SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act
Date of Report
(Date of earliest event reported)
WIZZARD SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
Colorado | 000-33381 | 87-0609860 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
5001 Baum Boulevard, Suite 770
Pittsburgh, Pennsylvania 15213
(Address of Principal Executive Offices)
(412) 621-0902
(Registrant's Telephone Number)
(Former Name or Former Address if changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see general instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14-a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 9.01 Financial Statements and Exhibits.
(a) Professional Personnel, Inc. financial statements for the years ended December 31, 2005 and 2006.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
FINANCIAL STATEMENTS
December 31, 2006 and 2005
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
CONTENTS
PAGE
—
Independent Auditor’s Report 1
—
Balance Sheets, December 31, 2005 and 2006 2
—
Statements of income, for the years ended
December 31, 2005 and 2006 3
—
Statement of Stockholder’s Equity for
the years ending December 31, 2005 and 2006 4
—
Statements of Cash Flows for the years ended
December 31, 2005 and 2006 5
—
Notes to Financial Statements 6 – 9
![[ka1001.jpg]](https://capedge.com/proxy/8-KA/0001010412-07-000163/ka1001.jpg)
2812 SOUTH 2750 EAST • SALT LAKE CITY, UTAH 84109
(801) 277-2763 PHONE • (801) 277-6509 FAX
INDEPENDENT AUDITOR’S REPORT
Board of Directors
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
Casper, Wyoming
We have audited the accompanying balance sheets of PROFESSIONAL PERSONNEL, INC. dba., PROFESSIONAL NURSING PERSONNEL POOL, INC. [An S Corporation] as of December 31, 2005 and 2006, and the related statements of operations, stockholder’s equity and cash flows for the years ended December 31, 2005 and 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PROFESSIONAL PERSONNEL, INC. dba., PROFESSIONAL NURSING PERSONNEL POOL, INC. [An S Corporation] as of December 31, 2005 and 2006 and the results of its operations and its cash flows for the year ended December 31, 2005 and 2006 in conformity with generally accepted accounting principles in the United States of America.
/s/Gregory & Associates
June 25, 2007
Salt Lake City, Utah
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
BALANCE SHEETS
ASSETS
| December 31, | ||||
| 2005 |
| 2006 | ||
CURRENT ASSETS: |
|
|
|
|
|
Cash | $ | 126,999 |
| $ | 195,813 |
Accounts receivable, net of allowance for doubtful accounts of $10,401 and $0, respectively |
| 132,128 |
|
| 209,584 |
Total Current Assets |
| 259,127 |
|
| 405,397 |
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,net |
| 16,827 |
|
| 33,328 |
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
|
Goodwill |
| 32,500 |
|
| - |
Definate life intangible assets, net |
| 123,333 |
|
| 71,666 |
Deferred loan costs, net |
| 3,703 |
|
| 2,777 |
Other Assets |
| 159,536 |
|
| 106,943 |
| $ | 435,490 |
| $ | 545,668 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
CURRENT LIABILITIES: |
|
|
|
|
|
Accounts payable | $ | - |
| $ | 1,206 |
Accrued liabilities |
| 19,604 |
|
| 27,395 |
Current portion of notes payable |
| 38,050 |
|
| 40,801 |
Total Current Liabilities |
| 57,654 |
|
| 69,402 |
|
|
|
|
|
|
NOTES PAYABLE,less current portion |
| 173,203 |
|
| 90,670 |
Total Liabilities |
| 230,857 |
|
| 160,072 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT): |
|
|
|
|
|
Common Stock, no par value, 1,000 shares authorized, 500 shares issued and outstanding, respectfully |
| 32,000 |
|
| 32,000 |
Retained earning |
| 172,633 |
|
| 353,596 |
Total Stockholders' Equity |
| 204,633 |
|
| 385,596 |
| $ | 435,490 |
| $ | 545,668 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
STATEMENTS OF INCOME
| December 31, | ||||
| 2005 |
| 2006 | ||
