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
September 8, 2005
-----------------
Date of Report
(Date of Earliest Event Reported)
WIZZARD SOFTWARE CORPORATION
----------------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 000-33381 87-0575577
-------- --------- ----------
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
5001 Baum Boulevard, Suite 770
Pittsburgh, Pennsylvania 15213
------------------------------
(Address of Principal Executive Offices)
(412) 621-0902
--------------
Registrant's Telephone Number
N/A
---
(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) Interim Financial Statements.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
FINANCIAL STATEMENTS
December 31, 2003 and 2004
and for the period ended June 30, 2005
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
CONTENTS
PAGE
Independent Auditor's Report 1
Audited Balance Sheets, December 31, 2003 and 2004; 2
and unaudited for the period ended June 30, 2005
Audited Statements of income, for the years ended
December 31, 2003 and 2004; and unaudited for the
period ended June 30, 2005 3
Audited Statement of Stockholders' Equity for
the period ending December 31, 2003 and 2004;
and unaudited for the period ended June 30, 2005 4
Audited Statements of Cash Flows for the years ended
December 31, 2003 and 2004; and unaudited for the
period ended June 30, 2005 5
Notes to Financial Statements 6 - 9
GREGORY & ELDREDGE, LLC [LETTERHEAD]
4631 Sycamore Drive * Salt Lake City, Utah 84117
(801)277-2763 Phone * (801)277-6509 Fax
INDEPENDENT AUDITOR'S REPORT
Board of Directors
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
Casper, Wyoming
We have audited the accompanying balance sheets of Interim Health Care of
Wyoming, Inc.[An S Corporation] as of December 31, 2003 and 2004, and the
related statements of operations, stockholders' equity and cash flows for the
years ended December 31, 2003 and 2004. 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 Interim Health Care of
Wyoming, Inc. [An S Corporation] as of December 31, 2003 and 2004 and the
results of its operations and its cash flows for the year ended December 31,
2003 and 2004 in conformity with generally accepted accounting principles in
the United States of America.
/s/Gregory & Eldredge, LLC
October 7, 2005
Salt Lake City, Utah
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
BALANCE SHEETS
ASSETS
December 31,
_________________________ June 30,
2003 2004 2005
(Unaudited)
___________ ___________ ___________
CURRENT ASSETS:
Cash $ 144,101 $ 243,839 $ 167,333
Accounts receivable, net of
allowance for doubtful accounts
of $47,182, $57,503 and $132,822,
respectively 333,548 339,603 420,663
Supplies inventory 1,130 1,130 1,130
___________ ___________ ___________
Total Current Assets 478,779 584,572 589,126
PROPERTY AND EQUIPMENT, net 247,533 205,362 186,123
___________ ___________ ___________
$ 726,312 $ 789,934 $ 775,249
___________ ___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,929 $ 17,483 $ 13,870
Accrued payroll and related
liabilities 67,324 74,350 74,377
Deferred revenue - 24,921 24,921
Contingent liability 250,000 250,000 250,000
Current portion of capital lease
payable 30,633 32,861 34,034
___________ ___________ ___________
Total Current Liabilities 357,886 399,615 397,202
Capital lease obligation, less current
Portion 187,334 154,474 137,158
___________ ___________ ___________
Total Liabilities 545,220 554,089 534,360
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value, 50,000
shares authorized, 1,000 shares
issued and outstanding. 42,105 42,105 42,105
Retained Earnings 138,987 193,740 198,784
___________ ___________ ___________
Total Stockholders' Equity 181,092 235,845 240,889
___________ ___________ ___________
$ 726,312 $ 789,934 $ 775,249
___________ ___________ ___________
The accompanying notes are an integral part of these financial statements.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
STATEMENTS OF INCOME
For the Six
Months ended
December 31, June 30,
_______________________ ___________
2003 2004 2005
(Unaudited)
