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, 2016

[  ] 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes [X]  No [  ]

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

Large accelerated filer ☐	Accelerated filer [X]
Non-accelerated filer ☐ (Do not check if smaller reporting company)	Smaller reporting company ☐

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 7, 2016, was 65,305,254.

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

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 the size of the digital marketing market, our expectations that our revenues and cost of revenues will increase in 2016, our expansion plans, our new products, our intentions to grow revenues by investing in sales and marketing efforts, our spending on research and development, training, and support personnel, 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 17, 2016. 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.

ACCELERIZE INC.

INDEX

		Page
PART I - FINANCIAL INFORMATION:		1
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Position and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II - OTHER INFORMATION:		24
Item 1.	Legal Proceedings	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 6.	Exhibits	25
SIGNATURES		26

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ACCELERIZE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
Current Assets:
Cash	$	614,865		$	908,095
Restricted cash		200,000			-
Accounts receivable, net of allowance for bad debt of $366,198 and $395,147, respectively		2,273,738			1,833,007
Prepaid expenses and other current assets		507,744			239,921
Total current assets		3,596,347			2,981,023
Property and equipment, net of accumulated depreciation of $2,355,962 and $1,854,351, respectively		2,782,159			1,956,864
Other assets		108,020			124,882
Total assets	$	6,486,526		$	5,062,769
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	1,812,619		$	2,236,750
Deferred revenues		70,278			10,436
Line of credit, net of deferred financing cost of $0 and $36,559, respectively		-			4,598,441
Other short term loan, net of deferred financing cost of $7,893 and $0, respectively		517,107			-
Total current liabilities		2,400,004			6,845,627
Line of credit, net of deferred financing cost of $469,531 and $0, respectively		5,530,469			-
Total liabilities		7,930,473			6,845,627
Stockholders' Deficit
Common stock; $0.001 par value; 100,000,000 shares authorized; 65,125,254 and 65,069,327 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively		65,124			65,068
Additional paid-in capital		24,869,327			23,440,366
Accumulated deficit		(26,317,115	)		(25,266,612	)
Accumulated other comprehensive loss		(61,283	)		(21,680	)
Total stockholders’ deficit		(1,443,947	)		(1,782,858	)
Total liabilities and stockholders’ deficit	$	6,486,526		$	5,062,769

 See Notes to Unaudited Condensed Consolidated Financial Statements. 

1

ACCELERIZE INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2016			2015			2016			2015
Revenues:	$	6,015,800		$	5,288,628		$	17,883,105		$	15,954,114
Cost of revenue		2,073,018			1,797,056			6,035,828			4,706,167
Gross profit		3,942,782			3,491,572			11,847,277			11,247,947
Operating expenses:
Research and development		952,704			1,391,301			2,957,140			3,593,093
Sales and marketing		924,415			1,824,046			2,791,715			5,873,023
General and administrative		1,956,991			2,394,092			6,492,958			7,199,968
Total operating expenses		3,834,110			5,609,439			12,241,813			16,666,084
Operating income (loss)		108,672			(2,117,867	)		(394,536	)		(5,418,137	)
Other income (expense):
Other (loss) income		(153	)		9,475			20,781			63,840
Other expense		(242,516	)		(73,897	)		(676,748	)		(182,134	)
Total other (expense)		(242,669	)		(64,422	)		(655,967	)		(118,294	)
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Net loss per share:
Basic	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Diluted	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Basic weighted average common shares outstanding		65,121,621			63,876,095			65,086,886			63,184,579
Diluted weighted average common shares outstanding		65,121,621			63,876,095			65,086,886			63,184,579

See Notes to Unaudited Condensed Consolidated Financial Statements.

2

ACCELERIZE INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2016			2015			2016			2015
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Foreign currency translation loss		(10,106	)		(6,363	)		(39,603	)		(4,335	)
Total other comprehensive loss		(10,106	)		(6,363	)		(39,603	)		(4,335	)
Comprehensive loss	$	(144,103	)	$	(2,188,652	)	$	(1,090,106	)	$	(5,540,766	)

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

ACCELERIZE INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

	Nine-month periods ended September 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(1,050,503	)	$	(5,536,431	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		522,202			1,065,624
Impairment of fixed assets		275,029			-
Amortization of debt discount and deferred financing cost		125,183			30,282
Provision for bad debt		(28,949	)		(98,169	)
Fair value of options and warrants		1,037,400			1,632,029
Non-cash expenses paid on company's behalf		204,920			-
Gain on sale of fixed assets		(246	)		-
Changes in operating assets and liabilities:
Accounts receivable		(411,782	)		(563,531	)
Prepaid expenses and other assets		(267,823	)		(130,258	)
Restricted cash		(200,000	)		-
Accounts payable and accrued expenses		(449,131	)		(1,244,171	)
Deferred revenues		59,842			(187,091	)
Other assets		15,406			1,574
Net cash used in operating activities		(168,451	)		(2,541,800	)
Cash flows from investing activities:
Capitalized software for internal use		(1,606,887	)		(952,216	)
Capital expenditures		(20,206	)		(152,080	)
Proceeds from sale of assets		6,267			5,630
Net cash used in investing activities		(1,620,826	)		(1,098,666	)
Cash flows from financing activities:
Principal repayments of line of credit		(137,777	)		-
Proceeds from line of credit		1,803,105			1,315,000
Payment of financing costs		(129,678	)		-
Net proceeds from exercise of options and warrants		-			9,586
Net proceeds from issuance of shares of Common Stock		-			1,852,362
Payments related to issuance of shares of Common Stock					(143,169	)
Net cash provided by financing activities		1,535,650			3,033,779
Effect of exchange rate changes on cash		(39,603	)		(4,335	)
Net decrease in cash		(293,230	)		(611,022	)
Cash, beginning of period		908,095			1,130,667
Cash, end of period	$	614,865		$	519,645
Supplemental disclosures of cash flow information:
Cash paid for interest	$	639,744		$	179,484
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities:
Fair value of warrants issued in connection with line of credit	$	391,618		$	37,289
Repayment of Agility Loan, included in accounts payable	$	25,000		$	-
Repayment of Line of Credit	$	4,572,223		$	-

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

ACCELERIZE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

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.

The condensed consolidated balance sheet presented as of December 31, 2015 has been derived from our audited consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to those rules and regulations, but we believe that the disclosures are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the annual financial statements and notes for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the SEC on March 17, 2016.  In the opinion of management, all adjustments, consisting of normal, recurring adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results of operations for the three and nine-month periods ended September 30, 2016 are not necessarily indicative of the results for the year ending December 31, 2016.

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.

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 $200,000 at September 30, 2016.

5

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, 2016		December 31, 2015
Allowance for doubtful accounts	$	366,198	$	395,147

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, 2016, 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, 2016 or December 31, 2015.  The Company does not require any collateral from its customers.

 Revenue Recognition

The Company recognizes revenue on arrangements in accordance with ASC Topic 605, Revenue Recognition. Revenue is recognized only 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.

6

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,
	2016		2015		2016		2015
Advertising expense	$	23,992	$	114,824	$	100,669	$	349,907

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 balance sheet accounts using exchange 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 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 unaudited condensed consolidated statements of operations. 

7

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 $1,606,887 during the nine months ended September 30, 2016. 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 $2,584,007 and $1,548,085 at September 30, 2016 and December 31, 2015, respectively. The Company’s amortization expenses associated with capitalized software development costs amounted to $195,387 and $570,966 during the three and nine-month periods ended September 30, 2016, respectively, and $200,133 and $539,265 during the three and nine-month periods ended September 30, 2015, 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.

Segment Reporting

The Company generated revenues from one source, its SaaS business, during the nine-month periods ended September 30, 2016 and 2015. 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

The Company applied ASU 2015-03: Interest – Imputation of Interest, which simplifies the presentation of debt issuance costs, and netted debt issue costs previously reported as assets with the related liability for presentation purposes. Other accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.  

Reclassification

The balance sheet, and related footnotes, for the year ended December 31, 2015 has been reclassified to reflect the adoption of ASU 2015-03 which changes the presentation of debt issuance costs in financial statements and requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset.

8

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
	2016			2015			2016			2015
Numerator:
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Denominator:
Denominator for basic earnings per share--weighted average shares		65,121,621			63,876,095			65,086,886			63,184,579
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		65,121,621			63,876,095			65,086,886			63,184,579
Loss per share:
Basic	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Diluted	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Weighted-average anti-dilutive common share equivalents		18,087,545			16,562,631			18,501,508			17,146,481

Property and Equipment

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

Property and equipment consist of the following at:

	September 30, 2016			December 31, 2015
Internal use software costs	$	4,333,096		$	2,726,209
Computer equipment and software		389,150			563,892
Office furniture and equipment		125,789			222,061
Leasehold improvements		290,086			299,053
		5,138,121			3,811,215
Accumulated depreciation		(2,355,962	)		(1,854,351	)
	$	2,782,159		$	1,956,864

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Depreciation expense	$	52,203	$	74,851	$	226,265	$	230,063
Amortization expense on internal software	$	195,387	$	200,133	$	570,966	$	539,265

During the nine-month period ended September 30, 2016, the Company sold approximately $15,000 in computer equipment with a net book value of approximately $6,000 for proceeds of approximately $6,000.

During the nine-month period ended September 30, 2016, the Company wrote off approximately $280,000 in fixed assets with a net book value of approximately $31,000, which was recorded under the depreciation expense account.

NOTE 3: PREPAID EXPENSES

At September 30, 2016 and December 31, 2015, the Company’s prepaid expenses consisted primarily of prepaid insurance and rent.

9

NOTE 4: DEFERRED REVENUES

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

	September 30, 2016		December 31, 2015
Deferred revenues	$	70,278	$	10,436

NOTE 5: LINE OF CREDIT AND LOANS

Line of Credit

	September 30, 2016			December 31, 2015
Line of credit		4,635,000			4,635,000
Repayment of Line of credit		(4,635,000	)		-
Less: Deferred financing cost		-			(36,559	)
	$	-		$	4,598,441

On September 30, 2014, the Company entered into an amendment of its line of credit, or the Line of Credit, with Pacific Western Bank, as successor in interest by merger to Square 1 Bank, or the Lender, to borrow up to a maximum of $6,000,000 at the Company’s discretion, an increase from up to $3,000,000 that the Company was permitted to borrow under the original Line of Credit entered into on March 17, 2014. Amounts borrowed accrued interest at the prime rate in effect from time to time plus 1.25%, not to be less than 5.5% per annum, provided that in no event shall the accrued interest payable with respect to any month be less than $10,000. Accrued interest on amounts borrowed was payable monthly. All other amounts borrowed were to be payable in full on the maturity date of March 17, 2016; however, this date was extended by the Lender until May 31, 2016. This maturity extension was granted concurrently with a waiver issued by the Lender pursuant to an amendment to the Line of Credit on March 11, 2016, which amendment waived any default due to breach of the Line of Credit minimum liquidity covenant during the specified time period, adjusts the Minimum Adjusted EBITDA covenant, and reduces the credit limit to $5,135,000. A condition precedent to the waiver was the funding of a $625,000 subordinated loan, or the Agility Loan, from Agility Capital II, LLC, or Agility Capital, which funded on March 11, 2016. The Line of Credit may be earlier terminated without a prepayment fee. The Company also made a repayment of $62,777 in March 2016.

