10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-52635

ACCELERIZE INC.

(Exact name of registrant as specified in its charter)

Delaware	20-3858769
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

20411 SW BIRCH STREET, SUITE 250

NEWPORT BEACH,

CALIFORNIA 92660

 (Address of principal executive offices)

(949) 548 2253

 (Registrant’s Telephone Number, including Area Code)

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 [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes [X]  No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions 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 [X]	Smaller reporting company [X]
	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ]  No [X]

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value per share, as of November 14, 2018, was 66,179,709.

When used in this quarterly report, the terms “Accelerize,” “the Company,” “we,” “our,” and “us” refer to Accelerize Inc., a Delaware corporation.  

1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This quarterly report on Form 10-Q contains certain forward-looking statements. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. For example, when we discuss our pursuit of strategic transactions including acquisitions, dispositions, capital raising and debt restructuring, that our revenues will increase in 2018, and that we intend to invest in sales, marketing, product development and innovation, we are using forward-looking statements. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. These factors include, but are not limited to, our ability to implement our strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. The business and operations of Accelerize Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under “Item 1A. Risk Factors” in our annual report on Form 10-K as filed with the Securities and Exchange Commission, or the SEC, on March 27, 2018 and in this quarterly report on Form 10-Q. Readers are also urged to carefully review and consider the various disclosures we have made in this report and in our annual report on Form 10-K.

2

ACCELERIZE INC.

INDEX

		Page
PART I - FINANCIAL INFORMATION:		4
Item 1.	Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Position and Results of Operations	21
Item 4.	Controls and Procedures	30
PART II - OTHER INFORMATION:		30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	31
SIGNATURES		32

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ACCELERIZE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current Assets:
Cash	$	1,808,029		$	166,883
Restricted cash		50,000			50,000
Accounts receivable, net of allowance for bad debt of $268,923 and $471,144, respectively		2,130,476			2,692,636
Prepaid expenses and other assets		330,455			548,343
Total current assets		4,318,960			3,457,862
Property and equipment, net of accumulated depreciation of $788,587 and $775,152, respectively		63,975			69,405
Intangible assets, net of accumulated amortization of $2,938,350 and $2,512,203, respectively		4,624,377			3,925,523
Other assets		109,777			123,124
Total assets	$	9,117,089		$	7,575,914
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	2,278,096		$	2,479,083
Deferred revenues		564,002			299,937
Credit facility, short term		3,501,487			3,055,812
Other short-term loan, net of unamortized deferred financing cost of $0 and $0, respectively		-			1,224,194
Total current liabilities		6,343,585			7,059,026
Credit facility, net of unamortized deferred financing cost of $1,745,491 and $245,584, respectively		6,404,754			4,402,988
Other loan, related party net of unamortized deferred financing cost of $180,209 and $0, respectively		369,791			-
Other loan net of unamortized deferred financing cost of $744,205 and $82,868, respectively		2,205,795			267,938
Other liabilities		743,750			1,062,500
Total liabilities		16,067,675			12,792,452
Stockholders' Deficit:
Series A Preferred stock; $0.001 par value; 54,000 shares authorized; None issued and outstanding.		-			-
Series B Preferred stock; $0.001 par value; 1,946,000 shares authorized; None issued and outstanding.		-			-
Common stock; $0.001 par value; 100,000,000 shares authorized; 66,179,709 and 65,939,709 shares issued and outstanding, respectively		66,178			65,938
Additional paid-in capital		29,371,783			26,301,748
Accumulated deficit		(36,326,324	)		(31,542,684	)
Accumulated other comprehensive loss		(62,223	)		(41,540	)
Total stockholders’ deficit		(6,950,586	)		(5,216,538	)
Total liabilities and stockholders’ deficit	$	9,117,089		$	7,575,914

 See Notes to Unaudited Condensed Consolidated Financial Statements. 

4

ACCELERIZE INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2018			2017			2018			2017
Revenues:	$	5,292,304		$	6,065,674		$	16,682,730		$	18,016,552
Cost of revenue		2,042,435			2,749,975			6,865,431			6,660,684
Gross profit		3,249,869			3,315,699			9,817,299			11,355,868
Operating expenses:
Research and development		1,033,707			1,031,878			3,144,106			3,208,434
Sales and marketing		1,127,055			1,119,302			3,359,247			3,419,095
General and administrative		2,372,359			1,554,982			6,278,522			5,232,896
Total operating expenses		4,533,121			3,706,162			12,781,875			11,860,425
Operating loss		(1,283,252	)		(390,463	)		(2,964,576	)		(504,557	)
Other income (expense):
Other income (loss)		(222	)		2			564			744
Other expense		(679,663	)		(305,284	)		(1,819,628	)		(863,865	)
Total other (expense)		(679,885	)		(305,282	)		(1,819,064	)		(863,121	)
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Net loss per share:
Basic	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Basic weighted average common shares outstanding		66,177,101			65,520,434			66,019,709			65,356,201
Diluted weighted average common shares outstanding		66,177,101			65,520,434			66,019,709			65,356,201

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

ACCELERIZE INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2018			2017			2018			2017
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Foreign currency translation loss		(7,166	)		12,841			(20,683	)		32,098
Total other comprehensive loss		(7,166	)		12,841			(20,683	)		32,098
Comprehensive loss	$	(1,970,303	)	$	(682,904	)	$	(4,804,323	)	$	(1,335,580	)

See Notes to Unaudited Condensed Consolidated Financial Statements.

6

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine-month periods ended September 30,
	2018			2017
Cash flows from operating activities:
Net loss	$	(4,783,640	)	$	(1,367,678	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		461,893			612,639
Amortization of debt discount and deferred financing cost		636,125			180,204
Provision for bad debt		(202,221	)		(48,586	)
Fair value of options and warrants		342,698			633,997
Loss on sale of fixed assets		997			902
Changes in operating assets and liabilities:
Accounts receivable		764,381			(196,315	)
Prepaid expenses and other assets		147,888			(129,077	)
Accounts payable and accrued expenses		(415,072	)		(641,049	)
Deferred revenues		264,065			18,213
Other assets		13,346			(20,016	)
Net cash used in operating activities		(2,769,540	)		(956,766	)
Cash flows from investing activities:
Capitalized software for internal use		(1,125,000	)		(1,347,075	)
Capital expenditures		(31,579	)		(44,125	)
Proceeds from sale of assets		750			795
Net cash used in investing activities		(1,155,829	)		(1,390,405	)
Cash flows from financing activities:
Principal repayments of credit facility and loan		(2,402,652	)		(1,653,282	)
Proceeds from credit facility		5,489,850			1,923,000
Proceeds from promissory notes		3,500,000			1,000,000
Repayments of promissory notes		(1,000,000	)		-
Net cash provided by financing activities		5,587,198			1,269,718
Effect of exchange rate changes on cash		(20,683	)		32,098
Net increase (decrease) in cash		1,641,146			(1,045,355	)
Cash, beginning of period		216,883			1,730,127
Cash, end of period	$	1,858,029		$	684,772
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,133,678		$	613,240
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities:
Fair value of warrants issued in connection with credit facility and promissory notes	$	2,727,577		$	104,676
Repayment of Agility Loan, included in accounts payable	$	-		$	25,000
Capital expenditure included in account payable	$	1,739		$	-
Shares issued for cashless exercise of options and warrants	$	-		$	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	$	1,808,029		$	634,772
Restricted cash at end of period	$	50,000		$	50,000
Cash and cash equivalents and restricted cash at end of period	$	1,858,029		$	684,772

See Notes to Unaudited Condensed Consolidated Financial Statements.

7

ACCELERIZE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

Accelerize Inc., a Delaware corporation, incorporated on November 22, 2005, owns and operates CAKE, a Software-as-a-Service, or SaaS, platform providing online tracking and analytics solutions for advertisers and online marketers.

The Company provides software solutions for businesses interested in expanding their online advertising spend.

These unaudited condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2017 and 2016, respectively, which are included in the Company’s December 31, 2017 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on March 27, 2018.  The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation of these may be determined in that context. The results of operations for the three and nine-month periods ended September 30, 2018 are not necessarily indicative of results for the entire year ending December 31, 2018.

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 $2,024,625 and an accumulated deficit of $36,326,324 as of September 30, 2018.  The Company also had a net loss of $4,783,640 and cash used in operating activities of $2,769,540 during the nine months ended September 30, 2018.

Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, increased gross profit from revenue growth and managing and reducing operating and overhead costs.  During the second quarter of 2018, the Company engaged a nationally recognized investment bank to assist management in pursuing strategic transactions including acquisitions, dispositions, capital raising and debt restructuring. However, management cannot provide any assurances that the Company will be successful in accomplishing its plans. Management also 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.

 

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the results of operations of Cake Marketing UK Ltd., or the Subsidiary. All material intercompany accounts and transactions between the Company and the Subsidiary have been eliminated in consolidation.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of unaudited condensed 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.

8

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 September 30, 2018 and December 31, 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 deducted from the allowance.  

	September 30, 2018		December 31, 2017
Allowance for doubtful accounts	$	268,923	$	471,144

Long-Lived Assets

The Company accounts for long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

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. During the nine-month period ended September 30, 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 the financial institution 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 September 30, 2018 or December 31, 2017.  The Company does not require any collateral from its customers.

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with ASC 2014-09, Revenue from Contracts with Customers, Topic 606, which supersedes the revenue recognition requirements in FASB ASC 605. The guidance primarily states 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 in exchange for those goods and services. Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the resulting receivable is reasonably assured.

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.

9

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.

Advertising

The Company expenses advertising costs as incurred.

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Advertising expense	$	140,907	$	84,302	$	415,358	$	254,446

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.

10

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 $1,125,000 during the nine months ended September 30, 2018. The Company amortizes such costs once the new software products and significant upgrades and enhancements are completed. The unamortized internal-use software development costs amounted to $4,624,377 and $3,925,523 at September 30, 2018 and December 31, 2017, respectively. The Company’s amortization expenses associated with capitalized software development costs amounted to $105,000 and $426,146 during the three and nine-month periods ended September 30, 2018, respectively, and $193,935 and $509,039 during the three and nine-month periods ended September 30, 2017, respectively. Amortization of internal-use software is reflected in cost of revenues.

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.

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, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. 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.

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 issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other 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’ Equity.  

Segment Reporting

The Company generated revenues from one source, its SaaS business, during the three and nine-month periods ended September 30, 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.

Recent Accounting Pronouncements

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 July 2018, the FASB issued ASU 2018-09 to provide clarification and correction of errors to the Codification. The amendments in this update cover multiple Accounting Standards Updates. Some topics in the update may require transition guidance with effective dates for annual periods beginning after December 15, 2018. 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.

11

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequently amended the guidance relating largely to transition considerations under the standard in January 2017. The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. 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).

	Three months ended September 30						Nine months ended September 30
	2018			2017			2018			2017
Numerator:
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Denominator:
Denominator for basic earnings per share--weighted average shares		66,177,101			65,520,434			66,019,709			65,356,201
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		66,177,101			65,520,434			66,019,709			65,356,201
Loss per share:
Basic	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Weighted-average anti-dilutive common share equivalents		29,229,427			17,091,949			26,043,047			16,579,396

12

Property and Equipment and Intangible Assets

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 and intangible assets consist of the following at:

	September 30, 2018			December 31, 2017
Computer equipment and software	$	437,302		$	431,497
Office furniture and equipment		124,900			120,420
Leasehold improvements		290,360			292,640
Total (1)		852,562			844,557
Accumulated depreciation (2)		(788,587	)		(775,152	)
Total	$	63,975		$	69,405
(1) Includes 6,150 in foreign exchange translation
(2) Includes (3,085) in foreign exchange translation
Intangible assets	$	7,562,727		$	6,437,726
Accumulated amortization		(2,938,350	)		(2,512,203	)
Total	$	4,624,377		$	3,925,523

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Depreciation expense	$	10,035	$	34,071	$	35,747	$	103,601
Amortization expense on intangible assets	$	105,000	$	193,935	$	426,146	$	509,038

During the three and nine-month periods ended September 30, 2018, the Company disposed of approximately $19,000 mostly in computer equipment with a net book value of approximately $2,000 for proceeds of $750.

During the three and nine-month periods ended September 30, 2017, the Company disposed of approximately $0 and $7,500 in computer equipment with a net book value of approximately $0 and $1,700 for proceeds of approximately $0 and $800, respectively.

NOTE 3: PREPAID EXPENSES

At September 30, 2018 and December 31, 2017, the Company’s prepaid expenses consisted primarily of prepaid insurance and tradeshow costs.

NOTE 4: DEFERRED REVENUES

The Company’s deferred revenues consist of prepayments made by certain of the Company’s customers and undelivered implementation and training fees.  The Company decreases the deferred revenues by the amount of the services it renders to such customers when provided. 

	September 30, 2018		December 31, 2017
Deferred revenues	$	564,002	$	299,937

13

NOTE 5: CREDIT FACILITY AND LOANS

Agility Loan

	September 30, 2018			December 31, 2017
Agility Loan	$	625,000		$	625,000
Amendment, added to balance		400,000			400,000
Principal Payment of Agility Loan		(450,000	)		(425,000	)
Less: Loan repayment		(575,000	)		-
Balance	$	-		$	600,000

On March 11, 2016, the Company entered into a subordinated loan, or the Agility Loan, with Agility Capital II, LLC, or 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 the Company’s 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. The Agility Loan requires a security interest in all of the Company’s personal property and intellectual property, second in priority to SaaS Capital Funding II, LLC.

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 during the three and nine-month periods ended September 30, 2017, respectively, and $0 was expensed during 2018.

On November 29, 2016, the Company entered into an amendment of the Agility Loan 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 a settlement agreement with respect to pending litigation between the Company and a former officer during November 2016, or 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 $9,791 and $29,372 was expensed during the three and nine-month periods ended September 30, 2017, respectively, and $0 was expensed during 2018.

On August 14, 2017, the Company entered into a consent to waiver of the Agility Loan, to permit the issuance of promissory notes to lenders, as further described below.

On November 8, 2017, the Company entered into the third amendment of the Agility Loan, or the Third Amendment, 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 Company assets. The Company owed $0 and $600,000 under the Agility Loan at September 30, 2018 and December 31, 2017, respectively.

Credit Facility - SaaS Capital Loan

	September 30, 2018			December 31, 2017
SaaS Capital Loan, Total advances	$	10,253,000		$	9,903,000
Principal Payment of SaaS Capital Loan		(4,601,269	)		(2,198,616	)
Less: Deferred financing cost		(151,649	)		(245,584	)
Less: SaaS Capital Loan, short term		(3,501,487	)		(3,055,812	)
SaaS Capital Loan, long term	$	1,998,595		$	4,402,988

14

On May 5, 2016, the Company entered into a loan and security agreement, or the SaaS Capital Loan, with SaaS Capital Funding II, LLC 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 on May 5, 2017. Additionally, the Company incurred initial financing costs of $160,000 which was capitalized as deferred financing costs, of which $13,333 and $40,000 was expensed during the three and nine-month periods ended September 30, 2018 and 2017, respectively.

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 September 30, 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 Funding II, LLC 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 Funding II, LLC.

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 Funding II, LLC, 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 September 30, 2016. The fair value of the warrant amounted to $383,128 and was capitalized as deferred financing costs, of which $31,927 and $95,781 was expensed during the three and nine-month periods ended September 30, 2018 and 2017, respectively.

On November 29, 2016, the Company entered into an amendment of the SaaS Capital Loan 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 which was fully expensed at December 31, 2016.

On May 10, 2017, the Company entered into a second amendment of the SaaS Capital Loan 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 its hosting migration to a new platform and to allow for potentially augmented marketing and sales efforts.

On June 16, 2017, the Company entered into a third amendment of the SaaS Capital Loan 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 a fourth amendment of the SaaS Capital Loan to permit the issuance of promissory notes to lenders, further described below.

On November 8, 2017, the Company entered into a fifth amendment, or the Fifth Amendment, of the SaaS Capital Loan 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 a sixth amendment, or the Sixth Amendment, of the SaaS Capital Loan to permit the Company to enter into the Beedie Credit Agreement, further described below, and to permit the repayment of Agility Capital and of the promissory notes to lenders, further described below. 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 $4,736 and $12,629 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

15

On May 31, 2018, the Company entered into a seventh amendment, or the Seventh Amendment, of the SaaS Capital Loan to permit the issuance of promissory notes to lenders, as further described below, 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 an eighth amendment, or the Eighth Amendment, of the SaaS Capital Loan with SaaS Capital, to issue additional promissory notes, as further described below.

On August 31, 2018, the Company entered into a ninth amendment, or the Ninth Amendment, of the SaaS Capital Loan with SaaS Capital, to permit the issuance of promissory notes to lenders, as further described below, 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 the nine-month period ended September 30, 2018, the Company borrowed $350,000 from the SaaS Capital Loan, and made principal payments of $2,402,653.

The Company owed $5,651,731 and $7,704,384 under the SaaS Capital Loan at September 30, 2018 and December 31, 2017, respectively.

2017 Promissory Notes

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	1,000,000		$	1,000,000
Principal Payment of Promissory Notes		(1,000,000	)		-
Promissory Notes, Outstanding balance		-			1,000,000
Less: Deferred Financing cost		-			(82,868	)
Less: Promissory Notes, short term		-			(649,194	)
Balance	$	-		$	267,938

On August 14, 2017, the Company borrowed an aggregate of $1,000,000 from seven lenders, or the 2017 Lenders, and issued promissory notes, or 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 accrue interest at 12% per annum and accrued interest is 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 $0 and $82,868 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $8,723 and $8,723 was expensed during the three and nine-month periods ended September 30, 2017.

On January 26, 2018, the Company paid approximately $1,074,000 to repay the 2017 Promissory Notes which includes 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 September 30, 2018 and December 31, 2017, respectively.

Beedie Credit Agreement

	September 30, 2018			December 31, 2017
Total advances	$	6,000,000		$	-
Principal Payment of Loan		-			-
Less: Deferred financing cost		(1,593,841	)		-
Balance	$	4,406,159		$	-

16

On January 25, 2018, the Company entered into a non-revolving term credit agreement, or the Beedie Credit Agreement, with Beedie Investments Limited, or 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 loan agreement between the Company and Agility dated March 11, 2016, as amended, and to release Agility Capital’s security interest in Company 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 $14,583 and $38,888 was expensed during the three and nine-month periods ended September 30, 2018, respectively, 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 the Company's 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 September 30, 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. 

In connection with the Beedie Credit Agreement, the Company issued to Beedie a warrant, or 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 $91,655 and $244,413 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On May 31, 2018, the Company entered into a first amendment, or the First Beedie Amendment, of the Beedie Credit Agreement to permit the issuance of additional promissory notes to lenders, as further described below, 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 $10,027 and $13,370 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On June 13, 2018, the Company entered into a second amendment, or the Second Beedie Amendment, of the Beedie Credit Agreement to issue additional promissory notes, as further described below. 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 $2,004 and $2,672 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On August 31, 2018, the Company entered into a third amendment, or the Third Beedie Amendment, of the Beedie Credit Agreement to borrow the second tranche of the term loan facility in the amount of $1,500,000, to permit the issuance of additional promissory notes to lenders, as further described below, 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 the Company’s 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 $11,458 and $11,458 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

17

2018 Promissory Notes

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	2,000,000		$	-
Principal Payment of Promissory Notes		-			-
Promissory Notes, Outstanding Balance		2,000,000			-
Less: Deferred Financing Cost		(655,305	)		-
Less: Related Party Portion		(550,000	)
Balance	$	794,695		$	-

On May 31, 2018, and June 15, 2018, the Company borrowed an aggregate of $1,500,000 and $500,000, 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, one of the 2018 Lenders is an affiliate of the Company’s Chief Financial Officer, Anthony Mazzarella, 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 employees of the Company. 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 $61,435 and $81,913 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

August 2018 Promissory Notes

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	1,500,000		$	-
Principal Payment of Promissory Notes		-			-
Promissory Notes, Outstanding balance		1,500,000			-
Less: Deferred financing cost		(269,109	)		-
Balance	$	1,230,891		$	-

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 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 $7,689 and $7,689 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Amortization expense associated with credit facility and loan	$	251,718	$	64,560	$	636,125	$	180,204
Interest expense associated with credit facility and loan	$	422,051	$	217,695	$	1,133,678	$	613,240
Other finance fees associated with credit facility and loan	$	4,646	$	24,125	$	45,886	$	72,375

18

NOTE 6: STOCKHOLDERS’ DEFICIT

Common Stock

There were no exercises of options during the three and nine-month periods ended September 30, 2018.

During the nine-month period ended September 30, 2017, the Company issued 1,707,692 shares of its Common Stock pursuant to the cashless exercise of 2,400,000 options. 

As of September 30, 2018, and December 31, 2017, there were 66,179,709 and 65,939,709 shares of Common Stock issued and outstanding, respectively.

Restricted Stock

During 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 September 30, 2018, these restricted shares were fully issued. The Company recorded expenses of $30,000 and $60,000 during the three and nine-month periods ended September 30, 2018, respectively. $0 remained unvested as of September 30, 2018.

During the nine-month period ended September 30, 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 September 30, 2018, these restricted shares were fully issued. The Company recorded expenses of $30,000 during the three and nine-month periods ended September 30, 2018. 90,000 shares remained unvested as of September 30, 2018.

Warrants

There were no exercises of warrants during the three and nine-month periods ended September 30, 2018. During the three and nine-month periods ended September 30, 2017, the Company issued 0 and 160,096 shares of its Common Stock pursuant to the cashless exercise of 225,000 warrants.

During the three and nine-month periods ended September 30, 2018, the Company issued 3,835,000 and 12,135,000 warrants related to its loans, at a fair value of $689,281 and $2,727,577, respectively, and were recognized as deferred financing costs and amortized using the effective interest method over the term of the associated loan. During the three and nine-month periods ended September 30, 2018, the Company issued 1,000,000 and 1,500,000 warrants to employees at a fair value of $204,730 and $335,891 and 58,824 warrants expired, respectively.

During the three and nine-month periods ended September 30, 2017, 46,875 warrants expired and the Company issued 1,000,000 warrants to the 2017 Lenders, exercisable at a price of $0.35 per share and which expire on August 14, 2020. The fair value of these warrants, which amounted to $104,676, were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan. 

As of September 30, 2018, and December 31, 2017, there were 25,045,517 and 11,469,341 warrants issued and outstanding, respectively, with a weighted average price $0.53 and $0.74, respectively.

During the three and nine-month periods ended September 30, 2018 and 2017, the Company recorded expenses of $101,836 and $229,400 and $125,867 and $377,600, respectively.

Options

The Company generally recognizes its share-based payment over the vesting terms of the underlying options.

	Nine-month periods ended September 30,
	2018		2017
Weighted-average grant date fair value	$	-	$	-
Fair value of options, recognized as selling, general, and administrative expenses	$	23,298	$	166,397
Number of options granted		-		-

As of September 30, 2018 and December 31, 2017, there were 7,237,500 and 8,302,500 options, respectively, issued and outstanding with a weighted average price of $0.40 and $0.40 respectively.

