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 Exchange Act
February 7, 2001
Date of Report
(Date of Earliest Event Reported)
WIZZARD SOFTWARE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Colorado 333-69415 87-0575577
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
424 Gold Way
Pittsburgh, Pennsylvania 15213
(Address of Principal Executive Offices)
(412) 621-0902
Registrant's Telephone Number
Not Applicable
(Former Name or Former Address if changed Since Last Report)
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
WIZZARD SOFTWARE CORP.
FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
WITH
INDEPENDENT AUDITOR'S REPORT
YEARS ENDED DECEMBER 31, 2000 AND 1999
CONTENTS
PAGE
Independent auditor's report 1
Financial statements:
Balance sheets 2-3
Statements of income 4
Statements of retained earnings 5
Statements of cash flows 6-7
Notes to financial statements 8-14
Independent auditor's report on supplementary information 15
Supplementary information:
Schedule I - summaries of cost of goods sold 16
Schedule II - summaries of operating expenses 17
Schedule III - summaries of net change in
receivables, payables, inventory, prepaid and
accrued items 18
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Wizzard Software Corp.
Pittsburgh, Pennsylvania 15213
We have audited the accompanying balance sheets of Wizzard Software
Corp. as of December 31, 2000 and 1999, and the related statements of income,
retained earnings and cash flows for the years then ended. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits 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 Wizzard Software
Corp. as of December 31, 2000 and 1999 and the results of its operations and
its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States.
Clinton, Maryland
February 19, 2001
WIZZARD SOFTWARE CORP.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
Current assets:
Cash (Note 5) $ 54,143 $ 153,665
Inventory (Note 9) 121,023 136,504
Accounts receivable 416 0
Notes receivable (Note 10) 31,310 0
Prepaid expenses 285 0
Total current assets 207,177 290,169
Fixed assets, at cost:
Furniture, fixtures and equipment 181,308 141,386
Leasehold improvements 36,482 36,482
Software 37,449 32,539
255,239 210,407
Less accumulated depreciation and amortization 105,061 66,811
Total fixed assets, net 150,178 143,596
Other assets:
Intangible assets, net of amortization
of $2,739 and $1,535, respectively 8,033 972
Organization cost, net of amortization
of $323 and $405, respectively 11 1,420
Deposits 2,000 2,973
Total other assets 10,044 5,365
Total assets $ 367,399 $ 439,130
See accompanying notes.
WIZZARD SOFTWARE CORP.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
2000 1999
Current liabilities:
Trade accounts payable $ 95,137 $ 35,649
Franchise taxes payable 0 1,100
Note payable (Note 11) 750,000 0
Accrued expenses (Note 11) 45,747 0
Total current liabilities 890,884 36,749
Long-term liabilities:
Stockholder loans (Note 2) 0 854
Total liabilities 890,884 37,603
Stockholders' equity:
Common stock, $.001 par value; 20,000,000 and
14,154,133 shares authorized, respectively;
13,620,472 and 13,508,859 shares issued and
outstanding, respectively (Note 8) 13,620 13,509
Paid-in capital 2,373,837 1,918,290
Retained deficit (2,910,942) (1,530,272)
Total stockholders' equity (deficit) (523,485) 401,527
Total liabilities and stockholders' equity $ 367,399 $ 439,130
See accompanying notes.
WIZZARD SOFTWARE CORP.
STATEMENTS OF INCOME
Years ended December 31,
2000 1999
Sales (net of discounts of $10,842 and $17,412,
respectively) $ 189,625 $ 241,601
Cost of goods sold (67,874) (134,126)
Gross profit on sales 121,751 107,475
Operating expenses (1,503,994) (733,728)
Loss from operations (1,382,243) (626,253)
Other income 1,573 0
Net loss $ (1,380,670) $ (626,253)
Loss per common share $ (.10) $ (.05)
See accompanying notes.
WIZZARD SOFTWARE CORP.
STATEMENTS OF RETAINED EARNINGS
Years ended December 31,
2000 1999
Retained deficit, January 1 $ (1,530,272) $ (904,019)
Net loss (1,380,670) (626,253)
Retained deficit, December 31 $ (2,910,942) $(1,530,272)
See accompanying notes.