___________ ___________ ___________
SALES, net of returns $ 1,905,664 $ 2,186,121 $ 964,559
COST OF GOODS SOLD 1,205,617 1,481,432 638,626
___________ ___________ ___________
Gross profit 700,047 704,689 325,933
___________ ___________ ___________
OPERATING EXPENSES:
General and administrative 496,727 500,473 280,846
Selling expense 10,822 10,451 5,978
___________ ___________ ___________
Total Operating Expenses 507,549 510,924 286,824
___________ ___________ ___________
INCOME FROM OPERATIONS 192,498 193,765 39,109
___________ ___________ ___________
INTEREST INCOME 1,728 2,355 2,293
INTEREST (EXPENSE) (8,678) (14,366) (6,358)
GAIN ON SALE OF MARKETABLE
SECURITIES 1,262 - -
___________ ___________ ___________
INCOME (LOSS) BEFORE INCOME TAXES 186,810 181,754 35,044
CURRENT TAX EXPENSE - - -
DEFERRED TAX (BENEFIT) - - -
___________ ___________ ___________
NET INCOME $ 186,810 $ 181,754 $ 35,044
___________ ___________ ___________
The accompanying notes are an integral part of these financial statements.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 2003
THROUGH JUNE 30, 2005
Common Stock Additional
________________________ Paid-in Accumulated
Shares Amount Capital Income (Deficit)
____________ ___________ ___________ _______________
BALANCE, January 1, 2003 1,000 $ 42,105 $ - $ 233,091
Distributions paid owner - - - (280,914)
Net income for the period
ended December 31, 2003 - - - 186,810
____________ ___________ ___________ ____________
BALANCE, December 31, 2003 1,000 42,105 - $ 138,987
Distributions paid owner - - - (127,000)
Net income for the year
ended December 31, 2004 - - - 181,754
____________ ___________ ___________ ____________
BALANCE, December 31, 2004 1,000 42,105 - $ 193,740
Distributions paid owner
(Unaudited) - - - (30,000)
Net income for the six
months ended June 30,
2005 (Unaudited) - - - 35,044
____________ ___________ ___________ ____________
BALANCE, June 30, 2005
(Unaudited) 1,000 $ 42,105 $ - $ 198,784
____________ ___________ ___________ ____________
The accompanying notes are an integral part of this financial statement.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
STATEMENTS OF CASH FLOWS
Net Increase (Decrease) in Cash
For the Six
Months ended
December 31, June 30,
_______________________ ___________
2003 2004 2005
(Unaudited)
___________ ___________ ___________
Cash Flows from Operating Activities
Net Income $ 186,810 $ 181,754 $ 35,044
___________ ___________ ___________
Adjustments to reconcile net income
to net cash used by operations:
Depreciation and amortization 30,620 42,171 19,239
Bad debt allowance 29,901 10,321 75,319
Gain on sale of marketable securities (1,262) - -
Increase/ decrease in assets /
liabilities:
Accounts receivable (77,693) (16,376) (156,379)
Accounts payable (11,920) 7,554 (3,613)
Accrued expenses 18,814 7,027 27
Deferred revenue - 24,921 -
___________ ___________ ___________
Net Cash Provided (Used) by
Operating Activities 175,270 257,372 (30,363)
___________ ___________ ___________
Cash Flows from Investing Activities:
Purchase of Equipment (2,938) - -
Proceeds from sale of marketable
securities 7,234 - -
___________ ___________ ___________
Net Cash Provided by
Investing Activities 4,296 - -
___________ ___________ ___________
Cash Flows from Financing Activities:
Distributions paid to shareholder (280,914) (127,000) (30,000)
Payments on capital lease (11,651) (30,634) (16,143)
___________ ___________ ___________
Net Cash (Used) by
Financing Activities (292,565) (157,634) (46,143)
___________ ___________ ___________
Net Increase (Decrease) in Cash (112,999) 99,738 (76,506)
Cash at Beginning of Year / Period 257,100 144,101 243,839
___________ ___________ ___________
Cash at End of Year / Period $ 144,101 $ 243,839 $ 167,333
___________ ___________ ___________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 8,678 $ 14,366 $ 6,358
Income taxes $ - $ - $ -
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
For the year ended December 31, 2003:
During 2003 the Company entered into a lease obligation to purchase
$223,750 of equipment.
