Rivulet Entertainment, Inc 10-Q for FY2024 Q1
Rivulet Entertainment, Inc. (RIVF)
About this 10-Q
Rivulet Entertainment, Inc filed this 10-Q on November 16, 2023, covering the quarter ended September 30, 2023 (FY2024 Q1).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $0 a year earlier
- Net loss
- $134.26K
- compared with a net loss of $10.13K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
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For the Quarterly Period Ending
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For the transition period from _________ to _________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant's telephone number, including area code)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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.
Indicate by check mark whether the registrant has submitted electronically 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.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” non-accelerated filer “smaller reporting company” or “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| [X] | Smaller reporting company | ||
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of October 31, 2023,
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Advanced Voice Recognition Systems, Inc.
Table of Contents
PART I - FINANCIAL INFORMATION | ||||
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Item 1. |
| Financial Statements |
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| Unaudited Condensed Balance Sheets as of September 30, 2023 and December 31, 2022. | 3 | |
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| Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2023 and 2022. | 5 | |
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| Unaudited Condensed Statement of Stockholders’ Deficit for the three and nine months ended September 30, 2023 and 2022 | 6 | |
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| Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2023 and 2022. | 8 | |
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| Notes to Unaudited Financial Statements | 9 | |
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Item 2. |
| Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 | |
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Item 3 |
| Quantitative and Qualitative Disclosures About Market Risk | 16 | |
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Item 4. |
| Controls and Procedures | 16 | |
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PART II - OTHER INFORMATION | ||||
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Item 5. |
| Legal Proceedings | 17 | |
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Item 6. |
| Exhibits | 17 | |
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SIGNATURES |
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Item 1. Financial Statements
Advanced Voice Recognition Systems, Inc.
Condensed Balance Sheets
(Unaudited)
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| September 30, 2023 |
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| December 31, 2022 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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Total Current Assets |
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Fixed Assets |
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Computer equipment, net |
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Total Fixed Assets |
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Total Assets |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities |
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Accounts payable |
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Payroll |
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Note payable AIP |
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Advance - related party |
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Accrued interest |
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Total Current Liabilities |
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Total Liabilities |
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Commitments and Contingencies |
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Stockholders’ Deficit |
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Common stock, $ |
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Preferred stock, $ |
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Escrow Shares (1) |
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Additional paid-in capital |
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Accumulated Deficit |
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Total Stockholders' Deficit |
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Total Liabilities and Stockholders' Deficit |
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(1)
The accompanying notes are an integral part of these financial statements.
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Advanced Voice Recognition Systems, Inc.
Condensed Statements of Operations
(Unaudited)
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Sales |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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General and administrative: |
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Compensation |
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Professional fees |
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Office |
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Depreciation |
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Other |
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Total operating expenses |
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Loss from operations |
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Other income and (expense): |
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Gain on early ext. of debt |
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Interest expense |
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Net other income (expense) |
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Gain (loss) before income taxes |
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Provision for income taxes |
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Net Income (Loss) |
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Basic and diluted gain (loss) per common share* |
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Weighted average number of common shares |
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The accompanying notes are an integral part of these financial statements
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Advanced Voice Recognition Systems, Inc.
Condensed Statement of Stockholders’ Deficit
(Unaudited)
For the period ending September 30, 2022
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Balance at December 31, 2021 |
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Sales of Common Stock |
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Net Loss |
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Balance at March 31, 2022 |
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Sales of Common Stock |
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Net Loss |
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Balance at June 30, 2022 |
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Sales of Common Stock |
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Net Loss |
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Balance at September 30, 2022 |
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The accompanying notes are an integral part of these financial statements.
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For the period ending September 30, 2023
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Balance at December 31, 2022 |
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Sales of Common Stock |
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Net Income |
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Balance at March 31, 2023 |
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Sales of Common Stock |
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Release from Escrow |
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Net Loss |
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Balance at June 30, 2023 |
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Sales of Common Stock |
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Shares issued for reverse stock split |
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Net Loss |
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Balance at September 30, 2023 |
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The accompanying notes are an integral part of these financial statements.
