Accelerize Inc. (Form: 10-K, Received: 04/16/2019 16:31:50)

	Years Ended December 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(11,417,440	)	$	(2,424,488	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		604,258			707,081
Impairment of intangible assets		4,724,746			-
Amortization of deferred financing cost		943,377			249,125
Provision for bad debt		(225,408	)		(116,511	)
Fair value of options and warrants		469,041			862,859
(Gain) loss on sale of fixed assets		997			10,027
Amortization of debt discount fair value		-			18,966
Loss on debt extinguishment		-			106,034
Changes in operating assets and liabilities:
Accounts receivable		836,493			(346,515	)
Prepaid expenses		223,583			(150,156	)
Accounts payable and accrued expenses		221,234			(612,543	)
Deferred revenues		143,713			246,487
Other assets		14,910			(20,548	)
Net cash used in operating activities		(3,460,496	)		(1,470,182	)

Cash flows used in investing activities:
Capitalized software for internal use		(1,353,613	)		(1,713,759	)
Capital expenditures		(36,017	)		(63,429	)
Proceeds from sale of assets		750			895
Net cash used in investing activities		(1,388,880	)		(1,776,293	)

Cash flows provided by financing activities:
Principal repayments of credit facility		(3,244,248	)		(2,055,558	)
Proceeds from credit facility		5,489,850			2,703,000
Proceeds from promissory notes		3,500,000			1,000,000
Proceeds from sale of common stock		-			125,000
Proceeds from short-term loan		-			175,000
Repayments of short-term loan		-			(250,000	)
Repayments of promissory notes		(1,000,000	)		-
Net cash provided by financing activities		4,745,602			1,697,442

Effect of exchange rate changes on cash		(35,814	)		35,789

Net decrease in cash, cash equivalents and restricted cash		(139,588	)		(1,513,244	)

Cash, cash equivalents and restricted cash, beginning of year		216,883			1,730,127

Cash, cash equivalents and restricted cash, end of year	$	77,295		$	216,883

Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,578,878		$	851,544
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities:
Fair value of warrants issued in connection with promissory notes and credit facility	$	2,727,577		$	104,676
Repayment of Agility Loan, included in accounts payable	$	-		$	25,000
Stock issuance in conjunction with vested stock awards and cashless exercise of options	$	-		$	1,868
Accrued payables and short-term loan directly paid off by credit facility	$	680,149		$	-
Prepaid expenses reclassed to deferred financing cost	$	70,000		$	-
Deferred financing cost incurred in connection with promissory notes	$	75,000		$	-

Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	166,883		$	1,680,127
Restricted cash at beginning of period	$	50,000		$	50,000
Cash and cash equivalents and restricted cash at beginning of period	$	216,883		$	1,730,127
Cash and cash equivalents at end of period	$	27,295		$	166,883
Restricted cash at end of period	$	50,000		$	50,000
Cash and cash equivalents and restricted cash at end of period	$	77,295		$	216,883

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of fixed assets and intangible assets, and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank. The bank requires a collateral which is placed in a money market account and can be increased or decreased at any time at the discretion of the Company. The Company’s restricted cash amounted to $50,000 at December 31, 2018 and 2017.

Accounts Receivable

The Company’s accounts receivable are due primarily from advertisers and marketers. Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are written off and deducted from the allowance.

December 31,

2018

December 31,

2017

Allowance for doubtful accounts

245,736

471,144

F-8

Concentration of Credit Risks

The Company is subject to concentrations of credit risk primarily from cash, cash equivalents and accounts receivable.

The Company’s cash and cash equivalents accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. During 2017 and 2018, the Company has reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of financial institutions in which it holds deposits.

The Company's accounts receivable are due from customers, generally located in the United States, Europe, Asia, and Canada. None of the Company’s customers accounted for more than 10% of its accounts receivable at December 31, 2018 and 2017. The Company does not require any collateral from its customers.

Revenue Recognition

On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers for all open contracts and related amendments using the modified retrospective method. The adoption had no impact to the reported results. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while the comparative information will not be restated and will continue to be reported under the accounting standards in effect for those periods.

The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

The Company’s SaaS revenues are generated from implementation and training fees and a monthly license fee, supplemented by per transaction fees paid by customers for monthly platform usage. The initial term of the customer contract is generally one year with one of two general cancellation policies. Each party may cancel the contract within the initial period or after the initial period, with 30-days’ prior notice. The Company does not provide any general right of return for its delivered items. Services associated with the implementation and training fees have standalone value to the Company’s customers, as there are third-party vendors who offer similar services to the Company’s services. Accordingly, they qualify as separate units of accounting. The Company allocates a fair value to each element deliverable at the recognition date and recognizes such value when the services are provided. The Company bases the fair value of the implementation and training fees on third-party evidence and the monthly license fee on vendor-specific objective evidence. Fees charged by third-party vendors for implementation and training services do not vary significantly from the fees charged by the Company. Services associated with implementation and training fees are generally rendered within a month from the initial contract date. The value attributed to the monthly license fees as well as the fees associated with monthly transaction-based platform usage are recognized in the corresponding period.

Product Concentration

The Company generates its revenues from software licensing, usage, and related transaction fees.

Fair Value of Financial Instruments

The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and lines of credit approximate their fair value due to the short-term maturity of these items.

F-9

Advertising

The Company expenses advertising costs as incurred.

	2018		2017

Advertising expense	$	742,200	$	604,300

Income Taxes

Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.

Foreign Currency Translation

The Company’s reporting currency is U.S. Dollars. The functional currency of the Company’s subsidiary in the United Kingdom is British Pounds. The translation from British Pounds to U.S. dollars is performed for asset and liability accounts using exchange rates in effect at the balance sheet date, equity accounts using historical exchange rates or rates in effect at the balance sheet date, and for revenue and expense accounts using the average exchange rate in effect during the period. The resulting translation adjustments are recorded as a component of Accumulated Other Comprehensive Income (Loss). Foreign currency translation gains and losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the consolidated statements of operations.

Software Development Costs

Costs incurred in the research and development of software products and significant upgrades and enhancements thereto during the preliminary project stage and the post-implementation operation stage are expensed as incurred. Costs incurred for maintenance and relatively minor upgrades and enhancements are expensed as incurred. Costs associated with the application development stage of new software products and significant upgrades and enhancements thereto are capitalized when 1) management implicitly or explicitly authorizes and commits to funding a software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended. The Company capitalized internal-use software development costs of approximately $1,350,000 during 2018. The Company amortizes such costs once the new software products and significant upgrades and enhancements are completed. The Company’s amortization expenses associated with capitalized software development costs amounted to approximately $554,000 during 2018 and is reflected in cost of revenues. The unamortized internal-use software development costs amounted to approximately $4,725,000 at December 31, 2018 of which the entire amount was impaired at December 31, 2018.

Share-Based Payment

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

The Company has elected to use the BSM option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Segment Reporting

The Company generated revenues from one source, its SaaS business, during 2018 and 2017. The Company's chief operating decision maker evaluates the performance of the Company based upon revenues and expenses by functional areas as disclosed in the Company's statements of operations.

