FORM 10-Q  Securities and Exchange
Commission Washington, D. C.
 20549   [X] QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly
period ended March 31, 2008  [ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934  For
the transition period from to  Commission File No.
  000-33381  WIZZARD SOFTWARE
CORPORATION (Exact name of
registrant as specified in its charter)  COLORADO
87-0609860(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)  5001 Baum Boulevard,
Suite 770 Pittsburgh,
Pennsylvania 15213 (Address of
Principal Executive Offices)  Registrant's Telephone
Number:  (412) 621-0902  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   (1) Yes [ X]  No
               (2)
Yes  [ X ]  No  Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definition of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):  Large accelerated filer  [
 ]


Accelerated filer
[X]Non-accelerated filer  [
 ]


Smaller reporting
company  [  ]   Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes [ ]  No [X]   As of May 5, 2008,
there were 44,621,620 shares of common stock, par value $.001, of the registrant
issued and outstanding.     PART I - FINANCIAL
INFORMATION  Item 1.   Financial
Statements.  The Consolidated Financial
Statements of the Company required to be filed with this 10-Q Quarterly Report
were prepared by management and commence on the following page, together with
related notes.  In the opinion of management, the Unaudited Consolidated
Financial Statements fairly present the financial condition of the Company.        WIZZARD SOFTWARE CORPORATION AND
SUBSIDIARIESFINANCIAL STATEMENTSCONTENTSPAGEConsolidated Balance Sheets  As of March 31, 2008
and December 31, 2007

3Consolidated Unaudited Statements of Operations 
For the three months ended March 31, 2008 and 2007

4Consolidated Unaudited Statements of Cash Flows 
For the three months ended March 31,  2008 and 2007

5 - 7Notes to Unaudited Consolidated Financial
Statements

8 - 22        WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEET  ASSETS March 31,   2008

December 31, 2007CURRENT ASSETS:

(unaudited)Cash
$
4,603,774
$
6,036,209Accounts
receivable, net of $17,562 and $17,562 allowance, respectively

829,305

874,058Prepaid
expenses

38,444

24,143Total
current assets

5,471,523

6,934,410LEASED EQUIPMENT, net

67,925

75,916PROPERTY AND EQUIPMENT,
net

163,636

109,504GOODWILL

20,650,569

20,724,986INTANGIBLES, net

432,292

-OTHER ASSETS

4,757

4,757Total
assets
$
26,790,702
$
27,849,573LIABILITIES AND STOCKHOLDERS'
EQUITYCURRENT LIABILITIES:Accounts
payable
$
696,225
$
877,304Accrued
expenses

383,942

356,341Accrued
acquisition costs  Webmayhem, PNPP

-

1,949,843Capital
lease

71,536

81,411Notes
payable  current portion

47,909

46,915Deferred
revenue

47,257

53,039Total
current liabilities

1,246,869

3,364,853NOTES PAYABLE, less current
portion

38,649

51,016CONVERTIBLE NOTES PAYABLE,
less current portion, net of discount of $113,595 and $482,158,
respectively

1,931,117

1,687,554Total
liabilities

3,216,635

5,103,423STOCKHOLDERS' EQUITYPreferred
stock, $.001 par value, 10,000,000 shares authorized, 6,136 and 6,147
Series A cumulative, convertible, contingently redeemable shares issued
and outstanding with liquidation preferences, respectively

6

6Common
stock, $.001 par value, 100,000,000 shares authorized, 44,611,828 and
43,304,034 shares issued and outstanding, respectively

44,612

43,304Additional
paid-in capital

68,139,065

64,668,006Accumulated
deficit

(44,609,616)

(41,965,166)Total
stockholders' equity

23,574,067

22,746,150Total
liabilities and stockholders' equity
$
26,790,702
$
27,849,573   See accompanying notes
to these unaudited consolidated financial statements.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS  For the Three Months  Ended
March  31,2008

2007REVENUESoftware
$
655,347
$
297,101Healthcare

1,013,131

428,825Total
Revenue

1,668,478

725,926COST OF GOODS SOLDSoftware

420,771

171,547Healthcare

580,866

297,046Total Cost of
Goods Sold

1,001,637

468,593Gross Profit

666,841

257,333OPERATING EXPENSESSelling expenses

224,743

201,734General and
administrative

497,320

192,658Salaries, wages and related
expenses

762,945

322,088Consulting fees

1,168,320

424,145Research and development

35,253

52,178Total
Expenses

2,688,581

1,192,803LOSS FROM OPERATIONS

(2,021,740)

(935,470)OTHER INCOME (EXPENSE):Extension and re-pricing of
warrants

-

(689,610)Extension of notes payable

(263,483)

-Interest income

35,272

23,352Interest expense

(394,948)

(192,725)Other income(expense)

449

324Total Other Income
(Expense)

(622,710)

(858,659)LOSS BEFORE INCOME TAXES

(2,644,450)

(1,794,129)CURRENT INCOME TAX EXPENSE

-

-DEFERRED INCOME TAX EXPENSE

-

-NET LOSS
$
(2,644,450)
$
(1,794,129)PREFERRED
DIVIDENDS:Accrued dividend

(107,380)

-NET LOSS
AVAILABLE TO COMMON SHAREHOLDERS
$
(2,751,830)
$
(1,794,129)BASIC AND DILUTED LOSS PER COMMON SHARE AVAILABLE
TO COMMON SHAREHOLDERS
$
(0.06)
$
(0.05)BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING

43,682,477

36,090,859   See accompanying notes
to these unaudited consolidated financial statements.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS  For the Three Months Ended
March 31,2008

2007Cash Flows from Operating ActivitiesNet loss
$
(2,644,450)
$
(1,794,129)Adjustments to reconcile net loss to
net cash
used in operating activities:Amortization of discount on notes
payable

368,563

161,400Compensation for re-pricing and
extension of warrants

-

689,610Compensation for extension of
notes payable

263,483

-Stock for non cash
expenses

724,808

326,879Non-cash compensation for vested
stock options

157,516

47,090Non-cash interest expense on
notes payable

1,592

-Depreciation and amortization
expense

65,282

19,063Change in allowance for slow
moving inventory

-

(6,214)Change in assets and
liabilities:Accounts
receivable

44,752

123,568Inventory

-

13,057Prepaid
expenses

(14,300)

21,959Accounts
payable

(181,079)

(374,789)Accrued
expense

(104,092)

(9,100)Deferred
revenue

(5,783)

(7,075)Net Cash Used in
Operating Activities

(1,323,708)

(788,681)Cash Flows from Investing Activities:Purchase of property &
equipment

(68,715)

(3,934)Acquisition of PNPP

(6,264)

-Acquisition of iClipx

(12,500)

-Acquisition of Webmayhem

-

(228,536)Net Cash Used in Investing
Activities

(87,479)

(232,470)Cash Flows from Financing Activities:Proceeds from the issuance of
common stock

-

320,090Payments on capital lease

(9,875)

(9,206)Payments on note payable

(11,373)

-Net Cash (Used)
Provided by Financing Activities

(21,248)

310,884Net Increase (Decrease) in Cash

(1,432,435)

