<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                              ------------------
                                
                                    FORM 8-K



                                 CURRENT REPORT


                       Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934



      Date of Report: (Date of earliest event reported): January 20, 1998


                        APPLIED VOICE RECOGNITION, INC.
             (Exact name of registrant as specified in its charter)


                                      UTAH
                 (State or other jurisdiction of incorporation)

       33-1210-D                                           87-042552
(Commission File Number)                      (IRS Employer Identification No.)



4615 POST OAK PLACE, SUITE 111, HOUSTON, TEXAS              77027
   (Address of principal executive offices)               (Zip Code)



Registrant's telephone number, including area code: (713) 621-5678


                                      N/A
         (Former name or former address, if changed since last report)
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ITEM 5.  OTHER EVENTS

     Pursuant to action taken by the written consent of certain of the
shareholders of Applied Voice Recognition, Inc., a Utah corporation (the
"Company"), the Company plans to reincorporate in Delaware (the
"Reincorporation") and has adopted the 1997 Incentive Plan (the "Incentive
Plan") allowing the Company to grant stock awards of up to 3,000,000 shares (the
"Incentive Shares") of the Company's common stock, par value $.001 per share
(the "Common Stock").  The Reincorporation and the Incentive Plan are sometimes
collectively referred to herein as the "Shareholder Actions."  Specifically, the
Board of Directors of the Company (the "Board"), at a special meeting of the
Board held on September 26, 1997, and certain shareholders of the Company (the
"Consenting Shareholders") who own shares which together represent 54.8% of the
issued and outstanding shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), by written consent dated December 3, 1997, approved
the Shareholder Actions.  Certain other shareholders of the Company (the
"Consenting Preferred Shareholders") who own shares which together represent
100% of the issued and outstanding shares of the Company's Series A Preferred
Stock, par value $.10 per share (the "Series A Preferred Stock"), approved the
Reincorporation by written consent dated November 28, 1997.  If the Board
determines to consummate the Reincorporation, a Certificate of Ownership and
Merger in Delaware (the "Delaware Certificate") and Articles of Merger in Utah
(the "Utah Articles") will be filed with the appropriate Secretaries of State on
or about January 26, 1998.  A registration statement on Form S-8 (the
"Registration Statement") was filed with the Securities and Exchange Commission
(the "SEC") on January 13, 1998 to register the Incentive Shares.

     In order to accomplish the Reincorporation in accordance with the laws of
the States of Utah and Delaware, the Company proposes to merge (the "Merger")
with and into Applied Voice Recognition, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company (the "Delaware Corporation"), pursuant to
the terms and provisions of the Plan and Agreement of Merger (the "Merger Plan")
which is filed as Exhibit 2.1 hereto.  Under Utah law, shareholders who oppose
the proposed Merger have the right to receive payment for the estimated fair
value of their shares if they comply with the dissenters' rights provisions
under the Utah Revised Business Corporation Act. At the discretion of the Board
of Directors, the Company may choose not to consummate the Merger, and
ultimately the Reincorporation, if it receives a number of payment demands under
the applicable Utah dissenters' rights provisions so as to make the
Reincorporation no longer in the best interest of the Company.

     Under the terms of the Merger Plan, the Delaware Corporation will be the
surviving corporation; the separate corporate existence of the Company will
cease; the Delaware Corporation will succeed to all of the business, properties,
assets, and liabilities of the Company; the directors, officers, and employees
of the Company will become the directors, officers, and employees of the
Delaware Corporation; each outstanding share of the Company's Common Stock and
each outstanding share of the Company's Series A Preferred Stock will
automatically be converted into one share of the Delaware Corporation's Common
Stock and Series A Preferred Stock, respectively. On completion of the change of
domicile, the Company will be governed by the Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation"), as further amended by the
Certificate of Designation, Preferences, Rights and Limitations of the Series A
Preferred Stock (the "Series A Designation"), and the Amended and Restated
Bylaws (the "Bylaws") of the Delaware 

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Corporation. The proposed Certificate of Incorporation, Series A Designation and
Bylaws of the Delaware Corporation have been filed herewith as Exhibits 4.1, 4.2
and 4.3, respectively. According to Delaware and Utah law, the Merger will
become effective (the "Effective Date") immediately upon filing of the Delaware
Certificate and the Utah Articles. Immediately following the Merger and at the
Effective Time, all stock certificates which represented shares of Common Stock
or Series A Preferred Stock of the Company shall automatically represent and
evidence ownership of shares of Common Stock or Series A Preferred Stock of the
Delaware Corporation, respectively.

