Advanced Voice Recognition Systems, Inc - FORM 10-K

Attached files

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EX-31.2 - EXHIBIT 31.2 - Advanced Voice Recognition Systems, Inc	ex31x2.htm
EX-31.1 - EXHIBIT 31.1 - Advanced Voice Recognition Systems, Inc	ex31x1.htm
EX-31.1 - EXHIBIT 32.1 - Advanced Voice Recognition Systems, Inc	ex32x2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 000-52390

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

NEVADA	98-0511932
State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)

7659 E. Wood Drive Scottsdale, Arizona	85260
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code is (480) 704-4183

Securities registered pursuant to Section 12(b) of the Act:

Title of each class: NONE Name of each exchange on which registered: NONE

Securities registered pursuant to section 12(g) of the Act

Common Stock $0.001 Par Value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one)


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

The aggregate market value of the of the outstanding common equity held by non-affiliates of the Registrant as of the last business day of the Registrant’s most recently completed second fiscal quarter was approximately $11,078,773 based upon the last reported sales price on the OTCBB for such date. For purposes of this disclosure, shares of Common Stock held by officers and directors of the Registrant have been excluded because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily conclusive.

The number of shares of the registrant’s common stock, as of February 26, 2010 was 165,400,008.

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

TABLE OF CONTENTS

		PAGE

PART I

Item 1.	Business	1
Item 2.	Property	4
Item 3.	Legal Proceedings	4
Item 4.	Submission of Matters to a Vote of Security Holders	4

PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4
Item 6.	Selected Financial Data	5
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	5
Item 8.	Financial Statements and Supplementary Data	7
Item 9.	Controls and Procedures	22

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	23
Item 11.	Executive Compensation	24
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	26
Item 13.	Certain Relationships and Related Transactions, and Director Independence	27
Item 14.	Principal Accounting Fees and Services	27

PART IV

Item 15	Exhibits, Financial Statement Schedules	28

Cautionary Statement Regarding Forward Looking Statements

The statements contained in this prospectus 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 Annual Report 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 Annual Report 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 Annual Report. All forward-looking statements speak only as of the date of this Annual Report. 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.

PART I

Item 1. Business.

General Overview.

Advanced Voice Recognition Systems, Inc. (the “Company”, “we” or “us”), was incorporated in the State of Nevada on August 31, 2005 as Samoyed Energy Corp., an oil and gas company. In May 2008, we consummated a stock exchange with the shareholders of Advanced Voice Recognition Systems, Inc., a Colorado corporation (“AVRS”), and consequently, AVRS became our wholly-owned subsidiary. In May 2008, we also transferred our oil and gas assets to Stone Canyon Resources, Inc. In June 2008, AVRS merged with and into us and we changed our name to “Advanced Voice Recognition Systems, Inc.” As a result of the stock exchange and the transfer of our oil and gas assets, our current operations are those of AVRS, and our fiscal year became that of AVRS and now ends on December 31st.

Our common stock has been quoted on the Over-the-Counter Bulletin Board, also referred to as the OTCBB, since April 2007. Prior to June 19, 2008, our ticker symbol was “SMYD”, and on June 19, 2008, following our name change, our ticker symbol changed to “AVOI”. Our website is located at www.avrsys.com.

AVRS was incorporated on July 7, 2005. In May 2000, WG Investments, LLC, a Colorado limited liability company formed that same year, acquired all of the assets of NCC, Inc., an Ohio corporation, and all rights, title and interests in and to U.S. Patent #5,960,447. Promptly following the acquisition, the members of WG Investments, LLC voted to change its name to NCC, LLC. In 2005, the members of NCC, LLC exchanged their membership interests in NCC, LLC for shares of common stock of AVRS.

On March 25, 2009, we entered into an Agreement and Plan of Merger (“Agreement and Plan of Merger”) with our wholly-owned subsidiary, NCC, LLC, a Colorado limited liability company, whereby NCC, LLC merged with and into us pursuant to Section 92A.180 of the Nevada Business Corporations Act. Upon consummation of the Agreement and Plan of Merger; (i) NCC, LLC ceased to exist; (ii) our member interests in NCC, LLC automatically were canceled or retired and ceased to exist, without any consideration delivered in exchange thereof; (iii) the title to all estate, property rights privileges, powers and franchise assets and/or other rights owned by NCC, LLC became vested in us without reversion or impairment; and (iv) all liabilities of any kind of NCC, LLC became vested in us. As a result, we own U.S. Patent #5,960,447. Additionally, we own U.S. Patent #7,558,730.

We are a software development company headquartered in Scottsdale, Arizona, with an office in Mitchell, South Dakota. 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.

Industry Overview

We believe that speech recognition technology has a multitude of potential applications, and that automatic speech recognition (ASR) products have not provided an effective solution.

Speech recognition technology, which provides for the conversion of speech into written text, is the threshold feature of our solutions. Our technology focuses on improving speech recognition technology by increasing speech conversion precision, with the goal of achieving near 100% accuracy and allowing the user to speak naturally. We also focus on improving user productivity and profitability by enabling the user to effectively utilize the written text produced by speech recognition technology (the End-Text) in multiple applications specific to the user’s business purposes and goals.

We believe our main competitors are Microsoft, Nuance, IBM, and Google Voice. We also will compete with several smaller niche suppliers. We intend to differentiate our solutions from those of our competitors by focusing on efficient correction using traditional methods that will minimize the burden on the user.

Principal Proposed Products or Services

We are in the development stage and have not achieved any revenues from product sales. In addition, we will need substantial additional capital to achieve our marketing objectives as described below.

Speech Recognition Software and Related Firmware

Our principal proposed product is speech recognition software and related firmware which allows for dictation into a broad range of applications, including DOS applications running in Windows, UNIX and mainframe applications accessed through terminal emulation programs, various custom applications , and all Windows 3.x, 95, 98, 2000, XP and Vista programs. Through this product, we seek to provide full functionality including audio proofreading, deferred and delegated correction and additional capabilities that we believe are not available with other products. This product allows for deferred dictation, where the text is saved with the associated audio, and the users can resume when stopped and can play back dictated content. Similarly, the recognized text and associated audio can be saved to be used when text is corrected.

AVRS Enterprise Solutions

Through our AVRS Enterprise™ solutions utilizing the speech recognition software and related firmware, we hope to provide exceptional ease of use, security, scalability, centralized system administration, and flexible and efficient communications. We believe that the primary benefit that our AVRS Enterprise™ solutions will offer is the elimination of typing and the efficient use of personnel for correction and proofreading. We believe that dictation rates of over 300 words per minute are attainable through the three components of our speech recognition software and related firmware: Transaction Manager, Transcription Server, and the Dictation/Correction Assistant Clients. Additionally, AVRS Enterprise™ Solutions may provide useful in mobile search and voicemail to text.

Market

We intend to target vertical markets that require individuals and organizations to create reports, letters, e-mail, data entry, manuals, books, and virtually any other document or end product involving written data. These organizations include corporations, hospitals, medical product and service providers, governmental entities, legal professionals, sales and service organizations law enforcement agencies and mobile search and voicemail to text.

Medical Market

We principally intend to target the medical industry, which we believe presently has the highest level of individuals utilizing dictation methods to assist in satisfying reporting requirements and documentation needs. We intend to focus sales and marketing efforts on existing local and regional medical transcription, medical billing and equipment companies.

Legal, Law Enforcement, Insurance and Sales Markets

In addition to the medical field, we plan to concurrently target the legal profession, law enforcement, insurance and sales automation markets, which we believe have automatic dictation needs similar to those in the medical industry.

Original Equipment Manufacturer (OEM)

We anticipate that we will work with the OEM markets, targeting both software developers and hardware manufacturers. We may approach the larger OEM companies with a joint marketing approach strategy while using a direct sale basis to approach small and medium-sized OEMs.

Hardware Manufacturers

We also anticipate targeting hardware manufacturers, both on a direct basis and through joint sales and marketing programs. We intend to offer technology and patent licenses to manufacturers of medical devices, digital dictation systems, recorders, workstation PCs, mobile phones, PDAs, WAPs, and intelligent electronics. Alternatively, we may offer these manufacturers limited versions of our speech recognition software and related firmware product line for embedding into hardware. We expect to develop joint sales and marketing programs for mainframe, thin-client, telephony and other large hardware processing systems.

Distribution

Product development of the speech recognition software and related firmware was the primary focus for the first six years following its introduction into the software market. Early forms of the speech recognition software and related firmware were marketed through a network of approximately 200 small dealers specializing in speech recognition technology.

