CFN Enterprises Inc. (Form: 10-K, Received: 06/15/2020 17:13:27)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _________.

Commission file number 000-52635

CFN ENTERPRISES INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

20-3858769

(State of Incorporation)

(IRS Employer

Identification No.)

600 E.8^th STREET

WHITEFISH, MT 59937

(Address of Principal Executive Offices and Zip Code)

(833) 420-2636

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. :

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the common equity voting shares of the registrant held by non-affiliates on June 30, 2019, the registrant's most recently completed second fiscal quarter, was $7,071,578. For purposes of this calculation, an aggregate of 11,284,988 shares of Common Stock were held by the directors and officers of the registrant on June 30, 2019 and have been included in the number of shares of Common Stock held by affiliates.

The number of the registrant’s shares of Common Stock outstanding as of June 15, 2020: 99,679,709

In this Annual Report on Form 10-K, the terms the “Company,” “CFN Enterprises,” “we,” “us” or “our” refer to CFN Enterprises Inc., unless the context indicates otherwise.

Documents Incorporated by Reference: None

EXPLANATORY NOTE

On March 30, 2020 (the “Original Due Date”), CFN Enterprises Inc. (the “Company”) filed a Current Report on Form 8-K, and is filing this Annual Report on Form 10-K (the “Annual Report”), in reliance on the Order of the Securities and Exchange Commission (the “SEC”), dated March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 1934 modifying exemptions from the reporting and proxy delivery requirements for public companies (Release No. 34-88465).

Mandatory closures of businesses imposed by the federal, state and local governments to control the spread of the COVID-19 pandemic has disrupted the operations of the Company’s management, business and finance teams. This has, in turn, impacted the Company’s ability to complete its audit and file this Annual Report by the Original Due Date.

CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS

THIS ANNUAL REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE,” “EXPECT,” “ANTICIPATE,” “INTEND,” “PLAN,” “ESTIMATE,” “MAY,” “PREDICT,” “WILL,” “POTENTIAL,” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.

IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN OUR FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, GENERAL MARKET CONDITIONS, INCLUDING WEAKNESS IN THE ECONOMY, REGULATORY DEVELOPMENTS AND OTHER CONDITIONS WHICH ARE NOT WITHIN OUR CONTROL.

OTHER RISKS MAY ADVERSELY IMPACT US, AS DESCRIBED MORE FULLY IN THIS ANNUAL REPORT UNDER “ITEM 1A. RISK FACTORS.”

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD-LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization

CFN Enterprises Inc., formerly known as Accelerize Inc., or the Company, is a Delaware corporation incorporated on November 22, 2005 which owned and operated CAKE, a Software-as-a-Service platform providing online tracking and analytics solutions for advertisers and online marketers. The Company provided software solutions for businesses interested in expanding their online advertising spend. Effective October 22, 2019, the Company filed a certificate of amendment to its certificate of incorporation with the Secretary of State of the State of Delaware to change its corporate name to CFN Enterprises Inc.

On May 15, 2019, the Company entered into an asset purchase agreement, or the Asset Purchase Agreement, with CAKE Software, Inc., a Delaware corporation and a subsidiary of Constellation Software Inc., an Ontario, Canada corporation (TSX: CSU), or Constellation, pursuant to which the Company agreed to sell substantially all of the assets associated with its CAKE and Journey by CAKE business, or the CAKE Business, to Constellation for a base purchase price of $19,400,000 plus or minus an estimated closing date adjustment based on the net tangible assets of the CAKE Business at the closing, a holdback of $500,000 adjusted pursuant to the terms of the Asset Purchase Agreement and payable on the first anniversary of the closing date, and a three year earnout equal to 30% of the amount that the annual net revenue of the CAKE Business exceeds $13,750,000 and payable within 120 days on each of the first, second and third end of month anniversaries of the closing date. The sale of the assets of the CAKE Business pursuant to the Asset Purchase Agreement closed on June 18, 2019, and the Company received proceeds of $20,892,667, net of the estimated closing date adjustment.

As of the closing date, Constellation acquired all of the assets used by the Company in the CAKE Business and assumed the Company’s post-closing obligations under certain vendor, customer and other commercial contracts related to the CAKE Business, including the Company’s lease for its headquarters in Newport Beach, California. The Company’s cash and cash equivalents, and the assets associated with its Accelerize trademark, are excluded from the sale of the CAKE Business. Constellation offered employment to certain of the Company’s employees following the closing date.

