<PAGE>

  As filed with the Securities and Exchange Commission on February 24, 2000.

                                               Registration No. 333-___________
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------



                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                               -----------------

                                   FORM S-8
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933

                               -----------------

                        APPLIED VOICE RECOGNITION, INC.
            (Exact Name of Registrant as Specified in its Charter)

                               -----------------

                      DELAWARE                         76-0513154
            (State or Other Jurisdiction            (I.R.S. Employer
         of Incorporation or Organization)        Identification No.)

                        1717 ST. JAMES PLACE, SUITE 242
                             HOUSTON, TEXAS 77056
                   (Address of Principal Executive Offices)

                               -----------------

     FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (TIMOTHY J. CONNOLLY)
   FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (MILTON A. SPIEGELHAUER)
      FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (ROBIN P. RITCHIE)

                           (Full Title of the Plan)

                               -----------------

         Name, Address and Telephone       Copy of Communications to:
         Number of Agent for Service:
                                                  SAMUEL N. ALLEN
             TIMOTHY J. CONNOLLY                  ROBERT G. REEDY
        APPLIED VOICE RECOGNITION, INC.        PORTER & HEDGES, L.L.P.
        1717 ST. JAMES PLACE, SUITE 242         700 LOUISIANA STREET
             HOUSTON, TEXAS 77056             HOUSTON, TEXAS 77002-2764
               (713) 621-3131                      (713) 226-0600

<TABLE>
<CAPTION>
                                            CALCULATION OF REGISTRATION FEE
====================================================================================================================
                                                            PROPOSED MAXIMUM       PROPOSED
                                               AMOUNT TO        OFFERING       MAXIMUM AGGREGATE       AMOUNT OF
   TITLE OF SECURITIES TO BE REGISTERED      BE REGISTERED  PRICE PER SHARE(1)   OFFERING PRICE     REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>                <C>                  <C>
Common Stock, par value $.001 per share        1,054,852         $0.5188             $547,258             $145.00
=====================================================================================================================
</TABLE>

(1)  Pursuant to Rule 457(c), the registration fee is calculated on the basis of
     the average of the high and low prices for the Common Stock on The Nasdaq
     Over-the-Counter Bulletin Board on February 23, 2000, $0.5188.
<PAGE>

                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

     The following documents listed under this Part I and the documents
incorporated by reference under Item 3 of Part II to this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act, and are incorporated herein by reference.


ITEM 1.  PLAN INFORMATION

     The information required to be provided to participants pursuant to this
Item is set forth in the Information Memorandum for the First Amended and
Restated Employment Agreement (Timothy J. Connolly), the First Amended and
Restated Employment Agreement (Milton A. Spiegelhauer), and the First Amended
and Restated Employment Agreement (Robin P. Ritchie) (collectively, the "Written
Compensation Contracts").


ITEM 2.  REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION

     The written statement required to be provided to participants pursuant to
this Item is set forth in the Information Memorandum  referenced in Item 1
above.





                                      I-1
<PAGE>

PROSPECTUS
----------

                        APPLIED VOICE RECOGNITION, INC.


                                ---------------

                                 656,703 Shares
                                  Common Stock

                                ---------------


    Applied Voice Recognition, Inc. has prepared this prospectus for use by the
selling stockholder listed on page 12 of this prospectus to allow them to sell
such shares without restriction.  The selling stockholder has indicated that
sales may be made by the methods described in the section entitled "Plan of
Distribution" in this prospectus.  We will file a supplemental prospectus if
required to do so by applicable securities laws to describe specific sales of
shares or to identify any selling stockholders not listed in this prospectus.

    Our common stock trades on the Over-the-Counter Bulletin Board under the
symbol "EDOC."  On February 23, 2000, the last reported sale price of the common
stock was $0.4375 per share.

    We will not receive any portion of the proceeds resulting from the sale of
the shares offered by the selling stockholders under this prospectus.  In
addition, we will pay for certain of the expenses relating to the registration
of the shares.  See "Plan of Distribution" and "Selling Stockholders."

    Our principal executive offices are located at 1717 St. James Place, Suite
242, Houston, Texas 77056, and our telephone number is (713) 621-3131.


                                ---------------

        YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" ON PAGES 3-11
           OF THIS PROSPECTUS BEFORE DECIDING TO BUY OUR SECURITIES.


                                ---------------


    Neither the Securities and Exchange Commission nor any state securities
commission has approved of the securities to be issued under this prospectus or
determined if this prospectus is accurate or adequate.  Any representation to
the contrary is a criminal offense.


               The date of this prospectus is February 24, 2000.
<PAGE>

                               TABLE OF CONTENTS
                                                                            Page
                                                                            ----

Where You Can Find More Information........................................... 2
Risk Factors.................................................................. 3
About Us......................................................................12
Use of Proceeds...............................................................12
Selling Stockholders..........................................................12
Plan of Distribution..........................................................12
Legal Matters.................................................................13
Experts.......................................................................13


                      WHERE YOU CAN FIND MORE INFORMATION

    We have filed a registration statement on Form S-8 with the SEC to register
the securities offered hereby.  This prospectus does not contain all of the
information contained in the registration statement, including its exhibits and
schedules.  You should refer to the registration statement for further
information about us and the securities the selling stockholder is offering.
Statements made in this prospectus about certain contracts or other documents
are not necessarily complete.  When we make such statements, we refer you to the
copies of those contracts or other documents that are filed as exhibits to the
registration statement, because those statements are qualified in all respects
by reference to those exhibits.  The registration statement, including exhibits
and schedules, is on file at the offices of the SEC and may be inspected without
charge.

    We file annual, quarterly and special reports, proxy statements and other
information with the SEC.  Our SEC filings, including the registration
statement, are available to the public over the Internet at the SEC's website at
http://www.sec.gov.  You also may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C.; New York, New York; and
Chicago, Illinois.  Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms.

    SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to other
documents we file with them.  That means we can disclose important information
to you by referring you to those documents.  The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information.  We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of
1934 until all of the securities covered by this prospectus are sold:

     .    Annual Report on Form 10-KSB for the year ended December 31, 1998, as
          amended;

     .    Quarterly Reports on Form 10-QSB for the quarters ended March 31, June
          30, and September 30, 1999, as amended;

     .    Current Reports on Form 8-K as filed on June 14, August 27, and
          November 19, 1999, and January 24, 2000, as amended; and

     .    The description of our common stock contained in the Form 8-A
          effective January 9, 1998 (Commission File No. 000-23607), including
          any amendments or reports filed to update the description.

    You may request a copy of these filings, which we will provide to you at no
cost, by writing or telephoning us at the following address:

                          Applied Voice Recognition, Inc.
                          1717 St. James Place, Suite 242
                          Houston, Texas 77056
                          Attention: Corporate Secretary
                          (telephone: (713) 621-3131)

                                       2
<PAGE>

                                  RISK FACTORS

     You should carefully consider the following risk factors and other
information set forth in this prospectus before deciding to buy our securities.

SUFFICIENCY OF FUNDS

We will be required to raise additional capital in order to continue our current
operations and proceed with the implementation of our new e-commerce initiative.

We expect to continue to incur significant losses on a quarterly and annual
basis in the near future on limited sales of our products and services.  In
addition, we may not be successful in increasing sales of our products and
services for the long term, or be able to achieve profitability.  Further, we
have had working capital deficits in the past.  Our long-term capital
requirements will depend on many factors, including, cash flow from operations,
working capital requirements, product development expenses and capital
expenditures.  As a result, we will be required to raise substantial additional
capital during 2000 to fund our current operations.  We will also require
substantial additional capital to implement our new business-to-business e-
commerce initiative, the E-DOCS PHYSICIAN NETWORK(TM) (the "EPN") and to
maintain and improve the profitability of our current medical transcription
operations.  Historically, we have relied upon the sale of equity securities and
short-term loans as our primary sources of funding to finance operations and
acquisitions.  To the extent that existing resources are insufficient to fund
our operations in the short- or long-term, we will need to raise additional
funds through public or private financings.  We may not be able to raise
additional financing on terms favorable to us or to our stockholders without
substantial dilution of their ownership and rights.  If we are unable to raise
sufficient funds to satisfy either short- or long-term requirements, there would
be substantial doubt as to our ability to continue as a going concern and we may
be required to significantly curtail our operations, significantly alter our
growth strategy, forego market opportunities or obtain funds through
arrangements with strategic partners or others that may require us to relinquish
material rights to certain of our technologies or potential markets.

LIMITED HISTORY OF BUSINESS OPERATIONS; ANTICIPATION OF CONTINUED LOSSES

Due to its limited nature, you should not rely on our operating history as an
indicator of our future performance.

We have incurred significant net losses since our inception and expect to
continue to incur significant losses on a quarterly and annual basis in the
future.  For the eleven months ended November 30, 1999, we recorded a net loss
of $6,828,611, or $.45 per share, on net sales of $4,779,906.  As of November
30, 1999, our accumulated deficit was $22,285,376.  We have achieved only
limited revenues to date, and our ability to generate significant revenues is
subject to substantial uncertainty.  Our limited operating history makes the
prediction of future results of operations difficult or impossible, and we may
not be able to sustain revenue growth or achieve profitability.  Prior to
January 1998, our marketing and development efforts were focused on the creation
and sale of voice recognition word processing products intended for the general
office market.  In January 1998, we began to focus on the medical transcription
needs of the healthcare industry.  During this time, we redesigned our principal
product to focus on this new market, worked to develop an integrated, Internet-
based complete medical transcription solution, and acquired traditional medical
transcription companies in the Dallas, Texas; New York, New York; Manila,
Phillippines; and Denver, Colorado areas. However, we have achieved limited
revenues to date from sales of our medical transcription voice recognition
software and the performance of traditional medical transcription services. In
January 2000, we completed the sale of our medical transcription operations
located in Houston, Texas; New York, New York; and Manila, Philippines. Our
restructuring was intended to remove operations that were incurring substantial
losses in excess of $3,600,000 annually to alleviate the strain on our cash
flow. We have retained our Houston corporate operations and some Houston medical
transcription operations, along with our Dallas, Texas; Tyler, Texas; and
Denver, Colorado medical transcription operations, and plan to continue and
expand those operations. We have abandoned our acquisition strategy and the
development and sale of VoiceCOMMANDER(TM) 99, our dictation voice recognition
software application, to focus on developing the EPN. The EPN is a business-to-
business

                                       3
<PAGE>

e-commerce initiative designed to service other needs of our medical
transcription clients. Although the development of the EPN is in the very early
stages, we intend to integrate the EPN with our Internet-based medical
transcription service. Accordingly, we have a limited operating history upon
which you can base an evaluation of us and our current prospects. You must
consider us and our prospects in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets such as the
electronic and Internet-based medical transcription market and the emerging
business-to-business e-commerce market. To address these risks, we must respond
to competitive developments, continue to attract, retain and motivate qualified
persons, successfully implement our advertising program, continue to upgrade our
technologies, commercialize products and services incorporating such
technologies, and successfully implement our strategic business plan to
penetrate the healthcare transcription market. We may not be successful in
addressing such risks.

RISKS ASSOCIATED WITH A DEVELOPING MARKET AND THE ACCEPTANCE OF OUR PRODUCTS AND
SERVICES

Growth in the use of the Internet and automated speech recognition technology in
the healthcare transcription industry is an important factor in our business
plan.

The medical transcription market is well established; however, the use of the
Internet in the healthcare transcription industry, and the Internet markets in
general, have only recently begun to develop and are characterized by rapidly
changing technology, evolving industry standards and customer demands, and
frequent new product introductions and enhancements.  The healthcare
transcription-related Internet markets are highly dependent upon the increased
use of the Internet by healthcare professionals and continued price and
performance improvements in personal computers.  Our future operating results
will depend upon the emergence of the Internet in the healthcare transcription
market, our ability to develop and improve our technology and the successful
implementation of our marketing plan and the EPN.  However, the healthcare
transcription-related Internet markets may not develop or we may not achieve
market acceptance of our products and services or execute our business plan
successfully.  As is typical in the case of a new and rapidly evolving industry,
demand and market acceptance for recently introduced products and services are
subject to a high level of uncertainty.  The industry is young and has few
proven products.  If widespread use of the Internet does not develop in the
healthcare transcription industry, our business, results of operations and
financial condition will be materially adversely affected.  Because the market
for our products and services is new and evolving, it is difficult to predict
the size of this market and growth rate, if any.  The market for our products
and services may not develop or the demand for our products or services may not
emerge or become sustainable.  If the market fails to develop, develops more
slowly than expected or becomes saturated with competitors, or if our products
and services do not achieve or sustain market acceptance, our business, results
of operations and financial condition will be materially adversely affected.

