PART I ~~- FINANCIAL INFORMATION~~

ITEM 1 -– FINANCIAL STATEMENTS

IZEA Worldwide, Inc.

Unaudited Consolidated Balance Sheets


	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	65,465,588	$	33,045,225
Accounts receivable, net	4,071,940		5,207,205
Prepaid expenses	380,407		199,294
Other current assets	48,340		74,467
Total current assets	69,966,275		38,526,191

Property and equipment, net	219,563		230,918
Goodwill	4,016,722		4,016,722
Intangible assets, net	288,889		505,556
Software development costs, net	1,356,308		1,472,684
Total assets	$	75,847,757	$	44,752,071

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,675,520	$	1,880,144
Accrued expenses	1,680,722		1,924,973
Contract liabilities	7,222,120		7,180,264
Current portion of notes payable	1,797,976		1,477,139
Total current liabilities	12,376,338		12,462,520

Finance obligation, less current portion	34,292		43,808
Notes payable, less current portion	138,900		459,383
Total liabilities	12,549,530		12,965,711

Commitments and Contingencies (Note 7)	0		0

Stockholders’ equity:
Preferred stock; $0.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding	0		0
Common stock; $0.0001 par value; 200,000,000 shares authorized; 59,123,449 and 50,050,167, respectively, issued and outstanding	5,912		5,005
Additional paid-in capital	135,919,529		102,416,131
Accumulated deficit	(72,627,214)		(70,634,776)
Total stockholders’ equity	63,298,227		31,786,360
Total liabilities and stockholders’ equity	$	75,847,757	$	44,752,071

See accompanying notes to the consolidated financial statements.

September 30,
2017 December 31,
2016
Assets
Current:
Cash and cash equivalents $ 3,447,998
$ 5,949,004
Accounts receivable, net 5,253,423
3,745,695
Prepaid expenses 414,619
322,377
Other current assets 27,606
11,940
Total current assets 9,143,646
10,029,016

Property and equipment, net 310,277
460,650
Goodwill 3,604,720
3,604,720
Intangible assets, net 914,816
1,662,536
Software development costs, net 1,004,905
1,103,959
Security deposits 157,427
161,736
Total assets $ 15,135,791
$ 17,022,617

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 1,680,422
$ 1,438,389
Accrued expenses 1,888,985
1,242,889
Unearned revenue 3,750,617
3,315,563
Line of credit 810,376
—
Current portion of deferred rent 41,886
34,290
Current portion of acquisition costs payable 619,834
1,252,885
Total current liabilities 8,792,120
7,284,016

Deferred rent, less current portion 29,187
62,547
Acquisition costs payable, less current portion 477,718
688,191
Warrant liability —
—
Total liabilities 9,299,025
8,034,754

Commitments and Contingencies —
—

Stockholders’ equity:

Preferred stock; $.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding —
—
Common stock, $.0001 par value; 200,000,000 shares authorized; 5,709,626 and 5,456,118, respectively, issued and outstanding 571
545
Additional paid-in capital 52,370,539
50,797,039
Accumulated deficit (46,534,344 ) (41,809,721 )
Total stockholders’ equity 5,836,766
8,987,863

Total liabilities and stockholders’ equity $ 15,135,791
$ 17,022,617

Table of Contents

IZEA Worldwide, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Loss


	Three Months Ended March 31,
		2021		2020
Revenue		$	5,375,632	$	4,763,668

Costs and expenses:
Cost of revenue (exclusive of amortization)		2,404,752		2,140,517
Sales and marketing		2,078,323		1,523,143
General and administrative		2,535,147		2,417,838
Impairment of goodwill		0		4,300,000
Depreciation and amortization		365,529		501,269
Total costs and expenses		7,383,751		10,882,767

Loss from operations		(2,008,119)		(6,119,099)

Other income (expense):
Interest expense		(13,793)		(6,618)
Other income (expense), net		29,474		(37,744)
Total other income (expense), net		15,681		(44,362)

Net loss		$	(1,992,438)	$	(6,163,461)

Weighted average common shares outstanding – basic and diluted		56,334,219		34,681,198
Basic and diluted loss per common share		$	(0.04)	$	(0.18)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

IZEA Worldwide, Inc.

Unaudited Consolidated Statements of ~~Operations~~Stockholders’ Equity

Three Months Ended March 31, 2020 and 2021

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016

Revenue $ 8,154,674
$ 7,496,972
$ 21,337,401
$ 19,876,611
Cost of sales 3,758,621
3,927,279
10,396,328
10,447,035
Gross profit 4,396,053
3,569,693
10,941,073
9,429,576

Operating expenses:

General and administrative 2,687,266
2,454,555
8,021,420
7,559,302
Sales and marketing 2,342,002
2,584,287
7,666,720
7,556,664
Total operating expenses 5,029,268
5,038,842
15,688,140
15,115,966

Loss from operations (633,215 ) (1,469,149 ) (4,747,067 ) (5,686,390 )

Other income (expense):

Interest expense (15,058 ) (25,511 ) (45,406 ) (58,261 )
Change in fair value of derivatives, net 45,160
(14,705 ) 36,122
14,568
Other income (expense), net 44,308
(2,238 ) 31,728
(485 )
Total other income (expense), net 74,410
(42,454 ) 22,444
(44,178 )

Net loss $ (558,805 ) $ (1,511,603 ) $ (4,724,623 ) $ (5,730,568 )

Weighted average common shares outstanding – basic and diluted 5,702,297
5,420,020
5,659,423
5,357,119
Basic and diluted loss per common share $ (0.10 ) $ (0.28 ) $ (0.83 ) $ (1.07 )


	Common Stock			Additional Paid-In		Accumulated		Total Stockholders’
	Shares	Amount		Capital		Deficit		Equity
Balance, December 31, 2019	34,634,172	$	3,464	$	74,099,328	$	(60,384,769)	$	13,718,023
Sale of securities	—	—		—		—		—
Stock purchase plan issuances	—	—		—		—		—
Stock issued for payment of services	97,655	10		31,240		—		31,250
Stock issuance costs	—	—		(2,326)		—		(2,326)
Stock-based compensation	41,224	3		129,568		—		129,571
Net loss	—	—		—		(6,163,461)		(6,163,461)
Balance, March 31, 2020	34,773,051	$	3,477	$	74,257,810	$	(66,548,230)	$	7,713,057


	Common Stock			Additional Paid-In		Accumulated		Total Stockholders’
	Shares	Amount		Capital		Deficit		Equity
Balance, December 31, 2020	50,050,167	$	5,005	$	102,416,131	$	(70,634,776)	$	31,786,360
Sale of securities	8,701,691	870		34,357,142		—		34,358,012
Stock purchase plan & option exercise issuances	1,510	0		2,144		—		2,144
Stock issued for payment of services	7,176	1		34,695		—		34,696
Stock issuance costs	—	—		(746,957)		—		(746,957)
Stock-based compensation	526,903	52		197,934		—		197,986
Shares withheld to cover statutory taxes	(163,998)	(16)		(341,560)		—		(341,576)
Net loss	—	—		—		(1,992,438)		(1,992,438)
Balance, March 31, 2021	59,123,449	$	5,912	$	135,919,529	$	(72,627,214)	$	63,298,227

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

IZEA Worldwide, Inc.

Unaudited Consolidated ~~Statement~~Statements of ~~Stockholders’ Equity~~Cash Flows


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(1,992,438)	$	(6,163,461)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	32,486		35,629
Amortization of software development costs and other intangible assets	333,043		465,640
Impairment of goodwill	0		4,300,000
Gain on disposal of equipment	(7,914)		0
Provision for losses on accounts receivable	0		33,305
Stock-based compensation	197,986		129,571
Fair value of stock issued for payment of services	34,696		31,250
Changes in operating assets and liabilities:
Accounts receivable	1,135,265		1,585,843
Prepaid expenses and other current assets	(154,986)		(15,135)
Security deposits	0		619
Accounts payable	(204,624)		(1,121,745)
Accrued expenses	(245,077)		215,375
Contract liabilities	41,856		(869,287)
Right-of-use asset and lease liability, net	0		24,024
Net cash used for operating activities	(829,707)		(1,348,372)
Cash flows from investing activities:
Purchase of equipment	(22,109)		0
Proceeds from sale of equipment	8,892		0
Software development costs	0		(51,004)
Net cash used for investing activities	(13,217)		(51,004)
Cash flows from financing activities:
Proceeds from sale of securities	34,358,012		0
Stock issuance costs	(746,957)		(2,326)
Proceeds from stock purchase plan and option exercise issuances	2,144		0
Payments on shares withheld for statutory taxes	(341,576)		0
Net proceeds from line of credit	0		1,162,924
Payments on finance obligation	(8,336)		(11,410)
Net cash provided by financing activities	33,263,287		1,149,188

Net increase (decrease) in cash and cash equivalents	32,420,363		(250,188)
Cash and cash equivalents, beginning of period	33,045,225		5,884,629
Cash and cash equivalents, end of period	$	65,465,588	$	5,634,441

Supplemental cash flow information:
Interest paid	$	4,792	$	1,368
Non-cash financing and investing activities:
Equipment acquired with financing arrangement	$	0	$	43,003
Fair value of common stock issued for future services	$	147,329	$	125,000

Common Stock
Additional
Paid-In
Accumulated
Total
Stockholders’
Shares Amount Capital Deficit Equity
Balance, December 31, 2016 5,456,118
$ 545
$ 50,797,039
$ (41,809,721 ) $ 8,987,863
Stock issued for payment of acquisition liability 200,542
20
928,021
—
928,041
Stock purchase plan issuances 9,998
1
16,231
—
16,232
Stock issued for payment of services 42,968
5
130,519
—
130,524
Stock issuance costs —
—
(10,913 ) —
(10,913 )
Stock-based compensation —
—
509,642
—
509,642
Net loss —
—
—
(4,724,623 ) (4,724,623 )
Balance, September 30, 2017 5,709,626
$ 571
$ 52,370,539
$ (46,534,344 ) $ 5,836,766

See accompanying notes to the unaudited consolidated financial statements.

~~IZEA, Inc.~~

~~Unaudited Consolidated Statements of Cash Flows~~

Nine Months Ended
September 30,
2017 2016
Cash flows from operating activities:
Net loss $ (4,724,623 ) $ (5,730,568 )
Adjustments to reconcile net loss to net cash used for operating activities:

Depreciation and amortization 163,597
190,338
Amortization of software development costs and other intangible assets 932,234
744,725
Gain on disposal of equipment (5,462 ) (484 )
Provision for losses on accounts receivable 44,827
155,000
Stock-based compensation 509,642
576,144
Fair value of stock and warrants issued or to be issued for payment of services 143,536
107,440
Increase (decrease) in fair value of contingent acquisition costs payable 62,000
—
Gain on settlement of acquisition costs payable (10,491 ) —
Change in fair value of derivatives, net (36,122 ) (14,568 )
Changes in operating assets and liabilities, net of effects of business acquired:

Accounts receivable (1,552,555 ) (472,612 )
Prepaid expenses and other current assets (84,798 ) (51,792 )
Accounts payable 242,033
263,706
Accrued expenses 679,104
(142,156 )
Unearned revenue 435,054
161,967
Deferred rent (25,764 ) (2,948 )
Net cash used for operating activities (3,227,788 ) (4,215,808 )

Cash flows from investing activities:
Purchase of equipment (7,762 ) (121,651 )
Increase in software development costs (85,460 ) (304,790 )
Acquisition, net of cash acquired —
(329,468 )
Security deposits 4,309
(42,637 )
Net cash used for investing activities (88,913 ) (798,546 )

Cash flows from financing activities:

Proceeds from line of credit 810,376
—
Proceeds from stock purchase plan issuances 16,232
34,587
Stock issuance costs (10,913 ) (22,493 )
Payments on capital lease obligations —
(7,291 )
Net cash from financing activities 815,695
4,803

Net decrease in cash and cash equivalents (2,501,006 ) (5,009,551 )
Cash and cash equivalents, beginning of year 5,949,004
11,608,452

Cash and cash equivalents, end of period $ 3,447,998
$ 6,598,901

Supplemental cash flow information:

Cash paid during the period for interest $ 29,700
$ 21,230

Non-cash financing and investing activities:

Acquisition costs paid through issuance of common stock $ 938,532
$ 1,448,832
Fair value of common stock issued for future services $ 23,110
$ 31,962

~~See accompanying notes to the unaudited consolidated financial statements.~~

IZEA Worldwide, Inc.

Notes to the Unaudited Consolidated Financial Statements

NOTE 1. COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Unaudited Interim Financial Information~~Nature of Business

IZEA Worldwide, Inc. (together with its wholly-owned subsidiaries, “we,” “us,” “our,” “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”). ZenContent, Ebyline, and TapInfluence were merged into IZEA and the legal entities were dissolved in December 2017, December 2019 and December 2020, respectively.

The Company creates and operates online marketplaces that connect marketers with content creators. The creators are compensated by the Company 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 personal websites, blogs, and social media channels. Marketers receive influential consumer content and engaging, shareable stories that drive awareness.

The Company’s primary technology platform, the IZEA Exchange (“IZEAx”), enables transactions to be completed at scale through the management of custom content workflow, creator search and targeting, bidding, analytics, and payment processing. IZEAx is designed to provide a unified ecosystem that enables the creation and publication of multiple types of custom content through a creator’s personal websites, blogs, or social media channels including Twitter, Facebook, Instagram, and YouTube, among others.

In 2020, the Company launched two new platforms, BrandGraph and Shake. BrandGraph is a social media intelligence platform that is heavily integrated with IZEAx and both platforms rely heavily on data from each other, but it is also available as a stand-alone platform. The platform maps and classifies the complex hierarchy of corporation-to-brand relationships by category and associates social content with brands through a proprietary content analysis engine. Shake is a new online marketplace where buyers can quickly and easily hire creators of all types for influencer marketing, photography, design, and other digital services. The Shake platform is aimed at digital creatives seeking freelance “gig” work. Creators list available “Shakes” on their accounts in the platform and marketers select and purchase creative packages from them through a streamlined chat experience, assisted by ShakeBot - a proprietary, artificial intelligence assistant.

Basis of Presentation

The accompanying consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2021, the consolidated statements of operations and comprehensive loss for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, the consolidated ~~statement~~statements of stockholders' equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and 2020, and the consolidated statements of cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 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, ~~2016~~2020 has been derived from the audited consolidated financial statements at that date but, in accordance with the rules and regulations of the ~~Securities and Exchange Commission ("SEC"),~~SEC, does not include all of the information and notes required by GAAP for complete financial statements. Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 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, ~~2016~~2020 included in the Company's Annual Report on Form 10-K filed with the SEC on March ~~28, 2017.~~30, 2021.

~~Nature of Business~~

IZEA, Inc. (together with its wholly-owned subsidiaries, "we," "us," "our," "IZEA" or the "Company") was founded in February 2006 under the name PayPerPost, Inc. and became a public company incorporated in the state of Nevada in May 2011. In January 2015, IZEA purchased all of the outstanding shares of capital stock of Ebyline, Inc. (“Ebyline”) and in July 2016, IZEA purchased all the outstanding shares of capital stock of ZenContent, Inc. ("ZenContent"). Both of these entities now operate as wholly-owned subsidiaries under IZEA, Inc. On March 9, 2016, the Company formed IZEA Canada, Inc., a wholly-owned subsidiary, incorporated in Ontario, Canada to operate as a sales office for IZEA's Canadian customers and partners. The Company is headquartered near Orlando, Florida with additional offices in Illinois, California and Canada and a sales presence in New York, Michigan and Massachusetts.

The Company operates online marketplaces that facilitate transactions between marketers and influential content creators. These creators are compensated by IZEA for producing and distributing unique content such as long-form text, videos, photos, illustrations, and status updates on behalf of marketers through websites, blogs and social media channels. Marketers receive influential consumer content and engaging, shareable stories that drive awareness.

~~The Company's primary technology platform, the IZEA Exchange (“IZEAx”), enables transactions to be completed at scale through the management of custom content development, creator search and targeting, bidding, analytics, and payment processing.~~ ~~IZEAx~~ is designed to provide a unified ecosystem that enables the creation of multiple types of content including blog posts, status updates, videos and photos through a wide variety of social channels including blogs, Twitter, Facebook, Instagram and Tumblr, among others.

~~In addition to~~ ~~IZEAx~~, the Company operates the Ebyline technology platform, which it acquired in January 2015. The Ebyline platform is a self-service content marketplace which was originally designed to replace editorial newsrooms located within newspapers with a “virtual newsroom” to handle their content workflow.

Principles of Consolidation

The ~~unaudited~~ consolidated financial statements include the accounts of IZEA Worldwide, Inc. and its wholly-owned subsidiaries, ~~Ebyline after its~~subsequent to the subsidiaries’ individual acquisition, ~~on January 31, 2015, ZenContent, Inc. after its acquisition on July 31, 2016, and IZEA Canada, Inc. after its~~merger or formation ~~in March 2016.~~dates, as applicable. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The ~~unaudited~~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

IZEA Worldwide, Inc.

Notes to the Unaudited Consolidated Financial Statements

date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of COVID-19, the extent to which it impacts worldwide macroeconomic conditions, the speed of the anticipated recovery, access to capital markets, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of March 31, 2021 and through the date of the filing of this Quarterly Report on Form 10-Q. The accounting matters assessed included, but were not limited to estimates related to revenue, the accounting for potential liabilities and accrued expenses, the assumptions utilized in valuing stock-based compensation issued for services, the realization of deferred tax assets, and assessments of impairment related to long-lived assets, intangible assets, and goodwill. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in additional material impacts to the Company’s consolidated financial statements ~~were prepared using~~in future reporting periods.

Despite the ~~acquisition method~~Company’s efforts, the ultimate impact of ~~accounting with IZEA considered~~COVID-19 depends on factors beyond the ~~accounting acquirer~~Company’s knowledge or control, including the duration and severity of ~~Ebyline~~the outbreak, as well as third-party actions taken to contain its spread and ~~ZenContent. Under~~mitigate its public health effects. As a result, the ~~acquisition method~~Company is unable to estimate the full extent to which COVID-19 will impact its financial results or liquidity. However, in consideration of ~~accounting,~~ the ~~purchase price is allocated to~~effect of COVID-19 on the ~~underlying tangible~~assumptions and ~~intangible assets acquired~~estimates used in the preparation of the financial statements, the Company identified the goodwill impairment disclosed in Note 3 as a material adverse effect on its results of operations and ~~liabilities assumed based~~financial position in the first quarter of fiscal 2020 that was caused by COVID-19’s effect on ~~their respective fair market values with any excess purchase price allocated to goodwill.~~economic conditions and its business operations.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with aan original maturity of three months or less from the date of purchase to be cash equivalents. Deposits in our banks are insured by the FDIC up to a maximum amount of $250,000. Deposit balances exceeding this limit were approximately $62.7 million and $31.4 million as of March 31, 2021 and December 31, 2020, respectively.

Accounts Receivable and Concentration of Credit Risk

~~Accounts~~The Company’s accounts receivable balance consists of trade receivables, unbilled receivables, and a reserve for doubtful accounts. Trade receivables are customer obligations due under normal trade terms. ~~Uncollectability~~Unbilled receivables represent amounts owed for work that has been performed, but not yet billed. The Company had trade receivables of $4,019,050 and unbilled receivables of $52,890 at March 31, 2021. The Company had trade receivables of $5,148,213 and unbilled receivables of $58,992 at December 31, 2020. Management considers an account to be delinquent when the customer has not paid an amount due by its associated due date. Uncollectibility of accounts receivable is not significant since most customers are bound by contract and are required to fund the Company for all the costs of an “opportunity,” defined as an order created by a marketer for a creator to develop or share content on behalf of a marketer. 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. Management determines the ~~collectability~~collectibility of accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. The Company had a reserve ~~of $220,000 and $237,000~~ for doubtful accounts of $155,000 as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016, respectively.~~2020. Management believes that this estimate is reasonable, but there can be no assurance that the estimate will not change as a result of 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 and comprehensive loss as a general and administrative expense. Bad debt expense was less than 1% of revenue for each of the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~.2020.

Concentrations of credit risk with respect to accounts receivable ~~are~~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. However, with the Company’s addition of SaaS customers, it has increased credit exposure on certain customers who carry significant credit balances related to their marketplace spend. The Company ~~also~~ 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 ~~one~~no customer ~~that accounted for 14% of total accounts receivable at September 30, 2017 and no customers~~ that accounted for more than 10% of total accounts receivable at March 31, 2021 and December 31, ~~2016.~~2020. The Company had ~~one~~no customer ~~that accounted for 11% of its revenue during the three months ended September 30, 2017 and no customers~~ that accounted for more than 10% of its revenue during the three months ended ~~September 30, 2016. The Company had~~ no ~~customers that accounted for more than 10% of its revenue during~~March 31, 2021 and 2020.

IZEA Worldwide, Inc.

Notes to the ~~nine months~~ ~~ended September 30, 2017 and one customer that accounted for 11% of its revenue during the~~ ~~nine months~~ ~~ended September 30, 2016.~~Unaudited Consolidated Financial Statements

Property and Equipment

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



Computer Equipment		3 years
~~Software Costs~~		~~3 - 5 years~~
Office Equipment	3 - 10 years
Furniture and Fixtures		5 - 10 years

Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements. ~~Property and equipment under capital leases are depreciated over their estimated useful lives.~~ Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for betterments and major improvements are capitalized and depreciated over the remaining useful lives of the assets. 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. Depreciation expense on property and equipment recorded in general and administrative~~ expense in the ~~accompanying unaudited~~ consolidated statements of operations ~~was $50,168~~ and $65,106 for the three months ended September 30, 2017 and 2016, respectively. Depreciation expense on property and equipment recorded in general and administrative expense in the accompanying unaudited consolidated statements of operations was $163,597 and $190,338 for the nine months ended September 30, 2017 and 2016, respectively. Property and equipment is recorded net of accumulated depreciation and amortization amounts of $763,632 and $616,056 as of September 30, 2017 and December 31, 2016, respectively.

~~Intangible Assets~~

The Company acquired the majority of its intangible assets through its acquisition of Ebyline on January 30, 2015 and its acquisition of ZenContent on July 31, 2016. The Company is amortizing the identifiable intangible assets over a period of 12 to 60 months. See Note 3 for further details.

Management reviews long-lived assets, including property and equipment, software development costs and other intangible assets, for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared with the asset's carrying amount to determine if there has been an impairment, which is calculated as the difference between the fair value of an asset and its carrying value. Estimates of future undiscounted cash flows are based on expected growth rates for the business, anticipated future economic conditions and estimates of residual values. Fair values take into consideration management estimates of risk-adjusted discount rates, which are believed to be consistent with assumptions that marketplace participants would use in their

~~estimates of fair value. For the three and nine months ended September 30, 2017 and 2016, there~~comprehensive loss. There were no0 impairment charges associated with the ~~Company's~~Company’s long-lived ~~assets.~~tangible assets during the three months ended March 31, 2021 and 2020.