The total compensation cost related to non-vested awards not yet recognized amounted to $18,457 at September 30, 2018 and the Company expects that it will be recognized over the following 24 months.

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NOTE 7: COMPREHENSIVE LOSS

Comprehensive loss includes changes in equity related to foreign currency translation adjustments. The following table sets forth the reconciliation from net loss to comprehensive loss for the three and nine-month periods ended September 30, 2017 and 2016:

	Three months ended						Nine months ended
	September 30,						September 30,
	2018			2017			2018			2017
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Other comprehensive loss:
Foreign currency translation adjustment		(7,166	)		12,841			(20,683	)		32,098
Comprehensive loss	$	(1,970,303	)	$	(682,904	)	$	(4,804,323	)	$	(1,335,580	)

The following table sets forth the balance in accumulated other comprehensive loss as of September 30, 2018 and December 31, 2017, respectively:

	September 30, 2018			December 31, 2017
Accumulated other comprehensive loss	$	(62,223	)	$	(41,540	)

NOTE 8: SEGMENTS

The Company operates in one business segment. Percentages of sales by geographic region for the three and nine-month periods ended September 30, 2017 and 2016 were approximately as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
United States		64%		56%		62%		58%
Europe		15%		18%		17%		20%
Other		21%		26%		21%		22%

NOTE 9: COMMITMENTS AND CONTINGENCIES

During August 2017, the Company entered into an amendment to its original January 2014 lease for certain office space in Newport Beach.  Pursuant to the lease amendment, effective March 1, 2018, the premises shall be expanded to include an additional 1,332 usable square feet such that the premises shall consist of 11,728 usable square feet in the aggregate. In addition, pursuant to the terms of the lease amendment, the Company extended the term of the lease agreement until June 30, 2023. Commencing on March 1, 2018, the initial base rent for the premises is $38,702 per month for the first year and increasing to $44,566 per month by the end of the term.

During October 2016, the Company amended its original May 2014 sublease and entered into a 21-month sublease in Newport Beach, effective June 1, 2016. The monthly base rent was approximately $4,100 through the end of the sublease term, in February 2018. As of September 30, 2018, this sublease has expired.

During July 2014, the Company entered into a five-year lease for certain office space in a business center in London, England, which commenced on July 30, 2014. The base rent is GBP 89,667 (approximately $115,000) per year and the estimated service charges for the lease are GBP 45,658 (approximately $56,000) per year.

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows.

On November 29, 2016, the Company entered into the Settlement Agreement with Jeff McCollum, or McCollum, to settle pending litigation between the Company and McCollum in the Superior Court of the State of California related to McCollum’s termination as an executive officer of the Company on September 8, 2014. In connection with the Settlement Agreement, McCollum surrendered to the Company a stock certificate representing 1,890,000 shares of the Company’s Common Stock, or the Shares, and for dismissal with prejudice of the cross-complaint and action against the Company brought by McCollum. The Company agreed to pay McCollum a total of $2,700,000. $1,000,000 of this total has already been paid as of January 18, 2017, of which the Company’s insurance carrier contributed $500,000. The remaining $1,700,000 will be paid in 48 equal monthly installments starting on July 1, 2017. The Company previously cancelled McCollum’s options to purchase up to 6,600,000 shares of the Company’s Common Stock at exercise prices of $0.15 or $0.31 per share. The Company cancelled the 1,890,000 Shares and thereafter the Company’s issued and outstanding common stock decreased by approximately 3%. During 2016, the Company recorded a loss on legal settlement of $2,200,000, net of the reimbursement of $500,000, which the Company received from its insurance carrier in December 2016. The outstanding settlement balance amounted to $1,168,750 and $1,487,500 as of September 30, 2018 and December 31, 2017, respectively, pursuant to the Settlement Agreement, of which $425,000 has been classified as accounts payable and accrued expenses as of September 30, 2018 and December 31, 2017 and $743,750 and $1,062,500, respectively, as other long-term liabilities, in the accompanying condensed consolidated balance sheet.

NOTE 10: SUBSEQUENT EVENTS

None

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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2017. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See “Cautionary Statement Regarding Forward Looking Information’’ elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements

Overview

We own and operate CAKE and getcake.com, a marketing technology company that provides a proprietary solution for advanced analytics, attribution and campaign optimization for digital marketers. Our powerful software-as-a service, or SaaS, is an enterprise solution that has been an industry standard for advertisers, agencies, networks and publishers to measurably analyze and improve digital advertising spend. We currently have over 500 customers driving billions of consumer actions monthly through the CAKE enterprise platform.

In late 2017, we introduced Journey by CAKE, a new product family created specifically for brand advertisers and digital agencies. Journey by CAKE is a cloud-based solution that collects and analyzes customer journey data using multi-touch attribution for marketing campaign optimization. Journey by CAKE delivers accurate and actionable insights about the previously missing steps of the anonymous customer journey. With this extended view into vital customer interactions, Journey provides the intelligence needed to move unknown consumers to known customers, boosting campaign performance and return on advertising spend (RoAS). The main features are: Insights, a centralized dashboard which provides valuable customer journey insights that drive real-time decisions; Attribution, campaign spend optimization based on positional and data-driven attribution of key steps in the customer journey; and Connections, seamless integrations with digital media and marketing tools which make collecting customer journey data easier than ever. Journey by CAKE enables brands to move beyond the confines of siloed data and provides customer journey analytics for marketers, in real time.

On January 12, 2017, we announced that the CAKE platform was significantly enhanced with a new unified technical architecture and platform to collect and support high-traffic volumes. Now our industry-leading technology not only gathers granular information about the customer path to conversion, but also leverages data science and machine learning to further understand and maximize RoAS. Additionally, our patent-pending algorithmic attribution for predictive analytics clearly and accurately show marketers how to optimize campaigns. These new capabilities enhance our existing rules-driven attribution to programmatically allow marketers to analyze complex customer journeys; arming advertisers with more actionable insights needed to effectively measure the true impact of each media channel and maximize revenue for any given level of spending. 

The CAKE SaaS proprietary marketing platform is used by some of the world’s leading companies and largest customer-base of enterprise performance marketing networks and advertisers. CAKE’s platform is based on reliable, feature rich technology and is bolstered by the industry’s leading customer service and top-tier technology partners, assuring the highest level of uptime.

On February 14, 2017, Gartner, Inc. once again named us as a Vendor to Watch in its “Magic Quadrant for Digital Marketing Hubs” report. This research is intended for chief marketing officers (CMOs), chief marketing technologists and other digital marketing leaders involved in the selection of core systems to support digital marketing business requirements. According to Gartner, our solution enables hub-like multichannel data management and onboarding capabilities. CAKE is for enterprise performance marketers looking to track attribution and optimize data-driven lead generation and customer acquisition through affiliate and other digital marketing channels.  

Our revenue model is based on monthly recurring license fees, usually pursuant to an annual contract. The contracts typically include a prescribed volume of clicks, impressions, or other events, and are subject to overage charges for volumes in excess of the included amounts. We also charge training and implementation fees, and in certain cases, professional services fees and royalties. A majority of our revenue is derived from customers in the United States. During November 2012, we formed Cake Marketing UK Ltd, a private limited company, which is our wholly-owned subsidiary located in the United Kingdom in order to better provide our services in the European market.

Our business is currently headquartered in Newport Beach, California, with operations in Santa Monica, California, London, England and New Delhi, India, allowing us to provide global support to our customer base. The CAKE platform supports multiple languages and currencies so online marketers can track the performance of their marketing campaigns and better target their digital spend on a global scale.

Our training, support personnel, hosting and cloud-based infrastructure contribute to our cost of operating the business. We anticipate spending in these areas will remain approximately constant during the remainder of 2018. In addition, development resources were required to continue to enhance our products. Those resources were used to extend our software platform and to create deeper integrations to third-party technologies that include, but are not limited to, Google AdWords, Bing Ads, Facebook, DoubleClick Campaign Manager (DCM), Marketo and others. 

We intend to continue to invest in sales, marketing, product development and innovation. We allocated a portion of our marketing budget to being present at tradeshows, securing coverage in industry publications, and providing the support documentation required by sales initiatives. Additional efforts will be made to speak at industry events, write for media outlets and implement digital marketing campaigns, increasing awareness of the CAKE solutions and the thought leadership driving product development.

Our principal offices are located at 20411 SW Birch Street, Suite 250, Newport Beach, CA 92660. Our telephone number there is: (949) 548-2253. Our corporate website is: www.accelerize.com, the contents of which are not part of this quarterly report.

Our Common Stock is quoted on the OTCQB Marketplace under the symbol "ACLZ."  

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Results of Operations

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

	Three-month periods												Nine-month periods
	ended September 30,						$			%			ended September 30,						$			%
	2018			2017			Change			Change			2018			2017			Change			Change
Revenues:	$	5,292,304		$	6,065,674			(773,370	)		-12.7	%	$	16,682,730		$	18,016,552			(1,333,822	)		-7.4	%
Cost of revenue		2,042,435			2,749,975			(707,540	)		-25.7	%		6,865,431			6,660,684			204,747			3.1	%
Gross Profit		3,249,869			3,315,699			(65,830	)		-2.0	%		9,817,299			11,355,868			(1,538,569	)		-13.5	%
Operating expenses:
Research and development		1,033,707			1,031,878			1,829			0.2	%		3,144,106			3,208,434			(64,328	)		-2.0	%
Sales and marketing		1,127,055			1,119,302			7,753			0.7	%		3,359,247			3,419,095			(59,848	)		-1.8	%
General and administrative		2,372,359			1,554,982			817,377			52.6	%		6,278,522			5,232,896			1,045,626			20.0	%
Total operating expenses		4,533,121			3,706,162			826,959			22.3	%		12,781,875			11,860,425			921,450			7.8	%
Operating loss		(1,283,252	)		(390,463	)		(892,789	)		228.6	%		(2,964,576	)		(504,557	)		(2,460,019	)		487.6	%
Other income (expense):
Other income		(222	)		2			(224	)		-11200.0	%		564			744			(180	)		-24.2	%
Other expense		(679,663	)		(305,284	)		(374,379	)		-122.6	%		(1,819,628	)		(863,865	)		(955,763	)		-110.6	%
Total other expenses		(679,885	)		(305,282	)		(374,603	)		-122.7	%		(1,819,064	)		(863,121	)		(955,943	)		-110.8	%
Net loss	$	(1,963,137	)	$	(695,745	)		(1,267,392	)		-182.2	%	$	(4,783,640	)	$	(1,367,678	)		(3,415,962	)		-249.8	%

Discussion of Results for Three-Month and Nine-Month Periods Ended September 30, 2018 and 2017

Revenues

	Three Months Ended September 30,				%		Nine Months Ended September 30,				%
	2018		2017		Change		2018		2017		Change
Revenues	$	5,292,304	$	6,065,674		-12.7%	$	16,682,730	$	18,016,552		-7.4%

We generate revenues from monthly recurring license fees, overage fees (based on volume of transactions processed), training and implementation fees, and in certain cases, professional services fees and royalties. Our revenue breakdown for the three and nine-month periods ended September 30, 2018 and 2017 were as follows.

	Three Months Ended						Nine Months Ended
	September 30,				%		September 30,				%
	2018		2017		Change		2018		2017		Change
License	$	4,293,722	$	4,828,655		-11.1%	$	13,427,454	$	14,654,627		-8.4%
Overage		774,117		1,000,218		-22.6%		2,528,472		2,656,909		-4.8%
Other		224,464		236,801		-5.2%		726,804		705,016		3.1%
Total	$	5,292,304	$	6,065,674		-12.7%	$	16,682,730	$	18,016,552		-7.4%

The decrease in total revenues during the three and nine-month periods ended September 30, 2018, when compared to the same periods in 2017, is mainly due to a decrease in overage fees as a result of our decision to terminate our relationship with a major customer.

The decrease in our software licensing revenues during the three and nine-month periods ended September 30, 2018, when compared to the same periods in 2017, is largely due to our decision to terminate a major customer, combined with reductions in transaction volume for several other customers. Our monthly recurring license fee revenue, which constitutes the contractually recurring portion of our revenue and comprises the bulk of our total revenue, or 80% for the nine-month period ended September 30, 2018, decreased approximately 11% and 8% year over year during the three and nine-month periods ended September 30, 2018, respectively, when compared to the same periods in 2017. In addition to impacting licensing revenues, reduced transaction volume also impacted overage fees, which decreased approximately 23% and 5% year over year during the three and nine-month periods ended September 30, 2018, respectively, when compared to the same periods in 2017. Our average monthly revenue per customer decreased approximately 10% and 4% during the three and nine-month periods ended September 30, 2018, respectively, when compared to the same periods in 2017.

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We believe that there was substantial uncertainty and caution among some of our customers and our affiliate networks’ customers in reaction to the European Union’s recently instituted General Data Protection Regulation (GDPR). We believe this led to delays in some purchase decisions by new customers, as well as a temporary reduction in advertising activity among some current customers – likely contributing to our lower transaction volume and associated lower revenue.

Cost of Revenues

	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2018		2017				2018		2017
Cost of revenues	$	2,042,435	$	2,749,975		-25.7%	$	6,865,431	$	6,660,684		3.1%

Cost of revenues consists primarily of web hosting and personnel costs associated with supporting customer on-boarding and training activities, including salaries, benefits, and related infrastructure costs. Web hosting fees are partially correlated to our revenues, depending on each specific agreement we have with our customers. The majority of our customers’ services are hosted on non-dedicated servers, on which capacity can be maximized by server, while certain customers prefer to have their services hosted on dedicated servers, on which capacity can only be maximized by customer and by server. Additionally, our resources associated with on-boarding are usually allocated at the beginning of the relationship with the new customer (usually, the first two months). Accordingly, our personnel costs associated with supporting customer on-boarding activities are not necessarily correlated with our revenues.

During the three and nine-month periods ended September 30, 2018, when compared to the same periods in 2017, cost of revenues decreased reflecting the lower web hosting fees of approximately $313,000 and increased reflecting the higher web hosting fees of approximately $647,000, respectively, incurred to support our customers and platform usage.

We believe that our cost of revenues will remain approximately constant during the remainder of 2018.

Research and Development Expenses

	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2018		2017				2018		2017
Research and development	$	1,033,707	$	1,031,878		0.2%	$	3,144,106	$	3,208,434		-2.0%

Research and development expenses consist primarily of personnel costs associated with the enhancement and maintenance of our SaaS product offerings, consisting of salaries, benefits, and related infrastructure costs, offset by capitalized software development costs.  

Our research and development expenses remained constant and slightly decreased during the three and nine-month periods ended September 30, 2018, respectively, when compared to the same periods in 2017. The decrease was mainly due to lower capitalization of software development costs.

We believe that our research and development expenses will slightly increase during the remainder of 2018 as we continue to enhance features of our SaaS platform.

Sales and Marketing Expenses

	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2018		2017				2018		2017
Sales and marketing	$	1,127,055	$	1,119,302		0.7%	$	3,359,247	$	3,419,095		-1.8%

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Sales and marketing expenses consist primarily of personnel costs associated with the sale and marketing of our SaaS products, including salaries, benefits, and related infrastructure, as well as the costs of related marketing programs, such as trade shows and public relations.

We experienced a slight decrease in sales and marketing expenses during the nine-month period ended September 30, 2018, when compared to the same period in 2017, mainly due to a decrease in sales commissions.

We believe that our sales and marketing expenses will increase slightly in 2018 as we continue to execute on proven marketing programs.

General and Administrative Expenses

	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2018		2017				2018		2017
General and administrative	$	2,372,359	$	1,554,982		52.6%	$	6,278,522	$	5,232,896		20.0%

General and administrative expenses primarily consist of personnel costs associated with the support of our operations consisting of salaries, benefits, and related infrastructure. Also included are non-personnel costs, such as audit and legal fees, as well as professional fees, insurance, investor relations, and other corporate expenses.

The increase in general and administrative expenses during the three and nine-month periods ended September 30, 2018, when compared to the same periods in 2017, is primarily due to higher legal expenses of approximately $267,000, mostly related to work on our credit facility and loans, higher bad debt expenses of approximately $385,000, higher rent expenses of approximately $100,000, and approximately $120,000 in higher compensation related expenses.

We believe that our general and administrative expenses will remain approximately constant during the remainder of 2018.

Other Income

	Three Months Ended September 30,					% Change		Nine Months Ended September 30,				% Change
	2018			2017				2018		2017
Other (loss) income	$	(222	)	$	2		-11200.0%	$	564	$	744		-24.2%

Other Income during the three and nine-month periods ended September 30, 2018 consisted of small gain or loss on foreign exchange.

Other Expenses

	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2018		2017				2018		2017
Other expenses	$	679,663	$	305,284		-122.6%	$	1,819,628	$	863,865		-110.6%

Other expenses consist of interest charges and amortization of deferred financing costs associated with our credit facility and loans.

The increase in interest expenses during the three and nine-month periods ended September 30, 2018, when compared to the same periods in 2017, is primarily due to higher levels of borrowings we have made from time to time.

Liquidity and Capital Resources

We had a working capital deficit of $2,024,625 and an accumulated deficit of $36,326,324 as of September 30, 2018.  We also had a net loss of $4,783,640 and cash used in operating activities of $2,769,540 as of September 30, 2018.

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Our plan to continue as a going concern includes raising capital in the form of debt or equity, increased gross profit from revenue growth and managing and reducing operating and overhead costs. During the second quarter of 2018, we engaged a nationally recognized investment bank to assist us in pursuing strategic transactions including acquisitions, dispositions, capital raising and debt restructuring. However, we cannot provide any assurances that we will be successful in accomplishing our plans. We also 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 us to raise additional capital on an immediate basis. These matters, among others, raise substantial doubt about our ability 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 we be unable to continue as a going concern.

	Ending balance at September 30,				Average balance during nine-months ended September 30,
	2018		2017		2018		2017
Cash	$	1,808,029	$	634,772	$	987,456	$	1,157,450
Restricted cash		50,000		50,000		50,000		50,000
Accounts receivable		2,130,476		2,474,511		2,411,556		2,352,061
Accounts payable and accrued expenses		2,278,096		2,344,121		2,378,590		2,491,565
Short term credit facility, net of deferred financing cost		3,501,487		2,736,684		3,278,650		2,387,815
Short term loan, net of deferred financing cost		-		839,403		612,097		673,135
Credit facility, net of deferred financing cost		6,404,754		4,498,346		5,403,871		4,543,287
Other loan, related party net of deferred financing cost		369,791		-		184,896		-
Other loan net of deferred financing cost		2,205,795		379,853		1,236,867		189,927
Long term other liabilities		743,750		1,168,750		903,125		1,328,125

At September 30, 2018 and 2017, 44% and 42%, respectively, of our total assets consisted of cash and cash equivalents and accounts receivable.

We extend unsecured credit in the normal course of business to our customers. The determination of the appropriate amount of the reserve for uncollectible accounts is based upon a review of the amount of credit extended, the length of time each receivable has been outstanding, and the specific customers from whom the receivables are due.

The objective of liquidity management is to ensure that we have ready access to sufficient funds to meet commitments while implementing our growth strategy. Our primary sources of liquidity historically include the sale of our securities and borrowings from our credit facilities and loans.

We do not have any material commitments for capital expenditures of tangible items.

Agility Loan

On March 11, 2016, we entered into a subordinated 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, we were in compliance with these covenants. The Agility Loan requires a security interest in all of our personal property and intellectual property, second in priority to SaaS Capital Funding II, LLC.

In connection with the Agility Loan, on June 30, 2016, as a result of outstanding amounts under the Agility Loan, we issued to Agility Capital a warrant to purchase up to 69,444 shares of our 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 during the three and nine-month periods ended September 30, 2017, respectively, and $0 was expensed during 2018.

On November 29, 2016, we entered into an amendment of our Agility Loan 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 our entering into 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, we issued to Agility Capital a warrant to purchase up to 187,500 shares of our 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 $9,791 and $29,372 was expensed during the three and nine-month periods ended September 30, 2017, respectively, and $0 was expensed during 2018.

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

On November 8, 2017, we entered into the Third Amendment whereby Agility Capital agreed to loan an additional $300,000 to us, 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, we repaid the Agility Loan by paying Agility Capital approximately $581,000 which terminated the loan agreement between us and Agility Capital and released Agility Capital’s security interest in our assets. We owed $0 and $600,000 under the Agility Loan at September 30, 2018 and December 31, 2017, respectively.

Credit Facility - SaaS Capital Loan

On May 5, 2016, we entered into the SaaS Capital Loan, with SaaS Capital Funding II, LLC 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 us in connection with the initial advance and an additional $80,000 was paid in May 2017. Additionally, we incurred initial financing costs of $160,000 which was capitalized as deferred financing costs, of which $13,333 and $40,000 was expensed during the three and nine-month periods ended September 30, 2018 and 2017, respectively.

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 our ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of September 30, 2018, we were 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. We granted SaaS Capital Funding II, LLC a security interest in all of our personal property and intellectual property through the SaaS Capital Loan and the Patent, Trademark and Copyright Security Agreement between us and SaaS Capital Funding II, LLC.

On May 5, 2016, in connection with the SaaS Capital Loan, we issued to SaaS Capital Partners II, LP, an affiliate of SaaS Capital Funding II, LLC, a warrant to purchase up to 1,333,333 shares of our 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 our equity securities are first listed for trading on NASDAQ. We 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 $31,927 and $95,781 was expensed during the three and nine-month periods ended September 30, 2018 and 2017, respectively.

On November 29, 2016, we entered into an amendment of our SaaS Capital Loan 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, we 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, we entered into a second amendment of the SaaS Capital Loan which adjusts the Minimum Adjusted EBITDA covenant in Schedule 6.17 of the SaaS Capital Loan from $0 to ($150,000) until August 31, 2017 to give us 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, we entered into a third amendment of the SaaS Capital Loan 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, we entered into a fourth amendment of the SaaS Capital Loan to permit the issuance of the 2017 Promissory Notes.

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On November 8, 2017, we 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, we entered into the Sixth Amendment to permit the Company to enter into the Beedie Credit Agreement, further described below, and to permit the repayment of Agility Capital and of the 2017 Promissory Notes. The Sixth Amendment also amended our 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, we agreed to issue SaaS Capital a warrant to purchase up to 200,000 shares of our 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 $4,736 and $12,629 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On May 31, 2018, we entered into the Seventh Amendment to permit the issuance of the 2018 Promissory Notes to amend our 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, we entered into the Eighth Amendment to issue additional 2018 Promissory Notes.

On August 31, 2018, we entered into the Ninth Amendment to permit the issuance of the August 2018 Promissory Notes to amend our 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 our projected cash flows..

During the nine-month period ended September 30, 2018, we borrowed $350,000 from the SaaS Capital Loan, and made principal payments of $2,402,653.

We owed $5,651,731 and $7,704,384 under the SaaS Capital Loan at September 30, 2018 and December 31, 2017, respectively.