(710,267)Cash at Beginning of Period

6,036,209

2,685,068Cash at End of Period
$
4,603,774
$
1,974,801Supplemental Disclosures of Cash Flow
InformationCash paid during the periods
for:Interest
$
3,687
$
2,044Income taxes
$
-
$
-    (Continued) See accompanying notes
to unaudited consolidated financial statements.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)  Supplemental Schedule of Non-cash
Investing and Financing Activities:  For the three months ended March 31,
2008:  On February 1,
2008, the Company issued 250,000 restricted common shares valued at $670,000 for
consulting services.  On February 6,
2008, the Company issued 220,000 restricted common shares valued at $653,400 to
acquire the operations of iClipx Inc.  On February 12,
2008, the Company issued 13,296 common shares in payment of a $25,000 note
payable and $1,592 of accrued interest.  On February 29,
2008, the Company issued 49,000 common shares upon the exercise of options
valued at $134,750 to consultants for services rendered.  On February 29,
2008, the Company issued 5,000 restricted common shares valued at $13,750 for
consulting services.  On March 5,
2008, the Company issued 4,715 restricted common shares upon notice of
conversion of 11 shares of Series A Preferred Stock.  On March 5,
2008, the Company issued 688 restricted common shares in payment of all
dividends accruing on the shares of Series A Preferred stock that was converted
on March 5, 2008.  On March 24,
2008, the Company issued 49,038 restricted common shares valued at $106,412 for
Professional Nursing Personnel Pool attainment of the Milestones.  On March 24,
2008, the Company issued 1,000 common shares upon the exercise of options valued
at $2,170 to consultants for services rendered.  On March 24,
2008, the Company issued 713,150 restricted common shares valued at $1,547,535
for Webmayhem Inc. attainment of Milestone I.  On March 24,
2008, the Company issued 1,907 restricted common shares valued at $4,138 for
consulting services.  On March 15,
2008, the Company issuance of 400,000 warrants to extend the maturity date of
three notes payable to April 28, 2009.  The Company recorded a $263,483
non-cash expense related to the Fair Market Value of the 400,000 warrants.  During the first
three months of 2008, the company recorded $157,516 of non-cash compensation
expense related to the vesting of certain stock options issued.   For the three months ended March 31,
2007:  On February 1,
2007, the Company issued 15,000 common shares upon the exercise of options
valued at $47,550 to consultants for services rendered.  On February 8,
2007, the Company recorded $689,610 of compensation expense related to the
extension of certain warrants.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)  Supplemental Schedule of Non-cash
Investing and Financing Activities (Continued):  On February 15,
2007, the Company issued 84,691 restricted common shares valued at $272,705 for
consulting services.  On March 19,
2007, the Company issued 5,326,320 restricted common shares valued at
$16,298,539 to acquire Webmayhem Inc.  On March 26,
2007, the Company issued 2,400 common shares upon the exercise of options valued
at $6,624 to consultants for services rendered.  On March 26,
2007, the Company issued 11,909 restricted common shares valued at $36,918 for
Interim Healthcare of Wyoming Inc. attainment of Phase I Incentive.  During the first
three months 2007, the company recorded $47,090 of compensation expense related
to the vesting of certain stock options issued.          WIZZARD SOFTWARE
CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1   SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES  Unaudited Consolidated Financial Statements - The
accompanying consolidated financial statements have been prepared by the Company
without audit.  In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position at March 31, 2008, and the results of operations and cash
flows for the periods ended March 31, 2008 and 2007 have been made.  The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the instructions for Form 10-Q of the Securities and Exchange
Commission.  Certain information and footnote disclosures normally included
in consolidated financial statements prepared in accordance with generally
accepted accounting principles in the United States of America have been
condensed or omitted.  The consolidated financial statements are
consolidated and included the accounts of Wizzard and its wholly owned
subsidiaries after the elimination of all significant intercompany balances and
transactions. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's December 31, 2007 audited financial statements.
 The results of operations for the three months ended March 31, 2008 and
2007 are not necessarily indicative of the operating results for the full
year.  Organization - Wizzard Software Corporation
["Parent"], a Colorado corporation, was organized on July 1, 1998.  The
Company operates in two industry segments, Software and Healthcare.  The
Software segment engages primarily in the development, sale, and service of
custom and packaged computer software products, and digital media publishing and
advertising services.  The Healthcare segment operates primarily in the
home healthcare and healthcare staffing services in Wyoming and Montana.
 On April 9, 2004, Parent organized Wizzard Merger Corp., a New York
corporation, to acquire and dissolve into the operations of MedivoxRx
Technologies, Inc., a New York corporation, in a transaction accounted for as a
purchase.  On September 8, 2005, Parent purchased all of the issued and
outstanding shares of Interim Healthcare of Wyoming, Inc. ["Interim"], a Wyoming
corporation, in a transaction accounted for as a purchase.  On February 27,
2007, Parent organized Wizzard Acquisition Corp., a Pennsylvania corporation, to
acquire and dissolve into the operations of Webmayhem, Inc. [Libsyn], a
Pennsylvania corporation, in a transaction accounted for as a purchase.
 Libsyn engages primarily in providing digital media publishing services.
 On April 3, 2007, Interim purchased the operations of Professional
Personnel, Inc., d.b.a., Professional Nursing Personnel Pool [PNPP].  Consolidation - The consolidated financial
statements presented reflect the accounts of Parent, MedivoxRx, Libsyn and
Interim.  All significant inter-company transactions have been eliminated
in consolidation.  Accounting Estimates - The preparation of
consolidated financial statements in conformity with generally accepted
accounting principles 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 consolidated financial
statements, and the reported amounts of revenues and expenses during the
reporting period.  Significant estimates for the Company include allowances
and goodwill.  Actual results could differ from those estimated by
management.  Cash and Cash Equivalents - The Company considers
all highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents. At March 31, 2008, the Company had cash balances of
$4,362,337 in excess of federally insured limits.  Accounts Receivable - Accounts receivable consist
of trade receivables arising in the normal course of business. At March 31,
2008, the Company has an allowance for doubtful accounts of $17,562 which
reflects the Company's best estimate of probable losses inherent in the accounts
receivable balance. The Company determines the allowance based on known troubled
accounts, historical experience, and other currently available evidence. During
the three months ended March 31, 2008 and 2007, the Company had no change to the
allowance for bad debt.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)  Depreciation - Depreciation
of property and equipment is provided on the straight-line method over the
estimated useful lives of the assets of two to ten years.  Goodwill and Definite-life
intangible assets - The Company accounts for Goodwill and definite-life
intangible assets in accordance with provisions of Statement of Financial
Accounting Standards "SFAS" No. 142, "Goodwill and Other Intangible Assets".
 Goodwill and intangible assets acquired in a purchase business combination
and determined to have an indefinite useful life are not amortized, but instead
are tested for impairment at least annually in accordance with the provisions of
SFAS No. 142.  Impairment losses arising from this impairment test, if any,
are included in operating expenses in the period of impairment.  SFAS No.
142 requires that definite intangible assets with estimable useful lives be
amortized over their respective estimated useful lives, and reviewed for
impairment in accordance with SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets.  Software Development Costs - We account for
software development costs, including costs to develop software products or the
software component of products to be marketed to external users, as well as
software programs to be used solely to meet our internal needs in accordance
with SFAS No. 86, Accounting for Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed and Statement of Position No. 98-1,
Accounting for Costs of Computer Software Developed or Obtained for Internal
Use. We have determined that technological feasibility for our products to
be marketed to external users was reached shortly before the release of those
products. As a result, the development costs incurred after the establishment of
technological feasibility and before the release of those products were not
material, and accordingly, were expensed as incurred. In addition, costs
incurred during the application development stage for software programs to be
used solely to meet our internal needs were not material.  Loss Per Share - The Company
computes loss per share in accordance with Statement of Financial Accounting
Standards "SFAS" No. 128 "Earnings Per Share," which requires the Company to
present basic earnings per share and diluted earnings per share when the effect
is dilutive [see Note 9].  Income Taxes -The Company computes loss per share in
accordance with Statement of Financial Accounting Standards "SFAS" No. 128
"Earnings Per Share," which requires the Company to present basic earnings per
share and diluted earnings per share when the effect is dilutive (see Note
10).  Advertising Costs -
Advertising costs are expensed as incurred and amounted to $51,100 and $82,266
for the three months ended March 31, 2008 and 2007, respectively.  Fair Value of Financial
Instruments - The fair value of cash, accounts receivable, accounts payable
and notes payable are determined by reference to market data and by other
valuation techniques as appropriate. Unless otherwise disclosed, the fair value
of financial instruments approximates their recorded values due to their
short-term maturities.  Revenue Recognition - Revenue is recognized when
earned. The Company's revenue recognition policies are in compliance with the
American Institute of Certified Public Accountants Statement of Position ("SOP")
97-2 (as amended by SOP 98-4 and SOP 98-9) and related interpretations,
"Software Revenue Recognition" and the Securities and Exchange Commission Staff
Accounting Bulletin No. 101 and 104.  Software - The Company sells packaged and custom
software products and related voice recognition product development
consulting.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 -  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)  Software product revenues are recognized upon shipment of
the software product only if no significant Company obligations remain, the fee
is fixed or determinable, and collection is received or the resulting receivable
is deemed probable. Revenue from package software products are recorded when the
payment has been received and the software has been shipped.  Revenue is
recognized, net of discount and allowances, at the time of product shipment.
 Provisions are recorded for bad debts and at March 31, 2008 and 2007
amounted to $0. Revenue related to obligations, which include telephone support
for certain packaged products, are based on the relative fair value of each of
the deliverables determined based on vendor-specific objective evidence ("VSOE")
when significant. The Company VSOE is determined by the price charged when each
element is sold separately. Revenue from packaged software product sales to and
through distributors and resellers is recorded when payment is received and the
related products are shipped. The Company's distributors or resellers do not
carry packaged software product inventory and thus the Company does not offer
any price protections or stock balancing rights. Revenue from non-recurring
programming, engineering fees, consulting service, support arrangements and
training programs are recognized when the services are provided.  Healthcare - The Company recognizes revenue from
the providing of healthcare services when the services are provided and
collection is probable.  Digital media publishing  Digital media
publishing services are billed on a month to month basis.  The Company
recognizes revenue from providing digital media publishing services when the
services are provided and when collection is probable.  Digital media Advertising  The Company recognizes
revenue from the insertion of advertisements in digital medias.  Revenue is
recognized as the digital media with the advertisement is downloaded and
collection is probable.  Research and Development Cost
- The Company expenses the cost of developing new products as incurred as
research and product development costs. Included in general and administrative
expense for the three months ended March 31, 2008 and 2007 are $35,253 and
$52,178, respectively, of research and development costs associated with the
development of new products.  Stock Options - The Company
has stock option plans that provide for stock-based employee compensation,
including the granting of stock options, to certain key employees. The plans are
more fully described in Note 8. Prior to January 1, 2006, the Company applied
APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations in accounting for awards made under the Companys stock-based
compensation plans.  Under this method, compensation expense was recorded
on the date of grant only if the current market price of the underlying stock
exceeded the exercise price.     WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 -  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)  During the periods presented in the
accompanying consolidated financial statements, the Company has granted options
under its 2005, 2006, 2007 and 2008 defined stock option plans. The Company has
adopted the provisions of SFAS No. 123R using the modified-prospective
transition method and the disclosures that follow are based on applying SFAS No.
123R.  Under this transition method, compensation expense recognized during
the twelve months ended December 31, 2006 included:  (a) compensation
expense for all share-based awards granted prior to, but not yet vested as of
January 1, 2006, and (b) compensation expense for all share-based awards granted
on or after January 1, 2006 through December 31, 2006.  Non-cash
compensation cost of $157,516 and $47,090 have been recognized for the vesting
of options granted to employees and directors with an associated recognized tax
benefit of $0 for the three months ended March 31, 2008 and 2007, respectively.
 Non-cash compensation cost of $136,920 and $54,174 have been recognized
for options issued to employee and consultants which immediately vested and were
exercised with an associated recognized tax benefit of $0 for the three months
ended March 31, 2008 and 2007.  In accordance with the modified-prospective
transition method, the Companys consolidated financial statements for the prior
year have not been restated to reflect, and do not include, the impact of SFAS
123R.  Had compensation cost for the Company's stock option plans and
agreements been determined based on the fair value at the grant date for awards
in 2005 consistent with the provisions of SFAS No. 123R, the Company's net loss
and basic net loss per common share would not have changed.  NOTE 2  ACQUISITION  On January 20, 2008, the Company purchased the operations
of Skip Fredricks and iClipx.  The Purchase Agreement called for the
Company to pay $12,500 in cash and issue 220,000 of unregistered and restricted
shares of common stock valued at $653,400. As part of the purchase agreement,
the Company agreed to issue additional shares of common stock upon iClipx
achieving certain financial results.  The Milestone would include the seller to receive an
additional 200,000 shares of common stock of the Company should iClipx obtain
gross revenue of at least $300,000 through June 30, 2009.  The following unaudited proforma information summarizes
the estimated fair values of the assets acquired and the liabilities
assumed:  iClipxContent
$
400,000Non-compete

