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, 2009  [ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934  For
the transition period from to  Commission File No.
  001-33935  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 [
 ]Non-accelerated filer  [ X
]


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 4, 2009,
there were 47,795,290 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

3Consolidated Unaudited Statements of Operations

4Consolidated Unaudited Statements of Cash Flows

5 - 9Notes to Unaudited Consolidated Financial
Statements

10 - 25        WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS  ASSETS March 31,   2009

December 31, 2008CURRENT ASSETS:

(unaudited)Cash
$
746,859
$
1,730,361Accounts
receivable, net of $34,200 and $34,200 allowance, respectively

582,605

764,918Prepaid
expenses

91,251

37,465Total
current assets

1,420,715

2,532,744PROPERTY AND EQUIPMENT,
net

191,165

211,376GOODWILL

20,459,669

20,459,669DEFINITE LIFE INTANGIBLE
ASSETS, net

28,125

37,500OTHER ASSETS

4,757

4,757Total
assets
$
22,104,431
$
23,246,046LIABILITIES AND STOCKHOLDERS'
EQUITYCURRENT LIABILITIES:Accounts
payable
$
355,910
$
430,169Accrued
expenses

292,885

315,742Notes
payable - current portion

1,000,000

-Convertible
Notes Payable, net of discount of $200,300 and $350,276,
respectively

1,174,510

1,069,734Deferred
revenue

40,370

46,943Total
current liabilities

2,863,675

1,862,588NOTES PAYABLE, less current
portion

-

1,000,000Total
liabilities

2,863,675

2,862,588STOCKHOLDERS' EQUITYPreferred
stock, $.001 par value, 10,000,000 shares authorized, 4,682 and 6,032
Series A cumulative, convertible, contingently redeemable shares issued
and outstanding with liquidation preferences, respectively

5

6Common
stock, $.001 par value, 100,000,000 shares authorized, 47,204,660 and
45,713,981 shares issued and outstanding, respectively

47,205

45,714Additional
paid-in capital

70,168,343

69,994,782Accumulated
deficit

(50,974,797)

(49,657,044)Total
stockholders' equity

19,240,756

20,410,419Total
liabilities and stockholders' equity
$
22,104,431
$
23,246,046   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  31,2009

2008REVENUESoftware
$
164,208
$
253,665Healthcare

691,827

1,013,131Media Services

322,538

401,681Total Revenue

1,178,573

1,668,478COST OF GOODS SOLDSoftware

69,006

89,537Healthcare

458,171

580,866Media Services

277,115

331,234Total Cost of Goods Sold

804,291

1,001,637Gross Profit

374,282

666,841OPERATING EXPENSESSelling expenses

227,777

224,743General and
administrative

976,100

1,260,265Consulting fees

294,540

1,168,320Research and development

6,218

35,253Total Operating Expenses

1,504,635

2,688,581LOSS FROM OPERATIONS

(1,130,353)

(2,021,740)OTHER INCOME (EXPENSE):Extension of convertible notes
payable

-

(263,483)Interest income

1,320

35,272Interest expense

(190,842)

(394,948)Other income (expense)

2,122

449Total Other Income
(Expense)

(187,400)

(622,710)LOSS BEFORE INCOME TAXES

(1,317,753)

(2,644,450)CURRENT INCOME TAX EXPENSE

-

-DEFERRED INCOME TAX EXPENSE

-

-NET LOSS
$
(1,317,753)
$
(2,644,450)PREFERRED
DIVIDENDS:Accrued
dividend

-

(107,380)NET LOSS
AVAILABLE TO COMMON SHAREHOLDERS

(1,317,753)

(2,751,830)BASIC AND DILUTED LOSS PER COMMON SHARE AVAILABLE
TO COMMON SHAREHOLDERS
$
(0.03)
$
(0.06)BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING

46,821,762

43,682,477   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 31,2009

2008Cash Flows from Operating ActivitiesNet loss
$
(1,317,753)
$
(2,644,450)Adjustments to reconcile net loss to
net cash
used in operating activities:Amortization of discount on notes
payable

149,977

368,563Compensation for extension of
notes payable

-

263,483Stock for non cash
expenses

100,974

724,808Non-cash compensation - options
issued

23,970

157,516Non-cash interest expense on
notes payable

4,907

1,592Depreciation and amortization
expense

34,751

65,282Change in assets and
liabilities:Accounts
receivable

182,314

44,752Prepaid
expenses

(53,786)

(14,300)Accounts
payable

(74,259)

(181,079)Accrued
expense

(22,858)

(104,092)Deferred
revenue

(6,573)

(5,783)Net Cash Used in
Operating Activities

(978,336)

(1,323,708)Cash Flows from Investing Activities:Purchase of property &
equipment

(5,166)

(68,715)Acquisition of PNPP

-

(6,264)Acquisition of iClipx

-

(12,500)Net Cash Used in Investing
Activities

(5,166)

(87,479)Cash Flows from Financing Activities:Payments on capital lease

-

(9,875)Payments on note payable

-

(11,373)Net Cash Provided by
(Used in) Financing Activities

-

(21,248)Net Increase (Decrease) in Cash

(984,502)