On May 15, 2019, the Company entered into the Emerging Growth Agreement with Emerging Growth, LLC, or the Seller, pursuant to which the Company acquired certain assets from the Seller related to its sponsored content and marketing business for a purchase price consideration consisting of $420,000 in cash, 30,000,000 shares of the Company’s common stock, and 3,000 shares of Series B preferred stock with a total stated value of $3,000,000 which bears interest at 6% per annum and is convertible into the Company’s common stock at a conversion price to be mutually agreed in the future, without voting rights or a liquidation preference except with respect to default interest. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The closing of the purchase of the assets pursuant to the Emerging Growth Agreement occurred on June 20, 2019.

Subsequent to the closing of the Asset Purchase Agreement on June 18, 2018, the Company’s continuing operations consist of the sponsored content and marketing business from the assets acquired pursuant to the Emerging Growth Agreement.

F-8

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next 12 months as of the date these financial statements are issued.

The Company had a working capital deficit of $192,456 and an accumulated deficit of $34,721,149 as of December 31, 2019. The Company also had a net loss from continuing operations of $6,025,623 during the year ended December 31, 2019.

As discussed above, on May 15, 2019, the Company entered into the Asset Purchase Agreement with Constellation under which all the net assets associated with the CAKE Business were sold. The proceeds from the Asset Purchase Agreement were used to pay off the Company’s existing debt, as well as to acquire certain assets in the Emerging Growth Agreement from the Seller related to its sponsored content and marketing business. Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing the business acquired under the Emerging Growth Agreement and managing and reducing operating and overhead costs. Subsequent to the year end on May 6, 2020, the Company received $263,000 in the form of a loan from the PPP (see Note 10). However, the Company cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for the Company to raise additional capital on an immediate basis.

These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

COVID-19

In March 2020, the outbreak of COVID-19 caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including each of the areas in which the Company operates. While to date the Company has not been required to stop operating, COVID-19 has had and is expected to continue to have an adverse effect on the financial condition of the Company and its customers. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, it is expected to have a significant adverse impact to the Company’s revenue and ability to obtain financing.

Basis of Presentation

The accompanying consolidated financial statements include the results of operations of the Company and Cake Marketing UK Ltd., or the Subsidiary. The Company discontinued its operations associated with its CAKE Business and the operations of its Subsidiary in May 2019. These accounts have been presented as discontinued operations in the accompanying consolidated financial statements. Continuing operations presented in periods prior reflect administrative expenses associated with business insurance, legal and accounting fees that the Company will continue to incur. All material intercompany accounts and transactions between the Company and its Subsidiary have been eliminated in consolidation.

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, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

F-9

Financial Statement Reclassification

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. The prior year amounts have also been reclassified in these financial statements to properly report amounts under current operations and discontinued operations (see note 7).

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 had restricted cash as a result of its corporate card program through its bank, which required collateral placed in a money market account. The corporate card program was terminated during 2019, which resulted in the restricted cash balance being transferred back to the Company for its general use. The Company’s restricted cash amounted to $0 and $50,000 at December 31, 2019 and 2018, respectively. The restricted cash balance of $50,000 is included as a component of total cash and restricted cash as presented on the accompanying consolidated statement of cash flows for year ended December 31, 2018.

Accounts Receivable

The Company’s account receivables are due from customers relating to contracts to provide investor relation services. 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 deducted from the allowance. The allowance for doubtful accounts as of December 31, 2019 and 2018 amounted to $163,750 and $0, respectively.

Concentration of Credit Risks

The Company is subject to concentrations of credit risk primarily from cash and 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. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits.

The Company's accounts receivable are due from customers located in the United States and Canada. The Company had five customers who each accounted for 32.3%, 13.8%, 13.8%, 13.8% and 10.3%, respectively, of its net accounts receivable at December 31, 2019 and none at December 31, 2018.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification, or 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.

F-10

Prior to the Company discontinuing the operations of its CAKE Business in May 2019, the Company’s SaaS revenues were 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 were generally one year with one of two general cancellation policies. Each party could cancel the contract within the initial period or after the initial period, with 30-days’ prior notice. The Company did not provide any general right of return for its delivered items. Services associated with the implementation and training fees had standalone value to the Company’s customers, as there are third-party vendors who offer similar services to the Company’s services. Accordingly, they qualified as separate units of accounting. The Company allocated a fair value to each element deliverable at the recognition date and recognized 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 were 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 were recognized in the corresponding period.

Subsequent to the closing of the Emerging Growth Agreement on June 20, 2019, the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. The services provided by the Company include advertising, publishing of interviews and articles across its network and featuring of client content on its newsletters and social media. The packages all have fixed prices that are billed monthly over the terms of the agreement in even amounts. The Company recognizes revenue for its performance obligation associated with its contracts with customers over time as work is performed, which is deemed to occur evenly throughout the duration of the contract. This also reflects the pattern in which costs are incurred on performing the contracts. To the extent revenue recognized on contracts at each period end exceeds collections, the amounts are reflected as accounts receivable. To the extent collections on contracts at each period end exceeds revenue recognized, the amounts are reflected as deferred revenue.