75,000Net assets in excess of liabilities

475,000Purchase price

665,900Goodwill
$
190,900  Amortization expense for the three
months ended March 31, 2008 and 2007 was $42,708 and $0, respectively.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 2  ACQUISITION (Continued)  The following unaudited proforma information summarizes
the estimated results of operations as if the acquisitions had occurred at the
beginning of the period presented:  For the ThreeMonths EndedMarch 31, 2008Net revenue
$
1,668,478Cost of sales

1,001,637Operating expenses

2,690,090Other expense

(622,710)Net loss

(2,645,959)Accrued dividends

(107,380)Net loss available to common shareholders
$
(2,753,339)Basic and diluted loss per common share available
to common shareholders
$
(.06)Basic and diluted weighted average common shares
outstanding

43,771,928  NOTE 3  PROPERTY &
EQUIPMENT  The following is a summary of
property and equipment at: Life

March 31,
2008

December 31,
2007Furniture, fixtures and equipment
2-10 yrs
$
336,396
$
267,681Production molds
3 yrs

47,710

47,710Software
2-5 yrs

11,964

11,964396,070

327,355Less: Accumulated depreciation


(232,434)

(217,851)Property & equipment, net

$
163,636
$
109,504  Depreciation expense for the three
months ended March 31, 2008 and 2007 was $14,583 and $11,072, respectively.
Certain equipment
is held as collateral on notes payable.  The following is a summary of leased
equipment at: Life

March 31,
2008

December 31,
2007Leased equipment
5.25 yrs
$
223,750
$
223,750Less: Accumulated depreciation


(155,825)

(147,834)Leased equipment, net

$
67,925
$
75,916  Depreciation expense for the three
months ended March 31, 2008 and 2007 was $7,991 and $7,991, respectively. The
equipment is held as collateral on the underlying lease.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 4  GOODWILL / DEFINITE-LIFE
INTANGIBLE ASSETS  Intangible Assets - The
Company classifies its intangible assets as definite-life intangible assets and
amortizes them on a straight-line basis over their estimated useful lives.
 Amortization expense of $42,708 and $0 was recorded for the three months
ended March 31, 2008 and 2007, respectively.  Goodwill - On September 8,
2005, the Company recorded goodwill of $896,570 in connection with the
acquisition of Interim Health Care of Wyoming as the purchase price of $904,006
exceeded the $7,436 net book value of the assets acquired.  On September
30, 2006, the company recorded additional goodwill of $99,265 in connection with
the Phase I Incentives.  On March 1, 2007, the Company
recorded goodwill of $16,970,100 in connection with the acquisition of Webmayhem
Inc. as the assumption of liabilities exceeded assets by $319,230 plus the
purchase price of $16,650,870.  On December 31, 2007, the Company recorded
additional goodwill of $1,818,532 in connection with Milestone I, and
subsequently adjusted on March 24, 2008 to $1,547,535 upon actual issuance of
stock.  On April 3, 2007, the Company
recorded goodwill of $837,700 in connection with the asset purchase of PNPP as
the assumption of liabilities exceeded assets by $52,086 plus the purchase price
of $785,614. On December 31, 2007, the Company recorded additional goodwill of
$131,311 and $5,680 on March 24, 2008 in connection with achieving certain
financial results and meeting the contingent purchase price contingency.  On July 12, 2006, the Company
recorded goodwill of $204,370 in connection with the purchase of the assets of
Switchpod Technologies.  The purchase price of $204,572 exceeded the $202
of assets acquired. The goodwill was impaired during December 2006.  On September 8, 2006, the Company
recorded goodwill of $40,500 in connection with the purchase of the assets of
Blastpodcast.  The purchase price of $40,500 exceeded the value of the
assets acquired. The goodwill was impaired during December 2006.  On January 10, 2008, the Company
recorded goodwill of $190,900 in connection with the purchase of operations of
iClipx, as the purchase price exceeded the $475,000 of assets acquired.
 The purchase price, totaling $665,900 consisted of cash of $12,500 and
restricted common stock valued at $653,400.  The following is a summary of
goodwill: For the Three Months Ended March
31,

For the Year Ended December
31,2008

2007Goodwill at beginning of period
$
20,724,986
$
945,795Goodwill from acquisition of iClipx

190,900

-Goodwill from acquisition of Webmayhem Inc.

(270,997)

18,810,180Goodwill from acquisition of PNPP

5,680

969,011Goodwill at end of period
$
20,650,569
$
20,724,986    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - NOTES PAYABLE  On October 27, 2006, the Company closed a Subscription
Agreement by which three institutional investors purchased a) a 5% convertible
notes payable having a total principal amount of $2,375,000, convertible into
 common shares of the Company at $2.00 per share and maturing April 27,
2008; b) Class A Warrants to purchase a total of 593,750 shares of common stock,
at $2.50 per share, exercisable for three years, and c)Class B Warrants to
purchase a total of 1,187,500 shares of common stock at $2.00 per share,
exercisable until 180 days after the effective date of the Registration
Statement. As the conversion price for the note was below the fair value of the
common stock on the date issued, the Company recorded a discount on the note for
beneficial conversion feature of the note in accordance with the provisions
found in EITF 98-5. The fair value of the beneficial conversion feature and
Class A and Class B warrants were reduced on a pro-rata basis to the $2,375,000
proceeds received from the subscription and recorded as a discount against the
note.  The $968,000 discount on the beneficial conversion feature is being
amortized as interest expense over the term of the note. As of March 31, 2008,
the Company has amortized $2,261,405 of the discount with the remaining $113,595
unamortized discount being offset against the outstanding balance of the note in
the accompanying balance sheet.  The Class A Warrants and Class B Warrants were valued
using the Black-Scholes pricing model using the following weighted average
assumptions 77.19% volatility, 1.33 years expected life, 5.08% risk free
interest rate and expected dividend yield of zero.  In April 2007, Interim signed a $127,099 note payable to
a bank.  The note is unsecured, and accrues interest at 8.25% per annum.
 At March 31, 2008, the note has a remaining principal balance of $82,727.
 During the three months ended March 31, 2008 and 2007, interest expense on
the note payable amounted to $1,965 and $0, respectively.  NOTE 6 - LEASES  Capital Lease - The Company is leasing equipment
on a 63-month capital lease terminating in August 2008. Monthly payments of
$3,750 began in June 2003 and a payment of $54,688 is due at termination if the
Company elects to purchase the equipment. At March 31, 2008, the Company had
recorded equipment on capital lease at $223,750 with related accumulated
depreciation of $155,825. During the three months ended March 31, 2008 and 2007,
depreciation expense for equipment on capital lease amounted to $7,991 and
$7,991, respectively, and has been included in depreciation expense.
 During the three months ended March 31, 2008 and 2007, interest expense on
capital lease obligation amounted to $1,375 and $2,044, respectively.  Operating Lease - The Company leases office space,
in Pittsburgh, Pennsylvania, on a month to month basis for of $4,033 a month.
The Company leases additional office space in Casper, Wyoming from the former
owner of Interim Healthcare of Wyoming, Inc. and current shareholder, on a month
to month basis for $4,750 a month.  The Company leases space in Douglas
Wyoming, on a month to month basis for $120 a month.  The Company leases
space in Hollywood California, on a month to month basis for $1,500 a month. The
Company further leases space in Billings, Montana for of $1,350 a month through
February 2011.  NOTE 7 - CAPITAL STOCK  Preferred Stock - The Company
has authorized 10,000,000 shares of preferred stock, $.001 par value.  As
of March 31, 2008, the Company had 6,136 Series A Preferred shares issued and
outstanding. The Series A Preferred shares have no voting rights, with
liquidation rights of stated value plus unpaid dividends and damages.  The
Series A Preferred shares dividend and any damages are convertible into common
shares at $2.05 per common shares.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - CAPITAL STOCK
(Continued)  Holders of the Preferred Stock will be entitled to
receive cumulative dividends of 7% per annum for the first two years after
issuance of the Preferred Stock and 18% per annum thereafter, payable on January
1 and July 1, beginning on January 1, 2008, either in cash or, at the Companys
option, in shares of the Companys common stock.  The Company will have the right to force conversion of
all or part of the outstanding Preferred Stock, plus all accrued but unpaid
dividends and liquidated damages due with respect to the Preferred Stock if,
after the two-year anniversary of the effectiveness of the Registration
Statement referred to below, the price of the Companys common stock exceeds
$6.15 for 10 consecutive trading days and the volume for each such trading day
exceeds 100,000 shares of common stock.  Beginning two years after the
issuance date of the Preferred Stock, the Company may also elect to redeem all
(but not less than all) of the then outstanding Preferred Stock at a total price
of:  (i) 125% of the aggregate Stated Value then outstanding; (ii) accrued
but unpaid dividends; and (iii) all liquidated damages and other amounts due
with respect to the Preferred Stock.  On the occurrence of certain
Triggering Events as defined in Section 9(a) of the Articles of
Amendment/Certificate of Designation with respect to the Preferred Stock, each
holder will have the right to require the Company to redeem all of the holders
Preferred Stock or to increase the dividend rate on that holders Preferred
Stock to 18% per annum thereafter.  Common Stock - The Company
has authorized 100,000,000 shares of common stock, $.001 par value.  As of
March 31, 2008, the Company had 44,611,828 common shares issued and
outstanding.  On February 1, 2008, the Company
issued 250,000 restricted common shares valued at $670,000 for consulting
services.  On February 6, 2008, the Company
issued 220,000 restricted common shares valued at $653,400 to acquire the
operations of iClipx Inc.  On February 12, 2008, the Company
issued 13,296 common shares in payment of a $25,000 note payable and $1,592 of
accrued interest.  On February 29, 2008, the Company
issued 49,000 common shares upon the exercise of options valued at $134,750 to
consultants for services rendered.  On February 29, 2008, the Company
issued 5,000 restricted common shares valued at $13,750 for consulting
services.  On March 5, 2008, the Company issued
4,715 restricted common shares upon notice of conversion of 11 shares of Series
A Preferred Stock.  On March 5, 2008, the Company issued
688 restricted common shares in payment of all dividends accruing on the shares
of Series A Preferred stock that was converted on March 5, 2008.  On March 24, 2008, the Company
issued 49,038 restricted common shares valued at $106,412 for Professional
Nursing Personnel Pool attainment of the Milestones.  On March 24, 2008, the Company
issued 1,000 common shares upon the exercise of options valued at $2,170 to
consultants for services rendered.     WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - CAPITAL STOCK
(Continued)  On March 24, 2008, the Company
issued 713,150 restricted common shares valued at $1,547,535 for Webmayhem Inc.
attainment of Milestone I.  On March 24, 2008, the Company
issued 1,907 restricted common shares valued at $4,138 for consulting
services.  On February 1, 2007, the Company
issued 15,000 common shares upon the exercise of options valued at $47,550
consultants for services rendered.  On February 8, 2007, the Company
recorded $689,610 of compensation expense related to the extension of certain
warrants.  On February 15, 2007, the Company
issued 84,691 restricted common shares valued at $272,705 for consulting
services.  On March 19, 2007, the Company
issued 5,326,320 restricted common shares valued at $16,298,539 to acquire
Webmayhem Inc.  On March 26, 2007, the Company
issued 2,400 common shares upon the exercise of options valued at $6,624 to
consultants for services rendered.  On March 26, 2007, the Company
issued 11,909 restricted common shares valued at $36,918 for Interim Healthcare
attainment of Phase I Incentive.  Exercise of Warrants - On January
17, 2007, January 30, 2007, and March 16, 2007, the Company issued 11,749,
75,549, and 50,000 common shares, respectively, upon the exercise of warrants at
$1.25 per share.  Exercise of Warrants - On February
14, 2007, March 13, 2007, and March 23, 2007, the Company issued 84,167, 15,000,
and 10,000 common shares, respectively, upon the exercise of warrants at $1.36
per share.  NOTE 8  STOCK OPTIONS AND WARRANTS  2008 Key Employee Stock Option Plan
- During 2008, the Board of Directors adopted a 2008 Key Employee Stock Option
Plan ("2008 Key Employee Plan").  Under the terms and conditions of the
2008 Key Employee Plan, the Board is empowered to grant stock options to
employees and officers of the Company.  Additionally, the Board will
determine at the time of granting the vesting provisions and whether the options
will qualify as Incentive Stock Options under Section 422 of the Internal
Revenue Code.  The total number of shares of common stock available under
the 2008 Key Employee Plan may not exceed 400,000.  At March 31, 2008, no
options were available to be granted under the 2008 Key Employee Plan.
 During the three months ended March 31, 2008, the Company granted 400,000
options.  2008 Stock Option Plan - During
2008, the Board of Directors adopted a Stock Option Plan ("2008 Plan").
 Under the terms and conditions of the 2008 Plan, the Board is empowered to
grant stock options to employees and officers of the Company.
 Additionally, the Board will determine at the time of granting the vesting
provisions and whether the options will qualify as Incentive Stock Options under
Section 422 of the Internal Revenue Code.  The total number of shares of
common stock available under the 2008 Plan may not exceed 200,000.  At
March 31, 2008, 5,000 options were available to be granted under the 2008 Plan.
 During the three months ended March 31, 2008, the Company granted 190,000
options.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8  STOCK OPTIONS AND WARRANTS
 (Continued)  2007 Key Employee Stock Option Plan
- During 2007, the Board of Directors adopted a 2007 Key Employee Stock Option
Plan ("2007 Key Employee Plan").  Under the terms and conditions of the
2007 Key Employee Plan, the Board is empowered to grant stock options to
employees and officers of the Company.  Additionally, the Board will
determine at the time of granting the vesting provisions and whether the options
will qualify as Incentive Stock Options under Section 422 of the Internal
Revenue Code.  The total number of shares of common stock available under
the 2007 Key Employee Plan may not exceed 200,000.  At March 31, 2008, no
options were available to be granted under the 2007 Key Employee Plan.
 During the three months ended March 31, 2008 and 2007, the Company granted
no options.  2007 Stock Option Plan - During
2007, the Board of Directors adopted a Stock Option Plan ("2007 Plan").
 Under the terms and conditions of the 2007 Plan, the Board is empowered to
grant stock options to employees and officers of the Company.
 Additionally, the Board will determine at the time of granting the vesting
provisions and whether the options will qualify as Incentive Stock Options under
Section 422 of the Internal Revenue Code.  The total number of shares of
common stock available under the 2007 Plan may not exceed 200,000.  At
March 31, 2008, 34,745 options were available to be granted under the 2007 Plan.
 During the three months ended March 31, 2008 and 2007, the Company granted
no options.  2005 Stock Option Plan - During
2005, the Board of Directors adopted a Stock Option Plan ("2005 Plan").
 Under the terms and conditions of the 2005 Plan, the Board is empowered to
grant stock options to employees, officers, directors, and consultants of the
Company.  Additionally, the Board will determine at the time of granting
the vesting provisions and whether the options will qualify as Incentive Stock
Options under Section 422 of the Internal Revenue Code.  The total number
of shares of common stock available under the 2005 Plan may not exceed 220,000.
 At March 31, 2008, total options available to be granted under the 2005
Plan totaled 95.  During the three months ended March 31, 2008 and 2007,
the Company granted 0 and 17,400 options, respectively, which were immediately
exercised for service valued at $0 and $54,174, respectively.  The fair value of
option grants during the three months ended March 31, 2008 and 2007 was
determined using the Black-Scholes option valuation model.  The significant
weighted average assumptions relating to the valuation of the Companys Stock
Options for the three months ended March 30, 2008 and 2007 were as follows:  2008