DEPENDENCE ON PRINCIPAL PRODUCTS AND SERVICES

Our future results depend primarily upon the future success of our latest
product for the healthcare transcription market, the efficient operation of our
transcription operations and the successful introduction of our new
business-to-business e-commerce initiative.

Currently, we primarily derive our revenue from the sale of traditional
transcription services.  To date, we have had limited revenues from sales of our
VOICECOMMANDER(TM) line of products and have only derived revenue from the sale
of traditional transcription services since the acquisition of our first
transcription services company in March 1998.  Our future financial performance
will depend in part on our ability to continue to develop and establish our
traditional and Internet-based medical transcription service, and to effectively
develop and introduce the EPN.  However, we may not be successful in developing
these or other products or services in a manner which meets with market
acceptance.  In addition, new product releases by us, whether improved versions
of our current Internet-based products or introductions of other new products,
may contain undetected errors that require significant design modifications,
resulting in a loss of customer confidence and adversely affecting the use of
our product(s) and services.  Our future success will depend in significant part
on our ability to develop new product releases and to continually improve the
performance, features and reliability of our current Internet-based products in
response to both evolving demands of the healthcare transcription

                                       4
<PAGE>

marketplace and competitive product offerings, and we may not be successful in
doing so. Any factors adversely affecting the traditional transcription market,
such as increased price competition or the introduction of technologically
superior products and services, could have a material adverse effect on us.

MANAGEMENT OF GROWTH; NEED TO ESTABLISH INFRASTRUCTURE; ADDITIONAL PERSONNEL

Our success will depend on our ability to effectively manage our growth and
attract and retain additional personnel.

The rapid execution necessary for us to successfully offer our products and
services and implement our business plan in a rapidly evolving market requires
an effective planning and management process.  Our rapid growth places a
significant strain on our managerial, operational and financial resources.  In
order to manage our growth, we must:

  . implement and improve our operational and financial systems;
  . expand, train and manage our employee base; and
  . hire additional technical support personnel in order to convert healthcare
    professionals from traditional to Internet-related transcription methods.

There can be no assurance that we have made adequate allowances for the costs
and risks associated with this expansion, that our systems, procedures or
controls will be adequate to support our operations or that our management will
be able to achieve the rapid execution necessary to successfully offer our
products and services and implement our business plan simultaneously.  Our
future operating results will also depend on our ability to expand our sales and
expand our support organization commensurate with the growth of our business.
Any failure by our management to effectively anticipate, implement and manage
the changes required to sustain our growth could have a material adverse effect
on our business, results of operations and financial condition.  We may not be
able to effectively manage such change.


RAPID TECHNOLOGICAL CHANGE

We must respond quickly to technological developments and evolving industry
standards in order to remain competitive.

The healthcare information services industry is characterized by rapid
technological change, evolving customer needs and emerging technical standards.
While we believe that utilizing Internet-based technology can significantly
enhance the rendering of transcription services in the healthcare information
services industry, the introduction of competing services or products
incorporating new technologies, and the emergence of new technical standards
could render some or all of our services as unmarketable.  We believe that our
future success is dependent in part on our ability to enhance our current
services and develop new services that keep pace with technological developments
and emerging technical standards, and that address the increasingly
sophisticated needs of our customers.  We may not be successful in developing
and marketing enhancements to our existing services or new services that respond
to technological developments, emerging technical standards, or evolving
customer needs, on a timely basis or at all, and such enhancements or new
services, if developed and introduced, may not achieve market acceptance.  The
failure to develop and introduce service enhancements and new services in a
timely and cost-effective manner in response to changing technologies or
customer requirements, would have a material adverse effect on our business,
financial condition and results of operations.

RISKS ASSOCIATED WITH OUR DEPENDENCE ON THIRD-PARTY PROPRIETARY RIGHTS

All of our software products currently utilize IBM speech recognition software
engines.  The loss of this relationship would force us to redesign our products
to use alternative technology.

All of our speech recognition products utilize third-party speech recognition
software engines.  There are currently four major speech recognition software
engine manufacturers: Lernout & Hauspie Speech Products USA, Inc. ("L&H"),
International Business Machines Corp. ("IBM"), Philips Electronics N.V.
("Philips"), and Dragon Systems, Inc ("Dragon").  We currently have a non-
exclusive OEM Distribution Agreement with IBM that entitles us to embed and
utilize IBM's ViaVoice(TM) technology in our products.  For each unit of our
product that we license (sell), we must pay a license fee to IBM.  IBM may not
continue to manufacture and support ViaVoice(TM) or our arrangement with IBM may
be terminated.  The agreement with IBM may be terminated by IBM at any time for
acts or omissions that are considered to be so serious as to warrant
termination.  Although we have previously purchased 10,000 licenses of
ViaVoice(TM) from IBM, which can serve the needs of 40,000 customers, we may
need to buy additional licenses from IBM.  We

                                       5
<PAGE>

believe that if IBM discontinued or was unable to manufacture or support
ViaVoice(TM) or terminated our agreement with us that, with adequate time, we
could develop our products to utilize speech technology from other companies. If
we are unable to utilize the IBM technology and are unable to develop products
capable of utilizing alternative technology, our business, results of operations
and financial condition would be materially adversely affected.


COMPETITION

We are in an extremely competitive industry that is dominated by several
companies which have significantly greater financial, technical, and marketing
resources than we have.

The transcription services industry remains highly fragmented and primarily
consists of small, local or regional companies.  As a result, we compete with a
large number of third-party transcription companies that offer services similar
to ours and that target the same customers and qualified transcriptionists.  In
addition, there are several large national transcription service providers:
Medquist, Inc. (which recently acquired MRC Group, Inc., another large
transcription service provider), Transcend Services, Inc., Harris Corp. and
Rodeer Systems, Inc.  These competitors have significantly greater resources
than us.  We believe that our ability to compete depends upon many factors
within and outside of our control, including the timing and market acceptance of
our Internet-based transcription services, the successful development and market
acceptance of the EPN, the development of other service enhancements by us and
our competitors, service quality, performance, price, reliability, customer
service and support, and ability to attract qualified transcriptionists.  In
addition, the potential exists for large companies that do not currently provide
transcription services, but which currently provide other services to the
healthcare industry, to enter the transcription services field.  For example,
IDX Systems Corporation ("IDX") recently announced the acquisition of EDIX
Transcription, one of our larger competitors.  IDX is a provider of healthcare
information services and stated that it acquired EDIX because of perceived
synergies of the medical transcription business (data input) and health
information management businesses and is an example of an existing company that
could and has become a competitor. Such potential competitors could have
substantially greater financial, technical and marketing resources than us.  As
a result, such potential competitors, if they were to enter the transcription
business, could be able to respond more quickly to evolving technological
developments, changing customer needs or emerging technical standards or to
devote greater resources to the development, promotion or sale of their
services.  Our services also compete with the in-house transcription staffs of
our potential customers.  While we believe that our growth and earnings will
benefit from the outsourcing by healthcare providers of non-patient care
functions, including transcription services, the current trend could change
direction and cause healthcare providers to bring all or some of those services
in-house.  In addition, competition may increase due to consolidation of
transcription companies.  Increased competition may result in price reductions
for our services, reduced operating margins and an inability to increase our
market share, any of which would have a material adverse effect on our business,
financial condition and results of operations. We may not be able to compete
successfully against current or future competitors, and competitive pressures
may have a material adverse effect on our business, financial condition and
results of operations.


DEPENDENCE ON KEY PERSONNEL

Our success is heavily dependent upon our retention of certain of our key
officers.

Our performance is substantially dependent on the performance of our current
executive officers and key employees and the successful replacement of certain
executive officers and key employees who left the Company as part of the recent
corporate restructuring. In particular, the services of Timothy J. Connolly, our
current Chairman, would be difficult to replace. We have entered into an
employment agreement with Mr. Connolly, although we do not currently have a key
person life insurance policy on his life. However, any key person life insurance
policy we do put in place for Mr. Connolly may not be sufficient to compensate
us for the loss of his services. The loss of the services of any other key
employees and/or our inability to successfully replace those executive officers
we have lost could have a material adverse effect on our business, results of
operations or financial condition.

                                       6
<PAGE>

We are heavily dependent upon our ability to attract, retain and motivate
skilled technical and managerial personnel. Our future success also depends on
our continuing ability to identify, hire, train and retain other highly
qualified technical and managerial personnel. Competition for such personnel is
intense, and we may not be able to attract, assimilate or retain other highly
qualified technical and managerial personnel in the future. The inability to
attract, hire or retain the necessary technical and managerial personnel could
have a material adverse effect upon our business, results of operations or
financial condition.

ABILITY TO ATTRACT QUALIFIED TRANSCRIPTIONISTS

Competition for qualified transcriptionists is intense.

Our success is also dependent, in part, upon our ability to attract and retain
qualified transcriptionists, who can provide the accuracy and turnaround time
required by our customers.  Competition for transcriptionists is intense.  We
may not be successful in attracting and retaining the personnel necessary to
conduct our business successfully.  In addition, our inability to attract, hire,
assimilate and retain such personnel could have a material adverse effect upon
our business, financial condition and results of operations.  We may ultimately
prove unable to attract sufficient qualified transcriptionists to operate our
facilities.


UNCERTAINTY REGARDING GOVERNMENT HEALTHCARE REFORM AND REGULATION

Our business may be adversely affected by future changes in governmental
regulations relating to the healthcare industry.

The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the outsourcing arrangements of healthcare
providers.  Several states and the United States federal government are
investigating a variety of alternatives to reform the healthcare delivery system
and further reduce and control healthcare spending.  These reform efforts
include proposals to limit spending on healthcare items and services, limit
coverage for new technology, limit or control directly the prices healthcare
providers and drug and device manufacturers may charge for their services and
products, and otherwise change the environment in which providers operate.  The
scope and timing of such reforms cannot be predicted at this time, but if
adopted and implemented, they could have a material adverse effect on our
business.  Healthcare providers may react to these proposals and the uncertainty
surrounding such proposals by curtailing outsourcing arrangements or deferring
decisions regarding the use of outsourced services.  In response to this
environment, many healthcare providers are consolidating to create larger
healthcare delivery organizations.  This consolidation reduces the number of
potential customers for our products and services, and increases the bargaining
power of these organizations, which could lead to reductions in the amount we
are able to charge for our products and services.  The impact of these
developments in the healthcare industry is difficult to predict and could have a
material adverse effect on our business, operating results and financial
condition.

In providing our services, we are subject to certain statutory, regulatory and
common law requirements regarding the confidentiality of such medical
information.  We require our personnel to agree to keep all medical information
confidential and monitor compliance with applicable confidentiality
requirements.  However, the failure to comply with such confidentiality
requirements could have a material adverse effect on our business, operating
results and financial condition.


INTELLECTUAL PROPERTY AND PROPERTY RIGHTS

Our success is heavily dependent upon a combination of proprietary software
technology and hardware purchased and licensed from third parties.  Our current
protections may not be sufficient to protect these technologies.

We currently have only two issued patents and three patent applications pending,
and rely on a combination of trade secret, copyright and trademark laws, non-
disclosure agreements and contractual provisions to protect our proprietary
rights in our software and technology.  However, these protections may not
prevent misappropriation of this technology.  Moreover, third parties could
independently develop competing technologies that are substantially equivalent
or superior to our technologies.  As part of our recent sale of certain of our
medical transcription operations to Lonestar Medical Transcription USA, Inc., a
wholly-owned subsidiary of L & H Investment Co., N.V., we assigned Lonestar and
LHIC non-exclusive rights to our VC99 code. Although we believe that our
services and products and the proprietary rights developed or licensed by us do
not infringe patents and proprietary

                                       7
<PAGE>

rights of other parties, those parties may assert infringement claims,
regardless of merit, against us in the future. In addition, we have applied for
several federal service mark and trademark registrations for certain of the
marks we use, and have been granted U.S. Trademarks for various marks, including
Applied Voice Recognition and "VOICE-COMMANDER(TM)." There can be no assurance
that any further trademark registrations will be issued or, if issued, will
provide us with adequate protection against competitors.

Any patent applications now pending or filed in the future may not result in
patents being issued or, if patents are issued, the claims allowed may not be
sufficiently broad to protect what we believe to be our proprietary rights.  In
addition, pending applications or any patents licensed to us or issued or
licensed to us in the future may not afford any competitive advantages to us or
may be challenged by third parties or circumvented or designed around by others.
The cost of litigation to uphold the validity and prevent infringement of
patents and to enforce licensing rights can be substantial.  Furthermore, others
may independently develop similar technologies or duplicate the technology owned
by or licensed to us or design around the patented aspects of such technology.
Our services and products may or may not infringe patents or other rights owned
by others, licenses for which may not be available to us.


POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

Various market and economic factors may cause our future quarterly operating
results to vary.

