IZEA Worldwide Inc

NOTE 7. ACCRUED EXPENSES

Accrued expenses consist of the following:

(1)During the quarter ended September 30, 2024, the Company announced the departure of two executives. In accordance with their separation agreements and the payments they are entitled to receive, a severance amount of $825,000 was accrued.

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 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 $78,267 and $122,805 as of September 30, 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 September 30, 2024 and December 31, 2023, respectively.

Summary

Interest expense on financing arrangements recorded in the Company’s consolidated statements of operations was $5,654 and $6,373 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 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 twelve-month 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 initial fair value of these contingent payments to be $175,000, subject to quarterly adjustment until both measurement periods are completed.

As of June 30, 2024, the Company reassessed the fair value of the contingent performance-based consideration related to the earnout provision of the acquisition of Hoozu. Based on actual performance to date, and revised projections of Hoozu’s business performance, it was determined that achieving the contingent milestones was no longer probable. Consequently, the contingent liability was written off, resulting in a gain of $175,000 recognized as a reduction to general and administrative expense in the consolidated statements of income. This adjustment reflects our updated expectation of future performance and aligns with the requirements of ASC 805. The fair value will continue to be subject to quarterly assessment until the completion of both measurement periods.

The Company’s acquisition of 26 Talent through its subsidiary Hoozu on July 1, 2024, included two equal contingent cash consideration payments totaling $120,000, with twelve-month measurement periods ending July 31, 2025, and 2026. The contingent payments are based on meeting minimum Revenue thresholds for each measurement period. The contingent payments are hit-or-miss. The Company determined the fair value of these contingent payments to be $86,000 at the acquisition date, subject to periodic adjustment until both measurement periods are completed. On September 30, 2024, the accreted fair value of the earnout payments was $92,000.

Lease Commitments

The Company does not have any operating or finance leases greater than 12 months in duration as of September 30, 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 and nine months ended September 30, 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.