~~Software Development Costs~~

~~In accordance with Accounting Standards Codification ("ASC") 350-40,~~ ~~Internal Use Software~~ ~~and ASC 985-730,~~ ~~Computer Software Research and Development~~, research phase costs related to internal use software should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized. The Company amortizes software development costs equally over 5 years upon initial launch of the software or additional features. See Note 4 for further details.

Goodwill

Goodwill represents the excess of the ~~purchase~~ consideration oftransferred for an acquired business over the fair value of the underlying identifiable net ~~tangible and intangible~~ assets. The Company has goodwill in connection with its ~~acquisition~~acquisitions of Ebyline, ZenContent and ~~ZenContent.~~TapInfluence. 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 for the amount of impairment during the fiscal quarter in which the determination is made.

The Company performs its annual impairment tests of goodwill ~~during the fourth quarter~~as of October 1 of each year, or more frequently, if certain indicators are present. 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~~component’s operating results. Net assets and goodwill of acquired businesses are allocated to the reporting unit associated with the acquired business based on the anticipated organizational structure of the combined entities. If two or more components are deemed economically similar, those components are aggregated into one reporting unit when performing the annual goodwill impairment review. The Company ~~has determined that prior to and after~~had 1 reporting unit as of March 31, 2021.

Intangible Assets

The Company acquired the ~~acquisition~~majority of its intangible assets through its acquisitions of Ebyline, ZenContent, and ~~ZenContent, it had,~~TapInfluence. The Company is amortizing the identifiable intangible assets over periods of 12 to 60 months. See Note 3 for further details.

Management reviews long-lived assets, including property and ~~continues~~equipment, software development costs and other intangible assets, for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared with the asset's carrying amount to determine if there has been an impairment, which is calculated as the difference between the fair value of the asset and the carrying value. Estimates of future undiscounted cash flows are based on expected growth rates for the business, anticipated future economic conditions and estimates of residual values. Fair values take into consideration management estimates of risk-adjusted discount rates, which are believed to be consistent with assumptions that marketplace participants would use in their estimates of fair value. There were 0 impairment charges associated with the Company’s acquired intangible assets during the three months ended March 31, 2021 and 2020.

Software Development Costs

In accordance with Accounting Standards Codification (“ASC”) 350-40, Internal Use Software, the Company capitalizes certain internal use software development costs associated with creating and enhancing internally developed software related to its platforms. Software development activities generally consist of three stages (i) the research and planning stage, (ii) the application and development stage, and (iii) the post-implementation stage. Costs incurred in the research and planning stage and in the post-implementation stage of software development, or other maintenance and development expenses that do not meet the qualification for capitalization, are expensed as incurred. Costs incurred in the application and

IZEA Worldwide, Inc.

Notes to the Unaudited Consolidated Financial Statements

infrastructure development stage, including significant enhancements and upgrades, are capitalized. These costs include personnel and related employee benefits expenses for employees or consultants who are directly associated with and who devote time to software projects, and external direct costs of materials obtained in developing the software. The Company also capitalizes certain costs associated with cloud computing arrangements ("CCAs"). Software development, acquired technology, and CCA costs are amortized on a straight-line basis over the estimated useful life of five years upon initial release of the software or additional features. The Company reviews the software development costs for impairment when circumstances indicate that their carrying amounts may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess of carrying value over the fair value in its consolidated statements of operations and comprehensive loss. See Note 4 for further details.

Leases

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which established a right-of-use model that requires a lessee to record a right-of-use asset and a right-of-use liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company does not record leases on the balance sheet that have ~~one reporting unit.~~a lease term of 12 months or less at the commencement date.

Revenue Recognition

~~In January 2017, the~~The Company ~~revised the way it categorizes~~generates revenue from four primary sources: (1) revenue from its revenue streams to more closely align the revenue based on margin profiles and how it currently analyzes the business. The revised categories are as follows: Managed Services, Content Workflow, and Service Fee Revenue. Managed Services ismanaged services when a marketer ~~typically~~(typically a brand, agency or ~~partner, contracts IZEA~~partner) pays the Company to provide custom content, influencer marketing, amplification or ~~amplification services. Content Workflow is~~other campaign management services (“Managed Services”); (2) revenue from fees charged to software customers on their marketplace spend within the Company's IZEAx and Shake platforms (“Marketplace Spend Fees”); (3) revenue from license and subscription fees charged to access the IZEAx and BrandGraph platforms (“License Fees”); and (4) revenue derived from ~~the self-service use of the Ebyline platform by news agencies to handle their content workflow from initial content request to payment of content received. Service Fee Revenue is generated when~~other fees ~~are charged to customers primarily related to subscription~~such as inactivity fees, ~~for different levels of service within a platform, licensing fees for white-label use of~~ ~~IZEAx~~, early cash-out fees, ~~if a creator wishes~~and other miscellaneous fees charged to ~~take proceeds earned for services from their account when~~users of the ~~account balance is below certain minimum balance thresholds and inactivity fees for dormant accounts.~~ Company's platforms (“Other Fees”).

The Company recognizes revenue ~~at various times depending~~in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, revenue is recognized based on a five-step model as follows: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) performance obligations are satisfied. The core principle of ASC 606 is that revenue is recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are distinct performance obligations. The Company also determines whether it acts as an agent or a principal for each identified performance obligation. The determination of whether the Company acts as the principal or the agent is highly subjective and requires the Company to evaluate a number of indicators individually and as a whole in order to make its determination. For transactions in which the Company acts as a principal, revenue is reported on a gross basis as the amount paid by the marketer for the purchase of content or sponsorship, promotion and other related services and the Company records the amounts it pays to third-party creators as cost of revenue. For transactions in which the Company acts as an agent, revenue is reported on a net basis as the amount the Company charged to the self-service marketer using the Company’s platforms, less the amounts paid to the third-party creators providing the service.

The Company maintains separate arrangements with each marketer and content creator either in the form of a master agreement or terms of service, which specify the terms of the relationship and access to its platforms, or by statement of work, which specifies the price and the services to be performed, along with other terms. The transaction price is determined based on the ~~service that~~fixed fee stated in the statement of work and does not contain variable consideration. Marketers who contract with the Company to manage their advertising campaigns or custom content requests may prepay for services or request credit terms. Payment terms are typically 30 days from the invoice date. The agreement typically provides for either a non-refundable deposit, or a cancellation fee if the agreement is ~~being performed.~~canceled by the customer prior to completion of services. Billings in advance of completed services are recorded as a contract liability until earned. The Company assesses collectibility based on a number of factors, including the creditworthiness of the customer and payment and transaction history.

IZEA Worldwide, Inc.

Notes to the Unaudited Consolidated Financial Statements

Managed Services Revenue

For Managed Services Revenue, the Company enters into an agreement to provide services that may ~~require~~include multiple ~~deliverables~~distinct performance obligations in the form of: ~~(a) sponsored social items, such as~~(i) an integrated marketing campaign to provide influencer marketing services, which may include the provision of blogs, tweets, photos or videos shared through social network offerings ~~that provide awareness or advertising buzz regarding the marketer's brand; (b)~~and content promotion, such as click-through advertisements appearing in websites and social media channels; and ~~(c) original~~(ii) custom content items, such as a research or news article, informational material or ~~videos that a publisher~~videos. Marketers typically purchase influencer marketing services for the purpose of providing public awareness or ~~other marketer can~~advertising buzz regarding the marketer’s brand and they purchase custom content for internal and external use. The Company may provide one type or a combination of all types of these ~~deliverables including a management fee~~performance obligations on a statement of work for a lump sum fee. The Company allocates revenue to each performance obligation in the contract at inception based on its relative standalone selling price. These ~~deliverables~~performance obligations are to be provided over a stated period that ~~may range~~generally ranges from one day to one year. ~~Each item is considered delivered once the custom content has been delivered to the customer or once the content is distributed live through a public or social network.~~ Revenue is accounted for ~~separately on each of~~when the ~~deliverables~~performance obligation has been satisfied depending on the type of service provided. The Company ~~recognizes revenue related~~views its obligation to deliver influencer marketing services, ~~after~~including management services, as a ~~marketer's sponsored~~single performance obligation that is satisfied over time as the customer receives the benefits from the services. Revenue is recognized using an input method of costs incurred compared to total expected costs to measure the progress towards satisfying the overall performance obligation of the marketing campaign. The delivery of custom content represents a distinct performance obligation that is ~~posted through~~ ~~IZEAx~~ ~~and shared through a creator's social network for a requisite period of time. The requisite period ranges from~~ ~~3 days~~ ~~for a tweet to~~ ~~30 days~~ ~~for a blog, video or other form of content. Management fees from advertising campaigns managed by~~satisfied over time as the Company ~~are recognized ratably over~~has no alternative for the ~~term of the campaign which may range from a few days to one year. Revenue related to~~ custom content, ~~provided~~and the Company has an enforceable right to payment for performance completed to date under the contracts. The Company considers custom content to be a ~~marketer~~series of distinct services that are substantially the same and that have the same pattern of transfer to the customer, and revenue is recognized over time using an output method based on when ~~the~~each individual piece of content is delivered to ~~and accepted by~~ the customer. ~~Payment terms are typically 30 days~~Based on the Company’s evaluations, revenue from ~~the invoice date. If~~Managed Services is reported on a gross basis because the Company ~~is unable~~has the primary obligation to fulfill the performance obligations and it creates, reviews, and controls the services. The Company takes on the risk of payment to any third-party creators, and it establishes the contract price directly with its customers based on the services requested in the statement of work.

Marketplace Spend Fees Revenue

For Marketplace Spend Fees Revenue, the self-service customers instruct creators found through the Company’s IZEAx and Shake platforms to provide ~~a portion of the services, it may agree with the customer to provide a different type of service~~ and/or ~~to provide a credit~~distribute custom content for ~~the value of those services, which may be applied to the existing order or used for future services.~~an agreed upon transaction price. The ~~statement of work typically provides for a cancellation fee if the agreement is canceled by the customer prior to completion of services.~~

~~For Content Workflow services, the self-service marketer contracts the creators directly to provide custom content. The Ebyline platform controls~~Company’s platforms control the contracting, description of services, acceptance of and payment for the requested content. This service is used primarily by news agencies or marketers to control the outsourcing of their content and advertising needs. The Company charges the self-service customer the transaction price plus a fee based on the contract. Revenue is recognized when the transaction is completed by the creator and accepted by the ~~marketer.~~marketer or verified as posted by the system. Based on the Company’s evaluations, this revenue is reported on a net basis since the Company is acting as an agent through its platform for the third-party creator to provide the services or content directly to the self-service customer or to post approved content through one or more social media platforms.

~~Service Fee~~License Fees Revenue

License Fees Revenue is ~~recognized immediately when~~generated through the granting of limited, non-exclusive, non-transferable licenses to customers for the use of the IZEAx, BrandGraph, and until February 2020, the TapInfluence technology platforms for an agreed-upon subscription period. Customers may also separately subscribe to the IZEAx Discoveryservice ~~is performed or at~~within the ~~time an account becomes dormant or is cashed out. Service Fee Revenue~~ IZEAx platform. Customers license the platforms to manage their own influencer marketing campaigns. Fees for subscription or licensing ~~fees is~~services are recognized straight-line over the term of the service.

~~Marketers who use~~Other Fees Revenue

Other Fees Revenue is generated when fees are charged to the Company’s platform users primarily related to monthly plan fees, inactivity fees, and early cash-out fees. Plan fees are recognized within the month they relate to, inactivity fees are recognized at a point in time when the account is deemed inactive, and early cash-out fees are recognized when a cash-out is either below certain minimum thresholds or when accelerated payout timing is requested.

The Company does not typically engage in contracts that are longer than one year. Therefore, the Company does not capitalize costs to ~~manage their social advertising campaigns or custom content requests may prepay for services or request credit terms. Payments received or billings in advance of completed services are recorded~~obtain its customer contracts as ~~unearned revenue until earned as described above.~~

All of the Company's revenues are generated through the rendering of services. The Company recognizes revenue under the general guidelines of Staff Accounting Bulletin Topic 13 A.1, which states that revenue willthese amounts generally would be recognized ~~when it is realized or realizable~~over a period of less than one year and ~~earned. The Company considers its revenue as generally realized or realizable and earned once (i) persuasive evidence of an arrangement exists, (ii) services have been rendered, (iii) the price~~are not material.

IZEA Worldwide, Inc.

Notes to the marketer or customer is fixed (required to be paid at a set amount that is not subject to refund or adjustment) and determinable, and (iv) collectability is reasonably assured. The Company records revenue on the gross amount earned since it generally is the primary obligor in the arrangement, takes on credit risk, establishes the pricing and determines the service specifications.Unaudited Consolidated Financial Statements

Advertising Costs

Advertising costs are charged to expense as they are incurred, including payments to content creators to promote the Company. Advertising costs charged to operations for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 were approximately ~~$79,000~~$442,000 and ~~$74,000, respectively. Advertising costs charged to operations for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~were approximately~~ ~~$248,000~~ ~~and~~ ~~$291,000~~,$168,000, respectively. Advertising costs are included in sales and marketing expense in the accompanying ~~unaudited~~ consolidated statements of ~~operations.~~operations and comprehensive loss.

~~Deferred Rent~~

The Company’s operating leases for its office facilities contain rent abatements and predetermined fixed increases of the base rental rate during the lease terms. The Company accounts for rental expense on a straight-line basis over the lease terms. The Company records the difference between the straight-line expense and the actual amounts paid under the lease as deferred rent in the accompanying unaudited consolidated balance sheets.

Income Taxes

The Company has not recorded federal income tax expense due to ~~the generation~~its history of net operating losses. Deferred income taxes are accounted for using the balance sheet approach, which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. The Company incurs minimal state franchise tax in four states, which is included in general and administrative ~~expenses~~expense in the consolidated statements of ~~operations.~~operations and comprehensive loss.

The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s tax years subject to examination by the Internal Revenue Service are ~~2013, 2014~~2017 through 2020.

In March 2020, the CARES Act was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and ~~2015.~~

~~Derivative Financial Instruments~~

~~Derivative financial instruments~~technical corrections to tax depreciation methods for qualified improvement property. It also appropriated funds for the PPP loans that are ~~defined~~forgivable in certain situations to promote continued employment, as financial instruments or other contracts that contain a notional amount and one or more underlying factors (e.g., interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recordedwell as ~~liabilities or assets.~~Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19. The Company ~~accounts for derivative instruments~~is currently seeking forgiveness of the full amount of its PPP loan which, if approved, would result in ~~accordance with ASC 815,~~ ~~Derivatives and Hedging~~ (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under

~~ASC 815 to be accounted for separately from the host contract, and recorded~~non-taxable income on the ~~balance sheet at fair value. The fair value~~forgiveness of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. The Company had 5,502 warrant shares issued in its September 2012 public offering that required classification as a liability due to certain registration rights and listing requirements in the agreements. These warrants expired in September 2017 with no value. The fair value and outstanding derivative warrant liability related to these warrant shares as of December 31, 2016 was $0. During the three and nine months ended September 30, 2016, the Company recorded a gain of $1,231 and $4,960, respectively, due to the change in the fair value of its warrant liability.debt.

Fair Value of Financial Instruments

The Company’s financial instruments are recorded at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. There are three levels of inputs that may be used to measure fair value:

•Level 1 – Valuation based on quoted market prices in active markets for identical assets and liabilities.

•Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.

•Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The Company does not have any Level 1, 2 or 23 financial assets or liabilities. The Company’s Level 3 financial liabilities measured at fair value consisted of its acquisition cost liability (see Note 2) as of September 30, 2017 and December 31, 2016, and a warrant liability as of December 31, 2016. Significant unobservable inputs used in the fair value measurement of the warrants include the estimated term and risk-adjusted interest rates. In developing its credit risk assumption used in the fair value of warrants, the Company considered publicly available bond rates and US Treasury Yields. However, since the Company does not have a formal credit-standing, management estimated its standing among various reported levels and grades for use in the model. During all periods, management estimated that the Company's standing was in the speculative to high-risk grades (BB- to CCC in the Standard and Poor's Rating). Significant increases or decreases in the estimated remaining period to exercise or the risk-adjusted interest rate could result in a significantly lower or higher fair value measurement.

~~The~~ respective carrying ~~value~~values of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable, ~~unearned revenue,~~contract liabilities, and accrued expenses. Unless otherwise disclosed, the fair ~~value~~values of the Company’s ~~notes payable~~long-term debt obligations approximate their carrying value based upon current rates available to the Company.

Stock-Based Compensation

Stock-based compensation cost related to stock options granted under the 2011 Equity Incentive Plan, as amended and restated, the 2011 B Equity Incentive Plan (together, the ~~"2011~~“2011 Equity Incentive ~~Plans"~~Plans”) (see Note 6)8) is measured at the grant date, based on the fair value of the award, and is recognized as ~~a straight-lined~~ expense over the employee’s requisite service ~~period.~~period on a straight-line basis. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below. The Company ~~estimates~~uses the ~~fair value~~simplified method to estimate the expected term of ~~its common~~employee stock ~~using~~options, because it does not believe historical exercise data will provide a reasonable basis

IZEA Worldwide, Inc.

Notes to the Unaudited Consolidated Financial Statements

for estimating the expected term for the current share options granted. The simplified method assumes that employees will exercise share options evenly between the period when the share options are vested and ending on the date when the options would expire. The Company uses the closing stock price of its common stock on the date of the ~~grant.~~grant as the associated fair value of its common stock. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of ~~comparable peer companies that are publicly traded and have had a longer trading history than itself.~~its stock. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

The Company used the following assumptions for stock options granted under the 2011 Equity Incentive Plans during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~:2020:


	Three Months Ended
2011 Equity Incentive Plans Assumptions		March 31, 2021	March 31, 2020
Expected term		6 years	6 years
Weighted average volatility		117.97%	101.92%
Weighted average risk-free interest rate		0.70%	1.71%
Expected dividends		0	0
Weighted average expected forfeiture rate		19.64%	15.32%

Three Months Ended Nine Months Ended
2011 Equity Incentive Plans Assumptions September 30,
2017 September 30,
2016 September 30,
2017 September 30,
2016
Expected term 6 years 6 years 6 years 6 years
Weighted average volatility 43.08% 45.02% 43.49% 50.01%
Weighted average risk free interest rate 1.91% 1.23% 1.98% 1.42%
Expected dividends — — — —

~~Effective January 1, 2017, the Company considered its accounting for stock options pursuant to Accounting Standards Update ("ASU") No. 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~. This ASU is intended to reduce the cost and complexity of accounting for employee share-based payments primarily surrounding the accounting for income taxes upon vesting or exercise of share-based payments and accounting for forfeitures, as well as related financial statement classifications. Although the new standard allows for the non-use of forfeiture estimates, the Company elected to continue the use of estimated forfeitures when accounting for stock-based compensation, because it has an established history of forfeitures for non-vested options. There was no effect on the Company's financial statements as a result of the adoption of this standard.

The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and a revised amount of unamortized compensation expense to be recognized in future periods. ~~Average expected forfeiture rates were 6.79% and 7.87% during the three months ended September 30, 2017 and 2016, respectively. Average expected forfeiture rates were~~ ~~9.01%~~ ~~and 10.74% during the nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively.~~

~~Non-Employee Stock-Based Payments~~

The ~~Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions~~Company may issue shares of ~~ASC 505,~~ ~~“Equity-Based Payments to Non-Employees.”~~restricted stock or restricted stock units which vest over future periods. The ~~measurement date for~~value of shares is recorded as the fair value of the ~~equity instruments issued is determined at~~stock or units upon the ~~earlier of (i) the~~issuance date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. The fair value of equity instruments issued to consultants that vest immediatelyand is expensed ~~when issued. The fair value of equity instruments issued to consultants that have future vesting and are subject to forfeiture if performance does not occur is recognized as expense~~on a straight-line basis over the vesting period. ~~Fair values~~See Note 8 for ~~the unvested portion of issued instruments are adjusted each reporting period. The change in fair value is recorded in the accompanying consolidated statements of operations. Stock-based payments~~additional information related to ~~non-employees is accounted for based on the fair value of the related stock or the fair value of the services, whichever is more readily determinable.~~these shares.

~~Segment Information~~

The Company does not identify separate operating segments for management reporting purposes. The results of consolidated operations are the basis on which management evaluates operations and makes business decisions.

~~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.

~~Recent~~Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Income Taxes:In ~~May 2014,~~December 2019, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~ 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("“ASU ~~2014-09"~~2019-12”), which ~~supersedes nearly all~~is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing ~~revenue recognition~~ guidance ~~under GAAP.~~to improve consistent application. The ~~core principle~~Company adopted ASU 2019-12 on January 1, 2021 with no material impact on its current reporting in the Company’s consolidated financial statements.

Investments - Equity Securities: In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, 323 and Topic 815 (“ASU 2020-01”) to clarify the scope and interaction between these standards for equity securities, equity method and certain derivatives. The Company adopted ASU No. 2020-01 on January 1, 2021 with no material impact on its current reporting in the Company’s consolidated financial statements.

Reference Rate Reform: In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU ~~2014-09 is~~2020-04”), and further issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), in January 2021 to ~~recognize revenues when promised goods~~provide optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 and ASU 2021-01 also provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. Additionally, they only apply to contracts and hedging relationships that reference LIBOR or ~~services are transferred to customers in an amount that reflects the consideration to which an entity expects~~another reference rate expected to be ~~entitled for those goods or services.~~discontinued due to reference rate reform. ASU ~~2014-09 defines a five step process to achieve this core principle~~2020-04 is effective immediately and ~~in doing so, more judgment and estimates~~ may be ~~required within~~applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. As of March 31,

IZEA Worldwide, Inc.

Notes to the ~~revenue recognition process than are required under~~Unaudited Consolidated Financial Statements

2021, the Company does not have any contracts that reference LIBOR rates and this guidance has not had a material impact on its financial statements.

Codification Improvements: In October 2020, the FASB issued ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs ("ASU 2020-08"), and ASU No. 2020-10, Codification Improvements ("ASU 2020-10"). ASU 2020-08 and ASU 2020-10 provide changes to clarify or improve existing ~~GAAP.~~guidance. The ~~standard is effective for annual~~Company adopted ASU No. 2020-08 on January 1, 2021 with no material impact on its current reporting ~~periods beginning after December 15, 2017, and interim periods therein, using either of~~in the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

Credit Losses: In ~~March~~June 2016, the FASB issued ASU No. ~~2016-08,~~ ~~Revenue from Contracts~~2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology under current GAAP with ~~Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~ ("a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU ~~2016-08"). The amendments in ASU 2016-08 are intended to improve the understanding~~2016-13 requires use of ~~the implementation guidance on principal versus agent considerations by amending certain existing illustrative examples~~a forward-looking expected credit loss model for accounts receivables, loans, and ~~adding additional illustrative examples to assist in the application of the guidance. The effective date for ASU 2016-08 is the same as for ASU 2014-09 stated above.~~

other financial instruments. In ~~April 2016,~~May 2019, the FASB issued ASU ~~No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~ ("2019-05, which provides transition relief for entities adopting ASU ~~2016-10").~~2016-13. For entities that have adopted ASU ~~2016-10 is intended to reduce~~2016-13, the ~~cost and complexity of applying~~amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ~~guidance~~ASU in any interim period after its issuance if the ~~FASB's new revenue standard on identifying performance obligations, and is also intended to improve~~entity has adopted ASU 2016-13. For all other entities, the ~~understanding of the licensing implementation guidance. The~~ effective date ~~for ASU 2016-10 is~~will be the same as ~~for ASU 2014-09 stated above.~~

~~In May 2016,~~ the ~~FASB issued ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~ ~~("ASU 2016-12"). ASU 2016-12 does not change the core principles~~effective date of ASU ~~2014-09 but is intended to improve the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in this~~2016-13. ASU provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The effective date for ASU 2016-10 is the same as for ASU 2014-09 stated above.

