<PAGE>   1
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of PureSpeech, Inc.

In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in redeemable preferred stock and stockholders' deficit
and cash flows present fairly, in all material respects, the financial position
of PureSpeech, Inc. at December 31, 1996 and 1997, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has negative working capital of approximately $3 million and has an
accumulated deficit of approximately $9.4 million at December 31, 1997. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


Price Waterhouse LLP
Boston, Massachusetts

March 26, 1998, except for Note 10, which
is as of April 14, 1998

<PAGE>   2
PURESPEECH, INC.
BALANCE SHEET
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,               MARCH 31, 
                                                                                     1996               1997             1998  
                                                                                                                     (UNAUDITED)
<S>                                                                               <C>                <C>                <C>        
ASSETS
 Current assets:
    Cash and cash equivalents                                                     $  1,184,629      $    263,498      $     11,335
    Accounts receivable                                                                114,166           244,520           118,713
    Prepaid expenses and other current assets                                           30,680            23,555            28,855
                                                                                  ------------      ------------      ------------

    Total current assets                                                             1,329,475           531,573           158,903

  Fixed assets, net                                                                    277,927           261,326           239,481
  Other assets                                                                          23,236            18,693            18,833
                                                                                  ------------      ------------      ------------
                                                                                  $  1,630,638      $    811,592      $    417,217
                                                                                  ============      ============      ============

  LIABILITIES, REDEEMABLE PREFERRED STOCK AND
   STOCKHOLDERS' DEFICIT
  Current liabilities:
   Notes payable                                                                  $          -      $  1,212,500      $  1,500,000
   Notes payable - related parties                                                           -         1,240,798         1,840,798
   Accounts payable                                                                     83,651           171,334           285,744
   Accrued compensation                                                                 90,500            74,500            99,500
   Other accrued expenses                                                              154,952           200,764           109,937
   Interest payable - related parties                                                        -            62,000            93,000
   Capital lease obligation                                                             27,233                 -                 -
   Deferred revenue                                                                    537,803           538,054           554,453
                                                                                  ------------      ------------      ------------

   Total current liabilities                                                           894,139         3,499,950         4,483,462
                                                                                  ------------      ------------      ------------

  Series A redeemable convertible preferred stock,
   $1.00 par value; 825,000 shares authorized; 819,466 shares
   issued and outstanding; at issuance cost plus accrued dividends                   4,580,893         4,947,368         5,046,314
                                                                                  ------------      ------------      ------------

  Stockholders' deficit
    Undesignated preferred stock, $1.00 par value; 675,000 shares
     authorized; none issued or outstanding                                                  -                 -                 -
    Common stock, no par value; 6,000,000 shares authorized;
     3,566,325, 3,612,391 and 3,613,641 shares issued and outstanding
     at December 31, 1996 and 1997 and March 31, 1998, respectively                  1,269,012         1,302,649         1,302,911
    Additional paid-in capital                                                               -           460,712           460,712
    Accumulated deficit                                                             (5,113,406)       (9,399,087)      (10,876,182)
                                                                                  ------------      ------------      ------------

  Total stockholders' deficit                                                       (3,844,394)       (7,635,726)       (9,112,559)
                                                                                  ------------      ------------      ------------

  Commitments (Note 9)                                                            ------------      ------------      ------------

                                                                                  $  1,630,638      $    811,592      $    417,217
                                                                                  ============      ============      ============
 </TABLE>




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

<PAGE>   3
PURESPEECH, INC.
STATEMENT OF OPERATIONS 
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                 YEAR ENDED                   THREE MONTHS ENDED
                                                                DECEMBER 31,                       MARCH 31,
                                                            1996            1997             1997             1998
                                                                                                  (UNAUDITED)
<S>                                                    <C>              <C>              <C>              <C>        

Revenue:
  Software license revenue                             $        --      $   609,531      $    65,700      $    35,688
  Royalty revenue                                           49,051          324,885           93,209               86
  Royalty revenue - related party                          576,301           20,499            5,170               --
  Development and services revenue                         105,839          185,362           90,932               --
  Development and services revenue - related party         355,218               --               --               --
                                                       -----------      -----------      -----------      -----------

                                                         1,086,409        1,140,277          345,011           35,774
                                                       -----------      -----------      -----------      -----------

Costs and expenses:
  Cost of revenue                                          514,316           22,626            3,478            5,414
  Cost of revenue - related party                          216,000               --               --               --
  Research and development                               2,043,447        1,159,060          278,498          393,992
  Selling, general and administrative                    1,973,339        3,401,574          923,325          921,362
                                                       -----------      -----------      -----------      -----------

                                                         4,747,102        4,583,260        1,205,301        1,320,768
                                                       -----------      -----------      -----------      -----------

     Loss from operations                               (3,660,693)      (3,442,983)        (950,290)      (1,284,994)


Interest income                                             99,220           27,474           12,424            1,345
Interest expense                                            (3,858)        (168,697)              --          (94,500)
Interest expense - related parties                         (14,700)        (335,000)              --               -- 
                                                       -----------      -----------      -----------      -----------


     Net loss                                          $(3,580,031)     $(3,919,206)     $  (937,866)     $(1,378,149)
                                                       ===========      ===========      ===========      ===========
</TABLE>









