ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company Overview
IZEA Worldwide, Inc. (“IZEA”, “Company,” “we”, “us” or “our”) is a technology-enabled influencer marketing company that delivers creator economy solutions for marketers through managed services supported by proprietary technology. We provide value by managing custom content workflows, creator discovery and engagement, campaign execution, analytics, and payment processing. Our mission is to deliver creator economy solutions for marketers by facilitating effective collaboration between brands and creators.
IZEA pioneered the concept of an influencer marketplace in 2006 with the launch of PayPerPost, helping establish the foundation for modern influencer marketing. Today, we primarily serve enterprise brands and agencies across a range of industries, while also supporting small- and mid-sized businesses and independent creators. Our services include influencer marketing programs, customer-generated content, and custom content creation, delivered through technology-enabled managed services.
Our proprietary technology platform supports the delivery and management of influencer marketing programs at scale. IZEA Flex is our flagship platform and is used primarily by our internal teams to manage campaign workflows, creator relationships, compliance, budgeting controls, and performance measurement. Customers may be provided access to certain platform capabilities in connection with managed services engagements to facilitate collaboration, approvals, and visibility into campaign activity and results.
Our technology platform also includes capabilities that facilitate creator discovery and engagement, including functionality historically made available through online marketplace environments such as IZEA.com. In addition, we have developed AI-enabled tools, including FormAI, designed to support content creation and operational efficiency within the influencer marketing process. These technology capabilities are integrated into our broader platform and are primarily used to support the delivery of managed services.
Leadership and Strategy Transition
On September 6, 2024, the Board of Directors appointed Patrick J. Venetucci as Chief Executive Officer following the resignation of Edward H. (Ted) Murphy.Under the terms of their respective separation agreements, both Mr. Murphy and Ryan S. Schram, President, Chief Operating Officer, and Director, resigned their Director positions as of September 6, 2024, and their executive positions effective September 15, 2024. Neither resignation stemmed from any disagreement with the Company's management or Board.
Concurrently, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with GP Cash Management, Ltd., GP Investments, Ltd., Rodrigo Boscolo, and Antonio Bonchristiano (collectively, the "GP Parties"). As part of this agreement, the Company’s Board of Directors (the “Board”) appointed Mr. Bonchristiano and Mr. Boscolo as directors, filling the vacancies created by the departures of Ted Murphy and Ryan Schram. Mr. Bonchristiano serves on the Compensation Committee and the Nominations and Corporate Governance Committee. Messers Bonchristiano and Boscolo serve on the newly created Strategy and Capital Allocation Committee.
During the fourth quarter of 2024, the Company began executing a strategic realignment intended to accelerate its path to profitability and improve operational focus. These actions included the divestiture of non-core and unprofitable investments, targeted workforce reductions, primarily in product development and marketing functions, and organizational changes to better align sales and customer delivery teams into industry verticals to target growth opportunities and improve account management and customer retention. As a part of the realignment, the Company completed the divestiture of Hoozu Holdings on December 18, 2024 and centralized its sales and client development operations to serve domestic and international markets primarily from its North American hub.
Throughout 2025, management continued to operate under this revised organizational and strategic framework, with an emphasis on cost discipline, operational efficiency, enterprise customer focus, and technology-enabled service delivery. In connection with these efforts, the Company strengthened its sales and enterprise service delivery organizations by adding experienced industry professionals to support enterprise customer engagement and ensure consistent, higher-level execution. The Company believes these actions have improved its ability to manage expenses, align resources with near-term opportunities, and support sustainable profitability.
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.
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Revenue
We generate revenue primarily 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. We also generate a limited amount of SaaS Services Revenue, which is revenue from access to certain features of our proprietary platforms, as well as related transaction and miscellaneous fees.
Cost of Revenue
Our cost of revenue consists primarily of direct costs paid to our third-party creators who provide the custom content, influencer marketing, or amplification services for our Managed Service customers, for which revenue is reported on a gross basis. Cost of revenue also includes internal costs for our campaign fulfillment and customer support, including salaries, bonuses, commissions, stock-based compensation, employee benefit costs, and personnel-related costs incurred to support service delivery and fulfill our customer contractual obligations.
Sales and Marketing
Our sales and marketing expenses consist primarily of salaries, bonuses, commissions, stock-based compensation, employee benefit costs, travel, and other personnel-related costs for our sales, account management, and marketing teams. These expenses also include costs for brand marketing activities, public relations, industry events, marketing materials, and other demand-generation efforts to support customer acquisition and account expansion.
General and Administrative
Our general and administrative (“G&A”) expenses consist primarily of salaries, bonuses, commissions, stock-based compensation, employee benefits, and other personnel-related expenses for our executive, finance, legal, human resources, and other administrative functions. G&A also includes travel, public company and investor relations costs, accounting and legal professional services fees, and other corporate-related expenses.
G&A includes technology and development costsassociated with maintaining and enhancing our proprietary technology platform. These costs consist primarily of payroll costs for internal engineers and contractors, as well as hosting and software subscription expenses. Technology and development costs are expensed as incurred, except for qualifying internal-use software development costs, which are capitalized and recorded as software development costs on the consolidated balance sheet. Depreciation and amortization related to these capitalized costs are reflected separately in the consolidated statements of operations and comprehensive loss.
G&A expenses include current-period gains and losses on our acquisition costs payable and on the sale of fixed assets. Impairments on fixed assets, intangible assets, and goodwill, are included as part of G&A expenses presented separately in our consolidated statements of operations and comprehensive loss when deemed material.
Depreciation and Amortization
Depreciation and amortization expenses 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 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 primarily related to the payment plans for purchasing computer equipment.
Other Income. Other income consists primarily of interest income earned on investments, as well as realized gains and losses on foreign currency exchange transactions, primarily related to the Canadian and Australian Dollar.
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Results of Operations for the Years Ended December 31, 2025 and 2024
The following table summarizes our consolidated statements of operations and presents the period-to-period changes.
Twelve Months Ended December 31,
Costs and expenses:
Other income (expense):
Revenue
Revenue totaled $31.2 million for the year ended December 31, 2025, compared to $35.9 million for the year ended December 31, 2024. This represents a decrease of $4.6 million, or 12.9%, year over year. The prior-year period included $3.4 million from Hoozu, which was divested in December 2024 and did not contribute in 2025. The decline primarily reflects the absence of Hoozu revenue, along with the Company’s deliberate shift toward growing our core enterprise customer base and reducing reliance on non-core, lower-margin customers. This shift supports our continued focus on enhancing the quality, sustainability, and long-term profitability of our revenue.
Cost of Revenue
For the year ended December 31, 2025, cost of revenue was $16.2 million, a decrease of $5.0 million, or approximately 23.5%, compared to the same period in 2024. The reduction was primarily attributable due to the absence of Hoozu, which was included in the prior year period. Cost trends were also influenced by changes in customer mix resulting from the Company’s strategic repositioning, including the exit of certain lower-margin customer relationships. As a result, the Company’s remaining core enterprise business generated an improved gross margin percentage of 48.1% compared to 40.9% in the prior year.
Sales and Marketing
Sales and marketing expenses for the year ended December 31, 2025, decreased by $7.8 million, or approximately 64.4%, compared to the same period in 2024. Advertising expenses decreased due to a pause in current period advertising and promotional spending, lower payroll and related costs following our December 2024 targeted workforce reduction and decreased general contractor fees.
General and Administrative
General and administrative expenses for the year ended December 31, 2025, decreased by $4.8 million, or approximately 28.8%, compared to the same period in 2024. The decrease is primarily due to lower employee-related costs
following executive departures in September 2024 and the targeted workforce reduction in December 2024, reduced use of external contractors, decreased professional service fees, and lower software licensing expenses.
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Impairment of Goodwill
In September 2024, the Company identified a triggering event related to changes in executive management and Board-level changes, including the Cooperation Agreement. As a result, the Company performed an interim goodwill impairment assessment using both the income approach (discounted cash flow method) and the market approach (guideline transaction method). The assessment determined that the carrying value of the Company’s IZEA reporting unit as of September 30, 2024, exceeded its fair value. Consequently, the Company recorded a $4.0 million impairment of goodwill related to prior IZEA acquisitions in September 30, 2024. Additionally, the Company conducted a qualitative assessment of the carrying value of its Hoozu reporting unit, which did not indicate impairment as of September 30, 2024.
Depreciation and Amortization
Depreciation and amortization expenses for the year ended December 31, 2025, decreased by $0.5 million, or approximately 45.1%, compared to the same period in 2024.
Depreciation expense on property and equipment was approximately $0.1 million for the year ended December 31, 2025, and $0.1 million for 2024, respectively.
Amortization expenses were approximately $0.5 million and $1.1 million for the year ended December 31, 2025 and 2024, respectively. Amortization expense related to internal-use software development costs was $0.5 million for 2025, down from $0.8 million in 2024, primarily due to accelerated amortization for certain software assets no longer in use in 2024. This adjustment reflects the Company’s ongoing review of its software portfolio to align with current operational needs and strategic objectives, ensuring that the carrying value of these assets accurately reflects their utility and contribution to the business.
Other Income (Expense)
Interest expense totaled $6,403 during the year ended December 31, 2025, compared to $8,129 in the prior year period.
