The statements contained in this Quarterly Report that are not historical are
"forward-looking statements", which can be identified by use of terms such as
"may", "could", "should", "expect", "plan", "project", "intend", "anticipate",
"believe", "estimate", "predict", "potential", "pursue", "target" or "continue",
the negative of such terms or other comparable terminology, although some
forward-looking statements may be expressed differently.
The forward-looking statements contained in this 10-Q are largely based on our
expectations, which reflect estimates and assumptions made by our management.
These estimates and assumptions reflect our best judgment based on currently
known market conditions and other factors. Although we believe such estimates
and assumptions to be reasonable, they are inherently uncertain and involve a
number of risks and uncertainties that are beyond our control. In addition,
management's assumptions about future events may prove to be inaccurate.
Management cautions all readers that the forward-looking statements contained in
this 10-Q are not guarantees of future performance, and we cannot assure any
reader that such statements will be realized or the forward-looking events and
circumstances will occur. Actual results may differ materially from those
anticipated or implied in the forward-looking statements due to various factors
listed in this Quarterly Report. All forward-looking statements speak only as of
the date of this 10-Q. We do not intend to publicly update or revise any
forward-looking statements as a result of new information, future events or
otherwise. These cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
Overview
We are a software development company headquartered in Scottsdale, Arizona. We
specialize in creating interface and application solutions for speech
recognition technologies. Our speech recognition software and related firmware
was first introduced in 1994 at an industry trade show. We currently have
limited capital resources. We are not currently engaged in marketing any
products. Our principal assets are our patents. Our business strategy will be to
attempt to interest other companies in entering into license agreements or other
strategic relationships and to support and defend our patents through
infringement and interference proceedings, as appropriate. We are currently
engaged in discussions with firms that could assist us in commercialization of
our intellectual assets.
Results of Operations
We completed a stock exchange on May 19, 2008 and changed our business model. We
have not generated any revenue since the stock exchange and do not have any cash
generating product or licensing sales.
At September 30, 2021, we had current assets of $5,231 and current liabilities
of $305,156, as compared to $348 current assets and $276,955 in current
liabilities at December 31, 2020. Our increase in current assets is attributed
stock purchase agreements. Our increase in current liabilities is due to an
increase in Accounts Payable.
We had a net loss of $53,346 and $56,060 for the nine months ended September 30,
2021 and 2020 respectively. The decrease in net loss is attributable to reduced
compensation.
Liquidity and Capital Resources
For the nine months ended September 30, 2021, we used $28,107 of cash in
operating activities and -0- in investing activities, and we received a $19,000
cash from the sale of our common stock and $13,990 advance from related party.
As a result, for the nine months ended September 30, 2021, we recognized a
$4,883 increase in cash on hand. For the nine months ended September 30, 2020,
$27,027 cash was used in operating activities, $-0- cash in investing
activities, and we received $20,600 cash from the sale of our common stock, and
$750 advance from related party resulting in a $5,677 decrease in cash on hand
for the period.
Historically, our President has loaned or advanced to us funds for working
capital on an "as needed" basis. There is no assurance that these loans or
advances will continue in the future. At September 30, 2021 and December 31,
2020, we owed our officers an aggregate of $162,382 for accrued payroll. On
September 24, 2018, the Company entered into Promissory Note with Walter
Geldenhuys, who is our President, Chief Executive Officer and Chief Financial
Officer, and who serves as a member of our Board of Directors. The Promissory
Note is effective as of September 24, 2018 in the principal amount of $9,000
with a maturity date of the Promissory Note September 24, 2019. Interest at 4%
per annum was charged and accrued at December 31, 2018. The Company repaid
$2,500 of the note on December 10, 2018. During 2019 the Company repaid $6,500,
paying the note in full on December 27, 2019. Interest at 4% per annum was
charged and accrued at December 31, 2019. Accrued interest of $254 was paid on
February 28, 2020. On January 31, 2020 the Company advanced Walter Geldenhuys
$1,000. Mr. Geldenhuys repaid the advance on February 28, 2020. On June 21,
2021 Mr. Geldenhuys advanced the Company $4200. In the nine months ending
September 30, 2021 our Secretary Treasurer advanced the Company a total of
$13,990.