WIZZARD SOFTWARE CORP.
STATEMENTS OF CASH FLOWS
Years ended December 31,
2000 1999
Cash flows from operating activities:
Net loss $ (1,380,670) $ (626,253)
Noncash expenses, revenues and losses
included in net loss:
Depreciation and amortization 39,521 30,912
Prior year's amortization recaptured (149) 0
Net (increase) decrease in receivables,
inventory and prepaid items (22,331) 59,023
Net increase in payables
and accrued items 104,135 17,169
Net cash used by operating activities (1,259,494) (519,149)
Cash flows from investing activities:
Purchase of fixed assets (44,832) (24,219)
Cash flows from financing activities:
Decrease in stockholder loans (854) (12,070)
Proceeds from issuance of stock 455,658 406,072
Increase in notes payable 750,000 0
Net cash provided by financing activities 1,204,804 394,002
Net decrease in cash (99,522) (149,366)
Cash at beginning of year 153,665 303,031
Cash at end of year $ 54,143 $ 153,665
See accompanying notes.
WIZZARD SOFTWARE CORP.
STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Years ended December 31,
2000 1999
Cash paid for:
Interest $ 0 $ 0
Income taxes $ 0 $ 0
See accompanying notes.
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. Significant accounting policies
This summary of significant accounting policies of Wizzard
Software Corp. is presented to assist the reader in understanding the
Corporation's financial statements. The Corporation maintains its books
and records on the accrual basis of accounting, under which revenues are
recognized when earned and expenses are recognized when incurred.
History and business activity
Wizzard Software Corp. was incorporated on February 29, 1996 under
the laws of the State of Delaware. The Corporation engages primarily in
the development, sale, and service of computer software products.
Estimates
The preparation of these financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
amounts.
Cash
For purposes of the statement of cash flows, the Corporation
considers all highly liquid debt instruments with an original maturity
date of three months or less to be cash.
Inventory
Inventory is stated at cost. Cost is determined by the specific
identification method.
Accounts receivable - trade
The Corporation uses the direct write-off method for uncollectible
accounts receivable. Accounts are written off when management deems
them uncollectible. Management is of the opinion that all accounts
receivable as of December 31, 2000 were fully collectible. All accounts
receivable as of December 31, 1999 were fully collected.
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. Significant accounting policies (continued)
Depreciation and amortization
Depreciation of property and equipment and amortization of
software is provided on the straight-line methods over the following
estimated useful lives:
Estimated Life
Furniture, fixtures and equipment 5-10 years
Leasehold improvements 39 years
Software 5-10 years
Depreciation expense for the years ended December 31, 2000 and
1999 was $31,652 and $24,284, respectively. Amortization expense of
software for the years ended December 31, 2000 and 1999 was $6,598 and
$5,936, respectively.
Intangibles, which consist of web page development and domain name
registration, are being amortized on the straight-line method over a
period of 2-5 years. Amortization expense of intangibles for the years
ended December 31, 2000 and 1999 was $1,204 and $476, respectively.
Organizational costs are being amortized on the straight-line
method over a period of 5 years. Amortization expense of organization
costs for the years ended December 31, 2000 and 1999 was $67 and $216,
respectively.
Fair value of financial instruments
The carrying value of cash, receivables and accounts payable
approximates fair value due to the short maturity of these instruments.
The carrying value of short and long-term debt approximates fair value
based upon discounting the projected cash flows using market rates
available for similar maturities.
Advertising and marketing
Advertising and marketing costs, which are principally included in
operating expenses, are expensed as incurred. Advertising and marketing
expenses for the years ended December 31, 2000 and 1999 were $232,438
and $63,606, respectively.
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
2. Related party transactions
A loan payable in the amount of $854 was due to Christopher J.
Spencer, the President and twenty-one percent stockholder of the
Corporation, at December 31, 1999. The loan was paid in full during the
year ended December 31, 2000.