These new revenue recognition standards will be effective for the Company on January 1, 2018. The Company is continuing to work towards establishing policies, updating its processes and implementing necessary changes to be able to comply with the new requirements. The Company is reviewing each of the five steps in the new revenue recognition model, which are as follows: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) performance obligations are satisfied. The Company is currently focusing its assessment on revenue related to Managed Services or Content Workflow, which accounts for over 99% of the Company's revenue. The Company anticipates completing its assessment by December 31, 2017 and expects that any required change in accounting will be reflected retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). While the Company is continuing to assess all potential impacts of the standard, it currently believes the most significant impact relates to additional disclosures related to qualitative and quantitative information concerning the nature, amount, timing, and any uncertainty of revenue and cash flows from contracts with customers.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard2016-13 is effective for fiscal years beginning after December 15, ~~2018,~~2022, including interim periods within those fiscal years. ~~A modified retrospective transition approach~~The Company is ~~required~~currently evaluating the expected impact of adopting ASU 2016-13 on its consolidated financial statements and disclosures.

Convertible Instruments:In August 2020, the FASB issued ASU No. 2020-06, Accounting for ~~lessees~~Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the guidance on the issuer’s accounting for ~~capital~~convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and ~~operating leases existing at, or entered into after,~~(2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the ~~beginning~~scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the ~~earliest comparative period presented in~~if-converted method for calculating diluted earnings per share and the ~~financial statements,~~treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for the Company as a smaller reporting company for fiscal years beginning after December 15, 2023, with ~~certain practical expedients available.~~early adoption permitted. The Company is currently evaluating the impact that ~~this~~ ASU 2020-06 will have on its consolidated financial ~~statements.~~statements and disclosures.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts~~

NOTE 2. PROPERTY AND EQUIPMENT

Property and ~~Cash Payments.~~ The new standard addresses eight specific cash flow issues and provides guidance for classification. The new standard is effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact that this ASU will have on its consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment.~~ ~~To address concerns over the cost and complexity~~equipment consist of the ~~two-step goodwill impairment test,~~following:


	March 31, 2021		December 31, 2020
Furniture and fixtures	$	221,733	$	221,733
Office equipment	67,833		67,833
Computer equipment	512,558		513,344
Total	802,124		802,910
Less accumulated depreciation and amortization	(582,561)		(571,992)
Property and equipment, net	$	219,563	$	230,918

Depreciation and amortization expense on property and equipment recorded in depreciation and amortization expense in the ~~new standard removes the requirement~~consolidated statements of operations and comprehensive loss was $32,486 and $35,629 for the ~~second step of the goodwill impairment test for certain entities. An entity may apply a one-step quantitative test~~three months ended March 31, 2021 and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that this ASU will have on its consolidated financial statements.2020, respectively.

IZEA Worldwide, Inc.

Notes to the ~~Unaudited~~ Consolidated Financial Statements

~~NOTE 2. BUSINESS ACQUISITIONS~~

~~EBYLINE, INC.~~

On January 30, 2015, the Company purchased all of the outstanding shares of capital stock of Ebyline pursuant to the terms of a Stock Purchase Agreement, dated as of January 27, 2015, by and among IZEA, Ebyline and the stockholders of Ebyline (the “Ebyline Stock Purchase Agreement”) for a maximum purchase price of $8,850,000. The Ebyline Stock Purchase Agreement was made up of a combination of guaranteed payments and contingent performance payments to be paid if Ebyline met certain revenue targets in the three years following the closing. None of these targets were met in the first two years following the closing and it is not expected that they will be met in the third year. Therefore, the total consideration to be paid for the Ebyline acquisition is expected to be $3,327,064.

~~Purchase Price and Acquisition Costs Payable~~

Estimated Gross Purchase Consideration Initial Present and Fair Value Remaining Present and Fair Value Remaining Present and Fair Value
1/30/2015 1/30/2015 12/31/2016 9/30/2017
Cash paid at closing (a) $ 1,200,000
$ 1,200,000
$ —
$ —
Guaranteed purchase price (a) 2,127,064
1,982,639
934,728
—
Contingent performance payments (b) 2,210,000
1,834,300
—
—
Acquisition costs payable by Ebyline shareholders (c) —
—
—
—
Total estimated consideration $ 5,537,064
$ 5,016,939
$ 934,728
$ —

Current portion of acquisition costs payable $ 934,728
$ —
Long term portion of acquisition costs payable —
—
Total acquisition costs payable $ 934,728
$ —

~~(a)~~

The Ebyline Stock Purchase Agreement required a $1,200,000 cash payment at closing, a $250,000 stock payment on July 30, 2015 and a cash or stock payment of up to an additional $1,900,000 (subject to proportional reduction in the event Ebyline’s final 2014 revenue was below $8,000,000). Ebyline's final gross revenue for 2014 was $7,903,429. As such, the additional amount owed became $1,877,064 payable in two equal installments of $938,532 on January 30, 2016 and January 30, 2017. This guaranteed purchase price consideration was discounted to present value using the Company's borrowing rate of prime plus 2%. Interest expense imputed on the acquisition costs payable in the accompanying consolidated statements of operations was $0 and $11,412 for the three months ended September 30, 2017 and 2016, respectively. Interest expense imputed on the acquisition costs payable in the accompanying consolidated statements of operations was $3,804 and $38,137 for the ~~nine months~~ ended September 30, 2017 and 2016, respectively. Per the Ebyline Stock Purchase Agreement, the Company issued 31,821 shares of its common stock to satisfy the $250,000 guaranteed purchase price payment obligation on July 30, 2015. On January 29, 2016, the Company issued 114,398 shares of its common stock to satisfy the $848,832 annual guaranteed payment of $938,532 less $89,700 in closing related expenses (see item (c) below). On January 30, 2017, the Company issued 200,542 shares of common stock to satisfy the final annual guaranteed payment of $938,532. The Company recorded a $10,491 gain on the settlement of the acquisition costs payable in the accompanying consolidated statements of operations as a result of the difference between the market price of the stock on the settlement date and the 30-day average price of the stock required by the Ebyline Stock Purchase Agreement.

~~(b)~~

Total contingent performance payments up to $5,500,000 are to be paid based on Ebyline meeting certain revenue targets. The performance payments are to be made only if Ebyline achieves at least 90% of Content Revenue targets of $17,000,000 in 2015, $27,000,000 in 2016 and $32,000,000 in 2017. The initial fair value of the $5,500,000 of contingent performance payments was calculated using a Monte-Carlo simulation to simulate revenue over three years. Since the contingent consideration has an option like structure, a risk-neutral framework was considered appropriate for the valuation. The Company started with a risk-adjusted measure of forecasted revenue (using a risk-adjusted discount rate of 8.5%) and assumed it will follow geometric brownian motion to simulate the revenue at future dates. Once the initial revenue was estimated based off of projections made during the acquisition, payout was calculated for each year and present valued to incorporate the credit risk associated with these payments. The Company's initial value conclusion was based on the average payment from 100,000 simulation trials. The volatility used for the simulation was 35%. The Monte Carlo simulation resulted in an initial calculated fair value of contingent performance payments of $2,210,000 on January 30, 2015. Because the contingent performance payments are subject

~~IZEA, Inc.~~

~~Notes to the Unaudited Consolidated Financial Statements~~

to a 17% reduction related to the continued employment of certain key employees, ASC 805-10-55-25 indicates that a portion of these payments be treated as potential compensation to be accrued over the term rather than allocated to the purchase price. Therefore, the Company reduced its overall purchase price consideration by $357,700 and recorded the initial present value of the contingent performance payments at $1,834,300. Based on actual results for and projections for Content Revenue for 2015-2017, the Content Revenue for every year is expected to be below 90% of the required Content Revenues targets. Therefore, the Company reduced the fair value of contingent performance payments to zero by the end of 2015, as no further payments are expected to be owed.


~~(c)~~	According to the Ebyline Stock Purchase Agreement, $89,700 in closing related expenses paid by Ebyline during the acquisition process were payable by the selling shareholders. These costs were deducted from the guaranteed payment on January 30, 2016.

~~ZENCONTENT, INC.~~

On July 31, 2016, the Company purchased all of the outstanding shares of capital stock of ZenContent pursuant to the terms of a Stock Purchase Agreement, by and among IZEA, ZenContent and the stockholders of ZenContent (the “ZenContent Stock Purchase Agreement”) for a maximum purchase price to be paid over the next three years of $4,500,000.

~~Purchase Price and Acquisition Costs Payable~~

Estimated Gross Purchase Consideration Initial Present and Fair Value Remaining Present and Fair Value Remaining Present and Fair Value
7/31/2016 7/31/2016 12/31/2016 9/30/2017
Cash paid at closing (a) $ 400,000
$ 400,000
$ —
$ —
Stock paid at closing (a) 600,000
600,000
—
—
Guaranteed purchase price (b) 933,565
566,547
682,348
589,108
Contingent performance payments (c) 2,500,000
230,000
324,000
508,444
Total estimated consideration $ 4,433,565
$ 1,796,547
$ 1,006,348
$ 1,097,552

Current portion of acquisition costs payable $ 318,157
$ 619,833
Long-term portion of acquisition costs payable 688,191
477,719
Total acquisition costs payable $ 1,006,348
$ 1,097,552


~~(a)~~	~~The aggregate consideration paid at closing for the acquisition of ZenContent consisted of a cash payment of $400,000 and the issuance of 86,207 shares of IZEA common stock valued at $600,000.~~

~~(b)~~

Aggregate future consideration consists of (i) three equal annual installment payments totaling $1,000,000, commencing 12 months following the closing, less a reduction of $66,435 due to a customary closing date working capital adjustment ("guaranteed purchase price"), and (ii) contingent performance payments up to an aggregate of $2,500,000 over the three 12-month periods following the closing. These payments are also subject to a downward adjustment up to 30% if Brianna DeMike, ZenContent’s co-founder, is terminated by IZEA for cause or if she terminates her employment without good reason. As a result, the Company initially reduced its acquisition cost liability by $300,000 to be accrued as compensation expense over the three-year term rather than allocated to the initial purchase price in accordance with ASC 805-10-55-25. Compensation expense added to the guaranteed acquisition costs payable and recorded as general and administrative expense in the Company's consolidated statement of operations was $28,125 and $151,042 for the three and nine months ended September 30, 2017, respectively. Compensation expense added to the guaranteed acquisition costs payable and recorded as general and administrative expense in the Company's consolidated statement of operations was $40,972 for the three and nine months ended September 30, 2016. The initial guaranteed purchase price consideration was discounted to present value using the Company's borrowing rate of prime plus 2% (5.5% on July 31, 2016). Interest expense imputed on the guaranteed acquisition costs payable in the accompanying consolidated statement of operations was $6,572 and $22,616 for the three and nine months ended September 30, 2017. Interest expense imputed on the guaranteed acquisition costs payable in the accompanying consolidated statement of operations was $5,348 for the three and nine months ended September 30, 2016.

~~IZEA, Inc.~~

~~Notes to the Unaudited Consolidated Financial Statements~~

~~(c)~~

The contingent performance payments are subject to ZenContent achieving certain minimum revenue thresholds over 36 months. ZenContent is required to meet minimum revenues of $2.5 million, $3.5 million and $4.5 million in the first, second and third, respective 12-month periods following the closing in order to receive any portion of the contingent performance payments. Of these payments, 33% of each such annual installment or contingent performance payment will be in the form of cash and the remainder of such payment will be in the form of either cash or additional shares of IZEA common stock at then average stock prices (determined at IZEA’s option). Additionally, these payments are subject to downward adjustment of up to 30% if Brianna DeMike is terminated by IZEA for cause or she terminates her employment without good reason. We initially determined the fair value of the $2,500,000 contingent payments to be $230,000. The fair value of the contingent performance payments is required to be revalued each quarter and is calculated using a Monte-Carlo simulation to simulate revenue over the future periods. Since the contingent consideration has an option like structure, a risk-neutral framework is considered appropriate for the valuation. The Company started with a risk-adjusted measure of forecasted revenue (using a risk-adjusted discount rate of 17%) and assumed it will follow geometric brownian motion to simulate the revenue at future dates. Once the initial revenue was estimated based off of projections, payout was calculated for each year and present valued to incorporate the credit risk associated with these payments. The Company's fair value conclusion was based on the average payment from 250,000 simulation trials. The volatility used for the simulation was 45%. The interest rate used for the simulation was the Company's current borrowing rate of prime plus 2% (6.25%). The Company revalued its estimate of the contingent performance payment as of September 30, 2017 based on actual results and projections and the rates noted above and determined that current fair value of the contingent performance payments was $508,444 compared to $324,000 as of December 31, 2016. The change in the estimated fair value of contingent performance payable resulted in a $184,444 increase to general and administrative expense in the Company's consolidated statement of operations during the ~~nine months~~ ended September 30, 2017. Of this amount, $122,444 was allocated to compensation expense and a gain of $62,000 was allocated as a change in the fair value of the contingent performance payments. The change the estimated fair value of contingent performance payable from $342,861 as of June 30, 2017 to $508,444 as of September 30, 2017 resulted in a $165,583 decrease to general and administrative expense in the Company's consolidated statement of operations during the three months ended September 30, 2017. Of this amount, a gain of $47,583 was allocated as a decrease in compensation expense and a gain of $118,000 was allocated as a change in the fair value of the contingent performance payments.

~~Purchase Price Allocation~~

The consolidated financial statements reflect the allocation of the purchase price to the underlying ZenContent tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill.

~~The allocation of the purchase price as of July 31, 2016 is summarized as follows:~~

Final Purchase Price Allocation
Current assets $ 415,798
Property and equipment 4,551
Identifiable intangible assets 722,000
Goodwill 1,136,431
Current liabilities (482,233 )
Total estimated consideration $ 1,796,547

The ZenContent operations are included in the consolidated financial statements beginning on the date of acquisition of July 31, 2016. The ZenContent operations contributed revenue of $1,332,877 and gross profit of $840,891 in the consolidated statement of operations for the three months ended September 30, 2017. The ZenContent operations contributed revenue of $3,070,697 and gross profit of $1,930,281 in the consolidated statement of operations for the ~~nine months~~ ended September 30, 2017. The ZenContent operations contributed revenue of $465,574 and gross profit of $219,313 in the consolidated statement of operations for the three and nine months ended September 30, 2016. There are $29,621 and $40,918 of acquisition-related costs which are included in general and administrative expense on the Company's consolidated statement of operations for the three and nine months ended September 30, 2016, respectively.

NOTE 3. INTANGIBLE ASSETS

The identifiable intangible assets, other than Goodwill, consists of the following assets:


	March 31, 2021				December 31, 2020
	Intangible Asset Gross Value		Accumulated Amortization		Intangible Asset Gross Value		Accumulated Amortization		Useful Life (in years)
Content provider networks	$	160,000	$	160,000	$	160,000	$	160,000	2
Trade names	87,000		87,000		87,000		87,000		1
Developed technology	820,000		820,000		820,000		820,000		5
Self-service content customers	2,810,000		2,521,111		2,810,000		2,304,444		3
Managed content customers	2,140,000		2,140,000		2,140,000		2,140,000		3
Domains	166,469		166,469		166,469		166,469		5
Embedded non-compete provision	28,000		28,000		28,000		28,000		2
Total	$	6,211,469	$	5,922,580	$	6,211,469	$	5,705,913

Accumulated Amortization Useful Life (in years)
Balance September 30, 2017 December 31, 2016
Content provider networks $ 160,000
$ 105,833
$ 57,083
1
Trade names 52,000
52,000
45,000
1
Developed technology 530,000
213,667
134,167
3
Self-service content customers 210,000
186,667
134,167
5
Managed content customers 2,140,000
1,727,222
1,192,222
3
Domains 166,469
58,264
33,294
5
Total identifiable intangible assets $ 3,258,469
$ 2,343,653
$ 1,595,933

Total identifiable intangible assets from the ~~Ebyline and ZenContent purchase price allocation~~Company’s acquisitions and other acquired assets net of accumulated amortization thereon consists of the following:


	March 31, 2021		December 31, 2020
Ebyline Intangible Assets	$	2,370,000	$	2,370,000
ZenContent Intangible Assets	722,000		722,000
Domains	166,469		166,469
TapInfluence Intangible Assets	2,953,000		2,953,000
Total	$	6,211,469	$	6,211,469
Less accumulated amortization	(5,922,580)		(5,705,913)
Intangible assets, net	$	288,889	$	505,556

September 30,
2017 December 31,
2016
Ebyline Intangible Assets $ 2,370,000
$ 2,370,000
ZenContent Intangible Assets 722,000
722,000
Domains 166,469
166,469
Total Intangible Assets 3,258,469
3,258,469
Accumulated amortization (2,343,653 ) (1,595,933 )
Intangible Assets, net $ 914,816
$ 1,662,536

The Company is amortizing the identifiable intangible assets over a ~~weighted average~~remaining weighted-average period of 4 months. There were 0 impairment charges associated with the Company’s identifiable intangible assets in the three ~~years.~~ months ended March 31, 2021 and 2020.

Amortization expense recorded in ~~general~~depreciation and ~~administrative expense~~amortization in the accompanying consolidated statements of operations and comprehensive loss was ~~$247,907~~$216,667 and ~~$229,934~~$364,990 for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. ~~Amortization~~

The portion of this amortization expense specifically related to the costs of acquired technology that is excluded from cost of revenue and recorded in ~~general~~depreciation and ~~administrative expense in the accompanying consolidated statements of operations~~amortization was ~~$747,720~~$0 and ~~$615,748~~$136,500 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively.

As of ~~September 30, 2017,~~March 31, 2021, future estimated amortization expense related to identifiable intangible assets ~~over the next five years~~ is set forth in the following schedule:

Year ending December 31: Amortization Expense
2017 (three months remaining) $ 246,908
2018 349,432
2019 207,349
2020 84,293
2021 26,834
Total $ 914,816


	Intangible Asset Amortization Expense
Remainder of 2021	$	288,889
Total	$	288,889

IZEA Worldwide, Inc.

Notes to the ~~Unaudited~~ Consolidated Financial Statements

The Company’s goodwill balance changed as follows:


	Amount
Balance on December 31, 2019	$	8,316,722
Acquisitions, impairments, or other changes during 2020	(4,300,000)
Balance on December 31, 2020	4,016,722
Acquisitions, impairments, or other changes during 2021	0
Balance on December 31, 2021	$	4,016,722

In March 2020, the Company identified triggering events due to the reduction in its projected revenue due to adverse economic conditions caused by the COVID-19 pandemic, the continuation of a market capitalization below the Company’s carrying value, and uncertainty for recovery given the volatility of the capital markets surrounding COVID-19. The Company performed an interim assessment of goodwill, using the discounted cash flow method under the income approach and the guideline transaction method under the market approach, and determined that the carrying value of our Company’s reporting unit as of March 31, 2020 exceeded the fair value. As a result of the valuation, the Company recorded a $4.3 million impairment of goodwill, which is reflected as an expense under impairment of goodwill in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020. The Company did not identify any triggering events during the three months ended March 31, 2021.

NOTE 4. SOFTWARE DEVELOPMENT COSTS

Software development costs consists of the following:


	March 31, 2021		December 31, 2020
Software development costs	$	3,036,810	$	3,036,810
Less accumulated amortization	(1,680,502)		(1,564,126)
Software development costs, net	$	1,356,308	$	1,472,684

September 30,
2017 December 31,
2016
Software development costs $ 1,578,125
$ 1,492,665
Less accumulated depreciation and amortization (573,220 ) (388,706 )
Software development costs, net $ 1,004,905
$ 1,103,959

The ~~Company determined that on April 15, 2013, its project to create~~ ~~IZEAx~~ ~~became technologically feasible and the development phase began. Throughout 2013 and the first quarter of 2014, the~~ Company developed its ~~new~~ web-based ~~advertising exchange~~influencer marketing platform, IZEAx,~~. On March 17, 2014, the Company launched a public beta of IZEA.com powered by~~ ~~IZEAx. This platform is being utilized both internally~~to enable influencer marketing and ~~externally to facilitate native advertising~~content creation campaigns on a greater scale. The Company continues to add new features and additional functionality to ~~this platform each year. These new features will enable~~ IZEAx and developed additional platforms in 2020, BrandGraph and Shake, to facilitate the contracting, workflow, and delivery or posting of ~~direct~~ content as well as provide for invoicing, collaborating, and direct payments for the ~~Company's~~Company’s customers and creators. The Company capitalized software ~~as a service ("SaaS") customers. In accordance with ASC 350-40,~~ ~~Internal Use Software~~development costs of $0 and ~~ASC 985-730,~~ ~~Computer Software Research~~$51,004 during the three months ended March 31, 2021 and ~~Development, research phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized.~~2020, respectively. As a result, the Company has capitalized ~~$1,578,125~~a total of $3,036,810 in direct materials, consulting, payroll and benefit costs to its internal use software development costs in the consolidated balance sheet as of ~~September 30, 2017.~~ March 31, 2021.

The Company amortizes its software development costs, commencing upon initial release of the software or additional features, on a straight-line basis over the estimated ~~the~~ useful life of ~~its developed software to be 5~~five years, which is consistent with the amount of time its legacy platforms were ~~in-service.~~

in service. Amortization expense on software development costs that is excluded from cost of revenue and recorded in ~~general~~depreciation and ~~administrative~~amortization expense in the accompanying consolidated statements of operations and comprehensive loss was ~~$76,890~~$116,376 and ~~$44,549~~$100,650 for the three months ended ~~September 30, 2017~~March 31, 2021 and 2016, respectively. Amortization expense on software development costs recorded in general and administrative expense in the accompanying consolidated statements of operations was $184,514 and $128,977 for the nine months ended September 30, 2017 and 2016,2020, respectively.

