10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2019

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

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.)

2601 OCEAN PARK BOULEVARD, SUITE 310

SANTA MONICA,

CALIFORNIA 90405

 (Address of principal executive offices) (Zip code)

(310) 314-8804

 (Registrant’s Telephone Number, including Area Code)

20411 SW BIRCH STREET, SUITE 250

NEWPORT BEACH

CALIFORNIA 92660
(Former name, former address and former fiscal year, if changed since last report)

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

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

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

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [X]	Smaller reporting company [X]
	Emerging growth company [  ]

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

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

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value per share, as of August 16, 2019, was 99,679,709.

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 our expectations for 2019, our expectations for revenue sources, costs of revenue and expenses going forward, and that we will continue to pursue strategic transactions and opportunities, 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” contained herein and in our annual report on Form 10-K as filed with the Securities and Exchange Commission, or the SEC, on April 16, 2019. 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	21
Item 4. Controls and Procedures	28
PART II - OTHER INFORMATION:	28
Item 1A. Risk Factors	28
Item 6. Exhibits	30
SIGNATURES	31

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ACCELERIZE INC. 

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2019			2018
	(Unaudited)
Assets
Current assets
Cash	$	1,251,087		$	27,295
Restricted cash		50,000			50,000
Accounts receivable, net		51,560			-
Prepaid expenses and other current assets		32,500			-
Current assets of discontinued operations		40,710			2,336,311
Total current assets		1,425,857			2,413,606
Other assets
Property and equipment		3,738			-
Goodwill		3,804,817
Noncurrent assets of discontinued operations		-			160,246
Total other assets		3,808,555			160,246
Total assets	$	5,234,412		$	2,573,852
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable and accrued expenses	$	152,633		$	-
Deferred revenues		21,340			-
Current liabilities of discontinued operations		383,023			6,861,284
Total current liabilities		556,996			6,861,284
Noncurrent liabilities of discontinued operations		-			9,185,743
Total liabilities		556,996			16,047,027
Commitments and contingencies
Stockholders' equity (deficit)
Series A Preferred stock, $0.001 par value, 500 shares authorized, 500 and 0 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		1			-
Series B Preferred stock, $0.001 par value, 3,000 shares authorized, 3,000 and 0 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		3			-
Common stock, $0.001 par value, 500,000,000 shares authorized, 99,679,709 and 66,179,709 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		99,679			66,179
Additional paid-in capital		34,013,702			29,498,125
Accumulated deficit		(29,362,096	)		(42,960,124	)
Accumulated other comprehensive income		(73,873	)		(77,355	)
Total stockholders' equity (deficit)		4,677,416			(13,473,175	)
Total liabilities and stockholders' equity (deficit)	$	5,234,412		$	2,573,852

See accompanying notes to unaudited condensed consolidated financial statements

1

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2019			2018			2019			2018
Net revenues	$	62,720		$	-		$	62,720		$	-
Cost of revenue		33,449			-			33,449			-
Gross profit		29,271			-			29,271			-
Operating expenses:
Selling, general and administrative		605,828			245,125			894,829			702,832
Total operating expenses		605,828			245,125			894,829			702,832
Loss from operations		(576,557	)		(245,125	)		(865,558	)		(702,832	)
Other income (expense):
Interest income		56			25			112			36
Total other income (expense)		56			25			112			36
Net loss before provision for income taxes		(576,501	)		(245,100	)		(865,446	)		(702,796	)
Provision for (benefit from) income taxes		-			-			-			-
Net income (loss) from continuing operations		(576,501	)		(245,100	)		(865,446	)		(702,796	)
Gain (loss) from discontinued operations, net of tax		15,194,741			(1,318,944	)		14,470,049			(2,117,707	)
Net income (loss)	$	14,618,240		$	(1,564,044	)	$	13,604,603		$	(2,820,503	)
Preferred stock interest		6,575			-			6,575			-
Net income (loss) available to common shareholders	$	14,611,665		$	(1,564,044	)	$	13,598,028		$	(2,820,503	)
Net loss from continuing operations per share, basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Net income (loss) from discontinued operations per share, basic and diluted	$	0.22		$	(0.02	)	$	0.21		$	(0.03	)
Weighted average number of common shares outstanding, basic and diluted		69,861,028			65,939,709			68,030,538			65,939,709