2017 Promissory Notes

On August 14, 2017, we borrowed an aggregate of $1,000,000 from seven lenders and issued promissory notes for the repayment of the amounts borrowed. The 2017 Lenders are all accredited investors, certain of the 2017 Lenders are shareholders of ours, one of the 2017 Lenders is an affiliate of our 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 accrue interest at 12% per annum and accrued interest is payable monthly. We also issued to the 2017 Lenders three-year warrants to purchase an aggregate of 1,000,000 shares of our 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 $0 and $82,868 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $8,723 and $8,723 was expensed during the three and nine-month periods ended September 30, 2017.

On January 26, 2018, we paid approximately $1,074,000 to repay the 2017 Promissory Notes which includes approximately $65,000 in additional interest expenses due to the repayment date which was prior to the maturity date. We owed $0 and $1,000,000 under the 2017 Promissory Notes at September 30, 2018 and December 31, 2017 respectively.

Beedie Credit Agreement

On January 25, 2018, we entered into a non-revolving term 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 our gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal is payable monthly in arrears. We 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 our 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 loan agreement between us and Agility dated March 11, 2016, as amended, and to release Agility Capital’s security interest in our 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 $14,583 and $38,888 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

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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 our ability to incur additional indebtedness. 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. We granted Beedie a security interest, subordinated to the security interest of SaaS Capital, in all of our assets through a pledge and security agreement, patent security agreement and trademark security agreement, each between us and Beedie. Beedie is entitled to board of director observation rights during the term of the Beedie Credit Agreement. 

In connection with the Beedie Credit Agreement, we issued to Beedie a warrant to purchase up to 4,500,000 shares of our 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. We adopted ASU 2017-11 which revises ASC 815-10-15-74 to allow instruments with a down round features 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 $91,655 and $244,413 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On May 31, 2018, we entered into the First Beedie Amendment to permit the issuance of the 2018 Promissory Notes, to amend our 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, we issued to Beedie a warrant to purchase up to 500,000 shares of our 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 $10,027 and $13,370 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On June 13, 2018, we entered into the Second Beedie Amendment to issue additional 2018 Promissory Notes. In addition, we issued to Beedie a warrant to purchase up to 100,000 shares of our 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 $2,004 and $2,672 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

On August 31, 2018, we 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 our 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, we issued to Beedie a warrant to purchase up to 1,500,000 shares of our common stock and a warrant to purchase up to an additional 835,000 shares of our 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 $11,458 and $11,458 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

2018 Promissory Notes

On May 31, 2018, and June 15, 2018, we 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 our director, Greg Akselrud, one of the 2018 Lenders is an affiliate of our Chief Financial Officer, Anthony Mazzarella, two of the 2018 Lenders are related to our Chairman and Chief Executive Officer, Brian Ross, and two of the 2018 Lenders are employees of ours. 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. We also issued to the 2018 Lenders six-year warrants to purchase an aggregate of 3,000,000 shares of our 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 $61,435 and $81,913 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

August 2018 Promissory Notes

On August 31, 2018, we borrowed an aggregate of $1,500,000, from the August 2018 Lenders, and issued 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. We also issued to the Lenders six-year warrants to purchase an aggregate of 1,500,000 shares of our 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 $7,689 and $7,689 was expensed during the three and nine-month periods ended September 30, 2018, respectively, and $0 during 2017.

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Changes in Cash Flows

	Nine-month periods ended September 30,
	2018			2017
Cash flows from operating activities:
Net loss	$	(4,783,640	)	$	(1,367,678	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		461,893			612,639
Amortization of debt discount and deferred financing cost		636,125			180,204
Provision for bad debt		(202,221	)		(48,586	)
Fair value of options and warrants		342,698			633,997
Loss on sale of fixed assets		997			902
Changes in operating assets and liabilities:
Accounts receivable		764,381			(196,315	)
Prepaid expenses and other assets		147,888			(129,077	)
Accounts payable and accrued expenses		(415,072	)		(641,049	)
Deferred revenues		264,065			18,213
Other assets		13,346			(20,016	)
Net cash used in operating activities		(2,769,540	)		(956,766	)
Cash flows from investing activities:
Capitalized software for internal use		(1,125,000	)		(1,347,075	)
Capital expenditures		(31,579	)		(44,125	)
Proceeds from sale of assets		750			795
Net cash used in investing activities		(1,155,829	)		(1,390,405	)
Cash flows from financing activities:
Principal repayments of credit facility and loan		(2,402,652	)		(1,653,282	)
Proceeds from credit facility		5,489,850			1,923,000
Proceeds from promissory notes		3,500,000			1,000,000
Repayments of promissory notes		(1,000,000	)		-
Net cash provided by financing activities		5,587,198			1,269,718
Effect of exchange rate changes on cash		(20,683	)		32,098
Net increase (decrease) in cash		1,641,146			(1,045,355	)
Cash, beginning of period		216,883			1,730,127
Cash, end of period	$	1,858,029		$	684,772

Changes in Cash Flows During the Nine Months ended September 30, 2018 

As of September 30, 2018, we had cash of approximately $1,860,000.

Net cash used in operating activities was approximately $2,770,000 during the nine-month period ended September 30, 2018 compared to net cash used in operations of approximately $957,000 during the same period in 2017. The change in operating cash flow was primarily due to a decrease in accounts payable and accrued expenses.

Net cash used in investing activities was approximately $1,155,000 during the nine-month period ended September 30, 2018 compared to $1,390,000 for the same period in 2017. The decrease in capitalization of development costs for internal-use software of approximately $220,000 and a decrease in capital expenditures of approximately $30,000 accounted for the decrease in cash used in investing activities.

Net cash provided by financing activities was approximately $5,590,000 for the nine-month period ended September 30, 2018 compared to $1,270,000 for the same period in 2017. The increase in cash provided by financing activities was due to approximately $5,600,000 in higher proceeds from our credit facility and promissory notes during the nine-month period ended September 30, 2018 when compared to the same period in 2017, offset with higher credit facility principal payments of approximately $1,300,000. 

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Exercise of warrants

There were no proceeds generated from the exercise of warrants during the nine-month period ended September 30, 2018.

Other outstanding obligations at September 30, 2018

Warrants

As of September 30, 2018, 25,045,517 shares of our Common Stock are issuable pursuant to the exercise of warrants.

Options

As of September 30, 2018, 7,237,500 shares of our Common Stock are issuable pursuant to the exercise of options.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer, who is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2018, our disclosure controls and procedures are effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2018, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A. Risk Factors.

Except as set forth below, there have been no material changes to the Risk Factors set forth in our annual report on Form 10-K filed with the SEC on March 27, 2018.

Our pursuit of strategic transactions could disrupt our business, cause dilution to our stockholders and otherwise harm our business.

We may pursue strategic transactions such as acquisitions and dispositions as well as pursue strategic alliances, joint ventures, technology licenses or investments in complementary businesses. We have limited experience with respect to these types of strategic transactions. Any of these transactions could be material to our financial condition and operating results and expose us to many risks, including:

• disruption in our relationships with customers, distributors or suppliers as a result of such a transaction;

• unanticipated liabilities related to acquired companies;

• difficulties integrating acquired personnel, technologies and operations into our existing business;

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• diversion of management time and focus from operating our business to acquisition integration or disposal challenges;

• increases in our expenses and reductions in our cash available for operations and other uses; and

• possible write-offs or impairment charges relating to acquired businesses.

We may not be successful in pursing strategic transactions. The anticipated benefit of any strategic transaction may not materialize. Future strategic transactions such as acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition. We cannot predict the number, timing or size of future strategic transactions, or the effect that any such transactions might have on our operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.  

On July 1, 2018, we issued 120,000 restricted shares of our Common Stock, vesting in 4 equal quarterly increments commencing on July 1, 2018, to each of our non-employee directors as partial annual compensation for services as a director. These issuances are exempt from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, or the Securities Act, as not involving any public offering.

On August 13, 2018, we issued  warrants to purchase up to an aggregate of 1,000,000 shares of our Common Stock to two employees. The warrants are exercisable in cash or on a cashless basis at an exercise price of $0.50 per share, vest in twelve equal quarterly amounts, and expire on August 13, 2023.  These issuances are exempt from registration pursuant to Section 4(a)(2) under the Securities Act as not involving any public offering.

Item 6.  Exhibits 

4.1	Form of Warrant issued on August 31, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 5, 2018).
4.2	Form of Warrant issued on August 31, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 5, 2018).
10.1	Form of Restricted Stock Agreement entered into on July 1, 2018.*
10.2	Form of Promissory Note issued on August 31, 2018.*
10.3	Ninth Amendment to Loan and Security Agreement between Accelerize Inc. and SaaS Capital Funding II, LLC, dated as of August 31, 2018.*
10.4	Third Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of August 31, 2018.*
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and15d-14(a).*
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a).*
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350.**
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350.**
101.	The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Comprehensive Loss, (iv) the Statements of Cash Flows, and (v) related notes to these financial statements.*
*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ACCELERIZE INC.
Dated: November 14, 2018	By:	/s/ Brian Ross
		Brian Ross President and Chief Executive Officer (Principal Executive Officer)
Dated: November 14, 2018	By:	/s/ Anthony Mazzarella
		Anthony Mazzarella
		Chief Financial Officer
		(Principal Financial Officer)

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EX-10.1

Exhibit 10.1

Restricted Stock Agreement

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of July 1, 2018 (the “Grant Date”) by and between Accelerize Inc. a Delaware corporation (the “Company”), and [Director] (the “Grantee”).

WHEREAS, the Company’s Board of Directors (the “Board”) has determined that it is in the best interests of the Company and its shareholders to grant the award of Restricted Stock provided for herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

Grant of Restricted Stock. The Company hereby issues to the Grantee on the Grant Date a restricted stock award consisting of, in the aggregate, 120,000 shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company (the “Restricted Stock”), on the terms and conditions and subject to the restrictions set forth in this Agreement.

Consideration. The grant of the Restricted Stock is made in consideration of the services to be rendered by the Grantee to the Company as a director.

Restricted Period; Vesting.

Except as otherwise provided herein, provided that the Grantee remains in Continuous Service (as defined below) through the applicable vesting date, the Restricted Stock will vest in 4 equal quarterly increments commencing on July 1, 2018. For purposes of this Agreement, “Continuous Service” shall mean the Grantee remaining as a director of the Company.

The period over which the Restricted Stock vests is referred to as the “Restricted Period”.

The foregoing vesting schedule notwithstanding, if the Grantee's Continuous Service terminates for any reason at any time before all of his Restricted Stock has vested, the Grantee's unvested Restricted Stock shall be automatically forfeited upon such termination of Continuous Service and neither the Company nor any affiliate shall have any further obligations to the Grantee under this Agreement.

The foregoing vesting schedule notwithstanding, upon the occurrence of a Change in Control (as defined below), 100% of the unvested Restricted Stock shall vest as of the date of the Change in Control. For purposes of this Agreement, the term “Change in Control” shall mean (i) the sale of all or substantially all of the assets of the Company, (ii) the sale of more than fifty percent of the outstanding capital stock of the Company in a non-public sale, (iii) the dissolution or liquidation of the Company or (iv) any merger, share exchange, tender offer, share acquisition, consolidation or other reorganization or business combination of the Company if immediately after such transaction either (A) persons who were directors of the Company immediately prior to such transaction do not constitute at least a majority of the directors of the surviving entity or (B) persons who hold a majority of the voting capital stock of the surviving entity are not persons who held a majority of the voting capital stock of the Company immediately prior to the transaction; provided, however, that the term “Change in Control” shall not include a public offering of capital stock of the Company that is effected pursuant to a registration statement filed with, and declared effective by, the Securities and Exchange Commission under the Securities Act of 1933, as amended.

Notwithstanding any provision of this Agreement to the contrary, if the Board determines, after full consideration of the facts, that:

the Grantee has been engaged in fraud, embezzlement or theft in the course of his involvement with the Company, has made unauthorized disclosure of trade secrets or other proprietary information of the Company or of a third party who has entrusted such information to the Company or has been convicted of a felony or any crime that reflects negatively upon the Company; or

the Grantee has violated the terms of any noncompetition, nonsolicitation, confidentiality, nondisclosure or other agreement with the Company to which he is a party; or

the involvement with the Company of the Grantee was terminated for “cause,” as defined in any agreement with the Grantee governing his Continuous Service, or if there is no such agreement, as determined by the Board, which may determine that “cause” includes among other matters the willful failure or refusal of the Grantee to perform and carry out his assigned duties and responsibilities diligently and in a manner satisfactory to the Board;

then as of the date of such act (in the case of (a) or (b)) or such termination (in the case of (c)), the Grantee shall forfeit the unvested Restricted Stock and the Company shall have the right to repurchase all or any part of the vested Restricted Stock, at a price equal to the lower of (x) $0.50 per share, or (y) the Fair Market Value (as defined below) of such shares at the time of repurchase. The decision of the Board as to the cause of the Grantee’s discharge and the damage done to the Company shall be final, binding and conclusive. No decision of the Board, however, shall affect in any manner the finality of the discharge of the Grantee by the Company. The “Fair Market Value” of a share of Common Stock at any particular date shall be determined according to the following rules: (i) if the Common Stock is listed or admitted to trading on a stock exchange, the Fair Market Value shall be the closing price of the Common Stock on the date in question, (ii) if the Common Stock is not at the time listed or admitted to trading on a stock exchange, the Fair Market Value shall be the closing bid price of the Common Stock on the date in question in the over-the-counter market; provided, however, that if the price of the Common Stock is not so reported, the Fair Market Value shall be determined in good faith by the Board.

Restrictions. Subject to any exceptions set forth in this Agreement, during the Restricted Period, the Restricted Stock or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee without the prior written consent of the Board. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock or the rights relating thereto during the Restricted Period in contravention of this section shall be wholly ineffective and, if any such attempt is made, the Restricted Stock will be forfeited by the Grantee and all of the Grantee's rights to such shares shall immediately terminate without any payment or consideration by the Company.

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Rights as Shareholder; Dividends.

The Grantee shall be the record owner of the Restricted Stock until the shares of Common Stock are sold or otherwise disposed of, and shall be entitled to all of the rights of a shareholder of the Company including, without limitation, the right to vote such shares and receive all dividends or other distributions paid with respect to such shares. Notwithstanding the foregoing, any dividends or other distributions shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid.

The Company may issue stock certificates or evidence the Grantee's interest by using a restricted book entry account with the Company's transfer agent. Physical possession or custody of any stock certificates that are issued shall be retained by the Company until such time as the Restricted Stock vests.

If the Grantee forfeits any rights he has under this Agreement in accordance with Section 3, the Grantee shall, on the date of such forfeiture, no longer have any rights as a shareholder with respect to the Restricted Stock and shall no longer be entitled to vote or receive dividends on such shares.

No Right to Continued Service. This Agreement shall not confer upon the Grantee any right to be retained in any position, as an employee, consultant or director of the Company. Further, nothing in this Agreement shall be construed to limit the discretion of the Company to terminate the Grantee's Continuous Service at any time.

Adjustments. In the event that the outstanding shares of Common Stock are hereafter exchanged for a different number or kind of shares or other securities of the Company, by reason of a reorganization, recapitalization, exchange of shares, stock split, combination of shares or dividend payable in shares or other securities, a corresponding adjustment shall be made by the Board in the number of and/or kind of shares of Restricted Stock. Any such adjustment made by the Board shall be conclusive and binding upon all affected persons, including the Company and the Grantee. If the Restricted Stock is converted into or exchanged for, or stockholders of the Company receive by reason of any distribution in total or partial liquidation, securities of another corporation or other entity, or other property, pursuant to any merger or consolidation of the Company or acquisition of its assets, then the rights of the Company under this Agreement shall inure to the benefit of the Company’s successor and this Agreement shall apply to the securities received upon such conversion, exchange or distribution in the same manner and to the same extent as the Restricted Stock. Notwithstanding the foregoing, if the Restricted Stock is converted into cash pursuant to any such transaction, the Grantee will receive such cash free and clear of any restrictions imposed by this Agreement.

Tax Liability and Withholding.

The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee, the amount of any required withholding taxes in respect of the Restricted Stock and to take all such other action as the Board deems necessary to satisfy all obligations for the payment of such withholding taxes. The Board may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:

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tendering a cash payment;

authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the Restricted Stock; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or

delivering to the Company previously owned and unencumbered shares of Common Stock.

Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee's responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant or vesting of the Restricted Stock or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock to reduce or eliminate the Grantee's liability for Tax-Related Items.

Section 83(b) Election. The Grantee may make an election under Code Section 83(b) (a “Section 83(b) Election”) with respect to the Restricted Stock. Any such election must be made within thirty (30) days after the Grant Date. If the Grantee elects to make a Section 83(b) Election, the Grantee shall provide the Company with a copy of an executed version and satisfactory evidence of the filing of the executed Section 83(b) Election with the US Internal Revenue Service. The Grantee agrees to assume full responsibility for ensuring that the Section 83(b) Election is actually and timely filed with the US Internal Revenue Service and for all tax consequences resulting from the Section 83(b) Election.

Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Grantee understands that the Company is under no obligation to register the shares of Common Stock with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

Legends. A legend may be placed on any certificate(s) or other document(s) delivered to the Grantee indicating restrictions on transferability of the shares of Restricted Stock pursuant to this Agreement or any other restrictions that the Board may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws or any stock exchange on which the shares of Common Stock are then listed or quoted. All certificates representing unvested Restricted Stock shall have affixed thereto a legend in substantially the following form, in addition to any other legends that may be required under federal or state securities laws or pursuant to Section 12 below:

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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND RIGHTS TO PURCHASE SET FORTH IN A CERTAIN RESTRICTED STOCK AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED OWNER OF THESE SHARES (OR HIS PREDECESSOR IN INTEREST). SUCH AGREEMENT IS AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE OFFICE OF THE SECRETARY OF THE CORPORATION.

Representations and Warranties of the Grantee. The Grantee hereby represents and warrants to the Company as follows:

The Grantee has the legal right and capacity to enter into this Agreement and fully understands the terms and conditions of this Agreement;

The Grantee is acquiring the Restricted Stock for investment purposes only and not with a view to their resale or distribution; and

The Grantee will, at the request of the Company, execute an agreement in a form acceptable to the Company to the effect that the Restricted Stock shall be subject to any underwriter’s lock-up agreement in connection with a public offering of any securities of the Company that may from time to time apply to shares held by directors of the Company.

Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Secretary of the Company at the Company's principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee's address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.

Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Board for review. The resolution of such dispute by the Board shall be final and binding on the Grantee and the Company.

Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee's beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock may be transferred by will or the laws of descent or distribution.

Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each provision of this Agreement shall be severable and enforceable to the extent permitted by law.

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Discretionary Nature. The grant of the Restricted Stock in this Agreement does not create any contractual right or other right to receive any Restricted Stock or other awards in the future. Future awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of this Agreement shall not constitute a change or impairment of the terms and conditions of the Grantee's employment with the Company.

Amendment. The Board has the right to amend, alter, suspend, discontinue or cancel the Restricted Stock, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Grantee's material rights under this Agreement without the Grantee's consent.

No Impact on Other Benefits. The value of the Grantee's Restricted Stock is not part of his normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

Acceptance. The Grantee hereby acknowledges receipt of a copy of this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Restricted Stock subject to all of the terms and conditions of this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the grant or vesting of the Restricted Stock or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such grant, vesting or disposition.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

ACCELERIZE INC.

By: _____________________

Name:

Title:

[Director]

By: _____________________

Name:

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EX-10.2

Exhibit 10.2

Form of Promissory Note

PROMISSORY NOTE

$____,000 August 31, 2018

FOR VALUE RECEIVED, the undersigned, Accelerize Inc., a Delaware corporation (referred to herein as the “Borrower”), with offices at 20411 SW Birch Street, Suite 250, Newport Beach, CA 92660, hereby unconditionally promises to pay to the order of [_____________________] (the “Lender”), in lawful money of the United States, at [__________________________________], or such other address as the Lender may from time to time designate, the principal sum of ____________ Thousand Dollars ($___,000) (the “Principal”). This Note shall mature and become due and payable in full on August 30, 2021 (the “Maturity Date”).

1.     Terms of Repayment. Principal of and interest on this Note shall be paid by the Borrower as follows:

(a) Interest at the rate of twelve percent (12%) per annum from the date hereof through the Maturity Date shall be payable monthly in cash on the first day of each month (each an “Interest Payment Date”), commencing October 1, 2018.

(b) All computations of interest shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a business day, such payment shall be made on the next succeeding business day.

(c) Principal shall be due and payable on the Maturity Date.

(d) In the event Borrower fully retires or refinances all of its outstanding Secured Subordinated Debt, Principal shall be due and payable 30 days after the date of such retirement or refinancing.

2.     Terms of Prepayment. At any time prior to the Maturity Date, the Borrower may prepay all or any portion of the outstanding Principal and any interest amount accrued thereon (at Borrower’s option or pursuant to provision 1(d) above). In connection with any prepayment, payment of interest will be accelerated on the prepaid amount such that Borrower will pay to Lender an amount equal to the unpaid amount of two years of accrued interest on the prepaid amount. Partial prepayments shall be applied first to accrued interest and then to outstanding Principal.

3.     Representations and Warranties. The Borrower represents and warrants as follows: (i) the Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) the execution, delivery and performance by the Borrower of this Note are within the Borrower's powers, have been duly authorized by all necessary action, and do not contravene (A) the Borrower's certificate of incorporation or by-laws or (B) (x) any law or (y) any agreement or document binding on or affecting the Borrower, (iii) no authorization or approval or other action by, and no notice to or filing with, any governmental authority, regulatory body or third person is required for the due execution, delivery and performance by the Borrower of this Note other than has been obtained; (iv) this Note constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms except as enforcement hereof may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and subject to the applicability of general principles of equity; (v) the Borrower has all requisite power and authority to own and operate its property and assets and to conduct its business as now conducted and proposed to be conducted and to consummate the transactions contemplated hereby; (vi) the Borrower is duly qualified to conduct its business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it, or in which the transaction of its business makes such qualification necessary; and (vi) there is no pending or, to the Borrower's knowledge, threatened action or proceeding affecting the Borrower before any governmental agency or arbitrator which challenges or relates to this Note or which may otherwise have a material adverse effect on the Borrower.

4.     Covenants. So long as any principal or interest is due hereunder and shall remain unpaid, the Borrower will, unless the Lender shall otherwise consent in writing:

(a)     Maintain and preserve its existence, rights and privileges;

(b)     Not (i) directly or indirectly sell, lease or otherwise dispose of (A) any of its property or assets other than in its ordinary course of business or (B) substantially all of its properties and assets, in the aggregate, to any person(s), whether in one transaction or in a series of transactions over any period of time, (ii) merge into or with or consolidate with any other person or (iii) adopt any plan or arrangement for the dissolution or liquidation of the Borrower; and

(c)     Comply in all material respects with all applicable laws (whether federal, state or local and whether statutory, administrative or judicial or other) and with every applicable lawful governmental order (whether administrative or judicial).