Our business model has been revised and we plan to collect royalty payments based on actual usage of the speech recognition software and related firmware in various applications, and to implement our marketing strategy using the following marketing vehicles:

	•	Internet
	•	Trade shows
	•	Industry trade journal advertising
	•	Industry trade journal product reviews, reports, and papers
	•	Target market trade and professional journals
	•	Media interviews (TV, radio, newspapers)
	•	Editorial visitations
	•	Press releases
	•	Direct mail
	•	Brochures, sales literature
	•	Seminars

Intellectual Property

Our primary assets are United States Patent # 5,960,447 and United States Patent #7,558,730. U.S. Patent #5,960,447 is for a word tagging and editing system for speech recognition filed on November 13, 1995 and issued on September 28, 1999. In accordance with 35 USC 154, the term for the above-referenced patent began on September 28, 1999 and ends 20 years from the date on which the application for the patent was filed in the United States. Therefore, the patent will expire on November 13, 2015.

A word tagging and editing system for speech recognition receives recognized speech text from a speech recognition engine, and creates tagging information that follows the speech text as it is received by a word processing program or other program. The body of text to be edited in connection with the word processing program may be selected and cut and pasted and otherwise manipulated, and the tags follow within the audio data file created initially by the speech recognition engine. The sound bite may be replayed to the user through a speaker. The practical results include that the user may confirm the correctness of a particular recognized word, in real time whilst editing text in the word processor. If the recognition is manually corrected, the correction information may be supplied to the engine for use in updating a user profile for the user who dictated the audio that was recognized. Particular tagging approaches are employed depending on the particular word processor being used.

U.S. Patent #5,960,447 includes 42 claims covering an extremely broad base of features applicable to existing ASR products and markets. We intend to take full advantage of our patent protection by licensing or otherwise.

The U.S. Patent Office issued U.S. Patent # 7,558,730 titled, “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols”, filed on November 27, 2001 and issued on July 7, 2009. In accordance with 35 USC 154, the term for the above referenced patent began on July 7, 2009 and ends 20 years from the date on which the application for the patent was filed in the United States. Therefore, the patent will expire on November 27, 2021. The invention discloses a system for facilitating speech recognition and transcription among users employing incompatible protocols for generating, transcribing, and exchanging speech. The patent is expected to strengthen our position in voice recognition.

We are involved in a patent interference, in the U.S. Patent and Trademark Office, claiming our ownership of the subject matter of a third party’s patent.

Research and Development

During fiscal years 2009 and 2008, we did not incur any expense for research and development activities.

Employees

We currently do not have any employees. Walter Geldenhuys, our President, Chief Executive Officer and Chief Financial Officer, and Diana Jakowchuk, our Secretary, Treasurer and Principal Accounting Officer, have contributed services to us free of charge. We may engage consultants and other service providers in the future to help us carry out our business plan.

Available Information

We file the following reports with the SEC under Section 13(a) of the Securities Exchange Act of 1934 as a smaller reporting company: Annual Reports on Form 10-K; Quarterly Reports on Form 10-Q; Current Reports on Form 8-K; and any amendments to these reports. You may request a copy of these filings at no cost. Please direct your requests to:

Diane Jakowchuk

Secretary, Treasurer, Principal Accounting Officer

AVRS, Inc.

7659 E. Wood Drive

Scottsdale, AZ 85260

Our website is located at www.avrsys.com. The Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and all amendments to these reports and other information that we file with or furnish to the Securities and Exchange Commission, or the SEC, are accessible free of charge on our website. We make these documents available as soon as reasonably practicable after we file them with or furnish them to the SEC. You can also read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site (http://www.sec.gov) that contains our reports, proxy and information statements and other information that we file electronically with the SEC.

Item 2. Properties.

Our principal executive offices are located at 7659 E. Wood Drive, Scottsdale, Arizona and are provided to us free of charge by Diana Jakowchuk, our Secretary, Treasurer and Principal Accounting Officer.

Item 3. Legal Proceedings.

None

Item 4. Submission of Matters to a Vote of Security Holders.

None

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Between April 16, 2007 and June 18, 2008, our common stock was quoted on the Over-the-Counter Bulletin Board (the “OTCBB”) under the symbol “SMYD”. Commencing on June 19, 2008, our common stock has been quoted on the OTCBB under the symbol “AVOI”. The following table sets forth the high and low bid prices per share of our common stock for each full quarterly period in 2009 and 2008. These prices represent inter-dealer quotations without retail markup, markdown or commission and may not necessarily represent actual transactions.

	High	Low

Three Months Ended December 31, 2009	0.19	0.13
Three Months Ended September 30, 2009	0.18	0.110
Three Months Ended June 30, 2009	0.29	0.15
Three Months Ended March 31, 2009	0.27	0.14
Three Months Ended December 31, 2008	0.35	0.15
Three Months Ended September 30, 2008	0.53	0.30
Three Months Ended June 30, 2008	0.71	0.17
Three Months Ended March 31, 2008	0.85	030

Holders

As of February 25, 2010, we have approximately 33 holders of record of our common stock and 165,400,008 shares issued and outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies. The transfer agent of our common stock is Holladay Stock Transfer, 2939 N. 67th Place, Scottsdale, AZ 85251.

Dividends

We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent. It is anticipated that all available cash will be needed for our operations in the foreseeable future. We currently anticipate that we will retain all of our future earnings for use in the expansion and operation of our business and do not anticipate paying any cash dividends in the foreseeable future.

Unregistered Sales of Equity Securities

We have not sold any equity securities during the period covered by this Annual Report on Form 10-K that were not previously disclosed by us in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This document contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company’s plans, objectives, expectations and intentions. When used in this document, the words “expects”, “anticipates”, “intends” and “plans” and similar expressions are intended to identify certain of these forward-looking statements. The cautionary statements made in this document should be read as being applicable to all related forward-looking statements wherever they appear in this document. Our actual results could differ materially from those discussed in this document.

Results of Operation

We completed a stock exchange on May 19, 2008 and changed our business model. We have not generated any revenue since inception and do not have any cash generating product or licensing sales. We are a development stage enterprise that has incurred losses since inception.

At December 31, 2009, we had current assets of $20,961, and current liabilities of $394,090, as compared to $22,627 current assets and $297,559 in current liabilities at December 31, 2008. Our decrease in current assets is attributable to operating expenses. Our increase in current liabilities primarily is due to a promissory note to a related party and an increase in Accounts Payable.

We had a net loss of $456,568 for the year ended December 31, 2009, as compared to a net loss of $431,022 for the year ended December 31, 2008. The increase in net loss is attributable to increased contributed services and professional fees incurred in conjunction with the issuance of the second patent and our efforts to implement our business plan.

Liquidity and Capital Resources

During the year ended December 31, 2009, we used $123,461 of cash in operating activities and $4,635 of cash in investing activities, and received $128,430 of cash provided by financing activities. As a result, for the year ended December 31, 2009, we recognized a $334 net increase in cash on hand. For the year ended December 31, 2008, we used $278,692 of cash in operating activities and $10,634 cash in investing activities, and received $291,953 of cash provided by financing activities, resulting in a $2,627 increase in cash on hand for the year.

During the years ended December 31, 2009 and 2008, 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. Because of our history of losses, net capital deficit and lack of assurance of additional financing, the audit report on our financial statements contains a “going concern” opinion regarding doubt about our ability to continue as a going concern.

In an attempt to address our financing needs, on September 24, 2008, we entered into a purchase agreement (the “Purchase Agreement”) with Lion Share Capital, LLC (“Lion Share”) for the sale to Lion Share of 16,000,000 shares of our common stock, and we received a $5,000,000 note (the “Note”) from Lion Share. If we receive payments on the Note, our liquidity may increase. However, there is no assurance that we will be successful in obtaining payments on the note from Lion Share. Subsequently, on January 11, 2010, the Company terminated the Purchase Agreement and no payments were made by Lion Share on the Note. The Company has foreclosed on the collateral and cancelled the Note.

U.S. Patent #5,960,447 includes 42 claims that we believe cover an extremely broad base of features applicable to existing ASR products and markets. We intend to use our patent protection to our advantage by licensing or otherwise. If our licensing and other efforts prove successful, our liquidity may increase.

U.S. Patent #7,558,730 expands an extremely broad base of features in speech recognition and transcription across heterogeneous protocols. The deferred costs totaling $58,277 have been capitalized and amortized began in the third quarter 2009

We anticipate that our president will be responsible for our near-term working capital requirements. In addition, we anticipate conducting one or more financings to raise working capital, which may or may not be successful.

If we continue to pursue interference proceedings, or initiate or defend infringement actions, we would expect to incur substantial costs and legal fees that ultimately may not be recoverable.

We will require additional debt or equity financing or a combination of both in order to carry out our business plan. We plan to raise additional funds through future sales of our securities, 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 some combination of the private sale of equity, or issuance of convertible debt 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.