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

<PAGE>   4
PURESPEECH, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                              YEAR ENDED                    THREE MONTHS ENDED
                                                                              DECEMBER 31,                       MARCH 31,
                                                                          1996            1997            1997             1998
                                                                                                               (UNAUDITED)
<S>                                                                   <C>             <C>             <C>             <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                            $(3,580,031)    $(3,919,206)    $  (937,866)    $(1,378,149)
  Adjustments to reconcile net loss to net cash used for
     operating activities:
     Depreciation and amortization                                        109,427         156,460          34,499          42,062
     Amortization of debt discount                                             --         423,212              --          37,500
     Stock issued for services                                                 --          30,000              --              -- 
     Changes in assets and liabilities:
       Accounts receivable                                                163,821        (130,354)        (20,663)        125,807
       Prepaid expenses and other current assets                            3,014           7,125        (206,311)         (5,300)
       Other assets                                                         1,327           4,543              --            (140)
       Accounts payable                                                   (75,511)         87,683          88,942         114,440
       Accrued compensation                                                    --              --         (19,500)         25,000
       Other accrued expenses                                              69,185          91,812          33,928         (90,827)
       Interest payable - related parties                                      --              --              --          31,000
       Deferred revenue                                                   537,803             251          30,615          16,399
                                                                      -----------     -----------     -----------     -----------
       Net cash used for operating activities                          (2,770,965)     (3,248,474)       (996,356)     (1,082,208)
                                                                      -----------     -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of fixed assets                                               (263,004)       (139,859)        (61,686)        (20,217)
                                                                      -----------     -----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on capital lease obligation                                   (15,767)        (27,233)         (4,300)             --
   Proceeds from issuance of notes payable                                     --       1,250,000              --         250,000
   Proceeds from issuance of notes payable - related parties                   --       1,240,798              --         600,000
   Proceeds from sale of preferred stock, net of issuance costs         4,140,001              --              --              -- 
   Proceeds from issuance of common stock                                      --           3,637              --             262
   Repayment of notes payable - related party                             (50,000)             --              --              --
                                                                      -----------     -----------     -----------     -----------
       Net cash provided by (used for) financing activities             4,074,234       2,467,202          (4,300)        850,262
                                                                      -----------     -----------     -----------     -----------
Net increase (decrease) in cash and cash equivalents                    1,040,265        (921,131)     (1,062,342)       (252,163)

Cash and cash equivalents at beginning of period                          144,364       1,184,629       1,184,629         263,498
                                                                      -----------     -----------     -----------     -----------
Cash and cash equivalents at end of period                            $ 1,184,629     $   263,498     $   122,287     $    11,335
                                                                      ===========     ===========     ===========     ===========
</TABLE>


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
The Company converted $1,000,000 of senior convertible notes payable into
625,000 shares of common stock and $100,000 of demand convertible notes payable
into 19,048 shares of Series A redeemable preferred stock in February 1996 (Note
4). During the year ended December 31, 1996, the Company entered into a capital
lease of $43,000 for furniture. During the year ended December 31, 1996, accrued
interest of $11,077 payable on notes which had converted to common stock was
forgiven by the holders of the notes and added to the stated amount of common
stock.



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

<PAGE>   5
PURESPEECH, INC.
STATEMENT OF CHANGES IN REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                         REDEEMABLE PREFERRED STOCK                STOCKHOLDERS' DEFICIT 
                                                         --------------------------             ---------------------------
                                                                  SERIES A
                                                                 REDEEMABLE
                                                              PREFERRED STOCK                           COMMON STOCK
                                                        NUMBER OF                                 NUMBER OF
                                                          SHARES              AMOUNT                SHARES          AMOUNT         

<S>                                                     <C>                 <C>                 <C>              <C>
Balance at December 31, 1995                                  --             $        --         2,941,325       $   257,935

Issuance of Series A redeemable preferred
  stock, issuance costs of $62,194                        800,418              4,202,195                --                --

Conversion of demand convertible note payable to
  preferred stock                                          19,048                100,000                --                --

Accrual of cumulative dividends on Series A
  redeemable preferred stock                                   --                278,698                --                --

Conversion of senior convertible note payable to
  common stock                                                 --                     --           625,000         1,000,000

Forgiveness of accrued interest on notes payable
  converted to common stock                                    --                     --                --            11,077

Net loss                                                       --                     --                --                --
                                                          -------            -----------         ---------       -----------

Balance at December 31, 1996                              819,466              4,580,893         3,566,325         1,269,012

Issuance of common stock upon exercise of
  stock options                                                --                     --            36,066             3,637

Issuance of common stock for services                          --                     --            10,000            30,000

Accrual of cumulative dividends on Series A
  redeemable preferred stock                                   --                366,475                --                --

Issuance of common stock warrants                              --                     --                --                --

Net loss                                                       --                     --                --                --
                                                          -------            -----------         ---------       -----------

Balance at December 31, 1997                              819,466              4,947,368         3,612,391         1,302,649

Issuance of common stock upon exercise of
  stock options (unaudited)                                    --                     --             1,250               262

Accrual of cumulative dividends on Series A
  redeemable preferred stock                                   --                 98,946                --                --

Net loss (unaudited)                                           --                     --                --                --
                                                          -------            -----------         ---------       -----------

Balance at March 31, 1998 (unaudited)                     819,466            $ 5,046,314         3,613,641       $ 1,302,911
                                                          =======            ===========         =========       ===========

<CAPTION>
                                                                                 STOCKHOLDERS' DEFICIT 
                                                              --------------------------------------------------------------
                                                                ADDITIONAL                                        TOTAL
                                                                  PAID-IN               ACCUMULATED           STOCKHOLDERS'
                                                                  CAPITAL                 DEFICIT                DEFICIT

<C>                                                           <C>                    <C>                   <C>
Balance at December 31, 1995                                    $      --             $   (1,192,483)       $     (934,548)

Issuance of Series A redeemable preferred
  stock, issuance costs of $62,194                                     --                    (62,194)              (62,194)

Conversion of demand convertible note payable to
  preferred stock                                                      --                         --                    --

Accrual of cumulative dividends on Series A
  redeemable preferred stock                                           --                   (278,698)             (278,698)

Conversion of senior convertible note payable to
  common stock                                                         --                         --             1,000,000

Forgiveness of accrued interest on notes payable
  converted to common stock                                            --                         --                11,077

Net loss                                                               --                 (3,580,031)           (3,580,031)
                                                                ---------              -------------          ------------

Balance at December 31, 1996                                           --                 (5,113,406)           (3,844,394)

Issuance of common stock upon exercise of
  stock options                                                        --                         --                 3,637

Issuance of common stock for services                                  --                         --                30,000

Accrual of cumulative dividends on Series A
  redeemable preferred stock                                           --                   (366,475)             (366,475)

Issuance of common stock warrants                                 460,712                         --               460,712

Net loss                                                               --                 (3,919,206)           (3,919,206)
                                                                ---------              -------------          ------------