Loss from divestiture of assets totaled $2.3 million during the year ended December 31, 2024. This loss resulted from the sale of the Hoozu business unit, including the derecognition of goodwill, intangible assets, and other associated assets. The divestiture was part of the Company’s strategic initiative to streamline its portfolio and focus resources on core growth areas.
Other income net totaled $1.9 million for the year ended December 31, 2025, compared to $2.5 million in the prior year, primarily due to lower investment portfolio income and a decline in money-market rates.
Net Income (Loss)
Net income (loss) for the year ended December 31, 2025 was $42,326, a $19.3 million improvement from the net loss of $19.2 million for the same period in 2024. The increase in net income was primarily driven by decreased operating costs in the current period.
Other Comprehensive Income (Loss)
Other comprehensive loss for the year ended December 31, 2025 was $0.2 million, a $0.5 million change from the prior year period. Changes to other comprehensive loss are primarily driven by changes in the fair value of our marketable securities and foreign currency translation adjustments.
Key Metric
We review the information provided by our key financial metric, Managed Services Bookings, to assess the progress of our business and make decisions on where to allocate our resources including sales capacity, marketing investments, and product development. As our business evolves, we may change the key financial metrics in future periods.
Managed Services Bookings
Managed Services Bookings is a measure of all sales orders received during a time period, less any cancellations received or refunds issued during the same period. Our sales contracts vary in complexity by customer and range from custom content delivery to integrated marketing services, with contract terms generally ranging from several months for smaller contracts up to twelve months for larger contracts.
We recognize revenue from our Managed Services contracts on a percentage-of-completion basis as we deliver the content and services over time. Historically, bookings have converted to revenue over an average of approximately six months. As we have entered into increasingly larger and more complex contracts, the average revenue conversion period lengthened to approximately 9 months, with the largest contracts taking longer to complete. For the years ended December 31, 2025 and 2024, the average time between bookings and revenue improved to an average of approximately seven months. Accordingly, while Managed Services Bookings is an indicator of the health of our business, it may not be used to predict quarterly revenues and may be subject to future adjustments.
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We use the Managed Services Bookings metric to plan operational staffing, identify key customer group trends to enlighten go-to-market activities, and to support product development efforts. Managed Services Bookings for the years ended December 31, 2025 and 2024, were $25.7 million and $37.5 million excluding Hoozu, respectively. This decline reflects our intentional reduction in non-core customer activity, which accounted for the majority of the decline, rather than weakness in our enterprise business.
Non-GAAP Financial Measure
Adjusted EBITDA
Following the September 2024 change in management, our Chief Operating Decision Maker (“CODM”) and Board of Directors have emphasized our operating results for planning purposes to allocate resources to enhance the financial performance of our business. Adjusted EBITDA is a “non-GAAP financial measure” under the rules of the Securities and Exchange Commission (the “SEC”). We define Adjusted EBITDA as operating income (or loss) from operations before depreciation and amortization, non-cash stock-based compensation, and other operating adjustments that are non-recurring or unusual to our core ongoing operations.
We use Adjusted EBITDA as 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 Adjusted EBITDA also provides valuable information to investors as it excludes non-cash transactions, and it provides consistency to facilitate period-to-period comparisons.
You should not consider Adjusted EBITDA in isolation or as a substitute for an analysis of our results of operations under GAAP. In addition, not all companies calculate Adjusted EBITDA in the same manner, which limits its usefulness as a comparative measure. Moreover, Adjusted EBITDA has limitations as an analytical tool, including that it:
•does not include stock-based compensation expense, which is a non-cash expense, but has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an essential part of our compensation strategy;
•does 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 directors, vendors, and other parties who provide us with services;
•does 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; and
•does not include non-operating activity, including interest income and other gains, losses, and expenses that we believe are not indicative of our ongoing core operating results, but these items may represent a reduction or increase in cash available to us.
Because of these limitations, Adjusted EBITDA should not be considered 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 this non-GAAP financial measure, you should be aware that in the future, we may incur expenses similar to those for which adjustments are made in calculating Adjusted EBITDA. Our presentation of this non-GAAP financial measure should also not be construed to infer that our future results will be unaffected by unusual or non-recurring items.
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The following table sets forth a reconciliation from the GAAP measurement of net income (loss) to our non-GAAP financial measure of Adjusted EBITDA for the years ended December 31, 2025, and 2024:
Twelve Months Ended December 31,
Impairment of goodwill and intangible assets — 4,130,477
Adjustment to fair market value of digital assets — (28,414)
Non-cash stock issued for payment of services 360,000 319,070
Loss on sale of subsidiary — 2,286,083
Non-recurring charges — 7,668
Tax benefit (expense) — (400,750)
Adjusted EBITDA as a % of Revenue 2.1 % (30.9) %
Liquidity and Capital Resources
Near-Term Liquidity and Capital Resources
The Company’s primary cash needs have historically been funding the development and integration of our technology platforms, marketing expenses, and general and administrative (“G&A”) expenses, including salaries, bonuses, and commissions. The Company has incurred losses and negative cash flow from operations for most periods since inception, primarily the result of costs associated with third-party creators, salaries, bonuses and stock-based compensation, and other G&A expenses, including technology and development costs, which has resulted in a total accumulated deficit of $104.3 million as of December 31, 2025. While we have not yet achieved profitability, and we will continue to invest in areas we expect will help us grow, we believe we have sufficient resources to fund operations and planned investments for at least the next twelve months.
We had cash and cash equivalents of $50.9 million as of December 31, 2025, compared to $44.6 million as of December 31, 2024. This increase of $6.2 million is primarily due to the maturation of certain investments.
Twelve Months Ended December 31,
Net cash (used for)/provided by:
Effect of exchange rate changes on cash (158,967) (24,757)
Net cash provided by operating activities was $2.4 million during the year ended December 31, 2025, primarily driven by non-cash expenses, including stock-based compensation and depreciation and amortization, as well as improved collections reflected in a decrease in accounts receivable. Net cash provided by investing activities was $5.6 million during the year ended December 31, 2025, primarily due to the maturity of marketable securities. Net cash used for financing activities during the year ended December 31, 2025 was $1.6 million, primarily driven by stock repurchase activity and payments on shares withheld for statutory taxes.
Long-Term Liquidity
We anticipate that our operating expenses will increase over time to support higher revenue and the working capital financing required as we continue to expand our business. We currently believe that we have adequate cash and long-term
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investments to fund our business growth for the next twelve months; however, should additional capital become necessary, we expect these funds would be financed predominantly through proceeds from future equity, equity-based, or debt offerings, unless and until our operations are profitable and sustain our ongoing capital needs. As a result, our business success could significantly depend upon our ability to obtain the funding necessary to support our operations.
Financial Condition and Outlook
Beginning in early in 2025, we implemented a new account management model, redirecting our focus and resources primarily toward larger, more valuable recurring accounts - our core enterprise customers - while reducing the selling and delivery resources previously devoted to cost-intensive, lower-value or project-based accounts with limited repeat business. This strategic realignment reduced current-year contract bookings while significantly improving profitability and strengthening our foundation for sustainable growth. We believe that our bookings will show comparative growth beginning in early 2026.
We initiated a structured transition during the fourth quarter of 2025 for our non-enterprise customers into a new small and mid-sized business (“SMB”) service model; this targeted approach will allow us to serve a narrower set of these customers profitably, while maintaining strategic alignment with our enterprise objectives.
Revenue from Managed Services, excluding Hoozu, decreased 2.1% for the year ended December 31, 2025, compared to the prior-year period. This decrease reflects a deliberate shift away from smaller, non-strategic accounts and a greater focus on growing our enterprise customer base.
We implemented significant cost savings beginning in December 2024 and continuing into 2025 to align operating expenses with anticipated revenue and accelerate our path to profitability. These actions were effective, resulting in a $11.8 million improvement in EBITDA during the year ended December 31, 2025, improving from a $11.1 million negative adjusted EBITDA in 2024 to a positive $0.7 million adjusted EBITDA in 2025.
We expect growth opportunities in our core enterprise accounts, along with other business development activities, to support profitable organic growth over the next twelve months, although growth may not occur consistently each quarter. As managed services revenue is recognized over time and typically lags contract bookings by approximately seven months, our results for the first half of 2025 included revenue recognized from non-core customer contracts booked in 2024 that remained in backlog at the start of 2025. As those contracts have rolled off, we expect year-over-year revenue comparisons in the first half of 2026 to be lower. We anticipate more favorable comparisons in the second half of 2026 as revenue increasingly reflects our current mix of core enterprise engagements.
Operating expenses are expected to increase gradually as we invest in expansion; however, we believe our current cost structure is better aligned to scale efficiently, limiting the recurrence of historical cash losses and reducing the strain on working capital as the business grows.
We believe our cash and cash equivalents are sufficient to fund planned growth initiatives over the next twelve months. If additional capital is needed, we expect to obtain it primarily through equity, equity-linked, or debt financing until our operations generate sufficient profitability to meet ongoing capital requirements.
Off-Balance Sheet Arrangements
The Company did not engage in any “off-balance sheet arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2025.
