IZEA Worldwide Inc

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Depreciation expense on property and equipment recorded in depreciation and amortization expense in the consolidated statements of operations and comprehensive loss was $26,821 and $26,583 for the three months ended September 30, 2024 and 2023, respectively, and was $80,079 and $72,529 for the nine months ended September 30, 2024 and 2023, respectively.

NOTE 5. INTANGIBLE ASSETS

Definite Lived Intangible Assets

Definite lived intangible assets, net of amortization as of September 30, 2024 and December 31, 2023 totaled $1.7 million and $1.7 million, respectively.

Total intangible assets from the Company’s acquisitions and other acquired assets net of accumulated amortization thereon consists of the following:

As of September 30, 2024, future estimated amortization expense related to identifiable assets is set forth in the following schedule:

There wereno impairment charges associated with the Company’s identifiable intangible assets, other than digital assets, in the nine months ended September 30, 2024, and 2023.

Amortization expense recorded in depreciation and amortization in the accompanying consolidated statements of operations and comprehensive loss was $203,728 and $0 for the nine months ended September 30, 2024 and 2023, respectively.

Digital Assets

In September 2024, the Company sold all of its digital assets for total proceeds of $190,170, net of de minimis fees.

As of September 30, 2024, the Company no longer held any Bitcoin or Ethereum, as all digital assets were sold during the period. The Company recorded aloss of$51,703 and a gain $28,412 for the three and nine months ended September 30, 2024, respectively.

The Company determines the fair value of its digital assets on a recurring basis in accordance with ASU 2023-8, Accounting for and Disclosure of Crypto Assets, based on quoted prices on the active exchange(s) that has been determined to be the principal market for such assets (Level 1 inputs). The Company performs an analysis monthly to identify whether the fair market value of the digital assets has changed. If the then-current carrying value of a digital asset is different from the fair value so determined, an adjustment in the amount equal to the difference between their carrying value and the price determined is recognized.

Gains and losses on digital assets are recognized within other income in the consolidated statements of operations and comprehensive loss in the period in which the change to fair market value is identified. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.

The Company’s goodwill balance changed as follows:

The Company completed its acquisition of Hoozu on December 1, 2023. While Hoozu’s business is reported together with our Managed Services business, it will be treated as a separate component for Goodwill impairment testing.

The Company performs an annual impairment assessment of goodwill on October 1 each year or more frequently, if certain indicators are present. In September 2024, the Company identified a triggering event related to the changes in executive management and Board level changes, including the Cooperation Agreement. The Company performed an interim assessment of goodwill using the income approach of the discounted cash flow method and the market approach of the guideline transaction method and determined that the carrying value of the Company’s IZEA reporting segment as of September 30, 2024, exceeded the fair value. As a result of the valuation, the Company recorded a $4 million impairment of goodwill in the three and nine months ended September 30, 2024. The Company also performed a qualitative assessment of the carrying value of its Hoozu reporting unit, which did not indicate impairment as of September 30, 2024.