As of ~~September 30, 2017,~~March 31, 2021, future estimated amortization expense related to software development costs ~~over the next five years~~ is set forth in the following schedule:


	Software Development Amortization Expense
Remainder of 2021	$	332,849
2022	$	400,474
2023	$	359,685
2024	$	177,764
2025	$	78,920
Thereafter	$	6,616
Total	$	1,356,308

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

Year ending December 31: Software Amortization Expense
2017 (three months remaining) $ 98,259
2018 304,241
2019 218,910
2020 183,956
2021 134,432
2022 65,107
$ 1,004,905

NOTE 5. ~~COMMITMENTS & CONTINGENCIES~~ACCRUED EXPENSES

Accrued expenses consist of the following:

~~Credit Agreement~~


	March 31, 2021		December 31, 2020
Accrued payroll liabilities	$	1,320,452	$	1,504,113
Accrued taxes	131,593		286,455
Current portion of finance obligation	31,312		30,487
Accrued other	197,365		103,918
Total accrued expenses	$	1,680,722	$	1,924,973

NOTE 6. NOTES PAYABLE

Canada Emergency Business Account (“CEBA”) Loan

On April 22, 2020, the Company received a Canadian dollar loan in the principal amount of 40,000 CAD ($31,776 USD as of March 31, 2021), from TD Canada Trust Bank pursuant to a CEBA term loan agreement (the “CEBA Loan”). The CEBA Loan has an initial term from inception through December 31, 2022 (the “Initial Term”) and an extended term from January 1, 2023 through December 31, 2025 (the “Extended Term”). NaN interest is accrued and 0 payments are due on the loan during the Initial Term. If the Company repays 75% of the CEBA Loan (30,000 CAD) on or prior to December 31, 2022, the remaining 10,000 CAD balance will be forgiven. Otherwise, interest will begin to accrue on the unpaid balance on January 1, 2023 with monthly interest payments commencing on January 31, 2023 until the CEBA Loan is paid in full on or before the end of the Extended Term.

Paycheck Protection Program (“PPP”) Loan

On April 23, 2020, the Company received a loan from Western Alliance Bank (the “Lender”) in the principal amount of $1,905,100 (the “PPP Loan”) under the Paycheck Protection Program (“PPP”), evidenced by a promissory note issued by the Company (the “Note”) to the Lender.

The term of the Note is two years, though it may be payable sooner in connection with an event of default under the Note. The PPP Loan carries a fixed interest rate of 1 percent per year. Certain amounts received under the PPP Loan may be forgiven if the loan proceeds are used for eligible purposes, including payroll costs and certain rent or utility costs, and the Company meets other requirements regarding, among other things, the maintenance of employment and compensation levels.

Loan payments on the PPP Loan may be deferred to either (1) the date that the SBA remits the Company’s loan forgiveness amount to the Lender or (2) ten months after the end of the Company’s loan forgiveness covered period, if the Company does not apply for loan forgiveness. The Company submitted its forgiveness application for the entire amount of the loan in December 2020 and is awaiting approval from the SBA. The forgiveness of the PPP Loan is dependent on the Company qualifying for the forgiveness of the PPP Loan based on its adherence to the forgiveness criteria under the CARES Act, and no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

The total balance owed was $1,905,100 as of March 31, 2021 and December 31, 2020, with $1,797,976 and $1,477,139 reflected in the current portion of notes payable in the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively, based on the original terms of the Note which state that the first payment would be due seven months after the receipt of the loan.

Finance Obligation

The Company has 2 long term payment plans with a vendor to pay for its computer equipment in 4 annual payments between October 2019 and February 2023. The Company used an imputed interest rate of 9.5%, based on its incremental borrowing rate, to determine the present value of its finance obligation. The total balance owed was $65,604 and $74,295 as of March 31, 2021 and December 31, 2020, respectively, with the short-term portion of $31,312 and $30,487 recorded under accrued expenses in the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

Secured Credit Facility

The Company had a secured credit facility agreement (also referred to herein as “line of credit”) with Western Alliance Bank, the parent company of Bridge Bank, N.A. of San Jose, California, which it obtained on March 1, 2013 and expanded on April 13, 2015. Pursuant to ~~this~~the secured credit facility agreement, as amended, the Company may submit requests for ~~funding~~advances up to 80% of its eligible accounts receivable up to a maximum credit limit of $5 million. Interest accrued on the advances at the rate of prime plus 1.5% per annum and the default rate of interest was prime plus 7%. This agreement iswas secured by the ~~Company's~~Company’s accounts receivable and substantially all of the ~~Company's~~Company’s other assets. The agreement automatically renews ~~annually~~in April of each year and ~~requires~~required the Company to pay an annual facility fee of $20,000 (0.4% of the credit limit) and an annual due diligence fee of ~~$1,000. Interest accrues on the advances at the rate of prime plus 2% per annum.~~$1,000 upon renewal. The ~~default rate of interest is prime plus 7%. As of September 30, 2017, the~~Company elected to terminate this agreement upon its renewal in April 2021.

The Company had ~~$810,376~~0 amounts outstanding under this ~~line of~~secured credit ~~agreement. The Company had no advances outstanding under this agreement~~facility as of March 31, 2021 and December 31, ~~2016. As of September 30, 2017, the Company had a net accounts receivable balance of $5,253,423.~~2020. Assuming that all of the ~~Company's~~Company’s trade accounts ~~receivable balance was~~receivables were eligible for funding, itthe Company would have had ~~$3,392,362~~approximately $3.2 million in ~~remaining~~ available credit under the agreement as of ~~September 30, 2017.~~March 31, 2021.

The annual fees are capitalized in the ~~Company's~~Company’s consolidated balance sheet within other current assets and are amortized to interest expense over one year. ~~The~~During the three months ended March 31, 2021 and 2020, the Company amortized $5,250 and ~~$8,750~~$5,250, respectively, of the ~~annual~~secured credit facility costs through interest expense during the three months ended September 30, 2017 and 2016, respectively. The Company amortized $15,750 and $14,546 of the annual costs through interest expense during the nine months ended September 30, 2017 and 2016, respectively.expense. The remaining value of the capitalized loan costs related to the ~~Bridge Bank Credit Agreement~~secured credit facility as of ~~September 30, 2017~~March 31, 2021 is ~~$12,250.~~$1,750. This amount will be amortized to interest expense over the next ~~seven months.~~one month.

Summary

Interest expense on financing arrangements recorded in the Company’s consolidated statements of operations and comprehensive loss was $6,470 during the three months ended March 31, 2021. As of March 31, 2021, the future contractual maturities of our debt obligations by year is set forth in the following schedule:


Remainder of 2021	$	1,498,935
2022	493,125
2023	10,420
Total	$	2,002,480

NOTE 7. COMMITMENTS AND CONTINGENCIES

Lease Commitments

Due to the Company’s current work from home policy enacted on March 16, 2020 as a result of the COVID-19 pandemic, and its intent to remain virtual first, the Company does not have any office lease agreements as of March 31, 2021. Additionally, the Company does not have any other operating or finance lease greater than 12 months in duration as of March 31, 2021.

Total rent expense recorded in general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss was $147,983 for the three months ended March 31, 2020. Upon the January 1, 2019 adoption of ASU No. 2016-02, Leases, the Company had 1 material lease greater than 12 months in duration. This was the lease associated with its corporate headquarters in Winter Park, Florida. This lease expired in April 2020. Cash paid for this 1 operating lease was $85,137 during the three months ended March 31, 2020.

Litigation

From time to time, the Company may become involved in various other lawsuits and legal proceedings that arise in the ordinary course of its business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the ~~Company's~~Company’s business. The Company is currently not aware of any legal proceedings or claims that it believes would or could have, individually or in the aggregate, a material adverse effect on ~~its operations~~the Company. Regardless of final outcomes, however, any such proceedings or ~~financial position.~~claims may nonetheless impose a significant burden on management and employees and may come with costly defense costs or unfavorable preliminary interim rulings.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

NOTE ~~6. STOCKHOLDERS'~~8. STOCKHOLDERS’ EQUITY

Authorized Shares

The Company has 200,000,000 authorized shares of common stock and 10,000,000 authorized shares of preferred stock, each with a par value of ~~$0.0001~~$0.0001 per share.

~~Reverse Stock Split~~

Sale of Securities

On June 4, 2020, the Company entered into an ATM Sales Agreement (the “2020 Sales Agreement”) with National Securities Corporation, as sales agent (“National Securities”), pursuant to which the Company could offer and sell, from time to time, through National Securities, shares of the Company's common stock, by any method deemed to be an “at the market offering” (the “ATM Offering”).

On June 12, 2020, the Company entered into an amendment to the 2020 Sales Agreement to increase the amount of common stock that could be offered and sold in the ATM Offering to $40,000,000 in the aggregate. On January ~~6, 2016,~~25, 2021, the Company ~~filed~~entered into a ~~Certificate of Amendment~~new ATM Sales Agreement (the “2021 Sales Agreement”) with National Securities, pursuant to which the ~~Secretary of State of Nevada~~Company may offer and sell, from time to ~~effect a reverse stock split of the issued and outstanding~~time, through National Securities, up to $35,000,000 shares of its common stock, ~~at a ratio of one share for every 20 shares outstanding prior~~by any method deemed to the effective date of the reverse stock split. All current and historical information contained herein related to the share and per share information for the Company's common stock or stock equivalents reflects the 1-for-20 reverse stock split of the Company's outstanding shares of common stock that became market effective on January 11, 2016. There was no change in the number of the Company's authorized shares of common stock.be an at-the-market offering.

~~Nasdaq Uplisting~~

On January 26, 2016, the Company's shares of common stock commenced trading on the Nasdaq Capital Market under the symbol IZEA. Prior thereto, the Company's common stock was quoted on the OTCQB marketplace under the same symbol.

~~Stock Issued for Purchases~~

As further discussed in Note 2, the Company issued 31,821 shares of its common stock to satisfy the $250,000 guaranteed purchase price payment obligation on July 30, 2015 per the Ebyline Stock Purchase Agreement. On January 29, 2016, the Company issued 114,398 shares of its common stock to satisfy the $848,832 annual guaranteed payment of $938,532 less $89,700 in closing related expenses owed as part of the Ebyline Stock Purchase Agreement and on January 30, 2017, the Company issued 200,542 shares of common stock to satisfy the final annual guaranteed payment of $938,532. On July 31, 2016, the Company issued 86,207 shares of IZEA common stock valued at $600,000 as a partial payment of the guaranteed purchase price per the ZenContent Stock Purchase Agreement.

~~Stock Issued for Services~~

~~The Company issued its five independent directors a total of 32,385 shares of restricted common stock initially valued at $93,750 for their service as directors of the Company during the~~ ~~nine months~~ ended September 30, 2017. The stock vested monthly from January through September 2017. On February 12, 2017, the Company issued 7,109 shares valued at $30,000 as compensation for services a contractor provided. On August 14, 2017, the Company issued 2,812 shares of restricted stock to Mr. Edward Murphy, its Chief Executive Officer, as partial payment for his second quarter bonus. The stock was initially valued at $5,483 and vests in equal monthly installments over 48 months. On August 14, 2017, the Company issued 662 shares of restricted stock to Mr. Ryan Schram, its Chief Operating Officer, as partial payment for his second quarter bonus. The stock was initially valued at $1,291 and vests in equal monthly installments over 48 months.

~~The following table contains summarized information about nonvested restricted stock outstanding during the nine months ended September 30, 2017:~~

Restricted Stock Common Shares Weighted Average
Grant Date
Fair Value Weighted Average
Remaining Years
to Vest
Nonvested at December 31, 2016 —
$ —

Granted 42,968
3.04

Vested (39,713 ) 3.61

Forfeited —
—

Nonvested at September 30, 2017 3,255
$ 7.10
3.8

~~Total expense recognized for stock-based payments for services during~~During the three months ended ~~September 30, 2017~~March 31, 2021, the Company sold 8,701,691 shares at an average price of $3.95 per share for total gross proceeds of $34,358,012 pursuant to the 2020 and ~~2016 was $60,074~~2021 Sales Agreements with National Securities. As of March 31, 2021, the Company had sold 23,521,431 cumulative shares at an average price of $2.67 per share for total gross proceeds of $62,813,108 pursuant to the 2020 and $34,969, respectively. Total expense recognized for stock-based payments for services during the nine months ended September 30, 2017 and 2016 was $143,536 and $107,439, respectively. The fair value of the services is based on the value of the Company's common stock over the term of service. The Company recognized a gain of $45,160 and $36,122 as a change in the fair value of derivatives during the three and nine months ended September 30, 2017, based on the change between the Company's stock price upon issuance and the Company's stock price upon the date of vesting. The fair value of the remaining nonvested, but issued, 3,255 shares of restricted stock as of September 30, 2017 is $23,110, and it is included in prepaid expenses in the accompanying unaudited consolidated balance sheets. This value is the current estimate of future compensation expense that is expected to be recognized over the remaining individual vesting periods up to 46 months.2021 Sales Agreements with National Securities.

~~Stock Options~~

Equity Incentive Plans

In May 2011, the Company’s Board of Directors (the “Board”) adopted the 2011 Equity Incentive Plan of IZEA Worldwide, Inc. ~~(the~~(as amended, the “May 2011 Plan”). AtThe stockholders approved an amendment and restatement of the ~~Company's 2017~~Company’s May 2011 Plan at its 2020 Annual Meeting of Stockholders held on ~~June 21, 2017,~~December 18, 2020, to allow the ~~stockholders approved~~Company to award restricted stock, restricted stock units and stock options covering up to 7,500,000 shares of common stock as incentive compensation for its officers, employees, consultants, and advisors, including its non-employee directors. Shares of the ~~amendment and restatement~~Company’s common stock that are withheld (or not issued) to cover the purchase price of an option or any required tax withholding obligation will again be available for issuance under the May 2011 ~~Plan which increased~~Plan. As of March 31, 2021, the ~~number of~~Company had 3,809,381 remaining shares of common stock available for issuance ~~under the May 2011 Plan by 500,000 shares. The amended May 2011 Plan allows the Company~~pursuant to ~~grant options to purchase up to 1,500,000 shares as an incentive for its employees and consultants. As of~~ ~~September 30, 2017, the Company had 438,636 shares of common stock available for~~ future grants under the May 2011 Plan.

OnIn August ~~22,~~ 2011, the Company adopted the 2011 B Equity Incentive Plan (the “August 2011 Plan”) reserving 4,375 shares of common stock for issuance under the August 2011 Plan. As of ~~September 30, 2017~~,March 31, 2021, the Company had ~~1,875~~4,375 remaining shares of common stock available for future grants under the August 2011 Plan.

Restricted Stock

Under both the May 2011 Plan and the August 2011 Plan (together, the ~~"2011~~“2011 Equity Incentive ~~Plans"~~Plans”), the Board determines the terms and conditions of ~~Directors~~each restricted stock issuance, including any future vesting restrictions.

On January 31, 2020, the Company issued its 5 independent directors a total of 390,625 shares of restricted common stock initially valued at $125,000 for their annual service as directors of the Company. The stock vests in equal monthly installments from January through December 2020.

As of March 31, 2021, the Company had issued its 6 independent directors a total of 30,324 shares of restricted common stock initially valued at $147,329 for their annual service as directors of the Company. The stock vests in equal monthly installments from January through December 2021.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

The following table contains summarized information about restricted stock issued during the year ended December 31, 2020 and the three months ended March 31, 2021:


Restricted Stock Activity	Common Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Years to Vest
Nonvested at December 31, 2019	31,282	$	2.15	1.9
Granted	390,625	0.32
Vested	(408,241)	0.39
Forfeited	0
Nonvested at December 31, 2020	13,666	$	2.28	1.4
Granted	30,324	4.86
Vested	(9,823)	4.19
Forfeited	0
Nonvested at March 31, 2021	34,167	$	4.02	0.9

Although restricted stock is issued upon the grant of an award, the Company excludes restricted stock from the computations within the financial statements of total shares outstanding and basic earnings per share until such time as the restricted stock vests.

Expense recognized on restricted stock issued to non-employees for services was $34,696 and $31,250 during three months ended March 31, 2021 and 2020, respectively. Expense recognized on restricted stock issued to employees was $6,507 and $13,535 during the three months ended March 31, 2021 and 2020, respectively.

On March 31, 2021, the fair value of the Company’s common stock was approximately $3.77 per share and the intrinsic value on the non-vested restricted stock was $128,810. Future compensation expense related to issued, but non-vested, restricted stock awards as of March 31, 2021 is $137,328. This value is estimated to be recognized over the weighted-average vesting period of approximately ten months.

Restricted Stock Units

The Board determines the terms and conditions of each restricted stock unit award issued under the May 2011 Plan.

The Company issued 84,994 restricted stock units on January 3, 2020 to Mr. Schram under the terms of his employment agreement. The restricted stock units were initially valued at $23,739 and vest in equal monthly installments over 48 months from issuance. The Company also issued 100,000 restricted stock units on January 3, 2020 to Mr. Schram as additional incentive compensation. The restricted stock units were initially valued at $27,930 and vest in a lump sum 12 months from issuance.

During the twelve months ended December 31, 2020, the Company issued a total of 580,099 restricted stock units initially valued at $215,936 to non-executive employees as additional incentive compensation. The restricted stock units vest 12 months from issuance.

During the twelve months ended December 31, 2020, the Company issued Mr. Murphy 123,228 restricted stock units valued at $61,790 for bonuses owed under the terms of his amended employment agreement. The restricted stock units vest in equal monthly installments over 36 months from issuance.

During the twelve months ended December 31, 2020, the Company issued Mr. Schram 41,824 restricted stock units initially valued at $14,052 for bonuses owed under the terms of his employment agreement. The restricted stock units vest in equal monthly installments over 48 months from issuance.

During three months ended March 31, 2021 the Company issued Mr. Murphy 100,000 restricted stock units valued at $394,000 as a one-time bonus. The restricted stock units vest in equal monthly installments over 10 months from issuance.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

The following table contains summarized information about restricted stock units during the year ended December 31, 2020 and the three months ended March 31, 2021:


Restricted Stock Units Activity	Common Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Years to Vest
Nonvested at December 31, 2019	366,812	$	0.42	3.2
Granted	930,145	0.37
Vested	(172,441)	0.41
Forfeited	(154,167)	0.30
Nonvested at December 31, 2020	970,349	$	0.39	1.2
Granted	100,000	3.94
Vested	(524,256)	0.47
Forfeited	0	0
Nonvested at March 31, 2021	546,093	$	0.96	1.8

During the three months ended March 31, 2021, the Company withheld 163,998 shares of common stock valued at $341,576 to cover statutory employee withholding taxes due upon the delivery of common stock for the vested restricted stock units. Expense recognized on restricted stock units issued to employees was $137,808 and $56,607 during the three months ended March 31, 2021 and 2020, respectively. On March 31, 2021, the fair value of the Company’s common stock was approximately $3.77 per share and the intrinsic value on the non-vested restricted units was $2,058,771. Future compensation related to the non-vested restricted stock units as of March 31, 2021 is $491,208 and it is estimated to be recognized over the weighted-average vesting period of approximately 1.8 years.

Stock Options

Under the 2011 Equity Incentive Plans, the Board determines the exercise price to be paid for the stock option shares, the period within which each stock option may be exercised, and the terms and conditions of each stock option. The exercise price of ~~the~~ incentive and non-qualified stock options may not be less than 100% of the fair market value per share of the Company’s common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the exercise price of each share of an incentive stock option must be equal to or exceed 110% of fair market value. Unless otherwise determined by the Board ~~of Directors~~ at the time of grant, the ~~purchase~~exercise price is set at the fair market value of the Company’s common stock on the grant date (or the last trading day prior to the grant date, if it is awarded on a non-trading day). Additionally, the term is set at ten years and the ~~options~~option typically ~~vest~~vests on a straight-line basis over the requisite service period as follows: 25% ~~of options shall vest~~ one year from the date of grant ~~and~~with the remaining ~~options shall vest~~vesting monthly in equal increments over the following three ~~years~~. years. The Company issues new shares ~~to the optionee~~ for any stock awards or options exercised ~~pursuant to~~under its 2011 Equity Incentive Plans.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

A summary of option activity under the 2011 Equity Incentive Plans ~~for~~during the year ended December 31, ~~2016~~2020 and the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, is presented below:


Options Outstanding	Common Shares	Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding at December 31, 2019	1,357,837	$	3.24	7.2
Granted	411,350	0.69
Exercised	(369)	1.00
Expired	0	0
Forfeited	(56,012)	5.08
Outstanding at December 31, 2020	1,712,806	$	2.56	6.9
Granted	44,155	2.61
Exercised	(1,510)	1.42
Expired	0	0
Forfeited	(6,934)	5.57
Outstanding at March 31, 2021	1,748,517	$	2.55	6.8

Exercisable at March 31, 2021	1,070,149	$	3.60	5.7

Options Outstanding Common Shares
Weighted Average
Exercise Price

Weighted Average
Remaining Life
(Years)
Outstanding at December 31, 2015 830,599
$ 8.65
6.5
Granted 179,998
6.16

Exercised —
—

Forfeited (50,733 ) 10.15

Outstanding at December 31, 2016 959,864
$ 8.11
6.4
Granted 94,246
3.64

Exercised —
—

Forfeited (42,535 ) 50.15

Outstanding at September 30, 2017 1,011,575
$ 6.05
6.1

Exercisable at September 30, 2017 683,642
$ 6.24
5.1

During the three ~~and nine~~ months ended ~~September 30, 2017 and 2016,~~March 31, 2021, 1510 options were exercised for gross proceeds of $2,144. The intrinsic value on exercised options was $4,651. There were no options ~~were exercised.~~exercised during the three months ended March 31, 2020. The fair value of the Company's common stock on ~~September 30, 2017~~March 31, 2021 was ~~$7.10~~approximately $3.77 per ~~share. The~~share and the intrinsic value on outstanding options as of ~~September 30, 2017~~March 31, 2021 was ~~$1,354,688.~~$3,277,104. The intrinsic value on exercisable options as of ~~September 30, 2017~~March 31, 2021 was ~~$815,179.~~$1,321,186.

A summary of the nonvested stock option activity under the 2011 Equity Incentive Plans ~~for~~during the year ended December 31, ~~2016~~2020 and the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, is presented below:


Nonvested Options	Common Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Years to Vest
Nonvested at December 31, 2019	600,779	$	0.64	3.0
Granted	411,350	0.56
Vested	(283,766)	0.72
Forfeited	(12,877)	0.88
Nonvested at December 31, 2020	715,486	$	0.56	2.5
Granted	44,155	2.24
Vested	(79,460)	0.72
Forfeited	(1,813)	0.64
Nonvested at March 31, 2021	678,368	$	0.64	2.4

Nonvested Options Common Shares
Weighted Average
Grant Date
Fair Value

Weighted Average
Remaining Years
to Vest
Nonvested at December 31, 2015 461,926
$ 3.84
2.8
Granted 179,998
2.88

Vested (187,181 ) 4.00

Forfeited (40,437 ) 3.76

Nonvested at December 31, 2016 414,306
$ 3.60
2.6
Granted 94,246
1.28

Vested (161,321 ) 3.52

Forfeited (19,298 ) 3.12

Nonvested at September 30, 2017 327,933
$ 2.72
2.6

There were outstanding options to purchase 1,748,517 shareswith a weighted average exercise price of $2.55 per share, of which options to purchase 1,070,149 shares were exercisable with a weighted average exercise price of $3.60 per share as of March 31, 2021.