Balance at December 31, 1997                                      460,712                 (9,399,087)           (7,635,726)

Issuance of common stock upon exercise of
  stock options (unaudited)                                            --                         --                   262

Accrual of cumulative dividends on Series A
  redeemable preferred stock                                           --                    (98,946)              (98,946)

Net loss (unaudited)                                                   --                 (1,378,149)           (1,378,149)
                                                                ---------              -------------          ------------

Balance at March 31, 1998 (unaudited)                           $ 460,712              $ (10,876,182)         $ (9,112,559)
                                                                =========              =============          ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   6
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   ORGANIZATION AND BASIS OF PRESENTATION

     PureSpeech, Inc. (the "Company") was incorporated in Massachusetts on March
     31, 1994. The Company develops and markets state-of-the-art automated
     speech technology software applications for the telephony environment. The
     Company principally markets its software applications to corporate and
     government customers in the United States. Although planned principal
     operations commenced in 1996, revenue therefrom had not been significant
     and accordingly, the Company was considered a development stage enterprise
     at December 31, 1996, as defined in statement of Financial Accounting
     Standards No. 7, "Accounting and Reporting by Development Stage
     Enterprises." By December 31, 1997, the Company had derived significant
     revenue from its planned principal operations and accordingly is no longer
     considered to be in the development stage.

     The Company incurred a net loss of approximately $3.9 million for the year
     ended December 31, 1997, and at December 31, 1997, has negative working
     capital of approximately $3 million and an accumulated deficit of
     approximately $9.4 million. The Company requires additional financing to
     meet anticipated cash requirements. Management is reviewing alternative
     sources of financing; however, if additional financing is not obtained, the
     Company may be unable to continue as a going concern. The financial
     statements do not include any adjustments relating to the recoverability
     and classification of recorded asset amounts or the amounts and
     classification of liabilities that might be necessary should the Company be
     unable to continue as a going concern.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments purchased with an
     original maturity of three months or less to be cash equivalents. The
     Company invests excess cash primarily in U.S. government agency debt
     securities and money market funds of major financial institutions. These
     investments are subject to minimal credit and market risks.

     At December 31, 1996 and 1997, the Company's cash equivalents are
     classified as available-for-sale. At December 31, 1996, the Company's cash
     equivalents consisted of $497,855 in a U.S. government agency security
     which matured in January 1997 and $686,461 in money market funds. At
     December 31, 1997, the Company's cash equivalents consisted of $119,404 in
     money market funds. These securities are stated at cost plus accrued
     interest, which approximates fair market value.

     REVENUE RECOGNITION

     Revenue from software licenses is recognized upon delivery when all
     significant contractual obligations have been met and collection of the
     related receivable is probable. In the event the Company has significant
     post-delivery obligations or significant uncertainties remain, software
     license revenue is deferred and recognized when such obligations are met or
     uncertainties are resolved.

     Royalty revenue is recognized when earned, as determined by reseller
     reports of product shipments to end-users.

<PAGE>   7
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



     The Company recognizes revenue from software development and services
     agreements as the work is performed or defined milestones are attained.
     Payments received under the agreements prior to the recognition of revenue
     are recorded as deferred revenue.

     CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

     Financial instruments which potentially expose the Company to
     concentrations of credit risk include accounts receivable. The Company does
     not require collateral but closely monitors amounts receivable from
     customers. At December 31, 1996, 39%, 26% and 21% of the Company's accounts
     receivable were due from three separate customers. At December 31, 1997,
     54%, 12% and 10% of the Company's accounts receivable are due from three
     separate customers.

     The Company conducted business with a significant customer and stockholder
     (Note 4) pursuant to a development and license agreement. For the years
     ended December 31, 1996 and 1997, revenue from the customer accounted for
     approximately 65% and 1% of total revenue, respectively. For the year ended
     December 31, 1997, two customers accounted for 25% and 17% of total
     revenue.
     
     SOFTWARE DEVELOPMENT COSTS

     Costs associated with the development of computer software are expensed
     prior to establishing technological feasibility, as defined by Statement of
     Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs
     of Computer Software to be Sold, Leased, or Otherwise Marketed", and
     capitalized thereafter until commercial release of the software products.
     Software development costs eligible for capitalization have not been
     significant to date. 

     SMALL BUSINESS INNOVATION RESEARCH GRANTS

     Small Business Innovation Research ("SBIR") government grants to conduct
     research and development are recorded as a reduction to research and
     development expense as eligible costs are incurred up to the funding
     limit. Eligible grant-related costs which have been incurred in advance of
     cash receipts are recorded as receivables. For the years ended December
     31, 1996 and 1997, SBIR grants amounted to approximately $354,900 and
     $255,100, respectively.

     FIXED ASSETS

     Fixed assets are recorded at cost and depreciated using the straight-line
     method over their estimated useful lives. Repair and maintenance costs are
     expensed as incurred. Capital leases are amortized over the shorter of the
     lease life or the estimated useful life of the asset.

     INCOME TAXES

     During the period from inception (March 31, 1994) through December 31,
     1996, the Company was an S Corporation and was not required to pay income
     taxes. S Corporation stockholders are required to report their respective
     share of the Company's taxable income or loss on their individual tax
     returns and are personally liable for the related tax. As a result of the
     preferred stock financing (Note 6), the stockholders revoked the Company's
     S Corporation status on January 1, 1996 and it is now a C Corporation. The
     net loss incurred while the Company qualified as an S Corporation remains
     with its stockholders. The loss incurred by the Company as a C Corporation
     is to be carried forward by the Company (Note 8).



                                       2

<PAGE>   8
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

     ACCOUNTING FOR STOCK-BASED COMPENSATION

     The Company accounts for stock-based awards to its employees using the
     intrinsic value based method prescribed by Accounting Principles Board
     Opinion No. 25, "Accounting for Stock Issued to Employees", and related
     interpretations. The Company has adopted the provisions of SFAS No. 123,
     "Accounting for Stock-Based Compensation", through disclosure only (Note
     7).

     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 amount 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.