NET REVENUES | $ | 1,551,966 |
| $ | 2,241,574 |
|
|
|
|
|
|
COST OF SERVICES |
| 1,159,196 |
|
| 1,553,566 |
Gross profit |
| 392,770 |
|
| 688,008 |
OPERATING EXPENSES: |
|
|
|
|
|
Selling expense |
| 4,954 |
|
| 13,681 |
General and administrative |
| 63,955 |
|
| 83,923 |
Depreciation and amortization |
| 68,494 |
|
| 70,871 |
Total Operating Expenses |
| 137,403 |
|
| 168,475 |
|
|
|
|
|
|
INCOME FROM OPERATIONS |
| 255,367 |
|
| 519,533 |
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
Interest income |
| 2,213 |
|
| 8,930 |
Interest (expense) |
| (12,947) |
|
| (13,350) |
Total Other Income |
| (10,734) |
|
| (4,420) |
NET INCOME | $ | 244,633 |
| $ | 515,113 |
The accompanying notes are an integral part of these financial statements.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
STATEMENT OF STOCKHOLDER’S EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 2005
THROUGH DECEMBER 31, 2006
| Common Stock |
| Retained | ||||
| Shares |
| Amount |
| Earnings | ||
BALANCE,January 1, 2005 | 500 |
| $ | 32,000 |
| $ | - |
|
|
|
|
|
|
|
|
Distributions | - |
|
| - |
|
| (72,000) |
|
|
|
|
|
|
|
|
Net income for the period ended December 31, 2005 | - |
|
| - |
|
| 244,633 |
BALANCE,December 31, 2006 | 500 |
|
| 32,000 |
|
| 172,633 |
|
|
|
|
|
|
|
|
Distributions | - |
|
| - |
|
| (334,150) |
|
|
|
|
|
|
|
|
Net income for the year ended December 31, 2006 | - |
|
| - |
|
| 515,113 |
BALANCE,December 31, 2006 | 500 |
| $ | 32,000 |
| $ | 353,596 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of this financial statement.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
STATEMENTS OF CASH FLOWS
Net Increase (Decrease) in Cash
| December 31, | ||||
| 2005 |
| 2006 | ||
Cash Flows from Operating Activities |
|
|
|
|
|
Net Income | $ | 244,633 |
| $ | 515,113 |
|
|
|
|
|
|
Adjustments to reconcile net income to net cash used by operations: |
|
|
|
|
|
Depreciation and amortization |
| 68,494 |
|
| 70,871 |
Bad Debt allowance |
| - |
|
| 10,401 |
Amortization of deferred loan costs |
| 926 |
|
| 926 |
Increase/decrease in assets/liabilities: |
|
|
|
|
|
Accounts receivable |
| (59,628) |
|
| (87,857) |
Accounts payable |
| - |
|
| 1,206 |
Accrued expenses |
| 19,604 |
|
| 7,791 |
Net Cash Provided (Used) by Operating Activities |
| 274,029 |
|
| 518,451 |
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
Purchase of Equipment |
| - |
|
| (35,705) |
Net Cash Provided by Investing Activities |
| - |
|
| (35,705) |
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
Distributions paid to shareholder |
| (72,000) |
|
| (334,150) |
Proceeds from notes payable |
| 25,431 |
|
| - |
Payments on notes payable |
| (105,849) |
|
| (79,782) |
Net Cash (Used) by Financing Activities |
| (152,418) |
|
| (413,932) |
Net Increase (Decrease) in Cash |
| 121,611 |
|
| 68,814 |
|
|
|
|
|
|
Cash at Beginning of Year/Period |
| 5,388 |
|
| 126,999 |
|
|
|
|
|
|
Cash at End of Year/Period | $ | 126,999 |
| $ | 195,813 |
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
Interest | $ | 8,678 |
| $ | 14,366 |
Income taxes | $ | - |
| $ | - |
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
For the year ended December 31, 2005:
None
For the year ended December 31, 2006:
None
The accompanying notes are an integral part of these financial statements.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization – PROFESSIONAL PERSONNEL, INC. dba., PROFESSIONAL NURSING PERSONNEL POOL, INC. [Company] was incorporated in Montana on November 18, 2004. The Company provides a comprehensive, fully-integrated range of home nursing services to individuals with nonacute illnesses, long-term chronic health conditions, permanent disabilities, terminal illnesses or post-procedural needs in the Billings, Montana region. The Company also provides comprehensive health care personnel staffing services in the Billings, Montana region.