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-11

Advertising

The Company expenses advertising costs as incurred. Advertising expenses relating to continuing operations amounted to $368,226 for the year ended December 31, 2019. There were no advertising expenses during 2018 relating to continuing operations. Advertising expenses reported as a component of discontinued operations amounted $159,665 and $742,200 for the year ended December 31, 2019 and 2018, respectively.

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 was 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

At December 31, 2018, the Company impaired the entire balance of unamortized internal-use software development costs which amounted to approximately $4,725,000 and did not capitalize internal-use software development costs in 2019. 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. Prior to the December 31, 2018 impairment, costs associated with the application development stage of new software products and significant upgrades and enhancements thereto were capitalized when 1) management implicitly or explicitly authorized and committed to funding a software project and 2) it was probable that the project would be completed and the software would be used to perform the function intended. The Company capitalized internal-use software development costs of $1,350,000 during 2018. The Company amortized such costs once the new software products and significant upgrades and enhancements were completed. The Company’s amortization expenses associated with capitalized software development costs amounted to $554,389 during 2018 and was reflected in cost of revenues. The unamortized internal-use software development costs amounted to $4,724,746 which was impaired at December 31, 2018. There were no expenses associated with capitalized software development costs during 2019. The amortization and impairment expenses above are reported as a component of discontinued operations.

Property and Equipment

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

F-12

Goodwill

The Company’s goodwill represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from business acquisitions. Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level. There was an impairment charge of $3,225,817 during the year ended December 31, 2019 related to the impairment of goodwill acquired from the Emerging Growth Agreement.

Long-Lived Assets

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There was an impairment charge of $4,724,746 recorded during the year ended December 31, 2018 related to capitalized internal-use software development costs, which is reflected as a component of discontinued operations. There was an impairment charge of $541,724 during the year ended December 31, 2019 related to the impairment of marketing-related intangible assets acquired from the Emerging Growth Agreement.

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). As of December 31, 2019, the Company had 6,320,000 outstanding stock options and 7,543,944 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of December 31, 2018, the Company had 7,232,500 outstanding stock options and 25,045,517 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

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 Black-Scholes 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.

Common stock awards

The Company has granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash.

F-13

Warrants

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 6, Stockholders’ Deficit.

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. The Company has adopted this standard on January 1, 2019 and recognized assets and liabilities arising from any leases that meet the requirements under this standard on the adoption date and included qualitative and quantitative disclosures in the Company’s notes to the consolidated financial statements.

On June 20, 2019, the Company entered into a Lease Agreement with Emerging Growth, LLC for the lease of office space in Whitefish, Montana, for a period of one year at a rate of $1,500 per month. Management has elected a policy to exclude leases with an initial term of 12 months or less from the balance sheet presentation required under ASC 842. As a result, the office lease has been excluded from balance sheet presentation as it has an original term of 12 months or less.

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. This Company has adopted this guidance for its annual goodwill impairment test performed during the year ended December 31, 2019.

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. This standard has no impact on the Company’s financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The objective of this standard 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 standard 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.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date. The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. This Company has adopted this standard on January 1, 2019 and it has had no impact in the Company’s consolidated financial statements.

F-14

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

NOTE 6: STOCKHOLDERS’ DEFICIT

Common Stock

On June 20, 2019, the Company issued an aggregate of 3,500,000 restricted shares of common stock to certain promissory note holders as consideration for early payment of the promissory notes. The value of the shares issued amounted to $315,000 and was recorded as interest expense during the year ended December 31, 2019.

On June 20, 2019, the Company issued 30,000,000 restricted shares of common stock to Emerging Growth, LLC as part of the acquisition under the Emerging Growth Agreement (see Note 4). The value of the stock amounted to $2,700,000 and was recorded as part of the acquisition price of the net assets acquired under the Emerging Growth Agreement.

Restricted Stock Issued as Compensation

During 2018, the Company issued an aggregate total of 240,000 restricted shares of its common stock to its non-employee directors as partial director compensation, at a value of $0.50 per share, vesting in 4 equal quarterly increments commencing on July 1, 2018 and ending June 30, 2019. The Company recorded expenses of $60,000 and $120,000 during the year ended December 31, 2019 and 2018, respectively. There was no remaining unrecorded compensation expense related to restricted stock as of December 31, 2019.

Preferred Stock

The Company is authorized to issue 2,000,000 shares of preferred stock with a par value of $0.001 per share, of which 500 have been authorized as Series A Preferred Stock and 3,000 have been authorized as Series B Preferred Stock.