6.     Events of Default. Each and any of the following shall constitute a default and, after expiration of the Grace Period, if any, shall constitute an “Event of Default” hereunder:

(a)     the nonpayment of principal, interest, or any other costs or expenses promptly when due of any amount payable under this Note;

(b)     any other failure of the Borrower to observe or perform any covenant set forth in this Note or in the Warrant issued to Lender on the date hereof (other than a payment default described above), which failure is not cured within thirty (30) days (the “Grace Period”) of Borrower’s receipt of a written notice that such failure exists and is continuing, and should it not be cured within the Grace Period, it shall constitute an Event of Default under this Note;

(c)     if Borrower shall commence any case, proceeding or other action: (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution, composition or other relief with respect to it or its debts; or (ii) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, or the Borrower shall make a general assignment for the benefit of its creditors; or (iii) there shall be commenced against the Borrower any case, proceeding or other action of a nature referred to above or seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property, which case, proceeding or other action results in the entry of any order for relief or remains undismissed, undischarged or unbonded for a period of one hundred twenty (120) days;

(d)     any representation or warranty made by the Borrower under this Note shall prove to have been incorrect in any material respect when made; or

(e)     the sale of all or substantially all of the assets, or change in controlling ownership (i.e., change in excess of 50% the Borrower’s equity voting interest) or the dissolution, liquidation, merger, consolidation, or reorganization of Borrower without the Lender’s prior written consent.

6.     Lender’s Rights Upon Default. Upon the occurrence of any Event of Default, the Lender may, at its sole and exclusive option, do any or all of the following, either concurrently or separately: (a) accelerate the maturity of this Note and demand immediate payment in full, whereupon the outstanding principal amount of the Note and all obligations of Borrower to Lender, together with accrued interest thereon, shall become immediately due and payable; and (b) exercise all legally available rights and privileges.

7     Usury. In no event shall the amount of interest paid or agreed to be paid hereunder exceed the highest lawful rate permissible under applicable law. Any excess amount of deemed interest shall be null and void and shall not interfere with or affect the Borrower’s obligation to repay the principal of and interest on the Note. This confirms that the Borrower and, by its acceptance of this Note, the Lender intend to contract in strict compliance with applicable usury laws from time to time in effect. Accordingly, the Borrower and the Lender stipulate and agree that none of the terms and provisions contained herein shall ever be construed to create a contract to pay, for the use or forbearance of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from time to time in effect.

8.     Assignment. This Note shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns; provided that neither Borrower nor Lender may assign this Note, in whole or in part, by operation of law or otherwise, without the prior written consent of the other party, which consent will not be unreasonably withheld or delayed.

9.     Governing Law. This Note, and any claims arising out of relating to this Note, whether in contract or tort, statutory or common law, shall be governed exclusively by, and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.

10.     Jurisdiction. EACH OF BORROWER AND LENDER HEREBY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS NOTE, OR ANY OTHER INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH SHALL BE BROUGHT EXCLUSIVELY IN ANY COURT OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE, IN THE COUNTY OF NEW YORK. EACH OF BORROWER AND LENDER HEREBY EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDINGS. EACH OF BORROWER AND LENDER HEREBY AGREES THAT PERSONAL JURISDICTION OVER IT MAY BE OBTAINED BY THE DELIVERY OF A SUMMONS BY PERSONAL DELIVERY OR OVERNIGHT COURIER AT THE ADDRESS PROVIDED IN SECTION 12 OF THIS NOTE OR ANY OTHER ADDRESS AS SHALL BE PROVIDED BY SUCH PARTY IN WRITING. ASSUMING DELIVERY OF THE SUMMONS IN ACCORDANCE WITH THIS PROVISION, EACH OF BORROWER AND LENDER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OF FORUM NON CONVENIENS OR ANY SIMILAR BASIS.

11.     Miscellaneous. (a) If any provision of this Note shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Note shall be construed as if such invalid or unenforceable provision had never been contained herein. (b) The waiver of any Event of Default or the failure of Lender to exercise any right or remedy to which it may be entitled shall not be deemed a waiver of any subsequent Event of Default or Lender’s right to exercise that or any other right or remedy to which Lender is entitled. No delay or omission by Lender in exercising, or failure by Lender to exercise on any one or more occasions, shall be construed as a waiver or novation of this Note or prevent the subsequent exercise of any or all such rights. (c) This Note may not be waived, changed, modified, or discharged orally, but only in writing signed by each of Borrower and Lender. (d) By acceptance of this Note, Lender acknowledges that it is either an “accredited investor” as defined in Rule 501(a) under the Securities Act of 1933, as amended (the “Securities Act”) or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

12.     Notice, Etc. Any notice required by the provisions of this Note will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next business day; (c) three (3) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt, and delivered as follows:

If to the Borrower:

Accelerize Inc.

20411 SW Birch Street, Suite 250

Newport Beach, CA 92660

Attention: President and Chief Executive Officer

If to Lender:

NAME: ________________________

ADDRESS: ________________________

________________________

Attention: ________________________

or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first set forth above.

ACCELERIZE INC.

By:_______________________________

Name: Brian Ross

Title: President and Chief Executive Officer

Form of New Lender Warrant

THIS WARRANT AND THE COMMON STOCK SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS WARRANT AND THE COMMON STOCK SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACCELERIZE INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

Right to Purchase up to ___,000 shares of Common Stock of Accelerize Inc. (subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

No. _____  Issue Date: August 31, 2018

ACCELERIZE INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, __________ or its assigns (the “Holder”) is entitled, subject to the terms set forth below, to purchase from the Company at any time after August 31, 2018 (the “Issue Date”) until 5:00 p.m., Eastern Time, on the sixth (6th) anniversary of the Issue Date (the “Expiration Date”), up to _____,000 fully paid and nonassessable shares of Common Stock at a per share purchase price of $0.35. The aforementioned purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase Price.” The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The Company may reduce the Purchase Price without the consent of the Holder.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a)     The term “Company” shall include Accelerize Inc. and any corporation which shall succeed or assume the obligations of Accelerize Inc. hereunder.

(b)     The term “Common Stock” includes (i) the Company’s Common Stock, $0.001 par value per share, and (ii) any other securities into which or for which any of the securities described in (i) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(c)     The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to the terms herein.

(d)     The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant.

1.     Exercise of Warrant.

1.1.     Number of Shares Issuable upon Exercise. From and after the Issue Date through and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, up to ______,000 of shares of Common Stock of the Company, subject to adjustment pursuant to the terms hereof.

1.2.     Full Exercise. This Warrant may be exercised in full by the Holder hereof by delivery of an original or facsimile copy of the form of subscription attached as hereto Exhibit A (the “Subscription Form”) duly executed by such Holder and surrender of the original Warrant within three (3) days of exercise, to the Company at its principal office or at the office of its Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect. This Warrant may also be exercised by means of a “broker-assisted cashless exercise” procedure in which a broker reasonably acceptable to the Company (a) transmits the Purchase Price to the Company in cash or acceptable cash equivalents against the Holder’s Subscription Form and the Company’s confirmation that it will deliver to the broker stock certificates issued in the name of the broker for at least that number of shares of Common Stock having a fair market value equal to the Purchase Price; or (b) agrees to pay the Purchase Price to the Company in cash or acceptable cash equivalents upon the broker’s receipt from the Company of stock certificates issued in the name of the broker for at least that number of shares of Common Stock having a fair market value equal to the Purchase Price. The Holder’s notice of exercise of this Warrant pursuant to the foregoing procedure must include the name and address of the broker involved, a clear description of the procedure, and such other information or undertaking by the broker as the Company shall reasonably require.

1.3.     Partial Exercise. This Warrant may be exercised in part (but not for a fractional share) by surrender of this Warrant in the manner and at the place provided in subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in effect. On any such partial exercise, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, the whole number of shares of Common Stock for which such Warrant may still be exercised.

1.4.     Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

(a)     If the Company’s Common Stock is traded on an exchange or is quoted on the Nasdaq Stock Market LLC then the last sale price reported for the last business day immediately preceding the Determination Date;

(b)     If the Company’s Common Stock is not traded on an exchange or quoted on the Nasdaq Stock Market LLC but is traded in the over-the-counter market, then the average of the closing bid and ask prices reported for the last business day immediately preceding the Determination Date;

(c)     Except as provided in clause (d) below, if the Company’s Common Stock is not publicly traded, then as the Holder and the Company agree in writing, or in the absence of such agreement, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided; or

(d)     If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.

1.5.     Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights.

1.6.     Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share of Common Stock, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.

2.     Adjustments.

2.1.     Reorganization, Consolidation, Merger, etc. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Section 1, at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 3.

2.2.     Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable in accordance with Section 2.1 by the Holder of the Warrants upon their exercise after the effective date of such dissolution pursuant to this Section 2.

2.3.     Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 2, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any Other Securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant.

3.     Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 3. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 3) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 3) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

4.     Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 7 hereof).

5.     Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.

6.     Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense, once only and then at the expense of the Holder, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

7.     Warrant Agent. The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, and replacing this Warrant pursuant to Section 6, or any of the foregoing, and thereafter any such issuance or replacement, as the case may be, shall be made at such office by such Warrant Agent.

8.     Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

9.     Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur or (c) three business days after deposited in the mail if delivered pursuant to subsection (ii) above. The addresses for such communications shall be: (i) if to the Company to: 20411 SW Birch St. Ste. 250, Newport Beach, CA 92660, and (ii) if to the Holder, to ________________________ or if subsequently updated, the address in the Company books. The Company may change its address for notices but only to an address and fax number located in the United States.

10.     Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. Any dispute relating to this Warrant shall be adjudicated in any state court in New York County in the State of New York or in the U.S. District Court for the Southern District of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. By acceptance of this Warrant, Holder acknowledges that it is either an “accredited investor” as defined in Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

ACCELERIZE INC.

By:                                                                         

Name: Brian Ross

Title: Chief Executive Officer and President    

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO:     ACCELERIZE INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

___     ________ shares of the Common Stock covered by such Warrant.

Purchase Terms:

___ The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $___________.

___ broker-assisted cashless exercise pursuant to the procedure set forth in section 1.2 (describe procedure to be used:____________________).

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to                                                                        whose address is__________________________________________________________________________

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act, or pursuant to an exemption from registration under the Securities Act.

Dated:                              

(Signature must conform to name of holder

as specified on the fact of the Warrant.)

(Address)

EX-10.3

Exhibit 10.3

Ninth Amendment

To

Loan And Security Agreement and

Limited Waiver

This NINTH AMENDMENT to LOAN AND SECURITY AGREEMENT AND LIMITED WAIVER (this “Amendment”) is entered into as of August 31, 2018, by and between ACCELERIZE INC., a Delaware corporation (“Borrower”), and SAAS CAPITAL FUNDING II, LLC, a Delaware limited liability company (“Lender”).

Recitals

A.     Lender and Borrower have entered into that certain Loan and Security Agreement dated as of May 5, 2016, as amended by that certain First Amendment to Loan and Security Agreement, dated as of November 29, 2016, as further amended by that certain Second Amendment to Loan and Security Agreement, dated as of May 5, 2017, as further amended by that certain Third Amendment to Loan and Security Agreement, dated as of June 16, 2017, as further amended by that certain Fourth Amendment to Loan and Security Agreement, dated as of August 14, 2017, as further amended by that certain Fifth Amendment to Loan and Security Agreement, Limited Waiver and Consent, dated as of November 8, 2017, as further amended by that certain Sixth Amendment to Loan and Security Agreement and Consent, dated as of January 25, 2018, as further amended by that certain Seventh Amendment to Loan and Security Agreement, dated as of May 31, 2018, and as further amended by that certain Eighth Amendment to Loan and Security Agreement, dated as of June 13, 2018 (and as it may be further amended, modified, supplemented or restated from time to time prior to the date hereof, the “Loan Agreement”).

B.     Lender has extended credit to Borrower for the purposes permitted in the Loan Agreement.

C.     Borrower has requested that Lender agree to (i) amend certain provisions of the Loan Agreement, (ii) waive certain defaults and Events of Default under the Loan Agreement and (iii) consent to the issuance by Borrower of additional Subordinated Debt.

D.     Lender has agreed to (i) amend certain provisions of the Loan Agreement, (ii) waive certain defaults and Events of Default under the Loan Agreement and (iii) consent to the issuance by Borrower of additional Subordinated Debt, but, in each case, only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

Agreement

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1.       Definitions. Capitalized terms used but not defined in this Amendment shall have the respective meanings given to such terms in the Loan Agreement.

2.       Amendments to Loan Agreement.

2.1     Section 6.2 of the Loan Agreement shall be amended by adding the following new subsection (l) at the end thereof:

(l)     On the 1^st and 15^th day of each month, commencing on September 15, 2018 and ending with the forecast due on March 15, 2019, an updated detailed 13-week cash flow forecast illustrating the expected cash inflows and outflows of Borrower.

2.2     The Loan Agreement shall be amended by deleting Section 6.19 (Success Fee) in its entirety and replacing it with the following:

6.19     Success Fee. Borrower shall pay Lender a success fee (the “Success Fee”) in an aggregate amount equal to Five Hundred Fifty-Five Thousand Dollars ($555,000.00), due and payable upon the irrevocable payment in full of all outstanding Advances (whether pursuant to a pre-payment or upon maturity, whether by acceleration or otherwise) of all Notes representing all outstanding Advances (the “Payment-in-Full”); provided that the Payment-in-Full occurs either in connection with, or following the termination of, the commitment of Lender to make Advances under the Loan Agreement; provided further that a portion of the Success Fee in an amount equal to Sixty Thousand Dollars ($60,000.00) shall not be due and payable until both (a) the Payment-in-Full, and (b) irrevocable payment-in-full of all outstanding loans or advances (whether pursuant to a pre-payment or upon maturity, whether by acceleration or otherwise) of all notes representing all outstanding loans or advances under the Beedie Subordinated Debt Documents.

2.3     The Loan Agreement shall be amended by deleting Section 7.8 (Subordinated Debt) in its entirety and replacing it with the following:

7.8 Subordinated Debt. Without Lender’s prior written consent, (a) make or permit any payment on any Subordinated Debt, if any, except in accordance with the terms of any Subordination Agreement relating to such Subordinated Debt, (b) repay the Shareholder Debt except with the proceeds of a Qualified Financing in accordance with the terms of the Subordination Agreement relating to the Shareholder Debt, (c) repay the Junior Unsecured Debt except with proceeds of a Junior Unsecured Debt Qualified Financing in accordance with the terms of the Subordination Agreement relating to the Junior Unsecured Debt or (d) amend, restate, supplement or otherwise modify any of the Subordinated Debt Documents to the extent that such amendment, restatement, supplement or modification is not permitted under the applicable Subordination Agreement.

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2.4     Schedule 1 of the Loan Agreement shall be amended by deleting the definitions of “Qualified Financing”, “Revenue Renewal Rate”, “Subordinated Debt” and “Total Debt” contained therein and replacing them with, respectively, the following:

“Qualified Financing” means the issuance by Borrower of debt or equity securities or other refinancing of the Shareholder Debt, in a single transaction or series of related transactions, which (a) results in the receipt by Borrower of gross proceeds of at least Two Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate, (b) if debt securities are issued or new loans obtained, is subordinated to the Obligations at least to the same extent as the Shareholder Debt is subordinated to the Obligations, (c) has been consented to in advance and in writing by Lender and (d) is on terms and conditions reasonably satisfactory to Lender.

“Revenue Renewal Rate” shall mean the current month’s Revenue derived from Eligible End Users that generated Revenue during the same calendar month of the immediately preceding year divided by the Revenue derived from Eligible End Users during such month during the immediately preceding year; provided that, for purposes of the financial covenant set forth in paragraph (ii) of Schedule 6.17 hereof, all historical Revenue relating to the former client known as GlobalWide Media shall be excluded from the calculation of Revenue Renewal Rate.

“Subordinated Debt” is the Permitted Beedie Debt, the Shareholder Debt and the Junior Unsecured Debt, and any other debt that is subordinated to Borrower’s debt to Lender pursuant to a Subordination Agreement entered into among Lender, Borrower and each subordinated creditor, such debt and Subordination Agreement to be on terms acceptable to Lender, which acceptance shall be evidenced by Lender’s execution and delivery of the applicable Subordination Agreement.

“Total Debt” means all indebtedness, liabilities and obligations of Borrower and its Subsidiaries, including without limitation Permitted Debt; provided that, for purposes of the financial covenant set forth in paragraph (iv) of Schedule 6.17 hereto, Shareholder Debt and Junior Unsecured Debt shall be excluded from the calculation of Total Debt.

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2.5     Schedule 1 to the Loan Agreement shall be amended by adding the following definitions for “Gemini APA”, “Junior Unsecured Debt”, “Junior Unsecured Debt Qualified Financing”, “Ninth Amendment”, “Ninth Amendment Effective Date” and “Secured Debt” in their appropriate alphabetical places:

“Gemini APA” means that certain Asset Purchase Agreement, to be entered into by and between Borrower, as seller, and a to-be-determined party, as purchaser, with respect to the acquisition by purchaser of substantially all of the assets of Borrower.

“Junior Unsecured Debt” means that certain Subordinated Debt issued by Borrower to certain of Borrower’s shareholders and/or other investors in an aggregate principal amount of (a) One Million Dollars ($1,000,000) funded on or about the Ninth Amendment Effective Date, and (b) Five Hundred Thousand Dollars ($500,000) funded on or about September 14, 2018.

“Junior Unsecured Debt Qualified Financing” means the issuance by Borrower of debt or equity securities or other refinancing of the Junior Unsecured Debt, in a single transaction or series of related transactions which (a) results in the receipt by Borrower of gross proceeds of at least Five Million Dollars ($5,000,000) in the aggregate, (b) contemporaneously therewith, results in the refinancing of the Shareholder Debt, (c) if debt securities are issued or new loans obtained, is subordinated to the Obligations at least to the same extent as the Shareholder Debt is subordinated to the Obligations, (d) has been consented to in advance and in writing by Lender and (e) is on terms and conditions reasonably satisfactory to Lender.

“Ninth Amendment” means that certain Ninth Amendment to Loan and Security Agreement and Limited Waiver, between Borrower and Lender, dated as of August 31, 2018.

“Ninth Amendment Effective Date” means the date that all of the conditions to the effectiveness of the Ninth Amendment have been either satisfied by Borrower or waived in writing by Lender.

“Secured Debt” means (a) Indebtedness owing under the Beedie Credit Agreement, (b) the Obligations, and (c) in each case to the extent permitted hereunder, other Indebtedness secured by Permitted Liens.

2.6     Schedule 6.17 of the Loan Agreement is hereby amended to (a) delete paragraph (i) (“Minimum Adjusted EBITDA”) in its entirety and replace it with the following new paragraph (i), (b) delete paragraph (ii) (“Revenue Renewal Rate”) in its entirety and replace it with the following new paragraph (ii), (c) delete paragraph (iv) (“Total Debt to MRR”) in its entirety and replace it with the following new paragraph (iv), and (d) add the following new paragraph (vi) (“Secured Debt to MRR”) at the end thereof:

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(i)     Minimum Adjusted EBITDA. Borrower shall not suffer or permit its average Adjusted EBITDA per month for any three (3) consecutive calendar months, with each such month’s Adjusted EBITDA to be calculated as of the last day of such month, to exceed the amounts set forth below for such periods (numbers in parentheses are negative):

Period	Minimum Adjusted EBITDA
September 1, 2018 through September 30, 2018	($400,000)
October 1, 2018 through December 31, 2018	($300,000)
November 1, 2018 through November 30, 2018	($250,000)
December 1, 2018 to December 31, 2018	($200,000)
January 1, 2019 through February 28, 2019	($100,000)
March 1, 2019 and at all times thereafter	$0

For the purposes of determining Minimum Adjusted EBITDA for the period from July 1, 2018 through February 28, 2019, one-time legal, consulting, and out of pocket expenses relating to the Ninth Amendment (and any concurrent amendment to the Beedie Credit Agreement) and the entry into the Gemini APA, in each case as and when incurred, along with bad debt expense from July 1, 2018 through October 31, 2018, will be excluded from the calculation of Adjusted EBITDA.

(ii)     Revenue Renewal Rate. Borrower shall not permit its average Revenue Renewal Rate per month for any three (3) consecutive calendar months, with each such month’s Revenue Renewal Rate calculated at the end of such month within the Term, to be less than (a) seventy-two and one-half percent (72.5%) from the Ninth Amendment Effective Date through February 28, 2019, and (b) eighty percent (80%) on March 1, 2019 and at all times thereafter.

(iv)     Total Debt to MRR. Borrower shall not suffer or permit the ratio of Total Debt to MRR calculated on a consolidated basis for Borrower and its Subsidiaries as of the last day of any calendar month occurring during the periods set forth below, to exceed 6.50:1.00 from and after March 1, 2019 and thereafter.

(vi)     Secured Debt to MRR. Borrower shall not suffer or permit the ratio of Secured Debt to MRR calculated on a consolidated basis for Borrower and its Subsidiaries as of the last day of any calendar month occurring during the periods set forth below, to exceed the ratios set forth below for such periods:

(A)     7.00:1.00 from the Ninth Amendment Effective Date through December 31, 2018;

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(B)     6.50:1.00 from January 1, 2019 through February 28, 2019; and

(C)     6.00:1.00 from and after March 1, 2019 and thereafter.

3.     Limited Waiver.

3.1     Failure to Comply with Financial Covenants. Borrower acknowledges that during the months ending July 31, 2018 and August 31, 2018, it failed to comply with the financial covenants set forth in paragraphs (i) and (ii) on Schedule 6.17 of the Loan Agreement resulting in an Event of Default under Section 8.2.1 of the Loan Agreement (the “Specified Defaults”).

3.2     Limited Waiver of Specified Defaults. Subject to the satisfaction of the conditions set forth in Section 10 hereof, Lender hereby temporarily waives, on a one time only basis, the Specified Defaults, from the date hereof until the earliest of (a) a default or breach by Borrower of any term, agreement or covenant under this Amendment (except for the Specified Defaults) or (b) the occurrence of an Event of Default under the Loan Agreement or any other Loan Document (other than the Specified Defaults) (the “Waiver Termination Date”). This specific waiver applies only to the Specified Defaults and only for the periods and for the express circumstances described above. This specific waiver shall not be construed to constitute (i) a waiver of any other event, circumstance or condition or of any other right or remedy available to Lender pursuant to the Loan Agreement or any other Loan Document or (ii) a course of dealing or a consent to any departure by Borrower from any other term or requirement of the Loan Agreement. Immediately upon the occurrence of the Waiver Termination Date, the Specified Defaults and any other Event of Default which has occurred after the date hereof shall continue to exist and all of the rights and remedies available to Lender under the Loan Agreement and the other Loan Documents and at law, in equity or otherwise will be available to Lender without restriction, limitation or modification of any kind, as if the temporary limited waiver under this Amendment had not occurred.

4.     Limitations.

4.1     The amendments set forth in Section 2 above are effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document other than as expressly set forth in Section 3.2 herein, or (b) otherwise prejudice any right or remedy which Lender may now have or may have in the future under or in connection with any Loan Document.