In connection with the original Line of Credit, the Company issued to the Lender a warrant to purchase up to 46,875 shares of the Company’s Common Stock at an exercise price of $1.60 per share. The warrant expires on March 17, 2017. The fair value of the warrant amounted to $32,067. On March 27, 2015, in connection with an obligation under the Line of Credit when borrowings thereunder exceed $3,000,000, the Company issued to the Lender a warrant to purchase 58,824 shares of the Company’s Common Stock at an exercise price of $1.53 per share. This warrant expires on March 27, 2018. The fair value of the warrant amounted to $37,289.

As further described below, 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. On May 5, 2016, the Company drew down $5,000,000 as the initial advance from the SaaS Capital Loan and used a portion of the proceeds, $4,572,223, to repay the outstanding Line of Credit balance.

As of September 30, 2016, the Company had no outstanding balance under the Line of Credit.

10

The Company paid approximately $50,000 to the Lender in financing costs through December 31, 2015, and approximately $69,000 through May 5, 2016. The deferred financing costs associated with the Line of Credit were fully expensed at June 30, 2016.

Agility Loan 

	September 30, 2016			December 31, 2015
Agility Loan		625,000			-
Principal Payment of Agility Loan		(100,000	)		-
Less: Deferred financing cost		(7,893	)		-
	$	517,107		$	-

On March 11, 2016, the Company entered into a subordinated loan with Agility Capital which provides for total availability of $625,000 and matures 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 September 30, 2016, 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 the Lender and to SaaS Capital Funding II, LLC.

In connection with the Agility Loan, Agility Capital is entitled to purchase, under certain circumstances, fully paid and nonassessable shares of the Company’s class of securities, or Shares, at the initial exercise price per Share which is the closing price on the day prior to the issuance date, or the Warrant Price. The initial number of Shares issuable upon exercise of this Warrant is zero (0). On June 30, 2016, if any amounts under the Agility Loan remain outstanding, then the number of Shares issuable upon exercise of this Warrant shall equal $31,250 divided by the Warrant Price. In addition to the foregoing, upon the occurrence of an Event of Default, as defined in the loan agreement, pursuant to Section 5(a) or Section 5(b) of the Agility Loan, the number of Shares that may be acquired thereunder shall increase by an additional number of Shares equal to 5% of the number of Shares issuable thereunder upon the date of such Event of Default, and further increased on the 15th day following such Event of Default and on each 15th day thereafter (each, a "Measurement Date”) by a number of Shares equal to 5% of the number of Shares issuable upon such Measurement Date, until the Event of Default is cured to Agility Capital’s satisfaction or waived in writing by Agility Capital. 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 $15,787 and was capitalized as deferred financing costs at September 30, 2016.

The Company owed $525,000 under the Agility Loan at September 30, 2016.

SaaS Capital Loan 

	September 30, 2016			December 31, 2015
SaaS Capital Loan		6,000,000			-
Less: Deferred financing cost		(469,531	)		-
	$	5,530,469		$	-

On May 5, 2016, the Company 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 the Company in connection with the initial advance and an additional $80,000 is payable on May 5, 2017.

11

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, 2016, 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 $375,831.

The Company owed $6,000,000 under the SaaS Capital Loan at September 30, 2016.

The Company recognized amortization and interest expenses in connection with the line of credit and loans for the three and nine-month periods ended September 30, 2016 and 2015 as follows.

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Amortization expense associated with line of credit and loans	$	49,385	$	11,699	$	125,183	$	30,282
Interest expense associated with line of credit and loans	$	153,750	$	60,898	$	324,842	$	149,198

12

NOTE 6: STOCKHOLDERS’ EQUITY

Common Stock

During the nine-month period ended September 30, 2016, the Company issued 5,714 shares of its Common Stock pursuant to the cashless exercise of 50,000 options.   

During the nine-month period ended September 30, 2015, the Company generated proceeds of $9,586 from the exercise of 11,457 options and issued 96,316 shares of its Common Stock pursuant to the cashless exercise of 143,541 options.

During the nine-month period ended September 30, 2015, the Company sold to investors an aggregate of 2,145,000 shares of its Common Stock at a price of $1.00 per share and warrants to purchase up to an aggregate of 1,287,000 shares of its Common Stock at an exercise price of $1.32 per share for an aggregate gross consideration of $2,145,000 and net proceeds of approximately $1,700,000.

Restricted Stock

During the nine-month period ended September 30, 2016, 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, 2016, to each of its non-employee directors as partial annual compensation for services as a director.

Warrants

During the nine-month period ended September 30, 2015, the Company issued 58,824 warrants to the Lender. The warrants are exercisable at the price of $1.53 per share and expire on March 27, 2018. The fair value of these warrants which amounted to $37,289, has been recognized as deferred financing fees and is amortized using the effective interest method over the terms of the associated Line of Credit.

During the nine-month period ended September 30, 2016, the Company issued 69,444 and 1,333,333 warrants to Agility Capital and SaaS Capital Partners II, LP, respectively, exercisable at a price of $0.45 per share and which expire on March 11, 2021 and May 5, 2026, respectively.  The fair value of these warrants, which amounted to $15,787 and $375,831, respectively, were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan.

The fair value of the warrants granted during the nine-month period ended September 30, 2016 is based on the BSM model using the following assumptions:

Effective exercise price	$0.45	-	1.53
Effective market price	$0.41	-	1.53
Volatility	62	-	70%
Risk-free interest	0.7	-	0.9%
Term (years)	3	-	10
Expected dividend rate		0%

During the three and nine-month periods ended September 30, 2016, the Company recorded expenses of $125,867 and $680,467, respectively, related to warrants granted to employees. During the three and nine-month periods ended September 30, 2015, the Company recorded expenses of $284,093 and $852,278, respectively, related to warrants granted to employees in prior years.

During the nine-month period ended September 30, 2016, 2,466,760 warrants were forfeited, of which 1,650,000 warrants were forfeited and replaced with 2,000,000 new warrants issued in conjunction with the forfeiture of 650,000 options issued in December 2014.

As of September 30, 2016 and December 31, 2015, there were 7,603,716 and 6,667,699 warrants issued and outstanding, respectively, with a weighted average price of $0.88 and $1.25, respectively.

Stock Option Plan

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

13

The share-based payment is based on the fair value of the outstanding options amortized over the requisite period of service for option holders, which is generally the vesting period of the options. The fair value of the options granted during the nine-month periods ended September 30, 2016 and 2015 is based on the BSM model using the following assumptions:

	September 30, 2016				September 30, 2015
Effective Exercise price		$0.32	-	0.50		$0.80	-	1.43
Effective Market price		$0.32	-	0.50		$0.80	-	1.43
Volatility			70%			61	–	68%
Risk-free interest		0.7	–	0.9%		0.9	–	1.0%
Terms (years)		3	-	4		2	-	4
Expected dividend rate			0%				0%

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

	Nine-month periods ended
	September 30, 2016		September 30, 2015
Weighted-average grant date fair value	$	0.33	$	0.51
Fair value of options, recognized as selling, general, and administrative expenses	$	326,932	$	779,751
Number of options granted		2,070,000		740,000

The total compensation cost related to non-vested awards not yet recognized amounted to $578,923 at September 30, 2016 and the Company expects that it will be recognized over the following weighted-average period of 48 months.

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

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

14

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 income for the three and nine-month periods ended September 30, 2016 and 2015:

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2015			2016			2015
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Other comprehensive loss:
Foreign currency translation adjustment		(10,106	)		(6,363	)		(39,603	)		(4,335	)
Comprehensive loss	$	(144,103	)	$	(2,188,652	)	$	(1,090,106	)	$	(5,540,766	)

The following table sets forth the balance in accumulated other comprehensive loss as of September 30, 2016 and December 31, 2015, respectively:

	September 30, 2016			December 31, 2015
Accumulated other comprehensive loss	$	(61,283	)	$	(21,680	)

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, 2015 and 2014 were approximately as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2015			2016			2015
United States		66	%		69	%		67	%		71	%
Europe		20	%		19	%		19	%		19	%
Other		14	%		12	%		14	%		10	%

NOTE 9: COMMITMENTS AND CONTINGENCIES

During January 2014, the Company entered into a four year lease for certain office space in Newport Beach, effective February 1, 2014. Under the terms of the lease, the Company initially paid monthly base rent of approximately $22,000 increasing incrementally to approximately $25,000.

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 per year and the estimated service charges for the lease are GBP 45,658 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, including the following, 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.

McCollum Litigation

The Company is currently involved in a litigation with Jeff McCollum, the former President of its CAKE division, in the Superior Court of the State of California, commenced by the Company on February 22, 2015, whereby it asserted claims against Mr. McCollum for fraud, breach of contract, and breach of fiduciary duty, among others, following its termination of Mr. McCollum’s employment on September 8, 2014 for cause as a result of, among other things, Mr. McCollum having abandoned his position and professional responsibilities. Mr. McCollum filed a cross complaint alleging breach of contract by the Company with respect to Mr. McCollum’s employment agreement and commenced a separate action on February 23, 2015 in the Superior Court of the State of California asserting claims against the Company for violation of California Commercial Code §8401 and breach of fiduciary duty arising from Mr. McCollum’s request to have the restrictive legend removed from his share certificate representing 1.89 million shares of the Company’s Common Stock owned by him, and seeking declaratory relief as to whether he is entitled to have the restrictive legend removed from his share certificate. On April 27, 2016, the court granted Mr. McCollum summary adjudication as to his declaratory relief cause of action to have the restrictive legend removed from his share certificate.

NOTE 10: SUBSEQUENT EVENTS

None

15

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, 2015. 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, a marketing technology company that provides a comprehensive suite of innovative marketing intelligence solutions. Our powerful SaaS enterprise platform delivers a new approach to digital marketing, realized by advancements in our technology, that enables organizations to achieve a precise, data-driven view of their multi-channel digital marketing spend. An industry standard for advertisers, networks, publishers, and agencies to measurably improve and optimize campaign performance, CAKE has over 500 customers driving billions of consumer actions monthly through its system.