Accounting Estimates – The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated.
Cash and Cash Equivalents – For the purpose of the financial statements, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company had $95,812, in excess of federally insured amounts in its bank accounts at December 31, 2006.
Allowance for doubtful accounts -The allowance for doubtful accounts is based on our assessment of the collectibility of specific customer accounts and the aging of the accounts receivable. If there were a deterioration of a major customer’s credit worthiness, or actual defaults were higher that our historical experience, our estimates of the recoverability of amounts due to us could be overstated, which could have an adverse impact on our net income.
Fair value of financial instruments-The fair value of the Company’s accounts receivable, inventory, related party advances, accounts payable and accrued liabilities, and demand note payable approximate their carrying values based on their effective interest rates compared to current market prices.
Income Taxes – The Company elected to be tax as an S Corporation, wherein in lieu of corporate income taxes, the shareholders of the company are taxed individually on their proportionate share of the Company’s taxable income. Therefore, no deferred tax asset or liabilities, income tax payable or current and deferred tax expense or benefit for federal income taxes have been included in the financial statements.
Revenue Recognition –Revenue are recognized when services are provided for a determinable price, no further obligation exist with the customer for the services provided, and collection is reasonable assured.
Definite life intangible assets- Definite life intangibles assets consist of customer list, a non-compete agreement with the former owner, and the Professional Nursing Personnel Pool Trade-name and are amortized over their expected life of three to five years.
Advertising Costs – Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2005 and 2006 were $4,954, and $13,681, respectively.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Impairment of Long-Lived Assets-In accordance with SFAS No. 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated.
Recently Enacted Accounting Standards – In June 2006, the Financial Accounting Standards Board (FASB) issued Financial Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is required to adopt FIN 48 beginning in fiscal year 2007 and the impact that the adoption of FIN 48 will have on its consolidated financial statements and notes thereto is expected to be immaterial.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which establishes a framework for reporting fair value and expands disclosures about fair value measurements. SFAS 157 will have not have a material impact on the Company’s financial statements.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” SFAS No. 158 requires employers that sponsor defined benefit pension and postretirement benefit plans to recognize previously unrecognized actuarial losses and prior service costs in the statement of financial position and to recognize future changes in these amounts in the year in which changes occur through comprehensive income. As a result, the statement of financial position will reflect the funded status of those plans as an asset or liability. Additionally, employers are required to measure the funded status of a plan as of the date of its year-end statement of financial position. SFAS No. 158 will have no impact on the Company’s financial statements.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 – PROPERTY & EQUIPMENT
The following is a summary of property & equipment:
| Estimated |
| December 31, | ||||
| Lives |
| 2005 |
| 2006 | ||
Office Equipment & Furniture | 2 years |
| $ | 21,983 |
| $ | 21,983 |
Vehicles | 2 to 5 years |
|
| 11,671 |
|
| 47,376 |
|
|
|
| 33,654 |
|
| 69,359 |
Accumulated Depreciation |
|
|
| (16,827) |
|
| (36,031) |
Property & Equipment, net |
|
| $ | 16,827 |
| $ | 33,328 |
Depreciation expense for years ended December 31, 2005 and 2006 totaled $16,827 and $19,204, respectively.