For the year ended December 31, 2004: None
For the period ended June 30, 2005: None
The accompanying notes are an integral part of these financial statements.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization INTERIM HEALTH CARE OF WYOMING, INC. [Company] was
incorporated in Wyoming on July 13, 1992. The Company is a franchise of
INTERIM HEALTH CARE. The Company provides a comprehensive, fully-
integrated range of home nursing services including Medicare and
Medicaid to individuals with nonacute illnesses, long-term chronic
health conditions, permanent disabilities, terminal illnesses or post-
procedural needs in the Casper Wyoming region. The Company also
provides comprehensive health care personnel staffing services in the
Casper, Wyoming 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 $44,101, $143,839 and $67,333 in excess of federally insured amounts
in its bank accounts at December 31, 2003, 2004 and June 30, 2005,
respectively.
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.
Supplies Inventory Inventory is carried at the lower of cost or
market, as determined on the first-in, first-out (FIFO) method. Supplies
Inventory consisted of various medical supplies used in providing the
nursing services and totaled $1,130 at December 31, 2003, 2004 and June
30, 2005
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.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporatoin]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition Revenue are recognized when services are provided
and no further obligation exist with the customer. The Company
estimates and records deferred revenue for uncompleted Medicare visits.
The Company participates in the Medicaid program. The Company's
reimbursement arrangements with Medicaid are primarily on a fee for
service basis, without settlement. The Company's management believes
that any arrangements with Medicaid which are based on a cost
reimbursement methodology and are subject to potential settlement
adjustments have not had and will not have a significant impact on the
Company's financial position, results of operations, or cash flows.
The Company evaluates whether an allowance for estimated returns is
required based on historical returns.
Definite life intangible assets - Definite life intangibles assets
consist of franchise license fees of $10,000 which were fully amortized
for all periods presented.
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.
Advertising Costs The franchise pays a flat advertising fee equal to
1/4% of weekly gross sales to Interim Services, Inc. Advertising expense
for the years ended December 31, 2003, 2004 and six months ended June
30, 2005 were $10,822, $10,451 and $5,978, respectively.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 PROPERTY & EQUIPMENT
The following is a summary of property & equipment:
Estimated December 31, June 30,
Lives 2003 2004 2005
_____________ ________________________________
Furniture, & fixtures 2-10 years $ 17,254 $ 17,254 $ 17,254
Office and Medical Equipment 3 years 286,227 286,227 274,728
_____________ _________ ________ _________
303,481 303,481 291,982
Accumulated Deprecation (55,948) (98,119) (105,851)
_________ ________ _________
Property & Equipment, net $ 247,533 $205,362 $ 186,131
_________ ________ _________
Depreciation expense for years ended December 31, 2003, 2004 and six
months ended June 30, 2005 totaled $30,620, $42,171 and $19,239,
respectively.
NOTE 3 COMMITMENT AND CONTINGENCIES
Commitment The Company has a franchise agreement with Interim
Services Inc., a Delaware Corporation. The agreement includes an
obligation for the company to pay a weekly service charge equal to
five percent of weekly gross sales. The franchise agreement has a
term of five years, with the option to renew under the same terms
assuming the franchisee has met all the terms of the agreement. The
company renewed their franchise agreement for a term of ten years
during March, 1999.
Settlement During 2000, the Department of Health and Human Services
formally investigated the Company cost reports for fiscal years 1994
through 1999 and for certain claims in 1999 and 2000 for services
that were not supported by authorization of a physician. The Company
contended the cost report reflected the actual cost and all claims
were authorized by a physician. The Company entered into a $250,000
settlement agreement to settle possible claims resulting from there
investigation into the cost reports from 1994 to 1999 and certain
Medicare claims in 1999 and 2000 without admission nor concession by
the Company. The Company further agreed to sign an integrity
agreement.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 COMMITMENTS AND CONTINGENCIES [Continued]
Capital Leases- During 2003, the Company entered in a lease agreement
to acquire certain home health equipment. The lease is non-
cancelable and has an initial term of 63 months. At the end of the
lease term the Company has the option to renew the lease or purchase
the equipment as is at fair market prices.
