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.

Reverse Stock Split

On January 6, 2016, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to effect a reverse stock split of the issued and outstanding shares of its common stock at a ratio of one share for every 20 shares outstanding prior to the effective date of the reverse stock split. All current and historical information contained herein related to the share and per share information for the Company's common stock or stock equivalents reflects the 1-for-20 reverse stock split of the Company's outstanding shares of common stock that became market effective on January 11, 2016. There was no change in the number of the Company's authorized shares of common stock.

Nasdaq Uplisting

On January 26, 2016, the Company's shares of common stock commenced trading on the Nasdaq Capital Market under the symbol IZEA. Prior thereto, the Company's common stock was quoted on the OTCQB marketplace under the same symbol.

Stock Issued for Purchases

As further discussed in Note 2, the Company issued 31,821 shares of its common stock to satisfy the $250,000 guaranteed purchase price payment obligation on July 30, 2015 per the Ebyline Stock Purchase Agreement. On January 29, 2016, the Company issued 114,398 shares of its common stock to satisfy the $848,832 annual guaranteed payment of $938,532 less $89,700 in closing related expenses owed as part of the Ebyline Stock Purchase Agreement and on January 30, 2017, the Company issued 200,542 shares of common stock to satisfy the final annual guaranteed payment of $938,532.

Stock Issued for Services

The Company issued its five independent directors a total of 15,765 shares of restricted common stock initially valued at $62,500 for their service as directors of the Company during the six months ended June 30, 2017. The stock vested monthly from January through June 2017. On February 12, 2017, the Company issued 7,109 shares valued at $30,000 as compensation for services a contractor provided.

The following table contains summarized information about nonvested restricted stock outstanding during the six months ended June 30, 2017:



Restricted Stock	Common Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Years to Vest
Nonvested at December 31, 2016	—		$	—
Granted	22,784		4.06
Vested	(22,784	)	3.66
Forfeited	—		—
Nonvested at June 30, 2017	—		$	—

Total expense recognized for stock-based payments for services during the three months ended June 30, 2017 and 2016 was $22,830 and $41,220, respectively. Total expense recognized for stock-based payments for services during the six months ended June 30, 2017 and 2016 was $83,462 and $72,470, respectively. The fair value of the services is based on the value of the Company's common stock over the term of service. The Company recognized a loss of $8,420 and $9,038 as a change in the fair value of derivatives during the three and six months ended June 30, 2017, based on the change between the Company's stock price upon issuance and the Company's stock price upon the date of vesting. There is no remaining future compensation related to nonvested restricted awards as of June 30, 2017.

Stock Options

In May 2011, the Board of Directors adopted the 2011 Equity Incentive Plan of IZEA, Inc. (the “May 2011 Plan”). At the Company's 2017 Annual Meeting of Stockholders held on June 21, 2017, the stockholders approved the amendment and restatement of the May 2011 Plan which increased the number of shares of common stock available for issuance under the May 2011 Plan by 500,000 shares. The amended May 2011 Plan allows the Company to grant options to purchase up to 1,500,000 shares as an incentive for its employees and consultants. As of June 30, 2017, the Company had 493,852 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 4,375 shares of common stock for issuance under the August 2011 Plan. As of June 30, 2017, the Company had 625 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 purchase price is set at the fair market value of the Company’s common stock on the grant date, the term is set at ten years and the options typically vest on a straight-line basis 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 Company issues new shares to the optionee for any stock awards or options exercised pursuant to its 2011 Equity Incentive Plans.

A summary of option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2016 and the six months ended June 30, 2017, is presented below:



Options Outstanding	Common Shares		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Outstanding at December 31, 2015	830,599		$	8.65	6.5
Granted	179,998		6.16
Exercised	—		—
Forfeited	(50,733	)	10.15
Outstanding at December 31, 2016	959,864		$	8.11	6.4
Granted	55,003		3.64
Exercised	—		—
Forfeited	(37,074	)	50.15
Outstanding at June 30, 2017	977,793		$	6.26	6.2

Exercisable at June 30, 2017	635,371		$	6.24	5.3

During the three and six months ended June 30, 2017 and 2016, no options were exercised. The fair value of the Company's common stock on June 30, 2017 was $1.91 per share. The intrinsic value on outstanding options as of June 30, 2017 was $0. The intrinsic value on exercisable options as of June 30, 2017 was $0.

A summary of the nonvested stock option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2016 and the six months ended June 30, 2017, is presented below:



Nonvested Options	Common Shares		Weighted Average Grant Date Fair Value		Weighted Average Remaining Years to Vest
Nonvested at December 31, 2015	461,926		$	3.84	2.8
Granted	179,998		2.88
Vested	(187,181	)	4.00
Forfeited	(40,437	)	3.76
Nonvested at December 31, 2016	414,306		$	3.60	2.6
Granted	55,003		1.60
Vested	(109,024	)	3.60
Forfeited	(17,863	)	3.12
Nonvested at June 30, 2017	342,422		$	3.04	2.5

Stock-based compensation cost related to stock options granted under the 2011 Equity Incentive Plans is measured at the 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 option awards outstanding during the six months ended June 30, 2017 and 2016 was $326,846 and $405,326, respectively. Stock-based compensation expense was recorded as $30,494 to sales and marketing and $296,352 to general and administrative expense in the Company's consolidated statement of operations during the six months ended June 30, 2017. Stock-based compensation expense was recorded as $44,515 to sales and marketing and $360,811 to general and administrative expense in the Company's consolidated statement of operations during the three and six months ended June 30, 2016. Future compensation related to nonvested awards expected to vest of $859,382 is estimated to be recognized over the weighted-average vesting period of approximately two years, six months.

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 75,000 shares of the Company's common stock for issuance thereunder. Any employee 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) is eligible to participate in the ESPP. The ESPP operates in successive six month offering periods commencing at the beginning of each fiscal year half. Each eligible employee who elects to participate may purchase up to 10% of their annual compensation in common stock not to exceed $21,250 annually or 1,000 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. Employees paid $16,232 to purchase 9,998 shares of common stock during the six months ended June 30, 2017. Employees paid $34,587 to purchase 5,340 shares of common stock during the six months ended June 30, 2016. As of June 30, 2017, the Company had 39,764 remaining shares of common stock available for future grants under the ESPP.