NOTE 3 - GOODWILL / DEFINITE-LIFE INTANGIBLE ASSETS
Goodwill at December 31, 2006 is comprised and resulted from the purchase of the following operations of Professional Nursing Personnel Pool:
| December 31, | ||||
| 2005 |
| 2006 | ||
Professional Nursing Personnel Pool | $ | 52,500 |
| $ | 52,500 |
Definite-life intangible assets at December 31, 2006 are comprised of the following:
| Estimated |
| December 31, | ||||
| Lives |
| 2005 |
| 2006 | ||
Customer list | 2 years |
| $ | 125,000 |
| $ | 125,000 |
Trade-name | 2 to 5 years |
|
| 45,000 |
|
| 45,000 |
Non-compete agreement | 2 to 5 years |
|
| 5,000 |
|
| 5,000 |
|
|
|
| 175,000 |
|
| 175,000 |
Accumulated Depreciation |
|
|
| (51,667) |
|
| (103,334) |
Property & Equipment, net |
|
| $ | 123,333 |
| $ | 71,666 |
Amortization expense of $51,667 and $51,667 was recorded for the year ended December 31, 2005 and 2006.
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - GOODWILL / DEFINITE-LIFE INTANGIBLE ASSETS - CONTINUED
The Company estimates that its amortization expense will be approximately as follows for the twelve month periods ended:
Period ending December 31, |
| |
2007 |
| 51,666 |
2008 |
| 10,000 |
2009 |
| 10,000 |
| $ | 71,666 |
NOTE 4– NOTES PAYABLE
Notes payable at December 31, 2005 and 2006 consisted of the following:
| December 31, | ||||
| 2005 |
| 2006 | ||
7% Note Payable, payable in monthly installments of $4,059 maturing December 31, 2009. |
| 169,511 |
|
| 131,471 |
|
|
|
|
|
|
5% Note Payable, payable on demand |
| 41,742 |
|
| - |
Total |
| 211,253 |
|
| 131,471 |
Less Current Portion |
| (38,050) |
|
| (40,801) |
| $ | 173,203 |
| $ | 90,670 |
The notes payable mature as follows for the twelve-month periods ended:
Period ending December 31, | Principle Due | |
2007 |
| 40,801 |
2008 |
| 43,751 |
2009 |
| 46,919 |
| $ | 131,471 |
PROFESSIONAL PERSONNEL, INC.
dba., PROFESSIONAL NURSING PERSONNEL POOL, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 5– OPERATING LEASES
The Company leases its operating facilities in Billings Montana on a month to month basis through an operating lease requiring monthly lease payments of $671. Lease expense for the years ended December 31, 2005 and 2006 were $7,332 and $10,991, respectively.
NOTE 6 – COMMON STOCK
Common stock – The Company has 1,000 authorized shares of common stock with no par value. At December 31, 2005 and 2006, the Company had 500 shares of common stock issued and outstanding.
NOTE 7 – SUBSEQUENT EVENTS
Acquisition of the Company - On April 3, 2007, the Company was acquired by Wizzard Software Corporation [WSC] in a transaction accounted for as a purchase pursuant to an Asset Purchase Agreement signed. The agreement called for WSC to pay $150,000 in cash, payoff the remaining notes payable at April 3, 2007 of $127,099 and to issue 245,099 common shares of WSC valued at $625,000 and receive accounts receivable of $75,012, and the Home Healthcare and Staffing client base. In addition, WSC agreed to issue to common shareholders of Professional Personnel, Inc. 6,537 “unregistered” and “restricted” shares of its common stock for every $100,000 in gross sales revenues generated by Professional Personnel, Inc. operations relating to the acquired assets, to the extent that such revenues exceed $1,400,000, up to a maximum of $2,000,000, during the calendar year ended December 31, 2007. WSC further agreed to employ Professional Personnel’s current office team of six employees for a minimum of 90 days and to make available an additional $50,000 worth of stock to be issued to such employees on terms similar to the issuance of the Milestone Shares.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma combined consolidated balance sheet and statements of operations reflects adjustments to Wizzard Software Corporation (Wizzard) historical consolidated balance sheet as of December 31, 2006 and the consolidated statements of operations for the years ended December 31, 2006 and 2005, to give effect to:
·
The purchase of a significant portion of the assets (primarily Home Healthcare Services) from Professional Personnel Inc. (PNPP), which was completed April 3, 2007, and the related issuance of 245,098 shares of common stock, as if both had occurred on January 1, 2005;
The acquisition is treated as a purchase transaction and, as such, the purchase price allocation which is based upon preliminary estimates of fair market value of the assets acquired, is subject to change based on refinements as additional information, including the final determination of the PNPP purchase price. The unaudited pro forma combined statement of operations is not necessarily indicative of PNPP’s actual results of operations assuming the transaction had been completed on January 1, 2005, nor do they purport to represent PNPP’s results of operations for future periods.