Digital marketing spending worldwide is expected to increase from $200.8 billion in 2015 to $306 billion in 2020, according to a Technavio report issued on July 26, 2016. Additionally, an October 24, 2016 Gartner study reports that marketing budgets continue their steady ascent in 2016, climbing to 12% of company revenue. CAKE is poised to be a foundation of success and a catalyst for innovation in the growing marketing industry. Through its multi-channel digital marketing hub, CAKE continues to deliver new technology that reveals granular data from the source, and at any scale.

CAKE recently accomplished a significant intellectual property milestone with the filing of a provisional patent application, on September 12, 2016, with the United States Patent and Trademark Office covering technology of an algorithmic attribution analytics server and method. The method determines publishing channels for advertisements in a marketing campaign to analyze their marketing effectiveness for purchasable items. This is accomplished by using a processor and memory of the attribution server. The attribution server computes attribution scores associated with the publishing channels based on the attribution models and the optimal model parameters from regressions. The attribution scores are then communicated to a marketer client through a network upon a request.

Our revenue model is based on a monthly license fee, a usage fee (based on volume of clicks, impressions, or leads), a training and implementation fee, and in certain cases, professional services fees and royalties. Clients purchase annual or monthly subscriptions with an additional usage fee. A majority of our revenue is derived from clients in the United States but we have seen a 14% growth in our client base outside of the United States during the nine-month period ended September 30, 2016 when compared to the same period in 2015.

Our training, support personnel, hosting and cloud-based infrastructure contribute to our cost of operating the business. We anticipate more spending in these areas while we continue to grow and could foresee some savings in infrastructure cost due to economies of scale. However, we want to continue to invest in these areas to support our growth.

We experienced 12% year-over-year growth in revenue during the nine-month period ended September 30, 2016 when compared to the same period in 2015. We experienced a 28% year-over-year growth in monthly license fee revenue during the nine-month period ended September 30, 2016 when compared to the same period in 2015. The organic growth has been a result of providing the marketing technology industry a comprehensive suite of marketing intelligence tools through innovation and what we believe to be a superior product and customer experience.

We allocated a portion of our marketing budget to establish a strong presence at tradeshows, implement demand generation campaigns for customer acquisition and retention, and provide support documentation required by sales initiatives. Additional efforts will be made to speak at industry events and secure coverage in industry publications, increasing awareness of the CAKE suite of products 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."

16

Results of Operations

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

		Three-month periods					Increase/		Increase/			Nine-month periods					Increase/		Increase/
		ended September 30,					(Decrease)		(Decrease)			ended September 30,					(Decrease)		(Decrease)
		2016			2015		$		%			2016			2015		$		%
Revenues:	$	6,015,800		$	5,288,628		727,172		13.7	%	$	17,883,105		$	15,954,114		1,928,991		12.1	%
Cost of revenue		2,073,018			1,797,056		275,962		15.4	%	$	6,035,828		$	4,706,167		1,329,661		28.3	%
Gross Profit		3,942,782			3,491,572		451,210		12.9	%		11,847,277			11,247,947		599,330		5.3	%
Operating expenses:
Research and development		952,704			1,391,301		(438,597	)	-31.5	%	$	2,957,140		$	3,593,093		(635,953	)	-17.7	%
Sales and marketing		924,415			1,824,046		(899,631	)	-49.3	%	$	2,791,715		$	5,873,023		(3,081,308	)	-52.5	%
General and administrative		1,956,991			2,394,092		(437,101	)	-18.3	%	$	6,492,958		$	7,199,968		(707,010	)	-9.8	%
Total operating expenses		3,834,110			5,609,439		(1,775,329	)	-31.6	%		12,241,813			16,666,084		(4,424,271	)	-26.5	%
Operating income (loss)		108,672			(2,117,867	)	(2,226,539	)	-105.1	%		(394,536	)		(5,418,137	)	(5,023,601	)	-92.7	%
Other income (expense):
Other (loss) income		(153	)		9,475		(9,628	)	-101.6	%	$	20,781		$	63,840		(43,059	)	-67.4	%
Other expense		(242,516	)		(73,897	)	168,619		228.2	%	$	(676,748	)	$	(182,134	)	494,614		271.6	%
Total other expenses		(242,669	)		(64,422	)	178,247		276.7	%		(655,967	)		(118,294	)	537,673		454.5	%
Net loss	$	(133,997	)	$	(2,182,289	)	(2,048,292	)	-93.9	%	$	(1,050,503	)	$	(5,536,431	)	(4,485,928	)	-81.0	%

17

Discussion of Results for Three-Month and Nine-Month Periods Ended September 30, 2016 and 2015

Revenues

	Three Months Ended September 30,				% Change			Nine Months Ended September 30,				% Change
	2016		2015					2016		2015
Revenues	$	6,015,800	$	5,288,628		13.7	%	$	17,883,105	$	15,954,114		12.1	%

We generate revenues from a monthly license fee, a usage fee (based on volume of clicks, impressions, or leads), a training and implementation fee, and in certain cases, professional services fees, and royalties. Our revenue breakdown for the three and nine-month periods ended September 30, 2016 and 2015 were as follows.

	Three Months Ended				%			Nine Months Ended				%
	September 30,				Change			September 30,				Change
	2016		2015					2016		2015
License	$	4,637,119	$	3,761,507		23.3	%	$	13,642,368	$	10,670,784		27.8	%
Usage		960,517		953,544		0.7	%		2,796,337		2,932,574		-4.6	%
Other		418,164		575,577		-27.1	%		1,444,400		2,350,756		-38.6	%
Total	$	6,015,800	$	5,288,628		13.7	%	$	17,883,105	$	15,954,114		12.1	%

The increases in our software licensing revenues during the three and nine-month periods ended September 30, 2016, when compared to the prior year periods, is due to the increased number of customers using our SaaS products and services, as well as increased monthly revenues from our existing customers resulting from greater adoption and higher usage of our SaaS platform. Our monthly license fee revenue, which constitutes the contractually recurring portion of our revenue and comprises the bulk of our total revenue, or 76% for the nine-month period ended September 30, 2016, increased approximately 28% year over year during the nine-month period ended September 30, 2016 when compared to the same period in 2015. Our professional service fees, which make up the bulk of other revenue, decreased as a result of a concerted focus on increasing our contractually recurring portion of revenue. Our third quarter revenue this year was negatively impacted by approximately $250,000 as a result of our decision to discontinue servicing certain low quality emailing businesses late in the second quarter. Our average monthly revenue per customer increased 11% and 9% during the three and nine-month periods ended September 30, 2016, respectively, when compared to the prior year periods. The increases in the number of customers using our SaaS products and services during the three and nine-month periods ended September 30, 2016 is primarily due to the increased resources we have devoted to customer acquisition for our SaaS products. The higher average monthly revenues from our existing customers is primarily due to higher market acceptance and adoption among our users, resulting in a higher volume of transactions.

We believe that our SaaS revenues will continue to increase during the remainder of 2016 when compared to 2015.

Cost of Revenues

	Three Months Ended September 30,				% Change			Nine Months Ended September 30,				% Change
	2016		2015					2016		2015
Cost of revenues	$	2,073,018	$	1,797,056		15.4	%	$	6,035,828	$	4,706,167		28.3	%

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 clients. The majority of our clients’ 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, 2016, when compared to the prior year periods, cost of revenues significantly increased reflecting the higher web hosting fees incurred to support our increased number of clients and platform usage, which increased during the three and nine-month periods ended September 30, 2016 by approximately $310,000 and $1,140,000, respectively, when compared to the same periods in 2015.

We believe that our cost of revenues will continue to increase during the remainder of 2016, when compared to 2015. 

18

Research and Development Expenses

	Three Months Ended September 30,				% Change			Nine Months Ended September 30,				% Change
	2016		2015					2016		2015
Research and development	$	952,704	$	1,391,301		-31.5	%	$	2,957,140	$	3,593,093		-17.7	%

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 decreased during the three and nine-month periods ended September 30, 2016, when compared to the prior year periods, mainly due to increased capitalization of software development costs which amounted to $576,431 and $1,606,887 for the three and nine-month periods ended September 30, 2016, respectively.

We believe that our research and development expenses will increase gradually during the remainder of 2016 at lower levels than the prior year, as we continue to enhance the features of our SaaS platform.

Sales and Marketing Expenses

	Three Months Ended September 30,				% Change			Nine Months Ended September 30,				% Change
	2016		2015					2016		2015
Sales and marketing	$	924,415	$	1,824,046		-49.3	%	$	2,791,715	$	5,873,023		-52.5	%

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.

The decreases in sales and marketing expenses during the three and nine-month periods ended September 30, 2016, when compared to the prior year periods, are primarily due to more efficient spending in specific, higher return, marketing programs and trade shows, as well as a reduction in personnel costs in both the marketing and sales departments.

We believe that our sales and marketing expenses will increase slightly during the remainder of 2016 at substantially lower levels than the prior year, 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
	2016		2015					2016		2015
General and administrative	$	1,956,991	$	2,394,092		-18.3	%	$	6,492,958	$	7,199,968		-9.8	%

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 fees, accounting services and legal fees, as well as professional fees, insurance and other corporate expenses such as investor relations.

The decreases in general and administrative expenses during the three and nine-month periods ended September 30, 2016, when compared to the prior year periods, are primarily due to the reduction in personnel.

We believe that our general and administrative expenses will increase during the remainder of 2016 at lower levels than the prior year, as we continue to increase the scope of our operations. 

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Other Income

	Three Months Ended September 30,					% Change			Nine Months Ended September 30,				% Change
	2016			2015					2016		2015
Other (loss) income	$	(153	)	$	9,475		-101.6	%	$	20,781	$	63,840		-67.4	%

Other income during the nine-month period ended September 30, 2016 consisted mainly of the sale of non-inventory assets and credit card program cash back payments while during the three-month period ended September 30, 2016, some non-inventory assets were sold at a small loss. During the three and nine-month periods ended September 30, 2015, other income consisted of the sale of non-inventory assets as well as rent from a sublease of our Santa Monica office space.  

Other Expenses

	Three Months Ended September 30,				% Change			Nine Months Ended September 30,				% Change
	2016		2015					2016		2015
Other expenses	$	242,516	$	73,897		228.2	%	$	676,748	$	182,134		271.6	%

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

The increases in interest expenses during the three and nine-month periods ended September 30, 2016, when compared to the prior year periods, are primarily due to higher levels of borrowings we have made from time to time under the Line of Credit and debt issue costs related to the Agility and SaaS Capital Loans. Our interest expense may change during the remainder of 2016 depending on our liquidity needs and we may choose to further finance our working capital needs through our operations, from borrowings, or by issuing securities.

