10-K

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, 2012      

Or

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). xYes    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. x

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 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 $3,047,134 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 March 1, 2013 was 204,282,865.

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

TABLE OF CONTENTS

		PAGE
	PART I
Item 1.	Business	1
Item 2.	Property	4
Item 3.	Legal Proceedings	5
Item 4.	Submission of Matters to a Vote of Security Holders	5
	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
Item 6.	Selected Financial Data	6
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	6
Item 8.	Financial Statements and Supplementary Data	9
Item 9.	Controls and Procedures	26
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	28
Item 11.	Executive Compensation	29
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
Item 13.	Certain Relationships and Related Transactions, and Director Independence	32
Item 14.	Principal Accounting Fees and Services	32
	PART IV
Item 15	Exhibits, Financial Statement Schedules	33
EX 31.1

EX 31.2

EX 32.1

 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.

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.  We have increased our efforts to monetize our assets.  We are currently engaged in discussions with certain firms dedicated to assisting in the commercialization of intellectual assets.

Our principal assets are our patents.  We currently hold four issued patents.  Our first patent, U.S. Patent #5,960,447 entitled “Word Tagging and Editing system for Speech Recognition” includes 42 claims covering an extremely broad base of features applicable to existing ASR products and markets.  Our second patent, U.S. Patent #7,558,730 entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols” discloses a system for facilitating speech recognition and transcription among users employing incompatible protocols for generating, transcribing and exchanging speech.  Our third patent U.S. Patent #7,949,534 is an expansion of the coverage of AVRS’s second patent and incorporates speech recognition and transcription among transcription engines employing incompatible protocols.  Our fourth patent U.S. Patent #8,131,557 is an expansion of the coverage of AVRS’s second and third patents and incorporates speech recognition and transcription among transcription engines employing incompatible protocols for generating, transcribing, and exchanging speech among users employing incompatible protocols utilizing peer-to-peer networks, node-to-node networks, and the cloud. Our business strategy will be to attempt to interest other companies in entering into license agreements or other strategic relationships and to enforce 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 including but not limited to dictation and transcription, mobile messaging (voice to texting), server based web search, customer relations and translation.

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, Google Voice and Apple. 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 methods that will minimize the burden on the user as well as the efficiency and scalability of users having heterogeneous protocols.

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, Vista and Windows 7 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 is designed to allow 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

AVRS patented technology is applicable to many main stream speech enabled applications ranging from traditional desktop applications to mobile and web-based solutions.  The technology reaches beyond simple speech recognition and transcription into many other applications thus enabling the exchange of spoken text transcription amongst numerous users on diverse system platforms, as well as enabling the transcribed text to be utilized by many interface applications.  The key is the recognition of and in many cases the transcription of spoken text in a myriad of applications to allow a seamless interface among users and /or systems having disparate protocols.  Recognition of dictated speech including spoken text and commands, over many platforms provides operations of systems having diverse requirements and capabilities.

AVRS patents cover both a method of implementation and a system whereby speech recognition and transcription can be operated upon and exchanged amongst users employing disparate legacy protocols through one or more transaction managers having a systems protocol.  An underlying key factor in all AVRS patented technology lies in its enabling capability whereby any legacy application protocol can be made compatible with speech recognition and transcription engines with or without modification of the application or the protocol upon which the initiating or the receiving application relies.

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.

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 in 1994. 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.

Intellectual Property

Our primary assets are United States Patent #5,960,447, United States Patent #7,558,730, United States Patent #7,949,534 and United States Patent #8,131,557.  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 or other program being used.

U.S. Patent #7,558,730 titled, “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols”, was 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. We expect this patent to strengthen our position in voice recognition.

On May 24, 2011 Patent No. US 7,949,534 was issued by the United States Patent and Trademark Office. In accordance with 35 USC 154, the patent shall be for a term beginning May 24, 2011 and ending 20 years from the application date of the parent application (US Patent No. #7,558,730) of November 27, 2001.  The patent will expire on November 27, 2021.  The deferred fees were capitalized during the quarter ended June 30, 2011 and the Company began amortization.

On March 6, 2012 Patent No. US 8,131,557 was issued by the United States Patent and Trademark Office. In accordance with 35 USC 154, the patent shall be for a term beginning March 6, 2012 and ending 20 years from the application date of the parent application (US Patent No. #7,558,730) of November 27, 2021.  The patent will expire on November 27, 2021. The deferred fees were capitalized during the quarter ended March 31, 2012 and the Company began amortization.

On March 9, 2010 the United States Patent and Trademark Office (“USPTO”) declared an interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party.  The Interference Proceeding is a proceeding conducted by the USPTO in instances where two or more parties claim patent rights to the same technology. The U.S. patent system awards patents to the first party to invent a particular technology.  In an interference, the primary purpose of the USPTO is to determine which party invented the technology first, and to award the patent to that party.  On January 13, 2011 the Board of Patent Appeals and Interferences (“BPAI”) heard oral arguments in the Interference Proceeding.  On April 27, 2012, the BPAI denied the Company’s motions.  On May 28, 2012 the Company filed a request for rehearing in the BPAI.  On December 19, 2012 the BPAI denied the Company’s request for rehearing.  Further options included filing an appeal to the Court of Appeals or filing a civil suit. The Company decided that further litigation would be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

Research and Development

During fiscal years 2012 and 2011, we did not incur any expense for research and development activities.

Employees

We currently have two employees, Diana Jakowchuk our Secretary, Treasurer and Principal Accounting Officer and Walter Geldenhuys, our President, Chief Executive Officer and Chief Financial Officer. 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:

Diana Jakowchuk

Secretary, Treasurer, Principal Accounting Officer

AVRS, Inc.

7659 E. Wood Drive

Scottsdale, AZ 85260

Our website is located at www.avrsys.comC:\AVRS Documents\10K requirements 12-31-2011\10K Doc\www.avrsys.com. Information contained on our website is not a part of, and is not incorporated into this Annual Report on Form 10-K.  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 at www.sec.com 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.

On March 9, 2010 the USPTO declared interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party.  The Company retained a law firm for representation in the interference.  Oral arguments before a three member panel of judges occurred on January 13, 2011.  On April 27, 2012, the BPAI denied the Company’s motions.  On May 28, 2012 the Company filed a request for rehearing in the BPAI.  On December 19, 2012 the BPAI denied the Company’s request for rehearing.

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.

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 2012 and 2011. 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, 2012		0.03			0.03
Three Months Ended September 30, 2012		0.04			0.03
Three Months Ended June 30, 2012		0.05			0.05
Three Months Ended March 31, 2012		0.10			0.10
Three Months Ended December 31, 2011		0.07			0.04
Three Months Ended September 30, 2011		0.07			0.07
Three Months Ended June 30, 2011		0.09			0.09
Three Months Ended March 31, 2011		0.08			0.08

Holders

As of December 31, 2012, we have approximately 61 holders of record of our common stock and 204,282,865 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. 67thPlace, Scottsdale, AZ 85251.

Dividends

We have not declared any cash dividends, nor do we have any current plans 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.  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.

As a "smaller  reporting  company" as defined by Item 10 of Regulation  S-K, we are not required to provide information required by this Item.

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 (March 15, 1994).

At December 31, 2012, we had current assets of $76,520, and current liabilities of $215,523, as compared to $13,405 current assets and $276,053 in current liabilities at December 31, 2011. Our increase in current assets is primarily attributable to sales of shares of our Common Stock. Our decrease in current liabilities primarily is due to the decreased professional fees incurred in connection with the interference proceedings in the USPTO.

We had a net loss of $419,900 for the year ended December 31, 2012, as compared to a net loss of $414,330 for the year ended December 31, 2011. The increase in net loss is primarily attributable to the increase in legal and accounting fees during the course of the year ended December 31, 2012.