F-10

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This guidance will be effective for public entities for fiscal years beginning after December 15, 2018 including the interim periods within those fiscal years. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, the sale will only be recognized if the criteria in the new revenue recognition standard are met. The new standard is effective for the Company on January 1, 2019, with early adoption permitted. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company is currently evaluating the impact that the new standard will have to the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the new guidance on its financial statements.

In January 2016, the FASB issued ASU No. 2016‑01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective in the first quarter of fiscal 2019. Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option. The Company is currently evaluating the impact of the new guidance on its financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. Since the Company has not acquired any material businesses, this standard has no impact on its financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230 ): Restricted Cash . The objective of this ASU is to eliminate the diversity in practice related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows. For public business entities, this ASU is effective for annual and interim reporting periods beginning after December 15, 2017. The Company has adopted this standard on January 1, 2018, and it has had no material impact on its financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) : Scope of Modification Accounting (ASU 2016-09), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017. The Company has adopted this standard on January 1, 2018 and it has had no material impact on its financial statements.

Other accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method).

	2018			2017
Numerator:
Net loss	$	(11,417,440	)	$	(2,424,488	)

Denominator:
Denominator for basic earnings per share--weighted average shares		66,060,038			65,413,094
Effect of dilutive securities- when applicable:
Stock options		-			-
Warrants		-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		66,060,038			65,413,094

Loss per share:
Basic	$	(0.17	)	$	(0.04	)
Diluted	$	(0.17	)	$	(0.04	)


Weighted-average anti-dilutive common share equivalents		27,626,932			17,273,444

F-11

Property and Equipment

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of three years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.

Property and equipment consist of the following at:

	December 31, 2018			December 31, 2017
Computer equipment and software	$	422,441		$	431,497
Office furniture and equipment		123,932			120,420
Leasehold improvements		288,937			292,640
		835,310			844,557
Accumulated depreciation		(783,275	)		(775,152	)
Total	$	52,035		$	69,405

Intangible assets		-			6,437,726
Accumulated amortization		-			(2,512,203	)

Total	$	-		$	3,925,523

	2018		2017
Depreciation expense	$	49,868	$	130,037
Amortization expense of internal software	$	554,389	$	572,246

During the year ended December 31, 2018, the Company impaired the carrying value of its intangible assets.

During the year ended December 31, 2017, the Company disposed of and sold approximately $7,500 in computer equipment with a net book value of approximately $1,700 for proceeds of approximately $800.

NOTE 5: LINE OF CREDIT AND LOANS

Agility Loan

	December 31, 2018			December 31, 2017
Agility Loan		625,000			625,000
Amendment, added to balance		400,000			400,000
Principal Payment of Agility Loan		(1,025,000	)		(425,000	)
Less: Deferred financing cost		-			-
Balance	$	-		$	600,000

On March 11, 2016, the Company entered into the Agility Loan with Agility Capital, which provides for total availability of $625,000 and was to originally mature, prior to amendment, on March 31, 2017. The Agility Loan has a fixed interest rate of 12% per year and requires $25,000 monthly amortization payments beginning on June 1, 2016. The Agility Loan also requires fees of approximately $130,000 over the life of the loan and is subject to a total aggregate minimum interest of $50,000 in the event of a prepayment. The Agility Loan contains covenants to achieve specified Adjusted EBITDA levels, as defined, limiting capital expenditures, restricting our ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of December 31, 2017, and at repayment of the Agility Loan, the Company was in compliance with these covenants.

In connection with the Agility Loan, on June 30, 2016, as a result of outstanding amounts under the Agility Loan, the Company issued to Agility Capital a warrant to purchase up to 69,444 shares of the Company’s Common Stock at an exercise price of $0.45 per share. This warrant expires on March 11, 2021. The fair value of the warrant amounted to $15,880 and was capitalized as deferred financing costs, of which $0 and $3,970 was expensed at December 31, 2018 and 2017, respectively.

On November 29, 2016, the Company entered into the Agility Loan Amendment, which waived any event of default and the breach of any covenant, representation, warranty, and any other agreement contained in the Agility Loan as a result of the Company entering into of the Settlement Agreement. On the date of the amendment, a loan modification fee in the amount of $100,000, fully earned and non-refundable, was added to the outstanding loan balance. Additionally, the maturity date was extended to December 31, 2017. On November 29, 2016, the Company issued to Agility Capital a warrant to purchase up to 187,500 shares of the Company’s Common Stock at an exercise price of $0.40 per share. This warrant expires on November 29, 2021. The fair value of the warrant amounted to $42,427 and was capitalized as deferred financing costs, of which $0 and $39,163 was expensed at December 31, 2018 and 2017, respectively.

On August 14, 2017, the Company entered into a consent to waiver of the Agility Loan, to permit the issuance of the 2017 Promissory Notes.

On November 8, 2017, the Company entered into the Third Amendment of the Agility Loan whereby Agility Capital agreed to loan an additional $300,000 to the Company, such that the aggregate principal amount owing to Agility Capital as of November 9, 2017 was $625,000. The Third Amendment extended the maturity date of the Agility Loan from December 31, 2017 to December 31, 2018. A loan modification fee of $125,000 was deducted from the Additional Loan amount. This arrangement was treated as a substantial modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). Because the net present value of the modified notes was greater than 10% of the present value of the remaining cash flows under the old debt, the transaction was treated as a debt extinguishment and reissuance of a new debt instrument, with the fair value of $606,034 and therefore recorded $106,034 as a loss on debt extinguishment. The carrying value of the $625,000 did not change as a result of the extinguishment since the discounts recognized at inception of these new notes were fully amortized at the time of the issuance.

On January 26, 2018, the Company repaid the Agility Loan by paying Agility Capital approximately $581,000 which terminated the loan agreement between the Company and Agility Capital and released Agility Capital’s security interest in the Company’s assets. The Company owed $0 and $600,000 under the Agility Loan at December 31, 2018 and 2017, respectively.

Credit Facility - SaaS Capital Loan

	December 31, 2018			December 31, 2017
SaaS Capital Loan		10,253,000			9,903,000
Principal Payment of SaaS Capital Loan		(5,442,865	)		(2,198,616	)
Less: Deferred financing cost		(100,867	)		(245,584	)
Less: SaaS Capital Loan, short term		(3,399,240	)		(3,055,812	)
Balance	$	1,310,028		$	4,402,988

F-13

On May 5, 2016, the Company entered into the SaaS Capital Loan, with SaaS Capital, to borrow up to a maximum of $8,000,000. Initial amounts borrowed will accrue interest at the rate of 10.25% per annum with future amounts borrowed bearing interest at the greater of 10.25% or 9.21% plus the three-year treasury rate at the time of advance. Accrued interest on amounts borrowed is payable monthly for the first six months and thereafter 36 equal monthly payments of principal and interest is payable. Prepayments will be subject to a 10%, 6% or 3% of principal premium if prepaid prior to 12 months, between 12 and 24 months, or between 24 months and maturity, respectively. Advances may be requested until May 5, 2018. The initial minimum advance amount of $5,000,000, on May 5, 2016, was used to repay the outstanding Line of Credit balance of $4,572,223. A facility fee of $80,000 was paid by the Company in connection with the initial advance and an additional $80,000 was paid in May 2017. Additionally, the Company incurred initial financing costs of $160,000 which was capitalized as deferred financing costs, of which $53,333 was expensed at December 31, 2018 and 2017.