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Advanced Voice Recognition Systems, Inc.
Condensed Statements of Cash Flows
(Unaudited)
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| Nine Months Ended September 30, | |||
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Cash Flows from Operating Activities: |
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Net income (loss) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization and depreciation |
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Accounts payable and accrued liabilities |
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Cash Flows from Investing Activities: |
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Cash Flows from Financing Activities: |
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Release from escrow |
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Payment of advance from related party |
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid during the period for: |
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Interest |
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Income taxes |
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Non-cash investing and financing activities: |
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Round up shares issued |
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The accompanying notes are an integral part of these financial statements.
8
Advanced Voice Recognition Systems, Inc.
Notes to Unaudited Condensed Financial Statements
Note 1. Nature of Operations
Company Overview
The operations of Advanced Voice Recognition Systems, Inc. (“AVRS” or the “Company”) commenced in 1994 with a predecessor entity called NCC, Inc. NCC, Inc. was incorporated on March 15, 1994 in the State of Ohio. NCC, Inc. operated as a software and hardware development company that marketed voice recognition and transcription products for commercial applications.
In May 2000, WG Investments, LLC acquired the assets of NCC, Inc. and subsequently changed its name to NCC, LLC. NCC, LLC (also a predecessor to AVRS) continued the operations of NCC, Inc. until approximately December 31, 2001, when shifts in the industry’s markets caused NCC, LLC to suspend its operations.
AVRS was incorporated in the State of Colorado on
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 continues to explore all options to monetize and enforce our patent portfolio through patent enforcement and licensing of the six patents issued.
Amended and Restated Articles of Incorporation
On July 3, 2023, the Company filed Amended and Restated Articles of Incorporation for the State of Nevada where the authorized number of common shares were amended to five hundred seventy-two million five hundred thousand shares (572,500,000) consisting of five hundred forty-seven million five hundred thousand (547,500,000) common shares with par value of $0.001 per share and twenty- five million (25,000,000) preferred shares with par value of $0.001.
Stock Purchase Agreements
During year ended December 31, 2022, the Company entered into a Stock Purchase Agreements for the private sale to one person or entity of an aggregate of 3,334 shares of the common stock for aggregate proceeds of $5,000 which was paid in full in the period. On December 29, 2022, the Company entered into an Escrow agreement for the purchase of 262,579,731 shares of the Company’s Common Stock. The shares were in Escrow until full payment was received on April 19, 2023 and released to the purchaser (Note 7).
Commitments and Contingencies
On April 20, 2015 Advanced Voice Recognition Systems, Inc. (“AVRS”) entered into a Material Letter Agreement with an unrelated third party (“AIP”) in which they promise to pay to patent legal counsel funds to continue prosecuting Patents on behalf of AVRS. AVRS promises to pay AIP, or to such other holder of this promissory note (Note) as designate, the principal, together with a premium of ten percent (10%) of Principle and two percent (2%) of proceeds received by Company from a Monetization Event initiated by AIP.
On September 21, 2018, Advanced Voice Recognition Systems, Inc. (“AVRS”) and Buether Joe & Carpenter, LLC (“BJC) entered into a Letter of Engagement for Legal Services Limited Scope Agreement (“Agreement”) with Schmeiser, Olsen & Watts LLP (“the Firm”) pursuant to which the Firm will serve as local counsel in the United States District Court, District of Arizona. The Firm has been hired to represent AVRS as local counsel in connection with forthcoming litigation in the U.S. District Court, District of Arizona. AVRS may terminate the Agreement at any time.
Litigation
From time to time, we may become involved in legal proceedings or other litigation that we consider to be a part of the ordinary course of our business. Presently, we are not involved in any litigation and to the best knowledge of management, there are no legal proceedings pending or threatened against the Company.