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On March 16, 2015 we entered into a letter agreement with Adapt IP Ventures, LLC
(Adapt IP) confirming the retention of Adapt IP to assist us in identifying
companies that might be interested in acquiring and / or licensing our patents,
to attempt to negotiate financial terms and conditions for acquisition and / or
licensing and to assist with collection of compensation from such entities.
Adapt IP will receive a success fee of 15% of net compensation received from
such entities based upon Adapt IP's efforts. We or Adapt IP may terminate the
agreement upon 30 days' notice to the other party.
On April 20, 2015 we made a Promissory Note to Adapt IP for up to $20,000, and
Adapt IP agreed to pay to our patent counsel $19,935 for patent work on our
behalf. The Note matures one year from the date of the Note. We are obligated
to repay the funds advanced by Adapt IP plus a premium of 10% of the principal
amount and a percentage of proceeds received by us from any monetization event
involving the patents. If we repay the Note within the six months of the date
of the Note, the percentage will be 1%, and it will be 2% after six months. As
of September 30, 2021, $13,456 interest has accrued.
On August 20, 2015, AVRS entered into a letter agreement with Dominion Harbor
Group, LLC pursuant to which Dominion will provide strategic advisory services
to AVRS to support the common goal of the acquisition, sale, licensing,
prosecution, enforcement, and settlement with respect to AVRS's intellectual
property, including patents held by AVRS. On June 28, 2017 AVRS and Dominion
agreed to terminate the August 20, 2015 Letter Agreement. AVRS did not incur
any material early termination penalties in connection of the early termination
of the agreement.
On November 1, 2016, AVRS entered into a Contingent Fee Agreement with Buether
Joe and Carpenter, LLC to represent AVRS in connection with investigating and
asserting claims including negotiating license agreements and the filing and
prosecution of lawsuits against any potential infringers of the Patent rights.
On June 6, 2017 AVRS and Buether Joe and Carpenter, LLC revised the Contingent
Fee Agreement as it related to the termination of the August 20, 2015 Dominion
Harbor Letter Agreement.
On June 21, 2018, Advanced Voice Recognition Systems, Inc. ("AVRS") and Buether
Joe & Carpenter, LLC ("BJC) entered into a Letter of Engagement for Legal
Services Limited Scope Agreement ("Agreement") with Schmeiser, Olsen & Watts LLP
("the Firm") pursuant to which the Firm will serve as local counsel in the
United States District Court, District of Arizona. AVRS may terminate the
Agreement at any time.
In carrying out our business strategy, we will likely continue to incur expenses
in defending our patents and pursuing license agreements. We plan to raise
additional funds through future sales of our securities or other means, until
such time as our revenues are sufficient to meet our cost structure, and
ultimately achieve profitable operations. There is no assurance we will be
successful in raising additional capital or achieving profitable operations. Our
board of directors may attempt to use non-cash consideration to satisfy
obligations that may consist of restricted shares of our common stock. These
actions would result in dilution of the ownership interests of existing
shareholders and may further dilute our common stock book value.
To obtain sufficient funds to meet our future needs for capital, we will from
time to time, evaluate opportunities to raise financing through sales of our
securities. However, future equity or debt financing may not be available to us
at all, or if available, may not be on terms acceptable to us. We do not intend
to pay dividends to shareholders in the foreseeable future.
U.S. Patent #7,558,730 expands an extremely broad base of features in speech
recognition and transcription across heterogeneous protocols. Costs totaling
$58,277 have been capitalized and amortization began in the third quarter 2009.
U.S. Patent #7,949,534 is an expansion of the coverage of our second patent and
incorporates speech recognition and transcription among transcription engines
employing incompatible protocols. Costs totaling $3,365 have been capitalized
and amortization began in the second quarter 2011.