Because of our limited operating history, we do not have historical financial
data for any significant period of time on which to base planned operating
expenses.  Our expense levels are based in part on our expectations as to future
revenues and, to a large extent, are fixed.  Quarterly sales and operating
results are generally difficult to forecast.  We may not be able to adjust
spending in a timely manner to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall in relation to our expectations would
have an immediate adverse impact on our business, results of operations and
financial condition.  In addition, we plan to significantly increase our
operating expenses to fund greater levels of research and development, increase
our sales and marketing operations, broaden our customer support capabilities
and establish brand identity and strategic alliances.  To the extent that such
expenses precede or are not subsequently followed by increased revenues, our
business, results of operations and financial condition will be materially
adversely affected.

Our operating results may fluctuate significantly in the future because of a
variety of factors, some of which are beyond our control.  These factors include
general economic conditions, specific economic conditions in the transcription
industry in general and the healthcare transcription industry specifically,
usage of healthcare transcription related and Internet-based technology,
seasonal trends in sales, capital expenditures and other costs relating to the
expansion of operations, the introduction of new products or services by us or
our competitors, the mix of the services sold and the channels through which
those services are sold and pricing changes.  As a strategic response to a
changing competitive environment, we may elect from time to time to make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business, results of operations and financial
condition.  We believe that period to period comparisons of our operating
results are not meaningful and should not be relied upon for an indication of
future performance.  Due to all of the foregoing factors, it is likely that in
some future quarter, our operating results may be below the expectations of
public market analysts and investors.  In such event, the price of our common
stock would likely be materially adversely affected.

                                       8
<PAGE>

CONCENTRATION OF STOCK OWNERSHIP

Our insiders beneficially own a majority of our common stock.

Our officers, directors and holders of more than 5% of our outstanding voting
securities beneficially own or have voting control over a total of 26,023,115
shares, which if all were issued today, would represent approximately 61% of the
total outstanding common stock.  Accordingly, these stockholders will have
substantial influence over our policies and management, and if these
stockholders act as a group, they will be able to elect substantially all of our
directors, to dissolve, merge, or sell our assets.  In addition pursuant to
their certificates of designation and other agreements, certain of our common
and preferred stockholders have the right to designate members of the Board of
Directors, as follows:

  .  SERIES A PREFERRED STOCK -- For so long as Entrepreneurial Investors, Ltd.
     ("EIL") owns at least 156,250 shares of the Series A Preferred Stock, we
     have agreed to use our best efforts to have one member of the Board of
     Directors be chosen by Equity Services, Ltd. ("ESL"). EIL currently holds
     186,000 shares of the Series A Preferred Stock, although EIL has entered
     into a stock exchange agreement with us for the exchange of all their
     Series A shares for shares of Series G Preferred Stock, which have no
     rights of designation.

  .  SERIES C PREFERRED STOCK -- For so long as the current holders of the
     Series C Preferred Stock hold at least 77,263 shares of the Series C
     Preferred Stock, we have agreed to use our best efforts to have one member
     of the Board of Directors be chosen by ESL. The holders of the Series C
     Preferred Stock currently hold 153,538 shares of the Series C Preferred
     Stock, although they have entered into a stock exchange agreement with us
     for the exchange of all their Series C shares for shares of Series G
     Preferred Stock, which have no rights of designation.

As a result of such director designation rights, ESL renominated Mr. Daniel S.
Dornier to our Board of Directors in July 1999.  Mr. Dornier has been appointed
to the Board of Directors.


SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

The market price of our common stock could be adversely affected by sales of
restricted and other securities.

As of February 17, 1999, there were approximately 18,240,411 shares of our
common stock issued and outstanding.  Approximately 1,333,052 shares of common
stock are issuable upon exercise of employee and director stock options under
our 1997 Incentive Plan and will become eligible for sale in the public markets
at prescribed times in the future.  Our issuance of such 1,333,052 shares is
registered on a Form S-8 Registration Statement.  We also have outstanding
warrants which are exercisable into an aggregate of 4,091,245 shares of common
stock.  In addition, our series of preferred stock are convertible into
additional shares of our common stock.  The following table illustrates the
maximum number of shares of common stock issuable upon the conversion of our
outstanding preferred stock:

                                PREFERRED STOCK
-------------------------------------------------------------------------------
                                         Issued and        Convertible into
   Class of Preferred      Authorized    Outstanding      Common Stock (max.)
-----------------------------------------------------     ---------------------
Series A Preferred Stock*    312,500       186,000             5,075,722
Series B Preferred Stock       3,000         1,440             2,571,464
Series C Preferred Stock*    231,788       153,538             5,213,713
Series E Preferred Stock*      5,000         2,000             6,756,433
Series 2 Preferred Stock     250,000      1,756.66               175,666
------------
* The holders of the Series A, Series C and Series E Preferred Stock have
 entered into Stock Exchange Agreements as of February 17, 2000, to exchange
 their shares of preferred stock for shares of Series G Preferred Stock.  The
 Series G Preferred Stock must be converted into common stock within seven days
 of its

                                       9
<PAGE>

 issuance.  The number of shares of common stock to be issued pursuant to
 that conversion will be the same as the number listed in the table above for
 each of the series.

In addition to the shares of preferred stock listed in the table above, we are
obligated to issue another 7,386.01 shares of Series 2 Preferred Stock as
consideration in three of our acquisitions.  The remaining shares of Series 2
Preferred Stock will be issued in equal annual installments on the anniversary
of the pertinent acquisition dates.  Furthermore, we may be obligated to issue
another 2,350 shares of Series 1 Preferred Stock and 2,990 shares of Series 2
Preferred Stock as contingent consideration in three of our acquisitions should
the acquired operations meet certain annual financial targets.  All the shares
of Series 1 Preferred Stock and Series 2 Preferred Stock remaining to be issued
will be convertible into an estimated maximum of 235,000 (based on an average
stock price of $1.00) and 1,037,602 shares of common stock, respectively.
In addition to the shares of common stock registered for resale by the selling
stockholder herein, we have registered 10,362,520 shares of common stock for
resale by certain other selling stockholders.  The issuance and sale of a
significant number of shares of common stock upon the exercise of stock options
and warrants, the conversion of our outstanding preferred stock, or the sales of
a substantial number of shares of common stock pursuant to Rule 144 or
otherwise, could adversely affect the market price of the common stock.

CERTAIN ANTI-TAKEOVER PROVISIONS AFFECTING STOCKHOLDERS

Our Board of Directors may authorize the issuance of preferred stock without
stockholder approval.

Our Certificate of Incorporation and Bylaws contain provisions that might
diminish the likelihood that a potential acquiror would make an offer for the
common stock, impede a transaction favorable to the interest of the stockholders
or increase the difficulty of removing incumbent Board of Directors or
management.  Currently, our Board of Directors has the authority, without
further stockholder approval, to issue up to 2,000,000 shares of preferred stock
in one or more series and to determine the price, rights, preferences and
privileges of those shares.  We currently have nine series of preferred stock
designated as more fully described in the table contained in the previous risk
factor.  See "Shares Eligible for Future Sale; Registration Rights."  The rights
of our common stockholders will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that is currently issued or may
be issued in the future.  The issuance of additional shares of preferred stock,
while potentially providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock.  We anticipate issuing additional shares of preferred stock through one
or more private placements during 2000.  In addition, certain provisions of our
Certificate of Incorporation, including provisions that provide for the Board of
Directors to be divided into three classes to serve for staggered three-year
terms, may have the effect of delaying or preventing a change of control, which
could adversely affect the market price of our common stock.


LIMITED MARKET FOR SECURITIES; LACK OF LIQUIDITY

The current public market for our common stock is limited and highly volatile.

The shares of common stock offered hereby are traded on the Over-the-Counter
Bulletin Board ("OTCBB").  Trading activity in our common stock should be
considered sporadic, illiquid and highly volatile, and an active trading market
for our common stock may not exist in the future.  Even if a market for the
common stock offered by this prospectus continues to exist, investors may not be
able to resell their common stock at or above the purchase price for which such
investors purchased such shares.  In addition, the SEC has adopted regulations
that generally define a penny stock to be any equity security that has a market
price (as defined in such regulations) of less than $5.00 per share, subject to
certain exceptions.  If the common stock meets the definition of a penny stock,
it will be subjected to these regulations which impose additional sales practice
requirements on broker-dealers

                                       10
<PAGE>

who sell such securities to persons other than established customers and
accredited investors (generally institutions with assets in excess of $5,000,000
and individuals with a net worth in excess of $1,000,000 or annual income
exceeding $200,000 (individually) or $300,000 (jointly with their spouse)).
These regulations are currently not applicable to trading in our common stock,
however, if they become applicable, these regulations could affect a holder's
ability to sell any of the shares offered by this prospectus.


DIVIDENDS

We do not intend to pay cash dividends on our common stock in the near future
and are required to pay dividends on our outstanding series of preferred stock.

Our proposed operations may not result in sufficient revenues to enable us to
operate at a profitable level.  We have not paid any dividends on our common
stock to date, and have no plans to pay any dividends on our common stock for
the foreseeable future. Our Series A and C Preferred Stock accrue a dividend of
4% per year, payable in shares of our common stock based on a share price equal
to the average closing price of our common stock for the 30 days prior to the
particular dividend date. Our Series B Preferred Stock accrues a dividend of 5%
per year, payable in cash or shares of our common stock based on a share price
equal to 78% of the 5 day average closing bid price of our common stock upon the
date of each conversion. Our Series E Preferred Stock accrues a dividend of 6%
per year, payable in cash or in shares of our common stock based on a share
price equal to the average closing price of our common stock for the 30 days
prior to the particular dividend date. Our Series 1 and 2 Preferred Stock,
accrue an 8% dividend payable in cash or in shares of common stock based upon
the greater of $1.00 or the average closing price of our common stock for the 30
days prior to the particular dividend date. Dividends on all of our shares of
preferred stock are cumulative. In addition, we anticipate that any preferred
stock issued in the future will also include dividend rights, including any
issued in connection with our strategy of acquiring healthcare transcription
companies.


DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this prospectus are based upon our management's beliefs
and expectations and may not be correct.

This Prospectus contains certain statements that are "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
Those statements include, among other things, the discussions of our business
strategy and expectations concerning market position, future operations,
margins, profitability, liquidity and capital resources.  Forward Looking
Statements are included in this section under "Limited History of Business
Operations; Anticipation of Continued Losses," "Sufficiency of Funds," "Risks
Associated with a Developing Market and the Acceptance of our Products and
Services," "Dependence on Principal Products and Services," "Management of
Growth; Need to Establish Infrastructure; Additional Personnel," "Rapid
Technological Change," "Risks Associated with Our Dependence on Third-Party
Proprietary Rights," "Competition," "Dependence on Key Personnel," "Ability to
Attract Qualified Transcriptionists," "Uncertainty Regarding Government
Healthcare Reform and Regulation," "Intellectual Property and Property Rights,"
"Potential Fluctuations in Quarterly Results," "Concentration of Stock
Ownership," "Shares Eligible for Future Sale; Registration Rights," "Certain
Anti-Takeover Provisions Affecting Stockholders," "Limited Market for
Securities; Lack of Liquidity" and "Dividends." Although we believe that the
expectations reflected in Forward Looking Statements are reasonable, we can give
no assurance that such expectations will prove to have been correct.  Generally,
these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies, or
projections involving anticipated revenues, expenses, earnings, levels of
capital expenditures, liquidity or indebtedness or other aspects of operating
results or financial position.  All phases of our operations are subject to a
number of uncertainties, risks and other influences, many of which are outside
our control and any one of which, or any combination of which, could materially
affect the results of our operations and whether the Forward Looking Statements
made by us ultimately prove to be accurate.  Important factors that could cause
actual results to differ materially from our expectations are disclosed in this
"Risk Factors" section of this prospectus.

                                       11
<PAGE>


                                    ABOUT US

     We provide traditional and Internet-based transcription services to
healthcare professionals. Our principal executive offices are located at 1717
St. James Place, Suite 242, Houston, Texas 77056, and our telephone number is
(713) 621-3131.

                                USE OF PROCEEDS

     We will not receive any of the proceeds from the sale of the common
stock offered by the selling stockholders.

                              SELLING STOCKHOLDER

     The following table sets forth certain information concerning the selling
stockholder. Assuming that the selling stockholders offer all of their shares of
common stock, the selling stockholder will not have any beneficial ownership.
The shares are being registered to permit the selling stockholders and certain
of their respective pledgees, donees, transferors or other successors in
interest to offer the shares for resale from time to time. See "Plan of
Distribution."