Critical Accounting Policies and Use of Estimates
We prepare our financial statements according to GAAP. Certain accounting policies require us to apply significant judgment defining the appropriate assumptions for calculating financial estimates. These judgments will be subject to an inherent degree of uncertainty by their nature. Our judgments are based upon the historical experience of the Company, terms of existing contracts, observance of trends in the industry, the information provided by our customers, and information available from other outside sources, as appropriate. For a summary of our significant accounting policies, please refer to Note 1 — Company and Summary of Significant Accounting Policies of this Annual Report. We consider accounting estimates to be critical accounting policies when:
•The estimates involve matters that are highly uncertain at the time the accounting estimate are based, and
•Different estimates or changes to estimates could have a material impact on the reported financial position, changes in financial position, or results of operations.
When more than one accounting principle or method of its application is generally accepted, we select the principle or method that we consider the most appropriate when given the specific circumstances. Applying these accounting principles requires us to estimate the future resolution of existing uncertainties. Due to the inherent uncertainty involving estimates, actual
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results reported in the future may differ from our estimates. The following critical accounting policies are significantly affected by judgments, assumptions, and estimates used to prepare the financial statements.
Accounts Receivable and Concentration of Credit Risk
Accounts receivable includes trade receivables, contract assets, and an allowance for credit losses. Trade receivables represent customer obligations arising from standard credit terms, which contract assets reflect revenue earned but not yet invoiced.
We determine the collectability of accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. We continue to monitor these factors and adjust our credit and collection policies as necessary to address evolving market conditions and potential risks to financial performance. An account is deemed delinquent when the customer has not paid an amount due by its associated due date. If a portion of the account balance is deemed uncollectible, we will either write off the amount owed or provide a reserve based on our best estimate of the uncollectible portion of the account. We assess collectability risk both generally and by specific aged invoices. Our loss history informs a general reserve percentage, which we apply to all invoices less than 90 days from the invoice due date, currently 1% of the outstanding balance. The general reserve, which we update periodically, recognizes that some invoices will likely become a collection risk. When an invoice ages 90 days past its due date, we consider each invoice to determine a reserve for collectability based on our prior history and recent communications with the customer, to determine a reserve amount. Generally, our reserve for such aged invoices will approach 100% of the invoice amount.
At December 31, 2025, our allowance for credit losses was $0.1 million, compared to $0.2 million at December 31, 2024. During the year, we wrote off approximately $0.1 million of accounts receivable that had been fully reserved in prior periods by applying the related allowance for credit losses. As a result, this activity had no impact on the consolidated statements of operations. We believe the allowance is reasonable; however, actual results may differ based on changes in customer financial condition or broader economic conditions.
The concentration of credit risk in accounts receivable is typically limited because many geographically diverse customers make up our customer base, thus spreading the trade credit risk. We manage credit risk through credit approvals, credit limits, and ongoing monitoring of customer balances, and generally do not require collateral. While the customer base is diversified, certain concentrations exist. At December 31, 2025, we had two customers each who accounted for 12.4% and 12.5% of total accounts receivable. At December 31, 2024, we had two customers each who accounted for 14.2% and 23.5% of total accounts receivable. These concentrations are monitored closely as part of the Company’s overall credit risk management process.
Software Development Costs
In accordance with ASC 350-40, Internal-Use Software, we capitalize certain costs incurred to develop and enhance internally developed software used to support our managed services and internal operations. Software development activities are generally categorized into three stages: (i) the research and planning stage, (ii) the application and development stage, and (iii) the post-implementation stage.
Costs incurred during the research and planning stage and the post-implementation stage, as well as maintenance and other development costs that do not qualify for capitalization, are expensed as incurred. Costs incurred during the application and development stage, including those related to significant enhancements and upgrades, are capitalized. Capitalized costs include personnel and related employee benefit costs for employees and consultants directly involved in software development, as well as external direct costs of materials used in developing the software. The Company also capitalizes qualifying costs associated with cloud computing arrangements (“CCAs”).
As of December 31, 2025, capitalized software development costs, net of accumulated amortization, totaled $2.3 million and are recorded as Software Development Costs in the consolidated balance sheet. The Company does not transfer ownership of its software to third parties. Capitalized software development costs and CCA-related assets are amortized on a straight-line basis over an estimated useful life of five years, beginning when the software or related functionality is available for its intended use.
The Company evaluates capitalized software development costs for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If an asset group is determined to be impaired, an impairment loss is recognized for the amount by which the carrying value exceeds fair value in the consolidated statements of operations and comprehensive loss.
Goodwill
Goodwill represents the excess of the consideration transferred for an acquired business over the fair value of the underlying identifiable net assets. Goodwill is not amortized: instead, it is tested for impairment at least annually. Should
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management determine that the value of goodwill has become impaired, we will record a charge for the amount of impairment during the fiscal quarter in which the determination is made.
Before the acquisition of Hoozu on December 1, 2023, IZEA had one business operating segment with one reporting unit for purposes of goodwill impairment testing. Until its disposition on December 18, 2024, Hoozu was treated as a second, separate reporting unit for goodwill impairment testing purposes.
In accordance with ASC 350-20, management’s practice is to assess the carrying value of the Company’s goodwill for impairment annually as of October 1, or more frequently during interim periods if events or changes in circumstances indicate it may be impaired.
In September 2024, the Company identified a triggering event related to changes in executive management and Board-level changes, including the Cooperation Agreement. As a result, the Company conducted an interim goodwill impairment test. The test utilized the income approach (discounted cash flow method) and the market approach (guideline transaction method) to evaluate the fair value of the Company’s IZEA reporting unit. The assessment determined that the carrying value of goodwill exceeded the fair value, resulting in a $4.0 million goodwill impairment charge recorded in the year ended December 31, 2024.
The Company completed the divestiture of the Hoozu business unit in December 2024, resulting in the derecognition of $1.3 million in goodwill attributed to the unitas a part of the net loss on divestiture. As a result, the Company had no goodwill on its balance sheet as of December 31, 2025 and 2024.
Purchase, Disposal, and Impairment of Digital Assets
Historically, we mined digital assets (mining operations ceased in 2019) and purchased digital assets on exchanges.
We record our digital assets in accordance with ASC 350, Intangibles - Goodwill and Other, which required acquired intangible assets to be recorded at cost. Under FASB ASC 350, an entity should determine whether an intangible asset has a finite or indefinite life. FASB ASC 350-30-35-4 states that if no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset should be considered indefinite. We will record our digital assets as indefinite-lived intangible assets.
We use the Coinbase platform for transactions and to determine the fair value of our digital assets. Based on the fair value level hierarchy, we have determined the market to be observable and Level 1.
In September 2024, we converted all our digital assets to USD, following ASC 610-20 guidance to record the excess over carrying value as a gain.
Indefinite-lived intangible assets are initially carried at the value determined in accordance with FASB ASC 350-30-30-1 and are not subject to amortization. Historically, they have been tested for impairment annually or more frequently if events or changes in circumstance indicate that the assets are more likely than not impaired. In December 2023, the FASB issued ASU No. 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires fair value measurement of certain crypto assets each reporting period, with the changes in fair value reflected in net income. The new guidance is effective for fiscal years and interim periods within those fiscal years, beginning December 15, 2024, with early adoption permitted. The Company adopted this guidance effective January 1, 2025.
Revenue Recognition
We generate revenue primarily 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”); we also generate a limited amount of SaaS Services Revenue, which is revenue from access to certain features of our proprietary technology platforms and related transaction-based fees.
We recognize revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, revenue is recognized when control of promised services or access to platform capabilities is transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.
In applying ASC 606, the Company identifies the contract with the customer, determines the performance obligations within the contract, establishes the transaction price, allocates the transaction price to the identified performance obligations, and recognizes revenue as those performance obligations are satisfied. The Company applies this model only to contracts for which it is probable that the consideration to which it is entitled will be collected.
At contract inception, the Company evaluates whether it acts as a principal or an agent for each identified performance obligation. For arrangements in which the Company acts as a principal, revenue is reported on a gross basis and reflects the amount paid by the marketer for campaign execution, content creation, sponsorship, promotion, and other related services, with
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amounts paid to third-party creators recorded as cost of revenue. For arrangements in which the Company acts as an agent, revenue is reported on a net basis and reflects the Company’s fee for facilitating the transaction between marketers and creators.
We enter into separate contractual arrangements with marketers and content creators, typically in the form of master agreements or terms of service that govern the overall relationship, supplemented by statements of work that define the specific services to be performed, pricing, and other relevant terms. Statements of work generally establish a fixed transaction price for the services provided.
Marketers who contract with us to manage their advertising campaigns or custom content requests may prepay for services or request credit terms, and payment terms are typically 30 days from the invoice date. Contractual arrangements may provide for a non-refundable deposit or a cancellation fee if the customer cancels the agreement prior to completion of the services. Amounts billed in advance of completed services are recorded as contract liabilities and recognized as revenue as the related performance obligations are satisfied. We assess collectability at contract inception and on an ongoing basis, considering factors such as the customer’s creditworthiness, payment history, and transaction history.
Managed Services Revenue
Managed Services arrangements where we act as principal generally involve integrated influencer marketing campaigns and custom content delivered over contractual periods that typically range from one day to one year. These arrangements may include campaign strategy, creator sourcing and management, content development, amplification, and performance measurement.
Managed Services are generally accounted for as a single performance obligation that is satisfied over time as customers simultaneously receive and consume the benefits of the services. Revenue is typically recognized using an input method based on costs relative to total expected costs. Services are generally performed over periods ranging from one day to one year.