2007Dividend yield
0 %

0 %Expected life
4 yrs

5 yrsExpected volatility
85.6%

65.6%Risk-free interest rate
3.80%

4.65%     WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 8  STOCK OPTIONS AND WARRANTS
(Continued)  A summary of the status of options
granted at March 31, 2008, and changes during the period then ended are as
follows:  For the Three Months EndedMarch 31, 2008Shares

Weighted Average Exercise
Price
Weighted Average Remaining Contractual
Term

Aggregate Intrinsic
ValueOutstanding at beginning of period
427,500
$
2.06
7.5 years
$
185,625Granted
595,000

2.11
7.4 years

172,550Exercised
(50,000)

-
-

136,920Forfeited
(25,000)

2.59
-

-Expired
-

-
-

-Outstanding at end of period
947,500

2.20
7.9 years

189,500Vested and expected to vest in the future
947,500

2.20
7.9 years

189,500Exercisable at end of period
562,500

2.12
8.8 years

157,500Weighted average fair value of options
granted
947,500
$
2.20
7.9 years
$
189,500  The Company had 40,000 non-vested
options at the beginning of the period with a weighted average exercise price of
$2.67.  At March 31, 2008 the Company had 375,000 non-vested options with a
weighted average exercise price of $2.32.  The total intrinsic value of options exercised during the
three months ended March 31, 2008 and 2007 was $136,920 and $54,174,
respectfully.  Intrinsic value is measured using the fair market value at
the date of exercise (for shares exercised) or at March 31, 2008 (for
outstanding options), less the applicable exercise price.  During the three months ended March 31, 2008 and 2007,
the Company recorded $157,516 and $49,070 of non-cash compensation expense
related to the vested stock options issued to employees.  For the three months ended March 31,
2008 and 2007, the Company recorded non-cash compensation cost of $136,920 and
$54,174 for vested and exercised options issued to employees and
consultants.  Warrants - A summary of the status
of the warrants granted is presented below for the three months ended:  March 31, 2008

March 31, 2007Shares

Weighted Average Exercise
Price

Shares

Weighted Average Exercise
PriceOutstanding at beginning of period
4,123,851
$
2.42

3,193,331
$
2.05Granted
400,000

2.85

-

-Exercised
-

-

(246,465)

1.30Forfeited
-

-

-

-Expired
-

-

-

-Outstanding at end of period
4,523,851
$
2.46

2,946,866
$
2.11    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 8  STOCK OPTIONS AND WARRANTS
(Continued)  On March 15, 2008, the Company
issuance of 400,000 warrants to extend the maturity date of three notes payable
to April 28, 2009.  The Company recorded a $263,483 non-cash expense
related to the Fair Market Value of the 400,000 warrants.  On February 8, 2007, the Company recorded $269,472 of
compensation expense related to the extension of certain warrants.  During February 2007, the Company extended the expiration
of 366,666 warrants from February 8, 2007 to June 14, 2007 and recorded $420,138
in compensation expense.  NOTE 9 - LOSS PER COMMON SHARE  The following data show the amounts
used in computing loss per share and the weighted average number of shares of
common stock outstanding for the periods presented:  For
the Three MonthsEnded March 31,2008

2007Net loss
(numerator)
$
(2,644,450)
$
(1,794,129)Accrued
dividend

(107,380)

-Net loss
available to common shareholders (numerator)
$
(2,751,830)
$
(1,794,129)Weighted average
number of common shares outstanding during the period used in loss per
share (denominator)