Liquidity and Capital Resources

	Ending balance at September 30,				Average balance during nine-months ended September 30,
	2016		2015		2016		2015
Cash	$	614,865	$	519,645	$	761,480	$	825,156
Restricted cash		200,000		-		100,000		-
Accounts receivable		2,273,738		2,411,266		2,053,373		2,080,416
Accounts payable and accrued expenses		1,812,640		2,450,167		2,024,685		1,826,331
Short term line of credit, net of deferred financing cost		-		-		2,299,221		-
Short term loan, net of deferred financing cost		517,107		-		258,554		-
Long term loan, net of deferred financing cost		5,530,469		4,166,742		2,765,235		3,533,371

At September 30, 2016 and 2015, 48% and 56%, 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 Line of Credit.

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

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Line of Credit 

On September 30, 2014, we entered into an amendment of our Line of Credit to borrow up to a maximum of $6,000,000 at our discretion, an increase from up to $3,000,000 that we were permitted to borrow under the original Line of Credit entered into on March 17, 2014. Amounts borrowed accrued interest at the prime rate in effect from time to time plus 1.25%, not to be less than 5.5% per annum, provided that in no event shall the accrued interest payable with respect to any month be less than $10,000. Accrued interest on amounts borrowed was payable monthly. All other amounts borrowed were to be payable in full on the maturity date of March 17, 2016; however, this date was extended by the Lender until May 31, 2016. This maturity extension was granted concurrently with a waiver issued by the Lender pursuant to an amendment to the Line of Credit on March 11, 2016, which amendment waives any default due to breach of the Line of Credit minimum liquidity covenant during the specified time period, adjusts the Minimum Adjusted EBITDA covenant, and reduces the credit limit to $5,135,000. A condition precedent to the waiver was the funding of the $625,000 subordinated loan from Agility Capital, which funded on March 11, 2016. The Line of Credit may be earlier terminated without a prepayment fee.

In connection with the original Line of Credit, we issued to the Lender a warrant to purchase up to 46,875 shares of our Common Stock at an exercise price of $1.60 per share. The warrant expires on March 17, 2017. The fair value of the warrant amounted to $32,067. On March 27, 2015, in connection with an obligation under the Line of Credit when borrowings thereunder exceed $3,000,000, we issued to the Lender a warrant to purchase 58,824 shares of our Common Stock at an exercise price of $1.53 per share. This warrant expires on March 27, 2018. 

On May 5, 2016, we repaid the outstanding Line of Credit balance with the initial advance from our SaaS Capital Loan, which became effective on May 5, 2016.  

Agility Loan

On March 11, 2016, we entered into a subordinated loan with Agility Capital which provides for total availability of $625,000 and matures 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 September 30, 2016, 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 the Lender and to SaaS Capital Funding II, LLC.

In connection with the Agility Loan, Agility Capital is entitled to purchase, under certain circumstances, Shares at the Warrant Price. The initial number of Shares issuable upon exercise of this Warrant is zero (0). On June 30, 2016, if any amounts under the Agility Loan remain outstanding, then the number of Shares issuable upon exercise of this Warrant shall equal $31,250 divided by the Warrant Price. In addition to the foregoing, upon the occurrence of an Event of Default, as defined in the loan agreement, pursuant to Section 5(a) or Section 5(b) of the Agility Loan, the number of Shares that may be acquired thereunder shall increase by an additional number of Shares equal to 5% of the number of Shares issuable thereunder upon the date of such Event of Default, and further increased on the 15th day following such Event of Default and on each Measurement Date by a number of Shares equal to 5% of the number of Shares issuable upon such Measurement Date, until the Event of Default is cured to Agility Capital’s satisfaction or waived in writing by Agility Capital. 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.

We owed $525,000 under the Agility Loan at September 30, 2016.

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 is payable on May 5, 2017.

The SaaS Capital Loan contains customary covenants including, but not limited to, covenants to achieve specified Adjusted EBITDA levels and revenue renewal levels, limiting capital expenditures and restricting our ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of September 30, 2016, 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 September 30, 2016.

We owed $6,000,000 under the SaaS Capital Loan at September 30, 2016.

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Changes in Cash Flows

	Nine-month periods ended September 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(1,050,503	)	$	(5,536,431	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		522,202			1,065,624
Impairment of fixed assets		275,029			-
Amortization of debt discount and deferred financing cost		125,183			30,282
Provision for bad debt		(28,949	)		(98,169	)
Fair value of options and warrants		1,037,400			1,632,029
Non-cash expenses paid on company's behalf		204,920			-
Gain on sale of fixed assets		(246	)		-
Changes in operating assets and liabilities:
Accounts receivable		(411,782	)		(563,531	)
Prepaid expenses and other assets		(267,823	)		(130,258	)
Restricted cash		(200,000	)		-
Accounts payable and accrued expenses		(449,131	)		(1,244,171	)
Deferred revenues		59,842			(187,091	)
Other assets		15,406			1,574
Net cash used in operating activities		(168,451	)		(2,541,800	)
Cash flows from investing activities:
Capitalized software for internal use		(1,606,887	)		(952,216	)
Capital expenditures		(20,206	)		(152,080	)
Proceeds from sale of assets		6,267			5,630
Net cash used in investing activities		(1,620,826	)		(1,098,666	)
Cash flows from financing activities:
Principal repayments of line of credit		(137,777	)		-
Proceeds from line of credit		1,803,105			1,315,000
Payment of financing costs		(129,678	)		-
Net proceeds from exercise of options and warrants		-			9,586
Net proceeds from issuance of shares of Common Stock		-			1,852,362
Payments related to issuance of shares of Common Stock					(143,169	)
Net cash provided by financing activities		1,535,650			3,033,779
Effect of exchange rate changes on cash		(39,603	)		(4,335	)
Net decrease in cash		(293,230	)		(611,022	)

Changes in Cash Flows During the Nine Months ended September 30, 2016 

The decrease in accounts receivable as of September 30, 2016, when compared to the same period in 2015, is due to an increase in revenues. Accounts payable and accrued expenses decreased during the nine-month period ended September 30, 2016 when compared to the same period in 2015 primarily due to reduced vendor payables and lower accruals.

Cash used in investing activities during the nine-month period ended September 30, 2016 consists primarily of capitalization of development costs for internal-use software of approximately $1,600,000. Cash used in investing activities during the nine-month period ended September 30, 2015 consisted primarily of purchases of computer equipment and other capital expenditures of approximately $150,000, and capitalization of development costs for internal-use software of approximately $950,000.

Cash provided by financing activities during the nine-month period ended September 30, 2016 resulted from the proceeds from the $625,000 Agility Loan and $6,000,000 SaaS Capital Loan, offset by the repayments of the Line of Credit of $4,635,000 and the Agility Loan of $75,000 as well as the related financing expenses of approximately $320,000. Cash provided by financing activities during the nine-month period ended September 30, 2015 resulted from the proceeds from the exercise of warrants of approximately $10,000, a $1,315,000 draw down on the Line of Credit, and $1,850,000 in net proceeds from the sale of shares of Common Stock offset by $143,000 in expense related to the offering.

The increase in net cash flows during the nine-month period ended September 30, 2016, when compared to the prior year period, was primarily a result of the Agility and SaaS Capital Loans, necessary to support our existing and anticipated growth.  

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Capital Raising Transactions

Exercise of warrants

There were no proceeds generated from the exercise of warrants during the nine-month period ended September 30, 2016.

Other outstanding obligations at September 30, 2016

Loans

As of September 30, 2016, we owed $0 under the Line of Credit, $525,000 under the Agility Loan, and $6,000,000 under the SaaS Capital Loan.

Warrants

As of September 30, 2016, 7,603,716 shares of our Common Stock are issuable pursuant to the exercise of warrants.

Options

As of September 30, 2016, 13,175,000 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 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to a variety of risks, including changes in foreign currency exchange rates and changes in interest rates.

Foreign Currency Exchange Risk

Transactions that occur in our Subsidiary are exposed to exchange rate fluctuations when converted to our reporting currency. As a result, our earnings are at risk as it relates to exchange rate fluctuations. A relatively small amount of our monetary assets and liabilities are denominated in foreign currencies, principally the British Pound. Fluctuations in these currencies relative to the United States Dollar will result in transaction gains or losses included in net earnings.

As of September 30, 2016, we held cash funds of approximately $42,000 in British Pounds in our Subsidiary’s bank. We did not hold any amounts of other foreign currencies. If rates of the British Pound were to strengthen or weaken relative to the United States Dollar, we would realize gains or losses in converting these funds back into United States Dollars. In any event, given the small amounts, we do not expect fluctuations in exchange rates to have a material adverse effect on our business. 

Interest Rate Risk

A portion of our debt may be exposed to future interest rate fluctuations. As a result, our earnings are at risk in relation to interest rate fluctuations. On May 5, 2016, we entered into the SaaS Capital Loan, allowing us to borrow up to a maximum of $8,000,000 over the next two years with repayment schedules which extend for approximately three further years. While initial amounts borrowed will accrue interest at the rate of 10.25% per annum, future amounts borrowed, if any, will bear interest at the greater of 10.25% or 9.21% plus the three-year treasury rate at the time of advance. Over the past five years, the three-year treasury rate has ranged from approximately 0.29% to approximately 1.38%. While future treasury rates are uncertain, we do not expect fluctuations in our applicable interest rates to have a material adverse effect on our business.

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, 2016, 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, 2016, 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.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings, including the following, that we currently believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.

McCollum Litigation

We are currently involved in a litigation with Jeff McCollum, the former President of our CAKE division, in the Superior Court of the State of California, commenced by us on February 22, 2015, whereby we asserted claims against Mr. McCollum for fraud, breach of contract, and breach of fiduciary duty, among others, following our termination of Mr. McCollum’s employment on September 8, 2014 for cause as a result of, among other things, Mr. McCollum having abandoned his position and professional responsibilities. Mr. McCollum filed a cross complaint alleging breach of contract by us with respect to Mr. McCollum’s employment agreement and commenced a separate action on February 23, 2015 in the Superior Court of the State of California asserting claims against us for violation of California Commercial Code §8401 and breach of fiduciary duty arising from Mr. McCollum’s request to have the restrictive legend removed from his share certificate representing 1.89 million shares of our Common Stock owned by him, and seeking declaratory relief as to whether he is entitled to have the restrictive legend removed from his share certificate. On April 27, 2016, the court granted Mr. McCollum summary adjudication as to his declaratory relief cause of action to have the restrictive legend removed from his share certificate. 

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

On July 1, 2016, we issued 120,000 restricted shares of our Common Stock, at a value of $0.50 per share, vesting in 4 equal quarterly increments commencing on July 1, 2016, 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 as not involving any public offering.

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Item 6.  Exhibits 

10.1	Form of Restricted Stock Agreement entered into on July 1, 2016.*
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, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Comprehensive (Loss) Income, (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 8, 2016	By:	/s/ Brian Ross
		Brian Ross President and Chief Executive Officer (Principal Executive Officer)
Dated: November 8, 2016	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, 2016 (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:

1.     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 at a value of $0.50 per share (the “Restricted Stock”), on the terms and conditions and subject to the restrictions set forth in this Agreement.