~~Stock-based compensation cost related to~~

Expense recognized on stock options granted under the 2011 Equity Incentive Plans is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option-pricing model that uses the assumptions stated in Note 1. Total stock-based compensation expense recognized on option awards outstanding during the ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~and 2016 was~~ ~~$509,642~~ ~~and~~ ~~$576,144, respectively. Stock-based compensation expense was recorded as $45,331~~issued to ~~sales and marketing and $464,311 to general and administrative expense in the Company's consolidated statement of operations during the~~ ~~nine months~~ ended September 30, 2017. Stock-based compensation expense was recorded as $67,586 to sales and marketing and $508,558 to general and administrative expense in the Company's consolidated statement of operationsemployees during the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2021 and 2020 was $52,407 and $59,051, respectively. Future compensation related to ~~nonvested~~non-vested awards ~~expected to vest~~as of ~~$753,299~~March 31, 2021 is $388,112, and it is estimated to be recognized over the weighted-average vesting period of approximately ~~two years, six~~2.4 years.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

The following table shows the number of stock options granted under the Company’s 2011 Equity Incentive Plans and the assumptions used to determine the fair value of those options using a Black-Scholes option-pricing model during the three months. ended March 31, 2021 and 2020:


Period Ended	Total Stock Options Granted	Weighted-Average Exercise Price	Weighted-Average Expected Term	Weighted-Average Volatility	Weighted-Average Risk-Free Interest Rate	Expected Dividends	Weighted-Average Grant Date Fair Value
March 31, 2020	8,917	$0.25	6 years	101.92%	1.71%	0	$0.16
March 31, 2021	44,155	$2.61	6 years	117.97%	0.70%	0	$2.24

Employee Stock Purchase Plan

~~On April 16, 2014, stockholders holding a majority of the Company's outstanding shares of common stock, upon previous recommendation~~

The amended and ~~approval of the Board of Directors, adopted the~~restated IZEA Worldwide, Inc. 2014 Employee Stock Purchase Plan (the “ESPP”) ~~and reserved 75,000~~, provides for the issuance of up to 500,000 shares of the ~~Company's~~Company’s common stock ~~for issuance thereunder. Any employee~~to employees regularly employed by the Company for 90 days or more on a full-time or part-time basis (20 hours or more per week on a regular schedule) ~~is eligible to participate in the ESPP.~~. The ESPP operates in successive six ~~month~~ months offering periods commencing at the beginning of each fiscal

year half. Each eligible employee who elects to participate may purchase up to 10% of their annual compensation in common stock not to exceed $21,250 annually or ~~1,000~~2,000 shares per offering period. The purchase price will be the lower of (i) 85% of the fair market value of a share of common stock on the first ~~trading~~ day of the offering period or (ii) 85% of the fair market value of a share of common stock on the last ~~trading~~ day of the offering period. The ESPP will continue until January 1, 2024, unless otherwise terminated by the Board. ~~Employees paid $16,232~~

Expense recognized on the options to purchase ~~9,998~~ shares ~~of common stock~~under the ESPP was $1,264 and $378 during the ~~nine~~three months ended ~~September 30, 2017. Employees paid $34,587 to purchase 5,340 shares of common stock during the~~ ~~nine months~~ ~~ended September 30, 2016.~~March 31, 2021 and 2020, respectively. As of ~~September 30, 2017,~~March 31, 2021, the Company had ~~39,764~~395,613 remaining shares of common stock available for future ~~grants~~issuances under the ESPP.

Summary Stock-Based Compensation

Stock-based compensation cost related to all awards granted to employees is measured at the grant date based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period utilizing the weighted-average forfeiture rates disclosed in Note 1. Total stock-based compensation expense recognized on restricted stock, restricted stock units, stock options, and employee stock purchase plan issuances during the three months ended March 31, 2021 and 2020 was recorded in the Company’s consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended
		March 31, 2021		March 31, 2020
Cost of revenue		$	1,454	$	7,004
Sales and marketing		5,430		22,056
General and administrative		191,102		100,511
Total stock-based compensation		$	197,986	$	129,571

NOTE ~~7. EARNINGS (LOSS)~~9. LOSS PER COMMON SHARE

Basic earnings (loss) per common share is computed by dividing the net income or loss by the basic weighted-average number of shares of common stock outstanding during each period presented. Although restricted stock is issued upon the grant of an award, the Company excludes restricted stock from the computations of weighted-average number of shares of common stock outstanding until such time as the stock vests. Diluted ~~earnings~~loss per share is computed by dividing the net income or loss by the sum of the total of the basic weighted-average number of shares of common stock outstanding plus the additional dilutive securities that could be exercised or converted into common shares during each period presented less the amount of shares that could be repurchased using the proceeds from the exercises.

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements


	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016					March 31, 2021		March 31, 2020
Net loss	$	(558,805	)	$	(1,511,603	)	$	(4,724,623	)	$	(5,730,568	)	Net loss		$	(1,992,438)	$	(6,163,461)
Weighted average shares outstanding - basic and diluted	5,702,297			5,420,020			5,659,423			5,357,119			Weighted average shares outstanding - basic and diluted		56,334,219		34,681,198
Basic and diluted loss per common share	$	(0.10	)	$	(0.28	)	$	(0.83	)	$	(1.07	)	Basic and diluted loss per common share		$	(0.04)	$	(0.18)

The Company excluded the following weighted average items from the above computation of diluted loss per common share, as their effect would be anti-dilutive:


	Three Months Ended
		March 31, 2021	March 31, 2020
Stock options		1,738,854	1,358,501
Restricted stock units		654,209	812,687
Restricted stock		29,331	386,209
Warrants		0	13,709
Total excluded shares		2,422,394	2,571,106

NOTE 10. REVENUE

The Company has consistently applied its accounting policies with respect to revenue to all periods presented in the consolidated financial statements contained herein. The following table illustrates the Company’s revenue by product service type:


	Three Months Ended
		March 31, 2021		March 31, 2020
Managed Services Revenue		$	4,872,034	$	4,125,061

Marketplace Spend Fees		108,797		166,293
License Fees		383,041		451,548
Other Fees		11,760		20,766
SaaS Services Revenue		503,598		638,607

Total Revenue		$	5,375,632	$	4,763,668

The following table provides the Company’s revenues as determined by the country of domicile:


	Three Months Ended
		March 31, 2021		March 31, 2020
United States		$	5,128,245	$	4,578,008
Canada		247,387		185,660
Total		$	5,375,632	$	4,763,668

IZEA Worldwide, Inc.

Notes to the Consolidated Financial Statements

Three Months Ended Nine Months Ended
September 30,
2017 September 30,
2016 September 30,
2017 September 30,
2016
Stock options 993,546
904,706
979,775
874,363
Warrants 520,147
557,423
537,039
550,002
Restricted stock units —
—
—
—
Total excluded shares 1,513,693
1,462,129
1,516,814
1,424,365
Contract Balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers reported in the Company’s consolidated balance sheet:


	March 31, 2021		December 31, 2020
Accounts receivable, net	$	4,071,940	$	5,207,205
Contract liabilities (unearned revenue)	$	7,222,120	$	7,180,264

The increase in contract liabilities is primarily the result of the increase in first quarter contracts where the customers have paid in advance for services in future periods. The Company does not typically engage in contracts that are longer than one year. Therefore, the Company recognized substantially all of the contract liabilities recorded at the end of the year in the following year and it did not recognize any contract assets as of March 31, 2021 or December 31, 2020. The Company does not capitalize costs to obtain its customer contracts given their general duration of less than one year, and the amounts are not material.

Contract receivables are recognized when the receipt of consideration is unconditional. Contract liabilities relate to consideration received from customers in advance of the Company satisfying performance obligations under the terms of the contracts, which will be earned in future periods. Contract liabilities increase as a result of receiving new advance payments from customers and decrease as revenue is recognized upon the Company meeting the performance obligations. As a practical expedient, the Company expenses the costs of sales commissions that are paid to its sales force associated with obtaining contracts less than 1 year in length in the period incurred.

Remaining Performance Obligations

The Company typically enters into contracts that are one year or less in length. As such, the remaining performance obligations at March 31, 2021 and December 31, 2020 are equal to the contract liabilities disclosed above. The Company expects to recognize the full balance of the unearned revenue at March 31, 2021 within the next year.

NOTE 8.11. SUBSEQUENT EVENTS

~~No material events have occurred after September 30, 2017~~In April 2021, the Company sold 2,484,393 shares of its common stock at an average price of $4.91 per share for gross proceeds of $12,186,677 under the 2021 Sales Agreement with National Securities. On April 15, 2021, the Company announced that ~~require recognition or disclosure~~it had sold the entire $35.0 million of common stock available for sale under the 2021 Sales Agreement. All shares eligible to be sold under the ATM Offering were sold by the Company in the ~~financial statements.~~last two fiscal quarters of 2020 and the first two fiscal quarters of 2021. Over the selling period, the Company sold a total of 26,005,824 shares at an average price of $2.88 per share for total gross proceeds of approximately $75.0 million pursuant to the 2020 and 2021 Sales Agreements with National Securities. The 2020 and 2021 Sales Agreements were terminated following the sale of all shares of common stock available to be sold thereunder.

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Special~~Cautionary Note Regarding Forward-Looking Information

The following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with, our consolidated financial statements and related notes included elsewhere in this report. Historical results and percentage relationships among any amounts in these financial statements are not necessarily indicative of trends in operating results for any future period. This ~~report~~Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking ~~statements.”~~statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. The statements, which are not historical facts contained in this report, including ~~this Management's~~those contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the notes to our consolidated financial statements, particularly those that utilize terminology such as “may,” “will,” “would,” “could,” “should,” ~~“should,~~“expects,” ~~“expects,~~“anticipates,” “anticipates,” “estimates,” “believes,” “thinks,” “intends,” “likely,” “projects,” “plans,” “pursue,” “strategy” or “future,” or ~~“plans”~~the negative of these words or ~~comparable terminology~~other words or expressions of similar meaning, are forward-looking statements. Such statements are based on currently available operating, financial and competitive information, and are subject to ~~various~~inherent risks, uncertainties, and ~~uncertainties.~~changes in circumstances that are difficult to predict and many of which are outside of our control. Future events and our actual results and financial condition may differ materially from ~~the results~~those reflected in these forward-looking statements. ~~Factors~~Therefore, you should not rely on any of these forward-looking statements. Important factors that ~~might~~could cause ~~such a difference~~these differences include, but are not limited to, the following:

•the impact of the COVID-19 pandemic on our operations, financial condition, and the worldwide economy;

•customer cancellations;

•our ability to raise additional funding ~~customer cancellations,~~ needed to fund our business operation in the future;

•our ability to satisfy the requirements for continued listing of our common stock on the Nasdaq Capital Market;

•our ability to maintain effective disclosure controls and procedures and internal control over financial reporting;

•our ability to protect our intellectual property;

•our ability to maintain and grow our ~~business,~~ business;

•results of any future litigation;

•competition in the industry;

•variability of operating ~~results,~~ results;

•our ability to maintain and enhance our ~~brand,~~ brand;

•accuracy of tracking the number of user accounts;

•our development and introduction of new products and ~~services,~~ services;

•the successful integration of acquired companies, technologies and assets into our portfolio of software and ~~services,~~ services;

•marketing and other business development ~~initiatives, competition in the industry,~~ initiatives;

•general government ~~regulation,~~ regulation;

•economic conditions, including as a result of health and safety concerns;

•dependence on key ~~personnel,~~ personnel;

•the ability to attract, hire, and retain personnel who possess the technical skills and experience necessary to meet the service requirements of our ~~customers, our ability to protect our intellectual property,~~ customers;

•the potential liability with respect to actions taken by our existing and past ~~employees,~~ employees;

•risks associated with international ~~sales,~~sales; and

•the other risks and uncertainties described ~~herein~~in the Risk Factors sections of this Quarterly Report and in our ~~other filings with~~Annual Report on Form 10-K for the ~~SEC.~~year ended December 31, 2020.

All forward-looking statements in this document are based on our current expectations, intentions, and beliefs using information currently available to us as of the date of this ~~report,~~Quarterly Report, and we assume no obligation to update any forward-looking statements, except as required by law. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

~~Company History~~

~~IZEA was founded in February 2006 under the name PayPerPost, Inc. and became a public company incorporated in the state~~

Table of Nevada in May 2011. In January 2015, we purchased all of the outstanding shares of capital stock of Ebyline, Inc. and in July 2016, we purchased all the outstanding shares of capital stock of ZenContent, Inc. These entities, which aid in our management and production of custom branded content, now operate as wholly-owned subsidiaries under IZEA, Inc. On March 9, 2016, we formed IZEA Canada, Inc., a wholly-owned subsidiary of IZEA, Inc. incorporated in Ontario, Canada to operate as a sales and support office for our Canadian customers and partners.Contents

Company Overview

IZEA Worldwide, Inc. (“IZEA”, “we”, “us” or “our”) creates and operates online marketplaces that connect marketers, including brands, agencies, and publishers, with ~~influential~~ content ~~creators.~~creators such as bloggers and tweeters (“creators”). Our technology brings the marketers and creators together, enabling their transactions to be completed at scale through the management of custom content workflow, creator search and targeting, bidding, analytics, and payment processing.

We help power the creator economy, allowing everyone from college students and ~~stay at home moms~~stay-at-home individuals to celebrities and accredited journalists the opportunity to monetize their content, creativity and ~~influence.~~influence through our marketers. These creators are compensated by IZEA for producing unique content such as ~~long-form~~long and short form text, videos, photos, ~~illustrations,~~status updates, and ~~status updates. In addition to creating content~~illustrations for marketers ~~our creators are also compensated for distribution~~or distributing such content on behalf of ~~that content~~marketers through their personal websites, blogs, and social ~~channels such as Twitter, Facebook and YouTube.~~media channels.

Marketers ~~including brands, agencies, and partners,~~ engage us to gain access to our industry expertise, technology, data, analytics, and network of creators. ~~These companies are our primary customers where we generate the~~The majority of ~~our revenue. They~~the marketers engage us to perform these services on their behalf, but they also have the ability to use our ~~services~~marketplaces on a self-service basis by licensing our technology. Our technology is used for two primary purposes: the engagement of creators for influencer marketing campaigns, ~~(also known as “influencer marketing” or "sponsored social"),~~ or the engagement of creators to create stand-alone custom content for the ~~marketer's~~marketers’ own use ~~as well as third party content marketing~~ and ~~native advertising efforts (“custom content”).~~distribution. Marketers receive influential consumer content and engaging, shareable stories that drive awareness.

Our primary technology platform, ~~the~~The IZEA Exchange (“(“IZEAx”), enables transactions to be completed at scale through the management of custom content ~~development,~~workflow, creator search and targeting, bidding, analytics, and payment processing. IZEAx is designed to provide a unified ecosystem that enables the creation and publication of multiple types of custom content ~~including blog posts, status updates, videos, and photos to be provided and further distributed~~ through a ~~wide variety of~~creator’s personal websites, blogs, or social media channels including ~~blogs,~~ Twitter, Facebook, Instagram, and ~~Tumblr,~~YouTube, among others.

In ~~addition to~~ ~~IZEAx~~,2020, we ~~operate~~launched two new platforms, BrandGraph and Shake. BrandGraph is a social media intelligence platform that is heavily integrated with IZEAx and both platforms rely heavily on data from each other, but it is also available as a stand-alone platform. The platform maps and classifies the ~~Ebyline technology platform, which we acquired in January 2015.~~complex hierarchy of corporation-to-brand relationships by category and associates social content with brands through a proprietary content analysis engine. Shake is a new online marketplace where buyers can quickly and easily hire creators of all types for influencer marketing, photography, design, and other digital services. The ~~Ebyline~~Shake platform is aimed at digital creatives seeking freelance “gig” work. Creators list available “Shakes” on their accounts in the platform and marketers select and purchase creative packages from them through a ~~self-service content marketplace which was originally designed to replace editorial newsrooms located within newspapers with~~streamlined chat experience, assisted by ShakeBot - a ~~“virtual newsroom” to handle their content workflow.~~proprietary, artificial intelligence assistant.

Impact of COVID-19 on our Business

~~Results of Operations for~~Our operations, sales, and finances were impacted by the ~~Three Months Ended September 30, 2017 Compared to~~COVID-19 pandemic during the ~~Three Months Ended September 30, 2016~~

~~Revenues~~

Historically, we broke out our revenue into categories labeled Sponsored Revenue, Content Revenue and Service Fees. In January 2017, we revised the way we categorize our revenue streams to more closely align the revenue based on margin profiles and how we currently analyze our business. For the revised chart classification by quarterly historical periods in 2015 and 2016, see our Quarterly Report on Form 10-Q for the quarterthree months ended March 31, ~~2017 filed with~~2020. In an effort to protect the ~~SEC~~health and safety of our employees, we took precautionary action and directed all staff to work from home effective March 16, 2020 and we allowed the leases for our company headquarters and temporary office spaces to expire at the end of their terms throughout 2020. We have not experienced any major declines in operating efficiency in our remote working environment and have made the decision to continue our work from home policy indefinitely as a virtual first employer.

While we are able to maintain full operations remotely, the economic conditions caused by COVID-19 have negatively impacted the business activity of our customers. We observed changes in advertising decisions, timing, and spending priorities from brand and agency customers, which resulted in a negative impact to our revenue in 2020.

When COVID-19 is demonstrably contained, we anticipate a rebound in economic activity, depending on ~~May 10, 2017~~the rate, pace, and effectiveness of the containment efforts deployed by various national, state, and local governments; however, the timing and extent of any such rebound is uncertain. In the fourth quarter of 2020 and the ~~information set forth~~first quarter of 2021, we saw a year over year increase in Managed Services bookings, our net orders from customers. That growth in bookings led to a 13% growth in overall revenue in the three months ended March 31, 2021. While we have seen an increase in Managed Services bookings, there is still risk that bookings will not be recognized as revenue if customers cancel prior to the performance of service.

We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and prospects, or on our future financial results.

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Key Components of Results of Operations

Overall consolidated results of operations are evaluated based on Revenue, Cost of Revenue, Sales and Marketing expenses, General and Administrative expenses, Depreciation and Amortization, and Other Income (Expense), net.

Revenue

We generate revenue from four primary sources: (1) revenue from our managed services when a marketer (typically a brand, agency or partner) pays us to provide custom content, influencer marketing, amplification or other campaign management services (“Managed Services”); (2) revenue from fees charged to software customers on their marketplace spend within our IZEAx and Shake platforms (“Marketplace Spend Fees”); (3) revenue from license and subscription fees charged to access the IZEAx and BrandGraph platforms (“License Fees”); and (4) revenue derived from other fees such as inactivity fees, early cash-out fees, and other miscellaneous fees charged to users of our platforms (“Other Fees”).

As discussed in more detail within “Critical Accounting Policies and Use of Estimates” under ~~Management's Discussion~~“Note 1. Company and ~~Analysis entitled~~"Summary of Significant Accounting Policies,” under Part I, Item 1 herein, revenue from Marketplace Spend Fees is reported on a net basis and revenue from all other sources, including Managed Services, License Fees, and Other Fees are reported on a gross basis. We further categorize these sources into two primary groups: (1) Managed Services and (2) SaaS Services, which includes revenue from Marketplace Spend Fees, License Fees, and Other Fees.

Cost of Revenue

Our cost of revenue consists of direct costs paid to our third-party creators who provide the custom content, influencer marketing or amplification services for our Managed Service customers where we report revenue on a gross basis. It also includes internal costs related to our campaign fulfillment and SaaS support departments. These costs include salaries, bonuses, commissions, stock-based compensation, employee benefit costs, and miscellaneous departmental costs related to the personnel who are primarily responsible for providing support to our customers and ultimately fulfillment of our obligations under our contracts with customers. Where appropriate, we capitalize costs that were incurred with software that is developed or acquired for our revenue supporting platforms and amortize these costs over the estimated useful lives of those platforms. This amortization is separately stated under depreciation and amortization in our consolidated statements of operations and comprehensive loss.

Sales and Marketing

Our sales and marketing expenses consist primarily of salaries, bonuses, commissions, stock-based compensation, employee benefit costs, travel and miscellaneous departmental costs for our marketing, sales and sales support personnel, as well as marketing expenses such as brand marketing, public relation events, trade shows and marketing materials, and travel expenses.

General and Administrative

Our general and administrative expense consists primarily of salaries, bonuses, commissions, stock-based compensation, employee benefit costs, and miscellaneous departmental costs related to our executive, finance, legal, human resources, and other administrative personnel. It also includes travel, public company and investor relations expenses, as well as accounting and legal professional services fees, leasehold facilities, and other corporate-related expenses. General and administrative expense also includes our technology and development costs consisting primarily of our payroll costs for our internal engineers and contractors responsible for developing, maintaining, and improving our technology, as well as hosting and software subscription costs. These costs are expensed as incurred, except to the extent that they are associated with internal use software that qualifies for capitalization, which are then recorded as software development costs in the consolidated balance sheet. We also capitalize costs that are related to our acquired intangible assets. Depreciation and amortization related to these costs are separately stated under depreciation and amortization in our consolidated statements of operations and comprehensive loss. General and administrative expense also includes current period gains and losses on our acquisition costs payable, as well as gains and losses from the sale of fixed assets. Impairments on fixed assets, intangible assets and goodwill, are included as part of general and administrative expense when they are not material and broken out separately in our consolidated statements of operations and comprehensive loss when they are material.

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Depreciation and Amortization

Depreciation and amortization expense consists primarily of amortization of our internal use software and acquired intangible assets from our business acquisitions. To a lesser extent, we also have depreciation and amortization on equipment and leasehold improvements used by our personnel. Costs are amortized or depreciated over the estimated useful lives of the associated assets.

Other Income (Expense)

Interest Expense. Interest expense is mainly related to the imputed interest on our acquisition costs payable and interest when we use our secured credit facility.

Other Income (Expense). Other income (expense) consists primarily of interest income for interest earned or changes in the value of our foreign assets and liabilities and foreign currency exchange gains and losses on foreign currency transactions, primarily related to the Canadian Dollar.

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Results of Operations for the Three Months Ended March 31, ~~2017 Compared to the Three Months Ended March 31, 2016." Our prior period revenue~~2021 and ~~cost categories included herein have been reclassified to conform to the current period presentation.~~

We derive revenue from three sources: revenue from our managed services when a marketer, typically a brand, agency or partner, pays us to provide custom content, influencer marketing or amplification services ("Managed Services"), revenue from the self-service use of our Ebyline platform by news agencies to handle their content workflow from initial content request to payment of content received ("Content Workflow"), and revenue derived from various service and license fees charged to users of our platforms ("Service Fee Revenue").