Liquidity and Capital Resources

During the year ended December 31, 2012, we used $469,447 of cash in operating activities and $5,438 of cash in investing activities, as we received $538,000 of cash from the sale of shares of our common stock. As a result, for the year ended December 31, 2012, we recognized a $63,115 net increase in cash on hand. For the year ended December 31, 2011, we used $494,950 of cash in operating activities and $25,780 of cash in investing activities, and received net cash of $405,575 provided by financing activities, resulting in a $115,155 decrease in cash on hand for the year.

During the years ended December 31, 2012 and 2011, 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, we have made sales of our common stock in private transactions.

We entered into Stock Purchase Agreements for the sale of our common stock in 2010 pursuant to which we received $420,000 in 2010 and $150,000 in proceeds.

We entered into a Stock Purchase Agreement dated March 9, 2011 with one person who agreed to purchase 4,375,000 restricted shares of the common stock of AVRS for $350,000.  Payment was made in full on March 10, 2011.

During the twelve months ended December 31, 2012, we entered into Stock Purchase Agreements for the private sale to four persons or entities of an aggregate of 11,640,000 shares of the common stock for aggregate proceeds of $532,000.  All of the proceeds were paid during the 12 months ended December 31, 2012.

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 incurred substantial legal fees and costs in connection with the interference proceeding with Allvoice, and we will likely continue to incur expenses in defending our patents and pursuing license agreements.  We plan to raise additional funds through future sales of our securities, 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.

We have increased our efforts to monetize our assets.  We are currently engaged in discussion with certain firms dedicated to assisting in the commercialization of intellectual assets.

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.  Costs totaling $58,277 have been capitalized and amortization began in the third quarter 2009.

U.S. Patent #7,949,534 is an expansion of the coverage of AVRS’s second patent and incorporates speech recognition and transcription among transcription engines employing incompatible protocols.  Costs totaling $3,365 have been capitalized and amortization began in the second quarter 2011.

U.S. Patent #8,131,557 is an expansion of AVRS’s second and third patent.  Costs totaling $5,092 have been capitalized and amortization began in the first quarter 2012.

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.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Item 8. Financial Statements and Supplementary Data.

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Advanced Voice Recognition Systems:

We have audited the accompanying balance sheets of Advanced Voice Recognition Systems (“the Company”) as of December 31, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit. 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advanced Voice Recognition Systems, as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles in the United States of America.

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 Company's internal control over financial reporting.  Accordingly, we express no such opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Borgers & Cutler CPA’s PLLC

Borgers & Cutler CPA’s PLLC
Denver, CO
March 5, 2012

ADVANCED VOICE RECOGNITION SYSTEMS, INC.

(A Development Stage Company)

Consolidated Balance Sheets

		DECEMBER 31,		DECEMBER 31,
		2012		2011
ASSETS
Current Assets
Cash	$	76,520	$	13,405
Prepaid Expenses (Note 7)		—		—
Total Current Assets		76,520		13,405
Fixed Assets (Note 2)
Computer software and equipment, net		4,333		1,982
Total Fixed Assets		4,333		1,982
Intangible Assets
Patent, net (Note 3)		56,709		61,274
Deferred costs		18,495		21,826
Total Intangible Assets		75,204		83,100
Total Assets	$	156,057	$	98,487
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	209,702	$	239,821
Payroll		21		30,432
Accrued interest to related party (Note 4)		—		—
Indebtedness to related parties (Note 4)		5,800		5,800
Total Current Liabilities		215,523		276,053
Stockholders' Deficit (Note 1)
Common stock, $.001 par value; 547,500,000 shares authorized
204,282,865 and 192,642,865, issued and outstanding respectively	$	204,283	$	192,643
Additional paid-in capital		7,485,100		6,958,740
Deficit accumulated during development stage		(7,748,849)		(7,328,949)
Total Stockholders' Deficit		(59,466)		(177,566)
Total Liabilities and Stockholders' Deficit	$	156,057	$	98,487

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				THROUGH
		DECEMBER 31,				DECEMBER 31,
		2012		2011		2012
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)		—		61,536		2,317,982
General and administrative:
Compensation		268,610		176,891		1,056,674
Stock Based Compensation		—		—		150,500
Professional fees		116,989		138,939		1,551,314
Office		19,212		17,174		315,672
Rent		—		—		157,356
Travel		3,336		6,667		158,181
Advertising		—		—		81,090
Bad debt expense		—		—		67,217
Other		11,753		11,877		421,362
Impairment of Deferred Costs		—		—		1,068,860
Total operating expenses		419,900		413,084		8,535,739
Loss from operations		(419,900)		(413,084)		(7,673,193)
Other income and (expense):
Investment Income		—		—		5,062
Interest expense		—		(1,246)		(67,215)
Loss on sale of assets		—		—		(13,503)
Net other expense		—		(1,246)		(75,656)
Loss before income taxes		(419,900)		(414,330)		(7,748,849)
Provision for income taxes (Note 5)		—		—		—
Net Loss	$	(419,900)	$	(414,330)	$	(7,748,849)
Basic and diluted loss per common share	$	(0)	$	(0)
Weighted average number of common shares outstanding		200,442,427		191,296,975

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

										Deficit
										Accumulated
		NCC, LLC					Additional			During
		Membership	Common Stock				Paid-in			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)
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)
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)			-		-		-
Proceeds from shareholder to retain common shares under Stock Exchange Agreement (Note 1)		-	-		-		331,000			-		-		331,000
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)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement (Note 1)		-	-		-		52,430			-		-		52,430
March 18, 2009, 350,000 shares of common stock issued for future services and stock based compensation (Note 1)			350,000		350		87,150			-		(81,181)		6,319
Contributed services (Note 4)		-	-		-		238,837			-		-		238,837
Stock Based 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)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement (Note 1)		-	-		-		153,332			-		-		153,332
March 11,02010 2,000,000 shares of common stock issued for stock purchase agreement		-	2,000,000		2,000		98,000			-		-		100,000
March 15, 2010 1,000,000 shares of common stock issued for stock purchase agreement		-	1,000,000		1,000		49,000			-		-		50,000
Stock Based Compensation		-	-		-					-		63,000		63,000
April 19, 2010 1,000,000 shares of common stock issued for stock purchase agreement		-	1,000,000		1,000		49,000			-		-		50,000
May 5, 2010 250,000 shares of common stock issued for stock purchase agreement		-	250,000		250		19,750			-		-		20,000
May 17, 2010 1,000,000 shares of common stock issued for stock purchase agreement		-	1,000,000		1,000		49,000			-		-		50,000
May 19, 2010 1,000,000 shares of common stock issued for stock purchase agreement		-	1,000,000		1,000		49,000			-		-		50,000
July 9, 2010 2,000,000 shares of common stock issued for stock purchase agreement		-	2,000,000		2,000		98,000			-		-		100,000
July 26, 2010 600,000 shares of common stock issued for stock purchase agreement		-	600,000		600		49,400			-		-		50,000
August 28, 2010 1,250,000 shares of common stock issued for stock purchase agreement		-	1,250,000		1,250		98,750			-		-		100,000
September 2, 2010 250,000 shares of common stock issued for stock purchase agreement		-	250,000		250		19,750			-		-		20,000
September 3, 2010 625,000 shares of common stock issued for stock purchase agreement		-	625,000		625		49,375			-		-		50,000
September 24, 2010 375,000 shares of common stock issued for stock purchase agreement		-	375,000		375		29,625			-		-		30,000
October 19, 2010 250,000 shares of common stock issued for stock purchase agreement		-	250,000		250		19,750			-		-		20,000
October 20, 2010 2,142,857 shares of common stock issued for stock purchase agreement		-	2,142,857		2,143		147,857			-		-		150,000
October 27, 2010 5,250,000 shares of common stock issued for stock purchase agreement		-	5,250,000		5,250		414,750			-		-		420,000
November 4, 2010 2,000,000 shares of common stock issued for stock purchase agreement		-	2,000,000		2,000		158,000			-		-		160,000
Contributed services (Note 4)		-	-		-		215,376			-		-		215,376
Net Loss										(1,905,362)				(1,905,362)
Balance at December 31, 2010	$		186,392,865	$	186,393	$	6,380,566		$	(6,914,619)	$	-	$	(347,660)
March 9, 2011 4,375,000 shares of common stock issued for stock purchase agreement			4,375,000		4,375		345,625	#						350,000
Proceeds from shareholder to retain common shares under Stock Exchange agreement (Note 1)							22,888							22,888
April 19, 2011 1,875,000 shares of common stock issued for stock purchase agreement			1,875,000		1,875		148,125							150,000
Contributed services (Note 4)							61,536							61,536
Net Loss										(414,330)				(414,330)
Balance at December 31, 2011	$		192,642,865	$	192,643	$	6,958,740		$	(7,328,949)	$	-	$	(177,566)
January 10, 2012 5,000,000 shares of common stock issued for stock purchase agreement			5,000,000		5,000		195,000							200,000
Proceeds from shareholder to retain common shares under Stock Exchange agreement (Note 1)							6,000							6,000
January 25, 2012 2,040,000 shares of common stock issued for stock purchase agreement			2,040,000		2,040		99,960							102,000
August 17, 2012 2,000,000 shares of common stock issued for stock purchase agreement			2,000,000		2,000		98,000							100,000
November 21, 2012 200,000 shares of common stock issued for stock purchase agreement			200,000		200		9,800							10,000
November 23, 2012 2,400,000 shares of common stock issued for stock purchase agreement			2,400,000		2,400		117,600							120,000
Net Loss										(419,900)				(419,900)
Balance at December 31, 2012	$		204,282,865	$	204,283	$	7,485,100		$	(419,900)	$	-	$	(59,466)