The future minimum lease payments for non-cancelable capital lease as
of June 30, 2005 are as follows:
Period ending December 31 Lease Payments
2005 23,625
2006 47,250
2007 47,250
2008 91,376
2009 -
_____________
Total Minimum Lease Payments $ 209,501
Less amount representing interest , fees and taxes (38,309)
_____________
Present value of minimum lease payments 171,192
Less current portion (34,034)
______________
$ 137,158
______________
At December 31, 2003, 2004 and June 30, 2005, the Company had recorded
equipment on capital lease at $223,750 with related accumulated
depreciation of $18,646, $50,605 and $66,585, respectively. During the
respective years and six months ended depreciation expense for equipment on
capital lease amounted to $18,646, $31,959 and $15,980, respectively, and
has been included in depreciation expense.
Related Party Leases- The Company leases its operating facilities in
Wyoming through an operating lease with a shareholder and officer of the
Company. The initial term of the lease will expire in March 2007. The
lease is automatically renewed for an additional two years on each fourth
anniversary of the lease commencement if the tenant has met all terms of
the lease agreement. The rent expense is $4,750 per month during the
initial term of the lease. Afterwards the monthly lease payment may
increase up to two percent. During the additional renewal periods, the
monthly lease payment may increase up to two percent every second
anniversary of the renewal period.
INTERIM HEALTH CARE OF WYOMING, INC.
[An S Corporation]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 COMMITMENTS AND CONTINGENCIES [Continued]
The future minimum lease payments for related party capital leases,
assuming the Company qualifies to accept the automatic renewal, having
remaining terms in excess of one year as of June 30, 2005 are as follows:
Period ending December 31 Lease Payments
2005 19,000
2006 57,000
2007 57,855
2008 58,140
2009 59,012
______________
Total Minimum Lease Payments $ 251,007
______________
The amount of lease expense charged to operating income during the years
2003 and 2004 and period ended June 30, 2005 relating to rent of building
and grounds was $51,713, $53,338 and 19,000, respectively.
NOTE 4 COMMON STOCK
Common stock The Company has 50,000 authorized shares of common stock
with no par value. At December 31, 2003, 2004 and June 30, 2005, the
Company had 1,000 shares of common stock issued and outstanding.
NOTE 5 SUBSEQUENT EVENTS
Acquisition of the Company - On September 8, 2005, the Company was acquired
by Wizzard Software Corporation [WSC] in a transaction accounted for as a
purchase pursuant to a Stock Purchase Agreement signed September 8, 2005.
The agreement called for WSC to pay $518,000 and to issue 201,045 shares of
WSC common stock valued at $386,006 for 100% of the outstanding stock of
Interim.
Settlement During August 2005, the Company settled a contingency with the
Department of Human and Health Services (See Note 3).
Distributions On September 8, 2005, the Company declared a distribution
of $203,698 of which $163,252 was paid on September 8, 2005 and the
remaining $40,446 was paid October 6, 2005.
(b) Pro forma financial statements.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
The following unaudited proforma condensed combined balance sheet aggregates
the balance sheet of Wizzard Software Corporation and Subsidiaries ("PARENT")
as of June 30, 2005 and the balance sheet of Interim Health Care of Wyoming,
Inc. ("SUBSIDIARY") as of September 8, 2005, accounting for the transaction as
a purchase of SUBSIDIARY with the issuance 201,045 common shares of the PARENT
and paying $518,000 for all of the issued and outstanding shares of SUBSIDIARY
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
period. The transaction was completed as of September 8, 2005.
The following unaudited proforma condensed combined statement of operations
combine the results of operations of PARENT for the six months ended June 30,
2005, and the years ended December 31, 2004 and 2003 and the results of
operations of SUBSIDIARY for the period ended June 30, 2005, years ended
December 31, 2004 and 2003 as if the transaction had occurred as of the
beginning of the respective years and periods.
