaudited) .................................  10


                                        7

<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET

<TABLE>
<CAPTION>
                                                                   September 30,  December 31,
                                                                      1997            1996
                                                                   (unaudited)     (audited)
                                                                   -----------    -----------
<S>                                                                <C>            <C>        
ASSETS

CURRENT ASSETS

   Cash and Cash Equivalents                                       $     3,374    $     8,970
                                                                   -----------    -----------
      Total Current Assets                                               3,374          8,970

      Deferred Offering Costs                                          278,979        112,654
      Organization Costs, Net                                            1,400          1,700
      Intangible Assets                                              4,500,000      4,500,000
                                                                   -----------    -----------
      Total Assets                                                 $4,783, 753     $4,623,324
                                                                   ===========    ===========
CURRENT LIABILITIES
   Accounts Payable                                                $   142,492    $    74,029
   Due to Parent Company                                               120,500         25,000
   Note Payable, Parent Company                                      4,500,000      4,500,000
                                                                   -----------    -----------

      Total Current Liabilities                                      4,762,992      4,599,029

      Stockholders' Equity
      Preferred Stock, $.01 par value, 1,000,000
      shares authorized, no shares outstanding                             -0-            -0-
      Common Stock, $.01 par value, 10,000,000
      shares authorized, 2,500,000 shares issued and outstanding        25,000         25,000
Additional Paid in Capital                                                  20             20
Deficit accumulated during developmental stage                          (4,259)          (725)
                                                                   -----------    -----------
Total Stockholders' Equity                                              20,761         24,295
                                                                   -----------    -----------

Total Liabilities and Stockholders' Equity                         $ 4,783,753    $ 4,623,324
                                                                   ===========    ===========
</TABLE>


                      See notes to the financial statements


<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                             For the period
                                                              April 2, 1996
                                          Nine Months      (date of inception)     Three Months         Three Months
                                             Ended              through               Ended                Ended
                                          September 30,       September 30,        September 30,       September 30,
                                             1997                 1996                 1997                 1996 
                                          (unaudited)          (unaudited)          (unaudited)          (unaudited)
                                          -----------          -----------          -----------          -----------
<S>                                       <C>                  <C>                  <C>                  <C>        
Interest Income                           $        18          $        20          $         1          $        20
                                          -----------          -----------          -----------          -----------
Amortization                                      300                  200                  100                  100
Income Taxes                                    2,705                  353                  470                  176
Bank Charges                                      547                                       259
                                          -----------          -----------          -----------          -----------
   Total Expenses                               3,552                  553                  829                  276

   Loss from Operations                        (3,534)                (533)                (828)                (256)
                                          -----------          -----------          -----------          -----------
   Net Loss                               ($    3,534)         ($      533)         ($      828)         ($      256)
                                          ===========          ===========          ===========          ===========
    Net Loss per Common Share             $       .00          $       .00          $       .00          $       .00
                                          ===========          ===========          ===========          ===========
    Weighted average number of
   shares outstanding during the
   period                                   2,500,000            2,500,000            2,500,000            2,500,000
                                          ===========          ===========          ===========          ===========
</TABLE>


                      See notes to the financial statements


<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                          For the period
                                                                                           April 2, 1996
                                                                                         (date of inception)
                                                                  Nine Months Ended           through
                                                                  September 30, 1997     September 30, 1996
                                                                     (unaudited)            (unaudited)
                                                                  ------------------     ------------------
<S>                                                                  <C>                    <C>       
Cash Flows from Operating Activities

   Net Loss                                                          $  (3,534)             $    (533)

   Adjustments to reconcile net loss to net cash
     provided by operating activities:
     Increase in Accounts Payable                                       68,463                 59,589
     Amortization Expense                                                  300                    200
                                                                     ---------              ---------

     Total Adjustments                                                  68,763                 59,789

     Net cash provided by operating activities                          65,229                 59,256
                                                                     ---------              ---------
   Cash Flows used in Investing Activities

     Payments for Organization Costs                                       -0-                 (2,000)
                                                                     ---------              ---------
     Net cash used for investing activities                                -0-                 (2,000)
                                                                     ---------              ---------
   Cash Flows from Financing Activities

     Proceeds from issuance of stock                                                           25,000
     Additional Paid in Capital                                                                    20
     Advances from Parent Company                                       95,500                 25,000
     Payments for deferred offering costs                             (166,325)               (82,235)
                                                                     ---------              ---------
     Net cash used in financing activities                             (70,825)               (32,215)
                                                                     ---------              ---------
     Net (decrease) increase in cash and cash equivalents               (5,596)                25,041

     Cash and cash equivalents, beginning of period                      8,970                    -0-
                                                                     ---------              ---------
     Cash and cash equivalents, end of period                        $   3,374              $  25,041
                                                                     =========              =========
</TABLE>


Supplemental Disclosure of Noncash Financing Activities: 
During the period April 2, 1996  (inception)  through  September  30, 1996,  the
Company purchased technology from its parent company and incurred a note payable
of $4,500,000.