43,682,477

36,090,859  At March 31, 2008, the Company had
4,523,851 warrants outstanding to purchase common stock of the Company at $2.00
to $2.85 per share, the Company had 947,500 options outstanding to purchase
common stock of the Company at $1.59 to $2.89 per share, and a 5% convertible
note payable wherein the holder could convert the note into a minimum of
1,022,356 shares of common stock, [See Note 5], and a 7% cumulative Series A
Preferred shares wherein the holder could convert the note into a minimum of
2,993,170 shares of common stock which were not included in the loss per share
computation because their effect would be anti-dilutive.  At March 31, 2007, the Company had
2,946,866 warrants outstanding to purchase common stock of the Company at $1.25
to $3.41 per share, and a 5% convertible note payable wherein the holder could
convert the note into a minimum of 1,187,500 shares of common stock, [See Note
8], which were not included in the loss per share computation because their
effect would be anti-dilutive.  NOTE 10 - INCOME TAXES  The Company accounts for income
taxes in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes".  SFAS No. 109 requires the Company to
provide a net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book and tax
accounting methods and any available operating loss or tax credit carryforwards.
 The Company has available at March 31, 2008 operating loss carryforwards
of approximately $22,000,000 which may be applied against future taxable income
and which expires in various years through 2027.  The amount of and ultimate
realization of the benefits from the operating loss carryforwards for income tax
purposes is dependent, in part, upon the tax laws in effect, the future earnings
of the Company, and other future events, the effects of which cannot be
determined.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 10 - INCOME TAXES
(Continued)  Because of the uncertainty
surrounding the realization of the loss carryforwards and significant changes in
the ownership of the Company, a valuation allowance has been established equal
to the tax effect of the loss carryforwards and, therefore, no deferred tax
asset has been recognized for the loss carryforwards.  The net deferred tax
assets are approximately $11,200,000 as of March 31, 2008, with an offsetting
valuation allowance of the same amount.  The change in the valuation
allowance for the three months ended March 31, 2008 approximated $700,000.  NOTE 11 - COMMITMENTS AND
CONTINGENCIES  Agreements -In connection
with the agreement with AT&T to sell to AT&T's OEM Natural Voices
desktop product licenses the Company is required to make minimum purchase of
$125,000 per each six month period beginning  July 2004 through June 2008.  In connection with the agreement
with IBM to sell IBM's OEM ViaVoice desktop products licenses the Company is
required to make minimum purchases of $15,000 per quarter beginning July 2007
through June 2009.  Contingent Consideration for the
Acquisition of the assets of Switchpod Technology   As part of the
Switchpod acquisition, the Company agreed to issue additional shares of common
stock upon Switchpod obtaining certain milestones.  The second incentive
would include the seller to receive an additional 12,500 unregistered and
restricted common shares per month up to a maximum of 200,000 common shares,
if during the second year following the completion of the acquisition, Switchpod
delivers 1,000,000 digital media downloads per month in excess of the number of
digital media downloads per month as of May 31, 2007 or 5,000,000 digital media
downloads per month.  Contingent Consideration for the Acquisition of
Webmayhem, Inc.As part of the merger, the Company agreed to issue
additional shares of common stock upon Webmayhem achieving certain production
and financial results.  Milestone 2 would include the sellers to receive an
additional 2,281,580 shares of common stock of the Company should Webmayhem
obtain gross revenue of at least $5,000,000 and EBITDA of at least $1,500,000
during their second year of operation measured from the closing date of the
merger.  Milestone 3 would include the sellers to receive an
additional 2,281,580 shares of common stock of the Company should Webmayhem
obtain gross revenue of at least $15,000,000 and EBITDA of at least $5,000,000
during their third year of operation measured from the closing date of the
merger.  Contingent Consideration for the Acquisition of the
operations of iClipxAs part of the purchase agreement, the Company
agreed to issue additional shares of common stock upon iClipx achieving certain
financial results.  Wizzard agreed to issue an additional 200,000
unregistered and restricted shares of its common stock should iClipx obtain
gross revenue of at least $300,000 through June 30, 2009.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 12 - SEGMENT REPORTING  The Companys operations are divided into two independent
segments  software and healthcare. The Company does not have any inter-segment
revenues and the Company uses the same accounting principles used to prepare the
consolidated financial statements for both operating segments.  Software -The Company attributes revenues from
the development, sale, and service of custom and packaged computer software
products at the time the product is shipped and collections are likely and from
digital media publishing services at the time the service is provided.  Healthcare -The Company attributes revenue from
the development, sale, and service of talking prescription pill bottles and
healthcare services at the time the services are rendered and collections are
likely.  The following is a summary of the Companys operations by
segment for the three months ended March 31, 2008 and 2007:  2008

2007Software

Healthcare

Total

Software

Healthcare

TotalNet
revenues
$
655.347
$
1,013,131
$
1,668,478
$
297,101
$
428,825
$
725,926Cost of
sales

420,771

580,866

1,001,637

171,547

297,046

468,593General and
administrative

2,183,334

245,251

2,428,585

808,002

130,889

938,891Selling

213,449

11,294

224,743

157,587

44,147

201,734Research and
development

35,253

-

35,253

52,178

-

52,178Compensation for
re-pricing/extension of warrants

-

-

-

689,610

-

689,610Other
income

35,997

3,278

39,275

20,931

2,745

23,676Interest
expense

658,430

3,555

661,985

190,681

2,044

192,725Income tax
benefit/(expense)

-

-

-

-

-

-Net income
(loss)
$
(2,819,893)
$
175,443
$
(2,644,450)
$
(1,751,573)
$
(42,556)
$
(1,794,129)Total
assets

24,644,905

2,145,797

26,837,794

19,855,102

626,028

20,481,130Depreciation
expense

12,800

9,774

22,338

5,963

13,100

19,063  NOTE 13 - SUBSEQUENT EVENT  On April 15, 2008, the Company
issued 9,792 restricted common shares valued at $21,249 for Professional Nursing
Personnel Pool attainment of the Milestones.  On April 15,
2008, the Board of Directors approved the 2008 Key Employee Stock Option
Planand authorize the issuance of 400,000
shares under the 2008 Key Employee Stock Option Plan, effective February 22,
2008.  On May 5, 2008, the Company issued
20,000 common shares in payment of a $40,000 note payable.  On Mary 7, 2008, the Company issued
13,296 common shares in payment of a $40,002 note payable and $5,148 of accrued
interest.    Item 2.
  Management's Discussion and Analysis or Plan of Operation.  Highlights of First Quarter, 2008  Our business, for the last eleven years, has been focused
on the speech recognition technology industry.  As a result of our
commitment to speech technologies, we have been able to position ourselves as a
leader in the fast growing digital media aggregation, syndication and
advertising industry currently taking shape on the internet. Using sophisticated
speech recognition technologies, we are able to offer advertisers highly
targeted advertising packages from the 10,000+ digital media 'shows' hosted and
published using Wizzard Media's products and services.  Below is an update
of our entire business, from our most recent entry into digital media where we
expect most of our future growth to occur, to our legacy businesses of offering
core speech engine tools for developers and speech technology solutions for the
healthcare industry.  1.     GENERAL &
ADMINISTRATIVE  In the first quarter of 2008, Wizzard achieved one of its
long sought after goals:   Wizzard Approved for Listing on the
American Stock Exchange  Wizzard Begins Trading on American
Stock Exchange  2.     WIZZARD MEDIA  Wizzard Media is the one year old division for our
digital media business.  Wizzard Media is focused on the digital media
industry and how speech technology, when used effectively, can have a
significant impact on the industry by providing a safe means for advertisers to
promote their brands in professional and semi-professional content.  By
incorporating speech recognition into the digital media mix, Wizzard can search
through a transcript of every participating show using our publishing platform
and offer targeted keyword advertising to national brands and provide
monetization of digital content for our publishers and for Wizzard.
 Wizzard Media is currently the industrys largest network of independent
and professional digital media publishers utilizing RSS as a distribution
method.  The network received over 450 million download requests for shows
in 2006 and surpassed one billion download requests in 2007.  In the first
quarter of 2008, we received approximately 275,000,000 download requests for
shows.  Wizzard's publishing platform grew by over 1,268 new shows in the
first quarter of 2008 with 51,961 new episodes added across the network.
 With the continuing success of Apple's iPod, iPhone and Apple TV 2.0 along
with new RSS aggregators from Adobe and other companies, we expect the number of
content publishers using our service and the number of consumers watching the
shows we distribute to continue to grow rapidly.  The total number of
episodic shows published through Wizzard Media grew to 11,807 in the first
quarter of 2008 with over 500,000 individual episodes in syndication.
 Wizzard's LibsynPRO Enterprise service grew by 10 network publishers in
the first quarter of 2008 including one of the top three software companies in
the world.  We continue to receive positive feedback from major media
publishers for our new LibsynPRO Enterprise publishing and advertising platform.  Wizzard Media -
Distribution  In the first quarter of 2008, Wizzard Media received over
275,000,000 media download requests from a wide variety of distribution outlets
to which Wizzard syndicates content.  The Wizzard Media network received
over 3,050,000 million requests for shows per day in the first quarter for a
total of approximately one million hours of daily programming.  These shows
are consumed by over ten million people around the world creating what
management believes is a very compelling platform for advertisers.  Currently, Wizzard Media distributes digital shows for
our producers to a variety of web portals and content aggregators including:
Wizzard.tv, Veoh.com, Apple TV (Featured Provider), iTunes (Featured Provider),
Second Life, iPhone, YouTube (Partner Channel), Google (Affiliate Network),
Daily Motion (Featured Channel), Zune Marketplace, Sandra Carter Global
(traditional TV), Media Rights America (cell phone) and Facebook.  Some of
these partner channels were created solely to expand audience reach and some
both expand audience reach and generate revenues for Wizzard and our publishers.    In the first quarter of 2008,
Wizzard announced a content licensing and advertising agreement with YouTube. As
a YouTube content partner, Wizzard will have our own branded channel that will
enable users to access streaming video from the Wizzard Media Network.
 Through this agreement, YouTube will run ads against the shows in
Wizzard's YouTube Channel and share with Wizzard any ad revenue generated.
 In addition to the ad revenue generated by increased audience and
advertising opportunities, the agreement with YouTube will also allow for
content from the Wizzard Media Network to be incorporated into the Google
AdSense Network.  Through this program videos from the Wizzard Media
Network are blanketed across thousands of websites participating in the Google
AdSense service.  Wizzard will receive a share of revenues for certain ads
displayed in connection with the playback of the videos.  Wizzard will
share a percentage of these revenues collected with the publishers.  While we continue to see strong U.S. demand for the shows
we syndicate, we are seeing significant increased demand internationally.
 Below is a breakdown of top international countries for consumption and
growth (does not include U.S. figures):  Top Countries for Download
Requests Top Countries for Download
Growth  Country
Percent of total
Downloads

Canada
4.2%
Great Britain
3.2%
China
3.1%
Japan
1.7%
Germany
1.6%
Austria
1.6%
France
1.2%
Spain
1.2%
Mexico
0.7%
Italy

0.6%
Netherlands
0.5%
Switzerland
0.5%
Korea
0.5%
Singapore
0.4%
Sweden
0.3%
Brazil
0.3%
Puerto Rico
0.3%
Belgium
0.3%
Norway
0.2%
Country
Quarterly Growth
Percentage