4.2     This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

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4.3     The parties hereto hereby acknowledge that it shall be an Event of Default under the Loan Agreement if the final Five Hundred Thousand Dollar ($500,000) advance of the remaining principal amount of the Junior Unsecured Debt is not made by September 14, 2018 in accordance with subpart (b) of the definition of “Junior Unsecured Debt”.

5.     Representations and Warranties. To induce Lender to enter into this Amendment, Borrower hereby represents and warrants to Lender as follows:

5.1     Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents, are true, accurate and complete as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

5.2     Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under this Amendment and the Loan Agreement, as amended by this Amendment;

5.3     The organizational documents of Borrower delivered to Lender on or about May 5, 2016, remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

5.4     The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under this Amendment and the Loan Agreement, as amended by this Amendment, have been duly authorized;

5.5     The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under this Amendment and the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

5.6     The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under this Amendment and the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made;

5.7     This Amendment has been duly executed and delivered by Borrower and each of this Amendment and the Loan Agreement as amended by this Amendment, is the binding obligation of Borrower, enforceable against Borrower in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights; and

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5.8     Borrower has not assigned the Loan Agreement or any of its rights or obligations (including, without limitation, the Obligations) thereunder.

6.     Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. The exchange of copies of this Amendment and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Amendment as to the parties hereto and may be used in lieu of the original Amendment for all purposes.

7.     Expenses. Without limitation of the terms of the Loan Documents, and as a condition to the effectiveness of this Amendment, Borrower shall reimburse Lender for all its costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Lender in connection with this Amendment or that are otherwise outstanding. Lender, at its discretion, is authorized (x) to charge said fees, costs and expenses to Borrower’s loan account or any of Borrower’s deposit accounts or (y) to directly invoice Borrower for such fees, costs and expenses.

8.     No Third Party Beneficiaries. This Amendment does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Amendment.

9.     Loan Documents; Indemnity. For purposes of clarity and not by way of limitation, Borrower and Lender acknowledge and agree that this Amendment is one of the Loan Documents and that the indemnification provided pursuant to Section 12.2 of the Loan Agreement applies hereto.

10.     Effectiveness. This Amendment shall be deemed effective and the consent set forth herein is conditioned upon (a) the due execution and delivery of this Amendment by each party hereto, (b) the delivery to Lender of a Subordination Agreement relating to the Junior Unsecured Debt, in form and substance reasonably satisfactory to Lender, duly executed by the parties thereto, (c) the delivery to Lender of true, accurate and complete copies of any amendments to the Beedie Subordinated Debt Documents, as in effect as of the Ninth Amendment Effective Date, in form and substance reasonably satisfactory to Lender, duly executed by the parties thereto, (d) the delivery to Lender of the First Amendment to Subordination Agreement relating to the Permitted Beedie Debt, in form and substance reasonably satisfactory to Lender, duly executed by the parties thereto, (e) the receipt by Borrower of a portion of the proceeds of the Junior Unsecured Debt in an amount equal to One Million Dollars ($1,000,000), and (f) the payment by Borrower of the fees and expenses set forth in Section 7 above.

[Signatures on next page]

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In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

LENDER	BORROWER
SAAS CAPITAL FUNDING II, LLC By:           /s/ Todd Gardner                              Name:Todd Gardner Title:President	ACCELERIZE INC. By:          /s/ Anthony Mazzarella              Name:Anthony Mazzarella Title:Chief Financial Officer

Form of Beedie Warrant

THIS WARRANT AND THE COMMON STOCK SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS WARRANT AND THE COMMON STOCK SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACCELERIZE INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

Right to Purchase up to 835,000 shares of Common Stock of Accelerize Inc. (subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

No. BC -03 Issue Date: August 31, 2018

ACCELERIZE INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, Beedie Investments Limited or its permitted assigns (the “Holder”) is entitled, subject to the terms set forth below, to purchase from the Company at any time after August 31, 2018 (the “Issue Date”) until 5:00 p.m., Eastern Time, on January 25, 2024 (the “Expiration Date”), up to 835,000 Warrant Shares (subject to adjustment pursuant to the terms hereof), at a per share purchase price of $0.35. The aforementioned purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase Price.” The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The Company may reduce the Purchase Price without the consent of the Holder.

This warrant to purchase Common Stock (“Warrant”) is issued in connection with and pursuant to that amendment dated August31, 2018 to that certain Credit Agreement dated as of January 25, 2018 (the “Credit Agreement”), by and between the Company and Holder.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) The term “Business Day” means any day that is not a Saturday, Sunday or a statutory holiday in the Province of British Columbia or the State of California.

(b) The term “Company” shall include Accelerize Inc. and any corporation which shall succeed or assume the obligations of Accelerize Inc. hereunder.

(c) The term “Common Stock” includes (i) the Company’s Common Stock, $0.001 par value per share, and (ii) any other securities into which or for which any of the securities described in (i) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(d) The term “Material Event” means any of the following:

(i) any dividend or distribution in respect of the outstanding shares of Common Stock;

(ii) any offer for subscription or sale pro rata to all holders of the outstanding Common Stock any additional shares of any class or series of the Company’s capital stock;

(iii) any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding Common Stock;

(iv) (a) any Person, or group of Persons acting jointly or in concert, becoming the beneficial owner, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Company, (b) a transaction occurring which results in the stockholders of the Company immediately before the transaction owning, as a group, 50% or less of the outstanding shares of the Company or any successor entity after such transaction or (c) the sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company; or

(v) the winding-up, dissolution or liquidation of the Company.

(e) The term “Other Securities” refers to any stock (other than Common Stock) or other securities of the Company or any other Person which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to the terms herein.

(f) The term “Person” means an individual, partnership, limited partnership, limited liability partnership, limited liability company, corporation, trust or unincorporated organization.

(g) The term “Trading Market” means the following markets or exchanges on which the Company’s Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board, the Toronto Stock Exchange or a nationally recognized stock exchange in Canada.

(h) The term “VWAP” means for any date, the price determined by the first of the following clauses that applies: (A) if the shares are then listed or quoted on a Trading Market, the daily volume weighted average price per share for such date (or the nearest preceding date) on the Trading Market on which the Shares are then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:35 a.m. Eastern Time to 3:58 p.m. Eastern Time); (B) if the shares are not then listed or quoted on a Trading Market and if prices for the shares are then quoted on the OTC Bulletin Board, the volume weighted average price per share of the Shares for such date (or the nearest preceding date) on the OTC Bulletin Board; or (C) if the shares are not then listed or quoted on the OTC Bulletin Board and if prices for the shares are then reported in the “Pink Sheets” published by the Pink OTC Markets Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the shares so reported.

(i) The term “Warrant Shares” shall mean the fully paid and nonassessable shares of Common Stock issuable upon exercise of this Warrant.

1.     Exercise of Warrant.

1.1.     Number of Shares Issuable upon Exercise. From and after the Issue Date through and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of Section 1.2 or upon exercise of this Warrant in part in accordance with Section 1.3, up to 835,000 Warrant Shares, subject to adjustment pursuant to the terms hereof.

1.2.     Full Exercise. This Warrant may be exercised in full by the Holder hereof by delivery to the Company or Warrant Agent (as provided hereinafter) of an original or facsimile copy (or email attachment) of the form of subscription attached as hereto Exhibit A (the “Subscription Form”) duly executed by such Holder, and, subject to Section 11 below, accompanied by payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect (the “Full Exercise Price”).

1.3.     Partial Exercise. This Warrant may be exercised in part (but not for a fractional share) by delivery of the Subscription Form as provided in Section 1.2 except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in effect (the “Partial Exercise Price”). On any such partial exercise, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, the whole number of shares of Common Stock for which such Warrant may still be exercised.

1.4.     Fair Market Value. “Fair Market Value” of a share of Common Stock as of a particular date shall mean:

(a)     If the Company’s Common Stock is publicly traded, then the arithmetic average of the VWAP of such shares for each of the five (5) consecutive trading days ending on the date immediately preceding the date of the exercise of this Warrant;

(b)     Except as provided in clause (c) below, if the Company’s Common Stock is not publicly traded, then as the Holder and the Company agree in writing, or in the absence of such agreement, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided; or

(c)     If the date of the exercise of this Warrant is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (c) that all of the shares of Common Stock then issuable upon exercise of all warrants are outstanding at the date of the exercise of this Warrant.

1.5.     Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights.

1.6.     Delivery of Stock Certificates, etc. on Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Company’s transfer agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) the earlier of (A) two (2) trading days after the delivery to the Company of the Subscription Form and (B) one (1) trading day after delivery of the aggregate Full Exercise Price or Partial Exercise Price (as applicable) and (ii) the number of trading days comprising the Standard Settlement Period (such date, the “Warrant Share Delivery Date”). Upon delivery of the Subscription Form, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the Full Exercise Price or Partial Exercise Price (as applicable) (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) trading days and (ii) the number of trading days comprising the Standard Settlement Period following delivery of the Subscription Form. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of trading days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Subscription Form. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which such Holder would otherwise be entitled upon exercise, Holder shall receive cash equal to such fraction multiplied by the then Fair Market Value of one full share of Common Stock, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.

1.7 No Delivery of Warrant on Exercise. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Subscription Form shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. The Holder shall deliver the original Warrant to the Company within thirty (30) days after the full exercise of this Warrant, provided, that the Holder’s failure to so deliver the original Warrant shall not affect the validity of such exercise or any of the Company’s obligations under this Warrant and the Company’s sole remedy for the Holder’s failure to deliver the original Warrant shall be to obtain an affidavit of lost warrant and customary indemnity and security reasonably satisfactory in form and amount to the Company from the Holder.

2.     Adjustments.

2.1.     Reorganization, Consolidation, Merger, etc. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate or amalgamate with or merge into any other Person or (c) directly or indirectly transfer, lease, exclusively license or otherwise dispose of all or substantially all of its properties or assets to any other Person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Section 1, at any time after the consummation of such reorganization, consolidation, amalgamation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 3.

2.2.     Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable in accordance with Section 2.1 by the Holder of the Warrants upon their exercise after the effective date of such dissolution pursuant to this Section 2.

2.3.     Continuation of Terms. Upon any reorganization, consolidation, amalgamation, merger or transfer (and any dissolution following any transfer) referred to in this Section 2, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any Other Securities, including, in the case of any such transfer, the Person acquiring all or substantially all of the properties or assets of the Company, whether or not such Person shall have expressly assumed the terms of this Warrant.

2.4     No Impairment. The Company shall not, by amendment of its charter or other constating documents, or through a reorganization, transfer of assets, consolidation, merger, arrangement, amalgamation, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all the provisions hereof and in taking all such actions as may be necessary or appropriate to protect the Holder’s right hereunder against dilution or other impairment.

3.     Extraordinary Events Regarding Common Stock.

3.1 Dividends and Distributions; Subdivisions and Consolidations. In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 3.1. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 3.1) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 3) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

3.2 Issuance of Additional Shares. If the Company shall issue shares of Common Stock before the January 25, 2019 without consideration or for a consideration per share less than the Purchase Price, the Purchase Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying the Purchase Price then in effect by a fraction, (i) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of shares of Common Stock so issued would purchase at the Purchase Price in effect immediately prior to such issue, and (ii) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such shares of Common Stock so issued; provided that, immediately after any shares of Common Stock are deemed issued pursuant to this Section 3.2 such shares of Common Stock shall be deemed to be outstanding. For the purposes of calculating any adjustment to the Purchase Price under this Section 3.2, all shares of Common Stock issuable upon exercise, conversion or exchange of outstanding convertible securities shall be deemed to be outstanding. Notwithstanding the foregoing, no adjustment to the Purchase Price or number of Warrant Shares shall be triggered pursuant to this Section 3.2 by (i) the issuance of ordinary course stock options or share-based compensation to directors, officers, employees or other service providers when issued pursuant to the Company’s existing compensation plans or consistent with past practice, to a maximum of 10% of the Company’s issued and outstanding shares of Common Stock on a fully diluted basis at such time; or (ii) shares of Common Stock issued upon the exercise, conversion or exchange of any convertible security issued prior to the date hereof.

4.     Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 7 hereof).

5.     Representations and Covenants of the Company.

5.1 The Company hereby represents and warrants that it is authorized to create and issue the Warrant and that this Warrant is a valid and enforceable obligation of the Company, enforceable in accordance with the provisions of this Warrant Certificate.

5.2 The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant, and hereby represents and warrants that all Warrant Shares issued upon the exercise of the Warrant will, upon payment of the Purchase Price therefor by the Holder, be fully paid and non-assessable and duly and validly issued.

5.3 The Company shall give Holder notice of a Material Event at the same time and in the same manner as the Company notifies the holders of the outstanding Common Stock; provided, that at all times, if any, when the Company shall not be subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, the Company shall furnish the Holder with:

(a)     notice of such Material Event not less than 10 Business Days prior to the earlier to occur of the anticipated effective date thereof or the record date for any dividend, distribution, or subscription rights or for determining rights to vote, if any, in each case together with such information as the Holder may reasonably require regarding the treatment of this Warrant in connection with the Material Event giving rise to such notice;

(b)     such additional information as is furnished or required to be furnished to all or any shareholders of the Company, whether pursuant to the Company’s charter or other constating documents, any shareholder, investor rights or similar agreement, or applicable corporate or securities laws or stock exchange rules or policies.

6.     Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement and security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense, once only and then at the expense of the Holder, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

7.     Warrant Agent. The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, and replacing this Warrant pursuant to Section 6, or any of the foregoing, and thereafter any such issuance or replacement, as the case may be, shall be made at such office by such Warrant Agent.

8.     Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

9.     Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a Business Day during normal business hours where such notice is to be received), or the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such notice is to be received) or (b) on the Business Day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur or (c) three Business Days after deposited in the mail if delivered pursuant to clause (ii) above. The addresses for such communications shall be: (i) if to the Company to: 20411 SW Birch St. Ste. 250, Newport Beach, CA 92660, and (ii) if to the Holder, to: Suite 1730, 1111 West Georgia Street, Vancouver, BC V6E 4M3, Canada, or if subsequently updated, the address in the Company books. The Company may change its address for notices but only to an address and fax number located in the United States.

10. No Assignment. Holder shall not be permitted to sell, assign, hypothecate, pledge, dispose or otherwise transfer this Warrant or the rights and obligations hereunder, or any Warrant Shares acquired upon exercise hereunder, except to an affiliate or to a syndicate member under the Credit Agreement without the prior written consent of Company. Any prohibited assignment shall be null and void.

11. Notice of Expiration. The Company shall give notice of the Expiration Date (the “Expiration Notice”) to the Holder within ninety (90) but not less than thirty (30) days before the Expiration Date. If the Company does not deliver the Expiration Notice within ninety (90) but not less than thirty (30) days before the Expiration Date and the Fair Market Value of one share of Common Stock is greater than the Purchase Price in effect on the Expiration Date, then, subject to any determination of Fair Market Value required pursuant to Section 1.4(b), this Warrant shall automatically be deemed on and as of the Expiration Date to be exercised pursuant to Section 1.2 or Section 1.3, as applicable, as to all Warrant Shares for which it shall not previously have been exercised, and the Company shall deliver a certificate representing the Warrant Shares issued upon such exercise to the Holder in accordance with Section 1.6. In lieu of payment of the Full Exercise Price or the Partial Exercise Price in the manner as specified in Section 1.2 or Section 1.3, as applicable, but otherwise in accordance with the requirements of such Section, the Company shall issue to the Holder such number of Warrant Shares as is computed using the following formula:

X     = Y(A-B)/A

where:              

X     =	the number of Warrant Shares to be issued to the Holder;
Y     =	the number of Warrant Shares with respect to which this Warrant is being exercised (inclusive of the Warrant Shares surrendered to the Company in payment of the Full Exercise Price or Partial Exercise Price, as applicable);

A     =	the Fair Market Value of a share of Common Stock; and
B     =	the Purchase Price.

11. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of the State of New York. Any dispute relating to this Warrant shall be adjudicated in any state court in New York County in the State of New York or in the U.S. District Court for the Southern District of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. By acceptance of this Warrant, Holder acknowledges that it is either an “accredited investor” as defined in Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

ACCELERIZE INC.

By:                                                        

Name: Brian Ross

Title: Chief Executive Officer and President

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO:     ACCELERIZE INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

___ ________ shares of the Common Stock covered by such Warrant; or

Purchase Terms:

___ The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $                      .

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to whose address is                                                                                                                                                                                .

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act, or pursuant to an exemption from registration under the Securities Act.

Dated:

(Signature must conform to name of holder

as specified on the fact of the Warrant.)

(Address)

EX-10.4

Exhibit 10.4







 

THIRD AMENDING AGREEMENT

BETWEEN:

ACCELERIZE INC.

- AND -

BEEDIE INVESTMENTS LIMITED

dated as of AUGUST 31, 2018

THIRD AMENDING AGREEMENT

This Third Amending Agreement is made effective as of the 31^st day of August, 2018 between:

ACCELERIZE INC.
as Borrower

(the "Borrower")

and

BEEDIE INVESTMENTS LIMITED
as Lender

(the "Lender")

WHEREAS the Borrower and the Lender have entered into a credit agreement dated as of January 25, 2018, as amended by a first amending agreement (the “First Amending Agreement”) dated as of May 31, 2018, and a second amending agreement (the “Second Amending Agreement”) dated as of June 13, 2018 (collectively, the "Credit Agreement");

AND WHEREAS the parties have agreed to enter into this third amending agreement (the "Third Amending Agreement") to amend the Credit Agreement as provided for herein (the Credit Agreement as amended by this Third Amending Agreement is referred to as the "Amended Credit Agreement");

NOW THEREFORE in consideration of the payment of the sum of one dollar ($1.00) by each of the parties hereto to the others and other good and valuable consideration, including the issuance by the Borrower to the Lender of the Additional Warrants (as defined below), the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree with each other as follows:

1. Amendments to Credit Agreement

1.1 The Credit Agreement is hereby amended as of the date that the conditions precedent in Section 3 herein have been satisfied or waived by the Lenders (the "Effective Date") as follows:

(a) The definition of “Commitment Fee” in Section 1.1 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“‘Commitment Fee’ means collectively the First Tranche Commitment Fee and the Second Tranche Commitment Fee.”

(b) The following is added to the definitions in Section 1.1 of the Credit Agreement:

“‘First Tranche Commitment Fee’ means the non-refundable commitment fee in the amount of US $175,000, being 2.5% of the Credit Limit, which was paid to the Lender as of the Closing Date.”

(c) The following is added to the definitions in Section 1.1 of the Credit Agreement:

“‘Gemini APA’ means that certain Asset Purchase Agreement, to be entered into by and between the Borrower, as seller, and a to-be-determined party, as purchaser, with respect to the acquisition by purchaser of substantially all of the assets of the Borrower.”

(d) The definition of “Permitted SaaS Debt” in Section 1.1 of the Credit Agreement is amended by deleting “US $7,500,000” and replacing it with “the Priority Cap”.

(e) The following is added to the definitions in Section 1.1 of the Credit Agreement:

“‘Priority Cap’ means the initial principal amount of US $6,000,000, thereafter reduced permanently from time to time in the principal amount or amounts, if any, which correspond to the principal amount or amounts of payments received or collected by SaaS in respect of the SaaS Credit Agreement.”

(f) The following is added to the definitions in Section 1.1 of the Credit Agreement and shall constitute a “Subsequent Tranche” under the Credit Agreement:

“‘Second Tranche’ means the principal amount of US $1,500,000.”

(g) The following is added to the definitions in Section 1.1 of the Credit Agreement:

“‘Second Tranche Commitment Fee’ means the non-refundable commitment fee in the amount of US $275,000, earned by the Lender as at the date hereof.”

(h) The following is added as Section 2.7 of the Credit Agreement:

“2.7     Additional Warrants

In partial consideration for the Lender entering into the third amending agreement to the Credit Agreement, the Borrower shall issue common share purchase warrants (the “Additional Warrants”) registered in the name of the Lender to purchase up to an aggregate of 835,000 common shares of the Borrower (“Common Shares”), at an exercise price of US $0.35 per Common Share, as set forth in the certificates representing such Warrants (the “Additional Warrant Certificates”), such Additional Warrant Certificates to be substantially in the form as set out in Schedule D attached hereto. The Additional Warrants shall be issued on the Effective Date and shall be exercisable at any time on or before the date which is six (6) years following the date on which the Second Tranche is advanced.”

(i) The first sentence of Section 4.4 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“The Borrower shall pay to the Lender the outstanding balance of the First Tranche Commitment Fee by way of deduction from the Advance of the First Tranche. The Borrower (i) shall pay to the Lender US $75,000 of the Second Tranche Commitment Fee on or before the Second Tranche is advanced, and (ii) shall pay to the Lender the US $200,000 of the Second Tranche Commitment Fee that remains to be paid on or before the Maturity Date; provided, however, that the obligation of the Borrower to pay the amount set out in clause (ii) shall be waived by the Lender if the Borrower prepays the Obligations in full on or prior to the date which is six (6) months following the date on which the Second Tranche is advanced.”

(j) Section 6.1(b) of the Credit Agreement is amended by deleting “Commitment Fee” in such section and replacing it with “First Tranche Commitment Fee”.

(k) Section 6.2(a) of the Credit Agreement is waived in respect of the Second Tranche; provided that such waiver shall not be construed as a permanent waiver of such Section;

(l) Section 8.3(h) of the Credit Agreement is amended by deleting “Section 8.3(f)” and replacing it with “Section 8.3(g)”.

(m) Section 8.4(a) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(a) Minimum Adjusted EBITDA. Not suffer or permit its average Adjusted EBITDA per month for any three (3) consecutive calendar months, with each such month’s Adjusted EBITDA to be calculated as of the last day of such month, to exceed the amounts set forth below for such periods (numbers in parentheses are negative):

Period	Minimum Adjusted EBITDA
November 1, 2017 to December 31, 2017	($150,000)
January 1, 2018 through April 30, 2018	($175,000)
May 1, 2018 through June 30, 2018	($350,000)
July 1, 2018 through July 31, 2018	($300,000)
August 1, 2018 through August 31, 2018	($200,000)
September 1, 2018 through September 30, 2018	($400,000)
October 1, 2018 through December 31, 2018	($300,000)
November 1, 2018 through November 30, 2018	($250,000)
December 1, 2018 to December 31, 2018	($200,000)
January 1, 2019 through February 28, 2019	($100,000)
March 1, 2019 and at all times thereafter	$0

(a)     For purposes of determining Minimum Adjusted EBITDA for the period from January 1, 2018 through June 30, 2018, one-time legal, consulting, and out of pocket expenses relating to this Agreement and the concurrent amendment to the SaaS Credit Agreement will be excluded from the calculation of Adjusted EBITDA. For the purposes of determining Minimum Adjusted EBITDA for the period from July 1, 2018 through February 28, 2019, one-time legal, consulting and out of pocket expenses relating to this Agreement, the concurrent amendment to the SaaS Credit Agreement and the entry into the Gemini APA, in each case as and when incurred, along with bad debt expense from July 1, 2018 through October 31, 2018, will be excluded from the calculation of Adjusted EBITDA.”