In order for our operations to continue, we will need to generate revenues from our intended operations sufficient to meet our anticipated cost structure. We may encounter difficulties in establishing these operations due to our inability to successfully prosecute any patent enforcement actions or our inability to effectively execute our business plan.

If we do not raise additional capital, or we are unable to obtain additional financing, or begin to generate revenues from our intended operations, we may have to scale back or postpone the development and marketing of our products or the enforcement of our patent rights until such financing is available.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable

Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Advanced Voice Recognition Systems, Inc.

We have audited the accompanying consolidated balance sheets of Advanced Voice Recognition Systems, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2009 and 2008, and the period from March 15, 1994 (inception) through December 31, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Advanced Voice Recognition Systems, Inc. as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years ended December 31, 2009 and 2008, and the period from March 15, 1994 (inception) through December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is a development stage enterprise that has incurred losses since inception and, at December 31, 2009, has a net capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further information and management’s plans in regard to this uncertainty are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Cordovano and Honeck LLP

Cordovano and Honeck LLP

Englewood, Colorado

February 17, 2010

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(A Development Stage Company)

Consolidated Balance Sheets

	DECEMBER 31,				DECEMBER 31,
	2009				2008
ASSETS
Current Assets
Cash		$	2,961			$	2,627
Prepaid Expenses (Note 7)			18,000				20,000

Total Current Assets
			20,961				22,627

Fixed Assets (Note 3)
Computer Software and Equipment, net			3,164				3,762

Intangible Assets (Note 3)
Patent, net			75,960				24,245
Deferred costs			—				54,542

Total Assets		$	100,085			$	105,176

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable		$	84,509			$	68,981
Accrued interest to related party (Note 4)			7,238				2,234
Indebtedness to related parties (Note 4)			302,344				226,344

Total Current Liabilities			394,091				297,559

Stockholders' Deficit (Note 1)
Common stock, $.001 par value;
547,500,000 shares authorized, 181,400,008 and
180,700,008 shares issued, respectively; 165,400,008
and 164,700,008 shares outstanding, respectively			165,400				164,700
Additional paid-in capital			4,612,851				4,171,784
Deficit accumulated during development stage			(5,009,257	)			(4,528,867	)

Total Stockholders' Deficit
			(294,006	)			(192,383	)

Total Liabilities and Stockholders' Deficit		$	100,085			$	105,176

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

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(A Development Stage Company)

Consolidated Statements of Operations

	FOR THE YEARS ENDED DECEMBER 31,								MARCH 15, 1994 (INCEPTION) THROUGH DECEMBER 31,
	2009				2008				2009
Sales		$	—			$	—			$	1,241,924
Cost of goods sold			—				—				379,378

Gross profit			—				—				862,546
Operating expenses:
Research and development			—				—				1,189,531
Contributed services (Note 4)			238,837				121,077				2,041,070
General and administrative:
Compensation			—				—				570,000
Stock-based compensation expense			87,500				—				87,500
Professional fees			123,175				281,973				840,005
Office			8,239				6,533				253,183
Rent			—				—				157,356
Travel			4,025				7,382				133,534
Advertising			—				—				81,090
Bad debt expense			—				—				67,217
Other			8,747				8,364				385,946

Total operating expenses			470,523				425,329				5,806,432

Loss from operations			(470,523	)			(425,329	)			(4,943,886	)

Other income and (expense):
Investment Income			—				—				5,062
Interest expense			(9,867	)			(5,693	)			(56,930	)
Loss on sale of assets			—				—				(13,503	)

Net other expense
			(9,867	)			(5,693	)			(65,371	)

Loss before income taxes			(480,390	)			(431,022	)			(5,009,257	)

Provision for income taxes (Note 5)			—				—				—

Net Loss		$	(480,390	)		$	(431,022	)		$	(5,009,257	)

Basic and diluted loss per common share		$	(0.00	)		$	(0.00	)

Weighted average number of common
shares outstanding			164,999,186				161,054,526

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

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(A Development Stage Company)

Consolidated Statement of Stockholders' Deficit


	NCC, LLC Membership		Common Stock						Additional Paid-in			Deficit Accumulated During Development			Deferred
	Interests		Shares			Amount			Capital			Stage			Compensation		Total
Balance at March 15, 1994 (inception)	$	-		750		$	1,000		$	-		$	-		$	-	$	1,000

Net Loss		-		-			-			-			(3,976	)		-		(3,976	)
Balance at December 31, 1994		-		750			1,000			-			(3,976	)				(2,976	)

Net Loss		-		-			-			-			(38,516	)		-		(38,516	)
Balance at December 31, 1995		-		750			1,000			-			(42,492	)				(41,492	)

Net Loss		-		-			-			-			(144,843	)		-		(144,843	)
Balance at December 31, 1996		-		750			1,000			-			(187,335	)				(186,335	)

Net Loss		-		-			-			-			(3,291	)		-		(3,291	)
Balance at December 31, 1997		-		750			1,000			-			(190,626	)				(189,626	)

Net Loss		-		-			-			-			(537,561	)		-		(537,561	)
Balance at December 31, 1998		-		750			1,000			-			(728,187	)				(727,187	)

Net Loss		-		-			-			-			(512,491	)		-		(512,491	)
Balance at December 31, 1999		-		750			1,000			-			(1,240,678	)				(1,239,678	)

May 19, 2000, obligations contributed to capital		-		-			-			1,335,432			-			-		1,335,432
May 19, 2000, paid-in capital of NCC, Inc. transferred to NCC, LLC membership interests.		1,336,432		(750	)		(1,000	)		(1,335,432	)

	NCC, LLC Membership	Common Stock		Additional Paid-in	Deficit Accumulated During Development		Deferred
	Interests	Shares	Amount	Capital	Stage		Compensation		Total
May 19, 2000, acquisition of NCC, Inc. by NCC, LLC	487,500	-	-	-	-			-	487,500
Contributed services (Note 4)	520,000	-	-	-	-			-	520,000
Net Loss	-	-	-	-	(1,125,348	)		-	(1,125,348	)
Balance at December 31, 2000	2,343,932	-	-	-	(2,366,026	)		-	(22,094	)

Contributed services (Note 4)	720,500	-	-	-	-			-	720,500
Net Loss	-	-	-	-	(990,765	)		-	(990,765	)
Balance at December 31, 2001	3,064,432	-	-	-	(3,356,791	)			(292,359	)

Various dates, payment of expenses by member	257	-	-	-	-			-	257
Contributed services (Note 4)	50,767	-	-	-	-			-	50,767
Net Loss	-	-	-	-	(191,542	)		-	(191,542	)
Balance at December 31, 2002	3,115,456	-	-	-	(3,548,333	)			(432,877	)

Various dates, payment of expenses by member	600	-	-	-	-			-	600
Contributed services (Note 4)	18,749	-	-	-	-			-	18,749
Net Loss	-	-	-	-	(19,349	)		-	(19,349	)
Balance at December 31, 2003	3,134,805	-	-	-	(3,567,682	)			(432,877	)

December 31, 2004, obligation to member contributed to capital	378,462	-	-	-	-			-	378,462
Contributed services (Note 4)	58,651	-	-	-	-			-	58,651
Net Loss	-	-	-	-	(58,651	)		-	(58,651	)
Balance at December 31, 2004	3,571,918	-	-	-	(3,626,333	)		-	(54,415	)


	NCC, LLC Membership		Common Stock		Additional Paid-in		Deficit Accumulated During Develoment		Deferred
	Interests		Shares	Amount	Capital		Stage		Compensation	Total
July 7, 2005, Incorporation of AVRS from NCC LLC membership interests and subsequent merger with Samoyed Energy Corp (Note 1)	(3,571,918	)	93,333,333	93,333	3,478,585		-		-	-

December 20, 2005 1.5 to 1 stock split			46,666,667	46,667	(46,667	)			-
Contributed services (Note 4)	-		-	-	158,648		-		-	158,648
Net Loss	-		-	-	-		(241,957	)	-	(241,957	)
Balance at December 31, 2005	-		140,000,000	140,000	3,590,566		(3,868,290	)		(137,724	)

Contributed services (Note 4)	-		-	-	70,189		-		-	70,189
Net Loss	-		-	-	-		(106,867	)	-	(106,867	)
Balance at December 31, 2006	-		140,000,000	140,000	3,660,755		(3,975,157	)		(174,402	)

Contributed services (Note 4)	-		-	-	83,652		-		-	83,652
Net Loss	-		-	-	-		(122,688	)	-	(122,688	)
Balance at December 31, 2007	-		140,000,000	140,000	3,744,407		(4,097,845	)		(213,438	)