Stock-Based Compensation
Stock-based compensation is measured at the grant date, based on the award’s fair value, 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 having five or ten-year contract lives. We use the simplified method to estimate the expected term of employee stock options. We do not believe historical exercise data will provide a reasonable basis for estimating the expected term for the current share options granted. The simplified method assumes employees exercise share options evenly over the period from vesting through expiration. We use the closing price of our common stock on the grant date as the fair value of our common stock. For issuances after June 30, 2019, we estimate the volatility of our common stock at the grant date based on the stock's volatility over the period. For issuances on or before June 30, 2019, we estimated the volatility of our common stock at the date of grant based on the volatility of comparable peer companies that were publicly traded and had a longer trading history than us. We determine the expected life based on historical experience with similar awards, considering the contractual terms, vesting schedules, and post-vesting forfeitures. We use the risk-free interest rate implied by the current yield on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. We have never paid cash dividends on our common stock and do not anticipate paying any in the foreseeable future. We estimate forfeitures when recognizing compensation expense. 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.
Total stock-based compensation expense recorded in our consolidated statements of operations during the years ended December 31, 2025, and 2024 were $1.5 million and $2.3 million, respectively.
At December 31, 2025, 19,269 stock options were outstanding with a weighted-average exercise price of $11.76 per share. All outstanding options were fully exercisable at the same weighted-average price. The intrinsic value of both the outstanding and exercisable options was $535 at December 31, 2025.
As of December 31, 2025, we had unvested restricted stock units representing 1,770,927 shares of common stock with an intrinsic value of $6.4 million and we did not have any unvested shares of restricted stock.
As of December 31, 2025, we had time-based restricted stock unit awards granted under the Company’s 2023 Inducement Plan with certain new hires, representing 50,000 shares of common stock with an intrinsic value of $0.1 million.
Business Combinations and Asset Acquisitions
The Company follows Accounting Standards Codification (ASC) Topic 805, "Business Combinations," to handle
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business combinations. The acquisition method of accounting is utilized for all business combinations. This method involves recognizing and measuring identifiable assets acquired, liabilities assumed, and any non-controlling interests at their fair values on the acquisition date. Goodwill signifies the surplus of the purchase price over the fair value of net identifiable assets acquired and liabilities assumed. It is assigned to reporting units expected to benefit from the combination's synergies and undergoes annual impairment testing. Acquisition-related costs, such as advisory, legal, and due diligence fees, are expensed as incurred and are included in general and administrative expenses for acquisition period. The financial statements incorporate the results of operations and financial position of acquired businesses from their respective acquisition dates. Any adjustments to preliminary fair values of assets acquired and liabilities assumed, referred to as measurement period adjustments, are recorded in the period of adjustment.
Recent Accounting Pronouncements
See “Note 1. Company and Summary of Significant Accounting Policies,” under Part II, Item 8 of this Annual Report for information on additional recent pronouncements.
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
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ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Page
Consolidated Balance Sheets 37
Consolidated Statements of Operations 38
Consolidated Statements of Comprehensive Loss 39
Consolidated Statements of Stockholders’ Equity 40
Consolidated Statements of Cash Flows 41
Notes to Consolidated Financial Statements 42
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
IZEA Worldwide, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of IZEA Worldwide, Inc. (a Nevada corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income ( loss), stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2022.
Charlotte, North Carolina
March 17, 2026
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IZEA Worldwide, Inc.
Consolidated Balance Sheets
Assets
Current assets:
Property and equipment, net of accumulated depreciation 17,131 103,574
Software development costs, net of accumulated amortization 2,335,745 2,086,660
Liabilities and Stockholders’ Equity
Current liabilities:
Finance obligation, less current portion — 4,034
Commitments and Contingencies (Note 9)
Stockholders’ equity:
Accumulated other comprehensive income (loss) (53,680) 105,287
See accompanying notes to the consolidated financial statements.
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IZEA Worldwide, Inc.
Consolidated Statements of Operations
Twelve Months Ended December 31,
Costs and expenses:
Other income (expense):
Change in the fair value of digital assets — 28,414
Basic income (loss) per common share $ 0.00 $ (1.10)
Diluted income (loss) per common share $ 0.00 $ (1.10)
See accompanying notes to the consolidated financial statements.
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IZEA Worldwide, Inc.
Consolidated Statements of Comprehensive Income (Loss)
Twelve Months Ended December 31,
Other comprehensive income (loss)
Unrealized gain (loss) on securities held (12,209) 262,800
Unrealized gain (loss) on currency translation (146,758) 127,296
Reclassification of foreign currency translation adjustment to income — (34,218)
See accompanying notes to the consolidated financial statements.
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IZEA Worldwide, Inc.
Consolidated Statements of Stockholders’ Equity
Shares Amount Capital Stock Deficit Income (Loss) Equity
Foreign currency translation adjustment — — — — — 93,078 93,078
Unrealized gain (loss) on securities held — — — — — 262,800 262,800
Foreign currency translation adjustment — — — — — (146,758) (146,758)
Unrealized gain (loss) on securities held — — — — — (12,209) (12,209)
See accompanying notes to the consolidated financial statements.
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IZEA Worldwide, Inc.
Consolidated Statements of Cash Flows
Twelve Months Ended December 31,
Cash flows from operating activities:
Adjustment to fair market value of digital assets — (28,414)
Deferred tax benefit — (400,750)
Value of stock issued for payment of services 360,000 319,070
Changes in operating assets and liabilities:
Cash flows from investing activities:
Acquisitions, net of cash acquired — (203,403)
Payment for divestiture — 73,528
Proceeds from the sale of digital assets — 191,318
Capitalization of software development costs (799,028) (789,001)
Proceeds from the sale of PPE — 1,092
Cash flows from financing activities:
Proceeds from exercise of stock options & ESPP issuances 46,742 92,901
Stock issuance costs (134,017) —
Payments on shares withheld for statutory taxes (791,238) (589,726)
Effect of exchange rate changes on cash (158,967) (24,757)
Supplemental cash flow information:
Supplemental non-cash activities:
Fair Value of common stock issued for services $ 360,000 $ 319,070
See accompanying notes to the consolidated financial statements.
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Notes to the Consolidated Financial Statements
NOTE 1. COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Corporate Information and Nature of Business
IZEA Worldwide, Inc. (together with its wholly-owned subsidiaries, “IZEA” or the “Company”) is a Nevada corporation founded in February 2006 under the name PayPerPost, Inc. and became a public company in May 2011. In March 2016, the Company formed IZEA Canada, Inc., a wholly-owned subsidiary incorporated in Ontario, Canada. In December 2023, IZEA purchased all of Hoozu Holdings' outstanding shares of capital stock, which it subsequently divested in December 2024.
The Company helps power the creator economy by enabling marketers to engage creators to produce and distribute content across digital channels through technology-enabled managed services that support influencer and content marketing campaigns. The Company’s current focus is on delivering full-service solutions tailored to client needs.
Principles of Consolidation
The consolidated financial statements include the accounts of IZEA Worldwide, Inc. and its wholly-owned subsidiaries from their subsidiaries’ acquisition, merger, or formation dates, as applicable. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 may differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less from the date of purchase to be cash equivalents. Deposits made to Company bank accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum amount of $250,000. The Canada Deposit Insurance Corporation (“CDIC”) insures deposits made to the Company’s bank accounts in Canada up to CAD 100,000. Deposit balances exceeding the various limits were approximately $50.3 million and $44.2 million as of December 31, 2025 and December 31, 2024, respectively.
Investment in Debt Securities
The Company’s investments in debt securities are carried at either amortized cost or fair value, with the cost basis determined by the specific identification method. Debt securities for which the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at amortized cost. All other debt securities are classified as either trading or available-for-sale and carried at fair value.
Realized and unrealized gains and losses on trading debt securities, as well as realized gains and losses on available-for-sale debt securities, are included in net income. Unrealized gains and losses on available-for-sale debt securities, net of tax, are included in our consolidated balance sheet as a component of accumulated other comprehensive income (loss).
All debt securities matured as of June 30, 2025.
Accounts Receivable and Concentration of Credit Risk
The Company’s accounts receivable balance consists of trade receivables and contract assets, net of an allowance for credit losses. Trade receivables represent customer obligations arising from standard credit terms, while contract assets reflect revenue recognized but not yet invoiced. As of December 31, 2025, the Company reported net trade receivables of $3.4 million, comprised entirely of accounts receivable, with no contract assets. As of December 31, 2024, the Company had net trade receivables of $7.8 million, including $7.6 million of accounts receivable and $0.2 million in contract assets.
Management determines the collectability of accounts receivable by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. The Company continues to monitor these factors and will adjust credit and collection policies as necessary to address evolving market conditions and potential risks to financial performance. An account is deemed delinquent when the customer has not paid an amount due by its associated due date. If a portion of the account balance is deemed uncollectible, the Company will either write off the amount owed or provide a reserve based on its best estimate of the uncollectible portion of the account. The Company assesses collectability risk both generally and by specific aged invoices. The Company’s loss history informs a general reserve percentage, which is applied to all invoices less than 90 days from the invoice due date, currently 1% of the outstanding balance. The general reserve, which is updated periodically, recognizes that some invoices will likely become a collection risk. When an invoice ages 90 days past its due date, the Company considers each invoice to determine a reserve for
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collectability based on prior history and recent communications with the customer, to determine a reserve amount. Generally, the Company’s reserve for such aged invoices will approach 100% of the invoice amount.