See accompanying notes to unaudited condensed consolidated financial statements

2

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	For the Three Months Ended					For the Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2019		2018			2019		2018
Net income (loss)	$	14,618,240	$	(1,564,044	)	$	13,604,603	$	(2,820,503	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		551		(31,147	)		3,482		(13,517	)
Total other comprehensive income (loss), net of tax		551		(31,147	)		3,482		(13,517	)
Comprehensive income (loss)	$	14,618,791	$	(1,595,191	)	$	13,608,085	$	(2,834,020	)

See accompanying notes to unaudited condensed consolidated financial statements

3

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the Three and Six Month period Ended June 30, 2019 and 2018

																		Accumulated
													Additional					Other
	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Income			Total
Balance, December 31, 2017		-	$	-		-	$	-		65,939,709	$	65,938	$	26,301,747	$	(31,542,684	)	$	(41,540	)	$	(5,216,539	)
Fair value of options and restricted stock awards		-		-		-		-		-		-		38,303		-			-			38,303
Fair value of warrants		-		-		-		-		-		-		61,050		-			-			61,050
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		1,156,695		-			-			1,156,695
Net loss		-		-		-		-		-		-		-		(1,256,459	)		-			(1,256,459	)
Foreign currency translation		-		-		-		-		-		-		-		-			17,630			17,630
Balance, March 31, 2018		-		-		-		-		65,939,709		65,938		27,557,795		(32,799,143	)		(23,910	)		(5,199,320	)
Fair value of options and restricted stock awards		-		-		-		-		-		-		37,619		-			-			37,619
Fair value of warrants		-		-		-		-		-		-		66,515		-			-			66,515
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		881,600		-			-			881,600
Net loss		-		-		-		-		-		-		-		(1,564,044	)		-			(1,564,044	)
Foreign currency translation		-		-		-		-		-		-		-		-			(31,147	)		(31,147	)
Balance, June 30, 2018		-	$	-		-	$	-		65,939,709	$	65,938	$	28,543,529	$	(34,363,187	)	$	(55,057	)	$	(5,808,777	)
Balance, December 31, 2018		-	$	-		-	$	-		66,179,709	$	66,179	$	29,498,125	$	(42,960,124	)	$	(77,355	)	$	(13,473,175	)
Fair value of options and restricted stock awards		-		-		-		-		-		-		36,578		-			-			36,578
Fair value of warrants		-		-		-		-		-		-		89,119		-			-			89,119
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		44,670		-			-			44,670
Fair value of repricing adjustment		-		-		-		-		-		-		104,638		-			-			104,638
Net loss		-		-		-		-		-		-		-		(1,013,637	)		-			(1,013,637	)
Foreign currency translation		-		-		-		-		-		-		-		-			2,931			2,931
Balance, March 31, 2019		-		-		-		-		66,179,709		66,179		29,773,130		(43,973,761	)		(74,424	)		(14,208,876	)
Conversion of debt into Series A Preferred Stock		500		1		-		-		-		-		499,999		-			-			500,000
Issuance of Series B Preferred Stock for acquisition of CFN		-		-		3,000		3		-		-		686,997		-			-			687,000
Issuance of common stock for acquistion of CFN		-		-		-		-		30,000,000		30,000		2,670,000		-			-			2,700,000
Issuance of common stock as payment of interest		-		-		-		-		3,500,000		3,500		311,500		-			-			315,000
Fair value of options and restricted stock awards		-		-		-		-		-		-		34,385		-			-			34,385
Fair value of warrants		-		-		-		-		-		-		37,691		-			-			37,691
Preferred stock interest		-		-		-		-		-		-		-		(6,575	)		-			(6,575	)
Net income		-		-		-		-		-		-		-		14,618,240			-			14,618,240
Foreign currency translation		-		-		-		-		-		-		-		-			551			551
Balance, June 30, 2019		500	$	1		3,000	$	3		99,679,709	$	99,679	$	34,013,702	$	(29,362,096	)	$	(73,873	)	$	4,677,416