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Reverse Split and Increase in Authorized Shares
On July 5, 2023, the Shareholders approved to authorize a reverse split of 1 new share for one hundred old shares basis as of September 30, 2023 where fractional shares will be rounded up to the next whole share. In addition, the Shareholders approved to authorize twenty-five million (25,000,000) preferred shares for a total of 572,500,000 authorized shares of the company. The Articles of Information with the state of Nevada were amended to reflect the approved actions of the Shareholders.
Letter of Intent for Business Acquisition
On July 14, 2023, the Company issued a letter of intent to acquire 100% of issued and outstanding common and preferred shares of Rivulet Media, Inc, a Delaware corporation, with the ticker symbol (RIVU) in a stock for stock transaction subject to the completion of a reverse stock split of 100 to 1 of the Company’s issued and outstanding shares of common stock and an increase of authorized preferred shares by twenty-five million (25,000,000).
Reverse Stock Split
The Company effected a 1-for 100 reverse stock split of its outstanding shares of common stock on July 3, 2023. The reverse stock split did not change the number of authorized shares of common stock or par value. All references in these condensed financial statements to share, share prices, and other per share information in all periods for 2023 have been adjusted, on a retrospective basis, to reflect the reverse stock split.
Note 2. Significant Accounting Policies
Unaudited Financial Information
The accompanying financial information at September 30, 2023 and for the nine months ended September 30, 2023 and 2022 is unaudited. In the opinion of management, all normal and recurring adjustments which are necessary to provide a fair presentation of the Company’s financial position at September 30, 2023 and its operating results for the nine months ended September 30, 2023 and 2022 have been made. Certain information and footnote data necessary for a fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. It is therefore suggested that these financial statements be read in conjunction with the summary of significant accounting policies and notes to financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily an indication of operating results to be expected for the year ending December 31, 2023.
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. Liabilities exceed assets and there is a capital deficiency of $
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 twelve months ended December 31, 2022 the Company received an aggregate of $
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.
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 September 30, 2023 of $
10
Note 3. Intangible and Fixed Assets
Intangible Assets
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, U.S. Patent # 7,558,730, entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols,” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning on July 7, 2009 and ending 20 years from the application date of November 27, 2001, or November 27, 2021. The deferred fees were capitalized during the quarter ended September 30, 2009 and the Company began amortization. AVRS filed a Complaint in the United States District Court Northern District for Arizona (Case No. 2-18-cv-2083) on July 3, 2018, and alleges that Apple products infringe U.S. Patent No. 7,558,730 entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols” (the “‘730 Patent”). The patent was fully amortized in the fourth quarter 2021.
On May 24, 2011, U.S. Patent #7,949,534, entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols,” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning May 24, 2011 and ending 20 years from the application date of the parent application (U.S. Patent #7,558,730) of November 27, 2001, or November 27, 2021. The deferred fees were capitalized during the quarter ended September 30, 2011 and the Company began amortization. The patent was fully amortized in the fourth quarter 2021.
On March 6, 2012, U.S. Patent #8,131,557, entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols,” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning March 6, 2012 and ending 20 years from the application date of the parent application (U.S. Patent #7,558,730) of November 27, 2001, or November 27, 2021. The deferred fees were capitalized during the quarter ended March 31, 2012 and the Company began amortization. The patent was fully amortized in the fourth quarter 2021.
On July 30, 2013, U.S. Patent #8,498,871, entitled “Dynamic Speech Recognition and Transcription Among Users Having Heterogeneous Protocols,” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning on July 30, 2013 and ending 20 years from the application date of November 27, 2001, or November 27, 2021. The deferred fees were capitalized during the quarter ended September 30, 2013 and the Company began amortization. The patent was fully amortized in the fourth quarter 2021.