2.     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.

3.     Restricted Period; Vesting.

3.1     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, 2016. 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”.

3.2     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.

3.3      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.

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

(a)     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

(b)     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

(c)     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.

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4.     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.

5.     Rights as Shareholder; Dividends.

5.1     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.

5.2     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.

5.3     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.

6.     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.

7.     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.

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8.     Tax Liability and Withholding.

8.1     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:

(a)     tendering a cash payment;

(b)     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

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

8.2     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.

9.     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.

10.     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.

4

11.     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:

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.

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

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

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

(c)     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.

13.     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.

5

14.     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.

15.     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.

16.     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.

17.     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.

18.     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.

19.     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.

20.     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.

21.     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.

22.     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:

7

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, 2016 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 8, 2016

/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, 2016 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 8, 2016

/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

In connection with the quarterly report (the “Report”) of Accelerize Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2016 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, 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 8, 2016	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

In connection with the quarterly report (the “Report”) of Accelerize Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2016 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, 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 8, 2016	By: /s/ Anthony Mazzarella
	Anthony Mazzarella Chief Financial Officer (Principal Financial Officer)

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 07, 2016
Document Information [Line Items]
Entity Registrant Name	ACCELERIZE INC.
Entity Central Index Key	0001352952
Trading Symbol	aclzob
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		65,305,254
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 614,865	$ 908,095
Restricted cash	200,000
Accounts receivable, net of allowance for bad debt of $366,198 and $395,147, respectively	2,273,738	1,833,007
Prepaid expenses and other current assets	507,744	239,921
Total current assets	3,596,347	2,981,023
Property and equipment, net of accumulated depreciation of $2,355,962 and $1,854,351, respectively	2,782,159	1,956,864
Other assets	108,020	124,882
Total assets	6,486,526	5,062,769
Current Liabilities:
Accounts payable and accrued expenses	1,812,619	2,236,750
Deferred revenues	70,278	10,436
Line of credit, net of deferred financing cost of $0 and $36,559, respectively		4,598,441
Other short term loan, net of deferred financing cost of $7,893 and $0, respectively	517,107
Total current liabilities	2,400,004	6,845,627
Line of credit, net of deferred financing cost of $469,531 and $0, respectively	5,530,469
Total liabilities	7,930,473	6,845,627
Stockholders' Deficit
Common stock; $0.001 par value; 100,000,000 shares authorized; 65,125,254 and 65,069,327 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	65,124	65,068
Additional paid-in capital	24,869,327	23,440,366
Accumulated deficit	(26,317,115)	(25,266,612)
Accumulated other comprehensive loss	(61,283)	(21,680)
Total stockholders’ deficit	(1,443,947)	(1,782,858)
Total liabilities and stockholders’ deficit	$ 6,486,526	$ 5,062,769

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Line of Credit [Member]
Deferred financing cost	$ 0	$ 36,559
Subordinated Debt [Member]
Deferred financing cost	7,893	0
Accounts receivable, allowance for bad debt	366,198	395,147
Property and equipment, accumulated depreciation	2,355,962	1,854,351
Deferred financing cost	$ 469,531	$ 0
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)	65,125,254	65,069,327
Common stock, shares outstanding (in shares)	65,125,254	65,069,327

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:	$ 6,015,800	$ 5,288,628	$ 17,883,105	$ 15,954,114
Cost of revenue	2,073,018	1,797,056	6,035,828	4,706,167
Gross profit	3,942,782	3,491,572	11,847,277	11,247,947
Operating expenses:
Research and development	952,704	1,391,301	2,957,140	3,593,093
Sales and marketing	924,415	1,824,046	2,791,715	5,873,023
General and administrative	1,956,991	2,394,092	6,492,958	7,199,968
Total operating expenses	3,834,110	5,609,439	12,241,813	16,666,084
Operating income (loss)	108,672	(2,117,867)	(394,536)	(5,418,137)
Other income (expense):
Other (loss) income	(153)	9,475	20,781	63,840
Other expense	(242,516)	(73,897)	(676,748)	(182,134)
Total other (expense)	(242,669)	(64,422)	(655,967)	(118,294)
Net loss	$ (133,997)	$ (2,182,289)	$ (1,050,503)	$ (5,536,431)
Net loss per share:
Basic (in dollars per share)	$ 0	$ (0.03)	$ (0.02)	$ (0.09)
Diluted (in dollars per share)	$ 0	$ (0.03)	$ (0.02)	$ (0.09)
Basic weighted average common shares outstanding (in shares)	65,121,621	63,876,095	65,086,886	63,184,579
Diluted weighted average common shares outstanding (in shares)	65,121,621	63,876,095	65,086,886	63,184,579

XML

Unaudited Condensed Consolidated Statements of Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net loss	$ (133,997)	$ (2,182,289)	$ (1,050,503)	$ (5,536,431)
Foreign currency translation loss	(10,106)	(6,363)	(39,603)	(4,335)
Total other comprehensive loss	(10,106)	(6,363)	(39,603)	(4,335)
Comprehensive loss	$ (144,103)	$ (2,188,652)	$ (1,090,106)	$ (5,540,766)

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net loss	$ (1,050,503)	$ (5,536,431)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	522,202	1,065,624
Impairment of fixed assets	275,029
Amortization of debt discount and deferred financing cost	125,183	30,282
Provision for bad debt	(28,949)	(98,169)
Fair value of options and warrants	1,037,400	1,632,029
Non-cash expenses paid on company's behalf	204,920
Gain on sale of fixed assets	(246)
Changes in operating assets and liabilities:
Accounts receivable	(411,782)	(563,531)
Prepaid expenses and other assets	(267,823)	(130,258)
Restricted cash	(200,000)
Accounts payable and accrued expenses	(449,131)	(1,244,171)
Deferred revenues	59,842	(187,091)
Other assets	15,406	1,574
Net cash used in operating activities	(168,451)	(2,541,800)
Cash flows from investing activities:
Capitalized software for internal use	(1,606,887)	(952,216)
Capital expenditures	(20,206)	(152,080)
Proceeds from sale of assets	6,267	5,630
Net cash used in investing activities	(1,620,826)	(1,098,666)
Cash flows from financing activities:
Principal repayments of line of credit	(137,777)
Proceeds from line of credit	1,803,105	1,315,000
Payment of financing costs	(129,678)
Net proceeds from exercise of options and warrants		9,586
Net proceeds from issuance of shares of Common Stock		1,852,362
Payments related to issuance of shares of Common Stock		(143,169)
Net cash provided by financing activities	1,535,650	3,033,779
Effect of exchange rate changes on cash	(39,603)	(4,335)
Net decrease in cash	(293,230)	(611,022)
Cash, beginning of period	908,095	1,130,667
Cash, end of period	614,865	519,645
Supplemental disclosures of cash flow information:
Cash paid for interest	639,744	179,484
Cash paid for income taxes	0	0
Non-cash investing and financing activities:
Fair Value of Warrants Issued in Connection with Line of Credit	391,618	37,289
Repayment of Agility Loan, included in accounts payable	25,000
Repayment of Line of Credit	$ 4,572,223

XML

Note 1 - Organization and Description of Business

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

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

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

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.

The condensed consolidated balance sheet presented as of December 31, 2015 has been derived from our audited consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to those rules and regulations, but we believe that the disclosures are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the annual financial statements and notes for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the SEC on March 17, 2016.  In the opinion of management, all adjustments, consisting of normal, recurring adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results of operations for the three and nine-month periods ended September 30, 2016 are not necessarily indicative of the results for the year ending December 31, 2016.

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, 2016

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 $200,000 at September 30, 2016.

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, 2016		December 31, 2015
Allowance for doubtful accounts	$	366,198	$	395,147

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, 2016, 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, 2016 or December 31, 2015.  The Company does not require any collateral from its customers.

 

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with ASC Topic 605, Revenue Recognition. Revenue is recognized only 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,
	2016		2015		2016		2015
Advertising expense	$	23,992	$	114,824	$	100,669	$	349,907

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 balance sheet accounts using exchange 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 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 unaudited condensed 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 $1,606,887 during the nine months ended September 30, 2016. 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 $2,584,007 and $1,548,085 at September 30, 2016 and December 31, 2015, respectively. The Company’s amortization expenses associated with capitalized software development costs amounted to $195,387 and $570,966 during the three and nine-month periods ended September 30, 2016, respectively, and $200,133 and $539,265 during the three and nine-month periods ended September 30, 2015, 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.

Segment Reporting

The Company generated revenues from one source, its SaaS business, during the nine-month periods ended September 30, 2016 and 2015. 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

The Company applied ASU 2015-03: Interest – Imputation of Interest, which simplifies the presentation of debt issuance costs, and netted debt issue costs previously reported as assets with the related liability for presentation purposes. Other accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.  

Reclassification

The balance sheet, and related footnotes, for the year ended December 31, 2015 has been reclassified to reflect the adoption of ASU 2015-03 which changes the presentation of debt issuance costs in financial statements and requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset.

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
	2016			2015			2016			2015
Numerator:
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Denominator:
Denominator for basic earnings per share--weighted average shares		65,121,621			63,876,095			65,086,886			63,184,579
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		65,121,621			63,876,095			65,086,886			63,184,579
Loss per share:
Basic	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Diluted	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Weighted-average anti-dilutive common share equivalents		18,087,545			16,562,631			18,501,508			17,146,481

Property and Equipment

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

Property and equipment consist of the following at:

	September 30, 2016			December 31, 2015
Internal use software costs	$	4,333,096		$	2,726,209
Computer equipment and software		389,150			563,892
Office furniture and equipment		125,789			222,061
Leasehold improvements		290,086			299,053
		5,138,121			3,811,215
Accumulated depreciation		(2,355,962	)		(1,854,351	)
	$	2,782,159		$	1,956,864

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Depreciation expense	$	52,203	$	74,851	$	226,265	$	230,063
Amortization expense on internal software	$	195,387	$	200,133	$	570,966	$	539,265

During the nine-month period ended September 30, 2016, the Company sold approximately $15,000 in computer equipment with a net book value of approximately $6,000 for proceeds of approximately $6,000.

During the nine-month period ended September 30, 2016, the Company wrote off approximately $280,000 in fixed assets with a net book value of approximately $31,000, which was recorded under the depreciation expense account.

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Note 3 - Prepaid Expenses

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Other Assets Disclosure [Text Block]

NOTE 3: PREPAID EXPENSES

At September 30, 2016 and December 31, 2015, the Company’s prepaid expenses consisted primarily of prepaid insurance and rent.