April 28, 2008, Stock issued in recapitalization with Samoyed (Note 1)	-		24,700,008	24,700	(24,700	)	-		-	-
May 27, 2008, Contributed cash (Note 1)	-		-	-	250,000		-		-	250,000
July 21, 2008, Contributed cash (Note 1)	-		-	-	81,000		-		-	81,000
Contributed services (Note 4)	-		-	-	121,077		-		-	121,077
Net Loss	-		-	-	-		(431,022	)	-	(431,022	)
Balance at December 31, 2008	-		164,700,008	164,700	4,171,784		(4,528,867	)	-	(192,383	)


		NCC, LLC Membership	Common Stock				Additional Paid-in		Deficit Accumulated During Development			Deferred
		Interests	Shares		Amount		Capital		Stage			Compensation			Total
Contributed cash for 60,840 shares of common stock (Note 1)		-	-		-		15,210		-			-			15,210
March 18, 2009, 350,000 shares of common stock issued for future services and deferred compensation (Note 1)			350,000		350		87,150		-			(81,181	)		6,319
Contributed services (Note 4)		-	-		-		238,837		-			-			238,837
Contributed cash for 72,880 shares of common stock (Note 1)		-	-		-		18,220		-			-			18,220
Contributed cash for 76,000 shares of common stock (Note 1)		-	-		-		19,000		-			-			19,000
Deferred Compensation (Note 1)		-	-		-		-		-			81,181			81,181
December 8, 2009, 350,000 shares of common stock issued for future services and deferred compensation (Note 1)			350,000		350		62,650					(63,000	)		-

Net Loss		-	-		-		-		(480,390	)		-			(480,390	)
Balance at December 31, 2009	$	-	165,400,008	$	165,400	$	4,612,851	$	(5,009,257	)	$	(63,000	)	$	(294,006	)

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

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows

	FOR THE YEARS ENDED DECEMBER 31,								MARCH 15, 1994 (INCEPTION) THROUGH DECEMBER 31,
	2009				2008				2009
Cash Flows from Operating Activities:
Net loss		$	(480,390	)		$	(431,022	)		$	(5,009,257	)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Amortization			8,060				4,844				47,690
Contributed services			238,837				121,077				2,041,070
Expenses paid in exchange for shareholder debt			—				34,047				34,047
Stock-based compensation expense			87,500				—				87,500
Changes in operating assets:
Prepaid Expenses			2,000				(20,000	)			(18,000	)
Changes in operating liabilities:
Accounts payable			15,528				10,128				84,509
Accrued interest related party			5,004				2,234				7,238

Net cash used in operating activities			(123,461	)			(278,692	)			(2,725,203	)

Cash Flows from Investing Activities:
Purchases of computer equipment and software			(900	)			(4,390	)			(5,290	)
Payments for patents			—				—				(63,247	)
Payments for deferred costs			(3,735	)			(6,244	)			(58,277	)

Net cash used in investing activities			(4,635	)			(10,634	)			(126,814	)

Cash Flows from Financing Activities:
Proceeds from sale of common stock			52,430				331,000				2,586,681
Payments on advances from shareholder			—				(34,047	)			(34,047	)
Payments on promissory note from shareholder			(4,000	)			(5,000	)			(9,000	)
Proceeds from promissory notes and advances			—				—				—
from shareholder			80,000				—				311,344

Net cash provided by financing activities			128,430				291,953				2,854,978

Net change in cash			334				2,627				2,961

Cash at beginning of period			2,627				—				—

CASH AT END OF PERIOD		$	2,961			$	2,627			$	2,961

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest		$	4,409			$	3,459			$	7,868

Income taxes		$	—			$	—			$	—

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

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations

The operations of Advanced Voice Recognition Systems, Inc. (“AVRS” or the “Company”) commenced in 1994 with a predecessor entity called NCC, Inc. NCC, Inc. was incorporated on March 15, 1994 in the State of Ohio. NCC, Inc. operated as a software and hardware development company that marketed voice recognition and transcription products for commercial applications.

In May 2000, WG Investments, LLC acquired the assets of NCC, Inc. and subsequently changed its name to NCC, LLC. NCC, LLC (also a predecessor to AVRS) continued the operations of NCC, Inc. until approximately December 31, 2001, when shifts in the industry’s markets caused NCC, LLC to suspend its operations.

AVRS was incorporated in the State of Colorado on July 7, 2005. In September 2005, the members of NCC, LLC transferred all of their membership interests in NCC, LLC to AVRS in exchange for 93,333,333 shares (post-recapitalization) of AVRS common stock. In December 2005, the Board of Directors approved a 1.5-to-1 stock split issuing 46,666,667 common shares (post-recapitalization), which increased the number of common shares outstanding to 140,000,000 shares (post-capitalization). Following the incorporation of AVRS, the Company initiated a new business plan and intends to continue its operations in the voice recognition and transcription industry.

AVRS specializes in creating interface and application solutions for speech recognition technologies. AVRS has successfully obtained patent protection of its proprietary technology (refer to Note 3, Intangible Assets). The Company is focusing its technologies for the medical profession because of the profession’s present extensive use of dictation and its need for multiple applications of speech recognition technology in the generation of reports, documents and medical bills. Additionally the Company will focus the mobile search and voicemail to text market.

The Company is a development stage enterprise in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises” now referred to as ACS 915 “Development Stage Entities”. The Company has been in the development stage since inception.

Stock Exchange Agreement

On April 28, 2008, the Company entered into a Stock Exchange Agreement with Samoyed Energy Corp., a Nevada corporation (“Samoyed”), which resulted in a reverse acquisition.

The Agreement provided for the reorganization of AVRS with Samoyed. In connection with the Agreement, Samoyed acquired all of the issued and outstanding common shares of AVRS in exchange for 140,000,000 shares of Samoyed’s common stock. At the closing of the Agreement, the former shareholders of AVRS owned approximately 85% of the outstanding common stock of Samoyed, resulting in a change in control.

For accounting purposes, this acquisition has been treated as a reverse acquisition and recapitalization of AVRS, with Samoyed the legal surviving entity. Since Samoyed had, prior to the recapitalization, minimal assets and limited operations, the recapitalization has been accounted for as the sale of 24,700,008 shares of AVRS common stock for the net liabilities of Samoyed. Therefore, the historical financial information prior to the date of the recapitalization is the financial information of AVRS. Costs of the transaction have been charged to the period in which they are incurred.

On May 19, 2008, pursuant to the Stock Exchange Agreement, the Company’s shareholders exchanged with, and transferred to Samoyed, all of the issued and outstanding shares of their capital stock. In exchange, Samoyed exchanged with, and issued to, the Company’s shareholders 85% (140,000,000 shares) of Samoyed’s common stock. In connection with the closing of the Stock Exchange Agreement:

•

Samoyed delivered to AVRS fully executed documents sufficient to evidence the transfer to Stone Canyon Resources, Inc. (“Stone Canyon”) of all of Samoyed’s oil and gas assets, as well as all of the liabilities related to those oil and gas assets, in exchange for the 22,749,998 shares of Samoyed’s common stock then owned by Stone Canyon, which transfer was completed immediately following the closing of the Stock Exchange Agreement. This transfer resulted in the Samoyed shareholders owning 24,700,008 shares of AVRS common stock.

•

Certain shareholders of Samoyed holding an aggregate of 500,000 shares of Samoyed's common stock paid to Samoyed $250,000;

•

A shareholder of Samoyed holding an aggregate of 3,500,000 shares of Samoyed’s common stock agreed to pay to Samoyed an amount equal to $1,750,000 within 90 days of the closing of the Stock Exchange Agreement, or in the alternative, tender to Samoyed for cancellation two shares of Samoyed’s common stock for every $1 not paid. On September 29, 2008, the Company and the shareholder agreed to modify this arrangement to provide that the shareholder would deliver to the Company an aggregate of $1,400,000 on or before November 15, 2008, or in the alternative, tender to the Company for cancellation two and one-half shares (2 ½) of the Company’s common stock for every $1 not paid. On January 13, 2009, the Company and the shareholder agreed to further modify this arrangement such that the shareholder is required to deliver to the Company an aggregate of $875,000 on or before March 31, 2009 or in the alternative tender to the Company for cancellation four shares of the Company’s stock for every $1 not paid. On May 26, 2009 the Company and the shareholder agreed to modify the agreement such that the shareholder is required to deliver to the Company an aggregate of $790,945 on or before August 31, 2009, or in the alternative tender to the Company for cancellation four (4) shares of Company’s common stock for every $1 not paid. On November 18, 2009 the Company and the shareholder agreed to modify the agreement such that the shareholder is required to deliver to the Company an aggregate of $478,606 on or before April 30, 2010, or in the alternative, tender to Company for cancellation 6.45 shares of Company’s common stock for every $1 not paid. In 2009 the shareholder made three payments which totaled $52,430 as of December 31, 2009. The shareholder has not tendered any of the shares of the Company’s common stock held by him for cancellation.