The following unaudited pro forma combined consolidated balance sheet has been prepared assuming the acquisition of PNPP occurred on December 31, 2006 and reflects adjustments to Wizzard’s historical consolidated balance sheet at December 31, 2006 to give effect to this transaction.
The unaudited pro forma combined consolidated financial statements should be read in conjunction with the historical financial statements and related notes of Wizzard.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||
For the Year Ended December 31, 2006 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Historical |
|
|
|
|
|
|
| ||||
|
| Wizzard |
|
| PNPP |
|
|
|
|
|
|
|
|
| Year Ended |
|
| Year Ended |
|
|
|
|
|
|
|
|
| December 31 |
|
| December 31 |
|
| Pro Forma |
|
| Pro Forma |
|
|
| 2006 |
|
| 2006 |
|
| Adjustments |
|
| As Adjusted | (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues | $ | 2,943,578 |
| $ | 2,241,574 |
| $ | (38,988) | (b) | $ | 5,146,164 |
|
Cost of sales |
| 1,879,463 |
|
| 1,553,566 |
|
| (11,137) | (c) |
| 3,421,892 |
|
|
| 1,064,115 |
|
| 688,008 |
|
| (27,851) |
|
| 1,724,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
| 4,466,091 |
|
| 154,794 |
|
| (52,996) | (c) |
| 4,567,889 |
|
Selling |
| 578,722 |
|
| 13,681 |
|
| - |
|
| 592,403 |
|
Research and development |
| 76,150 |
|
| - |
|
| - |
|
| 76,150 |
|
Impairment of goodwill |
| 289,670 |
|
| - |
|
| - |
|
| 289,670 |
|
Total cost and expenses |
| 5,410,633 |
|
| 168,475 |
|
| (52,996) |
|
| 5,526,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
| (4,346,518) |
|
| 519,533 |
|
| 25,145 |
|
| (3,801,840) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
| 14,664 |
|
| - |
|
| - |
|
| 14,664 |
|
Extension of note |
| (382,500) |
|
| - |
|
| - |
|
| (382,500) |
|
Interest expense |
| (184,421) |
|
| - |
|
| - |
|
| (184,421) |
|
Other income |
| 105,052 |
|
| (4,420) |
|
| - |
|
| 100,632 |
|
Loss before income taxes |
| (4,793,723) |
|
| 515,113 |
|
| 25,145 |
|
| (4,253,465) |
|
Income tax benefit/(expense) |
| - |
|
| - |
|
| - |
|
| - |
|
Net income (loss) | $ | (4,793,723) |
| $ | 515,113 |
| $ | 25,145 |
| $ | (4,253,465) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted | $ | (.14) |
|
|
|
|
|
|
| $ | (.13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
| 33,217,094 |
|
|
|
|
| 245,098 | (d) |
| 33,462,192 |
|
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||
For the Year Ended December 31, 2005 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Historical |
|
|
|
|
|
|
| ||||
|
| Wizzard |
|
| PNPP |
|
|
|
|
|
|
|
|
| Year Ended |
|
| Year Ended |
|
|
|
|
|
|
|
|
| December 31 |
|
| December 31 |
|
| Pro Forma |
|
| Pro Forma |
|
|
| 2005 |
|
| 2005 |
|
| Adjustments |
|
| As Adjusted | (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues | $ | 1,694,075 |
| $ | 1,551,966 |
| $ | (6,800) | (b) | $ | 3,239,241 |
|
Cost of sales |
| 991,005 |
|
| 1,159,196 |
|
| (747) | (c) |
| 2,149,454 |
|
|
| 703,070 |
|
| 392,770 |
|
| (6,053) |
|
| 1,089,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
| 3,444,517 |
|
| 132,449 |
|
| (44,352) | (c) |
| 3,532,614 |