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 AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
PROFORMA UNAUDITED CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 8, 2005
[Unaudited]
ASSETS
Wizzard Software Interim Healthcare
Corporation of Wyoming, Inc. Proforma
June 30, 2005 September 8, 2005 Increase Proforma
[Parent] [Subsidiary] (Decrease)Combined
____________ ____________ ____________ ________
ASSETS:
Cash $ 1,289,596 $ 34,653 [A](518,000) $ 806,249
Accounts receivable, net 29,141 388,667 - 417,808
Product Inventories 82,533 1,130 - 83,663
Prepaid expenses 24,083 - - 24,083
Property, Plant,
Equipment, net 97,414 177,478 - 274,892
Goodwill - - [A] 896,570 896,570
Other assets, net 8,124 - - 8,124
____________ ____________ ___________ __________
$ 1,530,891 $ 601,928 $ 378,570 $2,511,389
____________ ____________ ___________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
Notes payable -
Convertible $ 1,425,000 $ - $ - $1,425,000
Accounts payable 220,467 79,644 - 300,111
Accrued liabilities 40,804 62,428 - 103,232
Deferred Revenue - 39,514 - 39,514
Lease Obligation - 162,906 - 162,906
Contingent liability - 250,000 - 250,000
____________ ____________ ___________ __________
Total Liabilities 1,686,271 594,492 - 2,280,763
____________ ____________ ___________ __________
STOCKHOLDERS'
EQUITY (DEFICIT):
[A] 201
Common Stock 27,365 42,105 [A] (42,105) 27,566
Additional paid in
capital 17,195,982 - [A] 385,805 17,581,787
Retained Earnings
(Deficit) (17,378,727) (34,669) [A] 34,669(17,378,727)
____________ ____________ ___________ __________
Total Stockholders'
Equity (Deficit) (155,380) 7,436 378,570 230,626
____________ ____________ ___________ __________
$ 1,530,891 $ 601,928 $ 378,570 $2,511,389
____________ ____________ ___________ __________
See Notes To Unaudited Proforma Condensed Combined Financial Statements.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
PROFORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATION
[Unaudited]
Wizzard Software Interim Healthcare
Corporation of Wyoming, Inc.
For the six For the six
Months Ended Months Ended Proforma
June 30, 2005 June 30, 2005 Increase Proforma
[Parent] [Subsidiary] (Decrease) Combined
________________ _________________ ________ _________
REVENUE, net $ 515,084 $ 964,559 $ - $ 1,479,643
COST OF GOODS SOLD 283,661 638,626 922,287
__________ __________ _______ ___________
GROSS PROFIT 231,423 325,933 - 557,356
EXPENSES:
General and
administrative 1,281,451 280,846 - 1,562,297
Selling expense 179,509 5,978 - 185,487
Research and
Development 33,289 - - 33,289
Impairment of Goodwill 1,191,967 - - 1,191,967
__________ __________ _______ ___________
Total operating expenses 2,686,216 286,824 - 2,973,040
__________ __________ _______ ___________
INCOME (LOSS) FROM
OPERATIONS (2,454,793) 39,109 - (2,415,684)
__________ __________ _______ ___________
OTHER INCOME (EXPENSE) (1,452,065) (4,065) - (1,456,130)
__________ __________ _______ ___________
INCOME (LOSS) BEFORE
INCOME TAXES (3,906,858) 35,044 - (3,871,814)
INCOME TAX EXPENSE - - - -
__________ __________ _______ ___________
NET INCOME (LOSS) $(3,906,858) $ 35,044 $ - $(3,871,814)
__________ __________ _______ ___________
BASIC AND DILUTED NET
(LOSS) PER COMMON SHARE
OUTSTANDING $ (0.14)
-----------
See Notes To Unaudited Proforma Condensed Combined Financial Statements.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
[Unaudited]
Wizzard Software Interim Healthcare
Corporation of Wyoming, Inc.