     For more information about the Merger, see the Notice of Action by Written
Consent and the Dissenters' Rights Notice to Certain Shareholders filed herewith
as Exhibits 20.1 and 20.2, respectively.

DESCRIPTION OF CAPITAL STOCK AFTER THE MERGER

     Under the Certificate of Incorporation and Bylaws of the Delaware
Corporation, the authorized capital stock of the Company will consist of
50,000,000 shares of common stock, par value $.001 per share (the "Common
Stock"), and 2,000,000 shares of preferred stock, par value $.10 per share (the
"Preferred Stock").  As of the Effective Date, the Company will have
approximately 13,230,234 shares of Common Stock and 312,500 shares of Preferred
Stock outstanding, and will have reserved approximately 660,000 shares of Common
Stock for issuance upon exercise of outstanding options and 770,000 shares of
Common Stock for issuance upon exercise of outstanding warrants.

     Common Stock Under the Certificate of Incorporation and Bylaws of the
Delaware Corporation.  The holders of Common Stock are entitled to one vote per
share with respect to all matters required by law to be submitted to the
stockholders of the Company. The holders of Common Stock have the sole right to
vote, except as otherwise provided by law or by the Company's Certificate of
Incorporation. The Common Stock does not have any cumulative voting rights.  A
majority of the issued and outstanding Common Stock constitutes a quorum at any
meeting of stockholders and the vote by the holders of a majority of the
outstanding shares is required to effect certain fundamental corporate changes
such as liquidation, merger or amendment of the Certificate of Incorporation.

     Holders of shares of Common Stock are entitled to receive dividends, if,
as, and when declared by the Board out of funds legally available therefore.
Upon liquidation of the Company, holders of shares of Common Stock are entitled
to share ratably in all assets of the Company remaining after payment of
liabilities.  Holders of shares of Common Stock have no preemptive rights or
other rights to subscribe for unissued or treasury shares or securities
convertible into shares.  The outstanding shares of Common Stock are fully paid
and nonassessable.

     Preferred Stock Under the Certificate of Incorporation and Bylaws of the
Delaware Corporation.  The Board of Directors of the Company, without any action
by the stockholders of the Company, is authorized to issue up to a total of
2,000,000 shares of Preferred Stock in one or more series and to determine the
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and in liquidation and the conversion and other
rights of each such series. The Board of Directors could issue a series of
Preferred Stock that could, depending on the terms 

                                       3
<PAGE>
 
of such series, provide for a liquidation preference over the Common Stock or
impede the completion of a merger, tender offer or other takeover attempt. The
Board of Directors, in so acting, could issue Preferred Stock having terms that
discourage an acquisition attempt through which an acquiror may be otherwise
able to change the composition of the Board of Directors, including a tender or
exchange offer or other transaction that some, or a majority, of the Company's
stockholders might believe to be in their best interest. As of the date of this
Report, the Series A Preferred Stock (as described below) is the only series of
Preferred Stock so established by the Board of Directors.

     Series A Preferred Stock Under the Series A Designation of the Delaware
Corporation.  As of the Effective Date, all of the 312,500 shares of Series A
Preferred Stock, per value $.10 per share (the "Series A Preferred"), authorized
by the Company's Certificate of Incorporation will be outstanding.  The dividend
on the Series A Preferred is $.32 per annum per share, and is paid in shares of
the Company's Common Stock based on the Common Stock's 30 day average closing
price prior to the dividend date.  Such dividends are cumulative and are payable
quarterly, without interest on the accumulation thereof.  Except as required by
the Delaware General Corporation Law (the "DGCL") or the Company's Certificate
of Incorporation, the holders of the Series A Preferred have no voting rights,
and no consent of any such holder is required for the taking of any corporate
action. However, the vote or the prior written consent of a majority of the
holders of the Series A Preferred is required for any modification to the terms
of that series or for the authorization of any other class of Preferred Stock
having superior rights and preferences to those of the Series A Preferred.