<TABLE>
<CAPTION>
                                                  NUMBER OF SHARES                                    NUMBER OF          PERCENTAGE
                                                   OWNED AND TO BE               NUMBER OF             SHARES             OF SHARES
                                                   OWNED PRIOR TO              SHARES BEING          OWNED AFTER         OWNED AFTER
           SELLING STOCKHOLDER                     OFFERING (1)(2)              OFFERED (2)          OFFERING (3)         OFFERING
 -------------------------------------          --------------------         ----------------      ----------------      -----------
<S>                                               <C>                           <C>                 <C>                  <C>
Timothy J. Connolly (4)...............               6,374,696                   656,703             7,031,399              38.55%
</TABLE>

(1)  The selling stockholder has sole voting and sole investment power with
     respect to all shares owned.

(2)  Ownership is determined in accordance with Rule 13d-3 under the Exchange
     Act.  The actual number of shares beneficially owned and offered for sale
     hereunder is subject to adjustment and could be materially less or more
     than the estimated account indicated depending upon factors which we cannot
     predict at this time.

(3)  Assumes the sale of all shares offered hereby to persons who are not
     affiliates of the selling stockholder.

(4)  Represents shares issuable upon exercises of three-year warrants issued in
     connection with the certain bridge loan financing agreements entered into
     with these selling stockholders over two periods during May through July
     1997, and December 1998.  The warrants issued during 1997 and 1998 have
     exercise prices of $1.60 and $1.00 per share, respectively, and are all
     fully vested.

     Mr. Timothy J. Connolly is the President and sole owner of Voice
     Technologies Management Corp. ("VTMC"), which serves as the general partner
     of Voice Technologies Partners, Ltd. ("VTP").  Mr. Connolly has served as
     our Chairman of the Board and as a Director since August 1996.  The
     additional shares listed as beneficially held, which will be owned after
     completion of this offering, include 5,590,000 shares of common stock owned
     by VTP, 32,143 shares of common stock owned by Mr. Connolly, 126,970 shares
     of common stock owned by Jan Carson Connolly, his wife, and 500 and 100,000
     shares of common stock issuable upon exercise of currently exercisable
     employee stock options owned by Mr. and Mrs. Connolly, respectively.

                              PLAN OF DISTRIBUTION

    Pursuant to this prospectus, the selling stockholder may sell shares of
common stock from time to time in transactions on such exchanges or markets as
the common stock may be listed for trading from time to time, in separately-
negotiated transactions, in an underwritten offering, or by a combination of
such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices.  As used herein, "selling stockholder" includes
pledgees, donees, transferees and other successors in interest to the selling
stockholder selling shares received from a selling stockholder after the date of
this prospectus.  The selling stockholder may effect such transactions by
selling the

                                       12
<PAGE>

shares of common stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholder or the purchasers of the shares for whom such broker-
dealers may act as agent or to whom they sell as principal, or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions).

    Other methods by which the shares of common stock may be sold include,
without limitation: (i) transactions which involve cross or block trades or any
other transaction permitted by the OTCBB or other trading markets, (ii) "at the
market" to or through market makers or into an existing market for the common
stock, (iii) in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through agents,
(iv) through transactions in options or swaps or other derivatives (whether
exchange-listed or otherwise), (v) through short sales, or (vi) any combination
of any such methods of sale.  The selling stockholder may also enter into option
or other transactions with broker-dealers which require the delivery to such
broker dealers of the common stock offered hereby, which common stock such
broker-dealers may resell pursuant to this prospectus.  The selling stockholder
may also make sales pursuant to Rule 144 under the Securities Act of 1933, as
amended, if such exemption from registration is otherwise available.

    The selling stockholder and any broker-dealers who act in connection with
the sale of shares of common stock hereunder will be subject to the prospectus
delivery requirements because they may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.  All costs,
expenses and fees in connection with the registration of the common stock
offered hereby will be borne by us.  Brokerage commissions attributable to the
sale of common stock, if any,  will be borne by the selling stockholder.  We
have informed the selling stockholder that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934 may apply to
their sales in the market.

                                 LEGAL MATTERS

    The legality of the securities offered hereby will be passed on for us by
Porter & Hedges, L.L.P., Houston, Texas.


                                    EXPERTS

    The consolidated financial statements of Applied Voice Recognition, Inc.
appearing in Applied Voice Recognition, Inc.'s Annual Report (Form 10-KSB) for
the year ended December 31, 1998, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt about
the Company's ability to continue as a going concern as described in Note 2 to
the consolidated financial statements) included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.

                                       13
<PAGE>

    WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE
ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS.  YOU
MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.  THIS PROSPECTUS DOES NOT OFFER
TO SELL OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL.  THE
INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE BELOW.



                                -------------

                               TABLE OF CONTENTS


                                                                            Page
                                                                            ----

Where You Can Find More Information.........................................  2
Risk Factors................................................................  3
About Us.................................................................... 12
Use of Proceeds............................................................. 12
Selling Stockholders........................................................ 12
Plan of Distribution........................................................ 12
Legal Matters............................................................... 13
Experts..................................................................... 13


                                -------------


                        APPLIED VOICE RECOGNITION, INC.



                                 656,703 SHARES
                                       OF
                                  COMMON STOCK





                                --------------

                                  PROSPECTUS

                                --------------







                                -------------



                               February 24, 2000
<PAGE>

                                    PART II

              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


ITEM 3.  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The contents of the following documents filed by Applied Voice Recognition,
Inc., a Delaware corporation (the "Company" or "Registrant"), with the
Securities and Exchange Commission ("Commission") are incorporated into this
registration statement ("Registration Statement") by reference:

     (i)   Annual Report on Form 10-KSB for the year ended December 31, 1998, as
           amended;

     (ii)  Quarterly Reports on Form 10-QSB for the quarters ended March 31,
           June 30, and September 30, 1999;

     (iii) Current Reports on Form 8-K as filed on June 14, August 27, and
           November 19, 1999, and January 24, 2000; and

     (iv)  the description of the Company's Common Stock contained in the
           Company's Registration Statement on Form 8-A effective January 9,
           1998 (Commission File No. 000-23607), including any amendments or
           reports filed for the purpose of updating such description.

     All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), subsequent to the filing date of this Registration
Statement and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents.  The Company will provide without
charge to each participant in the written compensation contracts, upon written
or oral request of such person, a copy (without exhibits, unless such exhibits
are specifically incorporated by reference) of any or all of the documents
incorporated by reference pursuant to this Item 3.

ITEM 4.  DESCRIPTION OF SECURITIES

     Not Applicable.


ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL

     Not Applicable.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the DGCL permits a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action.  In an action brought to obtain a
judgment in the corporation's favor, whether by the corporation itself or
derivatively by a stockholder, the corporation may only indemnify for expenses,
including attorney's fees, actually and reasonably incurred in connection with
the defense or settlement of such action, and the corporation may not indemnify
for amounts paid in satisfaction of a judgment or in settlement of the claim. In
any such action, no indemnification may be paid in respect of any claim, issue
or matter as to which such person shall have been adjudged liable to the
corporation except as otherwise approved by the Delaware Court of Chancery or
the court in which the claim was

                                     II-1
<PAGE>

brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses.

     The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner reasonably believed to
be in, or not opposed to, the best interests of the corporation and, in the case
of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful.  The statute contains additional limitations
applicable to criminal actions and to actions brought by or in the name of the
corporation.  The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (1) by a majority vote of
a quorum of disinterested members of the board of directors, (2) by independent
legal counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.

     The Certificate of Incorporation and Bylaws of the Company require it to
indemnify its directors to the fullest extent permitted under Delaware law.
Pursuant to employment agreements entered into by the Company with its executive
officers and certain other key employees, the Company must indemnify such
officers and employees in the same manner and to the same extent that the
Company is required to indemnify its directors under the Company's Bylaws.  The
Certificate of Incorporation limits the personal liability of a director to the
corporation or its stockholders to damages for breach of the director's
fiduciary duty.

     The Company maintains officers' and directors' indemnity insurance against
expenses of defending claims or payment of amounts arising out of good-faith
conduct believed by the officer or director to be in or not opposed to the best
interest of the Company.

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED

     Not Applicable.

ITEM 8.   EXHIBITS

EXHIBIT
  NO.                                 DESCRIPTION
-------      -------------------------------------------------------------------
 4.1         First Amended and Restated Employment Agreement (Timothy J.
             Connolly) effective as of January 1, 2000 (filed herewith).

 4.2         First Amended and Restated Employment Agreement (Milton A.
             Spiegelhauer) effective as of January 1, 2000 (filed herewith).

 4.3         First Amended and Restated Employment Agreement (Robin P. Ritchie)
             effective January 1, 2000 (filed herewith).

 5.1         Opinion of Porter & Hedges, L.L.P. with respect to legality of
             securities (filed herewith).

23.1         Consent of Ernst & Young LLP (filed herewith).

23.2         Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).

24.1         Powers of Attorney (included on signature page).

                                     II-2
<PAGE>

ITEM 9.   UNDERTAKINGS

     (a)  Undertaking to Update

          The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this Registration Statement to:

              (i)   include any prospectus required by section 10(a)(3) of the
                    Securities Act of 1933, as amended (the "Securities Act");

              (ii)  reflect in the prospectus any facts or events arising after
                    the effective date of the Registration Statement (or the
                    most recent post-effective amendment thereof) which,
                    individually or in the aggregate, represent a fundamental
                    change in the information in the Registration Statement; and

              (iii) include any material information with respect to the plan of
                    distribution not previously disclosed in the Registration
                    Statement or any material change to such information in the
                    Registration Statement;

     Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
     the information required to be included in a post-effective amendment by
     those paragraphs is contained in periodic reports filed by the Registrant
     pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
     amended (the "Exchange Act") that are incorporated by reference in the
     Registration Statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) Undertaking With Respect to Documents Incorporated by Reference

          The undersigned Registrant hereby undertakes that, for purposes of
     determining any liability under the Securities Act, each filing of the
     Registrant's annual report pursuant to section 13(a) or section 15(d) of
     the Exchange Act that is incorporated by reference in this Registration
     Statement shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.

     (c) Undertaking With Respect to Indemnification

          Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and controlling
     persons of the Registrant pursuant to the foregoing provisions, or
     otherwise, the Registrant has been advised that in the opinion of the
     Securities and Exchange Commission such indemnification is against public
     policy as expressed in the Securities Act and is, therefore, unenforceable.
     In the event that a claim for indemnification against such liabilities
     (other than the payment by the Registrant of expenses incurred or paid by a
     director, officer or controlling person of the Registrant in the successful
     defense of any action, suit or proceeding) is asserted by such director,
     officer or controlling person in connection with the securities being
     registered, the Registrant will, unless in the opinion of its counsel the
     matter has been settled by controlling precedent, submit to a court of
     appropriate jurisdiction the question whether such indemnification by it is
     against public policy as expressed in the Securities Act and will be
     governed by the final adjudication of such issue.

                                     II-3
<PAGE>

                               POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Timothy J. Connolly his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
pre- and post-effective amendments and supplements to this Registration
Statement, and to file the same, or caused to be filed the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or the substitute or
substitutes of him, may lawfully do or cause to be done by virtue hereof.

                                  SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 22nd day of
February, 2000.

                              APPLIED VOICE RECOGNITION, INC.


                              By: /s/ Timothy J. Connolly
                                  ---------------------------------------
                                      Timothy J. Connolly,
                                      Chairman of the Board and Director


     In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on this 22nd day of February, 2000.

        SIGNATURE                          TITLE
        ---------                          -----

   /s/ Timothy J. Connolly          Chairman of the Board and Director
--------------------------------
     Timothy J. Connolly

   /s/ Mark Navarro                 Principal Financial Officer &
--------------------------------    Principal Accounting Officer
     Mark Navarro

   /s/ J. William Boyar             Director
--------------------------------
     J. William Boyar

   /s/ James S. Cochron             Director
--------------------------------
     James S. Cochron

   /s/ Daniel Dornier               Director
--------------------------------
     Daniel Dornier

   /s/ N. Rudy Garza                Director
--------------------------------
     N. Rudy Garza

                                     II-4
<PAGE>

                               INDEX TO EXHIBITS


EXHIBIT
  NO.                                 DESCRIPTION
-------      -------------------------------------------------------------------
 4.1         First Amended and Restated Employment Agreement (Timothy J.
             Connolly) effective as of January 1, 2000 (filed herewith).

 4.2         First Amended and Restated Employment Agreement (Milton A.
             Spiegelhauer) effective as of January 1, 2000 (filed herewith).

 4.3         First Amended and Restated Employment Agreement (Robin P. Ritchie)
             effective as of January 1, 2000 (filed herewith).

 5.1         Opinion of Porter & Hedges, L.L.P. with respect to legality of
             securities (filed herewith).

23.1         Consent of Ernst & Young LLP (filed herewith).

23.2         Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).