For the Year For the Year
Ended December Ended December Proforma
31, 2004 31, 2004 Increase Proforma
[Parent] [Subsidiary] (Decrease) Combined
________________ _________________ ________ _________
REVENUE, NET $ 525,434 $2,186,121 $ - $ 2,711,555
COST OF GOOD SOLD 408,349 1,481,432 - 1,889,781
__________ __________ _______ ___________
GROSS PROFIT 117,085 704,689 - 821,774
EXPENSES:
General and
administrative 4,333,254 500,473 - 4,833,727
Selling Expense 292,851 10,451 - 303,302
Research & Development 65,705 - - 65,705
Compensation for
re-pricing warrants 160,420 - - 160,420
Impairment of goodwill 522,932 - - 522,932
Impairment of
intangible asset 169,797 - - 169,797
__________ __________ _______ ___________
Total operating expenses 5,544,959 510,924 - 6,055,883
__________ __________ _______ ___________
INCOME (LOSS) FROM
OPERATIONS (5,427,874) 193,765 - (5,234,109)
__________ __________ _______ ___________
OTHER INCOME (EXPENSE) (58,966) (12,011) - (70,977)
__________ __________ _______ ___________
INCOME (LOSS) BEFORE
INCOME TAXES (5,486,840) 181,754 - (5,305,086)
INCOME TAX EXPENSE - - - -
__________ __________ _______ ___________
NET INCOME (LOSS) $(5,486,840) $ 181,754 $ - $(5,305,086)
__________ __________ _______ ___________
BASIC AND DILUTED NET
(LOSS) PER COMMON SHARE
OUTSTANDING $ (0.21)
----------
See Notes To Unaudited Proforma Condensed Combined Financial Statements.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
[Unaudited]
Wizzard Software Interim Healthcare
Corporation of Wyoming, Inc.
For the Year For the Year
Ended December Ended December Proforma
31, 2003 31, 2003 Increase Proforma
[Parent] [Subsidiary] (Decrease) Combined
________________ _________________ ________ _________
REVENUE, NET $ 470,487 $1,905,664 $ - $ 2,376,151
COST OF GOODS SOLD 388,330 1,205,617 - 1,593,947
__________ __________ _______ ___________
GROSS PROFIT 82,157 700,047 - 782,204
EXPENSES:
General and
administrative 1,714,900 496,727 - 2,211,627
Selling expense 153,865 10,822 - 164,687
Compensation for
re-pricing of warrants 210,000 - - 210,000
__________ __________ _______ ___________
Total operating expenses 2,078,765 507,549 - 2,586,314
__________ __________ _______ ___________
INCOME (LOSS) FROM
OPERATIONS (1,996,608) 192,498 - (1,804,110)
__________ __________ _______ ___________
OTHER (EXPENSE) (47,434) (5,688) - (53,122)
__________ __________ _______ ___________
INCOME (LOSS) BEFORE
INCOME TAXES (2,044,042) 186,810 - (1,857,232)
INCOME TAX EXPENSE - - - -
__________ __________ _______ ___________
NET INCOME (LOSS) $(2,044,042) $ 186,810 $ - $(1,857,232)
__________ __________ _______ ___________
BASIC AND DILUTED NET
(LOSS) PER COMMON SHARE
OUTSTANDING $ (0.09)
__________
See Notes To Unaudited Proforma Condensed Combined Financial Statements.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
NOTE 1 WIZZARD SOFTWARE CORPORATION
Wizzard Software Corporation [PARENT] a Colorado corporation, was organized
on July 1, 1998. Parent has two subsidiaries: Speech Systems, Inc a wholly
owned subsidiary, and MediVoxRx Technologies, Inc a wholly owned
subsidiary. The Company is an OEM licensee of certain speech to text and
text to speech software engines. The Company also develops, sells, and
service of custom and packaged speech recognition computer software
products.
NOTE 2 INTERIM HEALTHCARE OF WYOMING, INC.
INTERIM HEALTH CARE OF WYOMING, INC. [SUBSIDIARY] was incorporated in
Wyoming on July 13, 1992. The Company is a franchise of INTERIM HEALTH
CARE. The Company provides a comprehensive, fully-integrated range of home
nursing services including Medicare and Medicaid to individuals with non-
acute illnesses, long-term chronic health conditions, permanent
disabilities, terminal illnesses or post-procedural needs in the Casper
Wyoming region. The Company also provides comprehensive health care
personnel staffing services in the Casper, Wyoming region
NOTE 3 PROFORMA ADJUSTMENTS
Acquisition - On September 8, 2005, the PARENT acquired SUBSIDIARY in a
transaction accounted for as a purchase pursuant to a Stock Purchase
Agreement signed September 8, 2005. The agreement called for PARENT to pay
$518,000 and to issue 201,045 shares of PARENT common stock valued at
$386,006 for all of the issued and outstanding shares of SUBSIDIARY.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
NOTE 3 PROFORMA ADJUSTMENTS [Continued]
Proforma adjustments on the attached financial statements include the
following:
[A] To record the issuance of 201,045 restricted common shares of the
PARENT valued at $1.92 per share and payment of $518,000 for all of the
issued and outstanding shares of Subsidiary.