(n) Section 8.4(b) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(b) Revenue Renewal Rate. The Borrower shall not permit its average Revenue Renewal Rate per month for any three (3) consecutive calendar months, with each such month’s Revenue Renewal Rate calculated at the end of such month within the Term and excluding from the calculation all historical revenue relating to the former client known as GlobalWide Media, (i) for the months of May 2018, June 2018, July 2018 and August 2018, to be less than seventy-five percent (75%), (ii) for the months of September 2018, October 2018, November 2018, December 2018, January 2019 and February 2019, to be less than seventy-two and one-half percent (72.5%), and (iii) for any other month, to be less than eighty percent (80%).”

(o) Section 8.4(d) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(d) Total Debt to MRR. Maintain Total Debt to MRR calculated on a consolidated basis for the Loan Parties of not more than:

(i)     6.50:1.00 from the Closing Date to May 31, 2018;

(ii)     waived from September 1, 2018 to February 28, 2019; and

(iii)     6.50:1.00 from March 1, 2019 and for each calendar month thereafter;”.

(p) Section 8.4(f) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(f) Secured Debt to MRR. Maintain Secured Debt to MRR calculated on a consolidated basis for the Loan Parties of not more than:

(i)     6.50:1.00 from June 1, 2018 to August 31, 2018;

(ii)     7.00:1.00 from September 1, 2018 to December 31, 2018;

(iii)     6.50:1.00 from January 1, 2019 to February 28, 2019; and

(iv)     6.00:1.00 from March 1, 2019 and for each calendar month thereafter;”.

(q) The following is added as Section 8.2(h) of the Credit Agreement:

“(h)     on the 1^st and 15^th day of each month, commencing on September 15, 2018 and ending with the forecast due on March 15, 2019, an updated detailed 13-week cash flow forecast illustrating the expected cash inflows and outflows of the Borrower.”

(r) It shall be an “Event of Default” under the Credit Agreement if the advance of the remaining principal amount of the Second Junior Unsecured Debt Tranche of US $500,000 is not made by September 14, 2018 pursuant to Section 1.1(s) of this Third Amending Agreement.

(s) Section 1.1(f) of the First Amending Agreement is hereby deleted in its entirety and replaced with the following:

“Pursuant to clause (f) of the definition of “Permitted Funded Debt” in Section 1.1 of the Credit Agreement:

(i) unsecured debt of the principal amount of US $3,500,000 (the “Junior Unsecured Debt”) shall constitute “other Subordinated Obligations approved in writing by the Lender in its sole discretion” and “Permitted Funded Debt”, provided that (A) the Borrower incurs such Junior Unsecured Debt by way of money borrowed, (B) a principal amount of US $2,000,000 of the Junior Unsecured Debt is funded in the principal amount of US $1,500,000 on May 31, 2018 and in the remaining principal amount of US $500,000 on or before June 30, 2018, (C) a principal amount of US $1,500,000 (the “Second Junior Unsecured Debt Tranche”) of the Junior Unsecured Debt is funded in the principal amount of at least US $1,000,000 on or before the Second Tranche is advanced and in the remaining principal amount of US $500,000 on or before September 14, 2018; (D) no agreement evidencing or relating to the Junior Unsecured Debt (each, a “Junior Debt Document”) contains any financial covenants, (E) the Borrower causes such Junior Unsecured Debt to be subordinated and postponed on terms satisfactory to the Lender pursuant to the Subordination and Postponement Agreement (as defined below) and (F) except as provided in clauses (ii) and (iii) below, the Borrower incurs such Junior Unsecured Debt in compliance with all other covenants, terms and provisions of the Credit Agreement;

(ii) notwithstanding Section 8.3(r) of the Credit Agreement, the Borrower may pay interest in cash on the Junior Unsecured Debt at periodically scheduled intervals at a rate not to exceed 12% per annum so long as no “Blockage Period” (as defined in the Subordination and Postponement Agreement) is in effect; and

(iii) notwithstanding Section 8.3(n) of the Credit Agreement, the Borrower may enter into Junior Debt Documents with lender(s) that are Related Parties.”

2. Certification

2.1 The Borrower confirms to and agrees with the Lender that:

(a) each of the representations and warranties made in the Amended Credit Agreement, including the representations set out in Section 6.2, is true and correct (except for failure to comply with the covenants set forth in Section 8.4(a) (Minimum Adjusted EBITDA) and Section 8.4(b) (Revenue Renewal Rate) for the months of July 2018 and August 2018, each of which constitutes an Event of Default under Section 9.1(b) (the “Specified Defaults”), and any other qualifications to representations and warranties disclosed to the Lender and consented to in writing by the Lender in its sole discretion, and provided however that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date); and

(b) no Default or Event of Default has occurred which is continuing.

3. Conditions Precedent

3.1 This Third Amending Agreement shall become effective at such time as:

(a) the Lender shall have received the following documents, each in full force and effect, and in form and substance satisfactory to the Lender:

(i) this Third Amending Agreement, duly executed and delivered by the Borrower;

(ii) duly issued Additional Warrants;

(iii) a subordination agreement entered into by each holder of the Borrower’s unsecured debt in favor of the Lender and acknowledged by the Borrower; and

(iv) stock exchange, dealer network or other Governmental Authority approval and, if required under the Permitted SaaS Debt, SaaS consent for the issuance of the Additional Warrants;

(b) the Borrower shall have paid the Lender all interest which is accrued and unpaid (including interest claimed by the Lender at the Default Rate) up to the date on which the Second Tranche is advanced;

(c) the Borrower shall in respect of the preparation, execution and delivery of this Third Amending Agreement have paid all fees, costs and expenses of the kind referred to in Section 10.11 of the Credit Agreement;

(d) no event or circumstance shall have occurred that in the opinion of the Lender would reasonably be expected to have a Material Adverse Effect;

(e) no Default or Event of Default shall have occurred and be continuing;

(f) an amendment to the SaaS Credit Agreement, inter alia, amending its financial covenants, permitting the incurrence by the Borrower of the Second Junior Unsecured Debt Tranche and reducing the Permitted SaaS Debt shall have been executed and delivered by SaaS and the Borrower and a copy thereof provided to the Lender;

(g) the Lender shall be satisfied with all terms and conditions of the Second Junior Unsecured Debt Tranche, any additional Junior Debt Documents required in connection with the Second Junior Unsecured Debt Tranche shall have been executed and delivered by the lender(s) and agent (if any) of the Junior Unsecured Debt and the Borrower and copies thereof provided to the Lender, and the first advance of the Second Junior Unsecured Debt Tranche in the amount of US $1,000,000 shall have been made; and

(h) receipt of all regulatory, securities and/or third party consents and/or approvals in respect of this Third Amending Agreement and the Warrants, in form, and on terms, satisfactory to the Lender.

3.2 The terms and conditions of this Section 3 are inserted for the sole benefit of the Lender and may be waived by the Lender in whole or in part without terms and conditions.

4. Acknowledgements and Waivers

4.1 The Borrower hereby acknowledges and agrees that the Specified Defaults are Events of Default that have occurred under the Credit Agreement and requests a waiver thereof.

4.2 The Borrower hereby acknowledges and agrees that interest at the Default Rate is payable to the Lender on the Obligations from July 1, 2018 to the date on which the Second Tranche is advanced.

4.3 The Lender acknowledges and agrees that the failure by the Borrower to comply with the Specified Defaults is hereby waived provided that such waiver shall not be construed as a permanent waiver of such Sections.

5. Miscellaneous

5.1 All capitalized terms used but not otherwise defined herein shall have the meanings respectively ascribed thereto in the Amended Credit Agreement.

5.2 The Credit Agreement and all covenants, terms and provisions thereof, as amended by this Third Amending Agreement, shall be and continue to be in full force and effect and is hereby ratified and confirmed.

5.3 This Third Amending Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and such counterparts together shall constitute one and the same Third Amending Agreement. For the purposes of this Section, the delivery of a facsimile copy or pdf emailed copy of an executed counterpart of this Third Amending Agreement shall be deemed to be valid execution and delivery of this Third Amending Agreement, but the party delivering a facsimile copy or pdf emailed copy shall deliver an original copy of this Third Amending Agreement as soon as possible after delivering the facsimile copy or pdf emailed copy.

5.4 This Third Amending Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable in British Columbia. Each party to this Third Amending Agreement hereby irrevocably and unconditionally attorns to the non-exclusive jurisdiction of the courts of British Columbia and California and all courts competent to hear appeals therefrom.

5.5 This Third Amending Agreement shall enure to the benefit of and be binding upon the Borrower and the Lender and their respective successors and assigns.

[SIGNATURE PAGES TO FOLLOW]

IN WITNESS WHEREOF the parties hereto have executed this Third Amending Agreement as of the day and year first written above.

ACCELERIZE INC., as Borrower
By:	/s/ Brian Ross
	Name: Brian Ross
	Title:    CEO

BEEDIE INVESTMENTS LIMITED, as Lender
By:	/s/ Ryan Beedie
	Name: Ryan Beedie
	Title:    President

CONSENT AND AGREEMENT OF GUARANTOR

The undersigned unlimited guarantor of the Obligations of the Borrower to the Lender does hereby consent and agree to the Borrower entering into this Third Amending Agreement.

Dated as of August 31, 2018.

CAKE MARKETING UK LTD.
By:	/s/ Brian Ross
	Name: Brian Ross
	Title:    CEO

EX-31.1

 Exhibit 31.1

CERTIFICATION

Pursuant to Rule 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act of 1934, as Amended

I, Brian Ross, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2018 of Accelerize Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2018

/s/ Brian Ross

Brian Ross

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to Rule 13a-14(a) and 15d-14(a)

Under the Securities Exchange Act of 1934, as Amended

I, Anthony Mazzarella, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2018 of Accelerize Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2018

/s/ Anthony Mazzarella

Anthony Mazzarella

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report (the “Report”) of Accelerize Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof, I, Brian Ross, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2018	By: /s/ Brian Ross
	Brian Ross President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report (the “Report”) of Accelerize Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof, I, Anthony Mazzarella, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2018	By: /s/ Anthony Mazzarella
	Anthony Mazzarella Chief Financial Officer (Principal Financial Officer)

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 14, 2018
Document Information [Line Items]
Entity Registrant Name	ACCELERIZE INC.
Entity Central Index Key	0001352952
Trading Symbol	aclz
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		66,179,709
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
ASSETS
Cash	$ 1,808,029	$ 166,883
Restricted cash	50,000	50,000
Accounts receivable, net of allowance for bad debt of $268,923 and $471,144, respectively	2,130,476	2,692,636
Prepaid expenses and other assets	330,455	548,343
Total current assets	4,318,960	3,457,862
Property and equipment, net of accumulated depreciation of $788,587 and $775,152, respectively	63,975	69,405
Intangible assets, net of accumulated amortization of $2,938,350 and $2,512,203, respectively	4,624,377	3,925,523
Other assets	109,777	123,124
Total assets	9,117,089	7,575,914
Current Liabilities:
Accounts payable and accrued expenses	2,278,096	2,479,083
Deferred revenues	564,002	299,937
Credit facility, short term	3,501,487	3,055,812
Other short-term loan, net of unamortized deferred financing cost of $0 and $0, respectively		1,224,194
Total current liabilities	6,343,585	7,059,026
Credit facility, net of unamortized deferred financing cost of $1,745,491 and $245,584, respectively	6,404,754	4,402,988
Other loan, related party net of unamortized deferred financing cost of $180,209 and $0, respectively	369,791
Other loan net of unamortized deferred financing cost of $744,205 and $82,868, respectively	2,205,795	267,938
Other liabilities	743,750	1,062,500
Total liabilities	16,067,675	12,792,452
Stockholders' Deficit:
Common stock; $0.001 par value; 100,000,000 shares authorized; 66,179,709 and 65,939,709 shares issued and outstanding, respectively	66,178	65,938
Additional paid-in capital	29,371,783	26,301,748
Accumulated deficit	(36,326,324)	(31,542,684)
Accumulated other comprehensive loss	(62,223)	(41,540)
Total stockholders’ deficit	(6,950,586)	(5,216,538)
Total liabilities and stockholders’ deficit	9,117,089	7,575,914
Series A Preferred Stock [Member]
Stockholders' Deficit:
Preferred stock
Series B Preferred Stock [Member]
Stockholders' Deficit:
Preferred stock

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)		Sep. 30, 2018	Dec. 31, 2017
Accounts receivable, allowance for bad debt		$ 268,923	$ 471,144
Property and equipment, accumulated depreciation	[1]	788,587	775,152
Intangible assets, accumulated amortization		2,938,350	2,512,203
Deferred financing cost, current		0	0
Deferred financing cost, credit facility		1,745,491	245,584
Deferred financing cost, noncurrent, related party		180,209	0
Deferred financing cost, noncurrent		$ 744,205	$ 82,868
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Common stock, shares authorized (in shares)		100,000,000	100,000,000
Common stock, shares issued (in shares)		66,179,709	66,179,709
Common stock, shares outstanding (in shares)		65,939,709	65,939,709
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)		$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)		54,000	54,000
Preferred stock, shares issued (in shares)		0	0
Preferred stock, shares outstanding (in shares)		0	0
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)		$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)		1,946,000	1,946,000
Preferred stock, shares issued (in shares)		0	0
Preferred stock, shares outstanding (in shares)		0	0

[1] Includes (3,085) in foreign exchange translation

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues:	$ 5,292,304	$ 6,065,674	$ 16,682,730	$ 18,016,552
Cost of revenue	2,042,435	2,749,975	6,865,431	6,660,684
Gross profit	3,249,869	3,315,699	9,817,299	11,355,868
Operating expenses:
Research and development	1,033,707	1,031,878	3,144,106	3,208,434
Sales and marketing	1,127,055	1,119,302	3,359,247	3,419,095
General and administrative	2,372,359	1,554,982	6,278,522	5,232,896
Total operating expenses	4,533,121	3,706,162	12,781,875	11,860,425
Operating loss	(1,283,252)	(390,463)	(2,964,576)	(504,557)
Other income (expense):
Other income (loss)	(222)	2	564	744
Other expense	(679,663)	(305,284)	(1,819,628)	(863,865)
Total other (expense)	(679,885)	(305,282)	(1,819,064)	(863,121)
Net loss	$ (1,963,137)	$ (695,745)	$ (4,783,640)	$ (1,367,678)
Loss per share:
Basic (in dollars per share)	$ (0.03)	$ (0.01)	$ (0.07)	$ (0.02)
Diluted (in dollars per share)	$ (0.03)	$ (0.01)	$ (0.07)	$ (0.02)
Basic weighted average common shares outstanding (in shares)	66,177,101	65,520,434	66,019,709	65,356,201
Diluted weighted average common shares outstanding (in shares)	66,177,101	65,520,434	66,019,709	65,356,201

XML

Unaudited Condensed Consolidated Statements of Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net loss	$ (1,963,137)	$ (695,745)	$ (4,783,640)	$ (1,367,678)
Foreign currency translation loss	(7,166)	12,841	(20,683)	32,098
Total other comprehensive loss	(7,166)	12,841	(20,683)	32,098
Comprehensive loss	$ (1,970,303)	$ (682,904)	$ (4,804,323)	$ (1,335,580)

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net loss	$ (4,783,640)	$ (1,367,678)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	461,893	612,639
Amortization of debt discount and deferred financing cost	636,125	180,204
Provision for bad debt	(202,221)	(48,586)
Fair value of options and warrants	342,698	633,997
Loss on sale of fixed assets	997	902
Changes in operating assets and liabilities:
Accounts receivable	764,381	(196,315)
Prepaid expenses and other assets	147,888	(129,077)
Accounts payable and accrued expenses	(415,072)	(641,049)
Deferred revenues	264,065	18,213
Other assets	13,346	(20,016)
Net cash used in operating activities	(2,769,540)	(956,766)
Cash flows from investing activities:
Capitalized software for internal use	(1,125,000)	(1,347,075)
Capital expenditures	(31,579)	(44,125)
Proceeds from sale of assets	750	795
Net cash used in investing activities	(1,155,829)	(1,390,405)
Cash flows from financing activities:
Principal repayments of credit facility and loan	(2,402,652)	(1,653,282)
Proceeds from credit facility	5,489,850	1,923,000
Proceeds from promissory notes	3,500,000	1,000,000
Repayments of promissory notes	(1,000,000)
Net cash provided by financing activities	5,587,198	1,269,718
Effect of exchange rate changes on cash	(20,683)	32,098
Net increase (decrease) in cash	1,641,146	(1,045,355)
Cash, beginning of period	216,883	1,730,127
Cash, end of period	1,858,029	684,772
Supplemental disclosures of cash flow information:
Cash paid for interest	1,133,678	613,240
Cash paid for income taxes	0	0
Non-cash investing and financing activities:
Fair value of warrants issued in connection with credit facility and promissory notes	2,727,577	104,676
Repayment of Agility Loan, included in accounts payable		25,000
Capital expenditure included in account payable	1,739
Shares issued for cashless exercise of options and warrants		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
Cash and cash equivalents at beginning of period	166,883	1,680,127
Cash and cash equivalents at end of period	1,808,029	634,772
Restricted cash at beginning of period	50,000	50,000
Restricted cash at end of period	$ 50,000	$ 50,000

XML

Note 1 - Organization, Description of Business and Going Concern

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE

1:

ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

Accelerize Inc., a Delaware corporation, incorporated on

November 22, 2005,

owns and operates CAKE, a Software-as-a-Service, or SaaS, platform providing online tracking and analytics solutions for advertisers and online marketers.

The Company provides software solutions for businesses interested in expanding their online advertising spend.

These unaudited condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended

December 31, 2017

and

2016,

respectively, which are included in the Company’s

December 31, 2017

Annual Report on Form

10

-K filed with the United States Securities and Exchange Commission on

March 27, 2018.  

The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation of these

may

be determined in that context. The results of operations for the

three

and

nine

-month periods ended

September 30, 2018

are

not

necessarily indicative of results for the entire year ending

December 31, 2018.

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

$2,024,625

and an accumulated deficit of

$36,326,324

as of

September 30, 2018. 

The Company also had a net loss of

$4,783,640

and cash used in operating activities of

$2,769,540

during the

nine

months ended 

September 30, 2018.

Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, increased gross profit from revenue growth and managing and reducing operating and overhead costs.  During the

second

quarter of

2018,

the Company engaged a nationally recognized investment bank to assist management in pursuing strategic transactions including acquisitions, dispositions, capital raising and debt restructuring. However, management cannot provide any assurances that the Company will be successful in accomplishing its plans. Management also 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.

 

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the results of operations of Cake Marketing UK Ltd., or the Subsidiary. All material intercompany accounts and transactions between the Company and the Subsidiary have been eliminated in consolidation.

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of unaudited condensed 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

September 30, 2018

and

December 31, 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 deducted from the allowance.  

	September 30, 2018		December 31, 2017
Allowance for doubtful accounts	$	268,923	$	471,144

Long-Lived Assets

The Company accounts for long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic

360

-

10

-

05,

“Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic

360

-

10

-

05

requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying value of an asset

may

no

longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

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.

During the

nine

-month period ended

September 30, 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 the financial institution 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

September 30, 2018

or

December 31, 2017.  

The Company does

not

require any collateral from its customers.

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with ASC

2014

-

09,

Revenue from Contracts with Customers, Topic

606,

which supersedes the revenue recognition requirements in FASB ASC

605.

The guidance primarily states 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 in exchange for those goods and services. Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the resulting receivable is reasonably assured.

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.

Advertising

The Company expenses advertising costs as incurred.

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Advertising expense	$	140,907	$	84,302	$	415,358	$	254,446

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

$1,125,000

during the

nine

months ended

September 30, 2018.

The Company amortizes such costs once the new software products and significant upgrades and enhancements are completed. The unamortized internal-use software development costs amounted to

$4,624,377

and

$3,925,523

at

September 30, 2018

and

December 31, 2017,

respectively. The Company’s amortization expenses associated with capitalized software development costs amounted to

$105,000

and

$426,146

during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$193,935

and

$509,039

during the

three

and

nine

-month periods ended

September 30, 2017,

respectively. Amortization of internal-use software is reflected in cost of revenues.

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.

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, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. 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.

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 issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other 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’ Equity.  

Segment Reporting

The Company generated revenues from

one

source, its SaaS business, during the

three

and

nine

-month periods ended

September 30, 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.

Recent Accounting Pronouncements

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

July 2018,

the FASB issued ASU

2018

-

09

to provide clarification and correction of errors to the Codification. The amendments in this update cover multiple Accounting Standards Updates. Some topics in the update

may

require transition guidance with effective dates for annual periods beginning after

December 15, 2018.

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

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

and subsequently amended the guidance relating largely to transition considerations under the standard in

January 2017.

The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. 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).

	Three months ended September 30						Nine months ended September 30
	2018			2017			2018			2017
Numerator:
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Denominator:
Denominator for basic earnings per share--weighted average shares		66,177,101			65,520,434			66,019,709			65,356,201
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		66,177,101			65,520,434			66,019,709			65,356,201
Loss per share:
Basic	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Weighted-average anti-dilutive common share equivalents		29,229,427			17,091,949			26,043,047			16,579,396

Property and Equipment and Intangible Assets

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 and intangible assets consist of the following at:

	September 30, 2018			December 31, 2017
Computer equipment and software	$	437,302		$	431,497
Office furniture and equipment		124,900			120,420
Leasehold improvements		290,360			292,640
Total (1)		852,562			844,557
Accumulated depreciation (2)		(788,587	)		(775,152	)
Total	$	63,975		$	69,405
(1) Includes 6,150 in foreign exchange translation
(2) Includes (3,085) in foreign exchange translation
Intangible assets	$	7,562,727		$	6,437,726
Accumulated amortization		(2,938,350	)		(2,512,203	)
Total	$	4,624,377		$	3,925,523

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Depreciation expense	$	10,035	$	34,071	$	35,747	$	103,601
Amortization expense on intangible assets	$	105,000	$	193,935	$	426,146	$	509,038

During the

three

and

nine

-month periods ended

September 30, 2018,

the Company disposed of approximately

$19,000

mostly in computer equipment with a net book value of approximately

$2,000

for proceeds of

$750

.

During the

three

and

nine

-month periods ended

September 30, 2017,

the Company disposed of approximately

$0

and

$7,500

in computer equipment with a net book value of approximately

$0

and

$1,700

for proceeds of approximately

$0

and

$800,

respectively.

XML

Note 3 - Prepaid Expenses

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Other Assets Disclosure [Text Block]

NOTE

3:

PREPAID EXPENSES

At

September 30, 2018

and

December 31, 2017,

the Company’s prepaid expenses consisted primarily of prepaid insurance and tradeshow costs.

XML

Note 4 - Deferred Revenues

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

4:

DEFERRED REVENUES

The Company’s deferred revenues consist of prepayments made by certain of the Company’s customers and undelivered implementation and training fees.  The Company decreases the deferred revenues by the amount of the services it renders to such customers when provided. 