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Note 4 - Deferred Revenues

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Deferred Revenue Disclosure [Text Block]

NOTE 4: DEFERRED REVENUES

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

	September 30, 2016		December 31, 2015
Deferred revenues	$	70,278	$	10,436

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Note 5 - Line of Credit and Loans

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 5: LINE OF CREDIT AND LOANS

Line of Credit

	September 30, 2016			December 31, 2015
Line of credit		4,635,000			4,635,000
Repayment of Line of credit		(4,635,000	)		-
Less: Deferred financing cost		-			(36,559	)
	$	-		$	4,598,441

On September 30, 2014, the Company entered into an amendment of its line of credit, or the Line of Credit, with Pacific Western Bank, as successor in interest by merger to Square 1 Bank, or the Lender, to borrow up to a maximum of $6,000,000 at the Company’s discretion, an increase from up to $3,000,000 that the Company was permitted to borrow under the original Line of Credit entered into on March 17, 2014. Amounts borrowed accrued interest at the prime rate in effect from time to time plus 1.25%, not to be less than 5.5% per annum, provided that in no event shall the accrued interest payable with respect to any month be less than $10,000. Accrued interest on amounts borrowed was payable monthly. All other amounts borrowed were to be payable in full on the maturity date of March 17, 2016; however, this date was extended by the Lender until May 31, 2016. This maturity extension was granted concurrently with a waiver issued by the Lender pursuant to an amendment to the Line of Credit on March 11, 2016, which amendment waived any default due to breach of the Line of Credit minimum liquidity covenant during the specified time period, adjusts the Minimum Adjusted EBITDA covenant, and reduces the credit limit to $5,135,000. A condition precedent to the waiver was the funding of a $625,000 subordinated loan, or the Agility Loan, from Agility Capital II, LLC, or Agility Capital, which funded on March 11, 2016. The Line of Credit may be earlier terminated without a prepayment fee. The Company also made a repayment of $62,777 in March 2016.

In connection with the original Line of Credit, the Company issued to the Lender a warrant to purchase up to 46,875 shares of the Company’s Common Stock at an exercise price of $1.60 per share. The warrant expires on March 17, 2017. The fair value of the warrant amounted to $32,067. On March 27, 2015, in connection with an obligation under the Line of Credit when borrowings thereunder exceed $3,000,000, the Company issued to the Lender a warrant to purchase 58,824 shares of the Company’s Common Stock at an exercise price of $1.53 per share. This warrant expires on March 27, 2018. The fair value of the warrant amounted to $37,289.

As further described below, 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. On May 5, 2016, the Company drew down $5,000,000 as the initial advance from the SaaS Capital Loan and used a portion of the proceeds, $4,572,223, to repay the outstanding Line of Credit balance.

As of September 30, 2016, the Company had no outstanding balance under the Line of Credit.

The Company paid approximately $50,000 to the Lender in financing costs through December 31, 2015, and approximately $69,000 through May 5, 2016. The deferred financing costs associated with the Line of Credit were fully expensed at June 30, 2016.

Agility Loan 

	September 30, 2016			December 31, 2015
Agility Loan		625,000			-
Principal Payment of Agility Loan		(100,000	)		-
Less: Deferred financing cost		(7,893	)		-
	$	517,107		$	-

On March 11, 2016, the Company entered into a subordinated loan with Agility Capital which provides for total availability of $625,000 and matures 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 September 30, 2016, 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 the Lender and to SaaS Capital Funding II, LLC.

In connection with the Agility Loan, Agility Capital is entitled to purchase, under certain circumstances, fully paid and nonassessable shares of the Company’s class of securities, or Shares, at the initial exercise price per Share which is the closing price on the day prior to the issuance date, or the Warrant Price. The initial number of Shares issuable upon exercise of this Warrant is zero (0). On June 30, 2016, if any amounts under the Agility Loan remain outstanding, then the number of Shares issuable upon exercise of this Warrant shall equal $31,250 divided by the Warrant Price. In addition to the foregoing, upon the occurrence of an Event of Default, as defined in the loan agreement, pursuant to Section 5(a) or Section 5(b) of the Agility Loan, the number of Shares that may be acquired thereunder shall increase by an additional number of Shares equal to 5% of the number of Shares issuable thereunder upon the date of such Event of Default, and further increased on the 15th day following such Event of Default and on each 15th day thereafter (each, a "Measurement Date”) by a number of Shares equal to 5% of the number of Shares issuable upon such Measurement Date, until the Event of Default is cured to Agility Capital’s satisfaction or waived in writing by Agility Capital. 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 $15,787 and was capitalized as deferred financing costs at September 30, 2016.

The Company owed $525,000 under the Agility Loan at September 30, 2016.

SaaS Capital Loan 

	September 30, 2016			December 31, 2015
SaaS Capital Loan		6,000,000			-
Less: Deferred financing cost		(469,531	)		-
	$	5,530,469		$	-

On May 5, 2016, the Company 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 the Company in connection with the initial advance and an additional $80,000 is payable on May 5, 2017.

The SaaS Capital Loan contains customary covenants including, but not limited to, covenants to achieve specified Adjusted EBITDA levels and revenue renewal levels, limiting capital expenditures and restricting the Company's ability to pay dividends, purchase and sell assets outside the ordinary course and incur additional indebtedness. As of September 30, 2016, 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 $375,831.

The Company owed $6,000,000 under the SaaS Capital Loan at September 30, 2016.

The Company recognized amortization and interest expenses in connection with the line of credit and loans for the three and nine-month periods ended September 30, 2016 and 2015 as follows.

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Amortization expense associated with line of credit and loans	$	49,385	$	11,699	$	125,183	$	30,282
Interest expense associated with line of credit and loans	$	153,750	$	60,898	$	324,842	$	149,198

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Note 6 - Stockholders' Equity

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 6: STOCKHOLDERS’ EQUITY

Common Stock

During the nine-month period ended September 30, 2016, the Company issued 5,714 shares of its Common Stock pursuant to the cashless exercise of 50,000 options.   

During the nine-month period ended September 30, 2015, the Company generated proceeds of $9,586 from the exercise of 11,457 options and issued 96,316 shares of its Common Stock pursuant to the cashless exercise of 143,541 options.

During the nine-month period ended September 30, 2015, the Company sold to investors an aggregate of 2,145,000 shares of its Common Stock at a price of $1.00 per share and warrants to purchase up to an aggregate of 1,287,000 shares of its Common Stock at an exercise price of $1.32 per share for an aggregate gross consideration of $2,145,000 and net proceeds of approximately $1,700,000.

Restricted Stock

During the nine-month period ended September 30, 2016, 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, 2016, to each of its non-employee directors as partial annual compensation for services as a director.

Warrants

During the nine-month period ended September 30, 2015, the Company issued 58,824 warrants to the Lender. The warrants are exercisable at the price of $1.53 per share and expire on March 27, 2018. The fair value of these warrants which amounted to $37,289, has been recognized as deferred financing fees and is amortized using the effective interest method over the terms of the associated Line of Credit.

During the nine-month period ended September 30, 2016, the Company issued 69,444 and 1,333,333 warrants to Agility Capital and SaaS Capital Partners II, LP, respectively, exercisable at a price of $0.45 per share and which expire on March 11, 2021 and May 5, 2026, respectively.  The fair value of these warrants, which amounted to $15,787 and $375,831, respectively, were recognized as deferred financing fees and amortized using the effective interest method over the terms of the associated loan.

The fair value of the warrants granted during the nine-month period ended September 30, 2016 is based on the BSM model using the following assumptions:

Effective exercise price	$0.45	-	1.53
Effective market price	$0.41	-	1.53
Volatility	62	-	70%
Risk-free interest	0.7	-	0.9%
Term (years)	3	-	10
Expected dividend rate		0%

During the three and nine-month periods ended September 30, 2016, the Company recorded expenses of $125,867 and $680,467, respectively, related to warrants granted to employees. During the three and nine-month periods ended September 30, 2015, the Company recorded expenses of $284,093 and $852,278, respectively, related to warrants granted to employees in prior years.

During the nine-month period ended September 30, 2016, 2,466,760 warrants were forfeited, of which 1,650,000 warrants were forfeited and replaced with 2,000,000 new warrants issued in conjunction with the forfeiture of 650,000 options issued in December 2014.

As of September 30, 2016 and December 31, 2015, there were 7,603,716 and 6,667,699 warrants issued and outstanding, respectively, with a weighted average price of $0.88 and $1.25, respectively.

Stock Option Plan

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

The share-based payment is based on the fair value of the outstanding options amortized over the requisite period of service for option holders, which is generally the vesting period of the options. The fair value of the options granted during the nine-month periods ended September 30, 2016 and 2015 is based on the BSM model using the following assumptions:

	September 30, 2016				September 30, 2015
Effective Exercise price		$0.32	-	0.50		$0.80	-	1.43
Effective Market price		$0.32	-	0.50		$0.80	-	1.43
Volatility			70%			61	–	68%
Risk-free interest		0.7	–	0.9%		0.9	–	1.0%
Terms (years)		3	-	4		2	-	4
Expected dividend rate			0%				0%

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

	Nine-month periods ended
	September 30, 2016		September 30, 2015
Weighted-average grant date fair value	$	0.33	$	0.51
Fair value of options, recognized as selling, general, and administrative expenses	$	326,932	$	779,751
Number of options granted		2,070,000		740,000

The total compensation cost related to non-vested awards not yet recognized amounted to $578,923 at September 30, 2016 and the Company expects that it will be recognized over the following weighted-average period of 48 months.

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

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

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Note 7 - Comprehensive Loss

9 Months Ended

Sep. 30, 2016

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 income for the three and nine-month periods ended September 30, 2016 and 2015:

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2015			2016			2015
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Other comprehensive loss:
Foreign currency translation adjustment		(10,106	)		(6,363	)		(39,603	)		(4,335	)
Comprehensive loss	$	(144,103	)	$	(2,188,652	)	$	(1,090,106	)	$	(5,540,766	)

The following table sets forth the balance in accumulated other comprehensive loss as of September 30, 2016 and December 31, 2015, respectively:

	September 30, 2016			December 31, 2015
Accumulated other comprehensive loss	$	(61,283	)	$	(21,680	)

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Note 8 - Segments

9 Months Ended

Sep. 30, 2016

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, 2015 and 2014 were approximately as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2015			2016			2015
United States		66	%		69	%		67	%		71	%
Europe		20	%		19	%		19	%		19	%
Other		14	%		12	%		14	%		10	%

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Note 9 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 9: COMMITMENTS AND CONTINGENCIES

During January 2014, the Company entered into a four year lease for certain office space in Newport Beach, effective February 1, 2014. Under the terms of the lease, the Company initially paid monthly base rent of approximately $22,000 increasing incrementally to approximately $25,000.

