STOCKHOLDERS' EQUITY

Authorized Shares

The Company has 200,000,000 authorized shares of common stock and 10,000,000 authorized shares of preferred stock, each with a par value of $0.0001 per share.

Warrant Transactions

On January 22, 2015, the Company issued a warrant for 100,000 shares of its common stock to an investor relations consultant. The warrant has an exercise price of $0.51 per share, vests equally over twelve months from issuance and expires on January 22, 2020. The fair value of the warrant upon issuance was $7,700 and the Company received $100 as compensation for the warrant. The fair value of the warrant issuance was recorded in the Company's consolidated balance sheet as an increase in additional paid-in capital and the net $7,600 compensation expense was recorded in general and administrative expense during the three months ended March 31, 2015.

Stock Options

In May 2011, the Board of Directors adopted the 2011 Equity Incentive Plan of IZEA, Inc. (the “May 2011 Plan”). The May 2011 Plan allows the Company to grant options up to 20,000,000 shares as an incentive for its employees and consultants. As of March 31, 2015, the Company had 6,357,638 shares of common stock available for future grants under the May 2011 Plan.

On August 22, 2011, the Company adopted the 2011 B Equity Incentive Plan (the “August 2011 Plan”) reserving for issuance an aggregate of 87,500 shares of common stock under the August 2011 Plan. As of March 31, 2015, the Company had no shares of common stock available for future grants under the August 2011 Plan.

Under both the May 2011 Plan and the August 2011 Plan (together, the "2011 Equity Incentive Plans"), the Board of Directors determines the exercise price to be paid for the shares, the period within which each option may be exercised, and the terms and conditions of each option. The exercise price of the incentive and non-qualified stock options may not be less than 100% of the fair market value per share of the Company’s common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share of an incentive stock option must be equal to or exceed 110% of fair market value. Unless otherwise determined by the Board of Directors at the time of grant, the right to purchase shares covered by any options under the 2011 Equity Incentive Plans typically vest over the requisite service period as follows: 25% of options shall vest one year from the date of grant and the remaining options shall vest monthly, in equal increments over the following three years. The term of the options is up to ten years. The Company issues new shares to the optionee for any stock awards or options exercised pursuant to its equity incentive plans.

A summary of option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2014 and three months ended March 31, 2015 is presented below:



Options Outstanding	Common Shares		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding at December 31, 2013	7,750,478		$	0.51	8.1
Granted	4,358,831		$	0.38
Exercised	(1,250	)	$	0.24
Forfeited	(194,285	)	$	0.85
Outstanding at December 31, 2014	11,913,774		$	0.46	6.5
Granted	1,868,333		$	0.32
Exercised	—		$	—
Forfeited	(54,729	)	$	0.81
Outstanding at March 31, 2015	13,727,378		$	0.44	6.8

Exercisable at March 31, 2015	5,102,812		$	0.56	6.8

During the three months ended March 31, 2015 and 2014, no options were exercised. There is no aggregate intrinsic value on the outstanding or exercisable options as of March 31, 2015 since the weighted average exercise price per share exceeded the fair value of $0.40 on such date.

A summary of the nonvested stock option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2014 and three months ended March 31, 2015 is presented below:



Nonvested Options	Common Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Years to Vest
Nonvested at December 31, 2013	5,809,363		$	0.24	3.3
Granted	4,358,831		0.38
Vested	(2,566,848	)	0.23
Forfeited	(159,508	)	0.21
Nonvested at December 31, 2014	7,441,838		$	0.20	3.0
Granted	1,868,333		0.16
Vested	(635,084	)	0.23
Forfeited	(50,521	)	0.15
Nonvested at March 31, 2015	8,624,566		$	0.19	3.1

Stock-based compensation cost related to stock options granted under the 2011 Equity Incentive Plans is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option-pricing model that uses the assumptions stated in Note 1. Total stock-based compensation expense recognized on awards outstanding during the three months ended March 31, 2015 and 2014 was $142,331 and $115,338, respectively. Stock-based compensation expense is recorded as a general and administrative expense in the Company's consolidated statements of operations. Future compensation related to nonvested awards expected to vest of $1,477,668 is estimated to be recognized over the weighted-average vesting period of approximately three years.

Employee Stock Purchase Plan

On April 16, 2014, stockholders holding a majority of the Company's outstanding shares of common stock, upon previous recommendation and approval of the Board of Directors, adopted the IZEA, Inc. 2014 Employee Stock Purchase Plan (the “ESPP”) and reserved 1,500,000 shares of the Company's common stock for issuance thereunder. Any employee regularly employed by our company for 90 days or more on a full-time or part-time basis (20 hours or more per week on a regular schedule) will be eligible to participate in the ESPP. The ESPP will operate in successive six month offering periods commencing at the beginning of each fiscal year half. Each eligible employee who has elected to participate may purchase up to 10% of their annual compensation in common stock not to exceed $21,250 annually or 20,000 shares per offering period. The purchase price will be the lower of (i) 85% of the fair market value of a share of common stock on the first trading day of the offering period or (ii) 85% of the fair market value of a share of common stock on the last trading day of the offering period. The ESPP will continue until January 1, 2024, unless otherwise terminated by the Board. As of March 31, 2015, $5,164 subscription payments were received to purchase shares at the end of the offering period on June 30, 2015. As of March 31, 2015, the Company had 1,492,397 shares of common stock available for future grants under the ESPP.

Restricted Stock Issued for Services

Effective January 1, 2014, the Company entered into a one year agreement to pay $7,500 per month and 100,000 shares of restricted stock per quarter to a firm to provide investor relations services. In accordance with the agreement, the Company issued 100,000 shares of restricted common stock valued at $30,110 on January 1, 2014 and 100,000 shares of restricted common stock valued at $52,000 on April 1, 2014. This agreement was canceled in June 2014 and no further amounts are owed.

The Company issued 64,144 shares of restricted common stock valued at $25,000 to each Brian W. Brady, Lindsay A. Gardner and Dan R. Rua (192,432 total shares) for their service as directors of the Company during the year ended December 31, 2014.

The Company has reserved 19,096 shares of restricted common stock valued at $6,250 to each Brian W. Brady, Lindsay A. Gardner and Dan R. Rua (57,288 total shares) for their service as directors of the Company during the three months ended March 31, 2015.

The Company also reserved 25,000 shares of restricted common stock valued at $8,700 for an employee stock award during the three months ended March 31, 2015.

The following table contains summarized information about nonvested restricted stock outstanding during the year ended December 31, 2014 and the three months ended March 31, 2015:



Restricted Stock	Common Shares
Nonvested at December 31, 2013	—
Granted	392,432
Vested	(392,432	)
Forfeited	—
Nonvested at December 31, 2014	—
Granted	82,288
Vested	(82,288	)
Forfeited	—
Nonvested at March 31, 2015	—

Total stock-based compensation expense recognized for vested restricted stock awards during the three months ended March 31, 2015 and 2014 was $35,050 and $58,360, respectively, all of which is included in general and administrative expense in the consolidated statements of operations. The fair value of the services is based on the value of the Company's common stock over the term of service.