On June 20, 2019, the Company issued to certain of its promissory noteholders an aggregate of 500 shares of Series A Preferred Stock, each with a stated value per share of $1,000, as conversion of $500,000 worth of outstanding promissory notes. The Series A Preferred Stock bears interest at 12% per annum, and is convertible into the Company’s common stock at the election of the holder at a conversion price per share to be mutually agreed between the Company and the holder in the future, and be redeemable at the Company’s option following the third year after issuance, without voting rights or a liquidation preference.

On June 20, 2019, the Company issued 3,000 shares of Series B Preferred Stock to Emerging Growth, LLC, each with a stated value of $1,000 per share, as part of the Emerging Growth Agreement. The aggregate fair value of $687,000 was recorded as part of the acquisition price of the net assets acquired from Emerging Growth, LLC (see Note 4). The Series B Preferred Stock bears interest at 6% per annum and is convertible into the Company’s common stock at the election of Emerging Growth, LLC at a conversion price per share to be mutually agreed between the Company and Emerging Growth, LLC in the future, without voting rights or a liquidation preference, except with respect to accrued penalty interest.

For the year ended December 31, 2019, the Company incurred $126,575 of interest from the outstanding preferred stock.

F-17

Warrants

The following summarizes the Company’s warrant activity for the year ended December 31, 2019 and 2018.

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual
				Exercise		Life
	Warrants			Price		(Years)

Outstanding at January 1, 2018		11,469,341		$	0.74		3.89
Granted		13,635,000			0.37
Forfeited/cancelled		(58,824	)		1.53
Outstanding at December 31, 2018		25,045,517		$	0.53		4.16
Granted		1,000,000			0.13
Forfeited/cancelled		(18,501,573	)		0.52
Outstanding at December 31, 2019		7,543,944		$	0.50		3.37

Vested and expected to vest at December 31, 2019		7,543,944		$	0.50		3.37

Exercisable at December 31, 2019		7,543,944		$	0.50		3.37

During March 2019, the Company issued 500,000 warrants exercisable at a price of $0.15 per share which expire on January 25, 2024. The fair value of these warrants amounted to $44,670, and was recognized as deferred financing costs using the effective interest method during the three-month period ended March 31, 2019. Additionally, per the down round feature of 7,935,000 warrants issued in connection with the Beedie Credit Agreement (see Note 7), pursuant to ASU 2017-11 which allows instruments with a down round feature to qualify for equity classification, the Company recognized the value of the feature when it was activated and there was an actual reduction of the strike price or conversion feature. The reduction in income of such 7,935,000 warrants amounted to $104,638 and was capitalized as deferred financing costs during the three-month period ended March 31, 2019. In connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business on June 18, 2019, the above warrants were cancelled.

On September 10, 2019, the Company issued 500,000 warrants in connection with a promissory note payable (see Note 5).

During the year ended December 31, 2018, the Company issued 12,135,000 warrants related to its loans, at a fair value of $2,727,577 and were recognized as deferred financing costs and amortized using the effective interest method over the term of the associated loan. During the year ended December 31, 2018, the Company issued 1,500,000 warrants to employees, at a fair value of $335,891, which were recognized as an expense over the vesting terms.

The Company recorded expenses of $126,810 and $318,441 during the year ended December 31, 2019 and 2018, respectively, related to warrants granted for compensation for each period is reflected as a component of discontinued operations. As of December 31, 2019, all outstanding warrants were fully vested and there was no remaining unrecorded compensation expense.

F-18

The warrants granted during 2019 and 2018 were valued using the Black-Scholes pricing method using the following assumptions below.

	2019				2018
Expected life in years			5			5	-	10
Stock price volatility		105.3%	-	114.2%		67.73%	-	68.48%
Risk free interest rate		1.58%	-	2.67%		1.48%	-	2.33%
Expected dividends			None				None
Estimated forfeiture rate			None				None

Options

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.

The following summarizes the Company’s stock option activity for the year ended December 31, 2019 and 2018.

						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual
				Exercise		Life
	Options			Price		(Years)

Outstanding at January 1, 2018		8,302,500		$	0.40		4.42
Forfeited/cancelled		(1,070,000	)		0.39
Outstanding at December 31, 2018		7,232,500		$	0.40		3.45
Forfeited/cancelled		(912,500	)		0.86
Outstanding at December 31, 2019		6,320,000		$	0.33		2.45

Vested and expected to vest at December 31, 2019		6,320,000		$	0.33		2.45

Exercisable at December 31, 2019		6,320,000		$	0.33		2.45

The Company recorded expenses of $10,963 and $30,600 during the year ended December 31, 2019 and 2018, respectively, related to stock options and are reflected as a component of discontinued operations for each period. Employees with unvested stock options all left the Company in connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business on June 18, 2019. As a result, no further options are expected to vest, and the total compensation cost related to non-vested awards not yet recognized amounted to $0 at December 31, 2019.