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 per year and the estimated service charges for the lease are GBP 45,658 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, including the following, 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.

McCollum Litigation

The Company is currently involved in a litigation with Jeff McCollum, the former President of its CAKE division, in the Superior Court of the State of California, commenced by the Company on February 22, 2015, whereby it asserted claims against Mr. McCollum for fraud, breach of contract, and breach of fiduciary duty, among others, following its termination of Mr. McCollum’s employment on September 8, 2014 for cause as a result of, among other things, Mr. McCollum having abandoned his position and professional responsibilities. Mr. McCollum filed a cross complaint alleging breach of contract by the Company with respect to Mr. McCollum’s employment agreement and commenced a separate action on February 23, 2015 in the Superior Court of the State of California asserting claims against the Company for violation of California Commercial Code §8401 and breach of fiduciary duty arising from Mr. McCollum’s request to have the restrictive legend removed from his share certificate representing 1.89 million shares of the Company’s Common Stock owned by him, and seeking declaratory relief as to whether he is entitled to have the restrictive legend removed from his share certificate. On April 27, 2016, the court granted Mr. McCollum summary adjudication as to his declaratory relief cause of action to have the restrictive legend removed from his share certificate.

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Note 10 - Subsequent Events

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE 10: SUBSEQUENT EVENTS

None

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

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 $200,000 at September 30, 2016.

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, 2016		December 31, 2015
Allowance for doubtful accounts	$	366,198	$	395,147

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, 2016, 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, 2016 or December 31, 2015.  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 Topic 605, Revenue Recognition. Revenue is recognized only 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,
	2016		2015		2016		2015
Advertising expense	$	23,992	$	114,824	$	100,669	$	349,907

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 balance sheet accounts using exchange 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 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 unaudited condensed 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 $1,606,887 during the nine months ended September 30, 2016. 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 $2,584,007 and $1,548,085 at September 30, 2016 and December 31, 2015, respectively. The Company’s amortization expenses associated with capitalized software development costs amounted to $195,387 and $570,966 during the three and nine-month periods ended September 30, 2016, respectively, and $200,133 and $539,265 during the three and nine-month periods ended September 30, 2015, 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.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

The Company generated revenues from one source, its SaaS business, during the nine-month periods ended September 30, 2016 and 2015. 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

The Company applied ASU 2015-03: Interest – Imputation of Interest, which simplifies the presentation of debt issuance costs, and netted debt issue costs previously reported as assets with the related liability for presentation purposes. Other accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.  

Reclassification, Policy [Policy Text Block]

Reclassification

The balance sheet, and related footnotes, for the year ended December 31, 2015 has been reclassified to reflect the adoption of ASU 2015-03 which changes the presentation of debt issuance costs in financial statements and requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset.

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
	2016			2015			2016			2015
Numerator:
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Denominator:
Denominator for basic earnings per share--weighted average shares		65,121,621			63,876,095			65,086,886			63,184,579
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		65,121,621			63,876,095			65,086,886			63,184,579
Loss per share:
Basic	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Diluted	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Weighted-average anti-dilutive common share equivalents		18,087,545			16,562,631			18,501,508			17,146,481

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

Property and Equipment

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

Property and equipment consist of the following at:

	September 30, 2016			December 31, 2015
Internal use software costs	$	4,333,096		$	2,726,209
Computer equipment and software		389,150			563,892
Office furniture and equipment		125,789			222,061
Leasehold improvements		290,086			299,053
		5,138,121			3,811,215
Accumulated depreciation		(2,355,962	)		(1,854,351	)
	$	2,782,159		$	1,956,864

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Depreciation expense	$	52,203	$	74,851	$	226,265	$	230,063
Amortization expense on internal software	$	195,387	$	200,133	$	570,966	$	539,265

During the nine-month period ended September 30, 2016, the Company sold approximately $15,000 in computer equipment with a net book value of approximately $6,000 for proceeds of approximately $6,000.

During the nine-month period ended September 30, 2016, the Company wrote off approximately $280,000 in fixed assets with a net book value of approximately $31,000, which was recorded under the depreciation expense account.

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Note 2 - Summary Of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Depreciation Expense [Member]

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Depreciation expense	$	52,203	$	74,851	$	226,265	$	230,063
Amortization expense on internal software	$	195,387	$	200,133	$	570,966	$	539,265

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

	September 30, 2016		December 31, 2015
Allowance for doubtful accounts	$	366,198	$	395,147

Schedule of Accrued Liabilities [Table Text Block]

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Advertising expense	$	23,992	$	114,824	$	100,669	$	349,907

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

	Three months ended September 30						Nine months ended September 30
	2016			2015			2016			2015
Numerator:
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Denominator:
Denominator for basic earnings per share--weighted average shares		65,121,621			63,876,095			65,086,886			63,184,579
Effect of dilutive securities- when applicable:
Stock options		-			-			-			-
Warrants		-			-			-			-
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions		65,121,621			63,876,095			65,086,886			63,184,579
Loss per share:
Basic	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Diluted	$	(0.00	)	$	(0.03	)	$	(0.02	)	$	(0.09	)
Weighted-average anti-dilutive common share equivalents		18,087,545			16,562,631			18,501,508			17,146,481

Property, Plant and Equipment [Table Text Block]

	September 30, 2016			December 31, 2015
Internal use software costs	$	4,333,096		$	2,726,209
Computer equipment and software		389,150			563,892
Office furniture and equipment		125,789			222,061
Leasehold improvements		290,086			299,053
		5,138,121			3,811,215
Accumulated depreciation		(2,355,962	)		(1,854,351	)
	$	2,782,159		$	1,956,864

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Note 4 - Deferred Revenues (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Deferred Revenue, by Arrangement, Disclosure [Table Text Block]

	September 30, 2016		December 31, 2015
Deferred revenues	$	70,278	$	10,436

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Note 5 - Line of Credit and Loans (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Debt [Table Text Block]

	September 30, 2016			December 31, 2015
Line of credit		4,635,000			4,635,000
Repayment of Line of credit		(4,635,000	)		-
Less: Deferred financing cost		-			(36,559	)
	$	-		$	4,598,441

	September 30, 2016			December 31, 2015
Agility Loan		625,000			-
Principal Payment of Agility Loan		(100,000	)		-
Less: Deferred financing cost		(7,893	)		-
	$	517,107		$	-

	September 30, 2016			December 31, 2015
SaaS Capital Loan		6,000,000			-
Less: Deferred financing cost		(469,531	)		-
	$	5,530,469		$	-

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Amortization expense associated with line of credit and loans	$	49,385	$	11,699	$	125,183	$	30,282
Interest expense associated with line of credit and loans	$	153,750	$	60,898	$	324,842	$	149,198

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Note 6 - Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule Of Share Based Payment Award Warrants Valuation Assumptions [Table Text Block]

Effective exercise price	$0.45	-	1.53
Effective market price	$0.41	-	1.53
Volatility	62	-	70%
Risk-free interest	0.7	-	0.9%
Term (years)	3	-	10
Expected dividend rate		0%

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	September 30, 2016				September 30, 2015
Effective Exercise price		$0.32	-	0.50		$0.80	-	1.43
Effective Market price		$0.32	-	0.50		$0.80	-	1.43
Volatility			70%			61	–	68%
Risk-free interest		0.7	–	0.9%		0.9	–	1.0%
Terms (years)		3	-	4		2	-	4
Expected dividend rate			0%				0%

Schedule of Share-based Compensation, Activity [Table Text Block]

	Nine-month periods ended
	September 30, 2016		September 30, 2015
Weighted-average grant date fair value	$	0.33	$	0.51
Fair value of options, recognized as selling, general, and administrative expenses	$	326,932	$	779,751
Number of options granted		2,070,000		740,000

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Note 7 - Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Comprehensive Income (Loss) [Table Text Block]

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2015			2016			2015
Net loss	$	(133,997	)	$	(2,182,289	)	$	(1,050,503	)	$	(5,536,431	)
Other comprehensive loss:
Foreign currency translation adjustment		(10,106	)		(6,363	)		(39,603	)		(4,335	)
Comprehensive loss	$	(144,103	)	$	(2,188,652	)	$	(1,090,106	)	$	(5,540,766	)

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

	September 30, 2016			December 31, 2015
Accumulated other comprehensive loss	$	(61,283	)	$	(21,680	)

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Note 8 - Segments (Tables)

9 Months Ended

Sep. 30, 2016

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,
	2016			2015			2016			2015
United States		66	%		69	%		67	%		71	%
Europe		20	%		19	%		19	%		19	%
Other		14	%		12	%		14	%		10	%

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Note 2 - Summary Of Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Cost Of Revenues [Member] | Computer Software, Intangible Asset [Member]
Amortization of Intangible Assets	$ 195,387	$ 200,133	$ 570,966	$ 539,265
Estimated [Member]
Property, Plant and Equipment, Useful Life			3 years
Computer Equipment [Member]
Gross Proceeds From Sale of Property, Plant and Equipment			$ 15,000
Property, Plant and Equipment, Net	6,000		6,000
Proceeds from Sale of Productive Assets			6,000
Fixed Assets Write Downs [Member]
Property, Plant and Equipment, Disposals			280,000
Depreciation			31,000
Restricted Cash and Cash Equivalents, Current	200,000		200,000
Cash, FDIC Insured Amount	250,000		250,000
Payments to Develop Software			1,606,887	952,216
Capitalized Computer Software, Net	2,584,007		2,584,007		1,548,085
Amortization of Intangible Assets	195,387	200,133	$ 570,966	$ 539,265
Number of Reportable Segments			1	1
Property, Plant and Equipment, Net	2,782,159		$ 2,782,159		$ 1,956,864
Proceeds from Sale of Productive Assets			6,267	$ 5,630
Depreciation	$ 52,203	$ 74,851	$ 226,265	$ 230,063

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Note 2 - Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Allowance for doubtful accounts	$ 366,198	$ 395,147

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Note 2 - Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Advertising expense	$ 23,992	$ 114,824	$ 100,669	$ 349,907

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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, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Option [Member]
Effect of dilutive securities- when applicable:
Effect of dilutive securities
Warrant [Member]
Effect of dilutive securities- when applicable:
Effect of dilutive securities
Net loss	$ (133,997)	$ (2,182,289)	$ (1,050,503)	$ (5,536,431)
Denominator for basic earnings per share--weighted average shares (in shares)	65,121,621	63,876,095	65,086,886	63,184,579
Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions (in shares)	65,121,621	63,876,095	65,086,886	63,184,579
Basic (in dollars per share)	$ 0	$ (0.03)	$ (0.02)	$ (0.09)
Diluted (in dollars per share)	$ 0	$ (0.03)	$ (0.02)	$ (0.09)
Weighted-average anti-dilutive common share equivalents (in shares)	18,087,545	16,562,631	18,501,508	17,146,481