     INTERIM FINANCIAL DATA

     The interim financial data as of March 31, 1998 and for the three months
     ended March 31, 1997 and 1998 are unaudited; however, in the opinion of
     the Company, the interim data include all adjustments, consisting only of
     normal recurring adjustments, necessary for a fair statement of the
     financial position and results of operations for the interim periods. The
     operating results for the three months ended March 31, 1998 are not
     necessarily indicative of the results to be expected for the full year
     ending December 31, 1998.


3.   FIXED ASSETS

     Fixed assets consist of the following:

<TABLE>
<CAPTION>

                                        ESTIMATED
                                        USEFUL LIFE                   DECEMBER 31,
                                        IN YEARS                1996                1997

<S>                                     <C>                 <C>                 <C>
     Computers and equipment               3                $  322,628          $  426,509
     Computer software                     3                    50,770              83,445
     Furniture and fixtures                3                    60,367              63,670
     Leasehold improvements           lease term                 8,760               8,760
                                                            ----------          ----------

                                                               442,525             582,384

     Less - accumulated depreciation
       and amortization                                       (164,598)           (321,058)
                                                            ----------          ----------

                                                            $  277,927          $  261,326
                                                            ==========          ==========

</TABLE>

     At December 31, 1996, furniture and fixtures includes furniture of $43,000
     held under a capital lease and accumulated amortization relating to such
     furniture of approximately $15,800. This furniture was purchased in 1997
     of the lease buy out option.



                                       3

<PAGE>   9
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

4.   BORROWINGS

     NOTE PAYABLE

     In November 1994, the Company issued a demand note payable to a related
     party with a principal balance outstanding of $50,000 at December 31, 1995.
     The note accrued interest at a rate of 10% per annum and was repaid in May
     1996.

     DEMAND CONVERTIBLE NOTE PAYABLE

     In December 1995, the Company issued a demand convertible note payable (the
     "Bridge Note") bearing interest at 8.75% per annum for $100,000. The Bridge
     Note was convertible into Series A preferred stock at a conversion price of
     $5.25 per share and was converted into 19,048 shares of Series A preferred
     stock in February 1996. The Company granted 12,500 warrants to purchase
     common stock in connection with the Bridge Note. The warrants were issued
     with an exercise price of $0.004 per share and expire on December 18, 2000.
     The Company has determined that the warrants had an insignificant value.

     SENIOR CONVERTIBLE NOTE PAYABLE

     In February 1995, the Company issued a senior convertible note payable (the
     "Senior Note") bearing interest at 10% per annum for $1,000,000. The Senior
     Note was payable in full on December 31, 1997. Interest on the Senior Note
     was payable quarterly with the final interest due on the maturity date. The
     Company had an option to defer interest which was compounded quarterly and
     was repayable in subsequent quarters or at maturity. The Senior Note was
     convertible into shares of common stock at the option of the holder if the
     Company revoked or lost its elected status under Chapter S of the Internal
     Revenue Code. The Company had granted the holder of the Senior Note a
     senior security interest in all tangible and intangible assets of the
     Company. In February 1996, the holder of the Senior Note elected to convert
     the principal amount of $1,000,000 to 625,000 shares of common stock as a
     result of the Company revoking its S Corporation status. Accrued interest
     of approximately $101,100 was paid to the holder upon conversion.

     SUBORDINATED NOTES PAYABLE

     In May 1997, the Company issued subordinated notes payable (the "Notes") to
     existing stockholders in exchange for cash totaling $1,240,798. All
     principal and interest, accruing at an annual rate of 8%, relating to these
     Notes becomes due and payable on December 31, 1997 and March 31, 1998,
     respectively. All outstanding principal and accrued interest will become
     immediately due and payable if the holders of at least 60% of the then
     outstanding principal amount of the Notes request repayment. Upon the
     closing of an offering and sale by the Company of its capital stock in
     which gross proceeds equal or exceed $2,500,000 all outstanding principal
     and accrued interest on the Notes will become immediately due and payable.
     The Company may elect to i) repay the amount due with shares of capital
     stock which were sold in the offering at the offering price per share, ii)
     repay the amount due in full or iii) repay or convert in some combination.

     In connection with the issuance of such notes payable, the Company issued
     warrants to purchase 2,008,911 shares of the Company's common stock at an
     exercise price of $.21 per share. The warrants expire on May 30, 2007.
     These warrants were ascribed a value of approximately $273,000 which was
     reflected as a debt discount and was amortized to interest expense over the
     term of the note.


                                       4


<PAGE>   10
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


     BRIDGE LOAN

     In September 1997, the Company entered into a $1,500,000 bridge loan
     agreement with a financial institution maturing on January 31, 1998.  The
     loan bears interest at the bank's prime rate plus 1.5% (10% at December
     31, 1997).  The loan contains certain financial covenants, the more
     restrictive of which require the maintenance of certain cash flows and
     restrictions on the level of capital lease obligations.  The Company was
     in compliance with these covenants at December 31, 1997.  A commitment fee
     of 0.5% is owed on any unused portion of the loan.  The loan has priority
     over all other debt of the Company and is secured by substantially all of
     the assets of the Company.  At December 31, 1997, $1,250,000 was
     outstanding relating to the bridge loan.

     In connection with the issuance of the bridge loan, the Company issued
     warrants to purchase shares of the Company's common stock.  The exercise
     price and number of shares will be determined based upon the price of the
     next round of financing or $.42 per share if there is no qualified
     financing prior to the exercise of the warrants.  In the event there is a
     qualified financing, as defined by the agreement, the number of warrants
     will be determined by dividing $255,000 by the price of the next round of
     financing.  The exercise price of the warrants will be equal to the price
     of the next round of financing.  In the event there is no qualified
     financing, the number of warrants will be 607,143 and the exercise price
     will be $.42.  The warrants will become exercisable upon the earlier of i)
     September 1, 1998, ii) 10 business days prior to the completion of the
     first liquidity event, as defined by the agreement or iii) the completion
     of a qualified financing.  The warrants expire on September 4, 2004.
     These warrants were ascribed a value of $187,500 which is reflected as
     a debt discount and is being amortized to interest expense over the term of
     the note.