3. Income tax carryforwards
For income tax reporting purposes, the Corporation has a net
operating loss carryforward as of December 31, 2000 and 1999 of
$2,898,687 and $1,525,117, respectively, which can be used to reduce
taxable income in future years.
Net operating losses generated prior to 1998 may be carried
forward for fifteen years. Net operating losses generated after 1997
may be carried forward for twenty years. The net operating losses shown
above as of December 31, 2000 and 1999 are composed of losses generated
in the following years:
Amount of
Year of origination Year of expiration Loss remaining
1996 2011 $ 159,849
1997 2012 297,383
1998 2018 441,632
1999 2019 626,253
As of December 31, 1999 1,525,117
2000 2020 1,373,570
As of December 31, 2000 $ 2,898,687
The tax benefit from the net operating loss will be limited due
the substantial change in ownership (Note 12).
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
4. Future minimum rentals
The Corporation has entered into a lease for the use of office
space in Pittsburgh, Pennsylvania. The lease expires June 30, 2001.
After that time, the lease becomes renewable yearly. Minimum future
lease payments related to this lease are as follows:
Year ending December 31, 2001 $ 12,000
Rent expense for the years ended December 31, 2000 and 1999 was
$24,000 per year.
5. Concentration of credit risks
The Corporation maintains its cash balance at one financial
institution located in Pittsburgh, Pennsylvania. Accounts at financial
institutions are insured by the Federal Deposit Insurance Corporation up
to $100,000. At December 31, 2000 and 1999, the Corporation's uninsured
cash balances totaled $0 and $54,186, respectively.
6. Accrued compensated absences
As of December 31, 2000 and 1999, the Corporation had established
no policy regarding the rate at which employees would earn vacation,
sick and other similar leave. As a result, these financial statements
contain no accrual for those items. It is the Corporation's intent that
no amounts will be provided for these items until policies governing the
items are formally established. In addition, the Corporation does not
intend to ever incur an expense for any amounts "earned" prior to
January 1, 2001.
7. Loss per share
Basic and diluted earnings per share is calculated in accordance
with FASB Statement No. 128, Earnings per Share. All earnings per share
amounts for all periods have been presented, and where appropriate,
restated to conform to the requirements of Statement 128.
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
8. Issuance of common stock
During the year ended December 31, 2000, the Corporation issued an
additional 220,746 shares of common stock as a result of private
offerings. In consideration for these shares, the Corporation received
$412,600. Of that amount, $221 was recorded as common stock and
$412,379 was recorded as paid-in capital. In addition to the private
offerings, Wizzard Software Corp. issued 40,000 shares of common stock
in exchange for services. The stated value of the services was $44,550
and is included in professional fees. The effect on common stock was to
record $40 as common stock and $44,510 as paid-in capital.
During the year ended December 31, 1999, Wizzard Software Corp.
entered into a stock-for-stock exchange and subsequent merger with
Abacus Software Services, Inc. in order to obtain a shareholder base in
preparation for becoming a reporting company.
However, during the year ended December 31, 2000, the Corporation
entered into an agreement to rescind the merger with Abacus Software
Services, Inc. This agreement represents the compromise of disputed
claims between Wizzard Software Corp. and Abacus Software Services, Inc.
As a result of this rescinding agreement, the Corporation made a one-
time rescission payment of $3,000 to Abacus Software Services, Inc.
Common stock was decreased by 149,133 shares, which was previously
recorded as $149 of common stock and $1,342 of paid-in capital.
As a result of the rescission of the merger, organization costs
related to the merger were reversed and a portion of the prior year's
amortization was recaptured. The recaptured amortization is included in
other income.
9. Inventory
Inventory as of December 31 consists of the following:
2000 1999
Raw materials $ 49,159 $ 49,159
Finished goods 71,864 87,345
$ 121,023 $ 136,504
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
10. Notes receivable
During the year ended December 31, 2000, the Corporation received
three separate promissory notes from Speech Solutions, Inc. totaling
$29,999 plus accrued interest at 12.5% per annum, compounded monthly.