F-19

NOTE 7: DISCONTINUED OPERATIONS

During May 2019, the Company decided to discontinue most of its operating activities pursuant to the Asset Purchase Agreement entered into with CAKE Software, Inc. (see Note 1).

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of December 31, 2019 and 2018, and consist of the following:

	December 31,		December 31,
	2019		2018

Current assets of discontinued operations
Accounts receivable, net [1]	$	-	$	2,081,551
Prepaid expenses and other assets		-		254,760
Total current assets of discontinued operations	$	-	$	2,336,311

Noncurrent assets of discontinued operations
Property and equipment, net [2]	$	-	$	52,035
Other assets		-		108,211
Total noncurrent assets of discontinued operations	$	-	$	160,246

Current liabilities of discontinued operations
Accounts payable and accrued expenses	$	99,695	$	3,018,394
Deferred revenues [3]		-		443,650
Credit facility, short term [4]		-		3,399,240
Total current liabilities of discontinued operations	$	99,695	$	6,861,284

Noncurrent liabilities of discontinued operations
Credit facility, net of unamortized financing costs [4]	$	-	$	5,888,155
Other loan, related party net of unamortized financing costs [5]		-		386,686
Other long-term loan, net of unamortized financing costs [5]		-		2,273,402
Other liabilities		-		637,500
Total noncurrent liabilities of discontinued operations	$	-	$	9,185,743

[1]

The Company’s accounts receivable was due primarily from advertisers and marketers. Collateral was not required. The Company also maintained allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviewed 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 reserved for those accounts deemed uncollectible or likely to become uncollectible. When receivables were determined to be uncollectible, principal amounts of such receivables outstanding were deducted from the allowance. The allowance for doubtful accounts amounted to $0 and $245,736 at December 31, 2019 and 2018, respectively.

[2]	The Company’s property and equipment consisted of the following.

F-20

	December 31,		December 31,
	2019		2018


Computer equipment and software	$	-	$	422,441
Office furniture and equipment		-		123,932
Leasehold improvements		-		288,937

		-		835,310

Less: accumulated depreciation		-		(783,275	)

	$	-	$	52,035

Depreciation expense from discontinued operations amounted to $31,042 and $49,868 for the year ended December 31, 2019 and 2018, respectively. The deprecation expense for each period is reflected as a component of discontinued operations.

[3]	The Company’s deferred revenue represented prepayments made by certain customers and undelivered implementation and training fees. The Company decreased the deferred revenues by the amount of the services it rendered to such clients when provided.

[4]	A summary of the amounts previously outstanding under the Company’s credit facilities are as follows:

	December 31,		December 31,
	2019		2018


Saas Capital Loan	$	-	$	4,810,135
Less: deferred financing costs		-		(100,867	)
Saas Capital Loan, net		-		4,709,268

Beedie Credit Agreement	$	-	$	6,000,000
Less: deferred financing costs		-		(1,421,873	)
Beedie Credit Agreement, net		-		4,578,127

Total outstanding	$	-	$	10,810,135
Less: deferred financing costs		-		(1,522,740	)
Total credit facility loans	$	-	$	9,287,395

Short-term balance	$	-	$	3,399,240
Long-term balance		-		5,888,155
Total credit facility loans	$	-	$	9,287,395

SAAS Capital Loan

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 accrued 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 was 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.

F-21

The fair value of the warrants previously issued in connection with the SaaS Capital Loan were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the year ended December 31, 2019 and 2018, $100,867 and $198,408, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

On May 15, 2019, the Company entered into a consent letter, agreement and waiver of the SaaS Capital Loan to, among other things, provide that upon the closing of the Asset Purchase Agreement with Constellation, the Company will pay to SaaS Capital the outstanding principal balance and accrued but unpaid interest due under the SaaS Capital Loan plus $250,000 in fees, SaaS Capital will release its liens related to the Company’s CAKE Business assets, SaaS Capital’s warrants to purchase an aggregate of 1,733,333 shares of the Company’s common stock will be cancelled, and fees payable under the terms of the SaaS Capital Loan in the aggregate amount of $495,186 will be payable to SaaS Capital from the holdback and earnout payments payable by Constellation under the Asset Purchase Agreement in which the Company granted SaaS Capital a security interest.

All amounts outstanding under the SAAS Credit Loan were paid in full on July 18, 2019 upon the closing date of the Asset Purchase Agreement with Constellation. The total amount paid to satisfy the remaining obligation under the SaaS Capital Loan as of the closing date amounted to $4,576,123, consisting of the remaining principal balance outstanding of $4,252,209, as well as interest and fees of $323,914.

