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 have incurred losses since Inception
(March 15, 1994).
We had a net loss of $48,589 for the year ended December 31, 2022, as compared
to a net loss of $83,381 in 2021. Professional fees were $32,288 in 2022, as
compared to $52,765 in 2021, a decrease of $20,477. A decrease in auditing fees
is responsible for the decrease in professional fees. Office was $8,687 in 2022
as compared to $23,288 in 2021, a decrease of $14,601 which decreased our net
loss.
Liquidity and Capital Resources
For the year ended December 31, 2022, we used $46,499 of cash in operating
activities and $0 cash in investing activities. We received $5,000 of
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cash for the sale of our common stock. As a result, for the year ended December
31, 2022, we recognized a $12,010 net decrease in cash and cash equivalents.
During the year ended December 31, 2021, we used $44,367 of cash in operating
activities and $0 cash in investing activities. We received $46,000 of cash
from the sale of shares of our common stock. As a result, for the year ended
December 31, 2021, we recognized an $11,800 net increase in cash on hand.
At December 31, 2022, we had current assets of $138 and current liabilities of
$343,731 as compared to current assets of $12,148 and current liabilities of
$312,152 at December 31, 2021. Our decrease in current assets resulted from an
decreased amount of financing activities in 2022 as compared to 2021.
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.
During the twelve months ended December 31, 2022, we entered into one Stock
Purchase Agreement for the private sale to one person or entities of an
aggregate of 333,334 shares of the common stock for aggregate proceeds of
$5,000. Proceeds of $5,000 from were paid during the 12 months ended December
31, 2022. On December 29, 2022, we have issued 262,579,731 shares of AVRS
Common Stock into Escrow.
During the twelve months ended December 31, 2021, we entered into Stock Purchase
Agreements for the private sale to five persons or entities of an aggregate of
4,200,000 shares of the common stock for aggregate proceeds of $46,000. All of
the proceeds were paid during the 12 months ended December 31, 2021.
On March 16, 2015 we entered into a letter agreement with Adapt IP Ventures, LLC
(Adapt IP) confirming the retention of Adapt IP to assist us in identifying
companies that might be interested in acquiring and / or licensing our patents,
to attempt to negotiate financial terms and conditions for acquisition and / or
licensing and to assist with collection of compensation from such entities.
Adapt IP will receive a success fee of 15% of net compensation received from
such entities based upon Adapt IP's efforts. We or Adapt IP may terminate the
agreement upon 30 days' notice to the other party.
On April 20, 2015 we made a Promissory Note to Adapt IP for $20,000, and Adapt
IP agreed to pay to our patent counsel up to $20,000 for patent work on our
behalf. The Note matures one year from the date of the Note. We are obligated
to repay the funds advanced by Adapt IP plus a premium of 10% of the principal
amount and a percentage of proceeds received by us from any monetization event
involving the patents. If we repay the Note within the six months of the date
of the Note, the percentage will be 1%, and it will be 2% after six months. As
of December 31, 2022 $15,450 interest has accrued.
On August 20, 2015, AVRS entered into a letter agreement with Dominion Harbor
Group, LLC pursuant to which Dominion will provide strategic advisory services
to AVRS to support the common goal of the acquisition, sale, licensing,
prosecution, enforcement, and settlement with respect to AVRS's intellectual
property, including patents held by AVRS. On June 28, 2017 AVRS and Dominion
agreed to terminate the August 20, 2015 Letter Agreement. AVRS did not incur
any material early termination penalties in connection of the early termination
of the agreement.
On November 1, 2016, AVRS entered into a Contingent Fee Agreement with Buether
Joe and Carpenter, LLC to represent AVRS in connection with investigating and
asserting claims including negotiating license agreements and the filing and
prosecution of lawsuits against any potential infringers of the Patent rights.
On June 6, 2017 AVRS and BJC revised the Contingent Fee Agreement as it related
to the termination of the August 20, 2017 Dominion Harbor Letter Agreement.
Historically, our President has loaned or advanced to us funds for working
capital on an "as needed" basis. There is no assurance that these loans or
advances will continue in the future. At December 31, 2022 and December 31,
2021, we owed our officers an aggregate of $162,380 for accrued payroll. As of
December 31, 2022, Walter Geldenhuys, who is our President, Chief Executive
Officer and Chief Financial Officer, and who serves as a member of our Board of
Directors advanced the Company $6,000. Our Secretary / Treasurer advanced the
Company a total of $38,188 at December 31, 2022.
Because of our history of losses, and lack of assurance of additional financing,
the audit reports on our financial statements at December 31, 2022 and 2021
contained a "going concern" opinion regarding doubt about our ability to
continue as a going concern.