Principal and interest are payable to Wizzard on demand. As of December
31, 2000, no payments have been received from Speech Solutions, Inc.,
and $1,311 interest has accrued on these notes.
11.Note payable bridge loan
Wizzard Software Corp. entered into a financing agreement on May
2, 2000 with Salvage Holdings, Inc. Under the terms of the agreement,
the Corporation can borrow up to $1,000,000. As of December 31, 2000,
the Corporation has borrowed $750,000. Principal and interest are due
on August 10, 2001. Interest is calculated at 12.5% per annum. The
note is convertible into the Corporation's common stock, $.001 par
value. As additional consideration, the Corporation issued warrants to
Salvage Holdings, Inc., to purchase 65,000 shares of common stock for
each $500,000 borrowed by the Corporation. As of December 31, 2000,
$45,747 interest has accrued on this note payable.
12. Subsequent event
On February 7, 2001, Wizzard Software Corp. completed a Plan of
Reorganization and Stock Exchange Agreement (the "Wizzard Agreement")
with Jensen Services, Inc. and Balanced Living, Inc. The Company
heretofore known as "Wizzard Software Corp." became known as "Wizzard-
Delaware," effective February 7, 2001. Certain stockholders of
Wizzard-Delaware owning not less than 80% of the outstanding common
stock of Wizzard-Delaware (the "Wizzard-Delaware Stockholders") entered
into the Wizzard Agreement. As a result of the Wizzard Agreement, the
Wizzard Delaware stockholders exchanged their shares in Wizzard-Delaware
for 13,404,831 shares of the reorganized company. The reorganized
company became a 96%-owned subsidiary of Balanced Living, Inc.
WIZZARD SOFTWARE CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
12.Subsequent event (continued)
As part of the Wizzard Agreement, Balanced Living, Inc. was
required to amend its Articles of Incorporation to reflect this
recapitalization of its common stock from 50,000,000 shares at a par
value of $0.01 to 100,000,000 shares at $0.01 par value per share; to
effect a 1.65 for 1 forward split of Balanced Living, Inc.'s outstanding
shares of common stock; and the change its name to "Wizzard Software
Corporation".
Two conditions preceding the completion of the Wizzard Agreement
were the cancellation of 3,725,000 of the 4,025,000 shares of Balanced
Living, Inc.'s common stock owned by Jensen Services, Inc.; and the
receipt of an acceptance of subscriptions for the purchase of a minimum
of 500,000 shares of Balanced Living, Inc.'s common stock pursuant to a
Confidential Private Offering Memorandum dated August 1, 2000, at a
price of $1 per share. 531,000 shares of common stock were sold on this
offering at the closing of the Wizzard Agreement for aggregate gross
proceeds of $531,000. This offering will continue until the earlier of
April 1, 2001 or the sale of 9,000,000 shares for aggregate gross
proceeds of $9,000,000.
Wizzard Software Corp. began publicly trading its common stock on
February 9, 2001. Wizzard Software Corp. trades on the NASD Over the
Counter Bulletin Board Market (OTCBB). The initial price offering was
$6 per share.
SUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION
To the Board of Directors
Wizzard Software Corp.
Pittsburgh, Pennsylvania 15213
Our report on our audits of the basic financial statements of Wizzard
Software Corp. as of and for the years ended December 31, 2000 and 1999
appears on Page 1. Those audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The supplementary
information contained in Schedules I through III for the years ended December
31, 2000 and 1999 is presented for purposes of additional analysis and is not
a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Clinton, Maryland
February 19, 2001
WIZZARD SOFTWARE CORP.
SCHEDULE I SUMMARIES OF COST OF GOODS SOLD
Years ended December 31,
2000 1999
Inventory, January 1 $ 136,504 $ 172,797
Add:
Purchases 52,393 97,833
Total goods available for sale 188,897 270,630
Less inventory - December 31 121,023 136,504
Cost of goods sold $ 67,874 $ 134,126
WIZZARD SOFTWARE CORP.
