izea-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File No.: 001-37703

IZEA WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)


Nevada						37-1530765
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1317 Edgewater Dr., # 1880, Orlando, FL						32804
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (407) 674-6911

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol (s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

IZEA

The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-Accelerated Filer

☒

Smaller reporting company

☒

Emerging growth company

☐

Table of Contents

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 10, 2024, there were 16,339,860 shares of our common stock outstanding.

Table of Contents

Quarterly Report on Form 10-Q for the period ended March 31, 2024

Table of Contents


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			1
Unaudited Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023			1
Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023			2
Unaudited Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023			3
Unaudited Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023			4
Unaudited Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2024 and 2023			5
Notes to the Unaudited Consolidated Financial Statements			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			38
Item 4. Controls and Procedures			39

PART II. OTHER INFORMATION
Item1. Legal Proceedings			41
Item 1A. Risk Factors			41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			41
Item 3. Defaults Upon Senior Securities			42
Item 4. Mine Safety Disclosures			42
Item 5. Other Information			42
Item 6. Exhibits			43

Signatures			46

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

IZEA Worldwide, Inc.

Unaudited Consolidated Balance Sheets


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	39,035,332	$	37,446,728
Accounts receivable, net	4,798,692		5,012,373
Prepaid expenses	989,737		739,988

Short term investments	17,034,673		17,126,057
Other current assets	20,496		26,257
Total current assets	61,878,930		60,351,403

Property and equipment, net of accumulated depreciation	178,446		205,377
Goodwill	5,285,293		5,280,372
Intangible assets, net	1,704,437		1,749,441
Digital assets	269,064		162,905
Software development costs, net	2,002,307		2,056,972
Long term investments	4,708,910		9,618,996
Total assets	$	76,027,387	$	79,425,466

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,156,495	$	1,504,348
Accrued expenses	2,935,278		3,083,460
Contract liabilities	8,833,084		8,891,205
Contingent Liability	114,400		114,400
Total current liabilities	13,039,257		13,593,413

Finance obligation, less current portion	48,573		63,419
Deferred purchase price, less current portion	60,600		60,600
Deferred tax liability	377,110		394,646
Total liabilities	13,525,540		14,112,078

Commitments and Contingencies (Note 9)

Stockholders’ equity:
Preferred stock; $0.0001 par value; 2,500,000 shares authorized; no shares issued and outstanding	—		—
Common stock; $0.0001 par value; 50,000,000 shares authorized; shares issued: 16,666,513 and 16,602,155, respectively, shares outstanding: 16,300,658 and 16,236,300, respectively.	1,667		1,660
Treasury stock at cost: 365,855 and 365,855 shares at March 31, 2024 and December 31, 2023, respectively	(1,019,997)		(1,019,997)
Additional paid-in capital	152,419,065		152,027,110
Accumulated deficit	(88,710,644)		(85,444,794)
Accumulated other comprehensive income (loss)	(188,244)		(250,591)
Total stockholders’ equity	62,501,847		65,313,388
Total liabilities and stockholders’ equity	$	76,027,387	$	79,425,466

See accompanying notes to the consolidated financial statements.

IZEA Worldwide, Inc.

Unaudited Consolidated Statements of Operations


	Three Months Ended March 31,
		2024		2023
Revenue		$	6,952,883	$	8,737,722

Costs and expenses:
Cost of revenue		3,967,975		5,960,162
Sales and marketing		3,056,291		2,404,551
General and administrative		3,783,086		3,403,608
Depreciation and amortization		204,186		346,262
Total costs and expenses		11,011,538		12,114,583

Loss from operations		(4,058,655)		(3,376,861)

Other income (expense):
Change in the fair value of digital assets		106,159		—
Interest expense		(2,001)		(1,564)
Other income (expense), net		669,865		572,086
Total other income (expense), net		774,023		570,522

Net loss before income taxes		$	(3,284,632)	$	(2,806,339)
Tax benefit		18,782		—
Net loss		(3,265,850)		(2,806,339)

Weighted average common shares outstanding – basic and diluted		16,333,415		15,611,885
Basic and diluted loss per common share		$	(0.20)	$	(0.18)

See accompanying notes to the consolidated financial statements.

IZEA Worldwide, Inc.