Beedie Credit Agreement

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 accrued interest at the rate of 12% per annum increasing to 14% per annum if our gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal was payable monthly in arrears. We paid Beedie a commitment fee of $175,000 and paid to Beedie a monthly standby fee of 0.325% on the unadvanced and available amount.

The fair value of the warrants previously issued in connection with the Beedie Credit Agreement were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the year ended December 31, 2019 and 2018, $1,571,181 and $474,510, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

On May 15, 2019, the Company entered into a seventh amendment of the Beedie Credit Agreement to, among other things, provide that upon the closing of the Asset Purchase Agreement with Constellation, the Company will pay to Beedie the outstanding principal balance and accrued but unpaid interest due under the Beedie Credit Agreement, Beedie will release its liens related to the Company’s CAKE Business assets, Beedie’s warrants to purchase an aggregate of 7,935,000 shares of the Company’s common stock will be cancelled, and fees payable under the terms of the Beedie Credit Agreement in the aggregate amount of $1,015,862 will be payable to Beedie from the holdback and earnout payments payable by Constellation under the Asset Purchase Agreement in which the Company granted Beedie a security interest.

All amounts outstanding under the Beedie Credit Agreement were paid in full on July 18, 2019 upon the closing date of the Asset Purchase Agreement with Constellation. The total amount paid to satisfy the remaining obligation under the Beedie Credit Agreement as of the closing date amounted to $7,033,208, consisting of the remaining principal balance outstanding of $6,962,379, as well as interest and fees of $70,829.

[5]	A summary of the amounts previously outstanding under the Company’s other long-term loans were as follows:

F-22

	December 31,		December 31,
	2019		2018


2018 Promissory Notes	$	-	$	1,450,000
August 2018 Promissory Notes		-		1,500,000
Less: deferred financing costs		-		(676,598	)
Other long-term loans, net	$	-	$	2,273,402


2018 Promissory Notes, related party	$	-	$	550,000
Less: deferred financing costs		-		(163,314	)
	$	-	$	386,686

2018 Promissory Notes

On May 31, 2018, and June 15, 2018, the Company borrowed an aggregate of $2,000,000, respectively, from thirteen lenders, or the 2018 Lenders, and issued promissory notes, or 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.

All amounts outstanding under the 2018 Promissory Notes were paid in full or settled through the exchange of outstanding amounts into Series A Preferred Stock on June 18, 2019 upon the closing of the Asset Purchase Agreement with Constellation. There was no gain or loss associated with this transaction.

August 2018 Promissory Notes

On August 31, 2018, the Company borrowed an aggregate of $1,500,000 from ten lenders, or the August 2018 Lenders and issued promissory notes, or 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.

All amounts outstanding under the August 2018 Promissory Notes were paid in full or settled through the exchange of outstanding amounts into Series A Preferred Stock on June 18, 2019 upon the closing of the Asset Purchase Agreement with Constellation. There was no gain or loss associated with this transaction.

The fair value of the warrants previously issued in connection with the 2018 Promissory Notes and the August 2018 Promissory Notes were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the year ended December 31, 2019 and 2018, $839,912 and $174,103, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

F-23

In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations. The results of the discontinued operations of the CAKE Business for the year ended December 31, 2019 and 2018 have been reflected as discontinued operations in the consolidated statements of operations, and consist of the following:

	For the Year Ended
	December 31,			December 31,
	2019			2018


Net revenues	$	9,001,307		$	21,729,605
Cost of revenue		3,863,471			9,075,828
Gross profit		5,137,836			12,653,777

Operating expenses:
Research and development		1,263,808			4,165,586
Sales and marketing		2,016,637			4,301,712
General and administrative		3,085,858			7,006,874
Impairment loss		-			4,724,746
Total operating expenses		6,366,303			20,198,918

Loss from operations		(1,228,467	)		(7,545,141	)

Other income (expense):
Gain on sale of discontinued operations		19,473,080			-
Interest income		34			503
Interest expense		(3,773,651	)		(2,581,046	)
Total other income (expense)		15,699,463			(2,580,543	)

Net income (loss) from discontinued operations before provision for income taxes		14,470,996			(10,125,684	)
Provision for income taxes		79,823			-
Net income (loss) from discontinued operations	$	14,391,173		$	(10,125,684	)

The following is a summary of the gain on sale of discontinued operations of the CAKE Business reflected above during the year ended December 31, 2019.