     During February 1998, the terms of the bridge loan were amended to extend
     the maturity date of the note to May 31, 1998.  Concurrently with the
     amendment of the bridge loan, the Company entered into an agreement with
     the same financial institution to pay the principal sum of $58,000.  The
     note is non-interest bearing and becomes due and payable upon the earlier
     of i) May 31, 1998, ii) the closing of a change in control transaction as
     defined by the agreement, iii) the closing of any transaction involving
     the sale of equity securities resulting in cash proceeds of at least $1.5
     million or iv) the sale or transfer of assets constituting greater than
     50% of the total fair market value of all the assets of the Company.

     SUBORDINATED CONVERTIBLE NOTES PAYABLE

     During January and March 1998, the Company issued subordinated convertible
     notes payable to an existing stockholder in the aggregate amount of
     $600,000 (the "Notes"). The Notes are due on demand and accrue interest at
     an annual rate of 20%.  All outstanding principal and accrued interest will
     become immediately due and payable if the holders of at least 60% of the
     then outstanding principal amount of the Notes request repayment.

     If the Company does not consummate a sale of all or substantially all of
     the capital stock, assets or business of the Company to a third party (a 
     "Sale Transaction") prior to May 31, 1998, the entire outstanding principal
     amount of the Notes, together with accrued interest, shall be converted at
     the option of the holder into shares of the Company's common stock at a
     conversion rate equal to $.21 per share.  If a Sale Transaction which is
     not accounted for as a pooling-of-interests transaction is consummated
     prior to May 31, 1998, the entire outstanding principal amount of the
     Notes, together with accrued interest, shall be converted  at the option
     of the holder into shares of the Company's common stock at a conversion
     rate equal to $.42 per share.





                                       5

<PAGE>   11
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

5.   SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK

     VOTING RIGHTS

     Stockholders of Series A redeemable convertible preferred stock (the
     "Series A preferred stock") are entitled to one vote for each share of
     common stock into which the Series A preferred stock is convertible.

     DIVIDENDS
     
     Preferred stockholders are entitled to receive, whether or not declared by
     the Board of Directors, annual cumulative dividends accruing on a daily
     basis at the per annum rate of $.42 per share plus 8% per annum of the
     previously accrued but unpaid dividends from the preceding year. Cumulative
     unpaid dividends of $645,173 on Series A preferred stock have been charged
     to accumulated deficit and are included in the carrying value of the Series
     A preferred stock at December 31, 1997.

     CONVERSION

     Each share of Series A preferred stock may be converted at any time, at the
     option of the stockholder, into 2.5 common shares (subject to certain
     anti-dilution adjustments). The Series A preferred stock is mandatorily
     convertible into common stock upon the closing of an initial public
     offering in which net proceeds equal or exceed $10,000,000, and in which
     the price per common share to the public is at least $6.30 per share.

     RIGHT OF FIRST REFUSAL

     The holders of the Series A preferred stock have certain rights of first
     refusal to purchase common stock from certain common stockholders.

     REDEMPTION

     Shares of Series A preferred stock are redeemable by the holders at a price
     equal to $5.25 per share plus any accrued but unpaid dividends based on the
     following redemption schedule. Required redemption amounts excluding any
     cumulative but unpaid dividends are as follows:

<TABLE>
<CAPTION>
                                              CUMULATIVE
                                              REDEMPTION
     REDEMPTION DATE                             AMOUNT
     <S>                                     <C>
     February 15, 2001                       $  1,419,724
     February 15, 2002                          2,839,449
     February 15, 2003                          4,302,195
</TABLE>

     LIQUIDATION

     In the event of any liquidation, dissolution or winding up of the affairs
     of the Company, the holders of the then outstanding shares of Series A
     preferred stock are entitled to receive, prior to and in preference to
     holders of the common stock, a payment of $5.25 per share plus any accrued
     but unpaid dividends.



                                       6

<PAGE>   12
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

6.   COMMON STOCK

     The holders of common stock are entitled to one vote for each share held at
     all meetings of stockholders. Dividends on common stock may be paid out of
     lawfully available funds as and when determined by the Board of Directors,
     subject to any preferential dividend rights of the preferred stockholders.

     At December 31, 1997, the Company did not have a sufficient number of
     shares of common stock authorized for issue upon conversion of the
     preferred stock (Note 5) and for the exercise of outstanding warrants and
     options (Note 7). It is the intent of the Board of Directors to increase
     the number of authorized shares of common stock.

     STOCK SPLIT

     In April 1996, the Company effected a 1.5-for-one stock split in the form
     of a stock dividend. All common share and per share amounts included in the
     accompanying financial statements and notes thereto have been retroactively
     adjusted to reflect the stock split.

7.   STOCK OPTION PLANS

     1994 STOCK OPTION PLAN

     On July 11, 1994, the Board of Directors adopted the Key Employee Stock
     Option Plan (the "Plan") under which 818,750 shares of common stock are
     reserved for issuance to employees, officers, directors and non-employees
     upon the exercise of the options granted under the Plan. The Board of
     Directors determines the term of each option, option price, number of
     shares for which each option is granted and the rate at which each option
     is exercisable. The term of each option generally cannot exceed ten years
     (five years for options granted to holders of more than 10% of the voting
     stock of the Company). The exercise price of incentive stock options shall
     not be less than the fair market value of the common stock at the date of
     grant (110% of fair market value for options granted to holders of more
     than 10% of the voting stock of the Company). Non-qualified stock options
     may be issued under the Plan at an option price determined by the Board of
     Directors. The Plan allows the Board of Directors to grant restricted stock
     to consultants to the Company. The Board of Directors determines, and may
     modify or accelerate, the terms of restriction of the restricted stock.