Unaudited Consolidated Statements of Comprehensive Loss


	Three Months Ended March 31,
		2024		2023
Net loss		$	(3,265,850)	$	(2,806,339)

Other comprehensive income
Unrealized (gain) loss on securities held		(58,177)		(126,180)
Unrealized (gain) loss on currency translation		(4,170)		—
Total other comprehensive income (loss)		(62,347)		(126,180)

Total comprehensive income (loss)		$	(3,203,503)	$	(2,680,159)

See accompanying notes to the consolidated financial statements.

IZEA Worldwide, Inc.

Unaudited Consolidated Statements of Stockholders’ Equity


	Common Stock			Additional Paid-In		Treasury		Accumulated		Accumulated Other Comprehensive		Total Stockholders’
	Shares	Amount		Capital		Stock		Deficit		Income (Loss)		Equity
December 31, 2022	15,603,594	$	1,560	$	149,148,248	$	—	$	(78,103,066)	$	(780,795)	$	70,265,947
Cumulative Effect Retained Earnings Adjustment (FMV Crypto)	—	—		—		—		7,632		—		7,632
Stock purchase plan & option exercise issuances	—	—		—		—		—		—		—
Stock issued for payment of services	28,810	3		74,997		—		—		—		75,000
Stock-based compensation	29,217	3		195,519		—		—		—		195,522
Shares withheld to cover statutory taxes	(11,386)	(1)		(30,870)		—		—		—		(30,871)
Other comprehensive income (loss)	—	—		—		—		—		126,180		126,180
Net loss	—	—		—		—		(2,806,339)		—		(2,806,339)
March 31, 2023	15,650,235	$	1,565	$	149,387,894	$	—	$	(80,901,773)	$	(654,615)	$	67,833,071


	Common Stock			Additional Paid-In		Treasury		Accumulated		Accumulated Other Comprehensive		Total Stockholders’
	Shares	Amount		Capital		Stock		Deficit		Income (Loss)		Equity
December 31, 2023	16,602,155	$	1,660	$	152,027,110	$	(1,019,997)	$	(85,444,794)	$	(250,591)	$	65,313,388
Stock purchase plan & option exercise issuances	—	—		—		—		—		—		—
Stock issued for payment of services	32,470	3		75,003		—		—		—		75,006
Stock-based compensation	50,021	5		354,184		—		—		—		354,189
Shares withheld to cover statutory taxes	(18,133)	(1)		(37,232)		—		—		—		(37,233)
Foreign currency translation adjustment	—	—		—		—		—		4,170		4,170
Other comprehensive income (loss)	—	—		—		—		—		58,177		58,177
Net loss	—	—		—		—		(3,265,850)		—		(3,265,850)
March 31, 2024	16,666,513	$	1,667	$	152,419,065	$	(1,019,997)	$	(88,710,644)	$	(188,244)	$	62,501,847

See accompanying notes to the consolidated financial statements.

IZEA Worldwide, Inc.

Unaudited Consolidated Statements of Cash Flows


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(3,265,850)	$	(2,806,339)
Adjustments to reconcile net loss to net cash used for operating activities:
Adjustment to fair market value of digital assets	(106,159)		—
Depreciation	26,557		18,786
Amortization	177,629		327,476
Deferred tax benefit	(18,782)		—
Stock-based compensation	354,189		195,524
Value of stock issued or to be issued for payment of services	75,006		75,000
Changes in operating assets and liabilities:
Accounts receivable	213,681		(257,740)
Prepaid expenses and other current assets	(243,987)		1,053,159
Accounts payable	(347,852)		499,710
Accrued expenses	(148,183)		(149,489)
Contract liabilities	(58,121)		(1,392,966)
Net cash used for operating activities	(3,341,872)		(2,436,879)
Cash flows from investing activities:
Acquisitions, net of cash acquired	—		—
Purchase of short term investments	(91,280,704)		(75,492,435)
Proceeds from the sale of short term investments	91,430,265		74,159,649
Purchase of long term investments	(716,343)		—
Proceeds from the sale of long term investments	5,626,429		5,560,083
Purchase of property and equipment, net	(14,846)		(47,429)
Capitalization of software development costs	(73,678)		(156,868)
Net cash provided by investing activities	4,971,123		4,023,000
Cash flows from financing activities:



Payments on shares withheld for statutory taxes	(37,233)		(30,871)
Net cash used in financing activities	(37,233)		(30,871)
Effect of exchange rate changes on cash	(3,414)		—
Net increase in cash and cash equivalents	1,592,018		1,555,250
Cash and cash equivalents, beginning of period	37,446,728		24,600,960
Cash and cash equivalents, end of period	$	39,035,332	$	26,156,210

Supplemental cash flow information:
Interest paid	$	2,001	$	1,399


Non-cash financing and investing activities:
Equipment acquired with financing arrangement	$	—	$	61,224
Fair Value of common stock issued for services	75,006		75,000

See accompanying notes to the consolidated financial statements.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

NOTE 1. COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Corporate Information and Nature of Business

IZEA Worldwide, Inc. (together with its wholly-owned subsidiaries, “IZEA” or the “Company”) is a Nevada corporation that was founded in February 2006 under the name PayPerPost, Inc. and became a public company in May 2011. In January 2015, IZEA purchased all of the outstanding shares of capital stock of Ebyline, Inc. (“Ebyline”). In March 2016, the Company formed IZEA Canada, Inc., a wholly-owned subsidiary, incorporated in Ontario, Canada, to operate as a sales and support office for IZEA’s Canadian customers. In July 2016, IZEA purchased all the outstanding shares of capital stock of ZenContent, Inc. (“ZenContent”) and in July 2018, a subsidiary of the Company merged with TapInfluence, Inc. (“TapInfluence”). The ZenContent legal entity was dissolved in December 2017, and Ebyline and TapInfluence were merged into IZEA and the legal entities were dissolved December 2019 and December 2020, respectively. IZEA purchased all of the outstanding shares of capital stock of Hoozu Holdings, Ltd in December 2023, and completed an asset acquisition of Zuberance, Inc. in December 2023.

The Company helps power the creator economy, by enabling individuals to monetize their content, creativity and influence through global brands and marketers. IZEA compensates these creators for producing unique content, such as long and short-form text, videos, photos, status updates, and illustrations for marketers or distributing such content on behalf of marketers through their websites, blogs, and social media channels.

The Company also provides value through managing custom content workflow, creator search and targeting, bidding, analytics, and payment processing. While the majority of the marketers engage the Company to perform these services (the “Managed Services”) on their behalf, they may also access IZEA’s marketplaces to engage creators for influencer marketing campaigns or to produce custom content on a self-service basis by licensing the Company’s technology.

Basis of Presentation

The accompanying consolidated balance sheet as of March 31, 2024, the consolidated statements of operations for the three months ended March 31, 2024 and 2023, the consolidated statements of comprehensive loss for the three months ended March 31, 2024 and 2023, the consolidated statements of stockholders' equity for the three months ended March 31, 2024 and 2023, and the consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 are unaudited but include all adjustments that are, in the opinion of management, necessary for a fair presentation of its financial position at such dates and its results of operations and cash flows for the periods then ended in conformity with generally accepted accounting principles in the United States ("GAAP"). The consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements at that date but, in accordance with the rules and regulations of the SEC, does not include all of the information and notes required by GAAP for complete financial statements. Operating results for the three months ended March 31, 2024 are not necessarily indicative of results that may be expected for the entire fiscal year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2023, included in the Company's Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Principles of Consolidation

The consolidated financial statements include the accounts of IZEA Worldwide, Inc. and its wholly-owned subsidiaries, subsequent to the subsidiaries’ individual acquisition, merger, or formation dates, as applicable. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less from the date of purchase to be cash equivalents. Deposits made to Company bank accounts are insured by the FDIC up to a maximum amount of $250,000. The CDIC insures deposits made to the Company’s bank accounts in Canada up to CAD 100,000. The Australian Financial Claims Scheme insures deposits made to the Company’s accounts in Australia up to AUD $250,000. Deposit balances exceeding this limit were approximately $38.3 million and $36.7 million as of March 31, 2024 and 2023, respectively.

Investment in Debt Securities

Our investments in debt securities are carried at either amortized cost or fair value. The cost basis is determined by the specific identification method. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading debt securities as well as realized gains and losses on available-for-sale debt securities are included in net income. Unrealized gains and losses, net of tax, on available-for-sale debt securities are included in our consolidated balance sheet as a component of accumulated other comprehensive income (loss).