On September 22, 2015, U.S. Patent #9,142,217, entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols,” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning September 22, 2015 and ending 20 years from the application date of the parent application (US Patent No. 7,558,730) of November 27, 2001, or November 27, 2021. The deferred fees were capitalized during the quarter ended September 30, 2015 and the Company began amortization. The patent was fully amortized in the fourth quarter 2021.
On April 3, 2018, U.S. Patent #9,934,786, entitled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols,” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning April 3, 2018 and ending 20 years from the application date of the parent application (U.S. Patent #7,558,730) of November 27, 2001 or November 27, 2021. The deferred costs were capitalized during the quarter ended September 30, 2018 and the Company began amortization. The patent was fully amortized in the fourth quarter 2021.
Amortization at December 31, 2022 is as follows:
SCHEDULE OF INTANGIBLE ASSETS
Ended December 31, 2022 |
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U.S. Patent # |
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| Carrying Value |
| Amortization |
| Balance |
7,558,730 |
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| $ |
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7,949,534 |
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8,131,557 |
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| |
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8,498,871 |
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| |
| |
9,142,217 |
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| |
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9,934,786 |
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| |
| |
| |
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| $ |
| $ |
| $ | |
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Amortization at September 30, 2023 is as follows:
SCHEDULE OF INTANGIBLE ASSETS
Ended September 30, 2023 |
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| |
U.S. Patent # |
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| Carrying Value |
| Amortization |
| Balance |
7,558,730 |
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| $ |
| |
| |
7,949,534 |
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| |
| |
| |
8,131,557 |
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| |
| |
| |
8,498,871 |
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| |
| |
| |
9,142,217 |
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| |
| |
| |
9,934,786 |
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| |
| |
| |
|
| $ |
| $ |
| $ | |
The Patents were fully amortized in the fourth quarter 2021.
Fixed Assets
Computer equipment, net consisted of the following at September 30, 2023:
PLANT, PROPERTY, EQUIPMENT
Ended September 30, 2023 |
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|
| |
|
| Carrying Value |
| Depreciation |
| Balance | |
Computer |
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| $ |
| $ |
| $ |
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| $ |
| $ |
| $ | |
As of September 30, 2023, depreciation expense totaled $70.
Note 4. Related Party Transactions
Related Parties Transactions and Indebtedness
The Company owed the officers aggregate of $
On
On
On
On
On
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Note 5.Note Payable & Accounts Payable
On April 20, 2015, the Company entered into a Material Letter Agreement with an unrelated third-party AIP” in which they promise to pay to patent legal counsel funds to continue prosecuting Patents on behalf of AVRS. AVRS promises to pay AIP, or to such other holder of this promissory note (Note) as designate, the principal, together with a premium of ten percent (10%) of Principle and two percent (2%) of proceeds received by Company from a Monetization Event initiated by AIP. During the nine months ended September 30, 2023 the note payable for AIP had a balance of $
Note 6.Stockholder Equity / (Deficit)
The Company has issued shares of its common stock pursuant to certain agreements as described in Note 1.
Note 7. Change in Control
On December 29, 2022, the
Note 8. Appointment of CFO
Appointment of CFO
On May 8, 2023, Walter Geldenhuys resigned from his position of Chief Financial Officer of the Company and Chung Cam was appointed Chief Financial Officer of the Company. Mr. Cam will devote his full time and attention to his duties and will receive a monthly salary of $15,000 for the first 3 months and $20,000 monthly thereafter, payable in accordance with the Company’s standard payroll practices, provided that such amount may be deferred as determined by Mr. Cam or the Board to cover other Company expenses.
Note 9. Subsequent Events
Certificate of Designation
On
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The statements contained in this Quarterly Report that are not historical are “forward-looking statements”, which can be identified by use of terms such as “may”, “could”, “should”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target” or “continue”, the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently.