The SaaS Capital Loan contains customary covenants including, but not limited to, covenants to achieve specified Adjusted EBITDA levels and revenue renewal levels, limiting capital expenditures and restricting the Company's ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of December 31, 2018, the Company was in compliance with such covenants. The occurrence of a material adverse change will be an event of default under the SaaS Capital Loan, in addition to other customary events of default. The Company granted SaaS Capital a security interest in all of the Company's personal property and intellectual property through the SaaS Capital Loan and the Patent, Trademark and Copyright Security Agreement between the Company and SaaS Capital.

On May 5, 2016, in connection with the SaaS Capital Loan, the Company issued to SaaS Capital Partners II, LP, an affiliate of SaaS Capital, a warrant to purchase up to 1,333,333 shares of the Company's common stock at an exercise price of $0.45 per share subject to certain adjustments for dividends, splits or reclassifications. The Warrant is exercisable until the earlier of May 5, 2026, or the date that is 5 years from the date the Company’s equity securities are first listed for trading on NASDAQ. The Company paid approximately $169,000 in financing costs through December 31, 2016. The fair value of the warrant amounted to $383,128 and was capitalized as deferred financing costs, of which $127,709 was expensed at December 31, 2018 and 2017.

On November 29, 2016, the Company entered into the First Amendment to receive consent from SaaS Capital to enter into the Settlement Agreement. The amendment required a loan modification fee of $120,000, payable at $10,000 a month for one year, expensed in the statement of operations. In connection with this amendment, the Company agreed to issue SaaS Capital a warrant to purchase up to 200,000 shares of our Common Stock at an exercise price of $0.36 per share. This warrant expires on November 29, 2026. The fair value of the warrant amounted to $60,185 and was fully expensed at December 31, 2016.

On May 10, 2017, the Company entered into the Second Amendment which adjusted the Minimum Adjusted EBITDA covenant of the SaaS Capital Loan from $0 to ($150,000) until August 31, 2017 to give the Company added flexibility in completing our hosting migration to a new platform and to allow for potentially augmented marketing and sales efforts.

On June 16, 2017, the Company entered into the Third Amendment to provide that any advance made within 6 months of the final advance date will be for a 36-month period with interest only payments due from the date of advance until the final advance date.

On August 14, 2017, the Company entered into the Fourth Amendment to permit the issuance of promissory notes to lenders, further described below.

On November 8, 2017, the Company entered into the Fifth Amendment which adjusted the Minimum Adjusted EBITDA covenant of the SaaS Capital Loan from $0 to ($170,000) until October 31, 2017, to ($150,000) from November 1, 2017 to December 31, 2017, to ($100,000) from January 1, 2018 to May 31, 2018, to ($50,000) from June 1, 2018 to August 31, 2018, and to $0 thereafter. The Fifth Amendment added a new minimum liquidity covenant for a cash balance of $600,000 effective January 31, 2018. The Fifth Amendment also memorialized SaaS Capital’s waiver of the Minimum Adjusted EBITDA covenant for September 2017. In connection with the Fifth Amendment, the Company agreed to pay to SaaS Capital a fee of $375,000 upon the payment in full of all outstanding advances.

On January 25, 2018, the Company entered into the Sixth Amendment to permit the Company to enter into the Beedie Credit Agreement and to permit the repayment of Agility Capital and of the 2017 Promissory Notes. The Sixth Amendment also amended the Company’s adjusted EBITDA covenant and added covenants requiring a minimum gross margin and specified debt to monthly recurring revenue ratios. This arrangement was treated as a normal modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). Because the net present value of the modified notes was lesser than 10% of the present value of the remaining cash flows under the old debt, the transaction was treated as a debt modification. In connection with the Sixth Amendment, the Company agreed to issue SaaS Capital a warrant to purchase up to 200,000 shares of its Common Stock at an exercise price of $0.35 per share, subject to certain adjustments for dividends, splits or reclassifications. The fair value of the warrant amounted to $56,834 and was capitalized as deferred financing costs, of which $17,366 was expensed at December 31, 2018, and $0 during 2017.

On May 31, 2018, the Company entered into the Seventh Amendment to permit the issuance of the 2018 Promissory Notes to amend the Company’s adjusted EBITDA, revenue renewal and total debt to monthly recurring revenue covenants, to increase the success fee payable upon repayment of the facility by $120,000 to $495,000, and to fix prepayment penalties until October 31, 2018.

On June 13, 2018, the Company entered into the Eighth Amendment to issue additional 2018 Promissory Notes.

On August 31, 2018, the Company entered into the Ninth Amendment to permit the issuance of the August 2018 Promissory Notes to amend the Company’s minimum adjusted EBITDA, revenue renewal, total debt to monthly recurring revenue and secured debt to monthly recurring revenue covenants, to increase the success fee payable upon repayment of the facility to $555,000 and to provide for twice monthly reporting of the Company’s projected cash flows.

During 2018, the Company borrowed $350,000 from the SaaS Capital Loan, and made principal payments of $3,244,249.

The Company owed $4,810,135 under the SaaS Capital Loan at December 31, 2018.

F-14

2017 Promissory Notes

	December 31, 2018			December 31, 2017
2017 Promissory Notes, Total	$	1,000,000			1,000,000
Principal Payment of 2017 Promissory Notes		(1,000,000	)		-
2017 Promissory Notes, Outstanding balance		-			1,000,000
Less: Deferred financing cost		-			(82,868	)
Less: 2017 Promissory Notes, short term		-			(649,194	)
Balance	$	-		$	267,938

On August 14, 2017, the Company borrowed an aggregate of $1,000,000 from the 2017 Lenders, and issued the 2017 Promissory Notes, for the repayment of the amounts borrowed. The 2017 Lenders are all accredited investors, certain of the 2017 Lenders are shareholders of the Company, one of the 2017 Lenders is an affiliate of the Company’s director, Greg Akselrud, and two of the 2017 Lenders are each affiliated with a partner of Mr. Akselrud’s in the law firm of Stubbs Alderton and Markiles, LLP. The 2017 Promissory Notes are unsecured, have a maturity date of August 14, 2019 and all principal is due upon maturity. Amounts borrowed accrued interest at 12% per annum and accrued interest was payable monthly. The Company also issued to the 2017 Lenders three-year warrants to purchase an aggregate of 1,000,000 shares of the Company’s Common Stock at an exercise price of $0.35 per share. The fair value of the warrant amounted to $104,676 and was capitalized as deferred financing costs, of which $82,868 and $21,808 was expensed at December 31, 2018 and 2017, respectively.

On January 26, 2018, the Company paid approximately $1,074,000 to repay the 2017 Promissory Notes which included approximately $65,000 in additional interest expenses due to the repayment date which was prior to the maturity date. The Company owed $0 and $1,000,000 under the 2017 Promissory Notes at December 31, 2018 and 2017, respectively.

