WIZZARD SOFTWARE CORPORATION

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31 2010, 2009 AND 2008

Additional

Common Stock

Preferred Stock

Paid In

Accumulated

Shares

Amount

Shares

Amount

Capital

Deficit

Balance at December 31, 2007

43,304,034

$

43,304

6,147

$

6

$

64,668,006

$

(41,965,166)

Stock issued for consulting services

350,907

351

-

-

807,637

-

Stock issued upon exercise of options for services

126,500

127

-

-

246,163

-

Stock issued for PNPP Milestone

58,830

59

-

-

127,602

-

Stock issued upon conversion of notes payable and accrued interest

504,895

505

-

-

905,465

-

Stock issued for Webmayhem Inc. Milestone

713,150

713

-

-

1,546,823

-

Warrants issued for extension of note payable

-

-

-

-

263,483

-

Acquisition of iClipx

220,000

220

-

-

653,180

-

Stock issued for Switchpod Milestone

100,000

100

-

-

97,900

-

Stock issued upon conversion of Series A Preferred into Common Stock

82,216

82

(115)

-

(82)

-

Dividend on Series A Preferred Stock

253,449

253

-

-

(213,158)

-

Compensation for vested stock options

-

-

-

-

470,878

-

Beneficial conversion feature on notes payable

420,885

Net loss for the year ended December 31, 2008

(7,691,878)

Balance at December 31, 2008

45,713,981

$

45,714

6,032

$

6

$

69,994,782

$

(49,657,044)

Stock issued for consulting services

175,000

175

-

-

127,325

-

Stock issued upon exercise of options for services

1,038,166

1,038

-

-

490,554

-

Stock issued upon conversion of notes payable and accrued interest

1,162,291

1,162

-

-

505,072

-

Stock issued upon conversion of Series A Preferred Stock

1,850,000

1,850

(1,850)

(2)

(1,848)

-

Stock Issued upon conversion of warrants

1,704,884

1,705

-

-

1,011,762

-

Issuance of Common Stock

4,200,000

4,200

1,750,200

-

Acquisition of Developer Apps

621,000

621

-

-

366,399

-

Compensation for notes payable which were re-priced and terms extended

-

-

-

-

950,527

-

Compensation for warrants which were re-priced and terms extended

-

-

-

-

292,702

-

Compensation for vested stock options

-

-

-

-

38,371

-

Net Loss for the year ended December 31, 2009

-

-

-

-

-

(6,509,017)

Balance at December 31, 2009

56,465,322

$

56,465

4,182

$

4

$

75,525,846

$

(56,166,061)

The accompanying notes are an integral part of these financial statements.

Stock issued for consulting services

421,104

421

-

-

103,135

-

Stock issued upon conversion of notes payable and accrued interest

3,426,686

3,427

-

-

886,412

-

Stock issued upon conversion of Series A Preferred Stock

455,000

455

(182)

-

(455)

-

Stock Issued upon conversion of warrants

50,000

50

-

-

17,950

-

Issuance of Common Stock for cash

8,000,000

8,000

-

-

1,967,000

-

Acquisition of Developer Apps

110,000

110

-

-

37,890

-

Compensation for re-pricing and terms extended

945,000

945

-

-

824,177

-

Compensation for vested stock options

-

-

-

-

52,164

-

Net Loss for the year ended December 31, 2010

-

-

-

-

-

(4,110,459)

Balance at December 31, 2010

69,873,112

$

69,873

4,000

$

4

$

79,414,119

$

(60,276,520)

The accompanying notes are an integral part of these financial statements.