The Company’s allowance for credit losses was $0.1 million as of December 31, 2025, compared to a reserve of $0.2 million at December 31, 2024. During the year, the Company wrote off approximately $0.1 million of accounts receivable that had been fully reserved in prior periods by applying the related allowance for credit losses. As a result, the allowance balance decreased, with no impact on the consolidated statements of operations. Management believes this estimate is reasonable, but there can be no assurance that the estimate will not change due to economic or business conditions within the industry, the individual customers, or the Company. Any adjustments to this account are reflected in the consolidated statements of operations as a general and administrative expense.
Concentrations of credit risk with respect to accounts receivable have been typically limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs credit evaluations of its customers but generally does not require collateral to support accounts receivable. The Company had two customers that accounted for 12.4% and 12.5%, respectively, of total accounts receivable as of December 31, 2025 and two customers that accounted for 14.2% and 23.5%, respectively, of total accounts receivable as of December 31, 2024. The Company had two customers that accounted for 13.4% and 13.8%, respectively, of its revenue during the year ended December 31, 2025, and two customers that accounted for 10.3% and 12.8% of its revenue during the year ended December 31, 2024.
Property and Equipment
Property and equipment are recorded at cost, or if acquired in a business combination, at the acquisition date fair value. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Computer Equipment 3 years
Office Equipment 3 - 10 years
Furniture and Fixtures 5 - 10 years
The carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the year of disposal, with resulting gains or losses included in general and administrative expense in the consolidated statements of operations.
Goodwill
Goodwill represents the excess of the consideration transferred for an acquired business over the fair value of the underlying identifiable net assets. Goodwill is not amortized and is assigned to reporting units that are expected to benefit from the synergies of the business combination.
The Company tests goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. An impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the carrying amount of goodwill.
In September 2024, the Company identified a triggering event related to changes in executive management and Board-level changes, including the Cooperation Agreement. As a result, the Company conducted an interim goodwill impairment test. The test utilized the income approach (discounted cash flow method) and the market approach (guideline transaction method) to evaluate the fair value of the Company’s IZEA reporting unit. The assessment determined that the carrying value of goodwill exceeded the fair value, resulting in a $4.0 million goodwill impairment charge recorded in the three and nine months ended September 30, 2024.
The Company completed the divestiture of the Hoozu business unit on December 31, 2024, resulting in the derecognition of $1.3 million in goodwill attributed to the unit as a part of the net loss on divestiture.
As of December 31, 2025 and 2024, the Company had no goodwill recorded on its consolidated balance sheets.
Intangible Assets
Intangible assets with finite useful lives are recorded at cost and amortized on a straight-line basis over their estimated useful lives. The Company evaluates the recoverability of finite-lived intangible assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds its fair value.
Intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually, or more
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frequently if events or changes in circumstances indicate that the asset may be impaired.
As of December 31, 2025 and 2024, the Company had no intangible assets recorded on its consolidated balance sheets. See “Note 5 – Intangible Assets” for additional information regarding intangible asset activity in prior periods.
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 used to support its managed services and internal operations. Software development activities generally include a research and planning stage, an application and development stage, and a post-implementation stage. Costs incurred in the research and planning stage and in the post-implementation stage of software development are expensed as incurred, while costs incurred in the application and development stage, including significant enhancements and upgrades, are capitalized.
Capitalized costs include personnel and related employee benefits expenses for employees or consultants directly involved in software development, as well as certain external direct costs. The Company also capitalizes qualifying costs related to cloud computing arrangements (“CCAs”). Capitalized software development costs are amortized on a straight-line basis over the estimated useful life of five years beginning when the software or related enhancements are placed in service.
The Company reviews the software development costs for impairment when events or changes indicate the carrying amounts may not be recoverable. Impairment losses, if any, are recognized in the consolidated statements of operations. In December 2024, the Company reviewed its software assets, wrote off fully amortized balances no longer active, and accelerated the amortization of certain software assets no longer in use, with further details provided in "Note 6 - Software Development Costs.”
Leases
Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), 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 with a lease term of 12 months or less at the commencement date.
Revenue Recognition
The Company generates revenue primarily from Managed Services when a marketer (typically a brand, agency, or partner) engages the Company to provide custom content, influencer marketing, amplification, or other campaign management services (“Managed Services”). The Company also generates a limited amount of revenue from access to certain platform features and related fees.
The Company recognizes revenue 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. Revenue is recognized when the control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled. The Company applies this guidance only to contracts for which it is probable that the Company will collect the consideration to which it is entitled.
The Company evaluates whether it acts as an agent or a principal for each identified performance obligation. For transactions in which the Company acts as a principal, revenue is reported on a gross basis and reflects the amount billed to the customer, with amounts it pays to third-party creators as a cost of revenue.
The Company enters into contractual arrangements with marketers and content creators, typically through master agreements or terms of service, supplemented by a statements of work that define the specific services and pricing. Transaction prices are generally fixed. Customers may prepay for services or be granted credit terms, with payment typically due within 30 days of the invoice date. Amounts billed in advance of services performed are recorded as contract liabilities and recognized as revenue as the related performance obligations are satisfied. The delivery of custom content represents a distinct performance obligation that is satisfied at a point in time when each piece of content is delivered to the customer. The Company assesses collectability based on customer creditworthiness, payment history, and transaction history.
The Company’s costs to obtain customer contracts consist primarily of sales commissions and related payroll costs. The Company has elected the practical expedient under ASC 340-40 to expense incremental costs of obtaining a contract as incurred when the expected amortization period is one year or less. Accordingly, the Company does not capitalize costs to obtain customer contracts.
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Notes to the Consolidated Financial Statements
Revenue from subscription or platform access arrangements (“SaaS” or “Software as a Service”), which represents an immaterial portion of the Company’s consolidated revenue, is recognized on a straight-line basis over the contractual term.
Managed Services Revenue
Managed Services arrangements may include integrated marketing campaigns delivered through digital and social media channels. Marketers typically engage the Company to generate brand awareness or advertising activity and produce custom content for internal and external use.
Managed Services are generally accounted for as a single performance obligation that is satisfied over time as customers simultaneously receive and consume the benefits of the services. Revenue is typically recognized using an input method based on costs relative to total expected costs. Services are generally performed over periods ranging from one day to one year.
Advertising Costs
Advertising costs are expensed as incurred and include costs associated with promotional activities, including payments to third parties for marketing and brand promotion. Advertising costs are reflected within sales and marketing expenses in the accompanying consolidated statements of operations.
For the year ended December 31, 2025, advertising spend was de minimis. In comparison, advertising expenses totaled approximately $2.3 million for the year ended December 31, 2024, respectively. Advertising costs are reflected within sales and marketing expenses in the accompanying consolidated statements of operations.
Income Taxes
Deferred income taxes are accounted for using the balance sheet approach under ASC 740, which requires recognizing deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the assets and liabilities tax basis. A valuation allowance is established when, based on available evidence, it is more likely than not that some or all of a deferred tax asset will not be realized.
The Company incurs state franchise tax in certain jurisdictions, which is included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.
The Company evaluates uncertain tax positions in accordance with applicable accounting guidance and recognizes the impact of uncertain tax positions when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority. Unrecognized tax benefits, if any, are recorded as liability on the consolidated balance sheet. The Company has not recognized a liability for uncertain tax positions. Interest expense and penalties related to unrecognized tax benefits, if any, are recognized in interest expense and operating expenses, respectively.
The Company’s tax years subject to examination based on the statute of limitations by the IRS are generally three years; however, tax years in which net operating losses were generated may remain subject to examination to the extent that such losses are utilized in future periods. The Company’s tax years subject to examination by the Canadian Revenue Agency is generally four years.
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 classified and disclosed based on a fair value hierarchy that prioritizes the inputs used in valuation techniques. 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. As of December 31, 2025, the Company holds only cash and cash equivalents and no longer holds any marketable securities. Additional information is provided in “Note 3 – Financial Instruments of the Notes to the Consolidated Financial Statements.”
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Notes to the Consolidated Financial Statements
Stock-Based Compensation
Stock-based compensation for options granted under the 2011 Equity Incentive Plan and the 2023 Inducement Plan is measured at the grant date fair value and recognized on a straight-line basis over the requisite service period. Fair value is estimated using the Black-Scholes model.
The valuation of stock options requires the use of subjective assumptions, including the expected term of the option, expected stock price volatility, the risk-free interest rate, and the expected dividend yield. The Company applies the simplified method to estimate the expected term, assuming even exercise between vesting and expiration, and uses the grant-date closing stock price as the fair value of common stock. The Company uses the risk-free interest rate implied by the current yield on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The expected dividend yield is zero, as the Company has never paid cash dividends and does not anticipate paying any in the foreseeable future.
The Company estimates forfeitures and revises such estimates over the requisite service period to reflect actual and expected forfeiture activity. 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 Company may issue restricted stock or restricted stock units (“RSUs”) that vest over timeor upon achievement of specified performance conditions. These awards are recorded at fair value on the grant date and expensed on a straight-line basis over the vesting period. Additional information regarding the Company’s equity compensation plans is provided in “Note 10 - Stockholder’s Equity” to the consolidated financial statements.