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

						MARCH 15, 1994
						(INCEPTION)
		FOR THE YEARS ENDED				THROUGH
		DECEMBER 31,				DECEMBER 31,
		2012		2011		2012
Cash Flows from Operating Activities:
Net loss	$	(419,900)	$	(414,330)	$	(7,748,849)
Adjustments to reconcile net loss to net
Cash (used in) operating activities:
Amortization and depreciation		10,983		10,487		79,611
Contributed services		—		61,536		2,317,982
Expenses paid in exchange for shareholder debt		—		—		34,047
Disposal of fixed asset loss		—		495		495
Stock-based compensation expense		—		—		150,500
Changes in operating assets:
Prepaid Expenses		—		130,000		—
Changes in operating liabilities:
Accounts payable		(60,530)		(281,555)		209,723
Accrued interest related party		—		(1,583)		—
Net cash used in operating activities		(469,447)		(494,950)		(4,956,491)
Cash Flows from Investing Activities:
Purchases of computer equipment and software		(3,678)		(2,200)		(11,168)
Payments for patents		(5,092)		(3,365)		(129,981)
Payments for deferred costs		3,332		(20,215)		(18,494)
Net cash used in investing activities		(5,438)		(25,780)		(159,643)
Cash Flows from Financing Activities:
Proceeds from sale of common stock		538,000		522,888		5,220,901
Payments on advances from shareholder		—		—		(34,047)
Payments on promissory note from shareholder		—		(117,313)		(305,544)
Proceeds from promissory notes and advances		—		—		311,344
Net cash provided by financing activities		538,000		405,575		5,192,654
Net change in cash		63,115		(115,155)		76,520
Cash at beginning of period		13,405		128,560		—
CASH AT END OF PERIOD	$	76,520	$	13,405	$	76,520
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	—	$	2,813	$	25,816
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”), http://www.avrsys.com, 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 140million 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 is a software development company specializing in speech recognition technologies. AVRS has successfully obtained patent protection of its proprietary technology (refer to Note 3, Intangible Assets). The Company plans to focus 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 plans to focus on server based dictation and transcription, visual voicemail and the voicemail to text market.

The Company is a development stage enterprise in accordance with Financial Accounting Standards Board’s Accounting Standards Codification 915 “Development Stage Entities”. The Company has been in the development stage since Inception (March 15, 1994).

Stock Exchange Agreement

On April 28, 2008, the Company entered into a Stock Exchange Agreement (“the 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 million shares of Samoyed’s common stock.  On May 19, 2008 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.

In connection with the Agreement, a shareholder of Samoyed holding an aggregate of 3.5 million shares of Samoyed’s common stock made payments totaling $565,651 since 2008 in lieu of tendering shares to the Company.  The Company received the final payment of $6,000 on February 15, 2012.

Stock Purchase Agreements

During the year ended December 31, 2011, the Company entered into a Stock Purchase Agreement for the private sale of 4,375,000 restricted shares of its common stock for $350,000, all of which was received in 2011.

During the year ended December 31, 2012, the Company entered into Stock Purchase Agreements for the private sale of an aggregate of 11,640,000 shares of the common stock for aggregate proceeds of $532,000, all of which was received in 2012. 

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

During the period since Inception (March 15, 1994) the Company issued 700,000 restricted shares of the Company’s common stock for services rendered by outside consultants.

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, 2012 and 2011, 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.  During the twelve months ended December 31, 2011 the Company received an aggregate of $500,000 from the sale of shares in private offerings of its common stock. During the twelve months ended December 31, 2012, the Company received an aggregate of $ 532,000 from the sale of shares in private offerings of its common stock.

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 NCC, LLC which merged with and into AVRS, Inc. March 25, 2009. 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 at December 31, 2012 of $76,520, and $13,405 cash at December 31, 2011.  No amounts resulted from cash equivalents.

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. The revenue recognition policies relate to operations performed prior to the Company’s reverse acquisition.

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 adverse 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.

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.  The Company’s last impairment analysis was completed effective December 31, 2012.  Impairment recorded for each of the years ending 2012 and 2011 was $-0-.  See Note 3.

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, 2012 and 2011, 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

The carrying amounts of cash and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.

The FASB Accounting Standards Codification (ASC) clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3:	Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Subsequent Events

On March 9, 2010 the United States Patent and Trademark Office (“USPTO”) declared an interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party. On April 27, 2012, the BPAI denied the Company’s motions.  On May 28, 2012 the Company filed a request for rehearing in the BPAI.  On December 19, 2012 the BPAI denied the Company’s request for rehearing.

Recent Accounting Pronouncements

The Company reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

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.

On March 9, 2010 the United States Patent and Trademark Office declared interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party.  Interference is a proceeding before the Board of Patent Appeals and Interference (“BPAI”) in instances where two or more parties claim patent rights to the same technology. The U.S. patent system awards patents to the first party to invent a particular technology.  In an interference, the primary purpose is to determine which party invented the technology first, and to award the patent to that party.  The Company has been a party to the patent interference proceedings since March 2010.  Due to the absence of a decision by the end of 2010, in the 4^th quarter of 2010, AVRS impaired 100% of the deferred costs associated with the interference, resulting in a $1,068,860 impairment loss.  The expense in 2012 and 2011 was $40,649 and $44,007 respectively.  On April 27, 2012, the BPAI entered a judgment denying the Company’s motions.  On May 29, 2012, AVRS filed a Request for Rehearing in the BPAI.  On December 19, 2012 the BPAI entered a judgment denying the request for rehearing.  Further options included filing an appeal to the Court of Appeals or filing a civil suit. The Company decided that further litigation would be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

On May 24, 2011 Patent No. US 7,949,534 was issued by the United States Patent and Trademark Office. In accordance with 35 USC 154, the patent shall be for a term beginning May 24, 2011 and ending 20 years from the application date of the parent application (US Patent No. #7,558,730) of November 27, 2001.  The patent will expire on November 27, 2021.  The deferred fees were capitalized during the quarter ended June 30, 2011 and the Company began amortization.

On March 6, 2012 Patent No. US 8,131,557 was issued by the United States Patent and Trademark Office.  In accordance with 35 USC 154, the patent shall be for a term beginning March 6, 2012 and ending 20 years from the application date of the parent application (US Patent No. 7,558,730) of November 27, 2001.  The patent will expire on November 27, 2021.  The deferred fees were capitalized during the quarter ended March 31, 2012 and the Company began amortization.