See accompanying notes to unaudited condensed consolidated financial statements

4

ACCELERIZE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended
	June 30,			June 30,
	2019			2018
Cash flows from operating activities
Net income (loss)	$	13,604,603		$	(2,820,503	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		31,563			346,858
Gain on sale of CAKE Business		(19,473,080	)		-
Amortization of deferred financing cost		2,511,960			384,407
Provision for bad debt		54,264			(335,801	)
Fair value of options and warrants		197,773			203,486
Issuance of common stock as payment of interest		315,000			-
Changes in operating assets and liabilities:
Accounts receivable		(3,615	)		129,609
Prepaid expenses and other current assets		172,155			(40,214	)
Other assets		28,095			12,388
Accounts payable and accrued expenses		(1,928,243	)		(188,443	)
Deferred revenue		(284,198	)		-
Other liabilities		(602,083	)		416,393
Net cash (used in) operating activities	$	(5,375,806	)	$	(1,891,820	)
Cash flows from investing activities
Capitalized software for internal use		-			(750,000	)
Purchase of property and equipment		(1,751	)		(28,698	)
Proceeds from sale of CAKE Business		20,892,667			-
Payments for acquisition of subsidiary		(420,000	)		-
Net cash provided by (used in) investing activities	$	20,470,916		$	(778,698	)
Cash flows from financing activities
Principal repayments of credit facility and loan		(11,772,514	)		(2,163,212	)
Proceeds from credit facility		900,000			4,702,197
Proceeds from promissory notes		-			1,000,000
Repayment of related party notes		(300,000	)
Repayment of promissory notes		(2,700,000	)		-
Net cash (used in) provided by financing activities	$	(13,872,514	)	$	3,538,985
Effect of exchange rate fluctuations on cash		1,196			(13,517	)
Net change in cash and restricted cash		1,223,792			854,950
Cash and restricted cash, beginning of the period		77,295			216,883
Cash and restricted cash, end of the period	$	1,301,087		$	1,071,833
Supplemental disclosure of cash flow information:
Interest paid	$	946,691		$	711,627
Income taxes paid	$	-		$	-
Supplemental disclosure of non-cash investing and financing information:
Fair value of warrants issued in connection with line of credit and promissory notes	$	44,670		$	2,038,296
Capital expenditure included in accounts payable	$	-		$	1,299
Accrued payables and short-term note directly paid off by credit facility	$	-		$	623,399
Prepaid expenses reclassified to deferred financing costs	$	-		$	70,000
Accrual of preferred stock interest	$	6,575		$	-
Accrued interest reclassed to credit facility	$	62,379		$	-
Warrant repricing adjustment	$	104,638		$	-
Conversion of notes payable to Series A Preferred Stock	$	500,000		$	-
Issuance of Series B Preferred Stock for acquisition of subsidiary	$	687,000		$	-
Issuance of common stock for acquisition of subsidiary	$	2,700,000		$	-

See accompanying notes to unaudited condensed consolidated financial statements

5

ACCELERIZE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization

Accelerize Inc., a Delaware corporation, incorporated on November 22, 2005, or the Company, owned and operated CAKE, a Software-as-a-Service platform providing online tracking and analytics solutions for advertisers and online marketers. The Company provided software solutions for businesses interested in expanding their online advertising spend.

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

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

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

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

Going Concern

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

The Company had working capital of $868,861 and an accumulated deficit of $29,362,096 as of June 30, 2019.  The Company also had a net loss from continuing operations of $865,446 during the six months ended June 30, 2019.

6

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

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

Basis of Presentation

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

These unaudited condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2018 and 2017, respectively, which are included in the Company’s December 31, 2018 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on April 16, 2019.  The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation of these may be determined in that context. The results of operations for the period ended June 30, 2019 are not necessarily indicative of results for the entire year ending December 31, 2019.

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

Financial Statement Reclassification

Certain account balances from prior periods have been reclassified in these unaudited condensed consolidated financial statements to conform to current period classifications. The prior year amounts have also been reclassified in these financial statements to properly report amounts under current operations and discontinued operations (see note 6).

7

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank. The bank requires a collateral which is placed in a money market account and can be increased or decreased at any time at the discretion of the Company.  The Company’s restricted cash amounted to $50,000 at June 30, 2019 and December 31, 2018.  The restricted cash balance of $50,000 is included as a component of total cash and restricted cash in the beginning and ending balances as presented on the accompanying unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2019 and 2018.

Accounts Receivable

The Company’s account receivables are due from customers relating to contracts to provide investor relation services. Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. There was no allowance for doubtful accounts as of June 30, 2019 or December 31, 2018.