24.1         Powers of Attorney (included on signature page).

                                       6
[{"type": "S-8", "sequence": "1", "description": "FORM S-8", "secsgml_size_bytes": 76952}]
{"company-data": {"conformed-name": "APPLIED VOICE RECOGNITION INC /DE/", "cik": "0000780882", "assigned-sic": "6770", "irs-number": "760513154", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-31040", "film-number": "552478"}, "business-address": {"street1": "1717 ST JAMES PLACE SUITE 242", "city": "HOUSTON", "state": "TX", "zip": "77056", "phone": "7136213131"}, "mail-address": {"street1": "1717 ST JAMES PLACE SUITE 242", "city": "HOUSTON", "state": "TX", "zip": "77056"}, "former-company": {"former-conformed-name": "SUMMA VEST INC", "date-changed": "19961108"}}
As filed with the Securities and Exchange Commission on February 24, 2000.

                                               Registration No. 333-___________
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                               -----------------

                                   FORM S-8
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933

                               -----------------

                        APPLIED VOICE RECOGNITION, INC.
            (Exact Name of Registrant as Specified in its Charter)

                               -----------------

                      DELAWARE                         76-0513154
            (State or Other Jurisdiction            (I.R.S. Employer
         of Incorporation or Organization)        Identification No.)

                        1717 ST. JAMES PLACE, SUITE 242
                             HOUSTON, TEXAS 77056
                   (Address of Principal Executive Offices)

                               -----------------

     FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (TIMOTHY J. CONNOLLY)
   FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (MILTON A. SPIEGELHAUER)
      FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (ROBIN P. RITCHIE)

                           (Full Title of the Plan)

                               -----------------

         Name, Address and Telephone       Copy of Communications to:
         Number of Agent for Service:
                                                  SAMUEL N. ALLEN
             TIMOTHY J. CONNOLLY                  ROBERT G. REEDY
        APPLIED VOICE RECOGNITION, INC.        PORTER & HEDGES, L.L.P.
        1717 ST. JAMES PLACE, SUITE 242         700 LOUISIANA STREET
             HOUSTON, TEXAS 77056             HOUSTON, TEXAS 77002-2764
               (713) 621-3131                      (713) 226-0600
CALCULATION OF REGISTRATION FEE
====================================================================================================================
                                                            PROPOSED MAXIMUM       PROPOSED
                                               AMOUNT TO        OFFERING       MAXIMUM AGGREGATE       AMOUNT OF
   TITLE OF SECURITIES TO BE REGISTERED      BE REGISTERED  PRICE PER SHARE(1)   OFFERING PRICE     REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share        1,054,852         $0.5188             $547,258             $145.00
=====================================================================================================================
(1)  Pursuant to Rule 457(c), the registration fee is calculated on the basis of
     the average of the high and low prices for the Common Stock on The Nasdaq
     Over-the-Counter Bulletin Board on February 23, 2000, $0.5188.
PART I

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

     The following documents listed under this Part I and the documents
incorporated by reference under Item 3 of Part II to this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act, and are incorporated herein by reference.

ITEM 1.  PLAN INFORMATION

     The information required to be provided to participants pursuant to this
Item is set forth in the Information Memorandum for the First Amended and
Restated Employment Agreement (Timothy J. Connolly), the First Amended and
Restated Employment Agreement (Milton A. Spiegelhauer), and the First Amended
and Restated Employment Agreement (Robin P. Ritchie) (collectively, the "Written
Compensation Contracts").

ITEM 2.  REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION

     The written statement required to be provided to participants pursuant to
this Item is set forth in the Information Memorandum  referenced in Item 1
above.

                                      I-1
PROSPECTUS
----------

                        APPLIED VOICE RECOGNITION, INC.

                                ---------------

                                 656,703 Shares
                                  Common Stock

                                ---------------

    Applied Voice Recognition, Inc. has prepared this prospectus for use by the
selling stockholder listed on page 12 of this prospectus to allow them to sell
such shares without restriction.  The selling stockholder has indicated that
sales may be made by the methods described in the section entitled "Plan of
Distribution" in this prospectus.  We will file a supplemental prospectus if
required to do so by applicable securities laws to describe specific sales of
shares or to identify any selling stockholders not listed in this prospectus.

    Our common stock trades on the Over-the-Counter Bulletin Board under the
symbol "EDOC."  On February 23, 2000, the last reported sale price of the common
stock was $0.4375 per share.

    We will not receive any portion of the proceeds resulting from the sale of
the shares offered by the selling stockholders under this prospectus.  In
addition, we will pay for certain of the expenses relating to the registration
of the shares.  See "Plan of Distribution" and "Selling Stockholders."

    Our principal executive offices are located at 1717 St. James Place, Suite
242, Houston, Texas 77056, and our telephone number is (713) 621-3131.

                                ---------------

        YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" ON PAGES 3-11
           OF THIS PROSPECTUS BEFORE DECIDING TO BUY OUR SECURITIES.

                                ---------------

    Neither the Securities and Exchange Commission nor any state securities
commission has approved of the securities to be issued under this prospectus or
determined if this prospectus is accurate or adequate.  Any representation to
the contrary is a criminal offense.

               The date of this prospectus is February 24, 2000.
TABLE OF CONTENTS
                                                                            Page
                                                                            ----

Where You Can Find More Information........................................... 2
Risk Factors.................................................................. 3
About Us......................................................................12
Use of Proceeds...............................................................12
Selling Stockholders..........................................................12
Plan of Distribution..........................................................12
Legal Matters.................................................................13
Experts.......................................................................13

                      WHERE YOU CAN FIND MORE INFORMATION

    We have filed a registration statement on Form S-8 with the SEC to register
the securities offered hereby.  This prospectus does not contain all of the
information contained in the registration statement, including its exhibits and
schedules.  You should refer to the registration statement for further
information about us and the securities the selling stockholder is offering.
Statements made in this prospectus about certain contracts or other documents
are not necessarily complete.  When we make such statements, we refer you to the
copies of those contracts or other documents that are filed as exhibits to the
registration statement, because those statements are qualified in all respects
by reference to those exhibits.  The registration statement, including exhibits
and schedules, is on file at the offices of the SEC and may be inspected without
charge.

    We file annual, quarterly and special reports, proxy statements and other
information with the SEC.  Our SEC filings, including the registration
statement, are available to the public over the Internet at the SEC's website at
http://www.sec.gov.  You also may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C.; New York, New York; and
Chicago, Illinois.  Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms.

    SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to other
documents we file with them.  That means we can disclose important information
to you by referring you to those documents.  The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information.  We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of
1934 until all of the securities covered by this prospectus are sold:

     .    Annual Report on Form 10-KSB for the year ended December 31, 1998, as
          amended;

     .    Quarterly Reports on Form 10-QSB for the quarters ended March 31, June
          30, and September 30, 1999, as amended;

     .    Current Reports on Form 8-K as filed on June 14, August 27, and
          November 19, 1999, and January 24, 2000, as amended; and

     .    The description of our common stock contained in the Form 8-A
          effective January 9, 1998 (Commission File No. 000-23607), including
          any amendments or reports filed to update the description.

    You may request a copy of these filings, which we will provide to you at no
cost, by writing or telephoning us at the following address:

                          Applied Voice Recognition, Inc.
                          1717 St. James Place, Suite 242
                          Houston, Texas 77056
                          Attention: Corporate Secretary
                          (telephone: (713) 621-3131)

                                       2
RISK FACTORS

     You should carefully consider the following risk factors and other
information set forth in this prospectus before deciding to buy our securities.

SUFFICIENCY OF FUNDS

We will be required to raise additional capital in order to continue our current
operations and proceed with the implementation of our new e-commerce initiative.

We expect to continue to incur significant losses on a quarterly and annual
basis in the near future on limited sales of our products and services.  In
addition, we may not be successful in increasing sales of our products and
services for the long term, or be able to achieve profitability.  Further, we
have had working capital deficits in the past.  Our long-term capital
requirements will depend on many factors, including, cash flow from operations,
working capital requirements, product development expenses and capital
expenditures.  As a result, we will be required to raise substantial additional
capital during 2000 to fund our current operations.  We will also require
substantial additional capital to implement our new business-to-business e-
commerce initiative, the E-DOCS PHYSICIAN NETWORK(TM) (the "EPN") and to
maintain and improve the profitability of our current medical transcription
operations.  Historically, we have relied upon the sale of equity securities and
short-term loans as our primary sources of funding to finance operations and
acquisitions.  To the extent that existing resources are insufficient to fund
our operations in the short- or long-term, we will need to raise additional
funds through public or private financings.  We may not be able to raise
additional financing on terms favorable to us or to our stockholders without
substantial dilution of their ownership and rights.  If we are unable to raise
sufficient funds to satisfy either short- or long-term requirements, there would
be substantial doubt as to our ability to continue as a going concern and we may
be required to significantly curtail our operations, significantly alter our
growth strategy, forego market opportunities or obtain funds through
arrangements with strategic partners or others that may require us to relinquish
material rights to certain of our technologies or potential markets.

LIMITED HISTORY OF BUSINESS OPERATIONS; ANTICIPATION OF CONTINUED LOSSES

Due to its limited nature, you should not rely on our operating history as an
indicator of our future performance.

We have incurred significant net losses since our inception and expect to
continue to incur significant losses on a quarterly and annual basis in the
future.  For the eleven months ended November 30, 1999, we recorded a net loss
of $6,828,611, or $.45 per share, on net sales of $4,779,906.  As of November
30, 1999, our accumulated deficit was $22,285,376.  We have achieved only
limited revenues to date, and our ability to generate significant revenues is
subject to substantial uncertainty.  Our limited operating history makes the
prediction of future results of operations difficult or impossible, and we may
not be able to sustain revenue growth or achieve profitability.  Prior to
January 1998, our marketing and development efforts were focused on the creation
and sale of voice recognition word processing products intended for the general
office market.  In January 1998, we began to focus on the medical transcription
needs of the healthcare industry.  During this time, we redesigned our principal
product to focus on this new market, worked to develop an integrated, Internet-
based complete medical transcription solution, and acquired traditional medical
transcription companies in the Dallas, Texas; New York, New York; Manila,
Phillippines; and Denver, Colorado areas. However, we have achieved limited
revenues to date from sales of our medical transcription voice recognition
software and the performance of traditional medical transcription services. In
January 2000, we completed the sale of our medical transcription operations
located in Houston, Texas; New York, New York; and Manila, Philippines. Our
restructuring was intended to remove operations that were incurring substantial
losses in excess of $3,600,000 annually to alleviate the strain on our cash
flow. We have retained our Houston corporate operations and some Houston medical
transcription operations, along with our Dallas, Texas; Tyler, Texas; and
Denver, Colorado medical transcription operations, and plan to continue and
expand those operations. We have abandoned our acquisition strategy and the
development and sale of VoiceCOMMANDER(TM) 99, our dictation voice recognition
software application, to focus on developing the EPN. The EPN is a business-to-
business

                                       3
e-commerce initiative designed to service other needs of our medical
transcription clients. Although the development of the EPN is in the very early
stages, we intend to integrate the EPN with our Internet-based medical
transcription service. Accordingly, we have a limited operating history upon
which you can base an evaluation of us and our current prospects. You must
consider us and our prospects in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets such as the
electronic and Internet-based medical transcription market and the emerging
business-to-business e-commerce market. To address these risks, we must respond
to competitive developments, continue to attract, retain and motivate qualified
persons, successfully implement our advertising program, continue to upgrade our
technologies, commercialize products and services incorporating such
technologies, and successfully implement our strategic business plan to
penetrate the healthcare transcription market. We may not be successful in
addressing such risks.

RISKS ASSOCIATED WITH A DEVELOPING MARKET AND THE ACCEPTANCE OF OUR PRODUCTS AND
SERVICES

Growth in the use of the Internet and automated speech recognition technology in
the healthcare transcription industry is an important factor in our business
plan.

The medical transcription market is well established; however, the use of the
Internet in the healthcare transcription industry, and the Internet markets in
general, have only recently begun to develop and are characterized by rapidly
changing technology, evolving industry standards and customer demands, and
frequent new product introductions and enhancements.  The healthcare
transcription-related Internet markets are highly dependent upon the increased
use of the Internet by healthcare professionals and continued price and
performance improvements in personal computers.  Our future operating results
will depend upon the emergence of the Internet in the healthcare transcription
market, our ability to develop and improve our technology and the successful
implementation of our marketing plan and the EPN.  However, the healthcare
transcription-related Internet markets may not develop or we may not achieve
market acceptance of our products and services or execute our business plan
successfully.  As is typical in the case of a new and rapidly evolving industry,
demand and market acceptance for recently introduced products and services are
subject to a high level of uncertainty.  The industry is young and has few
proven products.  If widespread use of the Internet does not develop in the
healthcare transcription industry, our business, results of operations and
financial condition will be materially adversely affected.  Because the market
for our products and services is new and evolving, it is difficult to predict
the size of this market and growth rate, if any.  The market for our products
and services may not develop or the demand for our products or services may not
emerge or become sustainable.  If the market fails to develop, develops more
slowly than expected or becomes saturated with competitors, or if our products
and services do not achieve or sustain market acceptance, our business, results
of operations and financial condition will be materially adversely affected.

