IZEA(US:IZEA)2023-03-31 21:20Financial Position and Performance - The consolidated financial statements present fairly the financial position of IZEA Worldwide, Inc. as of December 31, 2022, in conformity with GAAP[240] - The Company reported a comprehensive loss for the year ended December 31, 2022, reflecting ongoing investments in growth and development[240] - Total revenue for the year ended December 31, 2022, was $41,095,937, representing a 37% increase from $30,022,377 in 2021[257] - The company reported a net loss of $4,469,498 for 2022, compared to a net loss of $3,140,621 in 2021, indicating a 43% increase in losses year-over-year[257] - Total assets decreased to $85,674,890 as of December 31, 2022, down from $90,795,072 in 2021, reflecting a decline of approximately 6%[254] - Cash and cash equivalents significantly dropped to $24,600,960 in 2022 from $75,433,295 in 2021, a decrease of about 67%[254] - Total liabilities decreased slightly to $15,408,943 in 2022 from $15,969,937 in 2021, a reduction of approximately 4%[254] - The company’s accumulated deficit increased to $78,103,066 in 2022 from $73,633,568 in 2021, marking a rise of about 6%[263] - Operating cash flow for 2022 was negative at $(3,057,112), compared to $(2,566,999) in 2021, indicating a worsening cash flow situation[267] - The company incurred total costs and expenses of $46,726,798 in 2022, up from $35,380,104 in 2021, representing a 32% increase[257] - Stockholders' equity decreased to $70,265,947 in 2022 from $74,825,135 in 2021, a decline of approximately 6%[254] Revenue Recognition and Sources - Revenue is generated from four primary sources, including Managed Services, Marketplace Spend Fees, License Fees, and Other Fees[300] - The Company applies ASC 606 for revenue recognition, ensuring revenue is recognized when performance obligations are satisfied[301] - Managed Services Revenue includes integrated marketing campaigns and custom content items, with revenue recognized over time based on costs incurred[304] - License Fees Revenue is recognized on a straight-line basis over the subscription period, allowing customers to access the Company's technology platforms[309] - Marketplace Spend Fees Revenue is recognized upon completion of transactions by creators, reported on a net basis as the Company acts as an agent[308] Assets and Liabilities - The Company reported net trade receivables of $5.7 million and contract assets of $39,095 as of December 31, 2022, compared to $7.6 million and $21,926 respectively in 2021[284] - The Company had a reserve for doubtful accounts of $155,000 as of December 31, 2022, consistent with the previous year[285] - Three customers accounted for 64% of total accounts receivable as of December 31, 2022, compared to three customers accounting for 38% in 2021[286] - The Company had $11,247,746 in contract liabilities, slightly down from $11,338,095 in 2021[394] - The company recognized $5,664,727 in accounts receivable as of December 31, 2022, down from $7,599,103 in 2021[394] Impairment and Valuation - Goodwill impairment analysis indicated no impairment as the fair value of the reporting unit exceeded its carrying value[249] - The Company recognized an impairment of $148,310 on digital assets held as indefinite-lived intangible assets in the twelve months ended December 31, 2022[294] - The company recognized an impairment of digital assets amounting to $148,310 in the twelve months ended December 31, 2022, with a fair market value of $64,953 as of the same date[337] - The Company recorded a total of $6,276,422 in intangible assets as of December 31, 2022, with no impairment charges for identifiable intangible assets during the twelve months ended December 31, 2022[334] Investments and Securities - The Company made an initial deposit of $60 million for investment securities as part of a revised investment strategy policy[327] - As of December 31, 2022, the total cash and cash equivalents amounted to $14,583,955, with total marketable securities valued at $70,784,582, reflecting a net unrealized loss of $780,795[330] - The estimated fair value of investments in marketable debt securities totaled $45,402,827, with $16,106,758 due in one year or less and $29,296,069 due in one to five years[331] Stock and Compensation - The Company issued 967,232 restricted stock units valued at $900,380 to non-executive employees during the twelve months ended December 31, 2022[371] - The intrinsic value of non-vested restricted stock on December 31, 2022, was approximately $155[370] - The Company had 1,317,153 non-vested restricted stock units as of December 31, 2022, with a weighted average fair value of $0.95[376] - The exercise price for stock options is set at the fair market value on the grant date, with a term of ten years and typical vesting over four years[377] - Stock-based compensation expense for the twelve months ended December 31, 2022, was $610,772, a decrease from $878,739 in 2021[387] - The company had 1,665,164 options outstanding at December 31, 2022, with a weighted average exercise price of $2.83 per share[381] Future Outlook and Risks - The Company faces risks from adverse economic conditions, customer cancellations, and competition in the industry[13] - Future performance may be affected by the impact of geopolitical events, such as the Ukraine crisis and sanctions against Russia[13] - The successful integration of acquired companies and technologies is essential for enhancing the Company's service portfolio[13] Tax and Regulatory Matters - As of December 31, 2022, the Company had approximately $93.7 million in net operating loss carryforwards for U.S. federal income tax purposes and $95.8 million for state income tax purposes, expiring between 2026 and 2040[398] - The change in the valuation allowance for the twelve months ended December 31, 2022, was an increase of $1.2 million, primarily due to net operating losses generated during the period[398] - The Company has deemed any foreign earnings will be indefinitely reinvested[400] - The Company has not recognized any liability for uncertain tax positions, with minimal state franchise tax incurred[314] Miscellaneous - The Company launched IZEA Flex in January 2023, which includes eight modules for influencer marketing and replaces the previous platform IZEAx[274] - The Creator Marketplace was launched in October 2022, providing tools for creators and marketers to connect, including features like Casting Calls[276] - The Company received a PPP loan of $1,905,100, which was fully forgiven, resulting in a gain of $1,927,220 recorded in other income for the twelve months ended December 31, 2021[347] - Interest expense on financing arrangements decreased to $799 in 2022 from $15,410 in 2021[351] - No subsequent events requiring disclosure were identified through March 31, 2023[401]