•

Certain shareholders of Samoyed holding shares of Samoyed’s common stock agreed that, commencing on the date the Stock Exchange Agreement closed, and ending on a date one year later, the shareholders will not, without the written consent of Samoyed, (i) sell, offer to sell, contract or agree to sell, hypothecate, hedge, pledge, grant any option to purchase, make any short sale or otherwise dispose of or agree to dispose of, directly or indirectly, certain of their shares of Samoyed’s common stock owned directly by them, or with respect to which they have beneficial ownership within the rules and regulations of the U.S. Securities and Exchange Commission, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of those shares of Samoyed’s common stock owned directly by them, or with respect to which they have beneficial ownership within the rules and regulations of the U.S. Securities and Exchange Commission. On May 19, 2009, one year from the closing date of the Stock Exchange Agreement, the Company released the shares of those certain stock holders.

Stock Purchase Agreement

The Company entered into a Purchase Agreement dated September 24, 2008 with Lion Share Capital, LLC, a Kansas limited liability company, pursuant to which Lion Share issued to the Company a promissory note in the amount of $5,000,000 in exchange for 16,000,000 shares of the Company’s common stock. Pursuant to the Purchase Agreement, Lion Share is required to pay the principal amount of the promissory note, together with all interest thereon in three installments. Lion Share pledged the shares of common stock issued to it pursuant to the Purchase Agreement as collateral to secure Lion Share’s satisfaction of its obligations under the promissory note, and as such, we are holding the 16,000,000 shares in escrow in accordance with the Purchase Agreement. Portions of the shares of common stock pledged as collateral will be released to Lion Share Capital upon the Company’s receipt of the periodic principal and interest payments. As of December 31, 2009 no funds have been received from Lion Share, and the 16,000,000 shares remain held in escrow. The 16,000,000 shares are not considered outstanding at December 31, 2009.

Agreement and Plan of Merger

On March 25, 2009, the Company entered into an Agreement and Plan of Merger (“Agreement and Plan of Merger”) with its wholly-owned subsidiary, NCC, LLC, a Colorado limited liability company, whereby NCC, LLC merged with and into the Company pursuant to Section 92A.180 of the Nevada Business Corporations Act. Upon consummation of the Agreement and Plan of Merger: (i) NCC, LLC ceased to exist; (ii) the Company’s membership interests in NCC, LLC automatically were canceled or retired and ceased to exist, without any consideration delivered in exchange thereof; (iii) the title to all estate, property rights privileges, powers and franchise assets and/or other rights owned by NCC, LLC became vested in the Company without reversion or impairment; and (iv) all liabilities of any kind of NCC, LLC became vested in the Company.

Stock Based Compensation

On March 18, 2009, the Company issued 350,000 restricted shares of the Company’s common stock, par value $.001 per share to Equiti-Trend Advisors LLC as deferred compensation in exchange for public relations services for a period of six months. Shares were valued at $.25 per share on the date as of March 18, 2009 for a total stock compensation of $87,500. On December 8, 2009, the Company issued 350,000 restricted shares of the Company’s common stock, par value $.001 per share to OTC Navigation as deferred compensation in exchange for public relations services for a period of three months. Shares were valued at $.18 per share on the date of issue, December 8, 2009. Deferred compensation of $63,000 has been recorded. Services are to begin January 6, 2010.

Note 2. Significant Accounting Policies

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company is a development stage enterprise with losses since inception and a net capital deficit. These factors, among others, may indicate that the Company will be unable to continue as a going concern for reasonable period of time.

The financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability. During the years ended December 31, 2009 and 2008, the Company’s president has loaned or advanced the Company funds for working capital on an “as needed” basis. There is no assurance that these loans or advances will continue in the future. As a condition to closing the Stock Exchange Agreement with Samoyed on May 19, 2008, the Company and one of its shareholders agreed that the shareholder would provide funds to the Company, or in the alternative tender certain of his shares of the Company’s common stock for cancellation.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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.

Basis of Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, NCC, LLC. Intercompany transactions and balances have been eliminated. The accounts, results of operations and cash flows of acquired companies are included from their respective acquisition dates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents. The Company had cash and cash equivalents at December 31, 2009 of $2,961, and $2,627 cash or cash equivalents at December 31, 2008.

Financial Instruments

The carrying amounts of cash, receivables and current liabilities approximate fair value due to the short-term maturity of the instruments.

Fixed Assets

Fixed assets are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to five years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal.

Revenue Recognition

Revenue from the sale of inventory is recognized on the date of sale, title and risk of loss have transferred to the purchaser, the fees are fixed or determinable and collection is reasonably assured. Revenue from the performance of services is recognized when services have been completed and collection is probable. There are no multiple element sales and no history of material returns.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverst effect on the Company’s financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. The Company did not record a cumulative effect adjustment related to the adoption of ASC 740.

Research and Development Costs

Research and development costs are expensed in the period incurred.

Patents, Deferred Costs and Amortization

Patents consist of costs incurred to acquire issued patents. Amortization commences once a patent is granted. Costs incurred to acquire patents that have not been issued are reported as deferred costs. If a patent application is denied or expires, the costs incurred are charged to operations in the year the application is denied or expires. The Company amortizes its patents over an estimated useful life of twenty years. The carrying value of the first patent is $63,247 with $43,218 amortized and a balance at December 31, 2009 of $20,029. The carrying balance of the second patent is $58,277 with $2,346 amortized and a balance at December 31, 2009 of $ $55,931. The weighted average arrives at a period of 13.75 years based on a period of 16.1 years for patent #1 and 12.4 years for patent #2, weighted for the total amount capitalized on each patent. Amortization expense totaled $6,562 and $4,216 for years ended, December 31, 2009 and 2008, respectively. Estimated aggregate amortization expense for each of the next five years is as follows:

Year ending December 31,

2010	$	8,908
2011		8,908
2012		8,908
2013		8,908
2014		7,857
Thereafter		32,471

	$	75,960

Impairment and Disposal of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets under the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” now referred to as ASC 360-10 Property, Plant, and Equipment – “Impairment or Disposal of Long Lived Assets” subsections” . ASC 306-10 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted future cash flows estimated to be generated by those assets are less than the assets’ carrying amount. If such assets are impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying value or fair value, less costs to sell. During the years ended December 31, 2009 and 2008 and from March 15, 1994 (inception) through December 31, 2009, no impairment charges were recognized based on a review of the carrying amount of each asset to the future undiscounted cash flows.

Loss per Common Share

The Company reports net loss per share using a dual presentation of basic and diluted loss per share. Basic net loss per share excludes the impact of common stock equivalents. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. At December 31, 2009 and 2008, there were no variances between the basic and diluted loss per share as there were no potentially dilutive securities outstanding.

Fair Value of Financial Instruments

Unless otherwise specified, the Company believes the carrying value of financial instruments approximates their fair value.

Subsequent Events

The Company has evaluated all subsequent events through January 26, 2010, the date the financial statements were issued, and no additional items were noted that need to be disclosed (see Note 8).

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“SFAS 168”), now referred to as ASC 105-10, Generally Accepted Accounting Principles. This guidance establishes only two levels of GAAP, authoritative and non-authoritative. This standard establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws remain sources of authoritative GAAP for SEC registrants. ASC 105-10 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of the guidance did not have a material impact on our financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”), now referred to as ASC 855-10. ASC 855-10 incorporates accounting and disclosure requirements related to subsequent events into U.S. GAAP. The guidance establishes general standards of accounting for and disclosure of subsequent events that occur after the balance sheet date. Entities are also required to disclose the date through which subsequent events have been evaluated and the basis for that date. The adoption of the guidance did not have a material impact on the Company’s financial statements. The Company has evaluated subsequent events through the date of issuance, January 18, 2010, the date these financial statements were available to be issued. See Note 8 for more information.

In June 2008, the EITF ratified EITF Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock, now referred to as ASC 815-40-15. ASC 815-40-15 provides guidance in assessing whether derivative instruments meet the criteria in paragraph 11(a) of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, now referred to as ASC 815, for being considered indexed to an entity’s own common stock, which mandates a two-step process for evaluating whether an equity –linked financial instrument or embedded feature is indexed to the entity’s own stock.. ASC 815-40-15 is effective for fiscal years beginning after December 15, 2008. The adoption of the guidance did not have a material impact on the Company’s financial statements.