DEPENDENCE ON PRINCIPAL PRODUCTS AND SERVICES

Our future results depend primarily upon the future success of our latest
product for the healthcare transcription market, the efficient operation of our
transcription operations and the successful introduction of our new
business-to-business e-commerce initiative.

Currently, we primarily derive our revenue from the sale of traditional
transcription services.  To date, we have had limited revenues from sales of our
VOICECOMMANDER(TM) line of products and have only derived revenue from the sale
of traditional transcription services since the acquisition of our first
transcription services company in March 1998.  Our future financial performance
will depend in part on our ability to continue to develop and establish our
traditional and Internet-based medical transcription service, and to effectively
develop and introduce the EPN.  However, we may not be successful in developing
these or other products or services in a manner which meets with market
acceptance.  In addition, new product releases by us, whether improved versions
of our current Internet-based products or introductions of other new products,
may contain undetected errors that require significant design modifications,
resulting in a loss of customer confidence and adversely affecting the use of
our product(s) and services.  Our future success will depend in significant part
on our ability to develop new product releases and to continually improve the
performance, features and reliability of our current Internet-based products in
response to both evolving demands of the healthcare transcription

                                       4
marketplace and competitive product offerings, and we may not be successful in
doing so. Any factors adversely affecting the traditional transcription market,
such as increased price competition or the introduction of technologically
superior products and services, could have a material adverse effect on us.

MANAGEMENT OF GROWTH; NEED TO ESTABLISH INFRASTRUCTURE; ADDITIONAL PERSONNEL

Our success will depend on our ability to effectively manage our growth and
attract and retain additional personnel.

The rapid execution necessary for us to successfully offer our products and
services and implement our business plan in a rapidly evolving market requires
an effective planning and management process.  Our rapid growth places a
significant strain on our managerial, operational and financial resources.  In
order to manage our growth, we must:

  . implement and improve our operational and financial systems;
  . expand, train and manage our employee base; and
  . hire additional technical support personnel in order to convert healthcare
    professionals from traditional to Internet-related transcription methods.

There can be no assurance that we have made adequate allowances for the costs
and risks associated with this expansion, that our systems, procedures or
controls will be adequate to support our operations or that our management will
be able to achieve the rapid execution necessary to successfully offer our
products and services and implement our business plan simultaneously.  Our
future operating results will also depend on our ability to expand our sales and
expand our support organization commensurate with the growth of our business.
Any failure by our management to effectively anticipate, implement and manage
the changes required to sustain our growth could have a material adverse effect
on our business, results of operations and financial condition.  We may not be
able to effectively manage such change.

RAPID TECHNOLOGICAL CHANGE

We must respond quickly to technological developments and evolving industry
standards in order to remain competitive.

The healthcare information services industry is characterized by rapid
technological change, evolving customer needs and emerging technical standards.
While we believe that utilizing Internet-based technology can significantly
enhance the rendering of transcription services in the healthcare information
services industry, the introduction of competing services or products
incorporating new technologies, and the emergence of new technical standards
could render some or all of our services as unmarketable.  We believe that our
future success is dependent in part on our ability to enhance our current
services and develop new services that keep pace with technological developments
and emerging technical standards, and that address the increasingly
sophisticated needs of our customers.  We may not be successful in developing
and marketing enhancements to our existing services or new services that respond
to technological developments, emerging technical standards, or evolving
customer needs, on a timely basis or at all, and such enhancements or new
services, if developed and introduced, may not achieve market acceptance.  The
failure to develop and introduce service enhancements and new services in a
timely and cost-effective manner in response to changing technologies or
customer requirements, would have a material adverse effect on our business,
financial condition and results of operations.

RISKS ASSOCIATED WITH OUR DEPENDENCE ON THIRD-PARTY PROPRIETARY RIGHTS

All of our software products currently utilize IBM speech recognition software
engines.  The loss of this relationship would force us to redesign our products
to use alternative technology.

All of our speech recognition products utilize third-party speech recognition
software engines.  There are currently four major speech recognition software
engine manufacturers: Lernout & Hauspie Speech Products USA, Inc. ("L&H"),
International Business Machines Corp. ("IBM"), Philips Electronics N.V.
("Philips"), and Dragon Systems, Inc ("Dragon").  We currently have a non-
exclusive OEM Distribution Agreement with IBM that entitles us to embed and
utilize IBM's ViaVoice(TM) technology in our products.  For each unit of our
product that we license (sell), we must pay a license fee to IBM.  IBM may not
continue to manufacture and support ViaVoice(TM) or our arrangement with IBM may
be terminated.  The agreement with IBM may be terminated by IBM at any time for
acts or omissions that are considered to be so serious as to warrant
termination.  Although we have previously purchased 10,000 licenses of
ViaVoice(TM) from IBM, which can serve the needs of 40,000 customers, we may
need to buy additional licenses from IBM.  We

                                       5
believe that if IBM discontinued or was unable to manufacture or support
ViaVoice(TM) or terminated our agreement with us that, with adequate time, we
could develop our products to utilize speech technology from other companies. If
we are unable to utilize the IBM technology and are unable to develop products
capable of utilizing alternative technology, our business, results of operations
and financial condition would be materially adversely affected.

COMPETITION

We are in an extremely competitive industry that is dominated by several
companies which have significantly greater financial, technical, and marketing
resources than we have.

The transcription services industry remains highly fragmented and primarily
consists of small, local or regional companies.  As a result, we compete with a
large number of third-party transcription companies that offer services similar
to ours and that target the same customers and qualified transcriptionists.  In
addition, there are several large national transcription service providers:
Medquist, Inc. (which recently acquired MRC Group, Inc., another large
transcription service provider), Transcend Services, Inc., Harris Corp. and
Rodeer Systems, Inc.  These competitors have significantly greater resources
than us.  We believe that our ability to compete depends upon many factors
within and outside of our control, including the timing and market acceptance of
our Internet-based transcription services, the successful development and market
acceptance of the EPN, the development of other service enhancements by us and
our competitors, service quality, performance, price, reliability, customer
service and support, and ability to attract qualified transcriptionists.  In
addition, the potential exists for large companies that do not currently provide
transcription services, but which currently provide other services to the
healthcare industry, to enter the transcription services field.  For example,
IDX Systems Corporation ("IDX") recently announced the acquisition of EDIX
Transcription, one of our larger competitors.  IDX is a provider of healthcare
information services and stated that it acquired EDIX because of perceived
synergies of the medical transcription business (data input) and health
information management businesses and is an example of an existing company that
could and has become a competitor. Such potential competitors could have
substantially greater financial, technical and marketing resources than us.  As
a result, such potential competitors, if they were to enter the transcription
business, could be able to respond more quickly to evolving technological
developments, changing customer needs or emerging technical standards or to
devote greater resources to the development, promotion or sale of their
services.  Our services also compete with the in-house transcription staffs of
our potential customers.  While we believe that our growth and earnings will
benefit from the outsourcing by healthcare providers of non-patient care
functions, including transcription services, the current trend could change
direction and cause healthcare providers to bring all or some of those services
in-house.  In addition, competition may increase due to consolidation of
transcription companies.  Increased competition may result in price reductions
for our services, reduced operating margins and an inability to increase our
market share, any of which would have a material adverse effect on our business,
financial condition and results of operations. We may not be able to compete
successfully against current or future competitors, and competitive pressures
may have a material adverse effect on our business, financial condition and
results of operations.

DEPENDENCE ON KEY PERSONNEL

Our success is heavily dependent upon our retention of certain of our key
officers.

Our performance is substantially dependent on the performance of our current
executive officers and key employees and the successful replacement of certain
executive officers and key employees who left the Company as part of the recent
corporate restructuring. In particular, the services of Timothy J. Connolly, our
current Chairman, would be difficult to replace. We have entered into an
employment agreement with Mr. Connolly, although we do not currently have a key
person life insurance policy on his life. However, any key person life insurance
policy we do put in place for Mr. Connolly may not be sufficient to compensate
us for the loss of his services. The loss of the services of any other key
employees and/or our inability to successfully replace those executive officers
we have lost could have a material adverse effect on our business, results of
operations or financial condition.

                                       6
We are heavily dependent upon our ability to attract, retain and motivate
skilled technical and managerial personnel. Our future success also depends on
our continuing ability to identify, hire, train and retain other highly
qualified technical and managerial personnel. Competition for such personnel is
intense, and we may not be able to attract, assimilate or retain other highly
qualified technical and managerial personnel in the future. The inability to
attract, hire or retain the necessary technical and managerial personnel could
have a material adverse effect upon our business, results of operations or
financial condition.

ABILITY TO ATTRACT QUALIFIED TRANSCRIPTIONISTS

Competition for qualified transcriptionists is intense.

Our success is also dependent, in part, upon our ability to attract and retain
qualified transcriptionists, who can provide the accuracy and turnaround time
required by our customers.  Competition for transcriptionists is intense.  We
may not be successful in attracting and retaining the personnel necessary to
conduct our business successfully.  In addition, our inability to attract, hire,
assimilate and retain such personnel could have a material adverse effect upon
our business, financial condition and results of operations.  We may ultimately
prove unable to attract sufficient qualified transcriptionists to operate our
facilities.

UNCERTAINTY REGARDING GOVERNMENT HEALTHCARE REFORM AND REGULATION

Our business may be adversely affected by future changes in governmental
regulations relating to the healthcare industry.

The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the outsourcing arrangements of healthcare
providers.  Several states and the United States federal government are
investigating a variety of alternatives to reform the healthcare delivery system
and further reduce and control healthcare spending.  These reform efforts
include proposals to limit spending on healthcare items and services, limit
coverage for new technology, limit or control directly the prices healthcare
providers and drug and device manufacturers may charge for their services and
products, and otherwise change the environment in which providers operate.  The
scope and timing of such reforms cannot be predicted at this time, but if
adopted and implemented, they could have a material adverse effect on our
business.  Healthcare providers may react to these proposals and the uncertainty
surrounding such proposals by curtailing outsourcing arrangements or deferring
decisions regarding the use of outsourced services.  In response to this
environment, many healthcare providers are consolidating to create larger
healthcare delivery organizations.  This consolidation reduces the number of
potential customers for our products and services, and increases the bargaining
power of these organizations, which could lead to reductions in the amount we
are able to charge for our products and services.  The impact of these
developments in the healthcare industry is difficult to predict and could have a
material adverse effect on our business, operating results and financial
condition.

In providing our services, we are subject to certain statutory, regulatory and
common law requirements regarding the confidentiality of such medical
information.  We require our personnel to agree to keep all medical information
confidential and monitor compliance with applicable confidentiality
requirements.  However, the failure to comply with such confidentiality
requirements could have a material adverse effect on our business, operating
results and financial condition.

INTELLECTUAL PROPERTY AND PROPERTY RIGHTS

Our success is heavily dependent upon a combination of proprietary software
technology and hardware purchased and licensed from third parties.  Our current
protections may not be sufficient to protect these technologies.

We currently have only two issued patents and three patent applications pending,
and rely on a combination of trade secret, copyright and trademark laws, non-
disclosure agreements and contractual provisions to protect our proprietary
rights in our software and technology.  However, these protections may not
prevent misappropriation of this technology.  Moreover, third parties could
independently develop competing technologies that are substantially equivalent
or superior to our technologies.  As part of our recent sale of certain of our
medical transcription operations to Lonestar Medical Transcription USA, Inc., a
wholly-owned subsidiary of L & H Investment Co., N.V., we assigned Lonestar and
LHIC non-exclusive rights to our VC99 code. Although we believe that our
services and products and the proprietary rights developed or licensed by us do
not infringe patents and proprietary

                                       7
rights of other parties, those parties may assert infringement claims,
regardless of merit, against us in the future. In addition, we have applied for
several federal service mark and trademark registrations for certain of the
marks we use, and have been granted U.S. Trademarks for various marks, including
Applied Voice Recognition and "VOICE-COMMANDER(TM)." There can be no assurance
that any further trademark registrations will be issued or, if issued, will
provide us with adequate protection against competitors.