Gross proceeds received	$	20,892,667

Less: value of net assets sold

Accounts receivable		1,979,342
Prepaid and other current assets		51,363
Property and equipment		20,986
ROU lease asset		1,458,922
Other assets		39,702
Accounts payable and accrued expenses		(344,787	)
Deferred revenue		(138,112	)
ROU lease liability		(1,612,412	)
Other liabilities		(35,417	)
Total net assets sold		1,419,587
Gain on sale of CAKE Business	$	19,473,080

F-24

		Page
PART I
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	4
ITEM 1B.	UNRESOLVED STAFF COMMENTS	12
ITEM 2.	PROPERTIES	12
ITEM 3.	LEGAL PROCEEDINGS	12
ITEM 4.	MINE SAFETY DISCLOSURES	12
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	13
ITEM 6.	SELECTED FINANCIAL DATA	13
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	22
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	22
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES	22
ITEM 9A.	CONTROLS AND PROCEDURES	22
ITEM 9B.	OTHER INFORMATION	23
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	23
ITEM 11.	EXECUTIVE COMPENSATION	24
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	26
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	28
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	28
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	29
ITEM 16.	FORM 10-K SUMMARY	31
SIGNATURES		31

	●	The global cannabidiol (CBD) market has an estimated value of $9.3 billion for 2020 and is projected to grow at a 22.2% compound annual growth rate to reach $23.6 billion by 2025, according to Grand View Research. The business-to-consumer (B2C) segment is the largest segment of this market and is expected to exhibit the fastest growth rate over the forecast period.
	●	The global legal cannabis market is projected to grow at an 18.1% compound annual growth rate to reach $73.6 billion by 2027, according to Grand View Research. North America held the largest revenue share at 88.4% in 2019, but the recent legalization of cannabis for medical purposes in countries like Australia, Germany and Poland is expected to create lucrative opportunities.
	●	The psychedelics market is expected to grow from $2.08 billion to $6.86 billion between 2020 and 2027, representing a 16.3% compound annual growth rate, driven by the growing acceptance of psychedelic drugs for treating depression and other mental disorders.

●	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.

●	7,543,944 shares of Common Stock issuable pursuant to the exercise of warrants

●	3,160,000 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.

	Year Ended
	December 31,			December 31,
	2019			2018
Cash flows used in operating activities	$	(6,965,636	)	$	(3,460,496	)
Cash flows provided by (used in) investing activities	$	20,470,915		$	(1,388,880	)
Cash flows provided by (used in) financing activities	$	(13,469,181	)	$	4,745,602

Name	Age	Position
Brian Ross	45	Chairman of the Board, President, Chief Executive Officer
Frank Lane	53	President of CFN Media
Mario Marsillo Jr.	51	Director, Vice President Corp Development

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,	2019		335,006	(3)		-		-		-		-		-		20,525		355,528
Chief Executive Officer	2018		312,159	(3)		-		-		-		-		-		22,942		335,101
Damon Stein (4),	2019		335,006	(3)		-		-		-		-		-		20,525		355,528
General Counsel and Secretary	2018		312,159	(3)		-		-		-		-		-		22,942		335,101
Frank Lane,	2019		160,583			-		-		-		-		-		-		160,583
President of CFN Media	2018		-			-		-		-		-		-		-		-

	(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 paid in 2018 and $95,089 paid in 2019.
	(4)	Damon Stein resigned from the Company on January 2, 2020.

●	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.

	Common Stock
Name	# of Shares		% of Class
Brian Ross (1)		10,860,000		10.9	%
Damon Stein (2)		2,204,711		2.2	%
Mario Marsillo Jr. (3)		1,379,724		1.4	%
Gregory Akselrud (4)		150,553		0.2	%
Frank Lane		-		-
All current officers and directors as a group (5 persons) (5)		14,594,988		14.6	%

Equity Compensation Plan Information
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted- average 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		13,863,944	$	0.43		-
Total		13,863,944	$	0.43		-

	(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)	Mr. Stein resigned from the Company on January 2, 2020.
	(3)	Includes 60,000 options vested and that will vest within the next 60 days.
	(4)	Mr. Akselrud resigned as a director on February 25, 2020.
	(5)	Includes 3,160,000 options and 150,000 warrants vested and that will vest within the next 60 days.

Fee Category	2019		2018

Audit Fees (1)	$	174,000	$	90,500
Audit Related Fees (2)		-		25,000
Tax Fees (3)		12,500		12,500
All Other Fees (4)		-		-

Total Fees		186,500		128,000

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-3
Consolidated Statements of Operations for the years ended December 31, 2019 and 2018	F-4
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2019 and 2018	F-5
Consolidated Statements of Changes in Stockholders' Deficit for the years ended December 31, 2019 and 2018	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018	F-7
Notes to Consolidated Financial Statements	F-8 - F-27

EXHIBIT NO.	DESCRIPTION

2.1	Asset Purchase Agreement, dated May 15, 2019, by and between Accelerize Inc. and CAKE Software Inc. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).

3.1	Composite Copy of Certificate of Incorporation, as amended as of October 10, 2014, February 4, 2019, and October 22, 2019 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 6, 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).

3.6	Certificate of Designation of Series A Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2019).

3.7	Certificate of Designation of Series B Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2019).

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

4.3	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).