In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion, now referred to as ASC 470-20. ASC 470-20 requires companies to separately account for the liability (debt) and equity (conversion option) components of convertible debt instruments that require or permit settlement in cash upon conversion in a manner that reflects the issuers’ nonconvertible debt borrowing rate at the time of issuance. ASC 470-20 is effective for fiscal years beginning after December 15, 2008 and may not be adopted early. The adoption of the guidance did not have a material impact on the Company’s financial statement.

Note 3. Intangible and Fixed Assets

Intangible Assets

On November 13, 1995 the Company filed a patent application with the U.S. Patent and Trademark Office, which was granted on September 28, 1999 as patent #5,960,447, “Word Tagging and Editing system for Speech Recognition”. In accordance with 35 USC 154, the term for the above referenced patent shall be for a period beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States. The above referenced U.S. Patent will expire on November 13, 2015.

The Company monitors the anticipated outcome of legal actions, and if it determines that the success of the defense of a patent is probable, and so long as the Company believes that the future economic benefit of the patent will be increased, the Company capitalizes external legal costs incurred in the defense of the patent. Upon successful defense of litigation, the amounts previously capitalized are amortized over the remaining life of the patent.

On July 7, 2009, Patent No.: US 7,558,730 titled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols” was issued by the United States Patent and Trademark Office. In accordance with 35 USC 154, the patent shall be for a term beginning on July 7, 2009 and ending 20 years from the application date of November 27, 2001. The patent will expire on November 27, 2021. The deferred fees were capitalized during the quarter ended September 30, 2009 and the Company began amortization.

	2009				2008

US Patent # 5,960,447		$	63,247			$	63,247
US Patent # 7,558,730			58,277				54,543

			121,524				117,790
Less: Accumulated amortization			(45,564	))			(39,002	)

		$	75.960			$	78,788

Fixed Assets

Fixed assets consist of the following:

	2009				2008

Computer equipment		$	1,650			$	750
Computer software			3,640				3,640

			5,290				4,390
Less: Accumulated depreciation			(2,126	)			(628	)

		$	3,164			$	3,762

Depreciation expense totaled $1,498 and $628, respectively, for the years ended December 31, 2009 and 2008.

Note 4. Related Party Transactions

Contributed Services

During the years from 2000 through 2009 the Company’s officers and employees contributed management services and administrative services. The fair value of those services was recorded in the accompanying financial statements based on the prevailing rates for such services, with a corresponding credit to Additional paid-in capital. Contributed services recorded in the accompanying financial statements consisted of the following:

Year ended December 31,

2000	$	520,000
2001		720,500
2002		50,767
2003		18,749
2004		58,651
2005		158,648
2006		70,189
2007		83,652
2008		121,076
2009		238,837

	$	2,041,069

Indebtedness to Related Parties

During the years from 2000 through 2009, certain officers advanced the Company working capital to maintain the Company’s operations. As of December 31, 2009 and 2008, the Company owed the officers $302,344 and $226,344, respectively. The majority of the balance is owed to the Company’s president and totaled $296,544 and $220,544, respectively, at December 31, 2009 and 2008. Of the amount owed to the Company’s president, $225,544 was converted into a promissory note in May 2008. On April 21, 2009 the Company repaid $2,500 to the Company’s president and on April 24, 2009 repaid $1,500 reducing the note to $216,544. The note carries a 4 percent annual interest rate and matured on July 6, 2009. On July 6, 2009 the Company issued an allonge to the promissory note that extended the maturity date to October 5, 2009. On November 12, 2009 a second allonge to the promissory note extended the maturity date to April 9, 2010. Interest expense related to the note totaled $8,685, of which $6,510 was accrued at December 31, 2009.

Also during 2009, the Company’s president advanced the Company working capital of $80,000 which was converted into a second promissory note in October 2009. The note carries a 4 percent annual interest rate and matures on April 9, 2010. Interest expense related to the note totaled $728 and was accrued at December 31, 2009.

Transactions with Related Parties

On April 6, 2009 AVRS purchased a Gateway E295 C convertible tablet to laptop for testing and demonstration of software. The computer was purchased for $900 from Progressive Technologies, LLC which is owned by Mr. Geldenhuys our President and CEO.

Note 5. Income Taxes

A reconciliation of the U.S. statutory federal income tax rate to the effective rate is as follows:

	December 31,
	2009		2008
U.S. federal statutory graduated rate		31.31%	33.60%
State income tax rate, net of federal benefit		0.00%	0.00%
Contributed services		-16.38%	-9.44%
Costs capitalized under Section 195		-14.93%	-24.16%

Effective rate		0.00%	0.00%

The Company is considered a start-up company for income tax purposes. As of December 31, 2009, the Company had not commenced its trade operations, so all costs were capitalized under Section 195. Accordingly, the Company had no net operating loss carry forwards at December 31, 2009.

Note 6 . Concentration of Risk

On December 31, 2009, the Company had cash balances at one financial institution of $2,961, which amount does not exceed the related federal deposit insurance.

Note 7. Prepaid Expenses

During 2009, the Company paid a $3,000 retainer to our auditors in connection with the 2009 audit. During 2008, the Company paid a $15,000 retainer to a law firm in connection with the Company’s involvement in a patent interference. This interference involves the Company’s claim of ownership of the subject matter of a third party’s patent.

Note 8. Subsequent Events

On January 11, 2010, the Company terminated the Purchase Agreement dated September 24, 2008 with Lion Share Capital LLC, a Kansas Limited liability company. No payments were made by Lion Share. On December 10, 2009 the Company delivered a notice of event of default to Lion Share. On December 18, 2009, the Company delivered a notice of acceleration and an unconditional proposal for strict foreclosure of the Collateral to Lion Share. On January 11, 2010, the Company foreclosed on the Collateral and cancelled the Promissory Note.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A(T). Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer, who also is our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) and pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of December 31, 2009. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the the Exchange Act, such as this Form 10-K, is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms, and that such information is accumulated and is communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our chief executive officer, who also is our chief financial officer, concluded that our disclosure controls and procedures are designed at a reasonable assurance level and were fully effective as of December 31, 2009 in providing reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of its management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management assessed the effectiveness of its internal control over financial reporting as of December 31, 2009. In making this assessment, management used the framework set forth in the report entitled Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on this assessment, our management believes that, as of December 31, 2009, our internal control over financing reporting is effective based on those criteria.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.

Changes in internal control over financial reporting.

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

There were no changes in our internal controls over financial reporting that occurred during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The following table and paragraphs provide the name and age of each of our current directors, executive officers and significant employees, the principal occupation of each during the past five years and, with respect to directors, the year in which the director was first elected as a member of our Board of Directors. Information as to the stock ownership of each of our directors and all of our current executive officers as a group is provided above under “Security Ownership of Certain Beneficial Owners and Management.” There are no family relationships between any director or executive officer. Our directors and officers serve until their respective successors are elected or appointed, as the case may be.

Name of Director(1)	Age	Month and Year Elected as Director	Position with the Company

Walter Geldenhuys	54	May 2008	President, Chief Executive Officer, Chief Financial Officer and Director

Donald Getty	76	December 2007	Director

Diane Jakowchuk	56	—	Secretary, Treasurer and Principal Accounting Officer

Walter Geldenhuys, Director, President and Chief Executive Officer

Mr. Geldenhuys has served as a member of our Board of Directors since May 2008. Mr. Geldenhuys served as the President of Advanced Voice Recognition Systems, Inc., a Colorado corporation, also known as AVRS, from 2005 until AVRS was merged with and into us in June 2008. From 2000 to 2005, Mr. Geldenhuys was a member of NCC, LLC, which became AVRS’s wholly-owned subsidiary in 2005. In addition, Mr. Geldenhuys has owned Progressive Technologies LLC, a design and manufacturing concern, since 2002.

Donald Getty, Director

Mr. Getty has served as a member of our Board of Directors since December 2007. Mr. Getty has served as President of Sunnybank Investments, Ltd., a consulting firm, since 1992. From 1985 to 1992, Mr. Getty served two, four year terms as Premier of Alberta. In addition to acting Premier of Alberta, he held the position of Energy Minister and the position of Minister of Federal and Intergovernmental Affairs during his two terms in office.

Mr. Getty has served as a director and Chairman of the Board of Capital Reserve Canada Limited, a Canadian company, which is a U.S. reporting issuer quoted on the OTCBB, since August 2005. Mr. Getty has served on the board of directors of Globetech Environmental Inc., a company publicly trading on the Pink Sheets, since 2005. Mr. Getty has served on the board of directors of West Isle Energy Inc., a company publicly trading on the Toronto Stock Exchange, since 1997. Mr. Getty has served on the board of directors of the Guyanor Resources SA, a company publicly trading on the Toronto Stock Exchange since 1995. Mr. Getty also serves as a director of Capital Reserve Canada Ltd., a company publicly trading on the OTCBB, and Euro Resources SA, a company publicly trading on the Toronto Stock Exchange. In 1954, Mr. Getty graduated, with honors, from the University of Western Ontario and earned a degree in business administration.