(1,432,435)Cash at Beginning of Period

1,730,361

6,036,209Cash at End of Period
$
746,859
$
4,603,774Supplemental Disclosures of Cash Flow
InformationCash paid during the periods
for:Interest
$
21,904
$
3,687Income 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,
2009:  On January 14,
2009, the Company issued 1,250,000 common shares upon notice of conversion of
1,250 shares of Series A Preferred Stock.  On January 15,
2009, the Company issued 50,000 common shares upon the exercise of options
valued at $35,000 to consultants for services rendered.  On February 5,
2009, the Company issued 25,037 common shares in payment of a $22,600 note
payable and $2,437 of accrued interest.  On February 17,
2009, the Company issued 20,000 common shares upon the exercise of options
valued at $12,600 to consultants for services rendered.  On February 17,
2009, the Company issued 50,000 restricted common shares valued at $31,500 for
consulting services.  On February 18,
2009, the Company issued 25,071 common shares in payment of a $22,600 note
payable and $2,471 of accrued interest.  On March 4,
2009, the Company issued 45,571 common shares upon the exercise of options
valued at $21,874 to consultants for services rendered.  On March 30,
2009, the Company issued 100,000 common shares upon notice of conversion of 100
shares of Series A Preferred Stock.  For the three months ended March 31,
2008:  On February 1,
2008, the Company issued 200,000 restricted common shares valued at $570,000 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.     WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)  Supplemental Schedule of Non-cash
Investing and Financing Activities (Continued):  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.       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, 2009, and the results of operations and cash
flows for the periods ended March 31, 2009 and 2008 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, 2008 audited financial statements.
 The results of operations for the three months ended March 31, 2009 and
2008 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 three industry segments, Software, Healthcare and Media
Services.  The Software segment engages primarily in the development, sale,
and service of custom and packaged computer software products. The Media
Services segment operates primarily in digital media publishing and advertising
services.  The Healthcare segment operates primarily in the home healthcare
and healthcare staffing services in Wyoming and Montana.  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.  Consolidation - The consolidated financial
statements presented reflect the accounts of Parent, 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
depreciation, amortization, allowances, valuation of stock options, and
realization of goodwill.  Actual results could differ from those estimated
by management.  Reclassification  The
financial statements for the period ended prior to March 31, 2009 have been
reclassified to conform to the headings and classifications used in the March
31, 2009 financial statements.  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, 2009, the Company had cash balances of
$264,315 in excess of federally insured limits.  Accounts Receivable - Accounts receivable consist
of trade receivables arising in the normal course of business. At March 31, 2009
and December 31, 2008, the Company has an allowance for doubtful accounts of
$34,200 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, 2009 and 2008, 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 accounts for income taxes
in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."  This statement requires an asset and
liability approach for accounting for income taxes. (see Note 10).  Advertising Costs -
Advertising costs are expensed as incurred and amounted to $24,708 and $51,100
for the three months ended March 31, 2009 and 2008, 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, 2009 and 2008 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.  Media Services  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.  The Company recognizes revenue from the
insertion of advertisements in digital media, 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, and amount to $6,218 and $35,253,
respectively for the three months ended March 31, 2009 and 2008.  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.  During the periods presented in the
accompanying consolidated financial statements, the Company has granted options
under its 2005, 2007 and 2008 defined stock option plans. The Company accounts
for options in accordance with the provisions of SFAS No. 123R using the
modified-prospective transition method and the disclosures that follow are based
on applying SFAS No. 123R.  Non-cash compensation cost of $23,970 and
$157,516 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, 2009 and 2008, respectively. Non-cash compensation cost
of $69,474 and $136,920 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, 2009 and 2008.  NOTE 2  GOING CONCERN  The accompanying consolidated financial statements have
been prepared in conformity with generally accepted accounting principles of the
United States of America, which contemplate continuation of the Company as a
going concern.  However, the Company has current liabilities in excess of
current assets, incurred significant losses and has not yet been successful in
establishing profitable operations. These factors raise substantial doubt about
the ability of the Company to continue as a going concern. In this regard,
management plans to mitigate this doubt by raising additional funds through debt
and/or equity offerings and by substantially increasing sales.  There is no
assurance that the Company will be successful in achieving profitable
operations.  The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 3  PROPERTY &
EQUIPMENT  The following is a summary of
property and equipment at: Life

March 31,
2009

December 31,
2008Furniture, fixtures and equipment
2-10 yrs
$
381,721
$
376,556Production molds
3 yrs

47,710

47,710Software
2-5 yrs

11,964

11,964441,395

436,230Less: Accumulated depreciation


(250,230)

(224,854)Property & equipment, net

$
191,165
$
211,376  Depreciation expense for the three
months ended March 31, 2009 and 2008 was $25,376 and $14,583, respectively.  NOTE 4  GOODWILL / DEFINITE-LIFE
INTANGIBLE ASSETS  Intangible Assets  The
Companys definite life intangible assets consist of a non-compete agreement
which is amortized on a straight-line basis over its estimated useful life.
 Amortization expense of $9,375 and $42,708 was recorded for the three
months ended March 31, 2009 and 2008, 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 $49,225 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 was
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 January 20, 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.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4  GOODWILL / DEFINITE-LIFE
INTANGIBLE ASSETS (Continued)  The following is a summary of
goodwill: For the Three Months Ended March
31,

For the Year Ended December
31,2009

2008Goodwill at beginning of period
$
20,459,669
$
20,724,986Goodwill from acquisition of iClipx

-

190,900Milestone payment in connection with the
acquisition of Switchpod

-

98,000Goodwill from incentive - Switchpod

-

150,000Goodwill from acquisition of Webmayhem Inc.

-

(270,997)Goodwill from acquisition of PNPP

-

5,680Impairment of goodwill

-

(288,900)Goodwill at end of period
$
20,459,669
$
20,459,669  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 was
amortized as interest expense over the term of the note. As of March 31, 2009,
the Company has amortized $2,375,000 of the discount.  On March 15, 2008,
the Company issuance of 400,000 warrants to extend the maturity date of three
notes payable to April 28, 2009.  On November 7, 2008, the maturity date of
one note payable was extended to October 15, 2009.  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.  On November 28, 2008, the Company changed the conversion
price of the 5% Convertible Notes Payable from $2.00 per share to $1.00 per
share.  As the conversion price for the note was at the fair value of the
common stock on the date of the change, the Company recorded a $420,885 discount
on the note for beneficial conversion feature of the note in accordance with the
provisions found in EITF 98-5.  As of March 31, 2009, the Company amortized
$220,585 of the discount, with the remaining $200,300 unamortized discount being
offset against the outstanding balance of the note in the accompanying balance
sheet.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - NOTES PAYABLE
(Continued)  On December 2, 2008, the Company closed a Subscription
Agreement by which three institutional investors purchased 11% promissory notes
payable having a total principal amount of $1,000,000, maturing January 1, 2010.
The holders of the notes were granted a security interest in the assets of the
Company and its subsidiary, Interim Healthcare of Wyoming Inc, including
ownership of the Subsidiary and the assets of the Subsidiary.  NOTE 6 - LEASES  Operating Lease - The Company leases office space,
in Pittsburgh, Pennsylvania, on a month to month basis for $4,231 a month. The
Company leases additional office space in Casper, Wyoming from the former owner
of Interim Healthcare of Wyoming, Inc., on a month to month basis for $4,750 a
month.  The Company leases space in Hollywood California, for $1,903 a
month through May 2009. 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, 2009, the Company had 4,682 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, dividends, and any damages are convertible into
common shares at $1.00 per common shares.  On December 2, 2008, the Company amended the Series A
Preferred Stock effectively reducing the conversion price to common stock from
$2.05 per share to $1.00 per share, eliminating future cumulative dividends.
  A liquidating dividend of $1,981,286 was recorded upon amendment of
the Series A Preferred shares and reflected in the December 31, 2008
Consolidated Statement of Operations.  Holders of the Preferred Stock were 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 until the dividend was eliminated in
connection with the decrease in the conversion price.  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, 2009, the Company had 47,204,660 common shares issued and
outstanding.  On January 14, 2009, the Company
issued 1,250,000 common shares upon notice of conversion of 1,250 shares of
Series A Preferred Stock.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - CAPITAL STOCK
(Continued)  On January 15, 2009, the Company
issued 50,000 common shares upon the exercise of options valued at $35,000 to
consultants for services rendered.  On February 5, 2009, the Company
issued 25,037 common shares in payment of a $22,600 note payable and $2,437 of
accrued interest.  On February 17, 2009, the Company
issued 20,000 common shares upon the exercise of options valued at $12,600 to
consultants for services rendered.  On February 17, 2009, the Company
issued 50,000 restricted common shares valued at $31,500 for consulting
services.  On February 18, 2009, the Company
issued 25,071 common shares in payment of a $22,600 note payable and $2,471 of
accrued interest.  On March 4, 2009, the Company issued
45,571 common shares upon the exercise of options valued at $21,874 to
consultants for services rendered.  On March 30, 2009, the Company
issued 100,000 common shares upon notice of conversion of 100 shares of Series A
Preferred Stock.  On February 1, 2008, the Company
issued 50,000 common shares in payment of a $100,000 note payable.  On February 1, 2008, the Company
issued 200,000 restricted common shares valued at $570,000 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.  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, 2009,
149,429 options were available to be granted under the 2008 Key Employee Plan.
 During the three months ended March 31, 2009, the Company granted 125,571
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, 2009,
25,000 options were available to be granted under the 2008 Plan.  During
the three months ended March 31, 2009, the Company granted no options.  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, 2009, no
options were available to be granted under the 2007 Key Employee Plan.
 During the three months ended March 31, 2009, 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, 2009,
3,245 options were available to be granted under the 2007 Plan.  During the
three months ended March 31, 2009 and 2008, the Company granted 0 and 56,500
options, respectively.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 8  STOCK OPTIONS AND WARRANTS
(Continued)  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, 2009, total options available to be granted under the 2005 Plan
totaled 95.  During the three months ended March 31, 2009, the Company
granted no options.  The fair value of
option grants during the three months ended March 31, 2009 and 2008 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 31, 2009 and 2008 were as follows: 2009