Any patent applications now pending or filed in the future may not result in
patents being issued or, if patents are issued, the claims allowed may not be
sufficiently broad to protect what we believe to be our proprietary rights.  In
addition, pending applications or any patents licensed to us or issued or
licensed to us in the future may not afford any competitive advantages to us or
may be challenged by third parties or circumvented or designed around by others.
The cost of litigation to uphold the validity and prevent infringement of
patents and to enforce licensing rights can be substantial.  Furthermore, others
may independently develop similar technologies or duplicate the technology owned
by or licensed to us or design around the patented aspects of such technology.
Our services and products may or may not infringe patents or other rights owned
by others, licenses for which may not be available to us.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

Various market and economic factors may cause our future quarterly operating
results to vary.

Because of our limited operating history, we do not have historical financial
data for any significant period of time on which to base planned operating
expenses.  Our expense levels are based in part on our expectations as to future
revenues and, to a large extent, are fixed.  Quarterly sales and operating
results are generally difficult to forecast.  We may not be able to adjust
spending in a timely manner to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall in relation to our expectations would
have an immediate adverse impact on our business, results of operations and
financial condition.  In addition, we plan to significantly increase our
operating expenses to fund greater levels of research and development, increase
our sales and marketing operations, broaden our customer support capabilities
and establish brand identity and strategic alliances.  To the extent that such
expenses precede or are not subsequently followed by increased revenues, our
business, results of operations and financial condition will be materially
adversely affected.

Our operating results may fluctuate significantly in the future because of a
variety of factors, some of which are beyond our control.  These factors include
general economic conditions, specific economic conditions in the transcription
industry in general and the healthcare transcription industry specifically,
usage of healthcare transcription related and Internet-based technology,
seasonal trends in sales, capital expenditures and other costs relating to the
expansion of operations, the introduction of new products or services by us or
our competitors, the mix of the services sold and the channels through which
those services are sold and pricing changes.  As a strategic response to a
changing competitive environment, we may elect from time to time to make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business, results of operations and financial
condition.  We believe that period to period comparisons of our operating
results are not meaningful and should not be relied upon for an indication of
future performance.  Due to all of the foregoing factors, it is likely that in
some future quarter, our operating results may be below the expectations of
public market analysts and investors.  In such event, the price of our common
stock would likely be materially adversely affected.

                                       8
CONCENTRATION OF STOCK OWNERSHIP

Our insiders beneficially own a majority of our common stock.

Our officers, directors and holders of more than 5% of our outstanding voting
securities beneficially own or have voting control over a total of 26,023,115
shares, which if all were issued today, would represent approximately 61% of the
total outstanding common stock.  Accordingly, these stockholders will have
substantial influence over our policies and management, and if these
stockholders act as a group, they will be able to elect substantially all of our
directors, to dissolve, merge, or sell our assets.  In addition pursuant to
their certificates of designation and other agreements, certain of our common
and preferred stockholders have the right to designate members of the Board of
Directors, as follows:

  .  SERIES A PREFERRED STOCK -- For so long as Entrepreneurial Investors, Ltd.
     ("EIL") owns at least 156,250 shares of the Series A Preferred Stock, we
     have agreed to use our best efforts to have one member of the Board of
     Directors be chosen by Equity Services, Ltd. ("ESL"). EIL currently holds
     186,000 shares of the Series A Preferred Stock, although EIL has entered
     into a stock exchange agreement with us for the exchange of all their
     Series A shares for shares of Series G Preferred Stock, which have no
     rights of designation.

  .  SERIES C PREFERRED STOCK -- For so long as the current holders of the
     Series C Preferred Stock hold at least 77,263 shares of the Series C
     Preferred Stock, we have agreed to use our best efforts to have one member
     of the Board of Directors be chosen by ESL. The holders of the Series C
     Preferred Stock currently hold 153,538 shares of the Series C Preferred
     Stock, although they have entered into a stock exchange agreement with us
     for the exchange of all their Series C shares for shares of Series G
     Preferred Stock, which have no rights of designation.

As a result of such director designation rights, ESL renominated Mr. Daniel S.
Dornier to our Board of Directors in July 1999.  Mr. Dornier has been appointed
to the Board of Directors.

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

The market price of our common stock could be adversely affected by sales of
restricted and other securities.

As of February 17, 1999, there were approximately 18,240,411 shares of our
common stock issued and outstanding.  Approximately 1,333,052 shares of common
stock are issuable upon exercise of employee and director stock options under
our 1997 Incentive Plan and will become eligible for sale in the public markets
at prescribed times in the future.  Our issuance of such 1,333,052 shares is
registered on a Form S-8 Registration Statement.  We also have outstanding
warrants which are exercisable into an aggregate of 4,091,245 shares of common
stock.  In addition, our series of preferred stock are convertible into
additional shares of our common stock.  The following table illustrates the
maximum number of shares of common stock issuable upon the conversion of our
outstanding preferred stock:

                                PREFERRED STOCK
-------------------------------------------------------------------------------
                                         Issued and        Convertible into
   Class of Preferred      Authorized    Outstanding      Common Stock (max.)
-----------------------------------------------------     ---------------------
Series A Preferred Stock*    312,500       186,000             5,075,722
Series B Preferred Stock       3,000         1,440             2,571,464
Series C Preferred Stock*    231,788       153,538             5,213,713
Series E Preferred Stock*      5,000         2,000             6,756,433
Series 2 Preferred Stock     250,000      1,756.66               175,666
------------
* The holders of the Series A, Series C and Series E Preferred Stock have
 entered into Stock Exchange Agreements as of February 17, 2000, to exchange
 their shares of preferred stock for shares of Series G Preferred Stock.  The
 Series G Preferred Stock must be converted into common stock within seven days
 of its

                                       9
issuance.  The number of shares of common stock to be issued pursuant to
 that conversion will be the same as the number listed in the table above for
 each of the series.

In addition to the shares of preferred stock listed in the table above, we are
obligated to issue another 7,386.01 shares of Series 2 Preferred Stock as
consideration in three of our acquisitions.  The remaining shares of Series 2
Preferred Stock will be issued in equal annual installments on the anniversary
of the pertinent acquisition dates.  Furthermore, we may be obligated to issue
another 2,350 shares of Series 1 Preferred Stock and 2,990 shares of Series 2
Preferred Stock as contingent consideration in three of our acquisitions should
the acquired operations meet certain annual financial targets.  All the shares
of Series 1 Preferred Stock and Series 2 Preferred Stock remaining to be issued
will be convertible into an estimated maximum of 235,000 (based on an average
stock price of $1.00) and 1,037,602 shares of common stock, respectively.
In addition to the shares of common stock registered for resale by the selling
stockholder herein, we have registered 10,362,520 shares of common stock for
resale by certain other selling stockholders.  The issuance and sale of a
significant number of shares of common stock upon the exercise of stock options
and warrants, the conversion of our outstanding preferred stock, or the sales of
a substantial number of shares of common stock pursuant to Rule 144 or
otherwise, could adversely affect the market price of the common stock.

CERTAIN ANTI-TAKEOVER PROVISIONS AFFECTING STOCKHOLDERS

Our Board of Directors may authorize the issuance of preferred stock without
stockholder approval.

Our Certificate of Incorporation and Bylaws contain provisions that might
diminish the likelihood that a potential acquiror would make an offer for the
common stock, impede a transaction favorable to the interest of the stockholders
or increase the difficulty of removing incumbent Board of Directors or
management.  Currently, our Board of Directors has the authority, without
further stockholder approval, to issue up to 2,000,000 shares of preferred stock
in one or more series and to determine the price, rights, preferences and
privileges of those shares.  We currently have nine series of preferred stock
designated as more fully described in the table contained in the previous risk
factor.  See "Shares Eligible for Future Sale; Registration Rights."  The rights
of our common stockholders will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that is currently issued or may
be issued in the future.  The issuance of additional shares of preferred stock,
while potentially providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock.  We anticipate issuing additional shares of preferred stock through one
or more private placements during 2000.  In addition, certain provisions of our
Certificate of Incorporation, including provisions that provide for the Board of
Directors to be divided into three classes to serve for staggered three-year
terms, may have the effect of delaying or preventing a change of control, which
could adversely affect the market price of our common stock.

LIMITED MARKET FOR SECURITIES; LACK OF LIQUIDITY

The current public market for our common stock is limited and highly volatile.

The shares of common stock offered hereby are traded on the Over-the-Counter
Bulletin Board ("OTCBB").  Trading activity in our common stock should be
considered sporadic, illiquid and highly volatile, and an active trading market
for our common stock may not exist in the future.  Even if a market for the
common stock offered by this prospectus continues to exist, investors may not be
able to resell their common stock at or above the purchase price for which such
investors purchased such shares.  In addition, the SEC has adopted regulations
that generally define a penny stock to be any equity security that has a market
price (as defined in such regulations) of less than $5.00 per share, subject to
certain exceptions.  If the common stock meets the definition of a penny stock,
it will be subjected to these regulations which impose additional sales practice
requirements on broker-dealers

                                       10
who sell such securities to persons other than established customers and
accredited investors (generally institutions with assets in excess of $5,000,000
and individuals with a net worth in excess of $1,000,000 or annual income
exceeding $200,000 (individually) or $300,000 (jointly with their spouse)).
These regulations are currently not applicable to trading in our common stock,
however, if they become applicable, these regulations could affect a holder's
ability to sell any of the shares offered by this prospectus.

DIVIDENDS

We do not intend to pay cash dividends on our common stock in the near future
and are required to pay dividends on our outstanding series of preferred stock.

Our proposed operations may not result in sufficient revenues to enable us to
operate at a profitable level.  We have not paid any dividends on our common
stock to date, and have no plans to pay any dividends on our common stock for
the foreseeable future. Our Series A and C Preferred Stock accrue a dividend of
4% per year, payable in shares of our common stock based on a share price equal
to the average closing price of our common stock for the 30 days prior to the
particular dividend date. Our Series B Preferred Stock accrues a dividend of 5%
per year, payable in cash or shares of our common stock based on a share price
equal to 78% of the 5 day average closing bid price of our common stock upon the
date of each conversion. Our Series E Preferred Stock accrues a dividend of 6%
per year, payable in cash or in shares of our common stock based on a share
price equal to the average closing price of our common stock for the 30 days
prior to the particular dividend date. Our Series 1 and 2 Preferred Stock,
accrue an 8% dividend payable in cash or in shares of common stock based upon
the greater of $1.00 or the average closing price of our common stock for the 30
days prior to the particular dividend date. Dividends on all of our shares of
preferred stock are cumulative. In addition, we anticipate that any preferred
stock issued in the future will also include dividend rights, including any
issued in connection with our strategy of acquiring healthcare transcription
companies.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this prospectus are based upon our management's beliefs
and expectations and may not be correct.

This Prospectus contains certain statements that are "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
Those statements include, among other things, the discussions of our business
strategy and expectations concerning market position, future operations,
margins, profitability, liquidity and capital resources.  Forward Looking
Statements are included in this section under "Limited History of Business
Operations; Anticipation of Continued Losses," "Sufficiency of Funds," "Risks
Associated with a Developing Market and the Acceptance of our Products and
Services," "Dependence on Principal Products and Services," "Management of
Growth; Need to Establish Infrastructure; Additional Personnel," "Rapid
Technological Change," "Risks Associated with Our Dependence on Third-Party
Proprietary Rights," "Competition," "Dependence on Key Personnel," "Ability to
Attract Qualified Transcriptionists," "Uncertainty Regarding Government
Healthcare Reform and Regulation," "Intellectual Property and Property Rights,"
"Potential Fluctuations in Quarterly Results," "Concentration of Stock
Ownership," "Shares Eligible for Future Sale; Registration Rights," "Certain
Anti-Takeover Provisions Affecting Stockholders," "Limited Market for
Securities; Lack of Liquidity" and "Dividends." Although we believe that the
expectations reflected in Forward Looking Statements are reasonable, we can give
no assurance that such expectations will prove to have been correct.  Generally,
these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies, or
projections involving anticipated revenues, expenses, earnings, levels of
capital expenditures, liquidity or indebtedness or other aspects of operating
results or financial position.  All phases of our operations are subject to a
number of uncertainties, risks and other influences, many of which are outside
our control and any one of which, or any combination of which, could materially
affect the results of our operations and whether the Forward Looking Statements
made by us ultimately prove to be accurate.  Important factors that could cause
actual results to differ materially from our expectations are disclosed in this
"Risk Factors" section of this prospectus.

                                       11
ABOUT US

     We provide traditional and Internet-based transcription services to
healthcare professionals. Our principal executive offices are located at 1717
St. James Place, Suite 242, Houston, Texas 77056, and our telephone number is
(713) 621-3131.

                                USE OF PROCEEDS

     We will not receive any of the proceeds from the sale of the common
stock offered by the selling stockholders.