Accounts Receivable and Concentration of Credit Risk

The Company’s accounts receivable balance consists of trade receivables, contract assets, and a reserve for doubtful accounts. Trade receivables are customer obligations due under normal trade terms. Contract assets represent amounts owed for work that has been performed but not yet billed. The Company had net trade receivables of $4.8 million that included $4.7 million of accounts receivable and contract assets of $76,070 on March 31, 2024. The Company had net trade receivables of $5.0 million that included $4.9 million of accounts receivable and contract assets of $83,697 at December 31, 2023.

Management determines the collectability of accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. An account is deemed delinquent when the customer has not paid an amount due by its associated due date. If a portion of the account balance is deemed uncollectible, the Company will either write off the amount owed or provide a reserve based on its best estimate of the uncollectible portion of the account. We assess collectability risk both generally and by specific aged invoices. Our loss history informs a general reserve percentage, which we apply to all invoices less than 90 days from the invoice due date, currently 1.1% of the outstanding balance. The general reserve, which we update periodically, recognizes that some invoices will likely become a collection risk. When an invoice ages 90 days past its due date, we consider each invoice to determine a reserve for collectability based on our prior history and recent communications with the customer, to determine a reserve amount. Generally, our reserve for such aged invoices will approach 100% of the invoice amount.

The Company had a reserve for doubtful accounts of $205,000 as of March 31, 2024, and $155,000 as of March 31, 2023. Management believes that this estimate is reasonable, but there can be no assurance that the estimate will not change due to a change in economic conditions or business conditions within the industry, the individual customers, or the Company. Any adjustments to this account are reflected in the consolidated statements of operations as a general and administrative expense. The Company did not recognize any bad debt expense in the three months ended March 31, 2024 and recognized $50,000 in the twelve months ended December 31, 2023.

Concentrations of credit risk with respect to accounts receivable have been typically limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs credit evaluations of its customers but generally does not require collateral to support accounts receivable. The Company had three customers that each accounted for more than 10% of total accounts receivable at March 31, 2024 and one customer that accounted for more than 10% of total accounts receivable at December 31, 2023. The Company had two customers each that accounted for more than 10% of its revenue during the three months ended March 31, 2024 and one customer that accounted for more than 10% of its revenue during the three months ended March 31, 2023.

Property and Equipment

Property and equipment are recorded at cost, or if acquired in a business combination, at the acquisition date fair value. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:


Computer Equipment			3 years
Office Equipment			3 - 10 years
Furniture and Fixtures			5 - 10 years

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

The carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the year of disposal, with resulting gains or losses included in general and administrative expense in the consolidated statements of operations.

Goodwill

Goodwill represents the excess of the consideration transferred for an acquired business over the fair value of the underlying identifiable net assets. The Company has goodwill in connection with its acquisitions of Ebyline, ZenContent, TapInfluence, and Hoozu. Goodwill is not amortized but instead, it is tested for impairment at least annually. In the event that management determines that the value of goodwill has become impaired, the Company will record a charge in an amount equal to the excess of the reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit during the fiscal quarter in which the determination is made.

Goodwill is required to be tested for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment level, which is referred to as a component. Management identifies its reporting units by assessing whether components (i) have discrete financial information available, (ii) engage in business activities, and (iii) whether a segment manager regularly reviews the component’s operating results. Prior to the acquisition of Hoozu on December 1, 2023, IZEA had one business operating segment with one reporting unit for purposes of goodwill impairment testing. Hoozu will be treated as a second, separate reporting unit for goodwill impairment testing.

The Company performs its annual impairment tests of goodwill as of October 1 each year, or more frequently if certain indicators are present. As described in Note 5, the assessments performed in 2022 and 2023 concluded that our reporting unit’s fair value exceeds their carrying value, including goodwill. The Company concluded in each year that no impairment existed.

Intangible Assets

The Company acquired the majority of its intangible assets through its acquisitions of Ebyline, ZenContent, TapInfluence, and Hoozu. The Company amortizes identifiable intangible assets over periods of 12 to 60 months. See Note 5 for further details.

The Company accounts for its digital assets held as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. The Company maintains ownership of and control over its digital assets and may use third-party custodial services to secure them. The digital assets are initially recorded at cost and are subsequently evaluated for any changes in the fair market value. The Company did not recognize any impairment of digital assets during the three months ended March 31, 2024, and 2023.

In December 2023, the FASB issued ASU No. 2023-08,

SEC Form 10-Q filed by IZEA Worldwide Inc.