2008Dividend yield
N/A

0 %Expected life
N/A

4 yrsExpected volatility
N/A

85.6%Risk-free interest rate
N/A

2.80%  A summary of the status of options
granted at March 31, 2009, and changes during the period then ended are as
follows: For the Three Months EndedMarch 31, 2009Shares

Weighted Average Exercise
Price
Weighted Average Remaining Contractual
Term

Aggregate Intrinsic
ValueOutstanding at beginning of period
742,500
$
2.15
5.2 years
$
-Granted
125,571

-
-

100,974Exercised
(125,571)

-
-

-Forfeited
(135,000)

2.34
-

-Expired
-

-
-

-Outstanding at end of period
607,500

2.11
6.5 years

-Vested and expected to vest in the future
597,500

2.12
6.6 years

-Exercisable at end of period
597,500

2.12
6.6 years

-Weighted average fair value of options
granted
607,500
$
2.11
6.5 years
$
-  The Company had 105,000 non-vested
options at the beginning of the period with a weighted average exercise price of
$2.10.  At March 31, 2009 the Company had 10,000 non-vested options with a
weighted average exercise price of $1.40.  The total intrinsic value of options exercised during the
three months ended March 31, 2009 and 2008 was $100,974 and $136,920,
respectively.  Intrinsic value is measured using the fair market value at
the date of exercise (for shares exercised) or at March 31, 2009 (for
outstanding options), less the applicable exercise price.  During the three months ended March 31, 2009 and 2008,
the Company recorded $23,970 and $157,516 of non-cash compensation expense
related to the vested stock options issued to employees.  For the three months ended March 31,
2009 and 2008, the Company recorded non-cash compensation cost of $100,974 and
$136,920 for vested and exercised options issued to employees and
consultants.    WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 8  STOCK OPTIONS AND WARRANTS
(Continued)  Warrants - A summary of the status
of the warrants granted is presented below for the three months ended:  March 31, 2009

March 31, 2008Shares

Weighted Average Exercise
Price

Shares

Weighted Average Exercise
PriceOutstanding at beginning of period
3,336,351
$
2.62

4,123,851
$
2.42Granted
-

-

400,000

2.85Exercised
-

-

-

-Forfeited
-

-

-

-Expired
-

-

-

-Outstanding at end of period
3,336,351
$
2.62

4,523,851
$
2.46  On March 15, 2008, the Company
issuance of 400,000 warrants to extend the maturity date of three notes payable
to April 29, 2009.  The Company recorded a $263,483 non-cash expense
related to the Fair Market Value of the 400,000 warrants.  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 31,2009

2008Net loss
(numerator)
$
(1,317,753)
$
(2,644,450)Accrued
dividend

-

(107,380)Net loss
available to common shareholders (numerator)
$
(1,317,753)
$
(2,751,830)Weighted average
number of common shares outstanding during the period used in loss per
share (denominator)

46,821,762

43,682,477  At March 31, 2009, the Company had
3,336,351 warrants outstanding to purchase common stock of the Company at $2.05
to $2.85 per share, the Company had 607,500 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
1,374,810 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
4,682,000 shares of common stock which were not included in the loss per share
computation because their effect would be anti-dilutive.  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.   WIZZARD SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  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, 2009 operating loss carryforwards
of approximately $29,300,000 which may be applied against future taxable income
and which expires in various years through 2029.  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.  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 $12,900,000 as of March 31, 2009, with an offsetting
valuation allowance of the same amount.  The change in the valuation
allowance for the three months ended March 31, 2009 approximated $497,000.  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 March 2010.  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
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 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 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 three
independent segments  software, media 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 all 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.  Media  The Company attributes revenue from
digital media publishing service at the time the service is provided and
collection is likely.  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, 2009 and 2008: (in
thousands)


|                                                  |   |          |   |        |   |            |   |         |   |          |   |        |   |            |   |        
|------------------------------------------------- | - | -------- | - | ------ | - | ---------- | - | ------- | - | -------- | - | ------ | - | ---------- | - | -------
|                                                  |   | 2009     |   | 2008  
|                                                  |   | Software |   | Media  |   | Healthcare |   | Total   |   | Software |   | Media  |   | Healthcare |   | Total  
|Net
revenues                                      | $ | 164      | $ | 323    | $ | 691        | $ | 1,178   | $ | 254      | $ | 402    | $ | 1,013      | $ | 1,669  
|Cost of
sales                                     |   | 69       |   | 277    |   | 458        |   | 804     |   | 90       |   | 331    |   | 581        |   | 1,002  
|General and
administrative                        |   | 443      |   | 328    |   | 205        |   | 976     |   | 620      |   | 409    |   | 228        |   | 1,257  
|Consulting                                        |   | 256      |   | 30     |   | 9          |   | 295     |   | 925      |   | 230    |   | 16         |   | 1,171  
|Selling                                           |   | 29       |   | 185    |   | 14         |   | 228     |   | 59       |   | 155    |   | 11         |   | 225    
|Research and
development                          |   | -        |   | 6      |   | -          |   | 6       |   | 34       |   | 1      |   | -          |   | 35     
|Compensation for
re-pricing/extension of warrants |   | -        |   | -      |   | -          |   | -       |   | 263      |   | -      |   | -          |   | -      
|Other
income                                      |   | 3        |   | -      |   | 1          |   | 4       |   | 33       |   | 3      |   | 3          |   | 39     
|Interest
expense                                  |   | 191      |   | -      |   | -          |   | 191     |   | 395      |   | -      |   | 4          |   | 662    
|Income tax
benefit/(expense)                      |   | -        |   | -      |   | -          |   | -       |   | -        |   | -      |   | -          |   | -      
|Net income
(loss)                                 | $ | (821)    | $ | (503)  | $ | 6          | $ | (1,318) | $ | (2,099)  | $ | (721)  | $ | 176        | $ | (2,644)
|                                                  |   |          |   |        |   |            |   |         |   |          |   |        |   |            |   |        
|Total
assets                                      |   | 1,326    |   | 18,692 |   | 2,086      |   | 22,104  |   | 6,167    |   | 18,658 |   | 2,146      |   | 26,791 
|Depreciation                                      |   | 6        |   | 15     |   | 4          |   | 25      |   | 8        |   | 4      |   | 10         |   | 22     