Diane Jakowchuk, Secretary, Treasurer and Principal Accounting Officer

Ms. Jakowchuk has served as our Secretary, Treasurer and Principal Accounting Officer since May 2008. Ms. Jakowchuk was a member of NCC, LLC, which became AVRS’s wholly-owned subsidiary in 2005. Ms. Jakowchuk has worked in the accounting and sales departments of ADCO Paint & Supply, a retail coating company, since July 2006. Between December 2004 and July 2006, Ms. Jakowchuk served as office manager for a retail hardware company. From December 2001 to December 2004, Ms. Jakowchuk served as the State Victim Assistance Coordinator for MADD Victim Services.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and designated officers to file reports of ownership and changes in ownership of our equity securities with the Securities and Exchange Commission. Based solely on our review of the copies of such forms that we have received and on written representations from reporting persons, we believe that during the fiscal year ended December 31, 2009, all reporting persons complied with all applicable filing requirements.

Corporate Governance, Code of Ethics

We are committed to maintaining sound corporate governance practices. These practices are essential to running our business efficiently and to maintaining our integrity in the marketplace. Our Board of Directors is responsible for providing effective governance oversight over our affairs. Our corporate governance practices are designed to promote honesty and integrity throughout our company.

We have adopted a Code of Ethics applicable to anyone who serves as our Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller. A copy of the Company’s Code of Ethics is incorporated by reference to this Form 10-K as Exhibit 14.1.

Audit Committee

The entire Board of Directors operates as the Audit Committee. We currently do not have a written audit committee charter or similar document. When the audit committee is formed, we intend to have a designated audit committee “financial expert” who will be responsible for reviewing the results and scope of the audit, and other services provided by the independent auditors, and review and evaluate the system of internal controls.

Item 11. Executive Compensation.

Summary Compensation Table

The following table sets forth all compensation paid to our principal executive officer and those individuals who received compensation in excess of $100,000 per year (collectively, the “Named Executive Officers”) for our last two completed fiscal years. Walter Geldenhuys, our President, Chief Executive Officer and Chief Financial Officer, and Diane Jakowchuk, our Secretary, Treasury and Principal Accounting Officer, have contributed their services free of charge during our last two completed fiscal years, as reflected in the following table.

Summary Compensation Table

A Name and Principal Position with AVRS	B Year	C Salary ($)	D Bonus ($)		E Stock Awards	F Option Awards ($)	G Non-Equity Incentive Plan Compensation ($)	H Nonqualified Deferred Compensation Earnings ($)	I All Other Compensation ($)	J Total

Walter Geldenhuys,	2009	0		0	0	0	0	0	0	0
President, CEO, CFO Director (1)	2008	0		0	0	0	0	0	0	0

Diane Jakowchuk,	2009	0		0	0	0	0	0	0	0
Principal Accounting Officer(2)	2008	0		0	0	0	0	0	0	0

1 Mr. Geldenhuys was appointed to our Board of Directors and as our President, Chief Executive Officer and Chief Financial Officer in May 2008. Mr. Geldenhuys also served as the President, Chief Executive Officer and Director of AVRS during the year ended December 31, 2007 and until AVRS merged with and into us in June 2008. The amounts reflected in this table include compensation Mr. Geldenhuys received as President, Chief Executive Officer and Director of AVRS in 2008 and 2009.

2 Ms. Jakowchuk was appointed as our Secretary, Treasurer and Principal Accounting Officer in May 2008. The amounts reflected in this table include compensation Ms. Jakowchuk received as Secretary, Treasurer and Principal Accounting Officer.

Salary (Column C)

The amounts reported in column C represent base salaries paid to each of the Named Executive Officers for the relevant fiscal year.

Bonus (Column D)

The amounts reported in column D represent the cash bonuses paid each of the Named Executive Officers for the relevant fiscal year.

Option Awards (Column F)

The amounts reported in column F represent the dollar amount of stock option awards recognized for each of the Named Executive Officers as compensation costs for financial reporting purposes (excluding forfeiture assumptions) in accordance with FAS 123(R) for the relevant fiscal years.

Effective January 1, 2006, we adopted the provisions of SFAS No. 123(R), which requires the measurement and recognition of compensation expense for all share-based payment awards (including stock options) made to employees and directors based on estimated fair value. We previously accounted for the stock options under the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure now known as ASC 718 “Compensation – Stock Compensation.”

The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on implied volatilities from similar companies that operate within the same industry sector index. We calculated the historical volatility for each comparable company to come up with an expected average volatility and then adjusted the expected volatility based on factors such as historical stock transactions, major business transactions, and industry trends. The expected terms of the options are estimated based on factors such as vesting periods, contractual expiration dates and historical exercise behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

We do not have written employment agreements or other employment arrangements with any of our executive officers. Our Board of Directors is evaluating the appropriate terms and conditions for the employment of our executive officers.

Outstanding Equity Awards At Fiscal Year End

We do not have any unexercised stock options outstanding for any of our Named Executive Officers.

Director Compensation

We have made no arrangements for the remuneration of our directors, except that they will be entitled to receive reimbursement for actual, demonstrable out –of –pocket expenses, including travel expenses, if any, made on our behalf. No remuneration has been paid to our directors for services to date.

The following table sets forth all compensation paid to our directors for the last completed fiscal year.

Name(1)	Fees Earned Or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)

Walter Geldenhuys(1)	0	0	0	0	0	0	0

Donald Getty(2)	0	0	0	0	0	0	0

1 Mr. Geldenhuys was appointed to our Board of Directors in May 2008. Mr. Geldenhuys also served as a Director of AVRS during the year ended December 31, 2007 and until AVRS merged with and into us in June 2008. Mr. Geldenhuys did not receive any compensation during the year ended December 31, 2009 for his service as one of our Directors or as a Director of AVRS.

2 Mr. Getty was appointed to our Board of Directors in December 2007. Mr. Getty also served as a Director of AVRS during the year ended December 31, 2007 and until AVRS merged with and into us in June 2008. Mr. Getty did not receive any compensation during the year ended December 31, 2009 for his service as one of our Directors or as a Director of AVRS.

Compensation Committee Interlocks and Insider Participation

As AVRS has not paid any compensation to its executive officers, we do not have a compensation committee.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information with respect to the beneficial ownership of shares of our common stock as of February 26, 2010, unless otherwise indicated, (i) individually by our Chief Executive Officer and each of our other executive officers and by each of our directors, (ii) by all our executive officers and directors as a group, and (iii) by each person known to us to be the beneficial owner of more than five percent of the outstanding shares of our common stock. Except as noted in the footnotes below, each of the persons listed has sole investment and voting power with respect to the shares indicated. The information in the table is based on information available to us. The total number of shares of common stock outstanding on February 26, 2010 was 165,400,008.

Beneficial Owner(1)	Amount and Nature Of Beneficial Ownership		Percentage of Common Stock Outstanding

†Walter Geldenhuys, President, Chief Executive Officer, Chief Financial Officer and Director 112 E. Spruce Street Mitchell, SD 57301	51,541,520	(2)	31	.16%

Donald Getty, Director 1273 Potters Green Edmonton, Alberta, Canada	1,000,000	(3)	*	%

Diane Jakowchuk, Secretary, Treasurer and Principal Accounting Officer 7659 E. Wood Drive Scottsdale, AZ 85260	4,000,000		2	.42%

All directors and executive officers as a group (three persons)	56,541,520		34	.18%

Blake Thorshov 220 Rock Falls Road Arroyo Grande, CA 93420	35,000,000		21	.16%

Douglas Holt 1465 E. Tierra Street Gilbert, AZ 85296	13,960,000		8	.44%

Joseph Miglietta 2464 Coral Ridge Circle Melbourne, FL 3295	13,935,000		8	.42%

Michael Davis 1933 E. McDowell Rd Phoenix, AZ 85006	13,887,800		8	.39%

† Named executive officer.

* Less than 1% of the outstanding common stock.

(1)

“Beneficial ownership” is defined in the regulations promulgated by the SEC as (A) having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer; or (B) directly or indirectly creating or using a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting such person of beneficial ownership of a security or preventing the vesting of such beneficial ownership. Unless otherwise indicated, the beneficial owner has sole voting and investment power.

(2)	This amount includes 94,000 shares of common stock held by Mr. Geldenhuys’ daughter, of which Mr. Geldenhuys may be deemed to have indirect ownership because he is his daughter’s custodian.