SCHEDULE II - SUMMARIES OF OPERATING EXPENSES
Years ended December 31,
2000 1999
Advertising $ 20,035 $ 8,794
Amortization 7,869 6,628
Auto expense 649 551
Bank charges 7,632 5,453
Broker fees 8,723 5,161
Business promotion 473 1,641
Cleaning services 2,435 2,010
Communications 22,425 16,339
Consulting fees 160,200 0
Contract labor 1,748 3,125
Depreciation 31,652 24,284
Director's fees 24,676 7,676
Dues and subscriptions 864 630
Employee benefits 3,610 0
Equipment rental 11,941 12,412
Insurance 9,419 5,605
Interest 47,244 0
Internet services 10,649 23,524
Licenses and fees 1,025 712
Marketing 212,403 54,812
Meals and entertainment 14,201 4,159
Office supplies 27,548 25,690
Payroll service 1,252 1,106
Postage and delivery 26,168 16,341
Printing and reproduction 24,650 3,490
Professional fees 185,746 50,821
Rent 24,000 24,000
Repairs 103 185
Salaries officers 161,992 123,992
Salaries other 275,511 223,726
Taxes payroll 34,484 29,827
Taxes state franchise 282 200
Trade shows 41,785 5,118
Travel 89,780 42,816
Utilities 3,476 2,900
Web site maintenance 7,344 0
$ 1,503,994 $ 733,728
WIZZARD SOFTWARE CORP.
SCHEDULE III - SUMMARIES OF NET CHANGE IN
RECEIVABLES, PAYABLES, INVENTORY, PREPAID AND ACCRUED ITEMS
Years ended December 31,
2000 1999
(Increase) decrease in receivables,
inventory and prepaid items:
Inventory $ 15,481 $ 36,293
Accounts receivable (416) 16,690
Notes receivable (31,310) 0
Intangible assets (6,774) (1,490)
Prepaid expenses (285) 7,530
Deposits 973 0
$ (22,331) $ 59,023
Increase (decrease) in payables and
accrued items:
Trade accounts payable $ 59,488 $ 16,969
Franchise taxes payable (1,100) 200
Accrued expenses 45,747 0
$ 104,135 $ 17,169
(b) Pro Forma Financial Information.
WIZZARD SOFTWARE CORPORATION
(Formerly Balanced Living, Inc.)
AND WIZZARD SOFTWARE CORP.
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
The following unaudited proforma condensed combined balance sheet aggregates
the balance sheet of Wizzard Software Corporation (Formerly Balanced Living,
Inc.) ("PARENT") as of December 31, 2000 and the balance sheet of Wizzard
Software Corp. ("SUBSIDIARY") as of December 31, 2000, accounting for the
transaction as a recapitalization of SUBSIDIARY with the issuance of shares
for the net assets of PARENT (a reverse acquisition) and using the assumptions
described in the following notes, giving effect to the transaction, as if the
transaction had occurred as of the end of the year. The transaction was not
completed until February 7, 2001.
The following unaudited proforma condensed combined statement of operations
combine the results of operations of PARENT for the year ended December 31,
2000 and the results of operations of SUBSIDIARY for the year ended December
31, 2000 as if the transaction had occurred as of the beginning of the period.
The proforma condensed combined financial statements should be read in
conjunction with the separate financial statements and related notes thereto
of PARENT and SUBSIDIARY. These proforma financial statements are not
necessarily indicative of the combined financial position, had the acquisition
occurred on the date indicated above, or the combined results of operations
which might have existed for the periods indicated or the results of
operations as they may be in the future.
WIZZARD SOFTWARE CORPORATION
(Formerly Balanced Living, Inc.)
AND WIZZARD SOFTWARE CORP.
PROFORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 2000
ASSETS
[Unaudited]
Wizzard Software
Corporation
(Formerly Balanced Wizzard Software
Living, Inc.) Corp. Proforma
December 31, 2000 December 31, 2000 Increase Proforma
[Parent] [Subsidiary] (Decrease) Combined
_____________________ ________________ __________ ________
ASSETS:
Cash $ 171,000 $ 54,143 [A] $ 298,178 $ 523,321
Accounts receivable - 416 - 416
Inventory - 121,023 - 121,023
Notes receivable - 31,310 - 31,310
Prepaid expenses - 285 - 285
Property and
equipment, net - 150,178 - 150,178
Other assets, net 29,517 10,044 [A] (29,517) 10,044
_________ _________ _________ ________
$ 200,517 $ 367,399 $ 265,196 $ 836,577
See Notes To Unaudited Proforma Condensed Financial Statements.