Amortization at December 31, 2012 is as follows:

SCHEDULE OF INTANGIBLE ASSETS

December 31, 2012
U.S. Patent #		Carrying Value		Amortization		Patent, net
5,960,447	$	63,247	$	55,866	$	7,381
7,558,730		58,277		16,422		41,855
7,949,534		3,365		548		2,817
8,131,557		5,092		436		4,656
	$	129,981	$	73,272	$	56,709

Amortization expense totaled $9,657 and $9,143 for the years ending December 31, 2012 and 2011, respectively.  Estimated aggregate amortization expense for each of the next five years is as follows:

SCHEDULE OF FUTURE AMORTIZATION

Year ending December 31,
2013		9,743
2014		8,692
2015		5,527
2016		5,527
2017		5,527
Thereafter		21,693
Total	$	56,709

Fixed Assets

Assets disposed of during 2011 include a laptop costing $900 and having accumulated depreciation of $405.  A loss of $495 was taken.  The laptop was scrapped. Depreciation expense totaled $1,326 and $1,344, respectively, for the years ended December 31, 2012 and 2011 respectively.

PROPERTY PLANT AND EQUIPMENT

		December 31, 2012		December 31, 2011
Computer equipment	$	6,627	$	2,950
Computer software		3,640		3,640
		10,267		6,590
Less accumulated depreciation		(5,934)		(4,608)
Computer software and equipment, net	$	4,333	$	1,982

Note 4.     Related Party Transactions

Contributed Services

During the years from 2000 through 2012 the Company’s officers and employees contributed management services and administrative services. The fair value of those services totaling $2,317,982 was recorded in the accompanying financial statements based on the prevailing rates for such services, with a corresponding credit to additional paid-in capital. AVRS currently pays salaries to its two employees.

Indebtedness to Related Parties

During the years from 2000 through 2012, certain officers advanced the Company working capital to maintain the Company’s operations. The majority of the indebtedness was owed to the Company’s president and was paid in full at December 31, 2011. Of the amount owed to the Company’s president, $225,544 was converted into a promissory note in May 2008. As of December 31, 2011 the Company repaid the note in full.   As of December 31, 2012 and 2011, the Company owed the officers $5,800.

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. As of December 31, 2011 the Company repaid the note in full.   Interest expense related to the notes totaled $1,230 and was paid in 2011.

Note 5.     Income Taxes

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

	December 31,
	2012		2011
U.S. federal statutory graduated rate		34.00%	34.00%
State income tax rate, net of federal benefit		0.00%	0.00%
Rent & services		-.45%	-5.05%
NOL’s		-33.55%	-28.95%
Effective rate		0.00%	0.00%

The Company is considered a start-up company for income tax purposes. As of December 31, 2012, 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, 2012.

Note 6.    Concentration of Risk

Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions.  On December 31, 2012, the Company had cash balances at one FDIC insured financial institution of $76,520 in non-interest bearing accounts, which amount does not exceed the related federal deposit insurance.

Note 7.     Prepaid Expenses

On March 12, 2010, the Company paid a $65,000 retainer to a law firm in connection with the patentability phase of the interference proceedings that is to be applied to the final billing.  On November 9, 2011 the retainer was applied to the outstanding balance reducing the accounts payable.

On April 6, 2010 the Company paid a second $65,000 retainer to a law firm for representation in anticipation of discovery request in connection with a lawsuit between Allvoice Developments, US, LLC and Microsoft Corporation. The retainer is to be applied to the final billing.  On November 9, 2011 the retainer was applied to the outstanding balance reducing the accounts payable.

Note 8.     Subsequent Events

On March 9, 2010 the USPTO declared interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party. On April 27, 2012, the BPAI entered a judgment denying the Company’s motions.  On May 29, 2012, AVRS filed a Request for Rehearing in the BPAI.  On December 19, 2012 the BPAI entered a judgment denying the request for rehearing. The Company decided that further litigation would be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

Note 9.   Stockholder Equity / (Deficit)

The Company has issued shares of its common stock pursuant to certain agreements as described in Note 1.

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, 2012. 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 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 review and evaluation, our chief executive officer, who also is our chief financial officer, concluded that our disclosure controls and procedures were adequate and effective, including consideration of the matters identified below to ensure that material information relating to us would be made known to them by others within the Company in a timely manner, particularly during the period in which this annual report on Form 10-K was being prepared, and that no changes are required at this time.  The evaluation of our disclosure controls and procedures and the conclusion as to their adequacy and effectiveness, included consideration of the deficiency noted below and the fact that our chief executive officer and chief financial officer is extensively involved in day-to-day transactional activities combined with the fact that the volume of transactions and activities of the Company are limited.

We have identified, as of December 31, 2012, a lack of segregation of duties in accounting and financial reporting activities, which we believe is a material weakness.  The size of our business necessarily imposes practical limitations on the effectiveness of those internal control practices and procedures that rely on the segregation of duties.

Management believes this deficiency in internal control did not result in material inaccuracies or omissions of material fact and, to the best of its knowledge, believes that the financial statements for the years ended December 31, 2012 and 2011 fairly present in all material respects the financial condition and results of operations for the Company in conformity with GAAP.  There is, however, a reasonable possibility that a material misstatement of the annual or interim financial statements would not have been prevented or detected as a result of this weakness.

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, 2012.  We have identified, as of December 31, 2012, a lack of segregation of duties in accounting and financial reporting activities, which we believe is a material weakness.  The size of our business necessarily imposes practical limitations on the effectiveness of those internal control practices and procedures that rely on the segregation of duties.

Management believes this deficiency in internal control did not result in material inaccuracies or omissions of material fact and, to the best of its knowledge, believes that the financial statements for the years ended December 31, 2012 and 2011 fairly present in all material respects the financial condition and results of operations for the Company in conformity with GAAP.  There is, however, a reasonable possibility that a material misstatement of the annual or interim financial statements would not have been prevented or detected as a result of this weakness.

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	57	May 2008	President, Chief Executive Officer, Chief Financial Officer and Director
Donald Getty	80	December 2007	Chairman of the Board, Director
Diane Jakowchuk	59	—	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 Ltd. 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, and Euro Resources SA, a company publicly trading on the Toronto Stock Exchange. In 1998 Mr. Getty was appointed an officer of the order of Canada and in 1999 as a member of the Alberta order of excellence.  In 1954, Mr. Getty graduated, with honors, from the University of Western Ontario and earned a degree in business administration. In 2003 he received an honorary degree of law from the University of Lethbridge.

Diana Jakowchuk, Secretary, Treasurer and Principal Accounting Officer

Ms. Jakowchuk has served as our Secretary, Treasurer and Principal Accounting Officer since May 2008. Ms. Jakowchuk served as Secretary to AVRS, Inc. (a Colorado company). 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.  Prior to December 2001, Ms. Jakowchuk served as Records Manager for NCC, LLC a predecessor to AVRS, Inc.  Ms. Jakowchuk received an Associates of Arts degree from Scottsdale Community College in 1979.

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, 2012; 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 has contributed his services free of charge until May 1, 2011 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,	2012	195,000		0	0	0	0	0	0	195,000
President, CEO, CFO Director (1)	2011	78,000		0	0	0	0	0	0	78,000
Diane Jakowchuk,	2012	83,417		0	0	0	0	0	0	83,417
Principal Accounting Officer(2)	2011	67,000		0	0	0	0	0	0	67,000

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 of AVRS commencing in 2011. Effective March 9, 2012, the annual salary for Mr. Geldenhuys was increased to $180,000.

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 in commencing in 2010.

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, 2012 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, 2012 for his service as one of our Directors or as a Director of AVRS.

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 15, 2012, 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 March 1, 2013 was 204,282,865.