                      See notes to the financial statements


<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1 - Basis of Presentation

The  financial  statements  included  herein have been  prepared by the Company,
without  audit,  pursuant to the rules and  regulations  of the  Securities  and
Exchange  Commission  and reflect all  adjustments  which are, in the opinion of
management, necessary to present fairly the information required herein. Certain
information  and  footnote   disclosures  normally  included  in  the  financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted  pursuant to such rules and regulations,  although  management
believes that the disclosures are adequate to make the information presented not
misleading.  The  results  of  operations  for the three and nine  months  ended
September 30, 1997 are not  necessarily  indicative of the results of operations
to be expected  for the full year.  For  information  concerning  the  Company's
significant accounting policies,  reference is made to the Company's filing with
the  Securities  and Exchange  Commission  on Form SB-2,  as filed on October 7,
1997.

Note 2 - Nature of Business

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

Note 3 - Net Loss Per Common Share

Net loss per share is computed based on the weighted average number of shares of
common  stock  outstanding  for the periods  presented.  The effect of the stock
options and warrants on the net loss per share was  antidilutive for the periods
presented.

Note 4 - Purchase of Technology

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


<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)


On August 31, 1996, as amended effective  November 1,1996 and December 31, 1996,
the  Company  executed a  $4,500,000  promissory  note  payable to  Southern  in
conjunction  with  the  above  agreement.  The note is  noninterest-bearing  and
payable as follows: (a) $2.5 million upon the earlier of October 31, 1997 or the
successful closing of the Company's public securities  offering,  (b) $1 million
upon the earlier of October 31, 1997 or the first signed  installation  contract
for a COURTSMART  system in the United  States of at least  $30,000,  and (c) $1
million on October 31, 1997. If not earlier paid, the full outstanding principle
shall be due in full on October 31,  1997.  The Company has granted to Southern,
as collateral, a security interest in all assets of the Company. See Note 6.

Note 5 - Due to Parent Company

The Company was advanced monies by Southern for start-up purposes.  Such amounts
are noninterest bearing and have no definitive  repayment terms. The balances as
of September 30, 1997 and 1996 amounted to $120,500 and $25,000, respectively.

Note 6 - Stockholders' Equity

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

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

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

On September 15, 1996,  the Company  adopted a  non-qualified  stock option plan
(the "Plan").  An aggregate of 500,000 shares of Common Stock are authorized for
issuance  under the Plan.  The Plan provides  that all regular  employees of the
Company except for directors who are members of the administrative committee are
eligible to  participate  in the Plan.  No options may be granted  subsequent to
September 15, 2006. There are no options issued and outstanding at September 30,
1997.


<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)


On  November 5, 1997,  the  Company  successfully  completed  an initial  public
offering of its common stock. In the public  offering,  562,500 shares of common
stock  were  issued  to  Southern  at a  conversion  price of $8.00 per share in
payment and satisfaction of a $4.5 million promissory note which the Company had
executed and  delivered  to Southern in August 1996  pursuant to the purchase of
speech  technology  from Southern under a Technology  Purchase  Agreement  dated
August 1, 1996, and 188,250 shares of common stock were sold to new shareholders
at the price of $8.00 per share.  After the underwriters  selling commission and
discount, the Company had net proceeds of approximately $1,365,000. In addition,
the Company incurred  approximately  $430,000 in transaction costs in connection
with the offering,  including  filing fees,  attorneys fees,  accountants  fees,
printing  costs,  transfer  agent's  fees,  travel  expenses and other costs and
expenses.


<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

Dated: November 19, 1997

                                    VOICENET, INC.


                                    By:  /s/ Frank Carr
                                         --------------------------------------
                                         Frank Carr, Chief Executive Officer and
                                         Principal Accounting Officer)