NOTE 13 - SUBSEQUENT EVENT  On April 13, 2009, the Company
issued 66,595 common shares upon the exercise of options valued at $45,950 to
consultants for services rendered.  On April 13, 2009, the Company
issued 78,643 common shares in payment of $36,962 of accrued interest.  On April 13, 2009, the Company
issued 500,000 common shares upon notice of conversion of 500 shares of Series A
Preferred Stock.  On April 27, 2009, the maturity
dates of two 5% convertible notes payable were extended to October 15, 2009.  On April 29, 2009, the Company
issued 38,334 common shares in payment of $21,084 of accrued interest.   Item 2.
  Management's Discussion and Analysis.  Highlights of First Quarter, 2009  Our business, for the last thirteen 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 fastest growing digital media aggregation, syndication and
monetization industry currently taking shape on the Internet. 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 software developers and technology solutions for
the healthcare industry.  Currently, our healthcare operations make up 59%
of our revenue, but we expect our digital media publishing business to become
our largest revenue generator at some point in 2009 or early 2010, and provide
the largest revenue growth in the future.  We believe this due to the size
of our digital media operations, our market leadership position, our substantial
presence in iTunes and the potential monetization of the content we distribute
through advertising and sales.  The network growth of our media operation
has occurred faster than initially expected and it is Managements opinion that
we are still in the early stages of growth for this industry as we are seeing
the flow of quality content coming to the Internet increase at a rapid pace and
advertisers and audiences showing increased interest in the medium.  At
this time, paid search advertising is the largest and most profitable segment of
the internet advertising industry (Google, Yahoo, etc), but Management believes
the digital media advertising segment has the potential over the next five years
to grow into the largest segment of the Internet advertising industry.
 Wizzard believes that our network and relevance in our industry will
continue to grow by leaps and bounds and that Wizzard is positioned to be one of
the leading companies in the digital media monetization business.  1.     WIZZARD MEDIA  Wizzard Media is the two-year old division for our
digital media business.  Wizzard Media is currently the industrys largest
network of independent and professional digital media publishers utilizing RSS
as a distribution method.  The Wizzard Network received over 2.2 billion
download requests for shows over the last two years from over 50 million unique
audience members.  In the first quarter of 2009, the Wizzard Network
received 380,124,773 download requests for episodes vs. approximately
275,000,000 download requests in the first quarter of 2008, an increase of 38%.
Wizzard's publishing platform grew by over 3,000 new podcast shows in the first
quarter of 2009 versus 1,268 in the first quarter of 2008.  The audience
consuming podcasts from the Wizzard Network grew from 15 million unique audience
members at the end of 2008 to 18.3 million uniques over the course of the first
quarter of 2009.  The total number of active episodes for the shows on the
Wizzard Network grew from 609,000 as of the end of the fourth quarter of 2008 to
667,000 in 2009, an increase of approximately 57,000 episodes available for
immediate distribution. With the continuing success of Apple's iPod, iPhone and
Apple TV, along with RSS aggregators from Adobe and others, Wizzard expects the
number of content publishers using our service and the number of consumers
watching the shows we distribute to continue to grow on an annual basis.
 The total number of episodic digital shows published through Wizzard Media
grew to over 20,000 in 2009.  Wizzard's LibsynPRO Enterprise service grew
to 91 networks in 2009, up from less than 35 in the first quarter of 2008.
 Management believes that Wizzard Media offers the best podcast publishing
platform in the industry and is one of only a few podcast publishing platforms
that are able to charge publishers for use of the service.  The majority of
podcast publishing platforms offer their service for free, in hopes of making
money exclusively from advertising sales.  Management believes that our
ability to charge for the services we provide is a testament to the quality of
service offered and expects to see revenue growth from these services in the
second and third quarter of 2009.  In the first quarter of 2009, our total
publishing service revenue, including data transfer, was $239,456.  Wizzard
continues to receive positive feedback from major media publishers for our
LibsynPRO Enterprise publishing platform.  As Wizzard Media derives a
portion of its revenues through data transfer from PRO customers, operating a
feature rich version of the PRO publishing platform provides Management with the
tools to grow the number of PRO publishers and thereby revenues associated with
our data transfer business.  Through the first quarter of 2009, revenue
from data transfer alone totaled $42,550.  Below is a more detailed
breakout of the information above.  Wizzard Media -
Distribution  In the first quarter of 2009 the Wizzard Network received
380,124,773 download requests for podcast episodes vs. approximately 275,000,000
download requests in the first quarter of 2008, from a wide variety of
distribution outlets   to which Wizzard syndicates
content.  The Wizzard Media network received over 4,223,609 requests for
podcasts per day in the first quarter of 2009.  Our network averaged over
18.3 million unique people around the world in the first quarter of 2009, up
from 15 million people at the end of the fourth quarter of 2008, creating what
Management believes is a strong media asset and a very compelling platform for
advertising and marketing.  Download requests are calculated by counting
the number of shows requested for download by audience members using
sophisticated in-house filters and third party measurement services.
 Wizzard works to generate revenue by inserting advertisements in the shows
in partnership with the shows publishers.  As the online digital media
industry is in the emerging stages, the majority of these shows are distributed
without advertising and the total download requests listed above are provided to
give an understanding of the potential size of advertising inventory available
for Wizzards third party advertising partners and its in-house advertising
sales team to fill.  Currently, Wizzard Media distributes digital shows for
our producers to a variety of web portals and content aggregators (approximately
27 in all), for both download and video streaming, including: Wizzard.tv,
Veoh.com, Apple TV (Featured Provider), iTunes (Featured Provider), YouTube
(Partner Channel), Google (Affiliate Network), Adobe Media Player, Daily Motion
(Featured Channel), Zune Marketplace and MySpace (Featured Channel).  In
the first quarter of 2009, Wizzard added SevenLoad and MySpace to its
distribution points.  Some of these channels were created solely to expand
audience reach for our publishers and some to expand audience reach and generate
revenues for Wizzard and our publishers through ad sales by the 3rd
party portals advertising sales team. Approximately 70% of the shows Wizzard
distributes reaches audiences using Apples iTunes platform which includes
iTunes on the computer, iPod, Apple TV and the iPhone.  It is Managements
opinion that the Wizzard Networks substantial presence in the iTunes Podcast
Store is one of the Companys most valuable assets as consumers using iTunes are
early adopters and spend money regularly on digital media.   We
believe this provides Wizzard with a unique offering for advertisers seeking
that type of consumer and provides Wizzard with other monetization opportunities
for its publishers of digital media.  In the first quarter of 2009, Wizzard focused its 3rd
party video streaming distribution efforts on our revenue sharing partnership
channels with YouTube and MySpace.  Management determined that it was in
the Companys best interest to focus the majority of our 3rd party
distribution efforts on two large platforms in terms of audience reach and the
third partys ability to bring advertisements to their own video site.
 Wizzard Management believes it will be able to report the success of this
new focus on the two largest video portal relationships once it has received its
first set of reports from these partners during the second quarter, but we
expect third party ad sales to be minimal at first as Wizzard posts new content
to the partner channels and builds audiences for the various shows.  Wizzard Media -
Advertising  In the first quarter of 2009, Wizzard executed multiple
national advertising campaigns for companies including Direct TV, Office Max,
and US Navy.  These campaigns run across multiple shows, bringing the total
number of advertising campaigns launched in 2009 to 28 with 16 different
advertisers, and 9.4 million ad impressions, resulting in $75,145 in 2009
advertising revenue.  In the first quarter of 2009, Wizzard had its best
quarter to date in terms of advertising impressions delivered with 9.4 million
versus 8.8 million ads delivered in the fourth quarter of 2008 and 5.5 million
ads delivered in the third quarter of 2008.  A portion of this increase in
ad impressions is due to the Companys recent partnership with Ando Media.
 The campaigns mentioned above are a combination of brand ads sold directly
by Wizzard, direct response ads and remnant ads provided by third party
networks.  In the first quarter of 2009, due to the global economic
recession, the majority of the ad impressions were the lower paying remnant ads
provide by third party networks as brand advertisers continued to significantly
reduce advertising spending across all advertising categories.  Management
believes that this will revert back to a higher brand ad sales ratio as economic
conditions improve.  In 2008, Wizzard launched a new technical advertising
insertion system, Alchemy, able to handle the insertion of advertisements into
audio and video shows with geographical targeting capabilities, which can be
used for multiple advertising campaigns across the Wizzard Network.  Using
the new system, the Wizzard Media Network had the capability to deliver over
950,311,932 advertisements in the first quarter of 2009 if 2.5 advertisements
were placed in every podcast request downloaded from the network.  In order
to increase the percentage of filled advertising inventory we must continue to
execute on our advertising sales strategy, integrate third party ad networks and
portals and create relationships with more advertising agencies and their
clients.  The advertising capabilities number mentioned above demonstrates
to advertisers the reach of the Wizzard Media Advertising Network as most   advertisers want to see the
opportunity for large advertising campaigns when considering a new medium for
their marketing plans.  Management believes that most advertisers prefer to
deal with a few companies with large reach rather than many companies with
smaller reach as it makes their advertising buys and tracking easier to
monitor. Wizzard continues its efforts to increase advertising fulfillment with
a goal to fill 20% of all available inventory for any given quarter at some
point in the next year.  Client response to our advertising execution to date has
been positive in Management's opinion and we continue to expand our services and
brand to advertising agencies as the podcasting network of choice when
considering podcast advertising.  Wizzards ad sales team has been
aggressively courting media buyers through extensive education sessions raising
awareness of digital media advertising opportunities delivered via subscribable,
episodic RSS (podcast) as well as streaming via the Internet.  We have now
had multiple advertisers renew campaigns with Wizzard including one advertiser
that is on its fifteenth campaign demonstrating what Management believes is
excellent back-end ad operational customer service on Wizzard's part and a
satisfactory ROI for our clients.  As of March 31, 2009, 893 publishers have signed up for
Wizzard's advertising network.  Wizzard Media currently has 22 distinct ad
categories we take to market.  Our efforts to date have been focused on the
top 574 shows using our publishing platform that represent 88.6% of our global
download requests. Of these 574 shows, 319 have signed up for the Wizzard
advertising network representing 73.6% of the most coveted traffic for
advertising sales. Wizzard will continue to aggressively market our advertising
network to the remaining 26% of the desired publishers not yet signed up through
our Publisher Relations team.  As the number of publishers joining
Wizzards Advertising Network grows, so does the available advertising inventory
for Wizzards advertising sales team to sell.  Month