The forward-looking statements contained in this 10-Q are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this 10-Q are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to various factors listed in this Quarterly Report. All forward-looking statements speak only as of the date of this 10-Q. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
Overview
We are a software development company headquartered in Scottsdale, Arizona. We specialize in creating interface and application solutions for speech recognition technologies. Our speech recognition software and related firmware was first introduced in 1994 at an industry trade show. We currently have limited capital resources. We are not currently engaged in marketing any products. Our principal assets are our patents. Our business strategy will be to attempt to interest other companies in entering into license agreements or other strategic relationships and to support and defend our patents through infringement and interference proceedings, as appropriate. We are currently engaged in discussions with firms that could assist us in commercialization of our intellectual assets.
Results of Operations
We completed a stock exchange on May 19, 2008 and changed our business model. We have not generated any revenue since the stock exchange and do not have any cash generating product or licensing sales.
At September 30, 2023, we had current assets of $1,436 and current liabilities of $221,816, as compared to $138 current assets and $343,731 in current liabilities at December 31, 2022. Our increase in current assets is attributed issuing related party promissory notes. Our decrease in current liabilities is attributed to payments of debt utilizing proceeds received from change in control transaction (Note 7) and debt extinguishment from Accounts Payable.
We had a net loss of $(181,489) and ($40,095) for the nine months ended September 30, 2023 and 2022, respectively. The increase in net loss is attributable to the increase of operational costs.
Liquidity and Capital Resources
For the nine months ended September 30, 2023, we used $332,761 of cash in operating activities and $1,051 in investing activities, and we received $335,110 from financing activities. As a result, for the nine months ended September 30, 2023 we recognized a $1,298 increase in cash on hand. For the nine months ended September 30, 2022, $35,789 cash was used in operating activities, $-0- cash in investing activities, and we received $5,000 cash from the sale of our common stock, and $18,793 advance from related party resulting in a $11,996 decrease in cash on hand for the period.
Historically, our President has loaned or advanced to us funds for working capital on an “as needed” basis. There is no assurance that these loans or advances will continue in the future. At September 30, 2023 and December 31, 2022, we owed our officers an aggregate of $107,181 and $162,380, respectively, for accrued payroll. On September 21, 2021 Mr. Geldenhuys advanced the Company $4,200. The advance was paid in full on January 7, 2022. In the nine months ending September 30, 2023 a related party advanced the Company $102,000 in promissory notes and Mr. Geldenhuys advanced the Company $7,000.
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.
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On April 20, 2015 we made a Promissory Note to Adapt IP for up to $20,000, and Adapt IP agreed to pay to our patent counsel $19,935 for patent work on our behalf. The Note matures one year from the date of the Note. We are obligated to repay the funds advanced by Adapt IP plus a premium of 10% of the principal amount and a percentage of proceeds received by us from any monetization event involving the patents. If we repay the Note within the six months of the date of the Note, the percentage will be 1%, and it will be 2% after six months. As of September 30, 2023, the Note has been paid in full.
On September 21, 2018, Advanced Voice Recognition Systems, Inc. (“AVRS”) and Buether Joe & Carpenter, LLC (“BJC) entered into a Letter of Engagement for Legal Services Limited Scope Agreement (“Agreement”) with Schmeiser, Olsen & Watts LLP (“the Firm”) pursuant to which the Firm will serve as local counsel in the United States District Court, District of Arizona. AVRS may terminate the Agreement at any time.
In carrying out our business strategy, we will likely continue to incur expenses in defending our patents and pursuing license agreements. We plan to raise additional funds through future sales of our securities or other means, until such time as our revenues are sufficient to meet our cost structure, and ultimately achieve profitable operations. There is no assurance we will be successful in raising additional capital or achieving profitable operations. Our board of directors may attempt to use non-cash consideration to satisfy obligations that may consist of restricted shares of our common stock. These actions would result in dilution of the ownership interests of existing shareholders and may further dilute our common stock book value.
To obtain sufficient funds to meet our future needs for capital, we will from time to time, evaluate opportunities to raise financing through sales of our securities. However, future equity or debt financing may not be available to us at all, or if available, may not be on terms acceptable to us. We do not intend to pay dividends to shareholders in the foreseeable future.