Beedie Credit Agreement

	December 31, 2018			December 31, 2017
Beedie Credit Agreement advances		6,000,000			-
Principal Payment of Beedie Credit Agreement		-			-
Less: Deferred financing cost		(1,421,873	)		-
Balance	$	4,578,127		$	-

On January 25, 2018, the Company entered into the Beedie Credit Agreement with Beedie, to borrow up to a maximum of $7,000,000. Outstanding principal will accrue interest at the rate of 12% per annum increasing to 14% per annum if the Company’s gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal is payable monthly in arrears. The Company paid Beedie a commitment fee of $175,000 and will pay to Beedie a monthly standby fee of 0.325% on the unadvanced and available amount. Advances may be requested until July 25, 2020 and outstanding principal must be paid in full on January 25, 2021. Prepayment, which if at the Company’s option must be made in full and is otherwise required following certain asset dispositions, will be subject to a fee of 24 months accrued interest less all interest previously paid by the Company on the outstanding principal amount if paid prior to January 25, 2020. The initial minimum advance amount of $4,500,000 was advanced on January 26, 2018. Approximately $581,000 of the initial advance was used to repay Agility Capital to terminate the Agility Loan and to release Agility Capital’s security interest in the Company’s assets. Approximately $1,074,000 of the initial advance was used to repay the 2017 Promissory Notes. The $175,000 commitment fee was capitalized as deferred financing costs, of which $53,472 was expensed at December 31, 2018, and $0 during 2017.

The Beedie Credit Agreement contains customary covenants including, but not limited to, covenants to achieve specified adjusted EBITDA levels, to maintain minimum revenue renewal and liquidity levels, to maintain minimum gross margins, to maintain specified debt to monthly recurring revenue ratios, that limit capital expenditures and restrict our ability to pay dividends, purchase and sell assets outside the ordinary course, and that limit the Company’s ability to incur additional indebtedness. As of December 31, 2018, the Company was in compliance with such covenants. The occurrence of a material adverse change will be an event of default under the Beedie Credit Agreement, in addition to other customary events of default. Default interest will be charged at 18% per annum. The Company granted Beedie a security interest, subordinated to the security interest of SaaS Capital, in all of the Company’s assets through a pledge and security agreement, patent security agreement and trademark security agreement, each between the Company and Beedie. As additional security, the Company’s Subsidiary issued an unlimited guarantee to Beedie. Beedie is entitled to board of director observation rights during the term of the Beedie Credit Agreement.

F-15

In connection with the Beedie Credit Agreement, the Company issued to Beedie the Beedie Warrant, to purchase up to 4,500,000 shares of the Company’s common stock at an exercise price of $0.35 per share subject to certain adjustments for dividends, splits or reclassifications, and a weighted average adjustment for certain issuances of common stock below the exercise price prior to January 26, 2019. Up to 2,500,000 additional shares of common stock under the Beedie Warrant will be exercisable on a pro rata basis to additional amounts borrowed if and when advanced under the Beedie Credit Agreement. The Company adopted ASU 2017-11 which revises ASC 815-10-15-74 to allow instruments with a down round feature to qualify for equity classification. Under the new guidance, the issuer would recognize the value of the feature only when it is activated and there is an actual reduction of the strike price or conversion feature. The value of the adjustment is then to be recorded as deemed dividend and a reduction of income available to common stockholders. The fair value of the warrant amounted to $1,099,861 and was capitalized as deferred financing costs, of which $336,069 was expensed at December 31, 2018, and $0 during 2017.

On May 31, 2018, the Company entered into the First Beedie Amendment to permit the issuance of the 2018 Promissory Notes to amend the Company’s adjusted EBITDA, revenue renewal and total debt to monthly recurring revenue covenants, and to add a secured debt to monthly recurring revenue covenant. In addition, the Company issued to Beedie a warrant to purchase up to 500,000 shares of the Company’s common stock at an exercise price of $0.35 per share subject to certain adjustments for dividends, splits or reclassifications, and a weighted average adjustment for certain issuances of common stock below the exercise price prior to January 25, 2019. This arrangement was treated as a normal modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (ASC 470-50). Because the net present value of the modified notes was lesser than 10% of the present value of the remaining cash flows under the old debt, the transaction was treated as a debt modification. The fair value of the warrant amounted to $120,330 and was capitalized as deferred financing costs, of which $23,398 was expensed at December 31, 2018, and $0 during 2017.

On June 13, 2018, the Company entered into the Second Beedie Amendment to issue additional 2018 Promissory Notes. In addition, the Company issued to Beedie a warrant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $0.35 per share subject to certain adjustments for dividends, splits or reclassifications, and a weighted average adjustment for certain issuances of common stock below the exercise price prior to January 25, 2019. This arrangement was treated as a normal modification of existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (ASC 470-50). Because the net present value of the modified notes was lesser than 10% of the present value of the remaining cash flows under the old debt, the transaction was treated as a debt modification. The fair value of the warrant amounted to $24,053 and was capitalized as deferred financing costs, of which $4,677 was expensed at December 31, 2018, and $0 during 2017.

On August 31, 2018, the Company entered into the Third Beedie Amendment to borrow the second tranche of the term loan facility in the amount of $1,500,000, to permit the issuance of the August 2018 Promissory Notes to amend the commitment fee, to amend the Company’s minimum adjusted EBITDA, revenue renewal, total debt to monthly recurring revenue and secured debt to monthly recurring revenue covenants and to provide for twice monthly reporting of our projected cash flows. In connection with the Third Beedie Amendment, the Company issued to Beedie a warrant to purchase up to 1,500,000 shares of the Company’s common stock and a warrant to purchase up to an additional 835,000 shares of the Company’s common stock at an exercise price of $0.35 per share subject to certain adjustments for dividends, splits or reclassifications, and a weighted average adjustment for certain issuances of common stock below the exercise price prior to January 25, 2019. The fair value of these warrants amounted to $412,484 and was capitalized as deferred financing costs, of which $56,894 was expensed at December 31, 2018, and $0 during 2017.

2018 Promissory Notes

	December 31, 2018			December 31, 2017
2018 Promissory Notes, Total	$	2,000,000		$	-
Principal Payment of 2018 Promissory Notes		-			-
2018 Promissory Notes, Outstanding Balance		2,000,000			-
Less: Deferred Financing Cost		(593,870	)		-
Less: Related Party Portion		(550,000	)
Balance	$	856,130		$	-

On May 31, 2018, and June 15, 2018, the Company borrowed an aggregate of $1,500,000 and $500,000, respectively, from the 2018 Lenders, and issued the 2018 Promissory Notes, for the repayment of the amounts borrowed. The 2018 Lenders are all accredited investors, one of the 2018 Lenders is an affiliate of the Company’s director, Greg Akselrud, two of the 2018 Lenders are related to the Company’s Chairman and Chief Executive Officer, Brian Ross, and two of the 2018 Lenders are the Company’s employees. The 2018 Promissory Notes are unsecured, have a maturity date of May 30, 2021 and all principal is due upon maturity. Amounts borrowed accrue interest at 12% per annum and accrued interest is payable monthly. The Company also issued to the 2018 Lenders six-year warrants to purchase an aggregate of 3,000,000 shares of the Company’s Common Stock at an exercise price of $0.35 per share. The fair value of the warrants amounted to $737,218 and was capitalized as deferred financing costs, of which $143,348 was expensed at December 31, 2018, and $0 during 2017.

