1 IZEA, Inc. Consolidated Statements of Operations Twelve Months Ended 31, 2016 Revenue $ $ Cost of sales Gross profit 8,231,010 Operating expenses: General and administrative 7,517,115 and marketing 7,936,215 Total operating expenses Loss from operations ) ) income (expense): Interest expense Loss on exchange of warrants — ) Change in fair value of derivatives, net 9,163 ) Other income (expense), net 9,640 Total other income (expense) ) Net loss $ ) ) Weighted average common shares outstanding – basic and diluted 5,380,465 3,737,897 Basic and diluted loss per common share $ $ 2 2 6
IZEA, Inc. Consolidated Statements of Stockholders’ Equity Common Stock Shares Balance, December 31, 2014 2,885,424 $ 289 $ $ ) $ Fair of warrants issued — — 51,950 — 51,950 Fair value of 2014 private placement warrants reclassified from liability to equity & loss on exchange — — 7,178,035 — 7,178,035 Stock issued for payment of acquisition liability 31,821 3 249,997 — 250,000 Exercise of warrants 2,191,547 219 — purchase plan subscriptions 13,403 1 76,169 — 76,170 Stock issued for payment of services 100,756 10 125,982 — 125,992 Stock issuance costs — — — Stock-based compensation — — 705,466 — 705,466 Net loss — — — ) ) Balance, December 31, 2015 5,222,951 $ 522 $ $ ) $ Stock issued for payment of acquisition liability 200,605 20 1,448,812 — 1,448,832 purchase plan issuances 11,453 58,020 — 58,021 Stock issued for payment of services 21,109 129,792 — 129,794 Stock issuance costs — — — Stock-based compensation — — 748,092 — 748,092 Net loss — — — ) Balance, December 31, 2016 5,456,118 $ 545 $ $ ) $
The ZenContent operations are included in the consolidated financial statements beginning on the date of acquisition of July 31, 2016. The ZenContent operations contributed revenue of $936,194 and gross profit of $436,395 in the consolidated statement of operations for the twelve months ended December 31, 2016. The Company incurred $52,665 in acquisition-related costs which are included in general and administrative expense on the Company's consolidated statement of operations for the twelve months ended December 31, 2016. NOTE 3. PROPERTY AND EQUIPMENT Property and equipment consists of the following: December 31, 2016 Furniture and fixtures $ 254,206 $ 252,516 Office equipment 65,463 53,265 Computer equipment 432,321 421,798 Leasehold improvements 324,716 314,400 Total 1,076,706 1,041,979 Less accumulated depreciation and amortization Property and equipment, net $ 460,650 $ 596,008 Computer equipment includes under capital leases totaling $59,458 as of December 31, 2015. Accumulated amortization relating to equipment under capital leases totaled $37,341 as of December 31, 2015. Depreciation expense on property and equipment recorded in general and administrative expense in the accompanying consolidated statements of operations was $253,004 and $206,670 for the twelve months ended December 31, 2016 and 2015, respectively. NOTE 4. INTANGIBLE ASSETS AND GOODWILL The identifiable intangible assets consists of the following assets: 31, 2016 31, 2015 Content provider networks $ $ 57,083 $ 30,000 $ 27,500 1 Trade names 52,000 45,000 40,000 36,667 1 Developed technology 530,000 134,167 300,000 55,000 3 Self-service content customers 210,000 134,167 210,000 64,167 Managed content customers 546,944 3 Domains 166,469 33,294 166,469 — 5 Total identifiable intangible assets $ $ $ $ Total identifiable intangible assets from the Ebyline and ZenContent purchase price allocation and other acquired assets along with accumulated amortization thereon consists of the following:
1 Name Number of Securities Underlying Unexercised Options: Exercisable (#) of (#) Equity Plan of (#) Date Edward H. (Ted) Murphy (2) 6,250 — — President and Chief Executive Officer 3,134 — — 25,000 — — $ 5.00 9,384 — — $ 5.00 195,892 24,057 — $ 5.00 48,715 22,143 — $ 7.30 26,732 13,268 — $ 5.20 3,194 4,106 — $ 7.80 1,166 1,942 — $ 8.40 1,033 2,274 — $ 8.00 10,126 27,262 — $ 7.80 1,556 6,741 — $ 6.91 808 4,731 — $ 5.75 672 7,386 — $ 7.22 525 5,774 — $ 4.72 833 39,167 — $ 4.75 Ryan S. Schram (3) 3,125 — — Chief Operating Officer 625 — — 5,000 — — $ 5.00 3,750 — — $ 5.00 7,333 2,667 — $ 5.40 29,688 7,812 — $ 6.80 3,334 3,333 — $ 5.60 532 685 — $ 7.80 192 319 — $ 8.40 175 385 — $ 8.00 1,589 4,766 — $ 7.60 259 1,124 — $ 6.91 135 788 — $ 5.75 112 1,231 — $ 7.22 88 962 — $ 4.72 LeAnn C. Hitchcock (4) 125 — — Chief Financial Officer 125 — — $ 5.00 3,667 1,333 — $ 5.40 11,667 8,333 — $ 8.00 2,708 7,292 — $ 8.00 _________________ Unless otherwise indicated, the option exercise price represents the closing price of our common stock on the date of grant.