	September 30, 2018		December 31, 2017
Deferred revenues	$	564,002	$	299,937

XML

Note 5 - Credit Facility and Loans

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

5:

CREDIT

FACILITY

AND LOANS

Agility Loan

	September 30, 2018			December 31, 2017
Agility Loan	$	625,000		$	625,000
Amendment, added to balance		400,000			400,000
Principal Payment of Agility Loan		(450,000	)		(425,000	)
Less: Loan repayment		(575,000	)		-
Balance	$	-		$	600,000

On

March 11, 2016,

the Company entered into a subordinated loan, or the Agility Loan, with Agility Capital II, LLC, or 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 the Company’s 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. The Agility Loan requires a security interest in all of the Company’s personal property and intellectual property,

second

in priority to SaaS Capital Funding II, LLC.

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 during the

three

and

nine

-month periods ended

September 30, 2017,

respectively, and

$0

was expensed during

2018.

On

November 29, 2016,

the Company entered into an amendment of the Agility Loan 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 a settlement agreement with respect to pending litigation between the Company and a former officer during

November 2016,

or 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

$9,791

and

$29,372

was expensed during the

three

and

nine

-month periods ended

September 30, 2017,

respectively, and

$0

was expensed during

2018.

On

August 14, 2017,

the Company entered into a consent to waiver of the Agility Loan, to permit the issuance of promissory notes to lenders, as further described below.

On

November 8, 2017,

the Company entered into the

third

amendment of the Agility Loan, or the Third Amendment, 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 Company assets. The Company owed

$0

and

$600,000

under the Agility Loan at

September 30, 2018

and

December 31, 2017,

respectively.

Credit Facility - SaaS Capital Loan

	September 30, 2018			December 31, 2017
SaaS Capital Loan, Total advances	$	10,253,000		$	9,903,000
Principal Payment of SaaS Capital Loan		(4,601,269	)		(2,198,616	)
Less: Deferred financing cost		(151,649	)		(245,584	)
Less: SaaS Capital Loan, short term		(3,501,487	)		(3,055,812	)
SaaS Capital Loan, long term	$	1,998,595		$	4,402,988

On

May 5, 2016,

the Company entered into a loan and security agreement, or the SaaS Capital Loan, with SaaS Capital Funding II, LLC 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 on

May 5, 2017.

Additionally, the Company incurred initial financing costs of

$160,000

which was capitalized as deferred financing costs, of which

$13,333

and

$40,000

was expensed during the

three

and

nine

-month periods ended

September 30, 2018

and

2017,

respectively.

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

September 30, 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 Funding II, LLC 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 Funding II, LLC.

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 Funding II, LLC, 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

September 30, 2016.

The fair value of the warrant amounted to

$383,128

and was capitalized as deferred financing costs, of which

$31,927

and

$95,781

was expensed during the

three

and

nine

-month periods ended

September 30, 2018

and

2017,

respectively.

On

November 29, 2016,

the Company entered into an amendment of the SaaS Capital Loan 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

which was fully expensed at

December 31, 2016.

On

May 10, 2017,

the Company entered into a

second

amendment of the SaaS Capital Loan 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 its hosting migration to a new platform and to allow for potentially augmented marketing and sales efforts.

On

June 16, 2017,

the Company entered into a

third

amendment of the SaaS Capital Loan 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 a

fourth

amendment of the SaaS Capital Loan to permit the issuance of promissory notes to lenders, further described below.

On

November 8, 2017,

the Company entered into a

fifth

amendment, or the Fifth Amendment, of the SaaS Capital Loan 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 a

sixth

amendment, or the Sixth Amendment, of the SaaS Capital Loan to permit the Company to enter into the Beedie Credit Agreement, further described below, and to permit the repayment of Agility Capital and of the promissory notes to lenders, further described below. 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

$4,736

and

$12,629

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

On

May 31, 2018,

the Company entered into a

seventh

amendment, or the Seventh Amendment, of the SaaS Capital Loan to permit the issuance of promissory notes to lenders, as further described below, 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 an

eighth

amendment, or the Eighth Amendment, of the SaaS Capital Loan with SaaS Capital, to issue additional promissory notes, as further described below.

On

August 31, 2018,

the Company entered into a

ninth

amendment, or the Ninth Amendment, of the SaaS Capital Loan with SaaS Capital, to permit the issuance of promissory notes to lenders, as further described below, 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 the

nine

-month period ended

September 30, 2018,

the Company borrowed

$350,000

from the SaaS Capital Loan, and made principal payments of

$2,402,653.

The Company owed

$5,651,731

 and

$7,704,384

under the SaaS Capital Loan at

September 30, 2018

and

December 31, 2017,

respectively.

2017

Promissory Notes

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	1,000,000		$	1,000,000
Principal Payment of Promissory Notes		(1,000,000	)		-
Promissory Notes, Outstanding balance		-			1,000,000
Less: Deferred Financing cost		-			(82,868	)
Less: Promissory Notes, short term		-			(649,194	)
Balance	$	-		$	267,938

On

August 14, 2017,

the Company borrowed an aggregate of

$1,000,000

from

seven

lenders, or the

2017

Lenders, and issued promissory notes, or 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 accrue interest at

12%

per annum and accrued interest is 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

$0

and

$82,868

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$8,723

and

$8,723

was expensed during the

three

and

nine

-month periods ended

September 30, 2017.

On

January 26, 2018,

the Company paid approximately

$1,074,000

to repay the

2017

Promissory Notes which includes 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

September 30, 2018

and

December 31, 2017,

respectively.

Beedie Credit Agreement

	September 30, 2018			December 31, 2017
Total advances	$	6,000,000		$	-
Principal Payment of Loan		-			-
Less: Deferred financing cost		(1,593,841	)		-
Balance	$	4,406,159		$	-

On

January 25, 2018,

the Company entered into a non-revolving term credit agreement, or the Beedie Credit Agreement, with Beedie Investments Limited, or 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 loan agreement between the Company and Agility dated

March 11, 2016,

as amended, and to release Agility Capital’s security interest in Company 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

$14,583

and

$38,888

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, 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 the Company's 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

September 30, 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. 

In connection with the Beedie Credit Agreement, the Company issued to Beedie a warrant, or 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

$91,655

and

$244,413

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

On

May 31, 2018,

the Company entered into a

first

amendment, or the First Beedie Amendment, of the Beedie Credit Agreement to permit the issuance of additional promissory notes to lenders, as further described below, 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

$10,027

and

$13,370

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

On

June 13, 2018,

the Company entered into a

second

amendment, or the Second Beedie Amendment, of the Beedie Credit Agreement to issue additional promissory notes, as further described below. 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

$2,004

and

$2,672

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

On

August 31, 2018,

the Company entered into a

third

amendment, or the Third Beedie Amendment, of the Beedie Credit Agreement to borrow the

second

tranche of the term loan facility in the amount of

$1,500,000,

to permit the issuance of additional promissory notes to lenders, as further described below, 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 the Company’s 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

$11,458

and

$11,458

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

2018

Promissory Notes

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	2,000,000		$	-
Principal Payment of Promissory Notes		-			-
Promissory Notes, Outstanding Balance		2,000,000			-
Less: Deferred Financing Cost		(655,305	)		-
Less: Related Party Portion		(550,000	)
Balance	$	794,695		$	-

On

May 31, 2018,

and

June 15, 2018,

the Company borrowed an aggregate of

$1,500,000

and

$500,000,

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,

one

of the

2018

Lenders is an affiliate of the Company’s Chief Financial Officer, Anthony Mazzarella,

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 employees of the Company. 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

$61,435

and

$81,913

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

August 2018

Promissory Notes

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	1,500,000		$	-
Principal Payment of Promissory Notes		-			-
Promissory Notes, Outstanding balance		1,500,000			-
Less: Deferred financing cost		(269,109	)		-
Balance	$	1,230,891		$	-

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 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

$7,689

and

$7,689

was expensed during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$0

during

2017.

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Amortization expense associated with credit facility and loan	$	251,718	$	64,560	$	636,125	$	180,204
Interest expense associated with credit facility and loan	$	422,051	$	217,695	$	1,133,678	$	613,240
Other finance fees associated with credit facility and loan	$	4,646	$	24,125	$	45,886	$	72,375

XML

Note 6- Stockholders' Deficit

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

6:

STOCKHOLDERS’ DEFICIT

Common Stock

There were

no

exercises of options during the

three

and 

nine

-month periods ended

September 30, 2018.

During the

nine

-month period ended

September 30, 2017,

the Company issued

1,707,692

shares of its Common Stock pursuant to the cashless exercise of

2,400,000

options. 

As of

September 30, 2018,

and

December 31, 2017,

there were

66,179,709

and

65,939,709

shares of Common Stock issued and outstanding, respectively.

Restricted Stock

During

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

September 30, 2018,

these restricted shares were fully issued. The Company recorded expenses of

$30,000

and

$60,000

during the

three

and

nine

-month periods ended

September 30, 2018,

respectively.

$0

remained unvested as of

September 30, 2018.

During the

nine

-month period ended

September 30, 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

September 30, 2018,

these restricted shares were fully issued. The Company recorded expenses of

$30,000

during the

three

and

nine

-month periods ended

September 30, 2018.

90,000

shares remained unvested as of

September 30, 2018.

Warrants

There were

no

exercises of warrants during the

three

and

nine

-month periods ended

September 30, 2018.

During the

three

and

nine

-month periods ended

September 30, 2017,

the Company issued

0

and

160,096

shares of its Common Stock pursuant to the cashless exercise of

225,000

warrants.

During the

three

and

nine

-month periods ended

September 30, 2018,

the Company issued

3,835,000

and

12,135,000

warrants related to its loans, at a fair value of

$689,281

and

$2,727,577,

respectively, and were recognized as deferred financing costs and amortized using the effective interest method over the term of the associated loan. During the

three

and

nine

-month periods ended

September 30, 2018,

the Company issued

1,000,000

and

1,500,000

warrants to employees at a fair value of

$204,730

and

$335,891

and

58,824

warrants expired, respectively.

During the

three

and

nine

-month periods ended

September 30, 2017,

46,875

warrants expired and the Company issued

1,000,000

warrants to the

2017

Lenders, exercisable at a price of

$0.35

per share and which expire on

August 14, 2020. 

The fair value of these warrants, which amounted to

$104,676,

 were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan. 

As of

September 30, 2018,

and

December 31, 2017,

there were

25,045,517

and

11,469,341

warrants issued and outstanding, respectively, with a weighted average price

$0.53

and

$0.74,

respectively.

During the

three

and

nine

-month periods ended

September 30, 2018

and

2017,

the Company recorded expenses of

$101,836

and

$229,400

and

$125,867

and

$377,600,

respectively.

Options

The Company generally recognizes its share-based payment over the vesting terms of the underlying options.

	Nine-month periods ended September 30,
	2018		2017
Weighted-average grant date fair value	$	-	$	-
Fair value of options, recognized as selling, general, and administrative expenses	$	23,298	$	166,397
Number of options granted		-		-

As of

September 30, 2018

and

December 31, 2017,

there were

7,237,500

and

8,302,500

options, respectively, issued and outstanding with a weighted average price of

$0.40

and

$0.40

respectively.

The total compensation cost related to non-vested awards

not

yet recognized amounted to

$18,457

at

September 30, 2018

and the Company expects that it will be recognized over the following

24

months.

XML

Note 7 - Comprehensive Loss

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

NOTE

7:

COMPREHENSIVE LOSS

Comprehensive loss includes changes in equity related to foreign currency translation adjustments. The following table sets forth the reconciliation from net loss to comprehensive loss for the

three

and

nine

-month periods ended

September 30, 2017

and

2016:

	Three months ended						Nine months ended
	September 30,						September 30,
	2018			2017			2018			2017
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Other comprehensive loss:
Foreign currency translation adjustment		(7,166	)		12,841			(20,683	)		32,098
Comprehensive loss	$	(1,970,303	)	$	(682,904	)	$	(4,804,323	)	$	(1,335,580	)

The following table sets forth the balance in accumulated other comprehensive loss as of

September 30, 2018

and

December 31, 2017,

respectively:

	September 30, 2018			December 31, 2017
Accumulated other comprehensive loss	$	(62,223	)	$	(41,540	)

XML

Note 8 - Segments

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

8:

SEGMENTS

The Company operates in

one

business segment. Percentages of sales by geographic region for the

three

and

nine

-month periods ended

September 30, 2017

and

2016

were approximately as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
United States		64%		56%		62%		58%
Europe		15%		18%		17%		20%
Other		21%		26%		21%		22%

XML

Note 9 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

9:

COMMITMENTS AND CONTINGENCIES

During

August 2017,

the Company entered into an amendment to its original

January 2014

lease for certain office space in Newport Beach.  Pursuant to the lease amendment, effective

March 1, 2018,

the premises shall be expanded to include an additional

1,332

usable square feet such that the premises shall consist of

11,728

usable square feet in the aggregate. In addition, pursuant to the terms of the lease amendment, the Company extended the term of the lease agreement until

June 30, 2023.

Commencing on

March 1, 2018,

the initial base rent for the premises is

$38,702

per month for the

first

year and increasing to

$44,566

per month by the end of the term.

During

October 2016,

the Company amended its original

May 2014

sublease and entered into a

21

-month sublease in Newport Beach, effective

June 1, 2016.

The monthly base rent was approximately

$4,100

through the end of the sublease term, in

February 2018.

As of

September 30, 2018,

this sublease has expired.

During

July 2014,

the Company entered into a

five

-year lease for certain office space in a business center in London, England, which commenced on

July 30, 2014.

The base rent is GBP

89,667

(approximately

$115,000

) per year and the estimated service charges for the lease are GBP

45,658

(approximately

$56,000

) per year.

Legal Proceedings

From time to time, the Company

may

become involved in legal proceedings arising in the ordinary course of business. The Company is

not

presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows.

On

November 29, 2016,

the Company entered into the Settlement Agreement with Jeff McCollum, or McCollum, to settle pending litigation between the Company and McCollum in the Superior Court of the State of California related to McCollum’s termination as an executive officer of the Company on

September 8, 2014.

In connection with the Settlement Agreement, McCollum surrendered to the Company a stock certificate representing

1,890,000

shares of the Company’s Common Stock, or the Shares, and for dismissal with prejudice of the cross-complaint and action against the Company brought by McCollum. The Company agreed to pay McCollum a total of

$2,700,000.

$1,000,000

of this total has already been paid as of

January 18, 2017,

of which the Company’s insurance carrier contributed

$500,000.

The remaining

$1,700,000

will be paid in

48

equal monthly installments starting on

July 1, 2017.

The Company previously cancelled McCollum’s options to purchase up to

6,600,000

shares of the Company’s Common Stock at exercise prices of

$0.15

or

$0.31

per share. The Company cancelled the

1,890,000

Shares and thereafter the Company’s issued and outstanding common stock decreased by approximately

3%.

During

2016,

the Company recorded a loss on legal settlement of

$2,200,000,

net of the reimbursement of

$500,000,

which the Company received from its insurance carrier in

December 2016.

The outstanding settlement balance amounted to

$1,168,750

and

$1,487,500

as of

September 30, 2018

and

December 31, 2017,

respectively, pursuant to the Settlement Agreement, of which

$425,000

has been classified as accounts payable and accrued expenses as of

September 30, 2018

and

December 31, 2017

and

$743,750

and

$1,062,500,

respectively, as other long-term liabilities, in the accompanying condensed consolidated balance sheet.

XML

Note 10 - Subsequent Events

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

10:

SUBSEQUENT EVENTS

None

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of unaudited condensed 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, Policy [Policy Text Block]

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

September 30, 2018

and

December 31, 2017.

Receivables, Policy [Policy Text Block]

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 deducted from the allowance.  

	September 30, 2018		December 31, 2017
Allowance for doubtful accounts	$	268,923	$	471,144

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-Lived Assets

The Company accounts for long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic

360

-

10

-

05,

“Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic

360

-

10

-

05

requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying value of an asset

may

no

longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

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.

During the

nine

-month period ended

September 30, 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 the financial institution 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

September 30, 2018

or

December 31, 2017.  

The Company does

not

require any collateral from its customers.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with ASC

2014

-

09,

Revenue from Contracts with Customers, Topic

606,

which supersedes the revenue recognition requirements in FASB ASC

605.

The guidance primarily states 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 in exchange for those goods and services. Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the resulting receivable is reasonably assured.

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 Policy [Policy Text Block]

Product Concentration

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

Fair Value of Financial Instruments, Policy [Policy Text Block]

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.

Advertising Cost, Policy, Expensed Advertising Cost [Policy Text Block]

Advertising

The Company expenses advertising costs as incurred.

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Advertising expense	$	140,907	$	84,302	$	415,358	$	254,446

Income Tax, Policy [Policy Text Block]

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 Transactions and Translations Policy [Policy Text Block]

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.

Research, Development, and Computer Software, Policy [Policy Text Block]

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

$1,125,000

during the

nine

months ended

September 30, 2018.

The Company amortizes such costs once the new software products and significant upgrades and enhancements are completed. The unamortized internal-use software development costs amounted to

$4,624,377

and

$3,925,523

at

September 30, 2018

and

December 31, 2017,

respectively. The Company’s amortization expenses associated with capitalized software development costs amounted to

$105,000

and

$426,146

during the

three

and

nine

-month periods ended

September 30, 2018,

respectively, and

$193,935

and

$509,039

during the

three

and

nine

-month periods ended

September 30, 2017,

respectively. Amortization of internal-use software is reflected in cost of revenues.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

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.

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, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. 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.

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 issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other 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’ Equity.  

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

The Company generated revenues from

one

source, its SaaS business, during the

three

and

nine

-month periods ended

September 30, 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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

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

July 2018,

the FASB issued ASU

2018

-

09

to provide clarification and correction of errors to the Codification. The amendments in this update cover multiple Accounting Standards Updates. Some topics in the update

may

require transition guidance with effective dates for annual periods beginning after

December 15, 2018.

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

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

and subsequently amended the guidance relating largely to transition considerations under the standard in

January 2017.

The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. 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. 

Earnings Per Share, Policy [Policy Text Block]

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).

	Three months ended September 30						Nine months ended September 30
	2018			2017			2018			2017
Numerator:
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Denominator:
Denominator for basic earnings per share--weighted average shares		66,177,101			65,520,434			66,019,709			65,356,201
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		66,177,101			65,520,434			66,019,709			65,356,201
Loss per share:
Basic	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Weighted-average anti-dilutive common share equivalents		29,229,427			17,091,949			26,043,047			16,579,396

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment and Intangible Assets

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 and intangible assets consist of the following at:

	September 30, 2018			December 31, 2017
Computer equipment and software	$	437,302		$	431,497
Office furniture and equipment		124,900			120,420
Leasehold improvements		290,360			292,640
Total (1)		852,562			844,557
Accumulated depreciation (2)		(788,587	)		(775,152	)
Total	$	63,975		$	69,405
(1) Includes 6,150 in foreign exchange translation
(2) Includes (3,085) in foreign exchange translation
Intangible assets	$	7,562,727		$	6,437,726
Accumulated amortization		(2,938,350	)		(2,512,203	)
Total	$	4,624,377		$	3,925,523

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Depreciation expense	$	10,035	$	34,071	$	35,747	$	103,601
Amortization expense on intangible assets	$	105,000	$	193,935	$	426,146	$	509,038

During the

three

and

nine

-month periods ended

September 30, 2018,

the Company disposed of approximately

$19,000

mostly in computer equipment with a net book value of approximately

$2,000

for proceeds of

$750.

During the

three

and

nine

-month periods ended

September 30, 2017,

the Company disposed of approximately

$0

and

$7,500

in computer equipment with a net book value of approximately

$0

and

$1,700

for proceeds of approximately

$0

and

$800,

respectively.

