IZEA Worldwide Inc

NOTE 7. ACCRUED EXPENSES

Accrued expenses consist of the following:

NOTE 8. NOTES PAYABLE

Finance Obligation

The Company pays for its laptop computer equipment through long-term payment plans, using an imputed interest rate of 7.8%, based on its incremental borrowing rate, to determine the present value of its financial obligation and to record interest expense over the term of the plan. The Company refreshed a portion of its computer inventory during the fourth quarter of 2022, entering a newthree-year payment plan with the same vendor. The total balance owed was $107,959 and $122,805 as of March 31, 2024 and December 31, 2023, respectively, with the short-term portion of $59,386 and $59,386 recorded under accrued expenses in the consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.

Summary

Interest expense on financing arrangements recorded in the Company’s consolidated statements of operations was $2,001 and $1,564 during the three months ended March 31, 2024, and 2023, respectively. As of March 31, 2024, the future contractual maturities of the Company’s long-term payment obligations by year are set forth in the following schedule:

NOTE 9. COMMITMENTS AND CONTINGENCIES

Deferred Purchase Price

The Company’s acquisition of Hoozu on December 1, 2023 included four equal contingent cash consideration payments totaling $396,940, with measurement periods ending December 31, 2024 and 2025. The contingent payments are based on meeting minimum Revenue and Adjusted Earnings before Taxes and Depreciation thresholds for each measurement period. The contingent payments are hit-or-miss, with the first measurement period payments carrying a make-up provision during the second measurement period. The Company determined the fair value of these contingent payments to be $175,000, subject to quarterly adjustment until both measurement periods are completed. As of March 31, 2024, the Company has reviewed the fair value of the contingent payments previously valued at $175,000 and determined that no adjustments is necessary for this quarter. The fair value remains unchanged and will continue to be subject to quarterly assessment until the completion of both measurement periods.

Lease Commitments

The Company does not have any operating or finance leases greater than 12 months in duration as of March 31, 2024.

Retirement Plans

The Company offers a 401(k) plan to all of its eligible employees. The Company matches participant contributions in an amount equal to 50% of each participant’s contribution up to 8% of the participant’s salary. The participants become vested in 20% annual increments aftertwo years of service, or fully vest upon the age of 60. Total expense for employer matching contributions during the three months ended March 31, 2024 and 2023 was recorded in the Company’s consolidated statements of operations as follows:

Litigation

From time to time, the Company may become involved in lawsuits and various other legal proceedings that arise in the ordinary course of its business. Litigation is, however, subject to inherent uncertainties, and an adverse result in any such litigation that may arise from time to time that may harm the Company’s business. The Company is currently not party to any legal proceedings or claims that it believes would or could have, individually or in the aggregate, a material adverse effect on the Company.