~~The following table illustrates our approximate revenue, cost of sales and gross profit by revenue stream for the three months ended September 30, 2017 and 2016:~~

Three Months Ended
September 30, 2017 September 30, 2016 $ Change % Change
Revenue & % of Total
Managed Services $ 6,997,391
86 % $ 5,838,139
78 % $ 1,159,252
20 %
Content Workflow 1,141,795
14 % 1,576,001
21 % (434,206 ) (28 )%
Service Fees & Other Revenue 15,488
— % 82,832
1 % (67,344 ) (81 )%
Total Revenue $ 8,154,674
100 % $ 7,496,972
100 % $ 657,702
9 %

Cost of Sales & % of Total
Managed Services COS $ 2,693,803
72 % $ 2,464,238
63 % $ 229,565
9 %
Content Workflow COS 1,064,818
28 % 1,463,041
37 % (398,223 ) (27 )%
Service Fees & Other COS —
— % —
— % —
100 %
Total Cost of Sales $ 3,758,621
100 % $ 3,927,279
100 % $ (168,658 ) (4 )%

Gross Profit & Profit %
Managed Services $ 4,303,588
62 % $ 3,373,901
58 % $ 929,687
28 %
Content Workflow 76,977
7 % 112,960
7 % (35,983 ) (32 )%
Service Fees & Other Revenue 15,488
100 % 82,832
100 % (67,344 ) (81 )%
Total Gross Profit $ 4,396,053
54 % $ 3,569,693
48 % $ 826,360
23 %

Revenues for the three months ended September 30, 2017 increased by $657,702, or approximately 9%, compared to the same period in 2016. Managed Services revenue increased primarily due to concentrated sales efforts toward larger IZEA-managed campaigns that have components of both custom content and influencer marketing resulting in higher revenue per

salesperson, and repeat business from existing customers. Content Workflow revenue generated from newspaper and traditional publishers through the Ebyline platform on a self-service basis declined compared to the same period in 2016 due to the ongoing consolidation and cutbacks in the newspaper industry. Although revenue from Content Workflow decreased by $434,206, or approximately 28%, in the three months ended September 30, 2017, our gross margin only declined by $35,983, because the margins are fixed at only 7% to 9% with these customers. We expect to see continued declines in Content Workflow revenue up to 35% compared to prior year levels due to the overall decline in this industry. Service Fee revenue decreased in the three months ended September 30, 2017 due to lower licensing fees generated from partners using our platforms.

Our net bookings of $7.9 million for the three months ended September 30, 2017 were 2% higher than the net bookings of $7.7 million for the three months ended September 30, 2016. Net bookings is a measure of sales orders received minus any cancellations or changes in a given period. Management uses net bookings as a leading indicator of future revenue recognition as revenue is typically recognized within 90-120 days of booking, though larger contracts may be recognized over twelve months from the original booking date. Net bookings can be affected by, among other things, cancellations or changes to orders that occur in future periods. Reductions in net bookings or changes in the expected timing of delivery for services due to delays and customer preferences or other considerations may result in fluctuations in expected future revenue.

~~Cost of Sales and Gross Profit~~

Our cost of sales is comprised primarily of amounts paid to our content creators to provide custom content or advertising services through the promotion or amplification of sponsored content in a blog post, tweet, click or action.

Cost of sales for the three months ended September 30, 2017 decreased by $168,658, or approximately 4%, compared to the same period in 2016. Cost of sales decreased overall due to the decrease in Content Workflow. However, this decrease was tempered by the increase in costs on Managed Services as a result of the higher revenues generated during the quarter.

Gross profit for the three months ended September 30, 2017 increased by $826,360, or approximately 23%, compared to the same period in 2016. Our gross profit percentage increased nearly 600 basis points in the three months ended September 30, 2017 compared to the same period in 2016. This increase is a result of the increased margins we are receiving on our managed customer content services in 2017. Content Workflow gross margin was consistent at 7% for the three months ended September 30, 2017 and 2016.

The total gross profit increase was primarily attributable to the increase in revenue and contribution margin from our higher margin, Managed Services offset by reduced revenue from our lower margin, Content Workflow. Managed Services contributed approximately 98% to the gross profit during the three months ended September 30, 2017 compared to 95% during the three months ended September 30, 2016. The mix of sales between our higher margin, Managed Services and lower margin, Content Workflow has a significant effect on our overall gross profit percentage.

2020

The following table sets forth a summary of our consolidated statements of operations and comprehensive loss and the change between the periods:



	Three Months Ended March 31,
	2021		2020		$ Change		% Change
Revenue	$	5,375,632	$	4,763,668	$	611,964	13	%

Costs and expenses:
Cost of revenue (exclusive of amortization)	2,404,752		2,140,517		264,235		12	%
Sales and marketing	2,078,323		1,523,143		555,180		36	%
General and administrative	2,535,147		2,417,838		117,309		5	%
Impairment of goodwill	—		4,300,000		(4,300,000)		(100)	%
Depreciation and amortization	365,529		501,269		(135,740)		(27)	%
Total costs and expenses	7,383,751		10,882,767		(3,499,016)		(32)	%
Loss from operations	(2,008,119)		(6,119,099)		4,110,980		(67)	%
Other income (expense):
Interest expense	(13,793)		(6,618)		(7,175)		108	%
Other income (expense), net	29,474		(37,744)		67,218		(178)	%
Total other income (expense), net	15,681		(44,362)		60,043		(135)	%
Net loss	$	(1,992,438)	$	(6,163,461)	$	4,171,023	(68)	%

(Unaudited)
Three Months Ended
September 30,
2017 September 30,
2016 $ Change % Change
Revenue $ 8,154,674
$ 7,496,972
$ 657,702
9 %
Cost of sales 3,758,621
3,927,279
(168,658 ) (4 )%
Gross profit 4,396,053
3,569,693
826,360
23 %
Operating expenses:
General and administrative 2,687,266
2,454,555
232,711
9 %
Sales and marketing 2,342,002
2,584,287
(242,285 ) (9 )%
Total operating expenses 5,029,268
5,038,842
(9,574 ) — %
Loss from operations (633,215 ) (1,469,149 ) 835,934
57 %
Other income (expense):
Interest expense (15,058 ) (25,511 ) 10,453
(41 )%
Loss on exchange of warrants —
—
—
100 %
Change in fair value of derivatives, net 45,160
(14,705 ) 59,865
(407 )%
Other income (expense), net 44,308
(2,238 ) 46,546
(2,080 )%
Total other income (expense), net 74,410
(42,454 ) 116,864
275 %
Net loss $ (558,805 ) $ (1,511,603 ) $ 952,798
63 %

Revenue

The following table illustrates our revenue by type, the percentage of total revenue by type, and the change between the periods:

~~Operating Expenses~~



	Three Months Ended March 31,
	2021				2020				$ Change		% Change
Managed Services Revenue	$	4,872,034	91	%	$	4,125,061	87	%	$	746,973	18	%

Marketplace Spend Fees	108,797		2	%	166,293		3	%	(57,496)		(35)	%
License Fees	383,041		7	%	451,548		10	%	(68,507)		(15)	%
Other Fees	11,760		—	%	20,766		—	%	(9,006)		(43)	%
SaaS Services Revenue	503,598		9	%	638,607		13	%	(135,009)		(21)	%
Total Revenue	$	5,375,632	100	%	$	4,763,668	100	%	$	611,964	13	%

~~Operating expenses consist~~Managed Services revenue during the three months ended March 31, 2021, increased 18% from the same period in 2020, primarily due to increased orders from new and existing customers returning to and expanding their marketing efforts through sponsored social marketing as compared to the prior year period when customers began to curtail marketing efforts in light of ~~general~~the COVID-19 uncertainties.

SaaS Services revenue is generated by the self-service use of our technology platforms by marketers to manage their own content workflow and ~~administrative expenses~~influencer marketing campaigns. It consists of fees earned on the marketer’s spend within the IZEAx, BrandGraph, and ~~sales~~Shake platforms, along with the license and ~~marketing expenses. Total operating expenses~~support fees to access the platform services.

•Marketplace Spend Fees decreased by $57,496 for the three months ended ~~September 30, 2017~~March 31, 2021 when compared with the same period in 2020, primarily as a result of lower spend levels from our marketers and lower average fees assessed on those spends as a result of competitive pricing efforts in IZEAx. Revenue from Marketplace Spend Fees represents our net margins received on this business.

•License Fees revenue decreased during the three months ended March 31, 2021 to $383,041 compared to $451,548 in the same period of 2020. The decrease was a result of the implementation of a competitive standardized pricing system for all new and renewing IZEAx license fee customers in 2020 that was at a lower

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price point than the former licensing contracts put in place prior to 2020. The decrease in IZEAx license fees was offset by ~~$9,574~~an increase in subscriptions for BrandGraph and IZEAx Discovery services. Prior to 2021, the subscription fees for BrandGraph and IZEAx Discovery were classified under Other Fees, but these amounts from 2020 have been reclassified under License Fees to conform with their 2021 classification.

•Other Fees revenue decreased (43)% for the three months ended March 31, 2021 compared to the same period in ~~2016.~~2020 due to a decrease in the amount of inactivity fees assessed on user accounts.

Cost of Revenue

Cost of revenue for the three months ended March 31, 2021 increased by $264,235, or approximately 12%, compared to the same period in 2020 primarily as a result of the increase in Managed Services revenue. Cost of revenue as a percentage of revenue remained consistent at 45% in 2020 and 45% in 2021.

Sales and Marketing

Sales and marketing expense for the three months ended March 31, 2021 increased by $555,180, or approximately 36%, compared to the same period in 2020. Advertising and marketing expenses increased $328,000 as a result of increased spends to increase brand awareness and improve customer acquisition, satisfaction and retention. Our payroll and personnel related expenses and stock compensation for sales and marketing personnel increased $208,000 as a result of increased commission and bonus expense due to the increase in customer bookings in the first quarter of 2021.

General and administrative expense for the three months ended ~~September 30, 2017~~March 31, 2021 increased by $232,711 compared to the same period in 2016. We posted a $129,000 increase in fixed personnel costs and in the variable costs related to personnel such as stock based compensation expense, software and subscription costs, communication, travel and supply costs due to higher average salaries and higher bonuses for our administrative and engineering personnel compared to the prior year period. General and administrative expense also increased by approximately $153,000 as a result of the change in our acquisition cost liability related to the ZenContent acquisition in July 2016 as further discussed below. The increases in general and administrative expenses during the three months ended September 30, 2017 were offset by a $27,000 decrease in contractor and professional fees and a $31,000 decrease in investor relation expenses due to the non-renewal of our investor relations firm agreement (effective May 1, 2017).

On July 31, 2016, we purchased all of the outstanding shares of capital stock of ZenContent, Inc. for aggregate consideration up to $4,500,000, consisting of guaranteed payments of $2,000,000 and contingent performance payments up to $2,500,000 based on ZenContent meeting certain revenue targets for each of the three years ending July 31, 2017, 2018 and 2019. These payments are subject to downward adjustment of up to 30% if Brianna DeMike, ZenContent’s co-founder, is terminated by IZEA for cause or if she terminates her employment without good reason. As a result, the Company initially reduced its acquisition cost liability by $300,000 to be accrued as compensation expense over the three-year term rather than allocated to the purchase price in accordance with ASC 805-10-55-25. Compensation expense added to the guaranteed acquisition costs payable and recorded as general and administrative expense was $28,125 and $40,972 during the three months ended September 30, 2017 and 2016, respectively. We estimate the fair value of the $2,500,000 of the future contingent performance payments for the ZenContent purchase each quarter using a Monte-Carlo simulation to simulate revenue based on actual results and future projections. Based on this calculation, we determined that the current fair value of the contingent performance payments was $508,444 as of September 30, 2017 compared to $342,861 as of June 30, 2017. As a result of the change in the value, we recorded a $165,583 non-cash increase in general and administrative expense during the three months ended September 30, 2017. Of this amount, $47,583 was allocated to compensation expense and $118,000 was allocated as an increase in the fair value of the contingent performance payments. To the extent that our future estimates in the value of contingent performance payments changes, this will continue to affect our general and administrative expense.

Sales and marketing expenses consist primarily of personnel costs related to employees and consultants who support sales and marketing efforts, promotional and advertising costs, and trade show expenses. Sales and marketing expenses for the three months ended September 30, 2017 decreased by $242,285,$117,309, or approximately 9%5%, compared to the same period in ~~2016. The decrease in sales~~2020. General and ~~marketing~~administrative expense ~~was primarily attributable~~for the three months ended March 31, 2021 increased due to a ~~$134,000 decrease~~$166,000 increase in ~~public relations, tradeshows~~payroll and ~~marketing event attendance in 2017~~personnel related expenses primarily as a result of ~~our cost reduction efforts for near term profitability, as well as a $74,000 decrease~~an increase in annual salaries, and ~~variable costs related to sales~~higher bonus and ~~sales support personnel~~stock compensation expense due to ~~a 25% reduction~~the improved company performance in the first quarter of 2021. Contractor expenses increased $209,000 as we are increasing the number of ~~personnel following~~internal and external engineers working on our ~~implementation~~technology offerings. These increases were partially offset by decreases in (i) rent expense of ~~marketing automation~~$142,000 due to the non-renewal of expiring office facility leases, (ii) software and ~~ongoing performance optimization~~AWS hosting costs of $77,000 due to continued efforts to reduce software subscriptions in 2020 and improve efficiencies in our data storage, (iii) non-renewal of investor relations contracts, and (iv) the elimination of travel costs of $19,000 due to limited travel after the outbreak of COVID-19.

Impairment of Goodwill

In March 2020, we identified triggering events due to the reduction in our projected revenue due to adverse economic conditions caused by the COVID-19 pandemic, the continuation of a market capitalization below our carrying value, and uncertainty for recovery given the volatility of the capital markets surrounding COVID-19. We performed an interim assessment of goodwill, using the discounted cash flow method under the income approach and the guideline transaction method under the market approach, and determined that the carrying value of our Company’s reporting unit as of March 31, 2020 exceeded the fair value. As a result of the valuation, we recorded a $4.3 million impairment of goodwill resulting in an expense for the three months ended March 31, 2020.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended March 31, 2021 decreased by $135,740, or approximately 27%, compared to the same period in 2020.

Depreciation and amortization expense on property and equipment was $32,486 and $35,629 for the three months ended March 31, 2021 and 2020, respectively. Depreciation expense has increased slightly due to the purchase of new equipment in recent periods.

Amortization expense was $333,043 and $465,640 for the three months ended March 31, 2021 and 2020, respectively. Amortization expense related to intangible assets acquired in the Ebyline, ZenContent, and TapInfluence acquisitions was $216,667 and $364,990 for the three months ended March 31, 2021 and 2020, respectively, while amortization expense related to internal use software development costs was $116,376 and $100,650 for the three months ended March 31, 2021 and 2020, respectively. Amortization on our intangible acquisition assets decreased in 2021 as several of these assets were fully amortized during ~~2017.~~2020. Amortization on our internal use software increased due to the release of BrandGraph and Shake in 2020.

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Other Income (Expense)

~~Other income (expense) consists primarily of interest~~Interest expense ~~loss on exchange of warrants and the change in the fair value of derivatives.~~

~~In prior years, we entered into financing transactions that gave rise~~increased by $7,175 to derivative liabilities. Additionally, we issue restricted stock that vests over future periods. These financial instruments are carried at fair value in our financial statements. Changes in the fair value of these instruments are required to be recorded in other income (expense) in the period of change. During the three months ended September 30, 2017 and 2016, we recorded income of $45,160 and expense of $15,936, respectively, due to the change in the fair value of our restricted stock as a result of the fluctuation in our stock price between the time of issuance and the time when the stock vested. During the three months ended September 30, 2016, we recorded income of $1,231, related to the change in the fair value of our remaining warrant liability. We have no control over the amount of change in the fair value of our derivative instruments as this is a factor based on fluctuating interest rates and stock prices and other market conditions outside of our control.

~~The $46,546 change in other income (expense) is primarily the result of currency exchange losses related to our Canadian transactions~~$13,793 during the three months ended ~~September 30, 2017.~~March 31, 2021 compared to the same period in 2020 due primarily to increase in our financing arrangements, such as the PPP Loan, and the interest imputed thereon during the three months ended March 31, 2021 compared to the same period in 2020.

The $67,218 increase in other income during the three months ended March 31, 2021 when compared to the same period in 2020 resulted primarily from increased interest income received on the substantial increase in cash balances, as well as, currency exchange gains on our Canadian transactions in 2021 compared with losses in 2020.

Net Loss

Net loss for the three months ended ~~September 30, 2017~~March 31, 2021 was ~~$558,805, which decreased from~~$1,992,438, a $4,171,023 decrease in the net loss of ~~$1,511,603~~$6,163,461 for the same period in ~~2016.~~2020. The decrease in net loss was primarily the result of the ~~increase in our gross profit contribution as~~impairment of goodwill discussed ~~above.~~

~~Results of Operations for the Nine Months Ended September 30, 2017 Compared to the Nine Months EndedSeptember 30, 2016~~

~~Revenues~~

~~The following table illustrates our approximate revenue, cost of sales and gross profit by revenue stream for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended
September 30, 2017 September 30, 2016 $ Change % Change
Revenue & % of Total
Managed Services $ 17,274,314
81 % $ 14,741,536
74 % $ 2,532,778
17 %
Content Workflow 3,973,286
19 % 4,875,237
25 % (901,951 ) (19 )%
Service Fees & Other Revenue 89,801
— % 259,838
1 % (170,037 ) (65 )%
Total Revenue $ 21,337,401
100 % $ 19,876,611
100 % $ 1,460,790
7 %

Cost of Sales & % of Total
Managed Services COS $ 6,696,191
64 % $ 5,921,107
57 % $ 775,084
13 %
Content Workflow COS 3,700,137
36 % 4,525,928
43 % (825,791 ) (18 )%
Service Fees & Other COS —
— % —
— % —
100 %
Total Cost of Sales $ 10,396,328
100 % $ 10,447,035
100 % $ (50,707 ) — %

Gross Profit & Profit %
Managed Services $ 10,578,123
61 % $ 8,820,429
60 % $ 1,757,694
20 %
Content Workflow 273,149
7 % 349,309
7 % (76,160 ) (22 )%
Service Fees & Other Revenue 89,801
100 % 259,838
100 % (170,037 ) (65 )%
Total Gross Profit $ 10,941,073
51 % $ 9,429,576
47 % $ 1,511,497
16 %

~~Revenues for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017increased~~ ~~by $1,460,790, or approximately 7%, compared to the same period in~~ ~~2016~~. Managed Services revenue increased $2,532,778, Content Workflow revenue decreased $901,951 and Service Fee Revenue decreased $170,037 during the nine months ended September 30, 2017 compared to the same period in 2016. Managed Services revenue increased primarily due to concentrated sales efforts toward larger IZEA-managed campaigns that have components of both custom content and influencer marketing resulting in higher revenue per salesperson, and repeat business from existing customers. Content Workflow revenue generated from newspaper and traditional publishers through the Ebyline platform on a self-service basis declined compared to the same period in 2016 due to the ongoing consolidation and cutbacks in the newspaper industry. Although revenue from Content Workflow decreased by $901,951, or 19%, in the nine months ended September 30, 2017, our gross margin only declined by $76,160, because the margins are fixed with these customers at only 7% to 9%. We expect to see continued declines in Content Workflow revenue up to 35% compared to prior year levels due to the overall decline in this industry. Service Fee revenue decreased in the nine months ended September 30, 2017 due to lower licensing fees generated from partners using our platforms.

~~We estimate that revenue from our Managed Services will continue to increase over the prior year, but this increase will be~~above partially offset ~~by the declines in the self-service Content Workflow revenue noted above. We estimate that total revenue will be between $29-$30 million, with gross margins ranging between 49% to 50% for 2017.~~

Our net bookings of $22.3 million for the nine months ended September 30, 2017 were higher than the net bookings of $21.9 million for the nine months ended September 30, 2016. This minimal increase is due to a $1.2 million reduction in 2017 bookings from Content Workflow as discussed above.

~~Cost of Sales and Gross Profit~~

~~Cost of sales for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017decreased~~ ~~by $50,707 compared to the same period in~~ ~~2016. Cost of sales decreased due to the decrease in higher cost Content Workflow revenue. However, this decrease was tempered~~ by the increase in ~~costs spent~~sales and marketing and general and administrative expenses in 2021.

Key Metric

We review information provided by our key financial metric, gross billings, to assess the progress of our business and make decisions on ~~Managed Services as a result of the higher revenues generated during the quarter.~~

~~Gross profit for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017increased~~ ~~by $1,511,497, or approximately 16%, compared~~where to allocate our resources. As our business evolves, we may make changes to the ~~same period~~key financial metrics that we consider to measure our business in ~~2016. Our gross profit as a percentage of revenue increased from 47% for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2016~~ ~~to 51% for the same period~~future periods.

Gross Billings by Revenue Type

Company management evaluates our operations and makes strategic decisions based, in ~~2017. The gross margin~~part, on our ~~Managed Services for influencer marketing or custom content services was 61%, while the~~key metric of gross ~~margin on Content Workflow was 7% for the~~ ~~nine months~~ ended September 30, 2017. Prior to being acquired by IZEA in 2015, Ebyline generated revenue primarily from newspaper and traditional publishers through their workflow platform on a self-service basis at a fixed 7% to 9% profit. We do not actively sell or market Content Workflow to new customers due to the low margins and challenges facing the newspaper industry. After the acquisition, this revenue stream still contributes a significant portion of our revenue, but we utilize the content creators to promote the sale of custom content to our marketers on a managed basis. These services are sold at comparable margins to our influencer marketing services.

~~The total gross profit increase was primarily attributable to the increase in revenue and contribution margin~~billings from our ~~higher margin, Managed Services versus reduced~~two primary types of revenue, ~~from our lower margin, Content Workflow. Managed Services contributed approximately 96% to the gross profit during the~~ ~~nine months~~ ~~ended September 30, 2017 compared to 93% during the~~ ~~nine months~~ ~~ended September 30, 2016. The mix of sales between our higher margin,~~ Managed Services and ~~lower margin, Content Workflow has a significant effect~~SaaS Services. We define gross billings as the total dollar value of the amounts earned from our customers for the services we perform or the amounts billed to our SaaS customers for their self-service purchase of goods and services on our ~~overall~~platforms. The amounts billed to our SaaS customers are on a cost plus basis. Gross billings are the amounts of our reported revenue plus the cost of payments we made to third-party creators providing the content or sponsorship services, which are netted against revenue for generally accepted accounting principles in the United States (“GAAP”) reporting purposes.

Managed Services Gross Billings include the total dollar value of the amounts billed to our customers for the services we perform. Gross billings for Managed Services are the same as Managed Services Revenue reported for those services in our consolidated statements of operations and comprehensive loss in accordance with GAAP.

SaaS Service Gross Billings include the license and other fees together with the total amounts billed to our SaaS customers for their self-service purchase of goods and services on our platforms, termed ‘Marketplace Spend Fees’. Our SaaS customers’ marketplace spend is billed on a cost-plus basis. SaaS Services Revenue includes the total of License and Other Fees gross ~~profit percentage.~~billings, plus the Marketplace Spend Fees gross billings netted by our third-party creator costs on those billings in accordance with GAAP.