Business Combinations and Asset Acquisitions
The Company accounts for business combinations in accordance with Accounting Standards Codification (ASC) Topic 805, “Business Combinations.” The acquisition method of accounting is applied to all business combinations, whereby the identifiable assets acquired, liabilities assumed, and any non-controlling interests in the acquiree are recognized and measured at their fair values as of the acquisition date.
Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired and liabilities assumed in a business combinationand is recognized as of the acquisition date. The determination of fair values requires management to make estimates and assumptions related to future cash flows, discount rates, and other valuation inputs.
Acquisition-related costs, including advisory, legal, and due diligence fees, are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations in the period in which the acquisition occurs. The consolidated financial statements include the results of operations and the financial position of businesses acquired from their respective acquisition dates.
During the measurement period, which may extend up to one year from the acquisition date, the Company may record adjustments to the provisional fair values of assets acquired and liabilities assumed. Measurement period adjustments are recognized in the period identified and reflect information that existed as of the acquisition date.
Asset acquisitions are accounted for by allocating the purchase price to the individual assets acquired and liabilities assumed based on their relative fair values. Acquisition-related costs incurred in connection with asset acquisitions are capitalized as part of the cost of the assets acquired.
Recently Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Segment Reporting: Improvements to Reportable Segment Disclosures: In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improving Reportable Segment Disclosures. This update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU also requires all annual disclosures currently required by Topic 280 to be included in the interim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted and requiring retrospective application to all prior periods presented in the financial statements. The adoption did not have a material impact on the consolidated financial statements.
Income Taxes: Improvements to Income Tax Disclosures: In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced disclosures of income tax components affecting the rate reconciliation and income taxes paid, disaggregated by applicable taxing jurisdictions. The Company adopted this ASU effective January 1, 2025. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements; however, the ASU resulted in expanded income tax disclosure requirements.
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Recently Issued Accounting Pronouncements Not Yet Adopted
Disaggregation of Income Statement Expenses: In November 2024, the FASB issued ASU No. 2024-03 (Subtopic 220-40) Disaggregation of Income Statement Expenses, which requires entities to provide enhanced disclosures related to certain expense categories included in the income statement. The update is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the timing and impact of adopting the updated provisions.
Intangibles - Goodwill and Other - Internal-Use Software: In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which eliminates the previous stage-based model for software development and introduces a principles-based framework for determining when capitalization of internal-use software costs is appropriate. The update also incorporates guidance on assessing significant development uncertainty and relocates the website development guidance from Subtopic 350-50 into Subtopic 350-40. The amendments are effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company is currently assessing the timing and impact of adopting the updated provisions.
Interim Reporting (Topic 270): Narrow-Scope Improvements: In December 2025, the Financial Accounting Standards Board issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the scope and applicability of interim reporting guidance and certain interim disclosure requirements. The amendments are effective for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.
NOTE 2. BUSINESS ACQUISITIONS AND DIVESTITURES
Divestiture of Hoozu Holdings PTY Ltd.
On December 18, 2024, the Company completed the divestiture of Hoozu Holdings PTY Ltd. (“Hoozu”) through its sale to a private Australian company.
The divestiture resulted in cash proceeds of $73,529, net of approximately $28,000 in transaction costs, and resulted in a net loss of $1.9 million, including the derecognition of $1.3 million in goodwill attributed to the unit, net of a $0.3 million deferred tax benefit. The loss on the sale, together with the year-to-date results of operations of Hoozu through the date of divestiture, is reflected in the Company’s financial statements for the period ended December 31, 2024.
Acquisition of 26 Talent
On July 1, 2024, the Company, through its subsidiary Hoozu, completed the acquisition of 26 Talent. The acquired business was subsequently integrated into Hoozu’s operations and was included in the December 18, 2024 divestiture of Hoozu.
Total consideration for the acquisition consisted of $0.2 million in cash and contingent consideration of up to $0.1 million, which was based on the achievement of specified revenue thresholds. No contingent consideration was paid prior to the divestiture of Hoozu. The acquisition was accounted for in accordance with ASC 805, Business Combinations.
Terminated Acquisition - The Reiman Agency
On July 24, 2024, the Company entered into an acquisition agreement with The Reiman Agency (“TRA”). The acquisition was subsequently terminated, effective September 30, 2024. All consideration paid to TRA upon closing was returned, a termination fee was paid to the Company, and the inducement grant issued in connection with Mr. Reiman’s employment was forfeited.
The operating results of TRA, which are immaterial, are included in the Company’s operating results for the September 30, 2024 quarter.
NOTE 3. FINANCIAL INSTRUMENTS
Cash, Cash Equivalents, and Marketable Securities (Available for Sale)
The Company maintains its cash, cash equivalents, and marketable securities with a nationally recognized financial institution. Cash equivalents consist of highly liquid investments with original maturities of three months or less.
As of December 31, 2025 the Company held $50.9 million in cash and cash equivalentsand did not hold any marketable securities. As of December 31, 2024, the Company held $51.1 million in cash and cash equivalents and marketable securities classified as available-for-sale.
Cash equivalents and marketable securities are recorded at fair value. Cash equivalents are classified as Level 1 financial instruments under the fair value hierarchy. Marketable securities are classified within Level 1 or Level 2 depending on
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the observability of inputs used in their valuation. The Company recognized a gain of $23,799 for the year ended December 31, 2025 and a loss of $4,323 for the year ended December 31, 2024, resulting from the sale of marketable securities.
Realized gains and losses are a component of other income (expense), net. Unrealized gains and losses are a component of other comprehensive income (loss) (“OCI”).
The following table summarizes the estimated fair value of investments in marketable debt securities by stated contractual maturity dates:
The following table presents fair values and net unrealized gains (losses) recorded to OCI, aggregated by investment category:
Fair Value Net Unrealized Gain (Loss) Fair Value Net Unrealized Gain (Loss)
During the year ended December 31, 2025, all marketable securities matured and were settled, clearing any unrealized gains and losses. Accordingly, the Company did not hold any marketable securities at year end, nor did it recognize any associated credit losses.
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 was $86,443 and $105,281 for the years ended December 31, 2025 and 2024, respectively.
NOTE 5. INTANGIBLE ASSETS
Definite Lived Intangible Assets
The Company had no definite-lived intangible assets as of December 31, 2025 and December 31, 2024. The Company did not have any amortization expense related to definite-lived intangible assets during the year ended December 31, 2025.
Amortization expense related to definite-lived intangible assets totaled $294,568 for the year ended December 31, 2024. This expense primarily related to the amortization of trade names and customer lists acquired in connection with the Hoozu and Zuberance acquisitions, both of which were sold or discontinued in 2024.
Digital Assets
In September 2024, the Company sold all of its digital assets for total proceeds of $190,170, net of de minimis fees.
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As of December 31, 2024, the Company no longer held any digital assets. During the year ended December 31, 2024, the Company recorded a gain of $28,414.
Prior to their sale in September 2024, the Company measured its digital assets at fair value in accordance with ASU 2023-8, Accounting for and Disclosure of Crypto Assets, based on quoted prices on the active markets for such assets (Level 1 inputs). Changes in fair value were recognized in earnings in the period identified.
Gains and losses on digital assets, including changes in fair value and gains or losses recognized upon sale, were recorded in other income (expense), net, in the consolidated statements of operations and comprehensive loss. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and the carrying value of the digital assets sold immediately prior to the sale.
Goodwill
The Company’s goodwill balance changed in 2024, as follows:
Amount
Divestiture of subsidiary (1,266,393)
Currency translation adjustment 2,743
Balance on December 31, 2024 $ —
Goodwill reflects the amount by which the purchase price of an acquired business exceeds the fair value of its identifiable net assets. Goodwill is not amortized and is evaluated for impairment at least annually, or more often if circumstances indicate a potential impairment.
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 changes in executive management and Board-level changes, including the Cooperation Agreement. As a result, 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. This assessment determined that the carrying value of the Company’s IZEA reporting segment exceeded its fair value, leading to a $4.0 million goodwill impairment recorded in September 2024.
In December 2024, in conjunction with recording a loss on the divestiture of its Hoozu reporting unit, the Company recognized a 1.3 million impairment related to intangible assets from the divested business, bringing the consolidated goodwill impairment for the year ended December 31, 2024, to $5.3 million.
There was no goodwill activity in 2025. As of December 31, 2025 and December 31, 2024, the Company had no goodwill recorded on its consolidated balance sheet.
NOTE 6. SOFTWARE DEVELOPMENT COSTS
Software development costs consist of the following:
The Company capitalized of $0.8 million and $0.8 million for the years ended December 31, 2025 and 2024, respectively of internal-use software development costs. Capitalized costs consist primarily of direct materials, consulting, payroll, and benefit costs associated with software development activities.
The Company amortizes capitalized software development costs on a straight-line basis over the estimated useful life of five years, beginning when the related software or features are available for their intended use. This estimated useful life is consistent with the period over which the Company’s legacy platforms have historically been in service, or the actual useful life if shorter.
Amortization expenses related to capitalized software development cost of $0.5 million and $0.8 million during the years ended December 31, 2025 and 2024, respectively.