|
Selling |
| 457,636 |
|
| 4,954 |
|
| - |
|
| 462,590 |
|
Research and development |
| 69,089 |
|
| - |
|
| - |
|
| 69,089 |
|
Impairment of goodwill |
| 1,191,967 |
|
| - |
|
| - |
|
| 1,191,967 |
|
Total cost and expenses |
| 5,163,209 |
|
| 137,403 |
|
| (44,352) |
|
| 5,256,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
| (4,460,139) |
|
| 255,367 |
|
| 38,299 |
|
| (4,166,473) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of assets |
| (4,527) |
|
| - |
|
| - |
|
| (4,527) |
|
Interest income |
| 36,540 |
|
| - |
|
| - |
|
| 36,540 |
|
Interest expense |
| (1,538,736) |
|
| - |
|
| - |
|
| (1,538,736) |
|
Other income |
| - |
|
| (10,734) |
|
| - |
|
| (10,734) |
|
Loss before income taxes |
| (5,966,862) |
|
| 244,633 |
|
| 38,299 |
|
| (5,683,930) |
|
Income tax benefit/(expense) |
| - |
|
| - |
|
| - |
|
| - |
|
Net income (loss) | $ | (5,966,862) |
| $ | 244,633 |
| $ | 38,299 |
| $ | (5,683,930) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted | $ | (.20) |
|
|
|
|
|
|
| $ | (.19) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
| 30,334,269 |
|
|
|
|
| 245,098 | (d) |
| 30,579,367 |
|
Notes to the Unaudited pro forma combined consolidated statements of operations
(a)
The Pro Forma Statements of Operations assumes that the PNPP acquisition occurred on January 1, 2005. For purposes of the Pro Forma Statements of Operations for the years ended December 31, 2006 and 2005, PNPP's historical statements of operations for the years ended December 31, 2006 and 2005 were combined with Wizzard’s historical statements of operations for the years ended December 31, 2006 and 2005.
(b)
Reflects adjustment for revenue assuming the PNPP acquisition occurred on January 1, 2005:
|
| For the Years Ended December 31, | ||
Revenue not included with acquisition: |
| 2006 |
| 2005 |
Consulting Services | $ | (38,988) | $ | (6,800) |
|
|
|
|
|
| $ | (38,988) | $ | (6,800) |
(c)
Reflects adjustments for expenditures assuming the PNPP acquisition occurred on January 1, 2005:
|
| For the Years Ended December 31, | ||
Expense not included with acquisition: |
| 2006 |
| 2005 |
Wages & Taxes – owner & employees | $ | (58,818) | $ | (40,657) |
Automotive expense |
| (5,315) |
| (4,442) |
| $ | (64,133) | $ | (45,099) |
(d)
Shares issued in connection with acquisition of PNPP assumed to be outstanding for the entire periods presented.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET | ||||||||||||||
December 31, 2006 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Historical |
|
|
|
|
|
|
|
|
| ||||
|
| Wizzard |
|
| PNPP |
| PNPP |
|
|
|
|
|
| |
|
| December 31, |
|
| December 31, |
| Assets Not |
|
| Pro Forma |
|
| Pro Forma | |
|
| 2006 |
|
| 2006 |
| Acquired |
|
| Adjustments |
|
| As Adjusted | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash | $ | 2,685,068 |
| $ | 195,813 |
| $ | (195,813) |
| $ | (150,324) | (a) | $ | 2,534,744 |
Accounts receivable |
| 371,636 |
|
| 209,584 |
|
| (134,572) |
|
| - |
|
| 446,648 |
Inventory |
| 10,878 |
|
| - |
|
| - |
|
| - |
|
| 10,878 |
Note Receivable |
| 50,000 |
|
| - |
|
| - |
|
| - |
|
| 50,000 |