4.4	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).

4.5	Form of Warrant to Purchase Stock issued on September 12, 2019 (incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2019).

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 as of June 21, 2019, between Accelerize Inc. and Frank Lane (incorporated by reference to the Company’s Current Report on Form 8-K filed on September 19, 2019).

10.4*	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).

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

10.6*	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).

10.7*	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).

10.8*	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).

10.9*	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).

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

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

10.12*	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).

10.13*	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).

10.14*	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).

10.15	Form of Promissory Note issued on September 12, 2019 (incorporated by reference to the Company’s current report on Form 8-K filed on September 18, 2019).

10.16**	Form of Promissory Note issued on May 6, 2020.

23.1**	Consent of RBSM LLP.

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

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

101.1**	The following materials from the Company's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Changes in Stockholders’ Deficit, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these financial statements.

SIGNATURE	TITLE	DATE

By: /s/ Brian Ross	Chairman of the Board, President and Chief Executive Officer	June 15, 2020
Brian Ross	(Principal executive officer, principal financial officer and principal accounting officer)

By: /s/ Mario Marsillo Jr.	Director	June 15, 2020
Mario Marsillo Jr.

																		Accumulated
													Additional					Other			Total
	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Paid-in		Accumulated			Comprehensive			Shareholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Income			Deficit
Balance, January 1, 2018		-	$	-		-	$	-		65,939,709	$	65,939	$	26,301,747	$	(31,542,684	)	$	(41,540	)	$	(5,216,538	)

Fair value of options and restricted stock awards		-		-		-		-		240,000		240		150,360		-			-			150,600
Fair value of warrants		-		-		-		-		-		-		318,441		-			-			318,441
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		2,727,577		-			-			2,727,577
Net loss		-		-		-		-		-		-		-		(11,417,440	)		-			(11,417,440	)
Foreign currency translation		-		-		-		-		-		-		-		-			(35,815	)		(35,815	)
Balance, December 31, 2018		-		-		-		-		66,179,709		66,179	$	29,498,125		(42,960,124	)		(77,355	)		(13,473,175	)

Fair value of options and restricted stock awards		-		-		-		-		-		-		70,963		-			-			70,963
Fair value of warrants		-		-		-		-		-		-		126,810		-			-			126,810
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		62,294		-			-			62,294
Fair value of repricing adjustment		-		-		-		-		-		-		104,638		-			-			104,638
Conversion of debt into Series A Preferred Stock		500		1		-		-		-		-		499,999		-			-			500,000
Issuance of Series B Preferred Stock for acquisition of CFN		-		-		3,000		3		-		-		686,997		-			-			687,000
Issuance of common stock for acquisition of CFN		-		-		-		-		30,000,000		30,000		2,670,000		-			-			2,700,000
Issuance of common stock as payment of interest		-		-		-		-		3,500,000		3,500		311,500		-			-			315,000
Preferred stock interest		-		-		-		-		-		-		-		(126,575	)		-			(126,575	)
Net income		-		-		-		-		-		-		-		8,365,550			-			8,365,550
Foreign currency translation		-		-		-		-		-		-		-		-			(6,118	)		(6,118	)
Balance, December 31, 2019		500	$	1		3,000	$	3		99,679,709	$	99,679	$	34,031,326	$	(34,721,149	)	$	(83,473	)	$	(673,613	)

	Purchase Allocation
Property and equipment	$	2,183
Other intangible assets		579,000
Goodwill		3,225,817
	$	3,807,000

	Pro Forma Combined Financials (Unaudited)
	Year Ended December 31, 2019			Year Ended December 31, 2018

Revenue from continuing operations	$	1,920,758		$	2,199,319

Net loss from continuing operations	$	(5,877,768	)	$	(730,987	)

Net loss from continuing operations per common share - basic and diluted	$	(0.07	)	$	(0.01	)

	Year Ended
	December 31,

2020	$	-
2021		-
2022		500,000
Total	$	500,000

	Years Ended
	December 31,
	2019		2018
Current
Federal		-		-
State		79,823		-
Total current	$	79,823	$	-
Deferred
Federal		-		-
State		-		-
Total deferred	$	-	$	-
Total	$	79,823	$	-

SBA Loan #	60531272-03
SBA Loan Name	CFN ENTERPRISES INC.
Date	MAY 6, 2020
Loan Amount	$263,000.00
Interest Rate	ONE PERCENT (1.00%) PER ANNUM
Borrower	CFN ENTERPRISES INC.
Operating Company	N/A
Lender	PACIFIC WESTERN BANK

	BORROWER:

	CFN ENTERPRISES INC., a Delaware corporation


	By:	/s/ Brian Ross
		Brian Ross, Chief Executive Officer