Concentration of Credit Risks

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

The Company’s cash and cash equivalents accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits. The Company had cash balances of approximately $1,034,000 at June 30, 2019 that exceeded the FDIC insurance limit.

The Company's accounts receivable are due from customers located in the United States. The Company had two customers who each accounted for 11.4% of its accounts receivable at June 30, 2019 and none at December 31, 2018. 

Revenue Recognition

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

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

8

Prior to the Company discontinuing the operations of its CAKE Business in May 2019, the Company’s SaaS revenues were generated from implementation and training fees and a monthly license fee, supplemented by per transaction fees paid by customers for monthly platform usage. The initial term of the customer contract were generally one year with one of two general cancellation policies. Each party could cancel the contract within the initial period or after the initial period, with 30-days’ prior notice. The Company did not provide any general right of return for its delivered items. Services associated with the implementation and training fees had standalone value to the Company’s customers, as there are third-party vendors who offer similar services to the Company’s services. Accordingly, they qualified as separate units of accounting. The Company allocated a fair value to each element deliverable at the recognition date and recognized such value when the services are provided. The Company bases the fair value of the implementation and training fees on third-party evidence and the monthly license fee on vendor-specific objective evidence. Fees charged by third-party vendors for implementation and training services do not vary significantly from the fees charged by the Company. Services associated with implementation and training fees were generally rendered within a month from the initial contract date. The value attributed to the monthly license fees as well as the fees associated with monthly transaction-based platform usage were recognized in the corresponding period.

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

Fair Value of Financial Instruments

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

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

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

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

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

Additional Disclosures Regarding Fair Value Measurements

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

Advertising

The Company expenses advertising costs as incurred. Advertising expenses amounted to $60,698 and $142,449 for the three months ended June 30, 2019 and 2018, respectively. Advertising expenses amounted to $159,665 and $276,107 for the six months ended June 30, 2019 and 2018, respectively. These advertising expenses are all reported as a component of discontinued operations for the three and six months ended June 30, 2019 and 2018.

9

Income Taxes

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

Foreign Currency Translation

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

Software Development Costs

At December 31, 2018, the Company impaired the entire balance of unamortized internal-use software development costs which amounted to approximately $4,725,000 and did not capitalize internal-use software development costs in 2019. Costs incurred in the research and development of software products and significant upgrades and enhancements thereto during the preliminary project stage and the post-implementation operation stage are expensed as incurred. Costs incurred for maintenance and relatively minor upgrades and enhancements are expensed as incurred. Prior to the December 31, 2018 impairment, costs associated with the application development stage of new software products and significant upgrades and enhancements thereto were capitalized when 1) management implicitly or explicitly authorized and committed to funding a software project and 2) it was probable that the project would be completed and the software would be used to perform the function intended. The Company capitalized internal-use software development costs of $375,000 and $750,000 during the three and six-month periods ended June 30, 2018. The Company amortized such costs once the new software products and significant upgrades and enhancements were completed. The Company’s amortization expenses associated with capitalized software development costs amounted to $216,146 and $321,146 during the three and six-month periods ended June 30, 2018 and was reflected in cost of revenues. There were no expenses associated with capitalized software development costs during the three or six-month periods ended June 30, 2019. The amortization expenses above are reported as a component of discontinued operations.

Property and Equipment

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

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). As of June 30, 2019, the Company had 7,130,000 outstanding stock options and 12,627,109 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of June 30, 2018, the Company had 7,245,000 outstanding stock options and 11,469,341 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

10

Share-Based Payment

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

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

Common stock awards

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

Warrants

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 5, Stockholders’ Deficit.  

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842).  This guidance will be effective for public entities for fiscal years beginning after December 15, 2018 including the interim periods within those fiscal years. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less.  All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. The Company has adopted this standard on January 1, 2019 and recognized assets and liabilities arising from any leases that meet the requirements under this standard on the adoption date and included qualitative and quantitative disclosures in the Company’s notes to the condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. This standard has no impact on the Company’s financial statements.

11

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

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

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

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

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

NOTE 3: PROPERTY AND EQUIPMENT

The Company’s property and equipment relating to continuing operations consisted of the following at June 30, 2019 and December 31, 2018.

	June 30,			December 31,
	2019			2018
	(Unaudited)
Computer equipment and software	$	8,139		$	-
		8,139			-
Less: accumulated depreciation		(4,401	)		-
	$	3,738		$	-

Depreciation expense from continuing operations amounted to $197 for the three and six months ended June 30, 2019. There was no depreciation expense from continuing operations during 2018.  