We will require additional debt or equity financing or a combination of both in
order to carry out our business plan. We plan to raise additional funds through
future sales of our securities, until such time as our revenues are sufficient
to meet our cost structure, and ultimately achieve profitable operations. There
is no assurance we will be successful in raising additional capital or achieving
profitable operations. Our board of directors may attempt to use non-cash
consideration to satisfy obligations that may consist of restricted shares of
our common stock. These actions would result in dilution of the ownership
interests of existing shareholders and may further dilute our common stock book
value.
To obtain sufficient funds to meet our future needs for capital, we will from
time to time, evaluate opportunities to raise financing through some combination
of the private sale of equity, or issuance of convertible debt securities.
However, future equity or debt financing may not be available
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to us at all, or if available, may not be on terms acceptable to us. We do not
intend to pay dividends to shareholders in the foreseeable future.
U.S. Patent #7,558,730 expands an extremely broad base of features in speech
recognition and transcription across heterogeneous protocols. Costs totaling
$58,277 have been capitalized and amortization began in the third quarter 2009.
The Patent was fully amortized in the fourth quarter 2021.
U.S. Patent #7,949,534 is an expansion of the coverage of our second patent and
incorporates speech recognition and transcription among transcription engines
employing incompatible protocols. Costs totaling $3,365 have been capitalized
and amortization began in the second quarter 2011. The Patent was fully
amortized in the fourth quarter 2021.
U.S. Patent #8,131,557 is an expansion of our second and third patent. Costs
totaling $5,092 have been capitalized and amortization began in the first
quarter 2012. The Patent was fully amortized in the fourth quarter 2021.
U.S. Patent #8,498,871 titled "Dynamic Speech Recognition and Transcription
Among Users Having Heterogeneous Protocols" was issued July 30, 2013 by the U.S.
Patent and Trademark Office. Costs totaling $21,114 have been capitalized and
amortization began in the third quarter 2013. The Patent was fully amortized in
the fourth quarter 2021.
U.S. Patent #9,142,217, an expansion of our fourth patent was issued September
22, 2015 by the U.S. Patent and Trademark Office. Costs totaling $35,068 have
been capitalized and amortization began in the third quarter 2015. The Patent
was fully amortized in the fourth quarter 2021.
U.S. Patent #9,934,786 issued April 3, 2018 by the U.S. Patent and Trademark
Office. Costs totaling $4,575 have been capitalized and amortization began in
the second quarter of 2018. The Patent was fully amortized in the fourth quarter
2021.
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.
Off-Balance Sheet Arrangements
On March 16, 2015 Advanced Voice Recognition Systems, Inc. (AVRS) entered into a
material Letter Agreement with Adapt IP Ventures, LLC (Adapt IP) in which it
retained Adapt IP on an exclusive basis. Adapt IP will assist AVRS in
identifying companies that might be interested in acquiring and / or licensing
the Patents, attempt to negotiate financial terms and conditions for the
acquisition and /or licensing of the Patents with such Entity(ies) and assist
with collection of compensation from such entities. In connection with services
provided under this Agreement, AVRS shall pay Adapt IP a success fee.
On August 20, 2015, Advanced Voice Recognition Systems, Inc. (AVRS) entered into
a letter agreement with Dominion Harbor Group, LLC (Dominion) pursuant to which
Dominion will provide strategic advisory services to AVRS to support the common
goal of the acquisition, sale, licensing, prosecution, enforcement, and
settlement with respect to AVRS's intellectual property, including patents held
by AVRS. Dominion has agreed to advance costs recommended by it, including court
filing fees, discovery and other litigation costs, and patent prosecution costs,
up to an aggregate of $10,000,000. AVRS will be responsible for costs not
recommended by Dominion, as well as travel and ordinary business expenses
incurred by AVRS. Except for the advanced costs by Dominion, AVRS will be
responsible for any contingency payments to law firms. On June 28, 2017 AVRS and
Dominion agreed to terminate the August 20, 2015 Letter Agreement. AVRS did not
incur any material early termination penalties in connection of the early
termination of the agreement.
On November 1, 2016, Advanced Voice Recognition Systems, Inc. ("AVRS") entered
into a Contingent Fee Agreement (the "Agreement") with Buether Joe & Carpenter,
LLC ("BJC") pursuant to which BJC will represent AVRS in connection with
investigating and asserting claims relating to certain patents, including the
negotiation of license agreements and the filing and prosecution of lawsuits,
against any potential infringers of rights associated with such patents (the
"Patent Rights") BJC will handle licensing and litigation activities under the
Agreement on a contingent fee basis. BJC's fee will depend upon whether AVRS
recovers any sums by way of licensing, settlement, trial or otherwise with
respect to the Patent Rights. On June 6, 2017 AVRS and BJC revised the
Contingent Fee Agreement as it related to the termination of the August 20, 2015
Dominion Harbor Letter Agreement.
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