F-16

August 2018 Promissory Notes

	December 31, 2018			December 31, 2017
August 2018 Promissory Notes, Total	$	1,500,000		$	-
Principal Payment of August 2018 Promissory Notes		-			-
August 2018 Promissory Notes, Outstanding balance		1,500,000			-
Less: Deferred financing cost		(246,042	)		-
Balance	$	1,253,958		$	-

On August 31, 2018, the Company borrowed an aggregate of $1,500,000 from the August 2018 Lenders and issued the August 2018 Promissory Notes for the repayment of the amounts borrowed. The August 2018 Lenders are all accredited investors. The August 2018 Promissory Notes are unsecured, have a maturity date of August 30, 2021 and all principal is due upon maturity. Amounts borrowed accrue interest at 12% per annum and accrued interest is payable monthly. The Company also issued to the August 2018 Lenders six-year warrants to purchase an aggregate of 1,500,000 shares of the Company’s common stock exercisable for cash at an exercise price of $0.35 per share. The fair value of the warrants amounted to $276,798 and was capitalized as deferred financing costs, of which $30,755 was expensed at December 31, 2018, and $0 during 2017.

The Company recognized amortization and interest expenses in connection with the credit facility and loans for 2018 and 2017 as follows.

	2018		2017

Amortization expense associated with credit facility and loan	$	943,377	$	249,125
Interest expense associated with the credit facility and loan	$	1,578,878	$	851,544
Other finance fees associated with credit facility and loan	$	-	$	125,000

NOTE 6: STOCKHOLDERS’ DEFICIT

Common Stock

There were no exercises of options in 2018.

During 2017, the Company issued 1,707,692 and 160,096 shares of its Common Stock pursuant to the cashless exercise of 2,400,000 options and 225,000 warrants.

During 2017, the Company sold 416,667 shares of its Common Stock in cash for the total consideration of $125,000.

Restricted Stock

During the year ended December 31, 2018, the Company issued 120,000 restricted shares of its Common Stock, at a value of $0.50 per share, vesting in 4 equal quarterly increments commencing on July 1, 2018, to each of its non-employee directors as partial annual compensation for services as a director. As of December 31, 2018, these restricted shares were fully issued and the Company recorded expenses of $60,000 during the year ended December 31, 2018 and $60,000 remained as unvested stock award expenses to be amortized over next six months.

During the year ended December 31, 2017, the Company issued 120,000 restricted shares of its Common Stock, at a value of $0.50 per share, vesting in 4 equal quarterly increments commencing on July 1, 2017, to each of its non-employee directors as partial annual compensation for services as a director. As of December 31, 2017, these restricted shares were fully issued and the Company recorded expenses of $60,000 during the year ended December 31, 2017 and $60,000 remained as unvested stock award expenses to be amortized over next six months.

F-17

Warrants

The following is a summary of the Company’s activity related to its warrants between January 1, 2017 and December 31, 2018:

	Warrants			Weighted Average Price Per Share		Weighted Average Remaining Contractual Term
Balance, January 1, 2017		7,991,216		$	0.85		4.39
Granted		3,750,000			0.46
Exercised		(225,000	)		0.15
Forfeitures		(46,875	)		1.60
Outstanding at December 31, 2017		11,469,341		$	0.74		3.89
Granted		13,635,000			0.37
Exercised		-			-
Forfeitures		(58,824	)		1.53
Outstanding at December 31, 2018		25,045,517		$	0.53		4.16

The fair value of the warrants granted during 2018 and 2017 is based on the BSM model using the following assumptions:

	2018			2017
Effective Exercise price	$0.35	-	$0.50	$0.35	-	$0.50
Effective Market price	$0.35	-	$0.50	$0.35	-	$0.50
Volatility	67.73	-	68.48%	67.73	-	68.48%
Risk-free interest	1.48	-	2.33%	1.48	-	2.33%
Terms (years)	5	-	10	5	-	10
Expected dividend rate		0%			0%

During the year ended December 31, 2018, the Company issued 200,000 warrants to one of the lenders, exercisable at a price of $0.35 per share and which expire on January 25, 2028. The fair value of these warrants, which amounted to $56,834, were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan.

During the year ended December 31, 2018, the Company issued 7,435,000 warrants to one of the lenders, exercisable at a price of $0.35 per share and which expire on January 25, 2024. The fair value of these warrants, which amounted to $1,656,728, were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan.

During the year ended December 31, 2018, the Company issued 1,500,000 warrants to employees, exercisable at a price of $0.50 per share of which 500,000 expire on May 11, 2023 and 1,000,000 expire on August 13, 2023. The fair value of these warrants, which amounted to $335,891, will be accounted over the vesting terms.

During the year ended December 31, 2018, the Company issued 4,500,000 warrants to promissory note holders, exercisable at a price of $0.35 per share of which 3,000,000 expire on May 31, 2024 and 1,500,000 expire on August 31, 2024. The fair value of these warrants, which amounted to $1,014,015, were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan.

During the years ended December 31, 2018 and 2017, the Company recorded expenses of $74,243 and $566,860, respectively, related to warrants granted to employees.

During the years ended December 31, 2018 and 2017, 0 and 225,000 warrants were exercised and 58,824 and 46,875 warrants were forfeited, respectively.

As of December 31, 2018, and 2017, there were 25,045,517 and 11,469,341 warrants issued and outstanding, respectively, with a weighted average price of $0.53 and $0.74, respectively.

Stock Option Plan

The Company has a Stock Option Plan, or the Plan, under which the total number of shares of capital stock of the Company that may be subject to options under the Plan is currently 22,500,000 shares of Common Stock from either authorized but unissued shares or treasury shares. The individuals who are eligible to receive option grants under the Plan are employees, directors and other individuals who render services to the management, operation or development of the Company or its subsidiaries and who have contributed or may be expected to contribute to the success of the Company or a subsidiary. Every option granted under the Plan shall be evidenced by a written stock option agreement in such form as the Board shall approve from time to time, specifying the number of shares of Common Stock that may be purchased pursuant to the option, the time or times at which the option shall become exercisable in whole or in part, whether the option is intended to be an incentive stock option or a non-incentive stock option, and such other terms and conditions as the Board shall approve. The Plan expired on December 14, 2016.

F-18

The share-based payment is based on the fair value of the outstanding options amortized over the requisite period of service for option holders, which is generally the vesting period of the options. There were no options granted during 2018 or 2017.

	Options			Weighted Average Price Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance, January 1, 2017		13,125,000		$	0.39		5.10	$	1,760,425
Granted		-
Exercised ⁽¹⁾		(2,400,000	)		0.15
Forfeitures		(2,422,500	)		0.57
Outstanding at December 31, 2017		8,302,500		$	0.40		4.42	$	-
Granted		-
Exercised		-
Forfeitures		(1,070,000	)		0.39
Outstanding at December 31, 2018		7,232,500		$	0.40		3.45	$	-
Exercisable at December 31, 2018	$	7,219,731		$	0.40		3.44	$	-

(1) Consists of cashless exercise of 2,400,000 options and 225,000 warrants in exchange for 1,707,692 and 160,096 shares of Common Stock, respectively

The share-based payment is based on the fair value of the outstanding options amortized over the requisite period of service for option holders, which is generally the vesting period of the options.