U.S. Patent #8,131,557 is an expansion of our second and third patent. Costs
totaling $5,092 have been capitalized and amortization began in the first
quarter 2012.
U.S. Patent #8,498,871 titled "Dynamic Speech Recognition and Transcription
Among Users Having Heterogeneous Protocols" was issued July 30, 2013 by the U.S.
Patent and Trademark Office. Costs totaling $21,114 have been capitalized and
amortization began in the third quarter 2013.
On September 22, 2015, Patent #9,142,217 titled "Speech Recognition and
Transcription Among Users Having Heterogeneous Protocols" (an expansion of our
fourth patent) was issued by the U.S. Patent and Trademark Office. In
accordance with 35 U.S.C. 154, the patent shall be for a term beginning
September 22, 2015 and ending 20 years from the application date of the parent
application (U.S. Patent No 7,558,730) of November 27, 2001, or November 27,
2021. Costs totaling $35,068 have been capitalized and amortization began in
the third quarter 2015.
On April 3, 2018, U.S. Patent #9,934,786 titled "Speech Recognition and
Transcription Among Users Having Heterogeneous Protocols" was issued by the U.S.
Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall
be for a term
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beginning April 3, 2018 and ending 20 years from the application date of the
parent application (U.S. Patent No 7,558,730) of November 27, 2001, or November
27, 2021. Costs totaling $4575 have been capitalized and amortization began in
the second quarter 2018.
In order for our operations to continue, we will need to generate revenues from
our intended operations sufficient to meet our anticipated cost structure.
Off-Balance Sheet Arrangements
On March 16, 2015 Advanced Voice Recognition Systems, Inc. (AVRS) entered into a
material Letter Agreement with Adapt IP Ventures, LLC (Adapt IP) in which it
retained Adapt IP on an exclusive basis. Adapt IP will assist AVRS in
identifying companies that might be interested in acquiring and / or licensing
the Patents, attempt to negotiate financial terms and conditions for the
acquisition and /or licensing of the Patents with such Entity(ies) and assist
with collection of compensation from such entities. In connection with services
provided under this Agreement, AVRS shall pay Adapt IP a success fee.
On August 20, 2015, Advanced Voice Recognition Systems, Inc. (AVRS) entered into
a letter agreement with Dominion Harbor Group, LLC (Dominion) pursuant to which
Dominion will provide strategic advisory services to AVRS to support the common
goal of the acquisition, sale, licensing, prosecution, enforcement, and
settlement with respect to AVRS's intellectual property, including patents held
by AVRS. Dominion has agreed to advance costs recommended by it, including court
filing fees, discovery and other litigation costs, and patent prosecution costs,
up to an aggregate of $10,000,000. AVRS will be responsible for costs not
recommended by Dominion, as well as travel and ordinary business expenses
incurred by AVRS. Except for the advanced costs by Dominion, AVRS will be
responsible for any contingency payments to law firms. On June 28, 2017 AVRS
and Dominion agreed to terminate the August 20, 2015 Letter Agreement. AVRS did
not incur any material early termination penalties in connection of the early
termination of the agreement.
On November 1, 2016, Advanced Voice Recognition Systems, Inc. ("AVRS") entered
into a Contingent Fee Agreement (the "Agreement") with Buether Joe & Carpenter,
LLC ("BJC") pursuant to which BJC will represent AVRS in connection with
investigating and asserting claims relating to certain patents, including the
negotiation of license agreements and the filing and prosecution of lawsuits,
against any potential infringers of rights associated with such patents (the
"Patent Rights") BJC will handle licensing and litigation activities under the
Agreement on a contingent fee basis. BJC's fee will depend upon whether AVRS
recovers any sums by way of licensing, settlement, trial or otherwise with
respect to the Patent Rights. On June 6, 2017 AVRS and BJC revised the
Contingent Fee Agreement as it related to the termination of the August 20, 2015
Dominion Harbor Letter Agreement.
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