Potential Ad ImpressionsJanuary 2008
*
155,842,635February 2008
*
145,449,788March 2008

148,176,155April 2008

142,014,592May 2008

146,629,010June 2008
*
134,409,515July 2008
*
143,855,017August 2008
*
146,070,265September 2008

150,003,405October 2008

163,727,852November 2008

173,409,732December 2008
*
179,560,792January 2009
*
195,220,230February 2009
*
180,530,527March 2009

193,664,192  * December,
January and February are historically strong months for downloads. June, July
and August are historically slower months for downloads.  Management
believes that the above numbers demonstrate to advertisers and shareholders the
reach of the Wizzard Media network as most advertisers want to see the
opportunity for large advertising campaigns and shareholders want to see revenue
potential.  Management believes that most advertisers prefer to deal with a
few companies with large reach rather than many companies with smaller reach as
it makes their advertising buys and tracking easier to monitor.  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). While
there can be no future pricing guarantees, the industry is currently charging,
and plans to continue to charge, between $.01 and $.04 per downloaded ad.
 The advertisements tend to be no longer than 15 to 30 seconds and several
ads can be inserted in one average twenty-minute episode.  Nielsen Certified Downloads for Ad
NetworkMonth

DownloadsJanuary 2008
**
62,337,054February 2008

58,179,915March 2008

59,270,462April 2008

56,805,837May 2008

58,651,604    June 2008
**
53,763,806July 2008

57,542,007August 2008

58,428,106September 2008

60,001,362October 2008

65,491,141November 2008

69,363,893December 2008

71,824,317January 2009

78,088,092February 2009

72,212,211March 2009

77,465,677  ** December,
January and February are historically strong months for downloads. June, July
and August are historically slower months for downloads. While there can be no
future pricing guarantees, the industry average is $.01 and $.04 per downloaded
ad.  In order to win new business, at times, our ad sales force will give
first time discounts in the per download price and we will use remnant ad
networks to fill unsold ad inventory which tends to have a lower per download ad
price.  The advertisements tend to be no longer than 15 to 30 seconds and
several ads can be inserted in one twenty-minute episode.  Wizzard Media 
Apps  In the first quarter of 2009, Management took note of the
extremely successful launch of the iTunes App Store by Apple.  Apps are
small software applications that users can purchase and download to their iPhone
and iPod Touch mobile devices with relative ease.  There are currently over
35,000 Apps in the iPhone App Store that have been downloaded by consumers over
1 billion times in less than 10 months.  App categories include video
games, sports, productivity, entertainment, education and health & fitness.
 Some of these Apps are free, while some are paid.  The paid Apps
range in price from $.99 to $100.00, with the average price under $4.99.
 Wizzard is currently exploring the Apps market on several fronts due to
the fact that approximately 70% of podcast audiences comes from the iTunes
Podcast Store and Management believes this same audience makes up a portion of
the consumers purchasing and downloading Apps from the iTunes App Store.
 In fact, Wizzard is of the belief through experience in the podcasting
business, knowledge of the podcasting consumer and survey results from podcast
audiences, that the average podcast consumer is a hard core iTunes platform
user.  Therefore, they are more likely to have the latest iPod Touch and/or
iPhone from Apple.  The average iPod Touch and iPhone user has downloaded
23 Apps according to mainstream media survey reports.  Piper Jaffrays
Financial Analyst, Gene Munster, is projecting total App Store revenue of $780
million in 2009 for Apple.  Apple retains 30% of all App sales to cover the
price of running the App Store and App owners/developers receive 70% of the
sales proceeds.  While Wizzards efforts in the App Store marketplace are
still in the early stages, we believe it is an obvious expansion of our
podcasting business and the three ways Wizzard believes it can generate profits
through the newly launched iTunes App Store are briefly outlined below.  Sale of Custom Podcast Apps  Wizzard is in the process of creating an App for sale in
the iTunes App Store that can be customized in as little as 30 minutes for each
of our top podcast producers.   Podcasters would then market their
very own customized App to their shows audience, many of who are iPhone/iPod
Touch users.  Management believes podcasters can be very successful
marketing their own customized iPhone App to their audience, as they know their
audience better than anyone else and are great influencers of their audience.
 This would encourage audiences of a specific podcast to purchase the
customized App for their favorite show from the iTunes App Store.  The
reasons Management believes an audience member would want to purchase an App for
a specific podcast are: 1) Easier access to the content.  2) Extra episodes
of their favorite podcast show exclusively for App users. 3) Inexpensive and
easy way to support their favorite podcasts.  4) Other benefits such as
flash cards that go along with a language learning podcast or special
discounts on new products reviewed by a technology podcast exclusively for App
users.  Wizzard will provide this App as a free tool to
podcasters on the Wizzard Network beginning with the podcasts that have the
largest audience and eventually opening it up to every podcaster on the network.
 Currently, there are approximately 20,000 podcasts on the Wizzard Network
and approximately 18.3 million audience members, of which approximately 70% us
iTunes.  Wizzard will submit each custom App to the iTunes App Store for
approval, which cant be guaranteed and is based on Apples terms of service and
approval process, and will manage the   collecting of the revenue from
Apple and distribution of the podcasters share of the revenues.  Wizzard
expects to retain approximately 35% of the sale price that will range from $.99
to $2.99 in most cases.  Sale of Podcast Episodes Via Custom
Podcast Apps  Once a podcaster has successfully marketed their own
custom App to their audience and has created a significant install base,
Management believes that from time to time the podcaster can release a special
episode, in addition to their normal podcast episodes, and charge a nominal fee
($.99) for that episode to their audience via their custom App provided by
Wizzard.  The technical ability to charge for episodes is being created by
Apple and released to their iPhone App Store developers in July of 2009.
 By having a successful, extremely easy to use (no credit card info has to
be entered if they already have an iTunes account; just two clicks of a button)
micropayment platform in iTunes/iPhone/iPod Touch, Management believes that
podcast audiences will be willing to pay a nominal fee ($.99), from time to
time, for special episodes of their favorite podcast.  Licensing and Marketing of Apps Via
Podcasts  One of the most vocal complaints from iPhone App
owners/developers regarding the iTunes App Store is the lack of marketing