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As of December 31, 2025, future estimated amortization expense related to software development costs is set forth in the following schedule:
Software Development Amortization Expense
NOTE 7. ACCRUED EXPENSES
Accrued expenses consist of the following:
Current portion of finance obligation 9,106 59,386
(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 were entitled to receive, a severance amount of $0.9 million was accrued and to be paid over the following twelve-month period. In December 2024, in conjunction with a targeted workforce reduction, the Company accrued $0.3 million in severance costs that were paid in January 2025. As of December 31, 2025, no severance accrual remains outstanding, as the liability has been fully settled.
NOTE 8. NOTES PAYABLE
Finance Obligation
The Company purchases laptop computer equipment through installment payment arrangements with a third-party vendor, which are accounted for as financing obligations. The related equipment is recorded as fixed assets, and the corresponding liability is recorded at its present value using an imputed interest rate of 12.9%, which approximates the Company’s incremental borrowing rate. Interest expense is recognized over the term of the payment plans.
In connection with a refresh of a portion of its computer inventory, the Company entered into a three-year payment plan with the same vendor during 2022. As of December 31, 2025 and December 31, 2024, the outstanding balance under these financing arrangements was $9,106 and $63,420, respectively. The short-term portion of the obligation, totaling $9,106 and $59,386 as of December 31, 2025 and 2024, respectively, is included in accrued expenses in the consolidated balance sheets.
Interest expense related to these financing arrangements totaled $6,189 and $8,129 for the years ended December 31, 2025 and 2024, respectively, and is included in interest expense in the consolidated statements of operations and comprehensive loss.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Deferred Purchase Price
As part of the acquisitions of Hoozu Holdings Pty Ltd. (“Hoozu”) in December 2023 and 26 Talent in July 2024, the Company recorded contingent consideration liabilities related to potential earn-out payments, all of which were fully recognized in the consolidated statements of operations during 2024. On December 18, 2024, the Company completed the divestiture of Hoozu, including the sale of 26 Talent, which had been integrated into Hoozu’s Huume talent-management division. In connection with the divestiture, all remaining contingent consideration obligations related to these acquisitions were either settled or placed into escrow, with the escrowed funds held by outside counsel. In July 2025, upon satisfaction of the applicable earn-out conditions, the escrowed funds were released. As a result, no contingent consideration liabilities or related commitments associated with Hoozu or 26 Talent remained outstanding as of December 31, 2025.
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Lease Commitments
The Company does not have any operating or finance leases greater than 12 months in duration as of December 31, 2025.
Retirement Plans
The Company offers a defined contribution 401(k) retirement plan to eligible employees. In November 2025, the Company implemented a new 401(k) plan that replaced its prior plan with substantially similar provisions, and participant account balances were rolled into the new plan. Under the plan, the Company matches participant contributions equal to 50% of each participant’s contribution, up to a maximum of 8% of the participant’s salary. Employer matching contributions vest ratably over four years of service.
Total expense for employer matching contributions during the years ended December 31, 2025 and 2024 was recorded in the Company’s consolidated statements of operations as follows:
Twelve Months Ended December 31,
Litigation
The Company may occasionally be involved in legal proceedings in the ordinary course of business. While litigation carries inherent uncertainties, the Company is not currently a party to any matters that it believes would have a material adverse effect, individually or in the aggregate.
NOTE 10. STOCKHOLDERS’ EQUITY
Authorized Shares
The Company has 50,000,000 authorized shares of common stock and 10,000,000 authorized shares of preferred stock, each with a par value of $0.0001 per share.
Share Repurchase
On June 28, 2024, the Company announced that its Board of Directors had authorized a $5.0 million share repurchase program of the Company’s common stock. In conjunction with the Cooperation Agreement entered into on September 6, 2024, the maximum authorized repurchase amount was increased to $10.0 million. Repurchases under the program may be made through open market purchases, privately negotiated transactions, or other methods, including tender offers.
Pursuant to this authorization, on May 13, 2025, the Company launched a modified “Dutch auction” tender offer to repurchase up to $8.7 million of its outstanding common stock. The tender offer expired on June 16, 2025. In accordance with the terms of the offer, the Company repurchased 38,682 shares at a purchase price of $2.80 per share, for an aggregate cost of approximately $0.1 million, excluding fees and expenses.
On June 16, 2025, the Company entered into an agreement with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) authorizing Ladenburg to purchase shares of the Company’s common stock on the Company’s behalf beginning on July 16, 2025, and ending on the earliest of May 15, 2026, the date the aggregate dollar limit under the Company’s repurchase authorization is reached, or the occurrence of certain other specified events. Purchases will be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management and are intended to comply with the safe harbor provisions of Rules 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. As of December 31, 2025, no shares have been purchased under this plan.
As of December 31, 2025, the Company had cumulatively repurchased 561,950 shares under its share repurchase programs at an aggregate cost of $1.4 million, representing the total treasury stock reflected on the consolidated balance sheet. The average purchase price of these shares was $2.55 per share. As of December 31, 2025, approximately $8.7 million remained available for repurchase under the Company’s authorization.
Equity Incentive Plan
The Company’s stockholders approved an amendment and restatement of the 2011 Equity Incentive Plan at the Company’s 2024 Annual Meeting of Stockholders held on December 12, 2024, to increase the number of plan shares by
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700,000 shares, from 3,675,000 to 4,375,000 shares. As of December 31, 2025, the Company had 291,384 remaining shares of common stock available for future issuance under the 2011 Equity Incentive Plan.
Restricted Stock
Under the 2011 Equity Incentive Plan, the Board determines the terms and conditions of each restricted stock issuance, including any future vesting restrictions.
The Company issues a stock grant to each of its independent directors on a quarterly basis for their annual service on the Board, with the shares vesting at the grant date. In 2025, the Company issued a total of 122,892 shares of restricted common stock, with an aggregate grant date valuation of $0.4 million. In 2024, the Company issued a total of 125,863 shares of restricted common stock with a grant date fair value of $0.3 million.
The following table contains summarized information about restricted stock issued during the years ended December 31, 2024 and December 31, 2025:
Expenses recognized on restricted stock issued to independent directors for services were $0.4 million and $0.3 million during the years ended December 31, 2025 and 2024, respectively.
Restricted Stock Units
The Board determines the terms and conditions of each restricted stock unit award issued under the Equity Incentive Plan.
During the year ended December 31, 2025, the Company issued a total of 768,967 time-based restricted stock units, initially valued at $2.2 million, as additional compensation, including 700,817 time-based restricted stock units, initially valued at $2.0 million, to non-executive employees and 68,150 time-based restricted stock units, initially valued at $0.2 million, to executives. These time-based restricted stock units have vesting periods ranging from 36 to 48 months from issuance.
On September 6, 2024, the Company granted 490,400 performance-based restricted stock units (“PBRSUs”) with an initial fair value of $0.5 million. The vesting of these awards will occur annually over a four-year period and its contingent upon the achievement of specified performance measures, including a market condition. The fair value of the awards was estimated on the grant date using a Monte Carlo simulation model due to the market condition. No similar awards were granted in 2025. The fair value assumptions using the Monte Carlo simulation model for the award granted in 2024 were:
Risk-free rate 4.0 %
Simulation term (in years) 3.3
Annual volatility (rounded) 55.0 %
Performance-based equity awards, including those granted to the Company’s Chief Executive Officer, are accounted for as restricted stock units and are included within the Company’s restricted stock unit activity and share pool disclosures.
The following table contains summarized information about restricted stock units during the years ended December 31, 2025 and December 31, 2024:
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Notes to the Consolidated Financial Statements
(1) In the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the table summarizing the shares granted during the year inadvertently omitted certain equity awards, although the correct total was disclosed in the accompanying narrative. The table has been updated to reflect the correct total of 2,348,423 shares granted. This correction had no impact the Company’s consolidated financial statements.
Stock-based compensation expense related to restricted stock units totaled approximately $1.5 million and $2.6 million for the years ended December 31, 2025 and 2024, respectively, and is included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.
On December 31, 2025, the fair value of the Company’s common stock was approximately $4.38 per share, and the intrinsic value of the non-vested restricted units was $6.4 million. Total unrecognized compensation cost related to non-vested restricted stock units as of December 31, 2025, is $3.3 million, which is expected to be recognized over a weighted-average vesting period of approximately 1.33 years.
Stock Options
Under the 2011 Equity Incentive Plan, the Board determines the exercise price, vesting terms, and contractual life of stock option awards. The exercise price of incentive and nonqualified stock options is not less than 100% of the fair market value of the Company’s common stock on the grant date, or 110% of fair market value for incentive stock options granted to individuals who own more than 10% of the Company’s outstanding common stock. Unless otherwise determined at the time of grant, stock options have a contractual term of ten years and vest 25% one year from the grant date, with the remaining balance vesting in equal monthly installments over the subsequent three years. Shares issued upon the exercise of stock options are newly issued shares.
A summary of option activity under the 2011 Equity Incentive Plan during the years ended December 31, 2024 and December 31, 2025, is presented below:
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A summary of the nonvested stock option activity under the 2011 Equity Incentive Plan during the years ended December 31, 2024, and December 31, 2025, is presented below:
Forfeited — —
Nonvested at December 31, 2025 — $ — 0
There were outstanding options to purchase 19,269 shareswith a weighted average exercise price of $11.76 per share, of which options to purchase 19,269 shares were exercisable with a weighted average exercise price of $11.76 per share as of December 31, 2025.