Colombia
66.35%
Ecuador

52.06%
Puerto Rico
46.71%
South Korea
43.94%
Switzerland
41.78%
Norway

38.85%
Eritrea

38.65%
Japan

36.09%
Turkey
35.62%
UAE
33.78%
Czech Republic
33.64%
Romania

33.62%
Finland

32.95%
Saudi Arabia
31.89%
Austria

31.80%
Australia
31.58%
Portugal
29.88%
Germany

28.98%
Poland

28.01%  Wizzard Media -
Advertising  In the first quarter of 2008, Wizzard launched six new
advertising campaigns and continued to run two from the fourth quarter of 2007.
 These campaigns run across multiple shows bringing the total number of
advertising campaigns launched to date to 16.  Also in the first quarter,
Wizzard closed its second advertising deal with the U.S. Navy for an eight month
run targeting medical professionals while at the same time delivering our first
ever international geographically targeted ad campaign for a U.K. based
advertiser.  In the first quarter of 2008, Wizzard's new technical
advertising insertion system, able to handle the insertion of advertisements
into audio and video shows with geographical targeting capabilities, was used
successfully for several campaigns.  Using this new system, the Wizzard
Media Network had the capability to deliver over four hundred and forty nine
million (449,468,578) advertisements in the first quarter.  Wizzard
announced more than 8.6 million ad insertions were delivered across the network
in the first quarter of 2008 as a result of multiple advertising campaigns in
our first real quarter of ad sales.  As Wizzard continues to ramp up its
advertising sales efforts our long term goal is to fill 35% of all available
inventory for any given quarter.    Client results of our largest
advertising execution to date were excellent in management's opinion and we
expect more buys from the client in the future. Wizzard's Data Research
department has increased the number of completed audience surveys to over 40,000
which is a critical component in the data driven advertising industry and the
information will be used by our ad sales team extensively. Wizzard's ad sales
team currently consists of five individuals in Los Angeles, Chicago and New York
who have been aggressively courting media buyers through extensive education
sessions raising awareness of digital media advertising opportunities delivered
via subscribable, episodic RSS.  Wizzard plans to launch an advertiser
awareness marketing campaign to support our ad sales efforts in the second
quarter of 2008.  In the first quarter, 2008, our publisher recruiting
efforts resulted in the addition of 50 new shows joining the Wizzard Media
Advertising Network. These 50 shows had a total of 4,515,876 Nielsen download
requests per month. As of March 31, 2008, 647 publishers have signed up for
Wizzard's advertising network.  Wizzard Media currently has 20 distinct ad
categories we take to market with more than 450 shows available in those
categories.  Our efforts to date have been focused on the top 456 shows
using our publishing platform which represent 86.7% of all global download
requests. Of these 456 shows, 213 (46%) have signed up for the Wizzard
advertising network representing 70.1% of the most coveted traffic for
advertising sales. Wizzard will continue to aggressively market our advertising
network to the remaining 56% of the desired publishers not already signed up
through our Publisher Relations team.  Wizzard expects to achieve 20%
quarterly growth in this area going forward.  Month
   Potential Ad Impressions 10/07 118,789,270 11/07 129,220,048 12/07 137,212,313 1/08 155,842,635* 2/08 145,449,788 3/08 148,176,155 *January is historically a strong
month for downloads. Formula: Nielsen certified downloads
x 2.5 (to take into account pre-roll and post-roll position, and 50% of all
downloads capable of handling 1 mid-roll ad)  Nielsen Certified Downloads for Ad
Network Jan 62,337,054* Feb 58,179,915 March 59,270,462 *January is historically a strong
month for downloads.  Growth from 4th Q 2007 to 1st Q 2008 in Nielsen
Impressions Q4 2007 Nielsen Impressions 150,078,460 Q1 2008 Nielsen
Impressions 179,787,431 Growth 29,708,971 (19.80%)    Survey Response Breakout for Demographic Purposes  Q4 2007 Total Survey
Responses 21,203 Q1 2008 Total Survey
Responses 38,754 Growth 17,551 (82.78%)  Based on these surveys we have found the core audience
demographic to be:  Age 25-34 27.14% 35-44 17.70% Sex Male 70.07% Race Caucasian 78.96% Household Income $100,000 -
$199,999 19.69%   Consumption
Device Computer 57.09% Mobile
(iPod, Zune) 33.20%  You have watched or listened to the following number of
episodes of this show: Almost all 22,570 Around half 3,565 Less than half 4,049 A few 5,817 Wizzard believes this demonstrates the enormous potential
of episodic media on the internet with most people watching all of the current
and previous episodes of a given show.  Generally, when watching or listening to this show you
watch: 100% 32,444 Around 75% 2,536 Around 50% 690 Around 25% 308 Less than 25% 743 Wizzard believes this demonstrates strong engagement
between consumer and the content we distribute as most consumption trends tend
to demonstrate more multi tasking when it comes to watching TV or the radio
(switch channels often).  Generally, you listen to or watch each episode: Once 24,199 Twice   7,879 Three+  4,635 Wizzard believes this data demonstrates engagement with
the show and excites advertisers knowing that their brand message will be heard
more than once by almost 50% of the audience at no additional cost.  You have been watching or listening to this show for: Two or more years 31.65% Between one and two years 26.39% Less than one year 41.95% Wizzard believes this data demonstrates renewed growth in
RSS digital media consumption with 41% of respondents being new to the medium
while at the same time it demonstrates the "stickiness" of the medium with 31%
having been consuming entertainment this way for over two years.   Wizzard Media - Content  Wizzard Media is currently the industrys largest network
of independent and professional digital media publishers utilizing RSS as a
distribution method.  Wizzard's publishing platform grew by over 1,268 new
shows in the first quarter of 2008 with 51,961 new episodes added across the
network.  The total number of shows published through Wizzard Media grew to
11,807 in the first quarter of 2008 with over 500,000 individual episodes in
syndication.  With the continuing success of Apple's iPod, iPhone and Apple
TV 2.0 along with new RSS aggregators from Adobe and other companies, we expect
the number of publishers using our service and the number of consumers watching
the shows we distribute to continue to grow rapidly.  Wizzard's LibsynPRO
enterprise service grew by 10 network publishers in the first quarter of 2008
including one of the top three software companies in the world.  We
continue to see extremely positive reception by major media publishers for our
new LibsynPRO publishing and advertising platform.  Some of the more notable shows joining Wizzard Media in
the first quarter of 2008 were:  · Podiobooks - a collection of over 200
different digital novels · Phidipidations - a popular exercise
show · Vital Signs, Joint Bone Journal
Summary (JBJS) and MedPod101 - specific for the U.S. Navy Medical advertising
campaign   · Webkinz  a show for kids related to
the Webkinz dolls · 10th Wonder - the leading fan show on
the TV show Heroes · Mashable  the official show for the
hugely popular blog Mashable.com  In connection with acquisition of iClipx, in the first
quarter of 2008, Wizzard retained Skip Fredricks as SVP of Content Development.
 Fredricks has won 40 Telly Awards in addition to two Emmy nominations.
 As part of the acquisition, Wizzard also obtained over 200 hours of
extreme sports content and will begin syndication in the second quarter of 2008.
 Fredericks brings a network of industry relationships and will continue to
professionally produce live extreme sports content for distribution by Wizzard
over a broad range of new media outlets including streaming web video, cell
phones and RSS.  Wizzard Media 
Personnel  · Hired one junior advertising sales
representative in NYC · Hired two junior engineers for the
technical development team · Hired Skip Fredericks as SVP of
Content Development · Hired John Lisovitch as VP of
Business Development  Skip Fredricks professionally produces live extreme
sports content for distribution over a broad range of new media outlets
including streaming web video, cell phones and RSS. In addition to distribution
of content, Fredricks brings exclusive distribution rights to over 60 national
extreme sporting events, including The USA Surf & Turf Jet Ski Tour and the
X-Fest Motocross Tour, and has secured a number of premier brands as sponsors
for these events in previous years, including Panasonic, Coca-Cola, Red Bull,
Ford and Chevrolet.  In the first quarter of 2008, Wizzard hired John
Lisovitch as VP of Business Development.  Prior to joining Wizzard,
Lisovitch led alliance development in North America with Oberon Media, the
leader in casual games digital distribution. He was instrumental in identifying
and winning partnerships among major ISPs, web portals, cable operators, telcos,
affinity sites, and high-traffic destinations. Client wins included Comcast,
Verizon, Lycos, Playboy Enterprises, a number of IAC Interactive properties, and
a host of others. Prior to joining Oberon he was Director, Business Development,
for Icon Nicholson New York, the U.S. headquarters for Amsterdam-based
IconMediaLab, a global high-end web development, applications, and systems
integrator. Clients included the Holy See Internet Commission and the Vatican
Museums; the Benetton Group in Treviso, Italy; AOL; and Honeywell.   Wizzard Media - Press  Wizzard Media utilizes the public relations firm of INK
to secure press placements and work closely with Wizzard's advertising public
relations firm, Braff Communications.  As a result of their efforts
combined with internal efforts, in the first quarter Wizzard secured mentions
in: Online Media Daily, Media Post, Podcasting News, Cynopsis Digital, Ad Age,
Mashable, Pittsburgh Tribune Review, Digital Podcast, ReadWriteWeb, WebProNews
and the Pittsburgh Tribune-Review.   Wizzard Media -
Technology  In October, 2007, Wizzard's engineers completed the
design and development of a new, highly targetable audio and video ad insertion
technology.  This advertising insertion system is state of the art with the
ability to insert advertisements as pre-roll, post roll as well as inside a show
itself to deliver advertisements in the traditional TV and radio formats along
with the ability to target specific cities, countries or regions around the
world.  The stitching of the show files is a very complex task and
management believes this new advertising insertion system gives Wizzard Media
advertising sales team a substantial competitive advantage. As of March 31,
2008, the ad insertion system is working extremely well and has delivered on
numerous campaigns to date.  In 2007, Wizzard's engineers produced a speech
recognition platform for show transcription to be used for advertising
targeting.  Implementation into the entire Wizzard Media network has begun
in the second quarter of   2008 along with the
development of a front-end search engine for internal use.  This system was
the driving factor in Wizzard's entree into the digital media industry.
 Using sophisticated speech recognition engines and complex algorithms, our
team can now identify the most relevant shows and specific episodes for
advertisers.  Having the ability to drill down into a huge amount of shows
