PROSPECTUS SUPPLEMENT NO. 2 Filed Pursuant to Rule 424(b)(3)
TO PROSPECTUS DATED AUGUST 23, 2005 Registration No. 333-123715
WIZZARD SOFTWARE CORPORATION
Supplement No. 2
to
Prospectus Dated August 23, 2005
This Prospectus Supplement No. 2 supplements and amends certain
information contained in our Prospectus, dated August 23, 2005. This
Prospectus Supplement No. 2 should be read in conjunction with, and may not be
delivered or utilized without, the Prospectus and our Prospectus Supplement
No. 1, which was filed with the Securities and Exchange Commission on January
6, 2006. This Prospectus Supplement No. 2 is qualified by reference to the
Prospectus and Prospectus Supplement No. 1, except to the extent that the
information in this Prospectus Supplement No. 2 supercedes the information
contained in the Prospectus and Prospectus Supplement No. 1.
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 $700,002 from the exercise of
outstanding warrants to acquire shares
underlying warrants that are being registered.
As of the date hereof, an additional 1,400,001
of our warrants have been exercised, for gross
proceeds of $1,096,666.35.
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 have received a total of $1,096,666.35 as a result of the
exercise of all of our Class A Warrants and 466,665 of our Class B Warrants.
For a detailed description of our outstanding warrants, see the Warrant Table
under the caption "Description of Securities."
New fourth and fifth paragraphs have been added as follows under the
caption "Selling Security Holders" on page 15 of the Prospectus:
Effective as of May 9, 2006, the Company and each of the Subscribers
executed a Warrant Amendment Agreement under which the Company agreed to amend
all 466,668 of our Class A Warrants to make them exercisable at a price of
$1.20 per share. As of the date hereof, all 466,668 of the repriced Class A
Warrants have been exercised at $1.20 per share, for gross proceeds of
$560,001.60. In addition, on May 9, 2006, we granted to the Subscribers Class
D Warrants to purchase a total of 466,668 "unregistered" and "restricted"
shares of our common stock, exercisable at $2.50 per share, for a period of
three years. These Class D Warrants have piggyback registration rights. See
the subheading "Warrant Table," page 27 hereof.
In connection with the repricing of our Class A Warrants, we also agreed
to extend the due date of our convertible notes with Alpha Capital and
Whalehaven from June 22, 2006, to December 28, 2006, and to issue 150,000
"unregistered" and "restricted" shares of our common stock to Alpha Capital
and 75,000 such shares to Whalehaven, all with piggyback registration rights.
As of May 9, 2006, Genesis had fully converted all outstanding principal and
interest on its convertible note.
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
- ------- ----- ---- ------ -----
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 (1) 266,667 $1.50
Aktiengesellschaft
Genesis Microcap 2/8/05 (1) 66,667 $1.50
Inc.
Whalehaven Capital 2/8/05 (1) 133,334 $1.50
Fund Ltd.
Alpha Capital 12/14/05 (2) 81,778 $3.75
Aktiengesellschaft
Genesis Microcap 12/14/05 (2) 20,444 $3.75
Inc.
Whalehaven Capital 12/14/06 (2) 40,889 $3.75
Fund Ltd.
Alpha Capital 5/9/06 (3) 266,667 $2.50
Aktiengesellschaft
Genesis Microcap 5/9/06 (3) 66,667 $2.50
Inc.
Whalehaven Capital 5/9/06 (3) 133,334 $2.50
Fund Ltd.
(1) These warrants are exercisable until 5:00 p.m. EST on February
8, 2007.
(2) These warrants are exercisable until 5:00 p.m. EST on December
14, 2006.
(3) These warrants are exercisable until 5:00 p.m. EST on May 9,
2009.
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. 2 OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus supplement is May 15, 2006.