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	49,728,520	(2)		24.34%
Donald Getty, Director 1273 Potters Green Edmonton, Alberta, Canada	1,600,000	(3)		*%
Diana Jakowchuk, Secretary, Treasurer and Principal Accounting Officer 7659 E. Wood Drive Scottsdale, AZ 85260	3,941,000			1.93%
All directors and executive officers as a group (three persons)	55,269,520			27.06%
Blake Thorshov 220 Rock Falls Road Arroyo Grande, CA 93420	44,542,857			21.80%
Douglas Holt 1465 E. Tierra Street Gilbert, AZ 85296	13,960,000			6.83%
Joseph Miglietta 2464 Coral Ridge Circle Melbourne, FL 3295	13,680,000			6.70%
Michael Davis 1933 E. McDowell Rd Phoenix, AZ 85006	13,687,800			6.70%

†  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 136,000 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 1,600,000 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 matured on April 15, 2011. As of December 31, 2011 the Company repaid the note in full.   Interest expense related to the note totaled $130 in 2011.

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 that matured on April 15, 2012. As of December 31, 2011 the Company repaid the note in full.    Interest expense related to the note totaled $1100 in 2011.

For the year ended December 31, 2011, Directors and Officers provided contributed services to the Company valued at $61,536.

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, 2012 and December 31, 2011.

Services		2012		2011
Audit Fees	$	15,930	$	10,160
Audit Related Services		9,382		2,363
Tax Fees		-		-
Total Fees	$	23,312	$	12,523

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)
10.16	Letter Agreement dated December 9, 2009 between Advanced Voice Recognition Systems, Inc. and OTC Navigation (19)
10.17	Strict Foreclosure dated January 11, 2010 between Advanced Voice Recognition Systems, Inc and Lion Share Capital (20)
10.18	Purchase Agreement dated March 10, 2010 between Advanced Voice Recognition Systems, Inc. and Investors. (21)
10.19	Letter Agreement dated March 31, 2010 between Advanced Voice Recognition Systems, Inc. and Lambert Lavallee (22)
10.20	Second Allonge to Promissory Note dated April 9, 2010 between Advanced Voice Recognition Systems, Inc and Walter Geldenhuys (23)
10.21	Third Allonge to Promissory Note dated April 9, 2010 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (24)
10.22	Purchase Agreement dated May 4, 2010 between Advanced Voice Recognition Systems, Inc. and Investors. (25)
10.23	Purchase Agreement dated July 26, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (26)
10.24	Purchase Agreement dated August 28, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (27)
10.25	Purchase Agreement dated September 2, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (28)
10.26	Purchase Agreement dated September 3, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (29)
10.27	Purchase Agreement dated September 24, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (30)
10.28	Purchase Agreement dated October 19, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (31)
10.29	Purchase Agreement dated October 20, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (32)
10.30	Purchase Agreement dated October 27, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (33)
10.31	Purchase Agreement dated November 4, 2010 between Advanced Voice Recognition Systems, Inc. and three Investors. (34)
10.32	Purchase Agreement dated December 22, 2010 between Advanced Voice Recognition Systems, Inc. and an Investor. (35)
10.33	Termination Agreement dated March 1, 2011 between Advanced Voice Recognition Systems, Inc. and an Investor. (36)
10.34	Purchase Agreement dated March 9, 2011 between Advanced Voice Recognition Systems, Inc. and an Investor. (37)
10.35	Second Allonge to Promissory Note dated June 6, 2011 between Advanced Voice Recognition Systems, Inc. and Walter Geldenhuys (38)
10.36	Changes in Registrants Certifying Accountant. (39)
10.37	Purchase Agreement dated January 10, 2012 between Advanced Voice Recognition Systems, Inc. and an Investor. (40)
10.38	Purchase Agreement dated January 25, 2012 between Advanced Voice Recognition Systems, Inc. and four Investors. (41)
10.39	Purchase Agreement dated August 17, 2012 between Advanced Voice Recognition Systems, Inc. and two Investors. (42)
10.40	Purchase Agreement dated November 21, 2012 between Advanced Voice Recognition Systems, Inc. and two Investors. (43)
10.41	Purchase Agreement dated November 23, 2012 between Advanced Voice Recognition Systems, Inc. and an Investor. (44)
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)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 15, 2010

(21)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 16, 2010 

(22)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 6, 2010 

(23)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 12, 2010 

(24)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 12, 2010 

(25)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 10, 2010 

(26)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 30, 2010 

(27)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 2, 2010 

(28)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 9, 2010 

(29)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 10, 2010 

(30)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 27, 2010 

(31)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 25, 2010 

(32)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 26, 2010 

(33)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 1, 2010 

(34)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 9, 2010 

(35)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 28, 2010 

(36)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 7, 2011 

(37)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 15, 2011 

(38)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 10, 2011 

(39)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 31, 2011 

(40)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 17, 2012 

(41)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 30, 2012 

(42)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 21, 2012 

(43)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 26, 2012 

(44)    Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 28, 2012 

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 5^th of March, 2013.

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	March _5_, 2013
/s/ Diane Jakowchuk
Diane Jakowchuk	Secretary, Treasurer, Principal Accounting Officer	March _5_, 2013
/s/Donald Getty
Donald Getty	Director	March _5_, 2013

EX-31

Exhibit 31.1

CERTIFICATION

I, Walter Geldenhuys, certify that:

1. I have reviewed this annual report on Form 10-K of Advanced Voice Recognition Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 5, 2013
Signature:	/s/ Walter Geldenhuys
	WalterGeldenhuys
Title:	President, Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION

I, Walter Geldenhuys, certify that:

1. I have reviewed this annual report on Form 10-K of Advanced Voice Recognition Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 5, 2013
Signature:	/s/ Walter Geldenhuys
	Walter Geldenhuys
Title:	Chief Financial Officer

EX-32

Exhibit 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Walter Geldenhuys, President, Chief Executive Officer and Chief Financial Officer of Advanced Voice Recognition Systems, Inc. (the Company), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

(1)	The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/ Walter Geldenhuys

Walter Geldenhuys

President, Chief Executive Officer and Chief Financial Officer

March 5, 2013

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Note 3. Intangible and Fixed Assets: Schedule of Finite-Lived Intangible Assets by Major Class (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Carrying Value	$ 129,981
Amortization	73,272
Patent, net	56,709	61,274
5,960,447
Carrying Value	63,247
Amortization	55,866
Patent, net	7,381
7,558,730
Carrying Value	58,277
Amortization	16,422
Patent, net	41,855
7,949,534
Carrying Value	3,365
Amortization	548
Patent, net	2,817
8,131,557
Carrying Value	5,092
Amortization	436
Patent, net	$ 4,656

XML

Note 2. Significant Accounting Policies: Impairment and Disposal of Long-lived Assets (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Impairment and Disposal of Long-lived Assets

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.  The Company’s last impairment analysis was completed effective December 31, 2012.  Impairment recorded for each of the years ending 2012 and 2011 was $-0-.  See Note 3.

XML

Note 5. Income Taxes (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
federal statutory graduated rate	34.00%	34.00%
State income tax rate, net of federal benefit	0.00%	0.00%
Rent & Services	(0.45%)	(5.05%)
Costs capitalized under Section 195	(33.55%)	(28.95%)
Effective rate	0.00%	0.00%

XML

Note 4. Related Party Transactions

12 Months Ended

Dec. 31, 2012

Notes

Note 4. Related Party Transactions

Note 4.     Related Party Transactions

Contributed Services

During the years from 2000 through 2012 the Company’s officers and employees contributed management services and administrative services. The fair value of those services totaling $2,317,982 was recorded in the accompanying financial statements based on the prevailing rates for such services, with a corresponding credit to additional paid-in capital. AVRS currently pays salaries to its two employees.

Indebtedness to Related Parties

During the years from 2000 through 2012, certain officers advanced the Company working capital to maintain the Company’s operations. The majority of the indebtedness was owed to the Company’s president and was paid in full at December 31, 2011. Of the amount owed to the Company’s president, $225,544 was converted into a promissory note in May 2008. As of December 31, 2011 the Company repaid the note in full.  As of December 31, 2012 and 2011, the Company owed the officers $5,800.

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. As of December 31, 2011 the Company repaid the note in full.   Interest expense related to the notes totaled $1,230 and was paid in 2011.