	2018		2017
Weighted-average grant date fair value	$	-	$	-
Fair value of options	$	30,600	$	175,999

The total compensation cost related to non-vested awards not yet recognized amounted to approximately $10,636 at December 31, 2018 and the Company expects that it will be recognized over the following weighted-average period of 21 months.

If any options granted under the Plan expire or terminate without having been exercised or cease to be exercisable, such options will be available again under the Plan. All employees of the Company and its subsidiaries are eligible to receive incentive stock options and non-qualified stock options. Non-employee directors and outside consultants who provided bona-fide services not in connection with the offer or sale of securities in a capital raising transaction are eligible to receive non-qualified stock options. Incentive stock options may not be granted below their fair market value at the time of grant or, if to an individual who beneficially owns more than 10% of the total combined voting power of all stock classes of the Company or a subsidiary, the option price may not be less than 110% of the fair value of the Common Stock at the time of grant. The expiration date of an incentive stock option may not be longer than ten years from the date of grant. Option holders, or their representatives, may exercise their vested options up to three months after their employment termination or one year after their death or permanent and total disability. The Plan provides for adjustments upon changes in capitalization.

The Company’s policy is to issue shares pursuant to the exercise of stock options from its available authorized but unissued shares of Common Stock. It does not issue shares pursuant to the exercise of stock options from its treasury shares.

F-19

Delaware	20-3858769
(State of Incorporation)	(I.R.S. Employer Identification No.)

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer [X]	Smaller reporting company [X]

	Emerging growth company ☐

		Page

PART I

Item 1.	Business	4
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosures	14

PART II

Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	26
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	27

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	28
Item 11.	Executive Compensation	29
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	31
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accountant Fees and Services	33

PART IV

Item 15.	Exhibits and Financial Statement Schedules	33
Item 16.	Form 10-K Summary	37

●	International Data Corporation, or IDC, research shows that worldwide spending on public cloud services and infrastructure will reach $122.5 billion for 2017, an increase of 24.4% over 2016. Over the 2015-2020 forecast period, overall public cloud spending will experience a 21.5% compound annual growth rate (CAGR) – nearly seven times the rate of overall IT spending growth. By 2020, IDC forecasts public cloud spending will reach $203.4 billion worldwide.
●	IDC predicts that by 2020, the cloud software model will account for $1 of every $3.51 spent on software.
●	The global mobile SaaS market will grow from $20.9 billion in 2016 to reach $37.9 billion by 2021, with a compound annual growth rate of 12.7% over the forecast period, according to Strategy Analytics.
●	Digital marketing spending worldwide is expected to increase from $200.8 billion in 2015 to $306 billion in 2020, according to a Technavio report.

●	Larger advertisers are evaluating mission-critical software, such as ours, to manage their online RoAS initiatives. Such companies are factoring whether it is more beneficial to them to either develop their own technology or license it from third-parties, such as us;
●	As the online performance-based market grows, there are new entrants as solution providers, who are competing mostly on price and less on richness of features and performance tools;
●	We believe that our existing and potential customer base continues to look for more measurable results as they expand their digital marketing campaigns in additional channels including social, display, video, search, mobile and more; and
●	We believe there are opportunities to increase our number of clients globally where companies are adopting and implementing digital marketing initiatives.

●	Rackspace Hosting, which operates in the hosting and cloud computing industry. It provides information technology (IT) as a service, managing Web-based IT systems for small and medium-sized businesses, as well as large enterprises worldwide;
●	Amazon Web Services , which operates cloud computing hosting environments; and
●	Microsoft Corporation, which provides software and related platforms for commercial and private users.

●	Variability in demand and usage for our products and services;

●	Market acceptance of new and existing services offered by us, our competitors and potential competitors; and

●	Governmental regulations affecting the use of the Internet, including regulations concerning intellectual property rights and security features.

●	If the content or the performance of our services violates third party copyright, trademark, or other intellectual property rights; or

●	If our customers violate the intellectual property rights of others by providing content through our services.

●	Limiting the growth of the Internet;

●	Creating uncertainty in the marketplace that could reduce demand for our products and services;

●	Increasing our cost of doing business;

●	Exposing us to significant liabilities associated with content distributed or accessed through our products or services; or

●	Leading to increased product and applications development costs, or otherwise harm our business.

●	25,045,517 shares of Common Stock issuable pursuant to the exercise of warrants

●	7,232,500 shares of Common Stock issuable pursuant to the exercise of options

●	that a broker or dealer approve a person's account for transactions in penny stocks; and
●	the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

●	Obtain financial information and investment experience objectives of the person; and
●	make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

●	sets forth the basis on which the broker or dealer made the suitability determination; and
●	that the broker or dealer received a signed, written statement from the investor prior to the transaction.

	Years Ended December 31,						$ Change 2018			% Change 2018
	2018			2017			vs 2017			vs 2017

Revenue:	$	21,729,605		$	24,104,624			(2,375,019	)		-9.9%
Cost of revenues		9,075,828			9,066,896			8,932			0.1%
Gross Profit		12,653,777			15,037,728			(2,383,951	)		-15.9%

Operating expenses:
Research and development		4,165,586			4,414,112			(248,526	)		-5.6%
Sales and marketing		4,301,712			4,378,588			(76,876	)		-1.8%
General and administrative		8,298,748			7,349,754			948,994			12.9%
Impairment loss		4,724,746			-			4,724,746			100.0%
Total operating expenses		21,490,792			16,142,454			5,348,338			33.1%

Operating loss		(8,837,015	)		(1,104,726	)		(7,732,289	)		-699.9%

Other income (expense):
Other income		621			748			(127	)		-17.0%
Interest expense		(2,581,046	)		(1,214,476	)		(1,366,570	)		-112.5%
Loss on extinguishment of debt		-			(106,034	)		(106,034	)		100.0%
Total other (expense)		(2,580,425	)		(1,319,762	)		(1,260,663	)		-95.5%

Net loss	$	(11,417,440	)	$	(2,424,488	)	$	(8,992,952	)		-370.9%

	Years ended December 31,				% Change
	2018		2017

Research and development	$	4,165,586	$	4,414,112		-5.6%

Name	Age	Position
Brian Ross	44	Chairman of the Board, President, Chief Executive Officer, Treasurer
Santi Pierini	55	Chief Operating Officer, President of our CAKE division
Damon Stein	43	General Counsel and Secretary
Paul Dumais	55	Senior Vice President Product Development
Mario Marsillo Jr.	50	Director
Gregory Akselrud	43	Director

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards	Option Awards ($) (1)	Non-Equity Incentive Plan Compensation ($)	Non- Qualified Deferred Compensation Earnings	All Other Compensation ($) (2)	Total ($)
Brian Ross,	2018	312,159 (3)	-	-	-	-	-	22,942	335,101
Chief Executive Officer	2017	309,515	35,000	-	-	-	-	16,842	361,357
Damon Stein,	2018	312,159 (3)	-	-	-	-	-	22,942	335,101
General Counsel and Secretary	2017	309,515	20,000	-	-	-	-	16,842	346,357
Paul Dumais,	2018	254,616	-	-	131,161 (4)	-	-	11,119	396,896
Sr. VP Product Development	2017	247,200	-	-	92,761 (5)	-	-	11,564	351,525