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	September 30, 2018		December 31, 2017
Allowance for doubtful accounts	$	268,923	$	471,144

Schedule of Advertising Expense [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Advertising expense	$	140,907	$	84,302	$	415,358	$	254,446

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three months ended September 30						Nine months ended September 30
	2018			2017			2018			2017
Numerator:
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Denominator:
Denominator for basic earnings per share--weighted average shares		66,177,101			65,520,434			66,019,709			65,356,201
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		66,177,101			65,520,434			66,019,709			65,356,201
Loss per share:
Basic	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Weighted-average anti-dilutive common share equivalents		29,229,427			17,091,949			26,043,047			16,579,396

Property, Plant and Equipment [Table Text Block]

	September 30, 2018			December 31, 2017
Computer equipment and software	$	437,302		$	431,497
Office furniture and equipment		124,900			120,420
Leasehold improvements		290,360			292,640
Total (1)		852,562			844,557
Accumulated depreciation (2)		(788,587	)		(775,152	)
Total	$	63,975		$	69,405
(1) Includes 6,150 in foreign exchange translation
(2) Includes (3,085) in foreign exchange translation
Intangible assets	$	7,562,727		$	6,437,726
Accumulated amortization		(2,938,350	)		(2,512,203	)
Total	$	4,624,377		$	3,925,523

Depreciation Expense [Member]

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Depreciation expense	$	10,035	$	34,071	$	35,747	$	103,601
Amortization expense on intangible assets	$	105,000	$	193,935	$	426,146	$	509,038

XML

Note 4 - Deferred Revenues (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Contract with Customer, Asset and Liability [Table Text Block]

	September 30, 2018		December 31, 2017
Deferred revenues	$	564,002	$	299,937

XML

Note 5 - Credit Facility and Loans (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	September 30, 2018			December 31, 2017
Agility Loan	$	625,000		$	625,000
Amendment, added to balance		400,000			400,000
Principal Payment of Agility Loan		(450,000	)		(425,000	)
Less: Loan repayment		(575,000	)		-
Balance	$	-		$	600,000

	September 30, 2018			December 31, 2017
SaaS Capital Loan, Total advances	$	10,253,000		$	9,903,000
Principal Payment of SaaS Capital Loan		(4,601,269	)		(2,198,616	)
Less: Deferred financing cost		(151,649	)		(245,584	)
Less: SaaS Capital Loan, short term		(3,501,487	)		(3,055,812	)
SaaS Capital Loan, long term	$	1,998,595		$	4,402,988

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	1,000,000		$	1,000,000
Principal Payment of Promissory Notes		(1,000,000	)		-
Promissory Notes, Outstanding balance		-			1,000,000
Less: Deferred Financing cost		-			(82,868	)
Less: Promissory Notes, short term		-			(649,194	)
Balance	$	-		$	267,938

	September 30, 2018			December 31, 2017
Total advances	$	6,000,000		$	-
Principal Payment of Loan		-			-
Less: Deferred financing cost		(1,593,841	)		-
Balance	$	4,406,159		$	-

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	2,000,000		$	-
Principal Payment of Promissory Notes		-			-
Promissory Notes, Outstanding Balance		2,000,000			-
Less: Deferred Financing Cost		(655,305	)		-
Less: Related Party Portion		(550,000	)
Balance	$	794,695		$	-

	September 30, 2018			December 31, 2017
Promissory Notes, Total	$	1,500,000		$	-
Principal Payment of Promissory Notes		-			-
Promissory Notes, Outstanding balance		1,500,000			-
Less: Deferred financing cost		(269,109	)		-
Balance	$	1,230,891		$	-

Schedule of Interest and Amortization Expense Line of Credit [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Amortization expense associated with credit facility and loan	$	251,718	$	64,560	$	636,125	$	180,204
Interest expense associated with credit facility and loan	$	422,051	$	217,695	$	1,133,678	$	613,240
Other finance fees associated with credit facility and loan	$	4,646	$	24,125	$	45,886	$	72,375

XML

Note 6- Stockholders' Deficit (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Share-based Compensation, Activity [Table Text Block]

	Nine-month periods ended September 30,
	2018		2017
Weighted-average grant date fair value	$	-	$	-
Fair value of options, recognized as selling, general, and administrative expenses	$	23,298	$	166,397
Number of options granted		-		-

XML

Note 7 - Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Comprehensive Income (Loss) [Table Text Block]

	Three months ended						Nine months ended
	September 30,						September 30,
	2018			2017			2018			2017
Net loss	$	(1,963,137	)	$	(695,745	)	$	(4,783,640	)	$	(1,367,678	)
Other comprehensive loss:
Foreign currency translation adjustment		(7,166	)		12,841			(20,683	)		32,098
Comprehensive loss	$	(1,970,303	)	$	(682,904	)	$	(4,804,323	)	$	(1,335,580	)

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	September 30, 2018			December 31, 2017
Accumulated other comprehensive loss	$	(62,223	)	$	(41,540	)

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Note 8 - Segments (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
United States		64%		56%		62%		58%
Europe		15%		18%		17%		20%
Other		21%		26%		21%		22%

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Note 1 - Organization, Description of Business and Going Concern (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Working Capital (Deficit)	$ 2,024,625		$ 2,024,625
Retained Earnings (Accumulated Deficit), Ending Balance	(36,326,324)		(36,326,324)		$ (31,542,684)
Net Income (Loss) Attributable to Parent, Total	$ (1,963,137)	$ (695,745)	(4,783,640)	$ (1,367,678)
Net Cash Provided by (Used in) Operating Activities, Total			$ (2,769,540)	$ (956,766)

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Note 2 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2018	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Restricted Cash and Cash Equivalents, Current, Total	$ 50,000			$ 50,000		$ 50,000
Cash, FDIC Insured Amount	250,000			250,000
Payments to Develop Software				1,125,000	$ 1,347,075
Capitalized Computer Software, Net, Ending Balance	4,624,377			4,624,377		$ 3,925,523
Capitalized Computer Software, Amortization	105,000	$ 193,935		$ 426,146	$ 509,039
Number of Reportable Segments				1	1
Property, Plant and Equipment, Useful Life			3 years
Proceeds from Sale of Productive Assets, Total				$ 750	$ 795
Computer Equipment [Member]
Property, Plant and Equipment, Disposals	19,000	0		19,000	7,500
Property, Equipment and Equipment, Net, Disposals	2,000			2,000	1,700
Proceeds from Sale of Productive Assets, Total	$ 750	$ 0		$ 750	$ 800
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage				0.00%

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Note 2 - Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Allowance for doubtful accounts	$ 268,923	$ 471,144

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Note 2 - Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Advertising expense	$ 140,907	$ 84,302	$ 415,358	$ 254,446

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Note 2 - Summary of Significant Accounting Policies - Basic and Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Numerator:
Net loss	$ (1,963,137)	$ (695,745)	$ (4,783,640)	$ (1,367,678)
Denominator:
Denominator for basic earnings per share--weighted average shares (in shares)	66,177,101	65,520,434	66,019,709	65,356,201
Effect of dilutive securities- when applicable:
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions (in shares)	66,177,101	65,520,434	66,019,709	65,356,201
Loss per share:
Basic (in dollars per share)	$ (0.03)	$ (0.01)	$ (0.07)	$ (0.02)
Diluted (in dollars per share)	$ (0.03)	$ (0.01)	$ (0.07)	$ (0.02)
Weighted-average anti-dilutive common share equivalents (in shares)	29,229,427	17,091,949	26,043,047	16,579,396
Employee Stock Option [Member]
Effect of dilutive securities- when applicable:
Effect of dilutive securities (in shares)
Warrant [Member]
Effect of dilutive securities- when applicable:
Effect of dilutive securities (in shares)

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Note 2 - Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($)		Sep. 30, 2018	Dec. 31, 2017
Computer equipment and software	[1]	$ 852,562	$ 844,557
Accumulated depreciation (2)	[2]	(788,587)	(775,152)
Total		63,975	69,405
Intangible assets		7,562,727	6,437,726
Accumulated amortization		(2,938,350)	(2,512,203)
Total		4,624,377	3,925,523
Software Development [Member]
Computer equipment and software		437,302	431,497
Furniture and Fixtures [Member]
Computer equipment and software		124,900	120,420
Leasehold Improvements [Member]
Computer equipment and software		$ 290,360	$ 292,640

[1] Includes 3,944 in foreign exchange translation

[2] Includes (3,085) in foreign exchange translation

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Note 2 - Summary of Significant Accounting Policies - Property and Equipment (Details) (Parentheticals)	9 Months Ended
	Sep. 30, 2018 USD ($)
Foreign exchange translation	$ 6,150
Foreign exchange translation	$ (3,085)

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Note 2 - Summary of Significant Accounting Policies - Property and Equipment, Depreciation Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Depreciation expense	$ 10,035	$ 34,071	$ 35,747	$ 103,601
Amortization expense on intangible assets	$ 105,000	$ 193,935	$ 426,146	$ 509,039

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Note 4 - Deferred Revenues - Deferred Revenues (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Deferred revenues	$ 564,002	$ 299,937

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Note 5 - Credit Facility and Loans (Details Textual) - USD ($)																1 Months Ended	2 Months Ended	3 Months Ended			5 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 31, 2018	Jun. 15, 2018	May 31, 2018	Jan. 26, 2018	Jan. 25, 2018	Nov. 08, 2017	Oct. 31, 2017	Oct. 30, 2017	Aug. 31, 2017	Aug. 14, 2017	May 10, 2017	May 05, 2017	Nov. 29, 2016	May 05, 2016	Mar. 11, 2016	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2018	Aug. 31, 2018	Sep. 30, 2017	May 31, 2018	Sep. 30, 2016	Jun. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 13, 2018	Jan. 31, 2018	Nov. 09, 2017	Dec. 31, 2016	Jun. 30, 2016
Subordinated Debt, Ending Balance																														$ 625,000
Amortization of Debt Issuance Costs																		$ 251,718		$ 64,560				$ 636,125	$ 180,204
Proceeds from Notes Payable, Total																								3,500,000	1,000,000
Repayments of Notes Payable																								1,000,000
Interest Paid, Excluding Capitalized Interest, Operating Activities																								1,133,678	613,240
Beedie Credit Agreement [Member] | Beedie Investments Limited [Member]
Debt Instrument, Face Amount																							$ 6,000,000
Debt Instrument, Interest Rate, Stated Percentage					12.00%
Debt Instrument, Fee Amount					$ 175,000
Line of Credit Facility, Maximum Borrowing Capacity					$ 7,000,000
Proceeds from Long-term Lines of Credit				$ 4,500,000
Debt Issuance Costs, Net, Total																$ 1,593,841		1,593,841						1,593,841
Amortization of Debt Issuance Costs																		14,583						38,888			0
Debt Instrument, Interest Rate, Stated Percentage, If Gross Margin Falls Below Specified Amount					14.00%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage					0.325%
Debt Instrument, Accrued Interest Fee, Period					2 years
Debt Instrument, Debt Default, Interest Rate, Percentage					18.00%
SaaS Capital Loan [Member]
Debt Instrument, Interest Rate, Stated Percentage														10.25%
Debt Instrument, Fee Amount	$ 555,000		$ 495,000			$ 375,000													$ 555,000		$ 495,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights													200,000
Class of Warrant or Right, Exercise Price of Warrants or Rights													$ 0.36
Warrants and Rights Outstanding														$ 383,128																	$ 60,185
Amortization of Debt Discount (Premium)																		31,927		95,781				31,927	95,781
Long-term Debt, Gross																5,651,731	7,704,384	5,651,731						5,651,731			7,704,384
Line of Credit Facility, Maximum Borrowing Capacity														$ 8,000,000
Debt Instrument, Reference Rate														9.21%
Prepayment Fee, Percentage Period One														10.00%
Prepayment Fee, Percentage, Period Two														6.00%
Prepayment Fee, Percentage, Period Three														3.00%
Proceeds from Long-term Lines of Credit														$ 5,000,000
Repayments of Long-term Lines of Credit														4,572,223
Line of Credit Facility, Commitment Fee Amount												$ 80,000		80,000
Debt Issuance Costs, Net, Total														$ 160,000
Amortization of Debt Issuance Costs																		13,333		40,000				13,333	40,000
Payments of Financing Costs, Total																						$ 169,000
Debt Instrument, Minimum Adjusted EBITDA							$ (170,000)	$ 0	$ (150,000)		$ 0					0	(150,000)		$ (50,000)		(100,000)
Debt Instrument, Minimum Liquidity Covenant for Cash Balance																													$ 600,000
Debt Instrument, Additional Fee Amount			$ 120,000																		$ 120,000
Proceeds from Issuance of Subordinated Long-term Debt																								350,000
Repayments of Subordinated Debt, Total																										$ 2,402,653
SaaS Capital Loan [Member] | Loan Modification [Member]
Debt Instrument, Periodic Payment, Total													$ 10,000
Debt Instrument, Fee Amount													120,000
Agility Loan Warrants [Member]
Debt Instrument, Fee Amount													$ 100,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights													187,500																			69,444
Class of Warrant or Right, Exercise Price of Warrants or Rights													$ 0.40																			$ 0.45
Warrants and Rights Outstanding													$ 42,427																			$ 15,880
Amortization of Debt Discount (Premium)																				0			0		3,970
Agility Loan Warrants 2 [Member]
Amortization of Debt Discount (Premium)																				9,791			0		29,372
SaaS Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					200,000									1,333,333
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.35									$ 0.45
Warrants and Rights Outstanding					$ 56,834
Amortization of Debt Discount (Premium)																		4,736						12,629			0
Beedie Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					4,500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.35
Warrants and Rights Outstanding																1,099,861		1,099,861						1,099,861
Amortization of Debt Issuance Costs																		91,655						244,413			0
Class of Warrant or Right, Number of Additional Securities Called by Warrants or Rights					2,500,000
Beedie Warrant Amendment 1 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			500,000																		500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.35																		$ 0.35
Warrants and Rights Outstanding			$ 120,330																		$ 120,330
Amortization of Debt Issuance Costs																		10,027						13,370			0
Beedie Warrant Amendment 2 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																												100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights																												$ 0.35
Warrants and Rights Outstanding																												$ 24,053
Amortization of Debt Issuance Costs																		2,004						2,672			0
Beedie Warrant Amendment 3 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	835,000																		835,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.35																		$ 0.35
Warrants and Rights Outstanding																412,484		412,484						412,484
Amortization of Debt Issuance Costs																		11,458						11,458			0
Class of Warrants or Right, Issued	1,500,000																		1,500,000
The 2018 Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			3,000,000																		3,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.35																		$ 0.35
Warrants and Rights Outstanding			$ 737,218																		$ 737,218
Warrants and Rights Outstanding, Term			6 years																		6 years
The 2018 Promissory Notes [Member]
Amortization of Debt Issuance Costs																		61,435						81,913			0
August 2018 Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	1,500,000																		1,500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.35																		$ 0.35
Warrants and Rights Outstanding	$ 276,798																		$ 276,798
Amortization of Debt Issuance Costs																		7,689						7,689			0
Warrants and Rights Outstanding, Term	6 years																		6 years
Subordinated Debt [Member]
Debt Instrument, Face Amount															$ 625,000	625,000	625,000	625,000						625,000			625,000
Debt Instrument, Interest Rate, Stated Percentage															12.00%
Debt Instrument, Periodic Payment, Total															$ 25,000
Debt Instrument, Fee Amount						125,000									130,000	400,000	400,000	400,000						400,000			400,000
Debt Instrument, Minimum Aggregate Interest in the Event of Prepayment															$ 50,000
Proceeds from Issuance of Long-term Debt, Total						300,000
Long-term Debt, Fair Value						606,034
Gain (Loss) on Extinguishment of Debt, Total						$ (106,034)
Repayments of Long-term Debt, Total				581,000
Long-term Debt, Gross																	600,000						$ 0				600,000
Repayments of Subordinated Debt, Total																								575,000
The 2017 Promissory Notes [Member]
Debt Instrument, Face Amount																1,000,000	1,000,000	1,000,000						1,000,000			1,000,000
Debt Instrument, Interest Rate, Stated Percentage										12.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights										1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 0.35
Warrants and Rights Outstanding																104,676		104,676						104,676
Amortization of Debt Discount (Premium)																		0		$ 8,723				82,868	$ 8,723
Long-term Debt, Gross																0	1,000,000	0						0			1,000,000
Debt Issuance Costs, Net, Total																	82,868										82,868
Proceeds from Notes Payable, Total										$ 1,000,000
Warrants and Rights Outstanding, Term										3 years
Repayments of Notes Payable				1,074,000
Interest Paid, Excluding Capitalized Interest, Operating Activities				$ 65,000
August 2018 Promissory Notes [Member]
Debt Instrument, Face Amount																1,500,000		1,500,000						1,500,000
Debt Instrument, Interest Rate, Stated Percentage	12.00%																		12.00%
Long-term Debt, Gross																1,500,000		1,500,000						1,500,000
Debt Issuance Costs, Net, Total																269,109		269,109						269,109
Proceeds from Notes Payable, Total	$ 1,500,000
August 2018 Promissory Notes [Member] | Brand Credit Agreement Amendment 3 [Member]
Proceeds from Notes Payable, Total	$ 1,500,000
The 2018 Promissory Notes [Member]
Debt Instrument, Face Amount																2,000,000		2,000,000						2,000,000
Debt Instrument, Interest Rate, Stated Percentage			12.00%																		12.00%
Long-term Debt, Gross																2,000,000		2,000,000						2,000,000
Debt Issuance Costs, Net, Total																$ 655,305		$ 655,305						$ 655,305
Proceeds from Notes Payable, Total		$ 500,000	$ 1,500,000

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Note 5 - Credit Facility and Loans - Line of Credit and Loans (Details) - USD ($)	8 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Dec. 31, 2017	Jun. 30, 2018	Jan. 25, 2018	Nov. 08, 2017	Mar. 11, 2016
Beedie Credit Agreement [Member] | Beedie Investments Limited [Member]
Loans				$ 6,000,000
Amendment, added to balance					$ 175,000
Principal Payment
Less: Deferred financing cost	$ (1,593,841)	(1,593,841)
Principal Payment of Loan
Balance	4,406,159	4,406,159
Subordinated Debt [Member]
Loans	625,000	625,000	625,000				$ 625,000
Amendment, added to balance	400,000	400,000	400,000			$ 125,000	$ 130,000
Principal Payment		(450,000)	(425,000)
Less: Loan repayment		(575,000)
Balance			600,000
Outstanding balance			600,000	$ 0
Principal Payment of Loan		450,000	425,000
SaaS Capital Loan [Member]
Loans	10,253,000	10,253,000	9,903,000
Principal Payment		(4,601,269)	(2,198,616)
Balance	1,998,595	1,998,595	4,402,988
Less: Deferred financing cost	(151,649)	(151,649)	(245,584)
Less: short term	(3,501,487)	(3,501,487)	(3,055,812)
Principal Payment of Loan		4,601,269	2,198,616
The 2017 Promissory Notes [Member]
Loans	1,000,000	1,000,000	1,000,000
Principal Payment	(1,000,000)
Balance			267,938
Less: Deferred financing cost			(82,868)
Less: short term			(649,194)
Outstanding balance	0	0	1,000,000
Principal Payment of Loan	1,000,000
The 2018 Promissory Notes [Member]
Loans	2,000,000	2,000,000
Principal Payment
Balance	794,695	794,695
Less: Deferred financing cost	(655,305)	(655,305)
Outstanding balance	2,000,000	2,000,000
Principal Payment of Loan
Less: Related Party Portion	(550,000)	(550,000)
Balance	550,000	550,000
August 2018 Promissory Notes [Member]
Loans	1,500,000	1,500,000
Principal Payment
Less: Deferred financing cost	(269,109)	(269,109)
Outstanding balance	1,500,000	1,500,000
Principal Payment of Loan
Less: Related Party Portion	(1,230,891)	(1,230,891)
Balance	$ 1,230,891	$ 1,230,891

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Note 5 - Credit Facility and Loans - Estimated Future Amortization Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Amortization expense associated with credit facility and loan	$ 251,718	$ 64,560	$ 636,125	$ 180,204
Interest expense associated with credit facility and loan	422,051	217,695	1,133,678	613,240
Other finance fees associated with credit facility and loan	$ 4,646	$ 24,125	$ 45,886	$ 72,375

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Note 6- Stockholders' Deficit (Details Textual)	2 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2017 USD ($) shares	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2017 USD ($) shares	Dec. 31, 2017 USD ($) $ / shares shares	Sep. 01, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		0		0	2,400,000
Stock Issued During Period, Shares, Stock Options Exercised, Noncash					1,707,692
Common Stock, Shares, Issued, Total	66,179,709	66,179,709		66,179,709		66,179,709
Common Stock, Shares, Outstanding, Ending Balance	65,939,709	65,939,709		65,939,709		65,939,709
Allocated Share-based Compensation Expense, Total | $		$ 101,836	$ 125,867	$ 229,400	$ 377,600
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised	225,000			225,000
Stock Issued During Period, Shares, Warrants Exercised, Noncash		0		160,096
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period			46,875		46,875
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	7,237,500	7,237,500		7,237,500		8,302,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares	$ 0.40	$ 0.40		$ 0.40		$ 0.40
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total | $	$ 18,457	$ 18,457		$ 18,457
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				24 years
Warrants Related to Loans 1 [Member]
Class of Warrant or Right, Issued During Period		3,835,000
Warrants and Rights Outstanding | $	689,281	$ 689,281		$ 689,281
Warrants Related to Loans 2 [Member]
Class of Warrant or Right, Issued During Period				12,135,000
Warrants and Rights Outstanding | $	2,727,577	$ 2,727,577		$ 2,727,577
Warrants Issued to Employees, 1 [Member]
Class of Warrant or Right, Issued During Period		1,000,000		1,500,000
Warrants and Rights Outstanding | $							$ 204,730
Warrants Issued to the 2017 Lenders [Member]
Class of Warrant or Right, Issued During Period			1,000,000		1,000,000
Stock Warrants Issued to Employees [Member]
Warrants and Rights Outstanding | $						$ 104,676
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares						$ 0.35
Warrants Issued to Employees, 2 [Member]
Warrants and Rights Outstanding | $	$ 204,730	$ 204,730		$ 204,730
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		58,824		58,824
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised		0		0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period		335,891		335,891
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance	25,045,517	25,045,517		25,045,517		11,469,341
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares	$ 0.53	$ 0.53		$ 0.53		$ 0.74
Restricted Stock [Member] | Non-employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		120,000				120,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares		$ 0.50				$ 0.50
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Vesting, Number of Equal Quarterly Increments		4				4
Allocated Share-based Compensation Expense, Total | $		$ 30,000		$ 30,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $	$ 0	$ 0		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance	90,000	90,000		90,000
Restricted Stock [Member] | Non-employee Directors [Member] | The 2017 Stock Award [Member]
Allocated Share-based Compensation Expense, Total | $		$ 30,000		$ 60,000

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Note 6 - Stockholders' Deficit - Additional Information Stock Options (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Weighted-average grant date fair value (in dollars per share)
Number of options granted (in shares)
Selling, General and Administrative Expenses [Member]
Fair value of options, recognized as selling, general, and administrative expenses	$ 23,298	$ 166,397

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Note 7 - Comprehensive Loss - Reconciliation From Net Loss to Comprehensive Loss (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net loss	$ (1,963,137)	$ (695,745)	$ (4,783,640)	$ (1,367,678)
Other comprehensive loss:
Foreign currency translation adjustment	(7,166)	12,841	(20,683)	32,098
Comprehensive loss	$ (1,970,303)	$ (682,904)	$ (4,804,323)	$ (1,335,580)

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Note 7 - Comprehensive Loss - Accumulated Other Comprehensive Loss (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accumulated other comprehensive loss	$ (62,223)	$ (41,540)

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Note 8 - Segments (Details Textual)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Number of Reportable Segments	1	1

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Note 8 - Segments - Sales by Geographic Region (Details) - Sales Revenue, Segment [Member] - Geographic Concentration Risk [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
UNITED STATES
Percentage of sales	64.00%	56.00%	62.00%	58.00%
Europe [Member]
Percentage of sales	15.00%	18.00%	17.00%	20.00%
Other [Member]
Percentage of sales	21.00%	26.00%	21.00%	22.00%

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Note 9 - Commitments and Contingencies (Details Textual)			1 Months Ended			12 Months Ended
	Mar. 01, 2018 USD ($) ft²	Nov. 29, 2016 USD ($) $ / shares shares	Oct. 31, 2016 USD ($)	Jul. 31, 2014 USD ($)	Jul. 31, 2014 GBP (£)	Dec. 31, 2016 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jul. 30, 2014
Estimated Litigation Liability							$ 1,168,750	$ 1,487,500
Common Stock Issued and Outstanding Percentage Decrease		3.00%
Gain (Loss) Related to Litigation Settlement, Total						$ (2,200,000)
Accounts Payable and Accrued Liabilities [Member]
Estimated Litigation Liability							425,000
Other Noncurrent Liabilities [Member]
Estimated Litigation Liability							$ 743,750	$ 1,062,500
Executive Officer [Member]
Stock Cancelled During Period, Shares | shares		1,890,000
Litigation Settlement, Amount Awarded to Other Party		$ 2,700,000
Payments for Legal Settlements		1,000,000
Payments for Legal Settlements by Insurance Carrier		500,000
Estimated Litigation Liability		$ 1,700,000
Payments For Legal Settlements, Installment Terms		48
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | shares		6,600,000
Minimum [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ / shares		$ 0.15
Maximum [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ / shares		$ 0.31
Office Space In Newport Beach California [Member]
Additional Area of Land | ft²	1,332
Area of Land | ft²	11,728
Office Space In Newport Beach California [Member] | Minimum [Member]
Operating Lease Monthly Rent	$ 38,702
Office Space In Newport Beach California [Member] | Maximum [Member]
Operating Lease Monthly Rent	$ 44,566
Sublease in Newport Beach [Member]
Operating Lease Monthly Rent			$ 4,100
Lessor, Operating Lease, Term of Contract			1 year 270 days
Office Space in London England [Member]
Operating Lease Monthly Rent				$ 115,000	£ 89,667
Lessee, Operating Lease, Term of Contract									5 years
Operating Lease Service Charges				$ 56,000	£ 45,658