opportunities for their App within the iTunes App Store from which they are
sold.  iTunes does not accept paid marketing in any fashion, unlike most
traditional retail and online stores who heavily encourage in-store marketing.
 As a result, the only effective way an App owner/developer can generate
substantial sales for their App is by landing in a Top 100 List maintained by
the App Store and readily viewable on the iPhone and in iTunes by the App
consumer.   If an App is not in the Top 100 List, or falls off the Top
100 List, sales tend to be minimal.  There are a few 3rd party
iPhone in App overlay advertising networks that give App owners/developers the
opportunity to market their App in other Apps that are downloaded for free, but
it is Managements opinion, based on conversations with numerous App
owners/developers as well as market research, that these in App overlay
advertising networks are not effective in terms of marketing an App and
increasing sales.  As a result, due to the fact that Wizzard has access
through its presence in the iTunes Podcast Store to what Management believes is
the same consumer base that purchase Apps from the iTunes App Store, the Company
believes it has a strong solution to a growing business problem.  Wizzard is in the early stage of licensing iPhone/iPod
Apps from their owners/developers exclusively for the iTunes platform and
marketing them to consumers via the podcasts Wizzard distributes through the
iTunes Podcast Store in a direct response type advertising method.
 Currently, Wizzard distributes over 4.2M podcasts per day and has a
tremendous amount of available advertising inventory that can be used to market
these licensed Apps.  Wizzard would receive approximately 50% of the
revenue for every App sold through this effort.  If successful, this could
cause Wizzard to become the largest advertiser on the Wizzard Network.
 If this were to occur, it could significantly enhance our podcast business
as podcasters would then have a steady stream of advertisements for their show
which would allow them to generate income and invest more capital into
production quality, marketing and episode frequency expanding audience size and
downloads.  We also believe that if we were able to assure podcast
producers that Wizzard could produce a steady stream of advertisements and
income, more podcast producers would be attracted to our network and pay for our
podcasting services.  Wizzard Media - Content  Wizzard Media is currently the industrys largest network
of independent and professional digital media publishers utilizing RSS
podcasting as a distribution method. Wizzard's publishing platform grew by over
3,000 new podcast shows in the first quarter of 2009, to 20,000 vs. 1,268 new
shows added in the first quarter of 2008.  The total number of active
episodes for the shows on the Wizzard Network grew from 609,000 in the end of
2008 to 667,000, an increase of 58,000 episodes available for immediate
distribution.  An increase in shows helps Wizzard gain additional
distribution for our publishers and correlates to more downloads, larger
audiences and increases our chances of securing advertisers for said shows in
addition to increasing hosting/publishing revenues.  With the continuing
success of Apple's iPod, iPhone and Apple TV, along with 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
in the foreseeable future.  Wizzard's LibsynPRO enterprise service grew to
91 networks as of the end of the first quarter of 2009.  We continue to see
extremely positive reception by major media publishers for our LibsynPRO
publishing and advertising platform.    In the first quarter of 2009 Wizzard launched new shows
from Lifetime Networks, Guidepost, Get Married and Attention Span Media.
 Some of the other more notable shows joining the Wizzard Media Network in
the first quarter of 2009 were:  · Friday Night Cranks  Wizzard
recruited Friday Night Cranks from YouTube and convinced them to do podcasting
as well.  This show is one of the fastest growing shows weve ever had on
the Wizzard Network surpassing 100,000 downloads in its first month.
  Targeted at young males.  · Scene Unseen Movie Reviews  Is one
of the largest Movie review podcasts and was recruited off network to be part of
a specific advertising campaign.  · WMMRs Preston and Steve Podcast 
Popular On-Air Morning show in Philly, this show had been hosting with us for
some time and now has agreed to work with us to help bring ads to their
show.  · The GeekBox  Former Electronic
Gaming Monthly / 1UP editor Ryan Scott created this podcast when Ziff Davis sold
1Up in early Jan 2009, bringing with him a large loyal fan base of young male
gaming enthusiasts.  · Pregtastic  The most popular podcast
for expecting mothers joined the network in early Q1. This show is a nice fit
for the other popular parenting podcasts we have on network.  · The Public Speaker  A new podcast
from the folks at QDNow (Grammar Girl), this show focuses on tips for public
speaking and has already built up a great monthly audience in the low six
figures.  Some of above mentioned new publishers are utilizing our
media services and in turn we have the ability to bring advertising to their
shows.  Others are obtaining ads themselves and utilizing our Ad Insertion
and Ad Management technology, Alchemy, in addition to Wizzard having the
opportunity to bring advertising to their shows.  Then, there are
publishers for which we are distributing their content and in turn, we have the
ability to license the content to a third party and/or bring advertising to
their show.  Any revenue generated from obtaining ads or the licensing of
the content will be shared with the publisher of the show.  While the
addition of these new shows will have minimal impact on revenue during 2009,
Management believes that by publicizing our high profile shows it lends
credibility to our service and helps to attract new publishers, distribution
outlets and advertisers.  Wizzard Media - Technology  Wizzard Media's technical development team continues to
make significant accomplishments in terms of maintaining and expanding our
publishing platform.  In the first quarter of 2009, Wizzards development
team released a major feature with its integration of our ad serving system,
Alchemy, into the Wizzard media Flash Player.  This allows Wizzards ad
campaigns to utilize the interactivity of the flash player to deliver ads with
many benefits not available through the podcast download system including
click-through interactivity and highly detailed ad delivery tracking.  Additionally, Wizzards development team added support
for VAST standard ad systems which now allows for inline pre, post and mid roll
ads, banner overlay ads, click-through support, ad countdown timer with
like/dislike feedback, Neilson NetRatings tracking of the flash player and
support for multiple 3rd party ad systems.  Wizzard's speech recognition system continues to process
hours upon hours of digital media allowing for better discovery of content,
advertising targeting and brand safety.  Below are various statistics from
the speech system and its efforts of converting shows on the Wizzard Media
Network to searchable text.    Wizzard Speech System for Digital
Media Statistics*Number of Total Words Captured