We consider gross billings to be an important indicator of our potential performance as it measures the total dollar volume of transactions generated through our marketplaces. Tracking gross billings allows us to monitor the percentage of gross billings that we are able to retain after payments to our creators. Additionally, tracking gross billings is critical as it pertains to our credit risk and cash flows. We invoice our customers based on total services performed or based on their self-service transactions plus our fee. Then we remit the agreed-upon transaction price to the creators. If we do not collect the money from our customers prior to the time of payment to our creators, we could experience large swings in our cash flows. Additionally, we incur the credit risk to collect amounts owed from our customers for all services performed by us or by the creators. Finally, gross billings allow us to evaluate our transaction totals on an equal basis in order for us to see our contribution margins by revenue stream so that we can better understand where we should be allocating our resources.

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The following ~~table sets~~tables set forth ~~a summary~~our gross billings by revenue type, the percentage of ~~our statements of operations~~total gross billings by type, and the change between the periods:


	Three Months Ended March 31,
	2021			2020			$ Change		% Change
Managed Services Gross Billings	$	4,872,034	74%	$	4,125,061	68%	$	746,973	18%

Marketplace Spend Fees	1,351,592		20%	1,499,774		25%	(148,182)		(10)%
License Fees	383,041		6%	451,548		7%	(68,507)		(15)%
Other Fees	11,760		—%	20,766		—%	(9,006)		(43)%
SaaS Services Gross Billings	1,746,393		26%	1,972,088		32%	(225,695)		(11)%
Total Gross Billings	$	6,618,427	100%	$	6,097,149	100%	$	521,278	9%

(Unaudited)
Nine Months Ended
September 30,
2017 September 30,
2016 $ Change % Change
Revenue $ 21,337,401
$ 19,876,611
$ 1,460,790
7 %
Cost of sales 10,396,328
10,447,035
(50,707 ) — %
Gross profit 10,941,073
9,429,576
1,511,497
16 %
Operating expenses:
General and administrative 8,021,420
7,559,302
462,118
6 %
Sales and marketing 7,666,720
7,556,664
110,056
1 %
Total operating expenses 15,688,140
15,115,966
572,174
4 %
Loss from operations (4,747,067 ) (5,686,390 ) 939,323
17 %
Other income (expense):
Interest expense (45,406 ) (58,261 ) 12,855
(22 )%
Loss on exchange of warrants —
—
—
100 %
Change in fair value of derivatives, net 36,122
14,568
21,554
148 %
Other income (expense), net 31,728
(485 ) 32,213
(6,642 )%
Total other income (expense), net 22,444
(44,178 ) 66,622
151 %
Net loss $ (4,724,623 ) $ (5,730,568 ) $ 1,005,945
18 %

~~Operating Expenses~~

Operating expenses consist of general and administrative expenses and sales and marketing expenses. Total operating expenses for the nine months ended September 30, 2017 increased by $572,174, or approximately 4%, compared to the same period in 2016. The increase was primarily attributable to increased personnel costs and additional marketing costs related to our IZEAFest Conference held in February 2017.

General and administrative expenses consist primarily of administrative and engineering personnel costs, general operating costs, public company costs, including non-cash stock compensation, acquisition costs, facilities costs, insurance, depreciation, professional fees, and investor relations costs. General and administrative expense for the nine months ended September 30, 2017 increased by $462,118, or approximately 6%, compared to the same period in 2016. The increase was primarily attributable to a $234,000 increase in base salary and personnel costs and in variable costs related to personnel such as bonuses, stock-based compensation expense, software and subscription costs, communication, travel and supply costs. Our

depreciation and amortization expense increased by $161,000 as a result of additional amortization on the increase in our intangible assets from software costs and the intangibles acquired in the ZenContent acquisition. As further discussed below, the change in our acquisition cost liability related to the ZenContent acquisition in July 2016 contributed $295,000 to the increase in general and administrative expense. The increases in general and administrative expense during the nine months ended September 30, 2017 were partially offset by a $99,000 decrease in contractor fees related to our software platforms and a $91,000 decrease in investor relation expenses due to the non-renewal of our investor relations firm after April 2017 and lower NASDAQ filing fees.

General and administrative expense is affected by the changes in our ZenContent acquisition liability valuation that are allocated to compensation expense each period. On July 31, 2016, we reduced our acquisition cost liability for guaranteed purchase price payments by $300,000 to be accrued as compensation expense over the three-year payment term. The compensation expense recorded as general and administrative expense and accrued to the acquisition cost liability during the nine months ended September 30, 2017 and 2016 was $151,042 and $40,972, respectively. We also determined that the current fair value of the $2,500,000 contingent performance payments for the ZenContent was $508,444 as of September 30, 2017 compared to $324,000 as of December 31, 2016. As a result of the change in the value, we recorded a $184,444 non-cash expense during the nine months ended September 30, 2017. Of this amount, $122,444 was allocated to compensation expense and $62,000 was allocated as an increase in the fair value of the contingent performance payments. To the extent that our future estimates in the value of contingent performance payments changes, this will continue to affect our general and administrative expense.

~~Other Income (Expense)~~

~~Other income (expense) consists primarily of interest expense and the change in the fair value of derivatives.~~

~~Interest expense during the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017decreased~~ ~~by $12,855 to $45,406 compared to the same period in~~ ~~2016~~ ~~primarily due to the lower imputed interest on the remaining balance of acquisition costs payable.~~

In prior years, we entered into financing transactions that gave rise to derivative liabilities. Additionally, we issue restricted stock that vests over future periods. These financial instruments are carried at fair value in our financial statements. Changes in the fair value of derivative financial instruments are required to be recorded in other income (expense) in the period of change. We recorded income of $36,122 and $14,568 resulting from the change in the fair value of certain warrants and restricted stock during the ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively.~~

~~The $32,213 change in other income (expense) is primarily the result of currency exchange losses related to our Canadian transactions during the~~ ~~nine months~~ ~~ended September 30, 2017.~~

~~Net Loss~~

~~Net loss for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~was~~ ~~$4,724,623, which decreased from a net loss of~~ ~~$5,730,568~~ ~~for the same period in~~ ~~2016. The decrease in net loss was primarily the result of the increased revenue and profit margins on our Managed Services offset by the increase in personnel expenses as discussed above.~~

Non-GAAP Financial ~~Measures~~Measure

~~Below are financial measures of cash based operating expenses (“Cash Opex”) and~~ Adjusted ~~EBITDA. These are~~EBITDA

Adjusted EBITDA is a “non-GAAP financial ~~measures” as defined~~measure” under the rules of the Securities and Exchange Commission (the “SEC”).

We define Cash Opex as total operating expenses exclusive of unusual or non-cash expenses such as depreciation and amortization, non-cash stock related compensation, gain or loss on asset disposals or impairment and changes in acquisition cost estimates, and gains or losses on settlement of liabilities, if applicable.

We define Adjusted EBITDA as earnings or loss before interest, taxes, depreciation and amortization, non-cash ~~stock related~~stock-based compensation, gain or loss on asset disposals or impairment, ~~changes in acquisition cost estimates,~~ and ~~all~~certain other unusual or non-cash income and expense items such as gains or losses on settlement of liabilities and exchanges, and changes in the fair value of derivatives, if applicable.

We use ~~Cash Opex as a percentage of revenue and~~ Adjusted EBITDA as ~~measures~~a measure of operating performance, for planning purposes, to allocate resources to enhance the financial performance of our business, and in communications with our Board of Directors regarding our financial performance. We believe that ~~Cash Opex as a percentage of revenue and~~ Adjusted EBITDA also ~~provide~~provides useful information to investors as ~~they exclude transactions not related to our core cash operating business activities, including~~it primarily excludes non-cash transactions, and ~~they provide~~it provides consistency ~~and~~to facilitate period-to-period comparisons. ~~We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.~~

All companies do not calculate ~~Cash Opex and~~ Adjusted EBITDA in the same manner, ~~and Cash Opex~~ and Adjusted EBITDA as presented by us may not be comparable to ~~Cash Opex and~~ Adjusted EBITDA presented by other companies, which limits ~~their~~its usefulness as a comparative ~~measures.~~

measure. Moreover, ~~Cash Opex and~~ Adjusted EBITDA ~~have~~has limitations as an analytical ~~tools,~~tool, and you should not consider ~~them~~it in isolation or as a substitute for an analysis of our results of operations as ~~reported~~ under ~~generally accepted accounting principles~~GAAP. These limitations are described further in the ~~United States (“GAAP”). These limitations include that Cash Opex~~“Management’s Discussion and ~~Adjusted EBITDA:~~

~~do not include stock-based compensation expense, which has been,~~Analysis of Financial Condition and ~~will continue to be~~Results of Operations” section our Annual Report on Form 10-K for the ~~foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;~~fiscal year ended December 31, 2020.

do not include stock issued for payment of services, which is a non-cash expense, but has been, and is expected to be for the foreseeable future, an important means for us to compensate our vendors and other parties who provide us with services;

do not include changes in acquisition cost estimates as a result of the allocation of acquisition costs payable to compensation expense or changes in the estimate of contingent acquisition costs payable, which may or may not ever be paid, but may be a significant recurring expense for our business if we continue to make business acquisitions;

do not include gains or losses on the settlement of acquisition costs payable or liabilities when the stock value, as agreed upon in the agreement, varies from the market price of our stock on the settlement date, which is a non-cash expense, but will continue to be a recurring expense for our business on certain business contracts where the amounts can vary; and

do not include depreciation and intangible assets amortization expense, impairment charges and gains or losses on disposal of equipment, which is not always a current period cash expense, but the assets being depreciated and amortized may have to be replaced in the future.

Furthermore, Adjusted EBITDA excludes changes in fair value of derivatives, interest expense and other gains, losses, and expenses that we do not believe are indicative of our ongoing results, but these items may represent a reduction or increase in cash available to us.

Because of these limitations, Cash Opex should not be considered as a measure of our total operating expenses, and Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the operation and growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures as supplements. In evaluating these non-GAAP financial measures, you should be aware that in the future we may incur expenses similar to those for which adjustments are made in calculating Adjusted EBITDA and Cash Opex. Our presentation of these non-GAAP financial measures should also not be construed to infer that our future results will be unaffected by unusual or non-recurring items.

The following table sets forth a reconciliation from the GAAP measurement of ~~Operating Expenses to our non-GAAP financial measure of Cash Opex and Cash Opex as a percentage of revenue for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Total operating expenses $ 5,029,268
$ 5,038,842
$ 15,688,140
$ 15,115,966
Less:
Non-cash stock-based compensation 182,796
170,818
509,642
576,144
Non-cash stock issued for payment of services 60,074
34,970
143,536
107,440
(Gain) loss on disposal of equipment (1,775 ) (484 ) (5,462 ) (484 )
(Gain) loss on settlement of acquisition costs payable —
—
(10,491 ) —
Increase (decrease) in value of acquisition costs payable 193,708
40,972
335,486
40,972
Depreciation and amortization 374,965
339,589
1,095,831
935,063
Total excluded expenses 809,768
585,865
2,068,542
1,659,135

Cash Opex $ 4,219,500
$ 4,452,977
$ 13,619,598
$ 13,456,831

Revenue $ 8,154,674
$ 7,496,972
$ 21,337,401
$ 19,876,611
Cash Opex / Revenue 52 % 59 % 64 % 68 %

~~The following table sets forth a reconciliation from the GAAP measurement of Net Loss~~net loss to our non-GAAP financial measure of Adjusted EBITDA for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016:~~2020:


	Three Months Ended March 31,
		2021			2020
Net loss		$	(1,992,438)		$	(6,163,461)
Non-cash stock-based compensation		197,986			129,571
Non-cash stock issued for payment of services		34,696			31,250
Interest expense		13,793			6,618
Depreciation and amortization		365,529			501,269
Impairment of goodwill		—			4,300,000
Other non-cash items		(7,914)			—
Adjusted EBITDA		$	(1,388,348)		$	(1,194,753)

Revenue		$	5,375,632		$	4,763,668
Adjusted EBITDA as a % of Revenue		(26)		%	(25)		%

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net loss $ (558,805 ) $ (1,511,603 ) $ (4,724,623 ) $ (5,730,568 )
Non-cash stock-based compensation 182,796
170,818
509,642
576,144
Non-cash stock issued for payment of services 60,074
34,970
143,536
107,440
(Gain) loss on disposal of equipment (1,775 ) (484 ) (5,462 ) (484 )
(Gain) loss on settlement of acquisition costs payable —
—
(10,491 ) —
Increase (decrease) in value of acquisition costs payable 193,708
40,972
335,486
40,972
Depreciation and amortization 374,965
339,589
1,095,831
935,063
Interest expense 15,058
25,511
45,406
58,261
Change in fair value of derivatives (45,160 ) 14,705
(36,122 ) (14,568 )
Adjusted EBITDA $ 220,861
$ (885,522 ) $ (2,646,797 ) $ (4,027,740 )

~~Although we estimate that operating expenses will increase for the year ending December 31, 2017 as a result~~Table of our continued expansion and investment in future growth, we expect that our Cash Opex as a percentage of revenue will decline in future quarters. We estimate that Adjusted EBITDA for the year ending December 31, 2017 will be approximately negative $3.0 million as a result of our continued investment in sales and engineering staff necessary to increase our revenue and support our customers.Contents

Liquidity and Capital Resources

We had cash and cash equivalents of ~~$3,447,998~~$65,465,588 as of ~~September 30, 2017~~March 31, 2021 as compared to ~~$5,949,004~~$33,045,225 as of December 31, ~~2016, a decrease~~2020, an increase of ~~$2,501,006~~$32,420,363, primarily due to net proceeds received from the ~~funding~~sale of our common stock, partly offset by operating losses. We have incurred significant net losses and negative cash flow from operations for most periods since our inception in 2006, which has resulted in a total accumulated deficit of ~~$46,534,344~~$72,627,214 as of ~~September 30, 2017~~.March 31, 2021. To date, we have financed our operations through ~~internally generated~~ revenue from operations, ~~and~~ the sale ~~and exercise~~ of our equity ~~securities.~~securities, proceeds from the PPP Loan, and borrowings under our secured credit facility.

Cash used for operating activities was ~~$3,227,788~~$829,707 during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and is primarily the result of ~~expenses exceeding~~operating losses during the ~~amount of gross margin provided from our revenues. Cash~~period. Net cash used for investing activities was ~~$88,913~~$13,217 during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 due to ~~the payment of $93,000 related to the development~~purchases and sales of our proprietary software and purchases of computer and office equipment for our expanded staff. These payments were offset by a net decrease of $4,000 in leasehold deposits on our California and Canadian space. Cashfixed assets. Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was ~~$815,695~~,$33,263,287, which ~~amount~~ consisted primarily of ~~advances received~~net proceeds of approximately $33.6 million from the sale of our ~~line of credit with Western Alliance Bank. We also received cash of $16,232 from employee stock purchases offset by stock issuance costs of $10,913.~~common stock.

At the Market (ATM) Offering

On June 4, 2020 and January ~~30, 2015,~~25, 2021, we purchased all of the outstanding shares of capital stock of Ebyline. The Ebyline Stock Purchase Agreement required a cash payment at closing of $1,200,000, a stock issuance of $250,000 paid on July 30, 2015,entered into ATM Sales Agreements with National Securities Corporation, as sales agent (“National Securities”), pursuant to which we could offer and ~~$1,877,064 paid in cash or stock in two equal installments of $938,532 on the first and second anniversaries of the closing. On January 29, 2016, we issued 114,398~~sell shares of our common stock through National Securities, by any method deemed to ~~satisfy~~be an “at the ~~first annual guaranteed payment~~market offering” as defined in Rule 415 under the Securities Act of ~~$938,532 less $89,700~~1933, as amended, for aggregate purchase prices of up to $40,000,000 and $35,000,000, respectively (the “ATM Offerings”). During the three months ended March 31, 2021, we sold 8,701,691 shares at an average price of $3.95 per share for total gross proceeds of $34,358,012. From June 4, 2020 through April 15, 2021, we sold a total of 26,005,824 shares at an average price of $2.88 per share for gross proceeds of $74,999,785 in ~~closing related expenses.~~ the ATM Offerings under our shelf registration statement on Form S-3 (File No. 333-238619).

PPP Loan

On ~~January 30, 2017,~~April 23, 2020, we received a loan from Western Alliance Bank (the “Lender”) in the principal amount of $1,905,100 (the “PPP Loan”) under the Paycheck Protection Program (“PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The term of the promissory note (the “Note”) issued ~~200,542 shares~~in respect of the loan is two years, though it may be payable sooner in connection with an event of default under the Note. The PPP Loan carries a fixed interest rate of one percent per year. Certain amounts received under the PPP Loan may be forgiven if the loan proceeds are used for eligible purposes, including payroll costs and certain rent or utility costs, and we meet other requirements regarding, among other things, the maintenance of employment and compensation levels. Loan payments on the PPP Loan may be deferred to either (1) the date that the SBA remits our loan forgiveness amount to the Lender or (2) ten months after the end of our ~~common stock to satisfy the second and final annual guaranteed payment of $938,532. The Ebyline Stock Purchase Agreement also required contingent performance payments up to $5,500,000 to be paid~~loan forgiveness covered period, if Ebyline met certain revenue targets in the three years following the closing. None of these targets were met in the first two years following the closing and it is not expected that they will be met in the third year. Therefore, we do not ~~believe~~apply for loan forgiveness. We submitted our forgiveness application for the entire amount of the loan in December 2020 and, as of the date of this Quarterly Report, are awaiting approval from the SBA. The forgiveness of the PPP Loan is based on our adherence to the forgiveness criteria under the CARES Act, and no assurance is provided that we will ~~be required to make any~~obtain forgiveness of the ~~$5,500,000~~PPP Loan in ~~contingent performance payments~~whole or in part.

Financial Condition

We have seen impacts on our operations due to changes in advertising decisions, timing and ~~we currently expect that the total consideration~~spending priorities from our customers as a result of COVID-19, which has had and may continue to ~~be paid for the Ebyline acquisition will be $3,327,064.~~

On July 31, 2016, we purchased all of the outstanding shares of capital stock of ZenContent. Upon closing we paid a cash payment of $400,000 and issued 86,207 shares of our common stock valued at $600,000. The agreement also requires (i) three equal annual installment payments totaling $1,000,000, commencing 12 months following the closing and (ii) contingent performance payments of up to an aggregate of $2,500,000 over the three 12-month periods following the closing, based upon ZenContent achieving certain minimum revenue thresholds. Of these payments, 33% of each such annual installment or contingent performance payment will be in the form of cash and the remainder of such payment will be in the form of either cash or additional shares of our common stock (determined at our option). If we decide to issue stock rather than make cash payments, this may result in the issuance of substantial amount of shares because the number of shares will be determined using the 30 trading-day volume-weighted average closing price of our common stock prior to the payment. On July 31, 2017, we paid $266,898 all in cash for the first annual installment of $333,333 less $66,435 in working capital adjustments.

We have a ~~secured credit facility agreement with Western Alliance Bank. Pursuant~~negative impact to ~~this agreement, we may submit requests for funding up to 80% of~~ our ~~eligible accounts receivable up to a maximum credit limit of $5 million. As of September 30, 2017, we had $810,376 outstanding under this agreement. Assuming that all of~~expected future sales and valuation estimates. With our ~~accounts receivable balance was eligible for funding, we had remaining available credit of $3,392,362 under the agreement~~cash on hand as of ~~September 30, 2017.~~

~~We believe that, with our current cash and our available credit line with Western Alliance Bank,~~March 31, 2021, we ~~will~~expect to have sufficient cash reserves and financing sources available to cover expenses at least one year from the issuance of this Quarterly Report based on our current estimates of revenue and expenses for ~~longer than~~ the next twelve months. ~~Given~~While the ~~volatility in U.S. equity markets and our normal working capital fluctuations, we may seek~~disruption caused by COVID-19 is currently expected to raise additional capital at any time to supplement our operating cash flows to the extent we can do so on competitive market terms. In such event, an equity financing may dilute the ownership interestsbe temporary, it is generally outside of our ~~common stockholders.~~control and there is uncertainty around the duration and the total economic impact. Therefore, this matter could have a further material adverse impact on our business, results of operations, and financial position in future periods.

Off-Balance Sheet Arrangements

~~As of September 30, 2017, we do~~We did not engage in any activities involving variable interest entities or ~~off-balance~~“off-balance sheet ~~arrangements.~~arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of March 31, 2021.

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Critical Accounting Policies and Use of Estimates

~~The preparation of the accompanying financial statements and related disclosures in conformity with GAAP requires us~~There have been no material changes to make judgments, assumptions and estimates that affect the amounts reported in the accompanying financial statements and the accompanying notes. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, tax positions and stock-based compensation. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies ~~are significantly affected by judgments, assumptions~~as set forth in Item 7, “Management’s Discussion and ~~estimates used~~Analysis of Financial Condition and Results of Operations,” included in ~~the preparation of the financial statements.~~

Accounts receivable are customer obligations due under normal trade terms. Uncollectability of accounts receivable is not significant since most customers are bound by contract and are required to fund us for all the costs of an “opportunity,” defined as an order created by a marketer for a creator to develop or share contentour Annual Report on behalf of a marketer. If a portion of the account balance is deemed uncollectible, we will either write-off the amount owed or provide a reserve based on the uncollectible portion of the account. 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. We have a reserve of $220,000 for doubtful accounts as of September 30, 2017. We believe that this estimate is reasonable, but there can be no assurance that the estimate will not change as a result of a change in economic conditions or business conditions within the industry, the individual customers or our Company. Any adjustments to this account are reflected in the consolidated statements of operations as a general and administrative expense. Bad debt expense was less than 1% of revenueForm 10-K for the ~~three and nine months~~year ended ~~September 30, 2017 and~~ ~~2016~~.

~~Throughout 2013 and the first quarter of 2014, we developed our new web-based advertising exchange platform,~~ ~~IZEAx. This platform is being utilized both internally and externally to facilitate native advertising campaigns on~~December 31, 2020. For a ~~greater scale. We continue to add new features and additional functionality to this platform each year. These new features will enable~~ ~~IZEAx~~ to facilitate the contracting, workflow, and delivery of direct custom content as well as provide for invoicing, collaborating, and direct payments for our SaaS customers. In accordance with ASC 350-40, ~~Internal Use Software~~ ~~and ASC 985-730,~~ ~~Computer Software Research and Development~~, research phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized. As a result, we have capitalized $1,578,125 in direct materials, consulting, payroll and benefit costs to software development costs in the consolidated balance sheet as of September 30, 2017. We estimate the useful lifesummary of our ~~software~~significant accounting policies, please refer to ~~be 5 years, consistent with the amount~~Note 1 — Company and Summary of ~~time our legacy platforms were in-service, and we are amortizing the software development costs over~~Significant Accounting Policies included in Item 1 of this ~~period.~~Quarterly Report.

We derive revenue from three sources: Managed Services, Content Workflow, and Service Fee Revenue. Managed Services is when a marketer, typically a brand, agency or partner, contracts IZEA to provide custom content, influencer marketing or amplification services. Content Workflow is derived from the self-service use of our Ebyline platform by news agencies to handle their content workflow from initial content request to payment of content received. Service Fee Revenue is generated when fees are charged to customers primarily related to subscription fees for different levels of service within a platform, licensing fees for white-label use of ~~IZEAx~~, early cash-out fees if a creator wishes to take proceeds earned for services from their account when the account balance is below certain minimum balance thresholds and inactivity fees for dormant accounts. We recognize revenue at various times depending on the service that is being performed.