     The Series A Preferred has a liquidation preference of $8.00 per share,
subject to adjustment. The liquidation preference is payable on any liquidation,
dissolution, or winding up of the Company. Each share of Series A Preferred is
presently convertible, at the option of the holder, into 5.4 shares of Common
Stock.  The number of shares of Common Stock into which a share of Series A
Preferred may be converted is subject to adjustment pursuant to the anti-
dilution provisions of the Series A Designation.  Generally, adjustments will be
made for any merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event.

     In accordance with the Series A Designation, the Company has the right to
redeem not less than all of the Series A Preferred at a price of $8.00 per
share.  The shares of Series A Preferred may be converted into shares of Common
Stock until the date fixed for redemption by the Board of Directors.  The
Company may not redeem the Series A Preferred until after the third anniversary
of their issuance.

     The Board of Directors Under the Certificate of Incorporation and Bylaws of
the Delaware Corporation.  The Company's Board of Directors is divided into
three classes: Class I, Class II and Class III.  The Directors in each of the
classes are elected to staggered three-year terms.  Therefore, the holders of
the Common Stock are only entitled to vote in the election of any single class
of directors once every three years.  Directors can only be removed for "cause"
as that term is defined in the Certificate of Incorporation.  For purposes of
director removal, cause means (i) the conviction of that director, or where a
director is granted immunity to testify the conviction of another, for a felony,
(ii) the affirmative vote by a majority of the Board of Directors that such
directors was grossly negligent or guilty of misconduct in the performance of
his duties to the Company in a matter of substantial importance to the Company,
or (iii) such director has been adjudicated to be mentally incompetent.

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<PAGE>
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS AFTER THE MERGER

     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 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 be 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 Delaware Corporation
require the Company 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.

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<PAGE>
 
ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

     The following exhibits are filed with this report on Form 8-K:

<TABLE>
<CAPTION>
 
<S>    <C>
 2.1   - Plan and Agreement of Merger between the Company and the Delaware
         Corporation dated November 7, 1997.
 
 4.1   - Amended and Restated Certificate of Incorporation for the Delaware
         Corporation to be filed on or about January 26, 1998 in Delaware.

 4.2   - Certificate of Designation for the Series A Preferred Stock for the
         Delaware Corporation to be filed on or about January 26, 1998 in
         Delaware. 

 4.3   - Amended and Restated Bylaws of the Delaware Corporation adopted on
         November 7, 1997.
 
20.1   - Notice of Action by Written Consent dated December 22, 1997.
 
20.2   - Dissenters' Rights Notice to Certain Shareholders dated December 22,
         1997.
 
</TABLE>
                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                              APPLIED VOICE RECOGNITION, INC.
        


January 20, 1998                                 /s/ William T. Kennedy
                                              --------------------------------
                                                     William T. Kennedy,
                                                 Chief Financial Officer and
                                                     Assistant Secretary

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<PAGE>
 
                                    EXHIBITS
<TABLE>
<CAPTION>
 

EXHIBIT NO.
<S>    <C>
 
 2.1   - Plan and Agreement of Merger between the Company and the Delaware
         Corporation dated November 7, 1997.
 
 4.1   - Amended and Restated Certificate of Incorporation for the Delaware
         Corporation to be filed on or about January 26, 1998 in Delaware. 

 4.2   - Certificate of Designation for the Series A Preferred Stock for the
         Delaware Corporation to be filed on or about January 26, 1998 in
         Delaware.
 
 4.3   - Amended and Restated Bylaws of the Delaware Corporation adopted on
         November 7, 1997.
 
20.1   - Notice of Action by Written Consent dated December 22, 1997.
 
20.2   - Dissenters' Rights Notice to Certain Shareholders dated December 22,
         1997.
</TABLE>

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