These transactions resulted in PARENT recording goodwill of $896,570 as
the total purchase price of $904,006 exceeds the fair value of the
$7,436 in net assets.
NOTE 4 CONTINGENT SHARES WHICH COULD BE ISSUED IN THE ACQUISITION
The SUBSIDIARY stockholders will receive an additional payment of two times
the Interim EBITDA for the year ended September 30, 2006, based upon the
amount that exceeds the Interim EBITDA for the year ended December 31,
2004. Twenty-five percent of which will be paid in cash and seventy-five
percent will be paid in restricted common shares of the PARENT.
The SUBSIDIARY stockholders will receive an additional payment of two times
the Interim EBITDA for the year ended September 30, 2007, based upon the
amount that exceeds the Interim EBITDA for the year ended September 30,
2006. Twenty-five percent of which will be paid in cash and seventy-five
percent will be paid in restricted common shares of the PARENT.
WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES
AND INTERIM HEALTHCARE OF WYOMING, INC.
NOTES TO PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[Unaudited]
NOTE 5 PROFORMA (LOSS) PER SHARE
The proforma (loss) per share is computed based on the weighted average
number of common shares outstanding during the period plus the estimated
shares issued in the acquisition and contingent shares which could be
issued in the acquisition had the acquisition occurred at the beginning of
the periods presented.
For the For the For the
Six Months Year Ended Year Ended
Ended December 31, December 31,
June 30, 2005 2004 2003
_____________ ___________ ____________
Weighted average number of common
shares outstanding during the period
used in loss per share (denominator) 27,045,817 24,824,265 20,631,309
Shares issued in acquisition 201,045 201,045 201,045
___________ __________ __________
Proforma weighted average number of
common shares outstanding during the
period used in loss per share after
purchase (denominator) 27,246,862 25,025,310 20,832,354
___________ __________ __________
At June 30, 2005, the PARENT had 2,091,835 warrants outstanding to purchase
common stock of the PARENT at $.25 to $1.55 per share, a 8% convertible
note payable wherein the holder could convert the note into a minimum of
50,000 shares of common stock and a 5% convertible note payable wherein the
holder could convert the note into 933,333 shares, which were not included
in the loss per share computation because their effect would be anti-
dilutive.
Subsequent to the June 30, 2005, the PARENT had issued 150,899 common
shares in payment of $300,000 in debt and $2,848 in interest; the PARENT
issued 508,750 in payment of $1,007,325 in consulting services. These
equity transactions were not included in the loss per share computation as
they occurred subsequent to June 30, 2005.
At December 31, 2004, the PARENT had 786,174 warrants outstanding to
purchase common stock of the PARENT at $0.25 to $1.55 per share and a
convertible note payable wherein the holder could convert the note into a
minimum of 200,000 shares of common stock; which were not included in the
loss per share computation because their effect would be anti-dilutive.
At December 31, 2003, PARENT had 608,076 warrants outstanding to purchase
common stock of the PARENT at $.25 to $2.00 per share and a convertible
note payable wherein the holder could convert the note into a minimum of
470,000 shares of common stock; which were not included in the loss per
share computation because their effect would be anti-dilutive.
(c) Exhibits.
Exhibit Description
------- -----------
10 Stock Purchase Agreement*
Interim Schedules
Wizzard Schedules
Employment Agreement (Exhibit 2.1(c))
Lock-Up/Leak-Out Agreement (Exhibit 2.2(c))
* Previously filed with original 8-K Current Report dated September 8, 2005.
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
Dated: 11/22/05 /s/ Christopher J. Spencer
-------- -----------------------------
Christopher J. Spencer
President