                              SELLING STOCKHOLDER

     The following table sets forth certain information concerning the selling
stockholder. Assuming that the selling stockholders offer all of their shares of
common stock, the selling stockholder will not have any beneficial ownership.
The shares are being registered to permit the selling stockholders and certain
of their respective pledgees, donees, transferors or other successors in
interest to offer the shares for resale from time to time. See "Plan of
Distribution."
NUMBER OF SHARES                                    NUMBER OF          PERCENTAGE
                                                   OWNED AND TO BE               NUMBER OF             SHARES             OF SHARES
                                                   OWNED PRIOR TO              SHARES BEING          OWNED AFTER         OWNED AFTER
           SELLING STOCKHOLDER                     OFFERING (1)(2)              OFFERED (2)          OFFERING (3)         OFFERING
 -------------------------------------          --------------------         ----------------      ----------------      -----------
Timothy J. Connolly (4)...............               6,374,696                   656,703             7,031,399              38.55%
(1)  The selling stockholder has sole voting and sole investment power with
     respect to all shares owned.

(2)  Ownership is determined in accordance with Rule 13d-3 under the Exchange
     Act.  The actual number of shares beneficially owned and offered for sale
     hereunder is subject to adjustment and could be materially less or more
     than the estimated account indicated depending upon factors which we cannot
     predict at this time.

(3)  Assumes the sale of all shares offered hereby to persons who are not
     affiliates of the selling stockholder.

(4)  Represents shares issuable upon exercises of three-year warrants issued in
     connection with the certain bridge loan financing agreements entered into
     with these selling stockholders over two periods during May through July
     1997, and December 1998.  The warrants issued during 1997 and 1998 have
     exercise prices of $1.60 and $1.00 per share, respectively, and are all
     fully vested.

     Mr. Timothy J. Connolly is the President and sole owner of Voice
     Technologies Management Corp. ("VTMC"), which serves as the general partner
     of Voice Technologies Partners, Ltd. ("VTP").  Mr. Connolly has served as
     our Chairman of the Board and as a Director since August 1996.  The
     additional shares listed as beneficially held, which will be owned after
     completion of this offering, include 5,590,000 shares of common stock owned
     by VTP, 32,143 shares of common stock owned by Mr. Connolly, 126,970 shares
     of common stock owned by Jan Carson Connolly, his wife, and 500 and 100,000
     shares of common stock issuable upon exercise of currently exercisable
     employee stock options owned by Mr. and Mrs. Connolly, respectively.

                              PLAN OF DISTRIBUTION

    Pursuant to this prospectus, the selling stockholder may sell shares of
common stock from time to time in transactions on such exchanges or markets as
the common stock may be listed for trading from time to time, in separately-
negotiated transactions, in an underwritten offering, or by a combination of
such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices.  As used herein, "selling stockholder" includes
pledgees, donees, transferees and other successors in interest to the selling
stockholder selling shares received from a selling stockholder after the date of
this prospectus.  The selling stockholder may effect such transactions by
selling the

                                       12
shares of common stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholder or the purchasers of the shares for whom such broker-
dealers may act as agent or to whom they sell as principal, or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions).

    Other methods by which the shares of common stock may be sold include,
without limitation: (i) transactions which involve cross or block trades or any
other transaction permitted by the OTCBB or other trading markets, (ii) "at the
market" to or through market makers or into an existing market for the common
stock, (iii) in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through agents,
(iv) through transactions in options or swaps or other derivatives (whether
exchange-listed or otherwise), (v) through short sales, or (vi) any combination
of any such methods of sale.  The selling stockholder may also enter into option
or other transactions with broker-dealers which require the delivery to such
broker dealers of the common stock offered hereby, which common stock such
broker-dealers may resell pursuant to this prospectus.  The selling stockholder
may also make sales pursuant to Rule 144 under the Securities Act of 1933, as
amended, if such exemption from registration is otherwise available.

    The selling stockholder and any broker-dealers who act in connection with
the sale of shares of common stock hereunder will be subject to the prospectus
delivery requirements because they may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.  All costs,
expenses and fees in connection with the registration of the common stock
offered hereby will be borne by us.  Brokerage commissions attributable to the
sale of common stock, if any,  will be borne by the selling stockholder.  We
have informed the selling stockholder that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934 may apply to
their sales in the market.

                                 LEGAL MATTERS

    The legality of the securities offered hereby will be passed on for us by
Porter & Hedges, L.L.P., Houston, Texas.

                                    EXPERTS

    The consolidated financial statements of Applied Voice Recognition, Inc.
appearing in Applied Voice Recognition, Inc.'s Annual Report (Form 10-KSB) for
the year ended December 31, 1998, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt about
the Company's ability to continue as a going concern as described in Note 2 to
the consolidated financial statements) included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.

                                       13
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE
ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS.  YOU
MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.  THIS PROSPECTUS DOES NOT OFFER
TO SELL OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL.  THE
INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE BELOW.

                                -------------

                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Where You Can Find More Information.........................................  2
Risk Factors................................................................  3
About Us.................................................................... 12
Use of Proceeds............................................................. 12
Selling Stockholders........................................................ 12
Plan of Distribution........................................................ 12
Legal Matters............................................................... 13
Experts..................................................................... 13

                                -------------

                        APPLIED VOICE RECOGNITION, INC.

                                 656,703 SHARES
                                       OF
                                  COMMON STOCK

                                --------------

                                  PROSPECTUS

                                --------------

                                -------------

                               February 24, 2000
PART II

              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The contents of the following documents filed by Applied Voice Recognition,
Inc., a Delaware corporation (the "Company" or "Registrant"), with the
Securities and Exchange Commission ("Commission") are incorporated into this
registration statement ("Registration Statement") by reference:

     (i)   Annual Report on Form 10-KSB for the year ended December 31, 1998, as
           amended;

     (ii)  Quarterly Reports on Form 10-QSB for the quarters ended March 31,
           June 30, and September 30, 1999;

     (iii) Current Reports on Form 8-K as filed on June 14, August 27, and
           November 19, 1999, and January 24, 2000; and

     (iv)  the description of the Company's Common Stock contained in the
           Company's Registration Statement on Form 8-A effective January 9,
           1998 (Commission File No. 000-23607), including any amendments or
           reports filed for the purpose of updating such description.

     All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), subsequent to the filing date of this Registration
Statement and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents.  The Company will provide without
charge to each participant in the written compensation contracts, upon written
or oral request of such person, a copy (without exhibits, unless such exhibits
are specifically incorporated by reference) of any or all of the documents
incorporated by reference pursuant to this Item 3.

ITEM 4.  DESCRIPTION OF SECURITIES

     Not Applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL

     Not Applicable.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the DGCL permits a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action.  In an action brought to obtain a
judgment in the corporation's favor, whether by the corporation itself or
derivatively by a stockholder, the corporation may only indemnify for expenses,
including attorney's fees, actually and reasonably incurred in connection with
the defense or settlement of such action, and the corporation may not indemnify
for amounts paid in satisfaction of a judgment or in settlement of the claim. In
any such action, no indemnification may be paid in respect of any claim, issue
or matter as to which such person shall have been adjudged liable to the
corporation except as otherwise approved by the Delaware Court of Chancery or
the court in which the claim was

                                     II-1
brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses.

     The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner reasonably believed to
be in, or not opposed to, the best interests of the corporation and, in the case
of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful.  The statute contains additional limitations
applicable to criminal actions and to actions brought by or in the name of the
corporation.  The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (1) by a majority vote of
a quorum of disinterested members of the board of directors, (2) by independent
legal counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.

     The Certificate of Incorporation and Bylaws of the Company require it to
indemnify its directors to the fullest extent permitted under Delaware law.
Pursuant to employment agreements entered into by the Company with its executive
officers and certain other key employees, the Company must indemnify such
officers and employees in the same manner and to the same extent that the
Company is required to indemnify its directors under the Company's Bylaws.  The
Certificate of Incorporation limits the personal liability of a director to the
corporation or its stockholders to damages for breach of the director's
fiduciary duty.

     The Company maintains officers' and directors' indemnity insurance against
expenses of defending claims or payment of amounts arising out of good-faith
conduct believed by the officer or director to be in or not opposed to the best
interest of the Company.

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED

     Not Applicable.

ITEM 8.   EXHIBITS

EXHIBIT
  NO.                                 DESCRIPTION
-------      -------------------------------------------------------------------
 4.1         First Amended and Restated Employment Agreement (Timothy J.
             Connolly) effective as of January 1, 2000 (filed herewith).

 4.2         First Amended and Restated Employment Agreement (Milton A.
             Spiegelhauer) effective as of January 1, 2000 (filed herewith).

 4.3         First Amended and Restated Employment Agreement (Robin P. Ritchie)
             effective January 1, 2000 (filed herewith).

 5.1         Opinion of Porter & Hedges, L.L.P. with respect to legality of
             securities (filed herewith).

23.1         Consent of Ernst & Young LLP (filed herewith).

23.2         Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).

24.1         Powers of Attorney (included on signature page).

                                     II-2
ITEM 9.   UNDERTAKINGS

     (a)  Undertaking to Update

          The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this Registration Statement to:

              (i)   include any prospectus required by section 10(a)(3) of the
                    Securities Act of 1933, as amended (the "Securities Act");

              (ii)  reflect in the prospectus any facts or events arising after
                    the effective date of the Registration Statement (or the
                    most recent post-effective amendment thereof) which,
                    individually or in the aggregate, represent a fundamental
                    change in the information in the Registration Statement; and

              (iii) include any material information with respect to the plan of
                    distribution not previously disclosed in the Registration
                    Statement or any material change to such information in the
                    Registration Statement;

     Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
     the information required to be included in a post-effective amendment by
     those paragraphs is contained in periodic reports filed by the Registrant
     pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
     amended (the "Exchange Act") that are incorporated by reference in the
     Registration Statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) Undertaking With Respect to Documents Incorporated by Reference

          The undersigned Registrant hereby undertakes that, for purposes of
     determining any liability under the Securities Act, each filing of the
     Registrant's annual report pursuant to section 13(a) or section 15(d) of
     the Exchange Act that is incorporated by reference in this Registration
     Statement shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.

     (c) Undertaking With Respect to Indemnification

          Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and controlling
     persons of the Registrant pursuant to the foregoing provisions, or
     otherwise, the Registrant has been advised that in the opinion of the
     Securities and Exchange Commission such indemnification is against public
     policy as expressed in the Securities Act and is, therefore, unenforceable.
     In the event that a claim for indemnification against such liabilities
     (other than the payment by the Registrant of expenses incurred or paid by a
     director, officer or controlling person of the Registrant in the successful
     defense of any action, suit or proceeding) is asserted by such director,
     officer or controlling person in connection with the securities being
     registered, the Registrant will, unless in the opinion of its counsel the
     matter has been settled by controlling precedent, submit to a court of
     appropriate jurisdiction the question whether such indemnification by it is
     against public policy as expressed in the Securities Act and will be
     governed by the final adjudication of such issue.

                                     II-3
POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Timothy J. Connolly his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
pre- and post-effective amendments and supplements to this Registration
Statement, and to file the same, or caused to be filed the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or the substitute or
substitutes of him, may lawfully do or cause to be done by virtue hereof.

                                  SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 22nd day of
February, 2000.

                              APPLIED VOICE RECOGNITION, INC.

                              By: /s/ Timothy J. Connolly
                                  ---------------------------------------
                                      Timothy J. Connolly,
                                      Chairman of the Board and Director

     In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on this 22nd day of February, 2000.

        SIGNATURE                          TITLE
        ---------                          -----

   /s/ Timothy J. Connolly          Chairman of the Board and Director
--------------------------------
     Timothy J. Connolly

   /s/ Mark Navarro                 Principal Financial Officer &
--------------------------------    Principal Accounting Officer
     Mark Navarro

   /s/ J. William Boyar             Director
--------------------------------
     J. William Boyar

   /s/ James S. Cochron             Director
--------------------------------
     James S. Cochron

   /s/ Daniel Dornier               Director
--------------------------------
     Daniel Dornier

   /s/ N. Rudy Garza                Director
--------------------------------
     N. Rudy Garza

                                     II-4
INDEX TO EXHIBITS

EXHIBIT
  NO.                                 DESCRIPTION
-------      -------------------------------------------------------------------
 4.1         First Amended and Restated Employment Agreement (Timothy J.
             Connolly) effective as of January 1, 2000 (filed herewith).

 4.2         First Amended and Restated Employment Agreement (Milton A.
             Spiegelhauer) effective as of January 1, 2000 (filed herewith).

 4.3         First Amended and Restated Employment Agreement (Robin P. Ritchie)
             effective as of January 1, 2000 (filed herewith).

 5.1         Opinion of Porter & Hedges, L.L.P. with respect to legality of
             securities (filed herewith).

23.1         Consent of Ernst & Young LLP (filed herewith).

23.2         Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).

24.1         Powers of Attorney (included on signature page).

                                       6