305,405,201Number of Shows Transcribed

3,292Number of Episodes Transcribed

82,236Minutes of Processed Content

2,075,310Number of Unique Words Captured

33,476 *as of May 12, 2009  2.     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 our own Internet
marketing efforts through Google, Yahoo and other major Internet search engines.
 In the first quarter of 2009 Wizzard revamped its Internet marketing
efforts through major search engines and continues to modify it on a quarterly
basis.  This new revamped effort should result in increased business leads
for our speech products and services.  In the first quarter of 2009, our T&S Group saw a
decrease in revenue over the first quarter of 2008 as a result of customers
delaying purchases due to the severe global economic recession.
 Additionally, some customers delayed the purchase of our top selling
product, AT&T Natural Voices Text To Speech, choosing to wait until Wizzard
released a new version of the product in the end of the first quarter of 2009.
 As a result of the new product launch, it is Managements opinion that
business for our speech products will pick up in the third and fourth quarters
of 2009, assuming the global recession does not continue beyond such time.
 The T&S Group continues to focus its efforts on core assistive
application, website audio and alert systems.  The website audio file
distribution category currently shows the most promise for expanded business
going forward.  The Speech Technology and Services Group's immediate
focus is to increase revenue and be a preferred supplier for speech technologies
to large businesses worldwide, emphasize great technologies, competitive prices,
and high quality support to the speech development community and offer
non-technical hosted speech conversion services to companies that have
subscriber bases in fast growing market segments. There can be no guarantee that
customers will be willing to pay Wizzard for these services.  3.   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.  Wizzard
currently derives the bulk of its revenues, 59% for the first three months of
2009, from its home healthcare and staffing operations.  As is the case
with most industry segments, the medical industry felt the slowing of the
economy in the first quarter of 2009.   As a result, our staffing
business in Billings, Montana has experienced a significant decrease in
utilization of our services from the hospitals and nursing homes.  This has
been driven by a decrease in the census (number of patients) utilizing these
facilities.  We are taking the necessary steps to position ourselves in
preparation of an upturn in the census for these facilities as the economy
recovers resulting in an increase in the use of our services. At the same time
our home healthcare services continues to be strong and provided a consistent
stream of revenue during the first quarter of 2009.  In Casper, we hired a new Administrator, who came with a
diverse background in the healthcare industry. Our Casper location continues to
provide home care and staffing services.  We have established a strong
management team and are looking forward to the benefits of having a tenured team
leading the efforts in Casper.  Casper staffing is exploring the potential
of new facilities for use of supplemental services.   Additionally, we
hired a full-time Physical Therapist, which will help to stabilize that line of
service, as well as our procedures and processes for   administering our clients with
physical therapy needs and should result in increase revenue during the second
quarter of 2009.  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 business in our Casper location, and we plan
to continue our aggressive marketing efforts to satisfy our customers'
demands.  Results of Operations  Three Months Ended March 31, 2009 and 2008.  During the first quarter ended March 31, 2009, Wizzard
recorded revenues of $1,178,573, a 29% decrease from revenues of $1,668,478 in
the first quarter of 2008. The decrease for the first quarter of 2009 reflects a
decrease in revenue over all segments due in most part to the significant drop
in the economy, but primarily to a decrease in our staffing revenues within our
home healthcare subsidiary in Billings, Mt., as hospitals and other healthcare
facilities that utilize our services experienced a much greater decrease in
patients than other areas of the country.  We also experienced softness
with customers delaying the purchase of Speech Software and usage of licensing
with the economy slowing and a cut back in spending.  Cost of goods sold totaled $804,291 in the first quarter
of 2009, versus $1,001,637 in the first quarter of 2008.  This decrease of
20% is a direct result of the decrease in sales of our products and services
during the first quarter of 2009 due to the economic recession.  Wizzard
posted a gross profit of $374,282 during the first quarter of 2009, versus a
gross profit of $666,841 in the first quarter of 2008, a decrease of 44%.  In the first quarter ended March 31, 2009, operating
expenses totaled $1,504,635 which was a 44% decrease from operating expenses of
$2,688,581 in the first quarter of 2008.  Broken down by line item our
operating expenses were:  Selling expenses in the first quarter of 2009 were
$227,777 versus $224,743 in 2008, representing a 1% increase over prior
year.  General and administrative expenses were $353,670 in 2009
versus $497,320 in 2008, a decrease of 29%, due to measures taken within our
Media business segment to reduce costs.  Salaries, wages and related
expenses decreased to $622,430 in 2009 from $762,945 in 2008, a decrease of 18%,
driven by an effort to reduce overhead costs within our Media business segment.
 Consulting fees decreased to $294,500 in 2009 from $1,168,320, a decrease
of 75% due to the price of the stock for consultants that were paid in stock and
the decrease in the use of consultants 2009 versus 2008.  Also, we have
made a transition to using employees instead of consultants.  Research and
Development expenses in the first quarter were $6,218 versus $35,253 in
2008.  Our efforts over the last two quarters to streamline
operations, control spending, decrease the use of consultants and re-structure
certain financial instruments reduced our cash spending by approximately
$600,000 per quarter.  Other expenses of $187,400 versus $622,710 in the first
quarter of 2008 consisted primarily of interest expense.  This decrease is
due to recording $263,483 of non-cash interest expense for issuance of warrants
during the first quarter of 2008, and $368,563 of non-cash interest expense for
the accretion of the discount on notes payable during the first quarter of 2008
versus $149,977 during the first quarter of 2009.  Wizzard's net loss available to common shareholders was
$1,317,753, or $0.03 per share, in the quarter ended March 31, 2009.  This
represents a 52% decrease from our net loss of $2,751,830, or $0.06 per share,
in the first quarter of 2008. During the first quarter of 2009, non-cash
expenditures totaled $314,579, an 80% decrease from non-cash expenditures of
$1,581,244 in the first quarter of 2008.    The following is a summary of
non-cash expenditures: For the ThreeMonths EndedMarch 31,2009