(3)	This amount represents 1,000,000 shares held by Sunnybank Investments Ltd., a consulting company of which Mr. Getty is President. Mr. Getty holds exclusive voting and investment power with respect to our securities held by Sunnybank Investments Ltd.

Securities Authorized for Issuance under Equity Compensation Plans

We currently do not have any securities authorized for issuance under an equity compensation plan.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Transactions with Related Persons

On May 20, 2008, AVRS made a promissory note (the “Promissory Note”) in the amount of $225,544 payable to Walter Geldenhuys, our President, Chief Executive Officer, Chief Financial Officer and Director for loans made by him to AVRS. The promissory note matures on July 6, 2009, and accrues interest at a rate of 4% per annum. On July 6, 2009, the Company issued an allonge to Promissory Note that extended the maturity date to October 5, 2009. On April 21, 2009, the Company repaid $2,500 to Mr. Geldenhuys and on April 24, 2009 repaid $1,500 reducing the note to $216,544. On November 12, 2009, a second allonge to the Promissory Note was issued with maturity date April 9, 2010. Interest expense related to the Promissory Note totaled $8,685, of which $6,510 was accrued at December 31, 2009. Also during 2009 Mr. Geldenhuys advanced the Company working capital of $80,000 which was converted into a promissory note in October 2009. This note also carries a 4% annual interest rate and matures on April 9, 2010. Interest expense related to the note was $728 accrued at December 31, 2009.

Aside from the relevant provisions of the Nevada Revised Statutes and other applicable laws, we currently do not have a formal policy or procedure for the review, approval or ratification of related party transactions.

Director Independence

Our Board of Directors affirmatively determines the independence of each director and nominee for election as a director, and has adopted the independence standards of the NASDAQ Capital Market, LLC. At this time, the Board of Directors has determined that Donald Getty, a non-employee director, is independent and has no relationship with us, except as a director and stockholder.

Item 14. Principal Accounting Fees and Services.

The following table sets forth the fees billed to us for professional services rendered by our principal accountant for years ended December 31, 2009 and December 31, 2008.

Services	2009		2008

Audit Fees		6,881		14,706
Audit Related Services		3,915		—
Tax Fees		—		800
Total Fees		10,796		15,506

Audit fees consist of fees for the audit of our financial statements. Audit related services include review of our financial statements and quarterly reports that are not reported as audit fees. Tax fees included tax planning and various taxation matters.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Exhibit

Description

2.1	Stock Exchange Agreement dated April 14, 2008, between Samoyed Energy Corp. and Certain Shareholders of Advanced Voice Recognition Systems, Inc.(1)
2.2	Agreement and Plan of Merger between Samoyed Energy Corp. and Advanced Voice Recognition Systems, Inc.(2)
2.3	Agreement and Plan of Merger between Advanced Voice Recognition Systems, Inc. and NCC, LLC(1)(2)
3.1	Articles of Incorporation(3)
3.2	Certificate of Change to Articles of Incorporation(4)
3.3	Bylaws(3)
10.1	Letter of Intent dated January 1, 2008 between Samoyed Energy Corp. and Advanced Voice Recognition Systems, Inc.(5)
10.2	Termination Agreement dated January 22, 2008 between Samoyed Energy Corp. and 313866 Alberta Ltd.(6)
10.3	Extension of Letter of Intent dated March 28, 2008 between Samoyed Energy Corp. and Advanced Voice Recognition Systems, Inc.(7)
10.4	Purchase and Sale Agreement dated May 15, 2008 between Samoyed Energy Corp. and Stone Canyon Resources, Inc.(8)
10.5	Promissory Note dated May 13, 2008 made by Advanced Voice Recognitions, Inc. to Walter Geldenhuys(9)
10.6	Form of Lock-Up Agreement(9)
10.7	Purchase Agreement dated September 24, 2008 between Advanced Voice Recognition Systems, Inc. and Lion Share Capital LLC(10)
10.8	Letter Agreement dated September 29, 2008 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee(10)
10.9	Letter Agreement dated January 13, 2009 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee(11)
10.10	Letter Agreement dated March 18, 2009 between Advanced Voice Recognition Systems, Inc. and Equiti-trend Advisors, LLC (12)
10.11	Letter Agreement dated May 26, 2009 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee (13)
10.12	Allonge to Promissory Note dated July 6, 2009 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (14)
10.13	Promissory Note dated October 9, 2009 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (16)
10.14	Second Allonge to Promissory Note dated November 13, 2009 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (17)
10.15	Letter Agreement dated November 18, 2009 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee (18)
10.15	Letter Agreement dated December 9, 2009 between Advanced Voice Recognition Systems, Inc. and OTC Navigation (19)
14.1	Code of Ethics(15)
21.1	Subsidiaries of the Registrant(15)
31.1	Section 302 Certification - Principal Executive Officer(20)
31.2	Section 302 Certification - Principal Financial Officer(20)
32.1	Certification Pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(20)

(1) Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 1, 2008.

(2) Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 10, 2008.

(3) Incorporated by reference from the Company’s Registration Statement on Form SB-2 filed on October 31, 2005.

(4) Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 18, 2007.

(5) Incorporated by reference from the Company’s Current Report on Form 8-K filed on February 4, 2008.

(6) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on February 14, 2008.

(7) Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 31, 2008.

(8) Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 21, 2008.

(9) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on August 14, 2008.

(10) Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 1, 2008.

(11) Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 20, 2009.

(12) Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 23, 2009

(13) Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 1, 2009

(14) Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 14, 2009

(15) Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 30, 2009

(16) Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 15, 2009

(17) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 13, 2009

(18) Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 23, 2009

(19) Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 13, 2009

(20) Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, this 26 day of February, 2010.

	ADVANCED VOICE RECOGNITION SYSTEMS, INC.

	/s/ Walter Geldenhuys
	Walter Geldenhuys, President, Chief Executive Officer, Principal Executive Officer, Chief Financial Officer, Principal Financial Officer, Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/Walter Geldenhuys Walter Geldenhuys	President, Chief Executive Officer, Principal Executive Officer, Chief Financial Officer, Principal Financial Officer, and Director	February 26, 2010

/s Diane Jakowchuk Diane Jakowchuk	Secretary, Treasurer, Principal Accounting Officer	February 26, 2010

/s/Donald Getty Donald Getty	Director	February 26, 2010

INDEX

Exhibit

Description

2.1	Stock Exchange Agreement dated April 14, 2008, between Samoyed Energy Corp. and Certain Shareholders of Advanced Voice Recognition Systems, Inc.(1)
2.2	Agreement and Plan of Merger between Samoyed Energy Corp. and Advanced Voice Recognition Systems, Inc.(2)
2.3	Agreement and Plan of Merger between Advanced Voice Recognition Systems, Inc. and NCC, LLC(1)(2)
3.1	Articles of Incorporation(3)
3.2	Certificate of Change to Articles of Incorporation(4)
3.3	Bylaws(3)
10.1	Letter of Intent dated January 1, 2008 between Samoyed Energy Corp. and Advanced Voice Recognition Systems, Inc.(5)
10.2	Termination Agreement dated January 22, 2008 between Samoyed Energy Corp. and 313866 Alberta Ltd.(6)
10.3	Extension of Letter of Intent dated March 28, 2008 between Samoyed Energy Corp. and Advanced Voice Recognition Systems, Inc.(7)
10.4	Purchase and Sale Agreement dated May 15, 2008 between Samoyed Energy Corp. and Stone Canyon Resources, Inc.(8)
10.5	Promissory Note dated May 13, 2008 made by Advanced Voice Recognitions, Inc. to Walter Geldenhuys(9)
10.6	Form of Lock-Up Agreement(9)
10.7	Purchase Agreement dated September 24, 2008 between Advanced Voice Recognition Systems, Inc. and Lion Share Capital LLC(10)
10.8	Letter Agreement dated September 29, 2008 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee(10)
10.9	Letter Agreement dated January 13, 2009 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee(11)
10.10	Letter Agreement dated March 18, 2009 between Advanced Voice Recognition Systems, Inc. and Equiti-trend Advisors, LLC (12)
10.11	Letter Agreement dated May 26, 2009 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee (13)
10.12	Allonge to Promissory Note dated July 6, 2009 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (14)
10.13	Promissory Note dated October 9, 2009 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (16)
10.14	Second Allonge to Promissory Note dated November 13, 2009 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (17)
10.15	Letter Agreement dated November 18, 2009 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee (18)
10.15	Letter Agreement dated December 9, 2009 between Advanced Voice Recognition Systems, Inc. and OTC Navigation (19)
14.1	Code of Ethics(15)
21.1	Subsidiaries of the Registrant(15)
31.1	Section 302 Certification - Principal Executive Officer(20)
31.2	Section 302 Certification - Principal Financial Officer(20)
32.1	Certification Pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(20)