     1997 STOCK OPTION PLAN

     On February 7, 1997, the Board of Directors adopted the 1997 Stock Option
     Plan (the "1997 Plan") under which 2,892,000 shares of common stock are
     reserved for issuance to employees, officers, directors and non-employees
     upon the exercise of the options granted under the 1997 Plan. The Board of
     Directors determines the term of each option, option price, number of
     shares for which each option is granted and the rate at which each option
     is exercisable. The term of each option generally cannot exceed ten years
     (five years for options granted to holders of more than 10% of the voting
     stock of the Company). The exercise price of incentive stock options shall
     not be less than the fair market value of the common stock at the date of
     grant (110% of fair market value for options granted to holders of more
     than 10% of the voting stock of the Company). Non-qualified stock options
     may be issued under the Plan at an option price determined by the Board of
     Directors, but not less than 50% of the fair market value of the common
     stock at the date of grant.



                                       7

<PAGE>   13
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

     The Company applies APB No. 25 and related interpretations in accounting 
     for its stock option plans. During the years ended December 31, 1996 and
     1997, no compensation expense has been recognized under the plans. Had
     compensation cost been determined based on the fair value of the options
     at the grant date consistent with the provisions of SFAS No. 123, the
     Company's net loss would not have been materially different. Because
     options vest over several years and additional option grants are expected
     to be made in future years, future years' results of operations may be
     materially different if the provisions of SFAS No. 123 were applied.

     The fair value of each option grant is estimated on the date of grant
     using the Black-Scholes option-pricing model with the following
     assumptions for grants in 1996 and 1997: no dividend yield for both years;
     no volatility for both years; risk-free interest rates of 6.2% for 1996
     and 6.4% for 1997; and expected lives of 5 years for both years.

     A summary of the status of the Company's option plans as of December 31, 
     1996 and 1997, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                                                   1996                        1997
                                                                          WEIGHTED-                     WEIGHTED-
                                                                          AVERAGE                       AVERAGE
                                                                          EXERCISE                      EXERCISE
                                                           SHARES          PRICE       SHARES            PRICE

<S>                                                    <C>               <C>        <C>                  <C>
     Outstanding at beginning of year                     562,250        $   .62       815,875           $  .64
     Granted                                              279,125            .66     2,520,453              .26
     Exercised                                                 --             --       (36,066)             .10
     Canceled                                             (25,500)           .66    (1,163,809)             .56
                                                       ----------                   ----------

     Outstanding at end of year                           815,875            .64     2,136,453              .23
                                                       ==========                   ==========

     Options exercisable at year-end                      176,999            .59       248,737              .33
                                                       ==========                   ==========

     Weighted-average fair value of options
       granted during the year -- all issued at
       fair value of the underlying common
       stock in 1997 and above fair value
       for 1996                                        $       --                   $      .06    
                                                       ==========                   ==========

     Options available for future grant                                                713,231
                                                                                    ----------
</TABLE>



                                       8

<PAGE>   14
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

     The following table summarizes information about stock options outstanding
     at December 31, 1997:

<TABLE>
<CAPTION>
                                              WEIGHTED-
                                              AVERAGE
                                              REMAINING         NUMBER OF
                       NUMBER OF             CONTRACTUAL         OPTIONS
EXERCISE PRICE          SHARES              LIFE (YEARS)       EXERCISABLE

<S>                    <C>                   <C>               <C>
$.03                       5,000                6.6                 4,271
$.21                   2,017,703                9.3               175,482
$.66                     113,750                7.5                68,984
                       ---------                                ---------

                       2,136,453                                  248,737
                       =========                                =========
                                                                
</TABLE>


     During 1997, the Company's Board of Directors determined that, because
     certain stock options held by employees of the Company had an exercise
     price significantly higher than the fair value of the Company's common
     stock, such stock options were not providing the incentive intended.
     Accordingly, options to purchase 649,125 shares of common stock with an
     exercise price of $.66 per share were canceled and reissued at a price of
     $.21 per share.



8.   INCOME TAXES

     Deferred tax assets consist of the following:

<TABLE>
                                                                           DECEMBER 31,
                                                                    1996                   1997

<S>                                                           <C>                    <C>
     Net operating loss carryforwards                          $  1,505,996          $  2,806,687
     Research and development credit carryforwards                   47,274               105,083
     Other temporary differences                                     25,443               312,978
                                                               ------------          ------------

     Net deferred tax assets                                     1,578,713              3,224,748

     Deferred tax asset valuation allowance                     (1,578,713)            (3,224,748)
                                                               ------------          ------------

                                                               $        --           $         --
                                                               ============          ============
</TABLE>

     The Company has provided a full valuation allowance for the full amount of
     its net deferred tax assets at December 31, 1996 and 1997 since it is more
     likely than not that these future benefits will not be realized. If the
     Company achieves future profitability these deferred tax assets could be
     available to offset future income taxes.

     At December 31, 1997, available federal and state net operating loss and
     research and development tax credits carryforwards were approximately
     $6,969,673 and $132,356, respectively. These carryforwards expire at
     various dates through 2012.



                                       9

<PAGE>   15
PURESPEECH, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


     Under the provisions of the Internal Revenue Code, certain substantial
     changes in the Company's ownership may result in a limitation of the amount
     of net operating loss carryforwards available annually to offset future
     taxable income. The amount of this annual limitation is determined based
     upon the Company's value prior to the ownership changes taking place.

9.   COMMITMENTS

     LEASE

     The Company leases its office space under a non-cancelable operating lease.
     At December 31, 1997, future minimum lease payments under operating leases
     are as follows:
     
<TABLE>
<CAPTION>
                    YEAR ENDING
                    DECEMBER 31,                        AMOUNT
<S>                                                 <C>
                      1998                          $    210,150
                      1999                               210,150
                      2000                               210,150
                      2001                                17,512
                                                    ------------
            Total minimum lease payments            $    647,962
                                                    ============
</TABLE>

     Rent expense for the years ended December 31, 1996 and 1997 was
     approximately $133,800 and $156,200, respectively.

     EXECUTIVE BONUS PLAN

     During 1997, the Board of Directors of the Company approved an executive
     bonus plan designed to provide certain key executives with an incentive to
     remain employed by the Company. Such compensation will be payable upon the
     closing of a merger, consolidation or sale of all or substantially all of
     the assets of the Company. The amount of the bonus will be based upon a
     percentage of the consideration paid in such transaction.