2008NON-CASH EXPENDITURESAmortization of discount on
notes payable

149,977

368,563Re-pricing and extension of
warrants

-

-Stock option grants

23,970

157,516Depreciation and amortization
expense

34,751

65,282Interest expense paid with
stock

4,907

1,592Issuance of warrants to extend
notes

-

263,483Non-cash expense

213,605

856,436Expenditures paid with issuance
of stock

100,974

724,808Total  non-cash expenditures

314,579

1,581,244  Liquidity and Capital
Resources.  Cash on hand was $746,859 at March 31, 2009, a decrease
of $984,502 over the $1,730,361 on hand at December 31, 2008.  Cash used in
operations for the three months ended March 31, 2009, was $978,336, a decrease
of 26% over the $1,323,708 cash used in operations for the three months ended
March 31, 2008.  Cash used in investing activities of $5,166 was for the
purchase of equipment during the three months ended March 31, 2009.  Cash used in financing activities was $21,248 which was
used for payment of the capital lease and note payable during the three months
ended March 31, 2008.  In the first three months of 2009, the Company used
$0 cash for financing activities.  The Company used common stock to pay $100,974 in
consulting services during the three months ended March 31, 2009. 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 digital media publishing services,
and estimates it will require approximately $250,000 per month to maintain
current operations and grow our digital media business.  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 on Form SB-2 filed with the Securities and Exchange Commission on July
26, 2007, and amended on August 28, 2007, 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.    The following table reflects
our contractual obligations as of March 31, 2009: Contractual Obligations



Less than

1-3Total

1 Year

YearsGuaranteed Royalty
$
405,000
$
280,000
$
­125,000Long-Term Obligations(1)

2,174,510

2,174,510

-Rent

34,950

20,100

14,850Total
$
2,614,460
$
2,474,610
$
139,850  (1)  
Includes the long term notes payable held by three institutional investors.
 The obligations are convertible into common stock at $1.00 per share and
total $1,174,510.  The global credit market crisis, increased unemployment,
the continued reductions in U.S. housing values, the volatility in the price of
oil, the recession in the United States and the slowdown of economic growth in
the rest of the world created a substantially more difficult business
environment. The ability to execute capital market transactions or sales of
assets was extremely limited, and home healthcare and media sales in North
America and throughout the world contracted severely. Our liquidity position, as
well as our operating performance, was negatively affected by these economic and
industry conditions and by other financial and business factors, many of which
are beyond our control. We do not believe it is likely that these adverse
economic conditions, and their effect on the media and healthcare industries,
will improve significantly in 2009, notwithstanding the unprecedented
intervention by governments in the United States and other countries in the
global banking and financial systems.  We have taken far reaching actions to restructure our
business, but the effects of current global economic and credit market
conditions on the advertising and healthcare industries require that we obtain
additional near-term liquidity support. Based on our estimated cash requirements
through December 31, 2009, we do not expect our current operations to generate
sufficient cash flow to fund our obligations as they come due, and we do not
currently have other traditional sources of liquidity available to fund these
obligations. As a result, we must continue to attempt to raise working capital,
as we have for the last several years.  We are currently contemplating capital market activities
and potential asset sales, both to conserve cash and to generate incremental
cash flow.  While we believe we can be successful in raising new working
capital, capital market activities will be challenging given the current
business and credit market environments and may be dilutive to current
shareholders. The effect of any of these potential actions will not be realized
until the second quarter of 2009 or later, even if they are implemented
successfully.  Our consolidated financial
statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. Our ability to continue as a going concern is substantially
dependent on the successful execution of many of the actions referred to above,
on the timeline contemplated by our plans. The uncertainty of successful
execution of our plan, among other factors, raises substantial doubt as to our
ability to continue as a going concern. The accompanying consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.  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 4T. Controls and
Procedures.  (a)
Evaluation of Disclosure 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.  As of March 31, 2009, an evaluation was carried out under
the supervision and with the participation of our management, including the
Chief Executive Officer and the Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls.  Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that, as of such date, the design and operation of these disclosure
controls were effective to accomplish their objectives at the reasonable
assurance level.  (b)
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), occurred during the fiscal quarter ended March 31, 2009 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.     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, 2008, which was filed with the Securities
and Exchange Commission on March 31, 2009.  During the quarterly period
ended March 31, 2009, 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 31, 2009, which were not
registered under the Securities Act of 1933, as amended (the "Securities
Act"):  Name

Date

Shares

DescriptionJohn Acunto

2-17-09

50,000

Services
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, 2009, 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:
5/15/09

By:
/s/ Christopher J. SpencerChristopher J. SpencerChief Executive Officer and
President   Date:
5/15/09


/s/ John BusshausJohn BusshausChief Financial
Officer   Date:
5/15/09


/s/ J. Gregory SmithJ. Gregory SmithDirector   Date:
5/15/09


/s/ David MansuetoDavid MansuetoDirector   Date:
5/15/09


/s/  Denis YevstifeyevDenis YevstifeyevDirector   Date:
5/15/09


/s/  Douglas PolinskyDouglas PolinskyDirector