Name	Number of Securities Underlying Unexercised Options (#) Exercisable			Number of Securities Underlying Unexercised Options (#) Unexercisable			Option Exercise Price ($)		Option Expiration Date
Brian Ross		3,100,000			-		$	0.31	5/24/2022
Damon Stein		3,100,000			-		$	0.31	5/24/2022
		275,000			-		$	0.55	12/04/2019
Paul Dumais		499,950	(1)		250,050	(1)	$	0.50	11/09/2022
		81,650	(2)		418,350	(2)	$	0.50	5/11/2023

	COMMON STOCK

	# OF		% OF
NAME	SHARES		CLASS
Brian Ross (1)		10,860,000		15.6%
Damon Stein (2)		5,579,711		8.0%
Paul Dumais (3)		791,625		1.2%
Mario Marsillo Jr. (4)		1,379,724		2.1%
Gregory Akselrud (5)		285,553		0.4%
All current officers and directors as a group (6 persons) (6)		20,790,268		27.5%

	Ending balance at December 31,				Average balance during years ended December 31,
	2018		2017		2018		2017
Cash	$	27,295	$	166,883	$	97,089	$	923,505
Restricted cash		50,000		50,000		50,000		50,000
Accounts receivable		2,081,551		2,692,636		2,387,094		2,461,123
Accounts payable and accrued expenses		3,018,394		2,479,083		2,748,739		2,559,046
Short term credit facility, net of deferred financing cost		3,399,240		3,055,812		3,227,526		2,547,379
Short term loan, net of deferred financing cost		-		1,224,194		612,097		865,531
Credit facility, net of deferred financing cost		5,888,155		4,402,988		5,145,572		4,495,608
Other loan, related party net of deferred financing cost		386,686		-		193,343		-
Other loan, net of deferred financing costs		2,273,402		267,938		1,270,670		133,969
Long term other liabilities		637,500		1,062,500		850,000		1,275,000

	(1)	The grant date fair dollar value recognized for the stock option awards was determined in accordance with ASC Topic 718. For a disclosure of the assumptions made in the valuation please refer to footnote 6 in our financial statements filed under Item 8 of this Annual Report on Form 10-K.
	(2)	Includes health-related insurance paid by us on behalf of the officer.
	(3)	Excludes $6,642 in deferred compensation during the year.
	(4)	5-year warrant to purchase up to 500,000 shares of our Common Stock at an exercise price of $0.50 granted on May 11, 2018, vesting quarterly over three years.
	(5)	5-year warrant to purchase up to 750,000 shares of our Common Stock at an exercise price of $0.50 granted on November 9, 2017, vesting quarterly over three years.


	(1)	Consists of warrants to purchase 750,000 shares of our Common Stock vesting on a quarterly basis over a period of 36 months commencing on October 1, 2016.
	(2)	Consists of warrants to purchase 500,000 shares of our Common Stock vesting on a quarterly basis over a period of 36 months commencing on April 1, 2018.

●	our directors;

●	each of our executive officers named in the compensation tables in Item 11; and

●	all of our executive officers and directors as a group.

	(1)	Includes 3,100,000 options held by Mr. Ross and 150,000 warrants vested held by Mr. Ross’ spouse and that will vest within the next 60 days. Mr. Ross disclaims beneficial ownership of the 150,000 warrants vested except to the extent of his pecuniary interest therein.
	(2)	Includes 3,375,000 options vested and that will vest within the next 60 days.
	(3)	Includes 791,625 warrants vested and that will vest within the next 60 days.
	(4)	Includes 60,000 options vested and that will vest within the next 60 days.
	(5)	Includes 60,000 options and 75,000 warrants vested and that will vest within the next 60 days.
	(6)	Includes 6,595,000 options and 2,891,625 warrants vested and that will vest within the next 60 days.

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		n/a		n/a		n/a
Equity compensation plans not approved by security holders		19,771,841	$	0.60		-
Total		19,771,841	$	0.60		-

Fee Category	2018		2017

Audit Fees (1)	$	90,500	$	90,500
Audit Related Fees (2)		25,000		-
Tax Fees (3)		12,500		12,500
All Other Fees (4)		-		-

Total Fees	$	128,000	$	103,000

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-3
Consolidated Statements of Operations for the years ended December 31, 2018 and 2017	F-4
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2018 and 2017	F-5
Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2018 and 2017	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017	F-7
Notes to Consolidated Financial Statements	F-8 – F-20

EXHIBIT NO.	DESCRIPTION

3.1**	Composite Copy of Certificate of Incorporation, as amended as of October 10, 2014 and February 4, 2019.

3.2	Certificate of Designation of 10% Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 filed on December 22, 2006).

3.3	Certificate of Designation of 8% Series B Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB filed on August 13, 2007).

3.4	By-laws of the Company (incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on December 22, 2006).

3.5	Certificate of Amendment to the Certificate of Designation of 8% Series B Convertible Preferred Stock (incorporated by reference to the Company's Annual Report on Form 10-K filed on March 29, 2012).

4.1	Form of Common Stock Certificate (incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on December 22, 2006).

4.2*	Form of Warrant to Purchase Stock issued September 18, 2014 (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 19, 2015).

4.3*	Form of Warrant to Purchase Stock issued December 12, 2014 (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 19, 2015).

4.4*	Form of Warrant to Purchase Stock issued December 12, 2014 (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 19, 2015).

4.5	Form of Warrant to Purchase Stock issued March 27, 2015 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2015).

4.6	Form of Warrant to Purchase Stock issued May 5, 2016 (incorporated by reference to the Company’s Current Report on Form 8-K filed on May 5, 2016).

4.7*	Form of Warrant to Purchase Stock issued on June 9, 2016 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2016).

4.8	Form of Warrant to Purchase Stock issued on June 30, 2016 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2016).

4.9	Form of Warrant to Purchase Stock issued November 29, 2016 (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 30, 2016).

4.10	Form of Warrant to Purchase Stock issued November 29, 2016 (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 30, 2016).

4.11	Form of Warrant to Purchase Stock issued on August 14, 2017 (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 16, 2017).

4.12*	Form of Warrant to Purchase Stock issued on November 9, 2017 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2017).

4.13*	Form of Warrant to Purchase Stock issued on November 9, 2017 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2017).

4.14	Form of Warrant to Purchase Stock issued on January 25, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 31, 2018).

4.15	Form of Warrant to Purchase Stock issued on January 25, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 31, 2018).

4.16	Form of Warrant to Purchase Stock issued on May 31, 2018 and June 15, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 6, 2018).

4.17	Form of Warrant to Purchase Stock issued on May 31, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 6, 2018).

4.18	Form of Warrant to Purchase Stock issued on August 31, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on September 5, 2018).

4.19	Form of Warrant to Purchase Stock issued on August 31, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on September 5, 2018).

10.1*	Employment Agreement, dated November 9, 2012, between Accelerize New Media, Inc. and Brian Ross (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on November 14, 2012).

10.2*	Amendment No. 1 to Employment Agreement, dated as of June 9, 2016, between Brian Ross and Accelerize Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 13, 2016).