Prepaid expenses |
| 47,487 |
|
| - |
|
| - |
|
| - |
|
| 47,487 |
Total current assets |
| 3,165,069 |
|
| 405,397 |
|
| (330,385) |
|
| (150,324) |
|
| 3,089,757 |
Leased equipment, net |
| 107,880 |
|
| - |
|
| - |
|
| - |
|
| 107,880 |
Property and equipment, net |
| 75,922 |
|
| 33,328 |
|
| (33,328) |
|
| - |
|
| 75,922 |
Goodwill and intangibles, net |
| 945,795 |
|
| 104,166 |
|
| (104,166) |
|
| 827,410 | (a) |
| 1,773,205 |
Other assets |
| 3,582 |
|
| 2,777 |
|
| (2,777) |
|
| - |
|
| 3,582 |
Total assets | $ | 4,298,248 |
| $ | 545,668 |
| $ | (470,656) |
| $ | 677,086 |
| $ | 5,050,346 |
Liabilities and stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable | $ | 337,758 |
| $ | 1,206 |
| $ | (1,206) |
| $ | - |
| $ | 337,758 |
Accrued expenses |
| 376,776 |
|
| 27,395 |
|
| (27,395) |
|
| - |
|
| 376,776 |
Current portion of capital lease |
| 37,813 |
|
| - |
|
| - |
|
| - |
|
| 37,813 |
Notes payable, net |
| 107,600 |
|
| 40,801 |
|
| (4,372) |
|
| - |
|
| 144,029 |
Deferred revenue |
| 20,142 |
|
| - |
|
| - |
|
| - |
|
| 20,142 |
Total current liabilities |
| 880,089 |
|
| 69,402 |
|
| (32,973) |
|
| - |
|
| 916,518 |
Notes payable |
| - |
|
| 90,670 |
|
| - |
|
| - |
|
| 90,670 |
Capital lease |
| 81,411 |
|
| - |
|
| - |
|
| - |
|
| 81,411 |
Total liabilities |
| 961,500 |
|
| 160,072 |
|
| (32,973) |
|
| - |
|
| 1,088,599 |
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
| 35,215 |
|
| 32,000 |
|
| (32,000) |
|
| 245 | (b) |
| 35,460 |
Additional paid-in-capital |
| 27,570,632 |
|
| - |
|
| - |
|
| 624,755 | (b) |
| 28,195,387 |
Retained earnings (deficit) |
| (24,269,099) |
|
| 353,596 |
|
| (405,683) |
|
| 52,086 | (b) |
| (24,269,100) |
Total stockholders’ equity |
| 3,336,748 |
|
| 385,596 |
|
| (437,683) |
|
| 677,086 |
|
| 3,961,747 |
Total liabilities and stockholders’ equity | $ | 4,298,248 |
| $ | 545,558 |
| $ | (470,656) |
| $ | 677,086 |
| $ | 5,050,346 |
Notes to the unaudited pro forma combined consolidated balance sheet at December 31, 2007
(a)
The purchase price and preliminary adjustments to historical book value of PNPP as a result of the acquisition are as follows:
|
|
|
Accounts receivable | $ | 75,013 |
Property equipment |
| - |
Note payable |
| (127,099) |
Net liabilities assumed in excess of assets |
| (52,086) |
Goodwill |
| 827,410 |
Purchase price | $ | 775,324 |
(b)
The adjustments to paid-in capital, retained earnings, common stock as a result of the acquisition is as follows:
|
|
|
Common stock: |
|
|
Value of Wizzard common stock issued | $ | 245 |
|
|
|
Additional paid-in capital: |
|
|
Value of Wizzard common stock issued | $ | 624,755 |
|
|
|
Retained earnings: |
|
|
Elimination of PNPP's pre-business combination | $ | 52,086 |
|
|
|
Total adjustments to equity | $ | 677,086 |
Exhibit Index
99.1 Press Release dated April 11, 2007*
*Previously filed with the original 8-K Current Report dated April 3, 2007.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
WIZZARD SOFTWARE CORPORATION
Date: | July 3, 2007 |
| By: | /s/Christopher J. Spencer |
|
|
|
| Christopher J. Spencer |
|
|
|
| CEO and President |
|
|
|
|
|