XML

Note 3. Intangible and Fixed Assets: Schedule of Finite-Lived Intangible Assets by Major Class (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Schedule of Finite-Lived Intangible Assets by Major Class

December 31, 2012
U.S. Patent #		Carrying Value		Amortization		Patent, net
5,960,447	$	63,247	$	55,866	$	7,381
7,558,730		58,277		16,422		41,855
7,949,534		3,365		548		2,817
8,131,557		5,092		436		4,656
	$	129,981	$	73,272	$	56,709

XML

Note 2. Significant Accounting Policies: Subsequent Events (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Subsequent Events

Subsequent Events

On March 9, 2010 the United States Patent and Trademark Office (“USPTO”) declared an interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party. On April 27, 2012, the BPAI denied the Company’s motions.  On May 28, 2012 the Company filed a request for rehearing in the BPAI.  On December 19, 2012 the BPAI denied the Company’s request for rehearing.  The Company decided that further litigation would be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

XML

Note 3. Intangible and Fixed Assets: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Year ending December 31,
2013		9,743
2014		8,692
2015		5,527
2016		5,527
2017		5,527
Thereafter		21,693
Total	$	56,709

XML

Note 3. Intangible and Fixed Assets: Property Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Property Plant and Equipment

		December 31, 2012		December 31, 2011
Computer equipment	$	6,627	$	2,950
Computer software		3,640		3,640
		10,267		6,590
Less accumulated depreciation		(5,934)		(4,608)
Computer software and equipment, net	$	4,333	$	1,982

XML

Note 3. Intangible and Fixed Assets

12 Months Ended

Dec. 31, 2012

Notes

Note 3. Intangible and Fixed Assets

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.

On March 9, 2010 the United States Patent and Trademark Office declared interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party.  Interference is a proceeding before the Board of Patent Appeals and Interference (“BPAI”) in instances where two or more parties claim patent rights to the same technology. The U.S. patent system awards patents to the first party to invent a particular technology.  In an interference, the primary purpose is to determine which party invented the technology first, and to award the patent to that party.  The Company has been a party to the patent interference proceedings since March 2010.  Due to the absence of a decision by the end of 2010, in the 4^th quarter of 2010, AVRS impaired 100% of the deferred costs associated with the interference, resulting in a $1,068,860 impairment loss.  The expense in 2012 and 2011 was $40,649 and $44,007 respectively.  On April 27, 2012, the BPAI entered a judgment denying the Company’s motions.  On May 29, 2012, AVRS filed a Request for Rehearing in the BPAI.  On December 19, 2012 the BPAI entered a judgment denying the request for rehearing.  Further options included filing an appeal to the Court of Appeals or filing a civil suit. The Company decided that further litigation would be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

On May 24, 2011 Patent No. US 7,949,534 was issued by the United States Patent and Trademark Office. In accordance with 35 USC 154, the patent shall be for a term beginning May 24, 2011 and ending 20 years from the application date of the parent application (US Patent No. #7,558,730) of November 27, 2001.  The patent will expire on November 27, 2021.  The deferred fees were capitalized during the quarter ended June 30, 2011 and the Company began amortization.

On March 6, 2012 Patent No. US 8,131,557 was issued by the United States Patent and Trademark Office.  In accordance with 35 USC 154, the patent shall be for a term beginning March 6, 2012 and ending 20 years from the application date of the parent application (US Patent No. 7,558,730) of November 27, 2001.  The patent will expire on November 27, 2021.  The deferred fees were capitalized during the quarter ended March 31, 2012 and the Company began amortization.

Amortization at December 31, 2012 is as follows:

SCHEDULE OF INTANGIBLE ASSETS

December 31, 2012
U.S. Patent #		Carrying Value		Amortization		Patent, net
5,960,447	$	63,247	$	55,866	$	7,381
7,558,730		58,277		16,422		41,855
7,949,534		3,365		548		2,817
8,131,557		5,092		436		4,656
	$	129,981	$	73,272	$	56,709

Amortization expense totaled $ 9,657 and $9,143 for the years ending December 31, 2012 and 2011, respectively.  Estimated aggregate amortization expense for each of the next five years is as follows:

SCHEDULE OF FUTURE AMORTIZATION

Year ending December 31,
2013		9,743
2014		8,692
2015		5,527
2016		5,527
2017		5,527
Thereafter		21,693
Total	$	56,709

Fixed Assets

Assets disposed of during 2011 include a laptop costing $900 and having accumulated depreciation of $405.  A loss of $495 was taken.  The laptop was scrapped. Depreciation expense totaled $1,326 and $1,344, respectively, for the years ended December 31, 2012 and 2011 respectively.

PROPERTY PLANT AND EQUIPMENT

		December 31, 2012		December 31, 2011
Computer equipment	$	6,627	$	2,950
Computer software		3,640		3,640
		10,267		6,590
Less accumulated depreciation		(5,934)		(4,608)
Computer software and equipment, net	$	4,333	$	1,982

XML

Note 2. Significant Accounting Policies: Going Concern (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Proceeds from Issuance of Private Placement	$ 532,000	$ 500,000

XML

Balance Sheets (USD $)	Dec. 31, 2012		Dec. 31, 2011
Current Assets
Cash	$ 76,520		$ 13,405
Total Current Assets	76,520		13,405
Computer software and equipment, net	4,333		1,982
Total Fixed Assets	4,333		1,982
Patent, net	56,709		61,274
Deferred costs	18,495		21,826
Total Intangible Assets	75,204		83,100
Total Assets	156,057		98,487
Current Liabilities
Accounts payable	209,702		239,821
Accrued liabilities	21		30,432
Indebtedness to related parties	5,800		5,800
Total Current Liabilities	215,523		276,053
Stockholders' Deficit
Common stock	204,283	[1]	192,643	[2]
Additional Paid-in Capital	7,485,100		6,958,740
Deficit Accumulated during Development Stage	(7,748,849)		(7,328,949)
Total Stockholders' Deficit	(53,466)		(177,566)
Total Liabilities and Stockholders' Deficit	$ 156,057		$ 98,487

[1] $.001 547,500,000 shares authorized, 204,282,865 shares issued in 2012.

[2] $.001 547,500,000 shares authorized, 192,642,865 shares issued in 2011

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Note 1. Nature of Operations

12 Months Ended

Dec. 31, 2012

Notes

Note 1. Nature of Operations

Note 1.     Nature of Operations

The operations of Advanced Voice Recognition Systems, Inc. (“AVRS” or the “Company”), http://www.avrsys.com, 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 140million 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 is a software development company specializing in speech recognition technologies. AVRS has successfully obtained patent protection of its proprietary technology (refer to Note 3, Intangible Assets). The Company plans to focus 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 plans to focus on server based dictation and transcription, visual voicemail and the voicemail to text market.

The Company is a development stage enterprise in accordance with Financial Accounting Standards Board’s Accounting Standards Codification 915 “Development Stage Entities”. The Company has been in the development stage since Inception (March 15, 1994).

Stock Exchange Agreement

On April 28, 2008, the Company entered into a Stock Exchange Agreement (“the 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 million shares of Samoyed’s common stock.  On May 19, 2008 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.

In connection with the Agreement, a shareholder of Samoyed holding an aggregate of 3.5 million shares of Samoyed’s common stock made payments totaling $565,651 since 2008 in lieu of tendering shares to the Company.  The Company received the final payment of $6,000 on February 15, 2012.

Stock Purchase Agreements

During the year ended December 31, 2011, the Company entered into a Stock Purchase Agreement for the private sale of 4,375,000 restricted shares of its common stock for $350,000, all of which was received in 2011.

During the year ended December 31, 2012, the Company entered into Stock Purchase Agreements for the private sale of an aggregate of 11,640,000 shares of the common stock for aggregate proceeds of $532,000, all of which was received in 2012. 

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

During the period since Inception (March 15, 1994) the Company issued 700,000 restricted shares of the Company’s common stock for services rendered by outside consultants.