Stock-based compensation expense recognized for stock options issued to employees was $9,495 and $171,897 for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, there was no unrecognized compensation cost related to non-vested stock option awards, as all awards were fully vested.
Inducement Plan
On November 30, 2023, the Board of Directors adopted the IZEA Worldwide, Inc. 2023 Inducement Plan (the “Inducement Plan”) to accommodate equity grants to new employees hired by IZEA in connection with acquisition transactions. Under the Inducement Plan, IZEA may grant restricted stock units (“RSUs”), including performance-based and time-based RSUs, with respect to up to a total of 1,800,000 shares of IZEA common stock to new employees of IZEA or its subsidiaries.
The Inducement Plan was adopted without stockholder approval in reliance on Rule 5635(c)(4) of the NASDAQ Listing Rules Awards under the Inducement Plan may be granted only to individuals who were not previously employees or non-employee directors of the Company, or following a bona fide period of non-employment, as an inducement material to such the individuals’ entry into employment with the Company or in connection with a merger or acquisition, as permitted by the NASDAQ Listing Rules.
The following table contains summarized information about inducement grant-related RSUs during the years ended December 31, 2024 and December 31, 2025.
Inducement Shares Time-Based Performance Based Total
Granted — — —
Forfeited — — —
(1) Inducement shares forfeited in 2024 were related to the divestiture of Hoozu in December 2024.
Employee Stock Purchase Plan
The amended and restated IZEA Worldwide, Inc. 2014 Employee Stock Purchase Plan (the “ESPP”) provides for the issuance of up to 125,000 shares of the Company’s common stock to eligible 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). The ESPP operates in successive six-month periods commencing at the beginning of each fiscal year half.
Eligible employees may elect to purchase shares of the Company’s common stock through payroll deductions of up to 10% of their annual compensation, subject to a maximum of $21,250 per year or 2,000 shares per offering period. The purchase
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price will be the lower of (i) 85% of the fair market value of a share of common stock on the first day of the offering period or (ii) 85% of the fair market value of a share of common stock on the last day of the offering period. The ESPP will continue until January 1, 2028, unless otherwise terminated by the Board.
Stock compensation expense related to the ESPP totaled $21,212 and $5,008 for the years ended December 31, 2025 and 2024, respectively, and is included in general and administrative expenses in the consolidated statement of operations and comprehensive loss. As of December 31, 2025, there were 52,992 remaining shares of common stock available for future issuance under the ESPP.
Shareholder Rights Plan
On May 28, 2024, the Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each share of the Company’s common stock as of June 7, 2024 (the “Record Date”), pursuant to a Rights Agreement between the Company and Broadridge Corporate Issuer Solutions, LLC, as Rights Agent. This Rights Agreement, which was filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 28, 2024, expired on May 31, 2025. The Rights did not become exercisable prior to the expiration of the Rights Agreement.
Summary of Stock-Based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period, net of estimated forfeitures, see “Note 1 Company and Summary of Significant Accounting Policies.”
Total stock-based compensation expense recognized on restricted stock, restricted stock units, stock options, and employee stock purchase plan issuances during the years ended December 31, 2025 and 2024 was recorded in the Company’s consolidated statements of operations as follows:
Twelve Months Ended December 31,
Accumulated Other Comprehensive Income (Loss)
We recognize activity in other comprehensive income (loss) for unrealized gains and losses on securities and foreign currency translation adjustments. The activity in accumulated other comprehensive income (loss) for the years ended December 31, 2025 and 2024 was as follows:
Twelve Months Ended December 31,
NOTE 11. EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period, adjusted for the potential dilutive effect of stock options, unvested restricted stock units, and other convertible securities. The calculation includes the effect of dilutive securities only when their inclusion would not be anti-dilutive. For share-based awards, the Company uses the treasury stock method, which assumes proceeds from the assumed exercise or vesting are used to repurchase shares at the average market price during the period.
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Twelve Months Ended December 31,
Basic income (loss) per common share $ 0.00 $ (1.10)
Plus:
“In-the-money” stock options 1,439 —
Contingently issuable restricted stock units 1,040,249 —
Less:
Shares offset for in-the-money options (treasury stock method) (1,234) —
Diluted income (loss) per common share $ 0.00 $ (1.10)
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:
Twelve Months Ended December 31,
NOTE 12. REVENUE
The following table illustrates the Company’s revenue:
Twelve Months Ended December 31,
The Company’s revenue is predominantly derived from Managed Services. Managed Services revenue consists primarily of Sponsored Social and Content services. Sponsored Social revenue, which totaled $27.4 million and $30.6 million for the years ended December 31, 2025 and 2024, respectively, is recognized over time. Content revenue, which totaled $3.6 million and $4.5 million for the years ended December 31, 2025 and 2024, respectively, is recognized at a point in time. SaaS Services Revenue, which is not material to total revenue, is recognized over time.
The following table provides the Company’s revenues as determined by customer geographic region:
Twelve Months Ended December 31,
Contract Assets and Liabilities
The following tables provide information about receivables, contract assets, and contract liabilities from contracts with customers reported in the Company’s consolidated balance sheet:
(1)Contract liabilities represent consideration received from customers for which the related performance obligations have not yet been satisfied.
The Company does not typically enter into contracts with original terms exceeding one year. As a result, substantially all of the contract liabilities recorded at the end of the year are recognized as revenue in the following year. The contract liability balance as of December 31, 2024, was $8.2 million. Of that balance, $7.5 million was recognized as revenue during the year ended December 31, 2025. The contract liability balance as of December 31, 2025, was $4.7 million. The Company expects to recognize substantially all of this balance as revenue within the next twelve months.
Contract receivables are recognized when the Company’s right to consideration is unconditional. Contract liabilities relate to the consideration received from customers in advance of the Company satisfying performance obligations under the terms of the contracts. Contract liabilities increase as advance payments from customers are received and decrease as revenue is recognized upon satisfaction of the related the performance obligations.
As a practical expedient, the Company expenses the costs of sales commissions and other incremental costs of obtaining customer contracts when the amortization period of such costs would have been one year or less.
Remaining Performance Obligations
As substantially all of the Company’s contracts have terms of one year or less, the remaining performance obligations at December 31, 2025 and December 31, 2024, are equal to the contract liabilities disclosed above. The Company expects to recognize substantially all of the remaining performance obligations as of December 31, 2025 as revenue within twelve months.
NOTE 13. SEGMENT DISCLOSURES
The Company provides value through managing custom content workflow, creator search and targeting, bidding, analytics, and payment processing (the “Managed Services”). The Company operates as one operating and one reportable segment in accordance with ASC 280, Segment Reporting.
The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer (“CEO”). The CODM evaluates segment performance and makes resource allocation decisions based on net income, which represents the measure of segment profit reviewed for purposes of assessing operating performance, allocating resources, and evaluating financial results.
In assessing performance, the CODM considers revenue growth and profitability trends to evaluate market demand, pricing strategies, customer acquisition and retention, and operating efficiency. Expense trends, including personnel-related costs and other cash operating costs, are monitored to assess cost structure, scalability, and the impact of strategic initiatives. Non-cash items, including depreciation and amortization, stock-based compensation, and impairment charges, are also reviewed as part of the overall assessment of segment profitability.
The following table presents the Company’s single reportable segment results for the years ended December 31, 2025 and 2024, which reconcile to the consolidated statements of operations and comprehensive loss:
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Twelve Months Ended December 31,
Less:
Loss on sale of subsidiary — 2,286,083
Deferred federal tax — (394,646)
Cost Classification Descriptions
The following descriptions provide additional detail regarding certain components included in the segment results above.
•Cost of revenue consists primarily of influencer fees and other costs directly attributable to fulfilling customer contracts.
•Human capital costs include employee-related expenses such as salaries, wages, bonuses, commissions, payroll taxes, and employee benefits.
•Other cash operating costs represent recurring operating expenses necessary to run the business, excluding non-cash items such as depreciation, amortization, and stock-based compensation, and primarily include professional services, software subscriptions, travel, and other general business expenses.
•Other expense (income), net includes realized gains and losses on marketable securities, digital assets, and foreign exchange transactions.
NOTE 14. INCOME TAX
Income (loss) from continuing operations before income taxes for the years ended December 31, 2025 and 2024 were as follows:
Twelve Months Ended
Income tax expense (benefit) for the years ended December 31, 2025 and 2024 were as follows:
Twelve Months Ended
Current expense (benefit)
Federal $ — $ —
State — —
Foreign — —
Total — —
Deferred expense (benefit)
Federal — —
State — —
The Company did not recognize income tax expense for the year ended December 31, 2025. For the year ended December 31, 2024, the Company recognized a deferred tax benefit of $0.4 million related to the write-off of deferred tax assets associated with the divestiture of Hoozu.
Cash income taxes paid for the years ended December 31, 2025 and 2024 were as follows:
Twelve Months Ended
Federal income tax paid $ — $ —
State and local income tax paid — —
Foreign income tax paid — —
Total income tax paid $ — $ —
The Company did not make cash income tax payments during the years ended December 31, 2025 and 2024 due to a taxable loss generated for the current year.