using keyword searches allows us to provide a highly targeted advertising
opportunity for marketers.  After using the system and showing it to
several key advertisers, we believe this system can achieve and surpass our most
ambitious expectations.  As of the writing of this document, the following
is a chart of key statistics generated by the Wizzard Speech System for Digital
Media:  Wizzard Speech System for Digital
Media Statistics  Number of Total Words
Captured 108,481,416 Number of Shows Transcribed 1,615 Number of Episodes Transcribed 32,515 Minutes of Processed
Content 757,802 Number of Unique Words
Captured 33,208   Additional technical developments in the first quarter of
2008 include:  · Development and delivery of third
party website for LibsynPRO · Two updates to LibsynPRO version 2
released to beta users · Began migration of users from v1.0 to
v2.0 of LibsynPRO · Wizzard Media Platform statistics
data warehouse project started (50% complete) · Wizzard Media Player project (flash
media player) started (75% complete) · Wizzard Media Tools project started
(75% complete) · Wizzard Media Ad-ops project redesign
started (80% complete) · Libsyn classic stats system upgraded
(v.1.6) to much praise from community · New publisher support system
installed and data migrated from legacy system · New publisher community forum
installed and data migrated from legacy system · WizzSystem: several new services and
improvements were done · WizzSystem: WMA/WMV conversion is
completed for radio station · WizzSystem: research started on how
to attached external mp4 files  3.     SPEECH TECHNOLOGY &
SERVICES GROUP  Wizzard Software's legacy Speech Technology &
Services Group sells and licenses speech programming tools, related speech
products and services, and distributable speech engines in over 13 languages
worldwide.  Wizzard receives the majority of its sales leads through
arrangements with IBM and AT&T, as well as through internal internet
marketing efforts through Google, Yahoo and other major internet search
engines.  In the first quarter of 2008 Wizzard's T&S Group
achieved a 17% increase in revenue over the first quarter of 2007.  The
T&S Group continues to focus its efforts on core assistive application and
medical dictation markets and continues to add new customers in the language
learning and website audio file distribution categories.  The website audio
file distribution category currently shows the most promise for expanded
business going forward.  Management believes a shift in customer demand is fully
underway from the purchase of stand alone speech engine applications to a more
hosted services type offering.  We believe we are well positioned to
capture the growing demand for hosted speech solutions with our recently
announced server based text to speech offerings as well as our server based
speaker independent speech recognition products.  The Speech Technology & Services Group's immediate
focus is to increase revenue and be a preferred supplier of speech technologies
to large businesses worldwide, emphasize great technologies, competitive prices
and high quality support to the speech development community as well as offering
non-technical hosted speech conversion services to companies that have
subscriber bases in fast growing market segments.    4.   SPEECH GROUP -
HEALTHCARE  Based in Casper, Wyoming and Billings, Montana, Interim
Health Care of Wyoming has been serving its community for fifteen years and is
part of the fast growing home health segment of the healthcare industry,
providing a wide range of visiting nurse services to the elderly, wounded and
sick. It is one of the 300 home health agencies that comprise Interim Health
Care, the largest home healthcare franchise in the United States.  Both home care offices, Billings and Casper, have
invested a great deal of time and effort into their respective conversions to
the Interlink Software System. The process has been extremely labor intensive
but has progressed to the point that it is operational in both offices.
 This system integrates scheduling, physician orders, employee data,
billing, and payroll functions: eliminating duplicate efforts in day to day
operations.  Both offices have worked with Wizzard in tracking process for
compliance with Sarbanes-Oxley requirements.  Billings hired a new director of healthcare services
recently who comes with extensive local healthcare management experience.
 As a result, Interim has realized the addition of two new services:
providing skilled assessment and supervision of patients at local testing
facilities, and local foot clinics.  We expect these two new services to
impact revenues over the next two quarters.  Interim Casper continues to provide home care and
staffing services.  Staffing services has experienced a slight decline in
the last quarter but as Casper is seeing the opening of two new facilities in
the first six months of 2008, opportunities are expanding.  Casper staffing
is exploring the potential of new facilities for use of supplemental services.  Overall, internal operations have been given greater
structure.  Employee hiring processes and record keeping have been fine
tuned.  Drug screening of employees upon hire and random quarterly
screening have been implemented.  Home care client files have been
restructured improving timely communication in the office and maintaining the
access to information in the home.  Promotional activities are escalating
as the offices experience stability in day to day operations and as we embark on
a new business in Insurance Physicals.  Our home healthcare business continues to be a strong
revenue generator for our Company as our country's population ages and new
methods of patient data capture become critical components for delivering high
quality, affordable healthcare services in a patient's home.  Although this
has been a gradual process, we believe that we are building a solid business
that will offer a complimentary package of new technology and traditional
services. Recruiting and retaining nurses continues to be one of the biggest
challenges for our home healthcare businesses and we plan to continue our
aggressive marketing efforts to satisfy our customers' demands.  Branded with the name "Rex," the Talking Prescription
Bottle allows end-users to "hear" medication instructions when reading a
medication label is not practical or possible.  There are several billion
prescriptions filled each year in the U.S. and pharmaceutical errors create
billions of dollars of additional medical spending with the number one error
being identified as labeling problems and education. Using unique microprocessor
electronics and Wizzard's advanced text-to-speech offerings, pharmacists can
automatically create a "talking" label while the traditional instruction label
is being printed. At the push of a button, the prescription bottle talks to the
patient, telling him or her the name of the medication, the dosage the patient
should consume, the frequency of administration, refill instructions, warnings
and other important information necessary to educate and help people take their
prescription medication properly.  In the fourth quarter of 2007, Management made the
decision to stop marketing Rex to traditional pharmacies and HMO's.  This
decision was derived from the fact that while we still very much believe in the
product and continue to see strong interest from pharmacists, doctors and
patients, until Medicare and insurance companies begin to absorb the cost of the
bottle for patients, it will be difficult to achieve profitability.  We
plan to continue to seek independent third party studies to present to Medicare
and various insurance companies and work with legislators in several states that
support legislation requiring pharmacies to carry assistive aid devices that
help ensure patient safety.  We have received attention and various levels
of support from members of Congress at the Federal and State levels in
conjunction with the proposed legislation in Maryland, California and continue
discussions with the states of Alabama, Colorado, Connecticut, Hawaii, Kentucky,
Louisiana, Nebraska, Ohio, Tennessee, Texas, Virginia, Washington, and West
Virginia.  We continue to believe in the Talking Prescription Bottle as the
ability of the   elderly and visually impaired
to fully comprehend prescription medication instructions is as necessary as
ever, and as new drugs are constantly introduced to the market and increasing
medication combinations make following dosage instructions critical.    Results of Operations  Three Months Ended March 31, 2008 and 2007.  During the first quarter ended March 31, 2008, Wizzard
recorded revenues of $1,668,478, a 130% increase from revenues of $725,926 in
the first quarter of 2007. The increase for the first quarter of 2008 was due
primarily to the expansion through acquisitions of our digital media publishing
and healthcare operations.  Cost of goods sold totaled $1,001,637 in the first
quarter of 2008, versus $468,593 in the first quarter of 2007.  This
increase of 114% is attributed primarily to expenses related to the expansion
through acquisition of our digital media publishing and healthcare operations.
 Wizzard posted a gross profit of $666,841 during the first quarter of
2008, versus a gross profit of $257,333 in the first quarter of 2007, an
increase of 159%.  In the first quarter ended March 31, 2008, operating
expenses totaled $2,688,581 which was a 125% increase from operating expenses of
$1,192,803 in the first quarter of 2007.  Broken down by line item our
operating expenses were:  Selling expenses in the first quarter of 2008 were
$224,743 versus $201,734 in 2007.  This 11% increase was due to the
addition of personnel with the development of our digital media publishing and
media business, and home healthcare operations.  General and administrative expenses were $497,320 in 2008
versus $192,658 in 2007, an increase of 158%, due primarily to the listing fee
of the American Stock Exchange and the additional expenses with the acquisition
of the digital media publishing and home healthcare operations.  Salaries,
wages and related expenses increased to $762,945 in 2008 from $322,088 in 2007,
an increase of 137%, due to the addition of personnel with the development of
our digital media publishing and media business, and home healthcare operations.
Consulting fees increased to $1,168,320 in 2008 from $424,145, an increase of
175% due primarily to an increase in investor relations services and consulting
fees related to the digital media publishing operations. Research and
Development expenses in the first quarter were $35,253 versus $52,178 in
2007.  Other expenses of $622,710 versus $858,659 in the first
quarter of 2007 consisted primarily of interest expense.  This decrease is
due to recording $689,610 of non-cash interest expense for the extension and
re-pricing of warrants during the first quarter of 2007, off-set by $368,563 of
non-cash interest expense for the accretion of the discount on notes payable
during the first quarter of 2008 versus $161,400 during the first quarter of
2007.  Wizzard's net loss available to common shareholders was
$2,751,830, or $0.06 per share, in the quarter ended March 31, 2008.  This
represents a 53% increase from our net loss of $1,794,129, or $0.05 per share,
in the first quarter of 2007. During the first quarter of 2008, non-cash
expenditures totaled $1,581,244, a 27% increase from non-cash expenditures of
$1,244,042 in the first quarter of 2007.  The following is a summary of non-cash expenditures:  For the ThreeMonths EndedMarch 31,2008