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Note 3. Intangible and Fixed Assets: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) (USD $)	12 Months Ended
	Dec. 31, 2012
Future Amortization Expense, Year One	$ 9,743
2013	8,692
2014	5,527
2015	5,527
2016	5,527
Thereafter	21,693
Total	$ 56,709

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Note 2. Significant Accounting Policies: Income Taxes (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Income Taxes

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 adverse 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.

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Note 3. Intangible and Fixed Assets: Property Plant and Equipment (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Computer equipment	$ 6,627	$ 2,950
Computer software	3,640	3,640
Less accumulated depreciation	(5,934)	(4,608)
Computer software and equipment, net	$ 4,333	$ 1,982

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Note 2. Significant Accounting Policies: Patents, Deferred Costs and Amortization (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Patents, Deferred Costs and Amortization

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.

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Note 2. Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Notes

Note 2. Significant Accounting Policies

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, 2012 and 2011, 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.  During the twelve months ended December 31, 2011 the Company received an aggregate of $500,000 from the sale of shares in private offerings of its common stock. During the twelve months ended December 31, 2012, the Company received an aggregate of $ 532,000 from the sale of shares in private offerings of its common stock.

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 NCC, LLC which merged with and into AVRS, Inc. March 25, 2009. 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 at December 31, 2012 of $ 76,520, and $13,405 cash at December 31, 2011.  No amounts resulted from cash equivalents.

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. The revenue recognition policies relate to operations performed prior to the Company’s reverse acquisition.

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 adverse 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.

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.  The Company’s last impairment analysis was completed effective December 31, 2012.  Impairment recorded for each of the years ending 2012 and 2011 was $-0-.  See Note 3.

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, 2012 and 2011, 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

The carrying amounts of cash and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.

The FASB Accounting Standards Codification (ASC) clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3:	Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Subsequent Events

On March 9, 2010 the United States Patent and Trademark Office (“USPTO”) declared an interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party. On April 27, 2012, the BPAI denied the Company’s motions.  On May 28, 2012 the Company filed a request for rehearing in the BPAI.  On December 19, 2012 the BPAI denied the Company’s request for rehearing.  The Company decided that further litigation would be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

Recent Accounting Pronouncements

The Company reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements  may be expected to cause a material impact on its financial condition or the results of its operations.

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Statements of Operations (USD $)	12 Months Ended		226 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012
Sales			$ 1,241,924
Cost of goods sold			379,378
Gross profit			862,546
Operating Expenses
Research and development			1,189,531
Contributed services		61,536	2,317,982
Compensation	268,610	176,891	1,056,674
Stock Based Compensation			150,500
Professional fees	116,989	138,939	1,551,314
Office	19,212	17,174	315,672
Rent			157,356
Travel	3,336	6,667	158,181
Advertising			81,090
Bad debt expense			67,217
Other Expenses	11,753	11,877	421,362
Impairment of Deferred Costs			1,068,860
Total operating expenses	419,900	413,084	8,535,739
Loss from operations	(419,900)	(413,084)	(7,673,193)
Other income and (expense):
Investment Income			5,062
Interest expense		(1,246)	(67,215)
Loss on sale of assets			(13,503)
Net other expense		(1,246)	(75,656)
Loss before income taxes	(419,900)	(414,330)	(7,748,849)
Net Loss	$ (419,900)	$ (414,330)	$ (7,748,849)
Basic and diluted loss per common share	$ (0.01)	$ (0.01)
Weighted average number of common shares outstanding	200,442,427	191,296,975

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Note 2. Significant Accounting Policies: Basis of Consolidation (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include our accounts and those of NCC, LLC which merged with and into AVRS, Inc. March 25, 2009. 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.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Jun. 30, 2012
Document and Entity Information
Entity Registrant Name	Advanced Voice Recognition Systems, Inc.
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Entity Central Index Key	0001342936
Current Fiscal Year End Date	--12-12
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding	204,282,865
Entity Public Float		$ 2,882,518
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY

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Note 2. Significant Accounting Policies: Cash and Cash Equivalents (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Cash and Cash Equivalents

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 at December 31, 2012 of $ 76,520, and $13,405 cash at December 31, 2011.  No amounts resulted from cash equivalents.

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Statement of Stockholders' Deficit (USD $)	NCC, LLC Membership	Common Stock	Additional Paid-in Capital	Deficit Accumulated During Development Stage	Deferred Compensation	Total
Stockholders Deficit, Starting Balance at Mar. 14, 1994		$ 1,000				$ 1,000
Shares, Issued, Starting Balance at Mar. 14, 1994		750
Net Loss				(3,976)		(3,976)
Stockholders Deficit, Ending Balance at Dec. 31, 1994		1,000		(3,976)		(2,976)
Shares, Issued, Ending Balance at Dec. 31, 1994		750
Net Loss				(38,516)		(38,516)
Stockholders Deficit, Ending Balance at Dec. 31, 1995		1,000		(42,492)		(41,492)
Shares, Issued, Ending Balance at Dec. 31, 1995		750
Net Loss				(144,843)		(144,843)
Stockholders Deficit, Ending Balance at Dec. 31, 1996		1,000		(187,335)		(186,335)
Shares, Issued, Ending Balance at Dec. 31, 1996		750
Net Loss				(3,291)		(3,291)
Stockholders Deficit, Ending Balance at Dec. 31, 1997		1,000		(190,626)		(189,626)
Shares, Issued, Ending Balance at Dec. 31, 1997		750
Net Loss				(537,561)		(537,561)
Stockholders Deficit, Ending Balance at Dec. 31, 1998		1,000		(728,187)		(727,187)
Shares, Issued, Ending Balance at Dec. 31, 1998		750
Net Loss				(512,491)		(512,491)
Stockholders Deficit, Ending Balance at Dec. 31, 1999		1,000		(1,240,678)		(1,239,678)
Shares, Issued, Starting Balance at Dec. 31, 1999		750
Contributed capital			1,335,432			1,335,432
NCC, Inc transfer to NCC,LLC membership	1,336,432	(1,000)	(1,335,432)
NCC, Inc transfer to NCC,LLC membership shares		(750)
Acquisition	487,500					487,500
Contributed services	520,000					520,000
Net Loss				(1,125,348)		(1,125,348)
Stockholders Deficit, Ending Balance at Dec. 31, 2000	2,343,932			(2,366,026)		(22,094)
Contributed services	720,500					720,500
Net Loss				(990,765)		(990,765)
Stockholders Deficit, Ending Balance at Dec. 31, 2001	3,064,432			(3,356,791)		(292,359)
Contributed capital	257					257
Contributed services	50,767					50,767
Net Loss				(191,542)		(191,542)
Stockholders Deficit, Ending Balance at Dec. 31, 2002	3,115,456			(3,548,333)		(432,877)
Contributed capital	600					600
Contributed services	18,749					18,749
Net Loss				(19,349)		(19,349)
Stockholders Deficit, Ending Balance at Dec. 31, 2003	3,134,805			(3,567,682)		(432,877)
Contributed capital	378,462					378,462
Contributed services	58,651					58,651
Net Loss				(58,651)		(58,651)
Stockholders Deficit, Ending Balance at Dec. 31, 2004	3,571,918			(3,626,333)		(54,415)
Acquisition	(3,571,918)		3,478,585			(93,333)
Stock Issued During Period, Value		140,000	(46,667)			93,333
Stock Issued During Period, Shares		140,000,000
Contributed services			158,648			158,648
Net Loss				(241,957)		(241,957)
Stockholders Deficit, Ending Balance at Dec. 31, 2005		140,000	3,590,566	(3,868,290)		(137,724)
Shares, Issued, Ending Balance at Dec. 31, 2005		140,000,000
Contributed services			70,189			70,189
Net Loss				(106,867)		(106,867)
Stockholders Deficit, Ending Balance at Dec. 31, 2006		140,000	3,660,755	(3,975,157)		(174,402)
Shares, Issued, Ending Balance at Dec. 31, 2006		140,000,000
Contributed services			83,652			83,652
Net Loss				(122,688)		(122,688)
Stockholders Deficit, Ending Balance at Dec. 31, 2007		140,000	3,744,407	(4,097,845)		(213,438)
Shares, Issued, Starting Balance at Dec. 31, 2007		140,000,000
Stock Issued During Period, Value		24,700	(24,700)
Stock Issued During Period, Shares		24,700,008
Contributed services			121,077			121,077
Net Loss				(431,022)		(431,022)
Stockholders Deficit, Ending Balance at Dec. 31, 2008		164,700	4,171,784	(4,528,867)		(192,383)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement at Dec. 31, 2008			331,000			331,000
Shares, Issued, Ending Balance at Dec. 31, 2008		164,700,008
Stock Issued During Period, Value		700	149,800		(63,000)	87,500
Stock Issued During Period, Shares		700,000
Contributed services			238,837			238,837
Net Loss				(480,390)		(480,390)
Stockholders Deficit, Ending Balance at Dec. 31, 2009		165,400	4,612,851	(5,009,257)	(63,000)	(294,006)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement at Dec. 31, 2009			52,430			52,430
Shares, Issued, Ending Balance at Dec. 31, 2009		165,400,008
Stock Issued During Period, Value		20,993	1,399,007			1,420,000
Stock Issued During Period, Shares		20,992,857
Stock Based Compensation					63,000	63,000
Contributed services			215,376			215,376
Net Loss				(1,905,362)		(1,905,362)
Stockholders Deficit, Ending Balance at Dec. 31, 2010		186,393	6,380,566	(6,914,619)		(347,660)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement at Dec. 31, 2010			153,332			153,332
Shares, Issued, Ending Balance at Dec. 31, 2010		186,392,865
Stock Issued During Period, Value		6,250	493,750			500,000
Stock Issued During Period, Shares		6,250,000
Contributed services			61,536			61,536
Net Loss				(414,330)		(414,330)
Stockholders Deficit, Ending Balance at Dec. 31, 2011		192,643	6,958,740	(7,328,949)		(177,566)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement at Dec. 31, 2011			22,888			22,888
Shares, Issued, Ending Balance at Dec. 31, 2011		192,642,865
Stock Issued During Period, Value		11,640	526,360			538,000
Stock Issued During Period, Shares		11,640,000
Net Loss				(419,900)		(419,900)
Stockholders Deficit, Ending Balance at Dec. 31, 2012		204,283	7,491,100	(7,748,849)		(53,466)
Proceeds from shareholder to retain common shares under Stock Exchange Agreement at Dec. 31, 2012			$ 6,000			$ 6,000
Shares, Issued, Ending Balance at Dec. 31, 2012		204,282,865