10.  SUBSEQUENT EVENT

     On April 14, 1998, Voice Control Systems, Inc. ("VCS") acquired all of the
     outstanding common stock of the Company in exchange for approximately
     2,005,846 shares of VCS common stock. As a result of the merger, each
     outstanding share of Company capital stock was converted (i) in the case of
     Company common stock, into .1422 shares of VCS common stock, (ii) in the
     case of Company Series A preferred stock (including accrued but unpaid
     dividends thereon) into .9107 shares of VCS common stock. Each option
     granted under the Company's 1997 stock option plan and warrants issued to
     investors in May 1997 and to a financial institution in September 1997 were
     assumed by VCS on the same terms and conditions in effect at the time of
     the merger and are exercisable for, or convertible into, VCS common stock
     at the above exchange ratio. In addition, the January 1998 bridge note was
     converted into 70,121 shares of VCS common stock and the May 1997 and March
     1998 bridge notes including accrued interest thereon were converted into
     VCS common stock at a rate of $6.7544 per share.


                                       10


<PAGE>   16
               UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS



     The following unaudited pro forma condensed financial statements give
effect to the Merger of Voice Control Systems, Inc. (VCS) and PureSpeech Inc.
(PureSpeech) on the purchase basis. The pro forma condensed balance sheet as of
March 31, 1998 assumes the Merger took place on March 31, 1998 and combines the
unaudited March 31, 1998 balance sheets of PureSpeech and Voice Control Systems.
The pro forma condensed balance sheet as March 31, 1998, also assumes the
issuance of the common stock occurs immediately following the Merger. The pro
forma condensed statement of operations for the year ended December 31, 1997 and
for the three months ended March 31, 1998 was prepared based on the historical
financial statements of PureSpeech and VCS and gives the effect to the
acquisition as if it had been consummated on January 1, 1997.

     The pro forma condensed financial statements should be read in conjunction
with the accompanying notes and the historical financial statements and notes of
PureSpeech and VCS included elsewhere herein. The unaudited pro forma condensed
statements of operations for the year ended December 31, 1997 and the quarter
ended March 31, 1998 are not necessarily indicative of future operations or the
actual results that would have occurred had the Merger been consummated as
presented. The purchase method of accounting allocates the aggregate purchase
price to the assets acquired and liabilities assumed based upon their respective
fair values. The determination of the allocation of the aggregate purchase price
is preliminary and is contingent upon studies and valuations that have not yet
been completed. Management is unable to predict whether any adjustments as a
result of the foregoing will have a material effect on the Pro Forma Financial
Statements.




<PAGE>   17
                       PRO FORMA STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                          YEAR ENDED DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                           HISTORICAL                PRO FORMA
                                                ------------------------------      ADJUSTMENTS        PRO FORMA
                                                 PURESPEECH           VCS             (NOTE 2)          COMBINED
                                                ------------      ------------      ------------      ------------ 
<S>                                             <C>               <C>               <C>               <C>         
Sales                                           $  1,140,277      $ 14,429,867      $         --      $ 15,570,144

Cost of Sales                                         22,626         3,221,629                --         3,244,255
                                                ------------      ------------      ------------      ------------ 
     Gross Profit                                  1,117,651        11,208,238                --        12,325,889

Cost and expenses:

     Operating expenses:
     Research and development                      1,159,060         5,252,801                           6,411,861
     Selling, general and administrative           3,401,574         7,143,619           537,000(B)     11,082,193
     Interest expense (Income), net                  141,223          (748,924)                           (607,701)
       Interest related parties                      335,000                --                             335,000
                                                ------------      ------------      ------------      ------------ 

Total expenses                                     5,036,857        11,647,496           537,000        16,684,353
                                                ------------      ------------      ------------      ------------ 

Net Loss                                        $ (3,919,206)     $   (439,258)     $   (537,000)     $ (4,895,464)
                                                ============      ============      ============      ============

Net Loss per share - Basic                                               (0.04)                              (0.38)
                                                                  ============                        ============ 

Weighted average shares outstanding - Basic                         11,176,173         1,699,312        12,875,485
                                                                  ============      ============      ============
</TABLE>



<PAGE>   18
                             PRO FORMA BALANCE SHEET
                                   (UNAUDITED)
                       FOR THE PERIOD ENDED MARCH 31, 1998


<TABLE>
<CAPTION>
                                                           HISTORICAL                PRO FORMA
                                                ------------------------------      ADJUSTMENTS        
                                                PURESPEECH            VCS             (NOTE 2)         PRO FORMA
                                                -----------       ------------      ------------      ------------
<S>                                             <C>               <C>               <C>               <C>         
ASSETS

 CURRENT ASSETS:
    Cash and cash equivalents                   $    11,335         12,450,222        (2,500,000)(B)     9,961,557
    Accounts receivable                             118,713          3,675,745                           3,794,458
    Inventory                                                          532,015                             532,015
    Prepaid expenses                                 28,855            184,398                             213,253
                                                -----------       ------------      ------------      -------------

        Total current assets                        158,903         16,842,380        (2,500,000)       14,501,283

 Net property and equipment                         239,481          1,508,879                            1,748,360
 Goodwill                                                                              2,682,783 (B)      2,682,783
 Other Assets                                        18,833            156,566                              175,399
                                                -----------       ------------      ------------      -------------

                                                $   417,217       $ 18,507,825      $    182,783      $ 19,107,825
                                                ===========       ============      ============      ============

 Liabilities and Stockholders' Equity

 Current:
    Accounts payable and accrued expenses           588,211       $  1,025,268           (73,553)(A)     1,539,926
    Deferred revenue                                554,453            717,631                           1,272,084
    Note Payable                                  3,340,798                 --        (1,840,798)(A)     1,500,000
                                                -----------       ------------      ------------      -------------

        Total current liabilities                 4,483,462          1,742,899        (1,914,351)        4,312,010