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Note 2 - Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Software Development [Member]
Property, plant, and equipment, gross	$ 4,333,096	$ 2,726,209
Computer Equipment [Member]
Property, plant, and equipment, gross	389,150	563,892
	6,000
Furniture and Fixtures [Member]
Property, plant, and equipment, gross	125,789	222,061
Leasehold Improvements [Member]
Property, plant, and equipment, gross	290,086	299,053
Property, plant, and equipment, gross	5,138,121	3,811,215
Accumulated depreciation	(2,355,962)	(1,854,351)
	$ 2,782,159	$ 1,956,864

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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, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Depreciation expense	$ 52,203	$ 74,851	$ 226,265	$ 230,063
Amortization expense on internal software	$ 195,387	$ 200,133	$ 570,966	$ 539,265

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Note 4 - Deferred Revenues - Deferred Revenues (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Deferred revenues	$ 70,278	$ 10,436

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Note 5 - Line of Credit and Loans (Details Textual) - USD ($)			1 Months Ended		9 Months Ended		15 Months Ended	19 Months Ended
	May 05, 2016	Mar. 11, 2016	Mar. 31, 2016	Mar. 17, 2014	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	May 05, 2016	Jun. 30, 2016	Mar. 27, 2015	Sep. 30, 2014
Line of Credit [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate				1.25%
Line of Credit [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Stated Percentage				5.50%
Line of Credit [Member] | Warrants Issued in Connection with Original Line of Credit [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				46,875
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 1.60
Line of Credit [Member]
Long-term Line of Credit					$ 0
Debt Instrument, Covenant, Minimum Accrued Interest Per Month				$ 10,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights										58,824
Class of Warrant or Right, Exercise Price of Warrants or Rights										$ 1.53
Warrants Issued Fair Value Disclosure				32,067
Line of Credit, Maximum Threshold to Trigger Warrant Issuance to Lender										$ 3,000,000
Warrants and Rights Outstanding										$ 37,289
Payments of Financing Costs							$ 50,000	$ 69,000
SaaS Captial Loan [Member]
Long-term Line of Credit					6,000,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 8,000,000							$ 8,000,000
Debt Instrument, Interest Rate, Stated Percentage	10.25%							10.25%
Proceeds from Long-term Lines of Credit	$ 5,000,000
Repayments of Long-term Lines of Credit	$ 4,572,223
Payments of Financing Costs					169,000
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%
Line of Credit Facility, Commitment Fee Amount	$ 80,000
Line of Credit Facility, Additional Commitment Fee Amount					$ 80,000
Subordinated Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage		12.00%
Debt Instrument, Face Amount		$ 625,000
Debt Instrument, Periodic Payment, Monthly Amortization		25,000
Debt Instrument, Aggregate Fees to Be Paid		130,000
Debt Instrument, Minimum Aggregate Interest in the Event of Prepayment		$ 50,000
Agility Loan Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		0							69,444
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.45				$ 0.45
Warrants and Rights Outstanding					$ 15,787
Class of Warrant or Right, Value to Be Divided By Warrant Price to Determine Issuable Warrants									$ 31,250
Class of Warrant or Right, Percent of Additional Shares Issuable in the Event of Default									5.00%
Long-term Debt					$ 525,000
SaaS Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	1,333,333							1,333,333
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.45				$ 0.45			$ 0.45
Warrants and Rights Outstanding					$ 375,831
Line of Credit Facility, Maximum Borrowing Capacity		$ 5,135,000		$ 3,000,000							$ 6,000,000
Repayments of Lines of Credit			$ 62,777		$ 137,777
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						1,287,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.88	$ 1.32	$ 1.25
Payments of Financing Costs					$ 129,678

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Note 5 - Line of Credit and Loans - Line of Credit and Loans (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Line of Credit [Member]
Debt Instrument, Carrying Amount	$ 4,635,000	$ 4,635,000
Repayment Amount	(4,635,000)
Less: Deferred financing cost		(36,559)
		4,598,441
Subordinated Debt [Member]
Less: Deferred financing cost	(7,893)
Debt Instrument, Face Amount	625,000
Principal Payment	(100,000)
	517,107
SaaS Captial Loan [Member]
Debt Instrument, Carrying Amount	6,000,000
Less: Deferred financing cost	(469,531)
	5,530,469
	$ 517,107

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Note 5 - Line of Credit and Loans - Estimated Future Amortization Expense (Details) - Line of Credit [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Amortization expense associated with line of credit and loans	$ 49,385	$ 11,699	$ 125,183	$ 30,282
Interest expense associated with line of credit and loans	$ 153,750	$ 60,898	$ 324,842	$ 149,198

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Note 6 - Stockholders' Equity (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2016 $ / shares shares	May 05, 2016 $ / shares shares	Mar. 11, 2016 shares	Dec. 31, 2015 $ / shares shares
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
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
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Vesting, Number of Equal Quarterly Increments			4
Lender Warrants [Member]
Class of Warrant or Right, Issued During Period				58,824
Class of Warrant or Right, Exercised During Period, Exercise Price | $ / shares				$ 1.53
Warrants and Rights Outstanding | $		$ 37,289		$ 37,289
Agility Loan Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					69,444		0
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.45		$ 0.45		$ 0.45
Class of Warrant or Right, Issued During Period			69,444
Warrants and Rights Outstanding | $	$ 15,787		$ 15,787
Fair Value of Warrants Issued in Connection with Line of Credit | $			$ 15,787
SaaS Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						1,333,333
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.45		$ 0.45			$ 0.45
Class of Warrant or Right, Issued During Period			1,333,333
Warrants and Rights Outstanding | $	$ 375,831		$ 375,831
Fair Value of Warrants Issued in Connection with Line of Credit | $			$ 375,831
Warrants Forfeited and Replaced with 2,000,000 New Warrants [Member]
Class of Warrants and Right, Forfeited			1,650,000
Stock Issued During Period Shares Stock Options Exercised Noncash			5,714	96,316
Cashless Exercise Of Options			50,000	143,541
Proceeds from Stock Options and Warrant Exercises | $				$ 9,586
Stock Issued During Period Shares Stock Options Exercised, Cash				11,457
Stock Issued During Period, Shares, New Issues				2,145,000
Sale of Stock, Price Per Share | $ / shares		$ 1		$ 1
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		1,287,000		1,287,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.88	$ 1.32	$ 0.88	$ 1.32				$ 1.25
Common Stock and Warrants Issued During Period, Value | $				$ 2,145,000
Proceeds from Issuance of Common Stock, and Warrants | $				1,700,000
Class of Warrant or Right, Issued During Period			2,000,000
Fair Value of Warrants Issued in Connection with Line of Credit | $			$ 391,618	37,289
Allocated Share-based Compensation Expense | $	$ 125,867	$ 284,093	$ 680,467	$ 852,278
Class of Warrants and Right, Forfeited			2,466,760
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period			650,000
Class of Warrant or Right, Outstanding	7,603,716		7,603,716					6,667,699
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	22,500,000		22,500,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 578,923		$ 578,923
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			4 years

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Note 6 - Stockholders' Equity - Assumptions Used to Determine Fair Value of Warrants Granted (Details) - Warrant [Member]	9 Months Ended
	Sep. 30, 2016 $ / shares
Minimum [Member]
Effective exercise price (in dollars per share)	$ 0.45
Effective market price (in dollars per share)	$ 0.41
Volatility	62.00%
Risk-free interest	0.70%
Term (years)	3 years
Maximum [Member]
Effective exercise price (in dollars per share)	$ 1.53
Effective market price (in dollars per share)	$ 1.53
Volatility	70.00%
Risk-free interest	0.90%
Term (years)	10 years
Expected dividend rate	0.00%

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Note 6 - Stockholders' Equity - Assumptions Used to Determine Fair Value of Stock Options Granted (Details) - Employee Stock Option [Member] - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Minimum [Member]
Effective Exercise price (in dollars per share)	$ 0.32	$ 0.80
Effective Market price (in dollars per share)	$ 0.32	$ 0.80
Volatility		61.00%
Risk-free interest	0.70%	0.90%
Terms (years)	3 years	2 years
Expected dividend rate		0.00%
Maximum [Member]
Effective Exercise price (in dollars per share)	$ 0.50	$ 1.43
Effective Market price (in dollars per share)	$ 0.50	$ 1.43
Volatility		68.00%
Risk-free interest	0.90%	1.00%
Terms (years)	4 years	4 years
Volatility	70.00%
Expected dividend rate	0.00%

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Note 6 - Stockholders' Equity - Additional Stock Option Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Selling, General and Administrative Expenses [Member]
Fair value of options, recognized as selling, general, and administrative expenses	$ 326,932	$ 779,751
Weighted-average grant date fair value (in dollars per share)	$ 0.33	$ 0.51
Number of options granted (in shares)	2,070,000	740,000

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Note 7 - Comprehensive Loss - Reconciliation from Net Loss to Comprehensive Income (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net loss	$ (133,997)	$ (2,182,289)	$ (1,050,503)	$ (5,536,431)
Foreign currency translation adjustment	(10,106)	(6,363)	(39,603)	(4,335)
Comprehensive loss	$ (144,103)	$ (2,188,652)	$ (1,090,106)	$ (5,540,766)

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Note 7 - Comprehensive Loss - Accumulated Other Comprehensive Loss (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accumulated other comprehensive loss	$ (61,283)	$ (21,680)

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Note 8 - Segments (Details Textual)	9 Months Ended
	Sep. 30, 2016
Number of Operating Segments	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, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
UNITED STATES
Percentage of sales	66.00%	69.00%	67.00%	71.00%
Europe [Member]
Percentage of sales	20.00%	19.00%	19.00%	19.00%
Other [Member]
Percentage of sales	14.00%	12.00%	14.00%	10.00%

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Note 9 - Commitments and Contingencies (Details Textual)	1 Months Ended
	Jul. 31, 2014 GBP (£)	Jan. 31, 2014 USD ($)	Sep. 30, 2016 shares	Dec. 31, 2015 shares
Office Space In Newport Beach California [Member] | Minimum [Member]
Operating Lease Monthly Rent | $		$ 22,000
Office Space In Newport Beach California [Member] | Maximum [Member]
Operating Lease Monthly Rent | $		$ 25,000
Office Space In Newport Beach California [Member]
Lessee Leasing Arrangements, Operating Leases, Term of Contract		4 years
Office Space in London England [Member]
Lessee Leasing Arrangements, Operating Leases, Term of Contract	5 years
Operating Lease Monthly Rent | £	£ 89,667
Operating Lease Service Charges | £	£ 45,658
President [Member]
Common Stock, Shares, Outstanding | shares			1,890,000
Common Stock, Shares, Outstanding | shares			65,125,254	65,069,327