Voxware Announces Fiscal 2005 Year End And Fourth Quarter Results - Record Revenue Growth And Increase in Cash Balance

PRINCETON, NJ — August 22, 2005 – Voxware, Inc. (OTC: VOXW), a leading supplier of voice-based solutions for the logistics workforce, announced preliminary financial results for the quarter and twelve months ended June 30, 2005.

Revenues for the fourth quarter increased to $5.3 million, up 7% from $5.0 million in the third quarter of 2005, and up 42% from $3.8 million in the fourth quarter of 2004. The increase in revenues over the third quarter of 2005 resulted from higher service revenues associated with the successful deployment of the VoiceLogistics® solution at additional sites. The increase in revenues over the fourth quarter of 2004 resulted from increased sales of voice-based solution products and related services. Total operating expenses for the fourth quarter were $2.9 million, up 5% from $2.7 million in the third quarter of 2005, and down 11% from $3.2 million in the fourth quarter of 2004. The increase in operating expenses over the third quarter of 2005 was due primarily to increases in staff to support Voxware’s continued growth. Net loss applicable to common stockholders for the fourth quarter decreased to $0.1 million, or $0.00 per diluted share compared to $4.2 million or $0.10 per diluted share in the fourth quarter of 2004.

Revenue for 2005 increased to $17.5 million, up 50% from $11.7 million in 2004. The Company’s operating loss decreased to $0.4 million in 2005 from $7.5 million in 2004. Net loss applicable to common stockholders for the full year decreased to $1.5 million, or $0.03 per diluted share compared to $10.3 million or $0.29 per diluted share in 2004.

“April through June was another record quarter for the Company,” stated Tom Drury, Voxware’s CEO. “Our revenue passed the $5 million mark for the first time. For fiscal year 2005, we achieved an operating profit of $1,186,000, excluding $1,630,000 in amortization of deferred employee compensation associated with stock option issuances, a noncash item. Voxware believes operating profit is an important measure of overall financial health of the Company because it is closely correlated with cash flow. We were cash flow positive for the quarter and for the overall year, and our accounts receivable and cash increased to nearly $6 million.”

On August 11, 2005, the Company issued and sold an aggregate of 188,860,967 shares of Common Stock. An additional 17,389,030 shares of Common Stock were issued and sold at the final closing today, August 22, 2005. Aggregate gross proceeds to the Company for the entire private placement were $6.6 million before taking into account expenses and commissions. In connection with these transactions, effective August 11, 2005, all of the Company’s outstanding shares of Series D Convertible Preferred Stock (the “Series D Preferred Stock”) converted into 650,918,946 shares of Common Stock, including accrued dividends. As of today, giving effect to the transactions and conversion of the Series D Preferred Stock, the Company has 936,221,605 shares of Common Stock issued and outstanding, as compared to 78,203,061 as of June 30, 2005.