WIZZARD SOFTWARE CORPORATION
(Formerly Balanced Living, Inc.)
AND WIZZARD SOFTWARE CORP.
PROFORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
[Unaudited]
Wizzard Software
Corporation
(Formerly Balanced Wizzard Software
Living, Inc.) Corp. Proforma
December 31, 2000 December 31, 2000 Increase Proforma
[Parent] [Subsidiary] (Decrease) Combined
_____________________ ________________ __________ ________
LIABILITIES:
Notes payable $ - $ 750,000 - $ 750,000
Accounts payable and
Accrued liabilities 32,982 140,884 [A] (29,517) 144,349
Advances from investors 171,000 - [A] (171,000) -
_________ _________ _________ ________
Total Liabilities 203,982 890,884 (203,982) 894,349
_________ _________ _________ ________
STOCKHOLDERS' EQUITY:
Non-controlling
interest in Subsidiary - - [C] - -
[A] 531
[B] (215)
Common Stock 5,722 13,620 [D] (3,725) 15,933
[A] 468,647
[B] 215
Par value in excess of [B] (645,327)
contributed capital 636,140 2,373,837 [D] 3,725 2,837,237
Retained deficit (645,327) (2,910,942)[B] 645,327(2,910,942)
_________ _________ _________ ________
Total Stockholders'
Equity (Deficit) (3,465) (523,485) 469,178 (57,772)
_________ _________ _________ ________
$ 200,517 $ 367,399 $ 265,196 $836,577
_________ _________ _________ ________
See Notes To Unaudited Proforma Condensed Financial Statements.
WIZZARD SOFTWARE CORPORATION
(Formerly Balanced Living, Inc.)
AND WIZZARD SOFTWARE CORPORATION
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
[Unaudited]
Wizzard Software
Corporation
(Formerly Balanced Wizzard Software
Living, Inc.) Corp. Proforma
December 31, 2000 December 31, 2000 Increase Proforma
[Parent] [Subsidiary] (Decrease) Combined
_____________________ ________________ __________ ________
REVENUE $ - $ 189,625 - $ 189,625
COST OF SALE - 67,874 - 67,874
___________________ __________ _________ __________
GROSS PROFIT - 121,751 - 121,751
EXPENSES:
General and
administrative 34,465 1,503,994 - 1,538,459
___________________ __________ _________ __________
Total expenses 34,465 1,503,994 - 1,538,459
___________________ __________ _________ __________
(LOSS) FROM
OPERATIONS (34,465) (1,382,243) - (1,416,708)
___________________ __________ _________ __________
OTHER INCOME - 1,573 - 1,573
___________________ __________ _________ __________
(LOSS) BEFORE INCOME
TAXES (34,465) (1,380,670) - (1,415,135)
INCOME TAXES EXPENSE - - - -
___________________ __________ _________ __________
(LOSS) BEFORE
DISCONTINUED
OPERATIONS (34,465) (1,380,670) - (1,415,135)
INCOME FROM
DISCONTINUED
OPERATIONS 123,006 - - 123,006
___________________ __________ _________ __________
NET (LOSS) $ 88,541 $(1,380,670) $ - $(1,292,129)
___________________ __________ _________ __________
BASIC NET (LOSS)
PER COMMON SHARE $ (.08)
__________
WIZZARD SOFTWARE CORPORATION
(Formerly Balanced Living, Inc.)
AND WIZZARD SOFTWARE CORPORATION
NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
NOTE 1 WIZZARD SOFTWARE CORPORATION (Formerly Balanced Living, Inc.)