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Note 7. Prepaid Expenses

12 Months Ended

Dec. 31, 2012

Notes

Note 7. Prepaid Expenses

Note 7.     Prepaid Expenses

On March 12, 2010, the Company paid a $65,000 retainer to a law firm in connection with the patentability phase of the interference proceedings that is to be applied to the final billing.  On November 9, 2011 the retainer was applied to the outstanding balance reducing the accounts payable.

On April 6, 2010 the Company paid a second $65,000 retainer to a law firm for representation in anticipation of discovery request in connection with a lawsuit between Allvoice Developments, US, LLC and Microsoft Corporation. The retainer is to be applied to the final billing.  On November 9, 2011 the retainer was applied to the outstanding balance reducing the accounts payable.

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Note 6. Concentration of Risk

12 Months Ended

Dec. 31, 2012

Notes

Note 6. Concentration of Risk

Note 6.    Concentration of Risk

Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions.  On December 31, 2012, the Company had cash balances at one FDIC insured financial institution of $76,520 in non-interest bearing accounts, which amount does not exceed the related federal deposit insurance.

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Note 2. Significant Accounting Policies: Research and Development Costs (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Research and Development Costs

Research and Development Costs

Research and development costs are expensed in the period incurred.

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Note 2. Significant Accounting Policies: Financial Instruments (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Financial Instruments

Financial Instruments

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

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Note 2. Significant Accounting Policies: Going Concern (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Going Concern

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, 2012 and 2011, 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.  During the twelve months ended December 31, 2011 the Company received an aggregate of $500,000 from the sale of shares in private offerings of its common stock. During the twelve months ended December 31, 2012, the Company received an aggregate of $ 532,000 from the sale of shares in private offerings of its common stock.

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Note 8. Subsequent Events

12 Months Ended

Dec. 31, 2012

Notes

Note 8. Subsequent Events

Note 8.     Subsequent Events

On March 9, 2010 the USPTO declared interference between the Company as Senior Party and Allvoice Developments, US LLC as Junior Party.On April 27, 2012, the BPAI entered a judgment denying the Company’s motions.  On May 29, 2012, AVRS filed a Request for Rehearing in the BPAI.  On December 19, 2012 the BPAI entered a judgment denying the request for rehearing. 

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Note 9. Stockholder Equity / (deficit)

12 Months Ended

Dec. 31, 2012

Notes

Note 9. Stockholder Equity / (deficit)

Note 9.   Stockholder Equity / (Deficit)

The Company has issued shares of its common stock pursuant to certain agreements as described in Note 1.

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Note 2. Significant Accounting Policies: Use of Estimates (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Use of Estimates

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.

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Note 3. Intangible and Fixed Assets (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets Amortization Expense	$ 9,657	$ 9,143
Depreciation Expense	$ 1,326	$ 1,344

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Note 2. Significant Accounting Policies: Revenue Recognition (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Revenue Recognition

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. The revenue recognition policies relate to operations performed prior to the Company’s reverse acquisition.

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Note 2. Significant Accounting Policies: Loss Per Common Share (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Loss Per Common Share

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, 2012 and 2011, there were no variances between the basic and diluted loss per share as there were no potentially dilutive securities outstanding.

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Statement of Cash Flows (USD $)	12 Months Ended		226 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012
Cash Flows from Operating Activities:
Net Loss	$ (419,900)	$ (414,330)	$ (7,748,849)
Amortization and depreciation	10,983	10,487	79,611
Contributed services		61,536	2,317,982
Expenses paid in exchange for shareholder debt			34,047
Disposal of Fixed Asset Loss		495	495
Stock-based compensation expense			150,500
Prepaid Expenses		130,000
Accounts payable and accrued liabilities	(60,530)	(281,555)	209,723
Accrued interest related party		(1,583)
Net cash used in operating activities	(469,447)	(494,950)	(4,956,491)
Cash Flows from Investing Activities:
Purchases of computer equipment and software	(3,678)	(2,200)	(11,168)
Payments for patents	(5,092)	(3,365)	(129,981)
Payments for deferred costs	3,332	(20,215)	(18,494)
Net cash used in investing activities	(5,438)	(25,780)	(159,643)
Cash Flows from Financing Activities:
Proceeds from sale of common stock	538,000	522,888	5,220,901
Payments on advances from shareholder			(34,047)
Payments on promissory note from shareholder		(117,313)	(305,544)
Proceeds from promissory notes and advances			311,344
Net cash provided by financing activities	538,000	405,575	5,192,654
Net change in cash	63,115	(115,155)	76,520
Cash at start of period	13,405	128,560
Cash at end of period	76,520	13,405	76,520
Supplemental Disclosure of Cash Flow Information:
Interest		$ 2,813	$ 25,816

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Note 5. Income Taxes

12 Months Ended

Dec. 31, 2012

Notes

Note 5. Income Taxes

Note 5.     Income Taxes

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

	December 31,
	2012		2011
U.S. federal statutory graduated rate		34.00%	34.00%
State income tax rate, net of federal benefit		0.00%	0.00%
Rent & services		-.45%	-5.05%
NOL’s		-33.55%	-28.95%
Effective rate		0.00%	0.00%

The Company is considered a start-up company for income tax purposes. As of December 31, 2012, 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, 2012.

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Note 2. Significant Accounting Policies: Fair Value of Financial Instruments (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of cash and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.

The FASB Accounting Standards Codification (ASC) clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3:	Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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Note 2. Significant Accounting Policies: Fixed Assets (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Fixed Assets

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.