10.3*	Employment Agreement, dated November 9, 2012, between Accelerize New Media, Inc. and Damon Stein (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on November 14, 2012).

10.4*	Amendment No. 1 to Employment Agreement, dated November 9, 2017, between Accelerize Inc. and Damon Stein (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2017).

10.5*	Employment Agreement, dated as of February 10, 2014, between Accelerize New Media, Inc. and Santi Pierini (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on May 13, 2014).

10.6*	Amendment No. 1 to Employment Agreement, dated as of July 9, 2014, between Accelerize New Media, Inc. and Santi Pierini (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 19, 2015).

10.7*	Amendment No. 2 to Employment Agreement, dated as of September 18, 2014, between Accelerize Inc. and Santi Pierini (incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2014).

10.8*	Amendment No. 3 to Employment Agreement, dated as of January 12, 2015, between Accelerize Inc. and Santi Pierini (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 19, 2015).

10.9*	Amendment No. 4 to Employment Agreement, dated May 6, 2015, between Accelerize Inc. and Santi Pierini (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2015).

10.10*	Employment Agreement, dated as of April 12, 2016, between Anthony Mazzarella and Accelerize Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed on April 13, 2016).

10.11*	Employment Agreement, dated as of November 9, 2017, between Paul Dumais and Accelerize Inc. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2017).

10.12*	Accelerize New Media, Inc. Stock Option Plan (incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on December 22, 2006).

10.13*	Form of Stock Option Agreement (incorporated by reference to the Company’s Registration Statement on Form SB-2 filed on December 22, 2006).

10.14*	Amendment No. 1 to Accelerize New Media, Inc. Stock Option Plan (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on May 10, 2011).

10.15*	Amendment No. 2 to Accelerize New Media, Inc. Stock Option Plan (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed on May 10, 2011).

10.16*	Amendment No. 3 to Accelerize New Media, Inc. Stock Option Plan (incorporated by reference to the Company's Annual Report on Form 10-K filed on March 29, 2012).

10.17*	Amendment No. 4 to Accelerize New Media, Inc. Stock Option Plan (incorporated by reference to the Company's Current Report on Form 8-K filed on May 29, 2012).

10.18*	Form of Stock Option Agreement (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2015).

10.19*	Form of Stock Option Agreement (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2015).

10.20	Standard Multi-Tenant Office Lease-Gross, dated January 8, 2014, between Accelerize New Media, Inc. and Ferrado Bayview, LLC (incorporated by reference to the Company's Current Report on Form 8-K filed on January 14, 2014).

10.21	First Amendment to Standard Multi-Tenant Office Lease-Gross, dated August 25, 2017, between Accelerize Inc. and Ferrado Bayview, LLC (incorporated by reference to the Company's Current Report on Form 8-K filed on August 29, 2017).

10.22	Form of Securities Purchase Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 14, 2015).

10.23	Form of Warrant Purchase Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 14, 2015).

10.24	Loan Agreement, dated March 11, 2016, between Accelerize Inc. and Agility Capital II, LLC. (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 17, 2016).

10.25	Intellectual Property Security Agreement, dated March 11, 2016, between Accelerize Inc. and Agility Capital II, LLC (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 17, 2016).

10.26	First Amendment to Loan Agreement, dated November 29, 2016, between Accelerize Inc. and Agility Capital II, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 30, 2016).

10.27	Third Amendment to Loan Agreement dated November 8, 2017 between Accelerize Inc. and Agility Capital II, LLC (incorporated by reference to the Company’sQuarterly Report on Form 10-Q filed on November 14, 2017).

10.28	Loan and Security Agreement, dated May 5, 2016, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed on May 6, 2016).

10.29	Patent, Trademark and Copyright Security Agreement, dated May 5, 2016, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed on May 6, 2016).

10.30	First Amendment to Loan and Security Agreement, dated November 29, 2016, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 30, 2016).

10.31	Second Amendment to Loan and Security Agreement, dated May 10, 2017, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 11, 2017).

10.32	Third Amendment to Loan and Security Agreement, dated June 16, 2017, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2017).

10.33	Fourth Amendment to Loan and Security Agreement, dated August 14, 2017, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 16, 2017).

10.34	Fifth Amendment to Loan and Security Agreement, Limited Waiver and Consent, dated November 8, 2017, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2017).

10.35	Sixth Amendment to Loan and Security Agreement, dated January 25, 2018, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 27, 2018).

10.36	Seventh Amendment to Loan and Security Agreement, dated January 25, 2018, between Accelerize Inc. and SaaS Capital Funding II, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 6, 2018).

10.37	Eighth Amendment to Loan and Security Agreement between Accelerize Inc. and SaaS Capital Funding II, LLC, dated as of June 13, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 18, 2018).

10.38	Ninth Amendment to Loan and Security Agreement between Accelerize Inc. and SaaS Capital Funding II, LLC, dated as of August 31, 2018 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2018).

10.39**	Tenth Amendment to Loan and Security Agreement between Accelerize Inc. and SaaS Capital Funding II, LLC, dated as of January 23, 2019.

10.40**	Payment Deferral Agreement between Accelerize Inc. and Saas Captial Funding II, LLC, dated as of March 1, 2019.

10.41*	Form of Restricted Stock Agreement entered into on July 1, 2016 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2016).

10.42*	Form of Restricted Stock Agreement entered into on July 1, 2017 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2017).

10.43*	Form of Restricted Stock Agreement entered into on July 1, 2018 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2018).

10.44	Confidential Settlement Agreement and Release, dated November 29, 2016, between Accelerize Inc. and Jeff McCollum (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 30, 2016).

10.45	Form of Promissory Note issued on August 14, 2017 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 16, 2017).

10.46	Credit Agreement, dated January 25, 2018, between Accelerize Inc. and Beedie Investments Limited (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 27, 2018).

10.47	Pledge and Security Agreement, dated January 25, 2018, between Accelerize Inc. and Beedie Investments Limited (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 27, 2018).

10.48	Guarantee Made by Cake Marketing UK Ltd. in favor of Beedie Investments Limited, dated January 25, 2018 (incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 27, 2018).

10.49	Form of Promissory Note issued on May 31, 2018 and June 15, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2018).

10.50	Form of Promissory Note issued on August 31, 2018 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2018).

10.51	First Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of May 31, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 6, 2018).

10.52	Second Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of June 13, 2018 (incorporated by reference to the Company’s Annual Report on Form 8-K filed on June 18, 2018).

10.53	Third Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of August 31, 2018 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2018).

10.54**	Fourth Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of January 23, 2019.

10.55**	Fifth Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of March 1, 2019.

23.1**	Consent of RBSM LLP.

31.1**	Rule 13a-14(a) Certification.

32.1***	Certification pursuant to 18 U.S.C. Section 1350.

SIGNATURE	TITLE	DATE

By: /s/ Brian Ross	Chairman of the Board, President and Chief Executive Officer	April 16, 2019
Brian Ross	(Principal executive officer, principal financial officer and principal accounting officer)

By: /s/ Mario Marsillo Jr.	Director	April 16, 2019
Mario Marsillo Jr.

By: /s/ Gregory Akselrud	Director	April 16, 2019
Gregory Akselrud