PROSPECTUS SUPPLEMENT NO. 1 Filed Pursuant to Rule 424(b)(3)
TO PROSPECTUS DATED AUGUST 23, 2005 Registration No. 333-123715
WIZZARD SOFTWARE CORPORATION
Supplement No. 1
to
Prospectus Dated August 23, 2005
This Prospectus Supplement No. 1 supplements and amends certain
information contained in our Prospectus, dated August 23, 2005. This
Prospectus Supplement No. 1 should be read in conjunction with, and may not be
delivered or utilized without, the Prospectus. This Prospectus Supplement No.
1 is qualified by reference to the Prospectus, except to the extent that the
information in this Prospectus Supplement No. 1 supercedes the information
contained in the Prospectus.
The information beginning "Use of Proceeds" on page 3 of the Prospectus
is hereby amended to read as follows:
Use of proceeds . . . . . . . . We will not receive any money from the
selling stockholders when they sell shares of
our common stock; however, we may receive up
to $2,403,336.75 from the exercise of
outstanding warrants to acquire shares
underlying warrants that are being registered.
As of the date hereof, 466,665 of these
warrants has been exercised, for gross
proceeds of $536,664.75.
The disclosure under the caption "Use of Proceeds" on page 14 of the
Prospectus is hereby amended to read as follows:
USE OF PROCEEDS
---------------
We will not receive any part of the proceeds from sale of our common
stock. However, we will have received $2,403,336.75 if all of the warrants
are exercised. Our Class A Warrants, of which 466,668 are outstanding, are
exercisable at a price of $2.50 per share. Of our 933,333 Class B Warrants,
a total of 466,668 are exercisable at a price of $1.50 per share. All 466,668
of these warrants are outstanding. The remaining 466,665 Class B Warrants
were exercisable at $1.15 per share, and all such warrants have been exercised
as of the date hereof. As of January 3, 2006, the bid price of our common
stock was $1.85 per share. As of that date, our stock price was less than the
exercise price of all of our Class A Warrants and more than the exercise price
of all of our outstanding Class B Warrants. For a detailed description of our
outstanding warrants, see the Warrant Table under the caption "Description of
Securities."
A new third paragraph has been added as follows under the caption
"Selling Security Holders" on page 15 of the Prospectus:
Effective as of December 19, 2005, the Company and each of the
Subscribers executed a Warrant Amendment Agreement under which the Company
agreed to amend the Class B Warrants to (i) make one-half of each Subscriber's
such warrants, totaling 466,665 warrants, exercisable at a price of $1.15 per
share, exercisable until 5:00 p.m. EST on the 150th day on which the
Registration Statement under which the shares underlying such warrants has
been effective; and (ii) extending the period of exercisability of the
remaining 466,668 Class B Warrants to 5:00 p.m. EST on February 8, 2007. As
of the date hereof, all of the 466,665 repriced warrants have been exercised
at $1.15 per share.
The disclosure under the subheading "Warrant Table" on page 27 of the
Prospectus is hereby amended to read as follows:
Warrant Table
-------------
The following is a description of our outstanding warrants:
Per Share
Date of Number of Exercise
Holders Grant Term Shares Price
- ------- ----- ---- ------ -----
Marc Lord (1) 12/15/03 3 years 20,000 $0.25
Alpha Capital 1/23/04 3 years 504,950 $1.55
Aktiengesellschaft
Genesis Microcap 1/23/04 3 years 137,362 $1.55
Inc.
Stonestreet Limited 1/23/04 3 years 79,362 $1.55
Partnership
Alpha Capital 2/8/05 3 years 266,667 $2.50
Aktiengesellschaft
Genesis Microcap 2/8/05 3 years 66,667 $2.50
Inc.
Whalehaven Capital 2/8/05 3 years 133,334 $2.50
Fund Ltd.
Alpha Capital 2/8/05 (2) 266,667 $1.50
Aktiengesellschaft
Genesis Microcap 2/8/05 (2) 66,667 $1.50
Inc.
Whalehaven Capital 2/8/05 (2) 133,334 $1.50
Fund Ltd.
(1) The shares underlying this warrant are subject to a Lock-Up/
Leak-Out Agreement under which the warrant holder has agreed to
sell only 15% of these shares in any 90 day period and that such
shares will be sold only at the asked price as indicated on the
OTC Bulletin Board.
(2) These warrants are exercisable until 5:00 p.m. EST on February
8, 2007.
27
INVESTORS IN THE COMMON STOCK SHOULD HAVE THE ABILITY TO LOSE THEIR
ENTIRE INVESTMENT SINCE AN INVESTMENT IN THE COMMON STOCK IS SPECULATIVE AND
SUBJECT TO MANY RISKS, INCLUDING THE QUESTION AS TO WHETHER WE CAN CONTINUE AS
A GOING CONCERN AND OUR HISTORY OF OPERATING LOSSES. SEE SECTION ENTITLED
"RISK FACTORS" ON PAGE 4 OF THE PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS SUPPLEMENT NO. 1 OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus supplement is January 6, 2006.