For our Managed Services, we enter into an agreement to provide services that may require multiple deliverables in the form of: (a) sponsored social items, such as blogs, tweets, photos or videos shared through social network offerings that provide awareness or advertising buzz regarding the marketer's brand; (b) content promotion, such as click-through advertisements appearing in websites and social media channels and (c) original content items, such as a research or news article, informational material or videos that a publisher or other marketer can use. We may provide one type or a combination of all types of these deliverables including a management fee on a statement of work for a lump sum fee. These deliverables are to be provided over a stated period that may range from one day to one year. Each item is considered delivered once the custom content has been delivered to the customer or once the content is distributed live through a public or social network. Revenue is accounted for separately on each of the deliverables depending on the type of service provided. We recognize revenue related to influencer marketing services after a marketer's sponsored content is posted through ~~IZEAx~~ and shared through a creator's social network for a requisite period of time. The requisite period ranges from 3 days for a tweet to 30 days for a blog, video or other form of content. Management fees from advertising campaigns managed by us are recognized ratably over the term of the campaign which may range from a few days to one year. Revenue related to custom content provided to a

marketer is recognized when the content is delivered to and accepted by the customer. Payment terms are typically 30 days from the invoice date. If we are unable to provide a portion of the services, we may agree with the customer to provide a different type of service or to provide a credit for the value of those services, which may be applied to the existing order or used for future services. The statement of work typically provides for a cancellation fee if the agreement is canceled by the customer prior to our completion of services.

For Content Workflow services, the self-service marketer contracts the creators directly to provide custom content. The Ebyline platform controls the contracting, description of services, acceptance of and payment for the requested content. This service is used primarily by news agencies to control the outsourcing of their content needs. Revenue is recognized when the transaction is completed by the creator and accepted by the marketer.

Service Fee Revenue is recognized immediately when the service is performed or at the time an account becomes dormant or is cashed out. Service Fee Revenue for subscription or licensing fees is recognized straight-line over the term of service.

Marketers who use us to manage their social advertising campaigns or custom content requests may prepay for services or request credit terms. Payments received or billings in advance of completed services are recorded as unearned revenue until earned as described above.

All of our revenues are generated through the rendering of services. We recognize revenue under the general guidelines of Staff Accounting Bulletin Topic 13 A.1, which states that revenue will be recognized when it is realized or realizable and earned. We consider our revenue as generally realized or realizable and earned once (i) persuasive evidence of an arrangement exists, (ii) services have been rendered, (iii) the price to the marketer or customer is fixed (required to be paid at a set amount that is not subject to refund or adjustment) and determinable, and (iv) collectability is reasonably assured. We record revenue on the gross amount earned since we generally are the primary obligor in the arrangement, take on credit risk, establish the pricing and determine the service specifications.

Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. We estimate the fair value of each stock option as of the date of grant using the Black-Scholes pricing model. Options typically vest ratably over four years with one-fourth of options vesting one year from the date of grant and the remaining options vesting monthly, in equal increments over the remaining three-year period and generally have five or ten-year contract lives. We estimate the fair value of our common stock using the closing stock price of our common stock on the date of the grant. We estimate the volatility of our common stock at the date of grant based on the volatility of comparable peer companies that are publicly traded and have had a longer trading history than us. We determine the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. We use the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. We have never paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. We estimate forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and a revised amount of unamortized compensation expense to be recognized in future periods.

The following table shows the number of options granted under our 2011 Equity Incentive Plans and the assumptions used to determine the fair value of those options during the nine months ended September 30, 2017 and 2016:

~~2011 Equity Incentive Plans - Options Granted~~

Period Ended Total Options Granted Weighted Average Exercise Price Weighted Average Expected Term Weighted Average Volatility Weighted Average Risk Free Interest Rate Weighted Average
Grant Date
Fair Value
December 31, 2016 179,998
$6.16 6.0 years 47.95% 1.58% $2.88
September 30, 2017 94,246
$3.64 6.0 years 43.49% 1.98% $1.28

There were outstanding options to purchase 1,011,575 shares with a weighted average exercise price of $6.05 per share, of which options to purchase 683,642 shares were exercisable with a weighted average exercise price of $6.24 per share as of ~~September 30, 2017. The intrinsic value on outstanding options as of September 30, 2017 was $1,354,688. The intrinsic value on exercisable options as of September 30, 2017 was $815,179.~~

~~We account for derivative instruments in accordance with ASC 815,~~ ~~Derivatives and Hedging~~, which requires additional disclosures about the objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

Recent Accounting Pronouncements

See ~~"Note~~“Note 1. Company and Summary of Significant Accounting Policies,"” under Part I, Item 1 ~~in Part I~~ of this ~~Form 10-Q.~~Quarterly Report for information on additional recent pronouncements.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

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ITEM 4 – CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial ~~officer,~~officers, as appropriate to allow timely decisions regarding required disclosures.

In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Furthermore, controls and procedures could be circumvented by the individual acts of some persons, by collusion or two or more people or by management override of the control. Misstatements due to error or fraud may occur and not be detected on a timely basis.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this ~~quarterly report~~Quarterly Report on Form 10-Q for the period ended ~~September 30, 2017,~~March 31, 2021, an evaluation was performed under the supervision and with the participation of our management including our ~~Chief Executive Officer ("CEO")~~principal executive officer and ~~Chief Financial Officer ("CFO")~~principal financial and accounting officer to determine the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2017.~~March 31, 2021. Based on this evaluation, our management concluded that our disclosure controls and procedures were effective as ~~of September 30, 2017~~designed to ~~provide reasonable assurance~~ensure that ~~the~~ information required to be disclosed ~~by us~~ in the reports we file or ~~submitted~~submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including ~~the Company's CEO~~our principal executive officer and ~~CFO, as appropriate,~~principal financial and accounting officer, to allow timely decisions regarding required ~~disclosure.~~disclosures.

Changes in Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining ~~adequate~~effective internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions;

(ii) provide reasonable assurance that transactions are recorded as necessary for the preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of any unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect financial statement misstatements. Also, projections of any evaluation of internal control effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~During the quarter ended September 30, 2017, there~~There were no ~~significant~~ changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) ~~that occurred~~during the fiscal quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II -– OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

From time to time, we may become involved in various other lawsuits and legal proceedings that arise in the ordinary course of our business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. WeAs of May 10, 2021, we are ~~currently~~ not aware of any legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us. Regardless of final outcomes, however, any such proceedings or claims may nonetheless impose a significant burden on management and employees and may come with costly defense costs or unfavorable preliminary interim rulings.

ITEM 1A – RISK FACTORS

~~In addition to~~You should carefully consider the ~~information set forth~~factors discussed under Item 1A of Part I to our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020 regarding the information set forth at the beginning of Management's Discussion and Analysis entitled "Special Note Regarding Forward-Looking Information," and updates noted below, you should consider that there are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially and adversely affected. In such case, the trading price of our common stock could decline, and investors could lose all or part of their investment. These risk factors may not identify all risks that we face, and our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

~~Risks Related to our Business and Industry~~

~~We have a history of annual net losses, expect future losses and cannot assure you that we will achieve profitability.~~

~~We have incurred significant net losses and negative cash flow from operations for most periods since our inception, which has resulted in a total accumulated deficit of~~ ~~$46,534,344~~ ~~as of~~ ~~September 30, 2017~~. For the nine months ended September 30, 2017, we had a net loss of $4,724,623, including a $4,747,067 loss from operations and we expect to incur a net loss for the fiscal year 2017. Although our revenue has increased since inception, we have not achieved profitability and cannot be certain that we will be able to maintain these growth rates or realize sufficient revenue to achieve profitability. If we achieve profitability, we may not be able to sustain it.

~~If we fail to retain existing customers or add new customers, our revenue and business will be harmed.~~

~~We depend on our ability to attract and retain customers that are prepared to offer products or services on compelling terms through~~ ~~IZEAx~~. Additionally, we rely on customers who purchase direct custom content from our creators in our platforms. We must continue to attract and retain customers in order to increase revenue and achieve profitability. We had no customers that accounted for more than 10% of our revenue and one customer that accounted for 11% of our revenue during the nine months ended September 30, 2017 and 2016, respectively. The loss of customers or a significant reduction in revenue from our major customers could have a material adverse effect on our results of operation. Moreover, if customers do not find our marketing and promotional services effective, they are not satisfied with content they receive, or if they do not believe that utilizing our platforms provides them with a long-term increase in value, revenue or profit, they may stop using our platforms or managed services. In addition, we may experience attrition in our customers in the ordinary course of business resulting from several factors, including losses to competitors, mergers, closures or bankruptcies. If we are unable to attract new customers in numbers sufficient to grow our business, or if too many customers are unwilling to offer products or services with compelling terms to our creators through our platforms or if too many large customers seek extended payment terms, our operating results will be adversely affected.

Risks Relating to our Common Stock

~~Exercise~~The price of ~~stock options, warrants and other securities will dilute your percentage of ownership and could cause~~ our ~~stock price to fall.~~

~~As of~~ ~~November 3, 2017, we had 5,726,336 shares of~~ common stock ~~issued, outstanding~~in the public markets has experienced, and may in the future experience, extreme volatility due to a variety of factors, many of which are beyond our control.

Since our common stock ~~options~~started trading on the Nasdaq Capital Market, it has been relatively thinly traded and at times been subject to ~~purchase 1,009,191~~price volatility. Recently our common stock has experienced extreme price and volume volatility. From January 1, 2020 to December 31, 2020, the closing price of our common stock ranged from a low of $0.13 on March 18, 2020 to a high of $2.82 on June 11, 2020, with an average daily trading volume of 6.7 million shares. On January 25, 2021, the price increased to an intraday high of $7.45 per share (a 52-week high) and 25.3 million shares were traded. In January 2021, the closing price of our common stock averaged $3.65 with an average daily trading volume of 8.9 million shares; in February 2021, the closing price of our common stock averaged $4.70 with an average daily trading volume of 4.0 million shares; and in March 2021, the closing price of our common stock averaged $4.07 with an average daily trading volume of 2.6 million shares.

In addition to shares of our common stock, ~~at an average exercise price~~the stock market in general, and the stock prices of ~~$6.03 per share, and outstanding warrants to purchase 516,919 shares of our common stock at an average exercise price of $8.45 per share.~~

~~We also~~technology-based companies in particular, have reserved shares to issue stock options, restricted stock or other awards to purchase or receive up to 441,020 shares of common stock under our May 2011 Equity Incentive Plan and 39,764 shares of common stock under our 2014 Employee Stock Purchase Plan. In the future, we may grant additional stock options, restricted stock units, warrants and convertible securities, as well as issue additional shares of common stock pursuantexperienced volatility that often has been unrelated to the ~~earn-out provisions~~operating performance of ~~the~~any specific public company. Further, on some occasions, our stock ~~purchase agreements in connection with our Ebyline and ZenContent acquisitions. The exercise, conversion~~price may be, or ~~exchange by holders of stock options, restricted stock units, warrants or convertible securities for shares of common stock, and the issuance of new shares pursuant~~may be purported to ~~acquisition earn-out provisions, will dilute the percentage ownership of our other stockholders. Sales of~~be, subject to “short squeeze” activity. A “short squeeze” is a ~~substantial number of shares of our common stock could cause~~technical market condition that occurs when the price of a stock increases substantially, forcing market participants who had taken a position that its price would fall (i.e. who had sold the stock “short”), to buy it, which in turn may create significant, short-term demand for the stock not for fundamental reasons, but rather due to the need for such market participants to acquire the stock in order to forestall the risk of even greater losses. A “short squeeze” condition in the market for a stock can lead to short-term conditions involving very high volatility and trading that may or may not track fundamental valuation models.

In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in our ~~common~~ stock ~~to fall~~price, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and ~~could impair~~operating results and divert management’s attention and resources from our ~~ability to raise capital by selling additional securities.~~business.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~Other than as previously reported in any Current Reports on Form 8-K, the Company did not sell any unregistered securities during the period covered by this report.

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ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

~~None~~None.

ITEM 4 – MINE SAFETY DISCLOSURES

Not ~~applicable~~applicable.

ITEM 5 -– OTHER INFORMATION

~~None~~None.

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ITEM 6 – EXHIBITS



~~31.1~~Exhibit No.		*Description
3.1		Amended and Restated Articles of Incorporation of IZEA, Inc., filed with the Nevada Secretary of State on November 28, 2011 (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on November 23, 2011).
3.2		Certificate of Change of IZEA, Inc., filed with the Nevada Secretary of State on July 30, 2012 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 1, 2012).
3.3		Certificate of Amendment to Articles of Incorporation filed with the Secretary of State of the State of Nevada on April 17, 2014 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2014).
3.4		Certificate of Withdrawal of Certificate of Designation filed with the Secretary of State of the State of Nevada effective January 23, 2015 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 29, 2015).
3.5		Certificate of Amendment filed with the Secretary of State of the State of Nevada effective January 11, 2016 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 12, 2016).
3.6		Amended and Restated Bylaws of IZEA, Inc. (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on November 23, 2011).
3.7		Certificate of Designation (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 27, 2011).
3.8		Articles of Merger of IZEA Innovations, Inc. filed with the Secretary of State of the State of Nevada effective April 5, 2016 (Incorporated by reference to Exhibit 3.11 to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 11, 2016).
3.9		Articles of Merger of IZEA Worldwide, Inc. filed with the Secretary of State of the State of Nevada effective August 20, 2018 (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on August 23, 2018).
3.10		Articles of Merger of IZEA Worldwide, Inc. filed with the Secretary of State of the State of Nevada effective December 17, 2019 (Incorporated by reference to Exhibit 3.10 to the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2020).
3.11		Articles of Merger of IZEA Worldwide, Inc. filed with the Secretary of State of the State of Nevada effective December 14, 2020 (Incorporated by reference to Exhibit 3.11 to the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2021).
31.1	*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	*	Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	* (a)	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	* (a)	Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	* (b)	The following materials from IZEA Worldwide, Inc.'s ~~Annual~~Quarterly Report ~~on Form 10-Q~~ for the quarter ended ~~September 30, 2017~~March 31, 2021 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Operations and Comprehensive Loss, (iii) the Unaudited Consolidated Statement of Stockholders' Equity, (iv) the Unaudited Consolidated Statements of Cash Flow, and (iv) the Notes to the Unaudited Consolidated Financial Statements.


*	* Filed or furnished herewith.

~~(a)~~

In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

(a) In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

(b) In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			IZEA Worldwide, Inc. a Nevada corporation

May 13, 2021			By:	/s/ Edward H. Murphy
				Edward H. Murphy Chairman and Chief Executive Officer (Principal Executive Officer)

May 13, 2021			~~IZEA, Inc.~~ ~~a Nevada corporation~~By:	/s/ Peter J. Biere

~~November 7, 2017~~	~~By:~~	~~/s/ Edward H. Murphy~~
		~~Edward H. Murphy~~ ~~Chairman, President and Chief Executive Officer~~ ~~(Principal Executive Officer)~~

~~November 7, 2017~~	~~By:~~	~~/s/ LeAnn C. Hitchcock~~
		~~LeAnn C. Hitchcock~~ Peter J. Biere Chief Financial Officer (Principal Financial and Accounting Officer)



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



~~480~~501 N. Orlando Avenue, Suite ~~200~~313, PMB 247 Winter Park, FL						32789
(Address of principal executive offices)						(Zip Code)



			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020			1
Unaudited Consolidated Statements of Operations and Comprehensive Loss for the ~~Three~~three months ended March 31, 2021 and ~~Nine Months Ended September 30, 2017 and 2016~~2020			2
Unaudited Consolidated ~~Statement~~Statements of Stockholders’ Equity for the ~~Nine Months Ended September 30, 2017~~three months ended March 31, 2021 and 2020			3
Unaudited Consolidated Statements of Cash Flows for the ~~Nine Months Ended September 30, 2017~~three months ended March 31, 2021 and ~~2016~~2020			4
Notes to the Unaudited Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2124
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3433
Item 4. Controls and Procedures			34

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			3635
Item 1A. Risk Factors			3635
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3735
Item 3. Defaults Upon Senior Securities			3736
Item 4. Mine Safety Disclosures			3736
Item 5. Other Information			3736
Item 6. Exhibits			3837

Signatures			3938



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



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



	September 30, 2017		December 31, 2016
Assets
Current:
Cash and cash equivalents	$	3,447,998	$	5,949,004
Accounts receivable, net	5,253,423		3,745,695
Prepaid expenses	414,619		322,377
Other current assets	27,606		11,940
Total current assets	9,143,646		10,029,016

Property and equipment, net	310,277		460,650
Goodwill	3,604,720		3,604,720
Intangible assets, net	914,816		1,662,536
Software development costs, net	1,004,905		1,103,959
Security deposits	157,427		161,736
Total assets	$	15,135,791	$	17,022,617



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Revenue	$	8,154,674		$	7,496,972		$	21,337,401		$	19,876,611
Cost of sales	3,758,621			3,927,279			10,396,328			10,447,035
Gross profit	4,396,053			3,569,693			10,941,073			9,429,576

Operating expenses:
General and administrative	2,687,266			2,454,555			8,021,420			7,559,302
Sales and marketing	2,342,002			2,584,287			7,666,720			7,556,664
Total operating expenses	5,029,268			5,038,842			15,688,140			15,115,966

Loss from operations	(633,215		)	(1,469,149		)	(4,747,067		)	(5,686,390		)

Other income (expense):
Interest expense	(15,058		)	(25,511		)	(45,406		)	(58,261		)
Change in fair value of derivatives, net	45,160			(14,705		)	36,122			14,568
Other income (expense), net	44,308			(2,238		)	31,728			(485		)
Total other income (expense), net	74,410			(42,454		)	22,444			(44,178		)

Net loss	$	(558,805	)	$	(1,511,603	)	$	(4,724,623	)	$	(5,730,568	)

Weighted average common shares outstanding – basic and diluted	5,702,297			5,420,020			5,659,423			5,357,119
Basic and diluted loss per common share	$	(0.10	)	$	(0.28	)	$	(0.83	)	$	(1.07	)



	Estimated Gross Purchase Consideration		Initial Present and Fair Value		Remaining Present and Fair Value		Remaining Present and Fair Value
	1/30/2015		1/30/2015		12/31/2016		9/30/2017
Cash paid at closing (a)	$	1,200,000	$	1,200,000	$	—	$	—
Guaranteed purchase price (a)	2,127,064		1,982,639		934,728		—
Contingent performance payments (b)	2,210,000		1,834,300		—		—
Acquisition costs payable by Ebyline shareholders (c)	—		—		—		—
Total estimated consideration	$	5,537,064	$	5,016,939	$	934,728	$	—

Current portion of acquisition costs payable					$	934,728	$	—
Long term portion of acquisition costs payable					—		—
Total acquisition costs payable					$	934,728	$	—



	Final Purchase Price Allocation
Current assets	$	415,798
Property and equipment	4,551
Identifiable intangible assets	722,000
Goodwill	1,136,431
Current liabilities	(482,233		)
Total estimated consideration	$	1,796,547



			Accumulated Amortization				Useful Life (in years)
	Balance		September 30, 2017		December 31, 2016		Useful Life (in years)
Content provider networks	$	160,000	$	105,833	$	57,083	1
Trade names	52,000		52,000		45,000		1
Developed technology	530,000		213,667		134,167		3
Self-service content customers	210,000		186,667		134,167		5
Managed content customers	2,140,000		1,727,222		1,192,222		3
Domains	166,469		58,264		33,294		5
Total identifiable intangible assets	$	3,258,469	$	2,343,653	$	1,595,933



Year ending December 31:	Amortization Expense
2017 (three months remaining)	$	246,908
2018	349,432
2019	207,349
2020	84,293
2021	26,834
Total	$	914,816



Year ending December 31:	Software Amortization Expense
2017 (three months remaining)	$	98,259
2018	304,241
2019	218,910
2020	183,956
2021	134,432
2022	65,107
	$	1,004,905



	Three Months Ended
	September 30, 2017				September 30, 2016				$ Change			% Change
Revenue & % of Total
Managed Services	$	6,997,391	86	%	$	5,838,139	78	%	$	1,159,252		20	%
Content Workflow	1,141,795		14	%	1,576,001		21	%	(434,206		)	(28	)%
Service Fees & Other Revenue	15,488		—	%	82,832		1	%	(67,344		)	(81	)%
Total Revenue	$	8,154,674	100	%	$	7,496,972	100	%	$	657,702		9	%

Cost of Sales & % of Total
Managed Services COS	$	2,693,803	72	%	$	2,464,238	63	%	$	229,565		9	%
Content Workflow COS	1,064,818		28	%	1,463,041		37	%	(398,223		)	(27	)%
Service Fees & Other COS	—		—	%	—		—	%	—			100	%
Total Cost of Sales	$	3,758,621	100	%	$	3,927,279	100	%	$	(168,658	)	(4	)%

Gross Profit & Profit %
Managed Services	$	4,303,588	62	%	$	3,373,901	58	%	$	929,687		28	%
Content Workflow	76,977		7	%	112,960		7	%	(35,983		)	(32	)%
Service Fees & Other Revenue	15,488		100	%	82,832		100	%	(67,344		)	(81	)%
Total Gross Profit	$	4,396,053	54	%	$	3,569,693	48	%	$	826,360		23	%



	(Unaudited)
	Three Months Ended
	September 30, 2017			September 30, 2016			$ Change			% Change
Revenue	$	8,154,674		$	7,496,972		$	657,702		9	%
Cost of sales	3,758,621			3,927,279			(168,658		)	(4	)%
Gross profit	4,396,053			3,569,693			826,360			23	%
Operating expenses:
General and administrative	2,687,266			2,454,555			232,711			9	%
Sales and marketing	2,342,002			2,584,287			(242,285		)	(9	)%
Total operating expenses	5,029,268			5,038,842			(9,574		)	—	%
Loss from operations	(633,215		)	(1,469,149		)	835,934			57	%
Other income (expense):
Interest expense	(15,058		)	(25,511		)	10,453			(41	)%
Loss on exchange of warrants	—			—			—			100	%
Change in fair value of derivatives, net	45,160			(14,705		)	59,865			(407	)%
Other income (expense), net	44,308			(2,238		)	46,546			(2,080	)%
Total other income (expense), net	74,410			(42,454		)	116,864			275	%
Net loss	$	(558,805	)	$	(1,511,603	)	$	952,798		63	%



Period Ended	Total Options Granted	Weighted Average Exercise Price	Weighted Average Expected Term	Weighted Average Volatility	Weighted Average Risk Free Interest Rate	Weighted Average Grant Date Fair Value
December 31, 2016	179,998	$6.16	6.0 years	47.95%	1.58%	$2.88
September 30, 2017	94,246	$3.64	6.0 years	43.49%	1.98%	$1.28