U.S. Patent #7,558,730 expands an extremely broad base of features in speech recognition and transcription across heterogeneous protocols. Costs totaling $58,277 have been capitalized and amortization began in the third quarter 2009. 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.
On September 22, 2015, Patent #9,142,217 titled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols” (an expansion of our fourth patent) was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning September 22, 2015 and ending 20 years from the application date of the parent application (U.S. Patent No 7,558,730) of November 27, 2001, or November 27, 2021. Costs totaling $35,068 have been capitalized and amortization began in the third quarter 2015. The patent was fully amortized in the fourth quarter 2021.
On April 3, 2018, U.S. Patent #9,934,786 titled “Speech Recognition and Transcription Among Users Having Heterogeneous Protocols” was issued by the U.S. Patent and Trademark Office. In accordance with 35 U.S.C. 154, the patent shall be for a term beginning April 3, 2018 and ending 20 years from the application date of the parent application (U.S. Patent No 7,558,730) of November 27, 2001, or November 27, 2021. Costs totaling $4575 have been capitalized and amortization began in the second quarter 2018. 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.
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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.
Item 3. Quantitative and Qualitative Disclosure 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 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and 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, 2021. 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-Q, 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.
We have identified, as of December 31, 2022 and 2021, a lack of segregation of duties in accounting and financial reporting activities, which we do not 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. Our chief executive officer and chief financial officer work closely and review all day-to-day transactional activities with the secretary Treasurer. The volume of the transactions of the Company is limited.
Management believes this lack of segregation of duties in accounting and financial reporting 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, 2022 and 2021 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.
Based on our evaluation, our chief executive officer and our chief financial officer, concluded that our disclosure controls and procedures are designed at a reasonable assurance level and were fully effective as of September 30, 2023 in providing reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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 Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 5. Legal Proceedings
From time to time, we may become involved in legal proceedings or other litigation that we consider to be a part of the ordinary course of our business. Presently, we are not involved in any litigation and to the best knowledge of management, there are no legal proceedings pending or threatened against the Company.
Item 6. Exhibits
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3(i).3 3(i).4
31.1 | Certificate of Designation dated October 25, 2023 and filed herewith Amended and Restated Articles of Incorporation and incorporated by reference to the Registrant’s Form 8-K filed on August 21, 2023. The Exhibit was inadvertently marked as exhibit 99.1. Section 302 Certification – Principal Executive Officer (1) |
31.2 | Section 302 Certification – Principal Financial Officer (1) |
32.1 | |
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(1) Certifications
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| ADVANCED VOICE RECOGNITION SYSTEMS, INC.
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Dated November 16, 2023 | By: | /s/ Walter Geldenhuys |
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| Walter Geldenhuys |
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| President, Chief Executive Officer (Principal Executive Officer) |
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Dated November 16, 2023 | By: | /s/ Chung Cam |
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| Chung Cam |
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| Chief Financial Officer (Principal Financial Officer) |
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Exhibit 31.1
CERTIFICATION
I, Walter Geldenhuys, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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; |
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(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; |
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(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 |
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(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 |
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(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. |
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Date: | November 16, 2023 | |
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Signature: | /s/ Walter Geldenhuys |
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| Walter Geldenhuys | |
Title: | President, Chief Executive Officer | |
Exhibit 31.2
CERTIFICATION
I, Chung Cam, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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; |
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(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; |
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(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 |
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(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 |
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(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: | November 16, 2023 | |
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Signature: | /s/ Chung Cam |
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| Chung Cam | |
Title: | Chief Financial Officer | |
Exhibit 32.1
SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Walter Geldenhuys, President, Chief Executive 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 Quarterly Report on Form 10-Q for quarterly period September 30, 2023, 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 |
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(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 |
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/s/ Chung Cam |
Chung Cam |
Chief Financial Officer |
November 16, 2023 |