 COMMITMENTS AND CONTINGENCIES

 STOCKHOLDERS' EQUITY:
    Preferred stock                               5,046,314                 --        (5,046,314)(B)             --
    Common stock                                  1,302,911            114,454         1,914,351 (A)
                                                                                      (3,217,262)(B)
                                                                                          16,993 (B)        131,447
    Paid-in capital                                 460,712         37,498,711          (460,712)(B)
                                                                                       8,013,896 (B)     45,512,607
    Treasury stock                                                    (325,546)                            (325,546)
    Receivable from stockholders                                       (70,010)                             (70,010)
    Accumulated Deficit                         (10,876,183)       (20,452,683)       10,876,183 (B)
                                                                                     (10,000,000)(B)    (30,452,683)
                                                -----------       ------------      ------------      -------------

        TOTAL STOCKHOLDERS' EQUITY               (4,066,245)        16,764,926         2,097,134         14,795,815
                                                -----------       ------------      ------------      -------------

                                                $   417,217       $ 18,507,825      $    182,783      $  19,107,825
                                                ===========       ============      ============      =============
</TABLE>

<PAGE>   19
                       PRO FORMA STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                       For the Period Ended March 31, 1998


<TABLE>
<CAPTION>
                                                           HISTORICAL                PRO FORMA
                                                ------------------------------      ADJUSTMENTS        
                                                PURESPEECH            VCS             (NOTE 2)         PRO FORMA
                                                -----------       ------------      ------------      ------------
<S>                                             <C>               <C>               <C>               <C>         
Sales                                           $    35,774       $  3,772,067      $         --      $  3,807,841

Cost of Sales                                         5,414            732,337                --           737,751
                                                -----------       ------------      ------------      ------------

     Gross Profit                                    30,360          3,039,730                --         3,070,090

Cost and expenses:

     Operating expenses:
     Research and development                       393,992          1,280,805                           1,674,797
     Selling, general and administrative            921,362          2,376,669           134,000 (B)     3,432,031
     Interest expense (Income), net                  93,155           (161,441)                            (68,286)
     Interest related parties                            --                 --                --                --
                                                -----------       ------------      ------------      ------------

Total expenses                                    1,408,509          3,496,033           134,000         5,038,542


Net Loss                                        $(1,378,149)      $   (456,303)     $   (134,000)     $ (1,968,452)
                                                ===========       ============      ============      ============ 


Net Loss per share  Basic                                                (0.04)                              (0.93)
                                                                  ============                        ============

Weighted average shares outstanding - Basic                         11,176,173         1,699,312        12,875,485
                                                                  ============      ============      ============ 
</TABLE>




<PAGE>   20
                 PURESPEECH, INC AND VOICE CONTROL SYSTEMS, INC.


                Notes to Pro Forma Condensed Financial Statements
                                   (Unaudited)

1.   Merger

     VCS acquired 100 percent of the stock of PureSpeech in return for VCS stock
     and the rights to acquire VCS stock valued at approximately $8 million, the
     assumption of PureSpeech liabilities in the amount of $2.6 million and cash
     consideration of approximately $2.5 million including transaction costs.
     Pursuant to the terms of the agreement, all shares of PureSpeech Common and
     Preferred Stock outstanding immediately prior to the closing of the Merger
     were converted into and exchanged for 1,316,555 shares of VCS Common Stock.
     In addition, PureSpeech shareholder debt assumed by VCS was converted into
     382,757 shares of VCS Common Stock. Options, warrants and other rights to
     acquire PureSpeech common stock were converted to options and warrants to
     acquire 619,561 shares of VCS common stock. The pro forma condensed balance
     sheet as of March 31, 1998 assumes the Merger took place as of March 31,
     1998. The pro forma condensed statement of operations for the year ended
     December 31, 1997 and the three months ended March 31, 1998 assumes the
     merger took place on January 1, 1997. The Merger was accounted for as a
     purchase with VCS acquiring PureSpeech in the acquisition.

2.   Pro forma adjustments

     For purposes of this pro forma condensed statement of operations, the
     write-off of the acquired in-process research and development has been
     excluded due to its non-recurring nature.

     The pro forma adjustments in the accompanying unaudited pro forma condensed
     financial statements are listed below.

     (A)  Reflects the conversion of the PureSpeech shareholders debt and
          accrued interest to equity.

     (B)  Reflects the issuance of 1,699,312 shares of VCS stock for the
          outstanding preferred and common stock of PureSpeech and the payment
          of $2.5 million in cash including transaction cost. The purchase price
          was allocated as follows, based on preliminary estimates:

<TABLE>
<S>                                                     <C>        
               Goodwill                                 $ 2,682,783
               In-process Research and Development       10,000,000
               Net Book Value of remaining assets           417,217
                                                        -----------

                                                        $13,100,000
                                                        ===========
</TABLE>

               The acquired research and development will be changed to expense
               as research and development costs. Goodwill will be amortized
               over its estimated useful life of five years.

     VCS acquired PureSpeech with two major products under development, the Pure
     Request and the Recite product lines.  The Pure Request product is
     automated attendant that is designed to handle up 10,000 names. The Recite
     product is a natural language speech engine that is designed to recognize
     up to 10,000 words or vocabularies.  Both products require research and
     development resources for market acceptance.  VCS will have to spend
     approximately $500,000 in Research and Development to complete the Pure
     Request product for end user acceptance. Additional expenses will be
     incurred to integrate the Recite engine into applications and end user
     products.  The majority of the research will be completed by year-end 1998,
     with continued R&D in the future to meet the rapidly changing competitive
     landscape.  If developed successfully both product lines can become an
     integral part of VCS's product line and revenue stream in future years.

     (C)  The pro forma net loss per share is computed assuming the 1,699,312
          shares of VCS stock issued in connection with the acquisition were
          outstanding during the entire period presented.
<PAGE>   21


                                                                    EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8, (Nos. 333-19309 and 33-65842) of Voice Control Systems,
Inc. of our report dated March 26, 1998, except for Note 10, which is as of
April 14, 1998, relating to the financial statements of PureSpeech, Inc. as of
December 31, 1996 and 1997 and for the two years then ended, which appears in
the Current Report on Form 8K/A of Voice Control Systems, Inc.


/s/ Price Waterhouse LLP
Boston, Massachusetts
August 31, 1998