2007NON-CASH EXPENDITURESAmortization of discount on
notes payable

368,563

161,400    Re-pricing and extension of
warrants

-

689,610Stock option grants

157,516

47,090Depreciation and amortization
expense

65,282

19,063Interest expense paid with
stock

1,592

-Issuance of warrants to extend
notes

263,483Non-cash expense

856,436

917,163Expenditures paid with issuance
of stock

724,808

326,879Total  non-cash expenditures

1,581,244

1,244,042   Liquidity and Capital
Resources.  Cash on hand was $4,603,774 at March 31, 2008, an
increase of $2,628,973 over the $1,974,801 on hand at March 31, 2007.  Cash
used in operations for the three months ended March 31, 2008, was $1,323,708, an
increase of 68% over the $788,681 cash used in operations for the three months
ended March 31, 2007.  Cash used in investing activities was $87,479
primarily for the purchase of equipment during the three months ended March 31,
2008.  Cash used in financing activities was $21,248 use for
payment of the capital lease and note payable during the three months ended
March 31, 2008.  In the first three months of 2007, the Company received
$320,090 from the issuance of common stock versus $0 for 2008.  The Company used common stock to pay $724,808 in
consulting and investor relations services during the three months ended March
31, 2008. In doing so, management believes we have conserved Wizzard's cash
liquidity for operational and expansion purposes.  The Company believes it is still in
the early stages of the new and developing speech technology market and digital
media publishing services, and estimates it will require approximately $350,000
per month to maintain current operations and grow our digital media
business.  Holders of the Preferred Stock will be entitled to
receive cumulative dividends of 7% per annum for the first two years after
issuance of the Preferred Stock and 18% per annum thereafter, payable on January
1 and July 1, beginning on January 1, 2008, either in cash or, at the Companys
option, in shares of the Companys common stock.  The Company will have the right to force conversion of
all or part of the outstanding Preferred Stock, plus all accrued but unpaid
dividends and liquidated damages due with respect to the Preferred Stock if,
after the two-year anniversary of the effectiveness of the Registration
Statement referred to below, the price of the Companys common stock exceeds
$6.15 for 10 consecutive trading days and the volume for each such trading day
exceeds 100,000 shares of common stock.  Beginning two years after the issuance date of the
Preferred Stock, the Company may also elect to redeem all (but not less than
all) of the then outstanding Preferred Stock at a total price of:  (i) 125%
of the aggregate Stated Value then outstanding; (ii) accrued but unpaid
dividends; and (iii) all liquidated damages and other amounts due with respect
to the Preferred Stock.  On the occurrence of certain Triggering Events as
defined in Section 9(a) of the Articles of Amendment/Certificate of Designation
with respect to the Preferred Stock, each holder will have the right to require
the Company to redeem all of the holders Preferred Stock or to increase the
dividend rate on that holders Preferred Stock to 18% per annum thereafter.  Safe Harbor Statement.  Statements made in this Form 10-Q
which are not purely historical are forward-looking statements with respect to
the goals, plan objectives, intentions, expectations, financial condition,
results of operations, future performance and business of the Company,
including, without limitation, (i) our ability to gain a larger share of the
digital media, home healthcare and speech recognition software industries, our
ability to continue to develop products and services acceptable to those
industries, our ability to retain our business relationships,   and our
ability to raise capital and the growth of the digital media, home healthcare
and speech recognition software industries, and (ii) statements preceded by,
followed by or that include the words "may", "would", "could", "should",
"expects", "projects", "anticipates", "believes", "estimates", "plans",
"intends", "targets", "tend" or similar expressions.  Forward-looking statements involve
inherent risks and uncertainties, and important factors (many of which are
beyond the Company's control) that could cause actual results to differ
materially from those set forth in the forward-looking statements, including the
following, in addition to those contained in the Company's reports on file with
the Securities and Exchange Commission: general economic or industry conditions,
nationally and/or in the communities in which the Company conducts business,
changes in the interest rate environment, legislation or regulatory
requirements, conditions of the securities markets, changes in the digital
media, home healthcare and/or speech recognition technology industries, the
development of products and/or services that may be superior to the products and
services offered by the Company, competition, changes in the quality or
composition of the Company's products and services, our ability to develop new
products and services, our ability to raise capital, changes in accounting
principals, policies or guidelines, financial or political instability, acts of
war or terrorism, other economic, competitive, governmental, regulatory and
technical factors affecting the Companys operations, products, services and
prices.  Accordingly, results actually
achieved may differ materially from expected results in these statements.
 Forward-looking statements speak only as of the date they are made.
 The Company does not undertake, and specifically disclaims, any obligation
to update any forward-looking statements to reflect events or circumstances
occurring after the date of such statements.  Item 3. Quantitative and
Qualitative Disclosures About Market Risk.  We are not subject to financial market risk exposure
related to changes in interest rates as our debt is at a fixed rate of
interest.   Item 4. Controls and
Procedures.  Our disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")),
which we refer to as disclosure controls, are controls and procedures that are
designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Exchange Act, such as this report, is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
are also designed with the objective of ensuring that such information is
accumulated and communicated to our management, including the Chief Executive
Officer and the Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure. There are inherent limitations to the
effectiveness of any control system. A control system, no matter how well
conceived and operated, can provide only reasonable assurance that its
objectives are met. No evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within our company have
been detected.  In connection with managements assessment of the
effectiveness of our internal controls over financial reporting as of March 31,
2008, management identified a material weakness relating to its policies and
procedures to insure the accuracy of the valuation and appropriate recording of
compensation for the issuance of stock-based compensation and the extension of
warrants was inadequate to ensure the valuation and accuracy of recording
compensation.  As a result, the Companys net loss was understated by
$420,138 in the first quarter of 2007.  This material weakness resulted in
the reasonable possibility that a material misstatement of our interim financial
statements would not be prevented or detected, and resulted from not having a
procedure in place to independently review the calculation of stock-based
compensation and the extension of warrants.  During the first quarter of
2008, the Company has implement the control procedure to have the compensation
calculation for stock based compensation and the extension of the life of
warrants reviewed by an individual, with adequate accounting expertise, and
independent of the preparer of the original calculation.    Changes in Internal Control
over Financial Reporting.  No change in our internal control
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act), except as noted below, occurred during the fiscal quarter ended
March 31, 2008 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.  During the first quarter of 2008,
the Company has implement the control procedure to have the compensation
calculation for stock based compensation and the extension of the life of
warrants reviewed by an individual, with adequate accounting expertise, and
independent of the preparer of the original calculation.    PART II - OTHER INFORMATION  Item 1.   Legal
Proceedings.  None.  Item 1A.   Risk
Factors.  Risks relating to our business and
our common stock are described in Item 1A of our Annual Report on Form 10-K for
the calendar year ended December 31, 2007, which was filed with the Securities
and Exchange Commission on March 17, 2008.  During the quarterly period
ended March 31, 2008, there were no material changes in these risk factors.   Item 2.   Unregistered
Sales of Equity Securities and Use of Proceeds.  The following table provides
information about all "unregistered" and "restricted" securities that Wizzard
has sold during the three month period ended March 30, 2008, which were not
registered under the Securities Act of 1933, as amended (the "Securities
Act"):  Name

Date

Shares

DescriptionArthur Douglas and Associates

2-1-2008

200,000

Services renderedGenesis Microcap

2-1-2008

50,000

Conversion of Note Payable at $2.00Gary Hohman

2-6-2008

55,000

Acquisition of iClipxJohn Acunto

2-6-2008

55,000

Acquisition of iClipxSkip Fredericks

2-6-2008

110,000

Acquisition of iClipxAlpha Capital

2-12-08

13,296

Conversion of Note Payable at $2.00Bruce Phifer

2-29-08

5,000

Services RenderedDavid Chekan

3-24-08

139,389

Milestone I - WebmayhemMatthew Hoopes

3-24-08

139,389

Milestone I - WebmayhemDavid Mansueto

3-24-08

139,389

Milestone I - WebmayhemMartin Mulligan

3-24-08

139,389

Milestone I - WebmayhemFakespace Labs

3-24-08

32,606

Milestone I - WebmayhemL. Blunt Jackson

3-24-08

16,303

Milestone I - WebmayhemChristopher MacDonald

3-24-08

45,648

Milestone I - WebmayhemNeil Roseman

3-24-08

36,583

Milestone I - WebmayhemRobert Leppo

3-24-08

8,151

Milestone I - WebmayhemCharles Mansueto

3-24-08

16,303

Milestone I - WebmayhemElizabeth Montgomery

3-24-08

2,454

Milestone - PNPPJoan Pinske

3-24-08

2,454

Milestone - PNPPDorothy Hartung

3-24-08

2,454

Milestone - PNPPCecilia Alder

3-24-08

2,454

Milestone - PNPPGreg Roadifer

3-24-08

39,222

Milestone - PNPPEdward Greiner

3-24-08

1,907

Service Rendered   We issued all of these securities to
persons who were either "accredited investors," or "sophisticated investors"
who, by reason of education, business acumen, experience or other factors, were
fully capable of evaluating the risks and merits of an investment in our
company; and each had prior access to all material information about us.
 We believe that the offer and sale of these securities were exempt from
the registration requirements of the Securities Act, pursuant to Sections 4(2)
and 4(6) thereof, and Rule 506 of Regulation D of the Securities and Exchange
Commission and from various similar state exemptions.  Item 3.   Defaults Upon
Senior Securities.  None;
not applicable.     Item 4.   Submission of
Matters to a Vote of Security Holders.  None;
not applicable.  Item 5.   Other
Information.  (a)
  None, not applicable  (b)
 During the quarterly period ended March 31, 2008, there were no changes to
the procedures by which shareholders may recommend nominees to the Companys
board of directors.  Item 6.   Exhibits.   31.1 - 302
Certification of Christopher J. Spencer  31.2 - 302
Certification of John Busshaus  32 - 906
Certification.         SIGNATURES  Pursuant to the requirements of the
Securities Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.  WIZZARD
SOFTWARE CORPORATION  Date:
5/9/08

By:
/s/ Christopher J. SpencerChristopher J. SpencerChief Executive Officer and
President   Date:
5/9/08


/s/ John BusshausJohn BusshausChief Financial
Officer   Date:
5/9/08


/s/ J. Gregory SmithJ. Gregory SmithDirector   Date:
5/9/08


/s/ David MansuetoDavid MansuetoDirector   Date:
5/9/08


/s/  Denis YevstifeyevDenis YevstifeyevDirector   Date:
5/9/08


/s/  Douglas PolinskyDouglas PolinskyDirector