Wizzard Software Corporation [Parent] a Colorado corporation, was
organized on July 1, 1998. The Company has not raised significant
revenue from planned principal operations and is considered a
development stage company as defined in SFAS No. 7. The Company was
engaged in the business of holding motivational seminars, and selling
books and other motivational products. The Company has, at the
present time, not paid any dividends and any dividends that may be
paid in the future will depend upon the financial requirements of the
Company and other relevant factors.
NOTE 2 WIZZARD SOFTWARE CORP
Wizzard Software Corp. [Subsidiary], was incorporated on February 29,
1996 under the laws of the State of Delaware. The Corporation
engages primarily in the development, sale, and service of computer
software products.
NOTE 3 PROFORMA ADJUSTMENTS
On February 7, 2001, the Company completed the Plan of Reorganization and
Stock Exchange agreement, through the issuance 13,404,831 shares of Parents
common stock for 96% of Subsidiary or 13,049,000 of 13,620,472 outstanding
at December 31, 2000. The merger was accounted for as a recapitalization of
the Subsidiary, wherein Subsidiary became a 96% owned subsidiary of the
Parent. In connection with the agreement, 3,725,000 shares of the parent's
common stock were contributed back and canceled. The Company also amended
it's articles of incorporation to increase the authorized number of common
shares to 100,000,000, to effected a 1.65 to 1 forward stock split and to
change the name of the Company to Wizzard Software Corporation.
As of February 7, 2001, 531,000 shares of common stock were sold in
connection with the Company's confidential private placement offering
for aggregate gross proceeds of $531,000. This offering will
continue until the earlier of April 1, 2001 or until the sale of
9,000,000 shares of the company's Common stock.
Proforma adjustments on the attached financial statements include the
following:
[A] To record the sell of 531,000 shares of common stock in connection
with the Company's confidential private placement offering. As of
February 7, 2001, aggregate gross proceeds of $531,000 had been
received of which $171,000 had been recorded as advances from
investors on Parent's December 31, 2000 financial statements. The
remaining $360,000 was recorded as cash receipts net of paying
deferred stock offering cost of $61,822. This offering will
continue until the earlier of April 1, 2001 or the sale of
9,000,000 shares of the company's Common stock.
WIZZARD SOFTWARE CORPORATION
(Formerly Balanced Living, Inc.)
AND WIZZARD SOFTWARE CORPORATION
NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
NOTE 3 PROFORMA ADJUSTMENTS [Continued]
[B] To record the acquisition of a 96% interest in the SUBSIDIARY by
PARENT through the issuance of 13,404,831 shares of post-split
common stock for 13,090,000 shares of the subsidiary and eliminate
the retained earned deficit of Parent prior to the date of the
acquisition. The ownership interests of the former owners of
Subsidiary in the combined enterprise will be greater than the
ongoing shareholders of Parent and, accordingly, the management of
Subsidiary will assume operating control of the combined
enterprise. Consequently, the acquisition is accounted for as the
recapitalization of Subsidiary, wherein Subsidiary purchased the
assets of PARENT and accounted for the transaction as a "Reverse
Purchase" for accounting purposes.
[C] No amount has been reflected for the non-controlling interest in
the SUBSIDIARY due to a total stockholder's deficit of $(523,485)
at December 31, 2000. There were approximately 545,938 shares held
by non-controlling individuals or approximately 4% of the
outstanding shares of the Subsidiary.
[D] To record the contribution and cancellation of 3,725,000 shares of
PARENT'S common stock.
NOTE 4 PROFORMA (LOSS) PER SHARE
The proforma (loss) per share is computed based on the number of shares
outstanding, after adjustment for shares issued in the acquisition and the
limited offering, as though all shares issued in the acquisition and
limited offering had been outstanding from the beginning of the periods
presented.
Proforma
Combined
______________
Weighted average shares
considered to be outstanding 15,932,782
______________
(c) Exhibits.
Exhibit No. Exhibit Description
- ----------- -------------------
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
WIZZARD SOFTWARE CORPORATION
Date: 4/04/01 By/s/Christopher J. Spencer
------- ---------------------------
President, CEO and Director