12

NOTE 4: ACQUISITONS

On May 15, 2019, the Company entered into the Emerging Growth Agreement with Emerging Growth, LLC (see Note 1), which closed on June 20, 2019. Pursuant to the terms of the Emerging Growth Agreement, the Company acquired certain assets from the Seller related to its sponsored content and marketing business for a purchase price consideration consisting of $420,000 in cash, 30,000,000 shares of the Company’s common stock valued at $2,700,000, and 3,000 shares of Series B preferred stock valued at $687,000. As a result, the total purchase price amounted to $3,807,000.

A summary of the purchase price allocation at fair value is below.  The business combination accounting is not yet complete and the amounts assigned to the net assets acquired are provisional.  Therefore, this may result in future adjustments to the provisional amounts as new information is obtained about facts and circumstances that existed at the acquisition date.

	Purchase Allocation
Property and equipment	$	2,183
Goodwill		3,804,817
	$	3,807,000

The following are the unaudited pro forma results of operations for the three and six months ended June 30, 2019 and 2018, as if the assets purchased in the Emerging Growth Agreement had been acquired on January 1, 2018.  The pro forma results include estimates and assumptions which management believes are reasonable.  However, pro forma results do include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated.

	Pro Forma Combined Financials (Unaudited)
	Six Months Ended June 30, 2019			Six Months Ended June 30, 2018
Revenue from continuing operations	$	1,055,843		$	1,033,378
Net loss from continuing operations	$	(717,591	)	$	(407,473	)
Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)

	Pro Forma Combined Financials (Unaudited)
	Thee Months Ended June 30, 2019			Three Months Ended June 30, 2018
Revenue from continuing operations	$	667,356		$	545,153
Net loss from continuing operations	$	(458,887	)	$	(426,537	)
Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)

13

NOTE 5: STOCKHOLDERS’ DEFICIT

Common Stock

On June 20, 2019, the Company issued an aggregate of 3,500,000 restricted shares of common stock to certain promissory note holders as consideration for early payment of the promissory notes. The value of the shares issued amounted to $315,000 and was recorded as interest expense during the three and six months ended June 30, 2019.

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

Restricted Stock Issued as Compensation

During 2018 and 2017, the Company issued 120,000 restricted shares of its common stock, at a value of $0.50 per share, vesting in 4 equal quarterly increments commencing on July 1, 2018 and July 1, 2017, to each of its non-employee directors as partial annual compensation for services as a director. As of June 30, 2019 and 2018, these restricted shares were fully issued. The Company recorded expenses of $30,000 during the three month periods ended June 30, 2019 and 2018 and $60,000 during the six months ended June 30, 2019 and 2018.

Preferred Stock

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

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

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

For the three and six months ended June 30, 2019, the Company incurred $6,575 of interest from the outstanding preferred stock.

Warrants

There were no exercises of warrants during the six months ended June 30, 2019 or 2018.

During the three months ended March 31, 2019, the Company issued 500,000 warrants exercisable at a price of $0.15 per share which expire on January 25, 2024. The fair value of these warrants amounted to $44,670, and was recognized as deferred financing costs using the effective interest method during the three-month period ended March 31, 2019. Additionally, per the down round feature of 7,935,000 warrants issued in connection with the Beedie Credit Agreement (see Note 6), pursuant to ASU 2017-11 which allows instruments with a down round feature to qualify for equity classification, the Company recognized the value of the feature when it was activated and there was an actual reduction of the strike price or conversion feature. The reduction in income of such 7,935,000 warrants amounted to $104,638 and was capitalized as deferred financing costs during the three-month period ended March 31, 2019.

14

During the three months ended March 31, 2018, the Company issued 200,000 and 4,500,000 warrants exercisable at a price of $0.35 per share and which expire on January 25, 2028 and January 25, 2024, respectively. The fair value of these warrants amounted to $56,834 and $1,099,861, respectively, and were recognized as deferred financing costs and amortized using the effective interest method over the terms of the associated loan. During this same period, 58,824 warrants expired. 

There were no warrants granted during the three months ended June 30, 2019. In connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business, warrants to purchase an aggregate of 9,668,333 shares of the Company’s common stock were cancelled. In addition, 3,250,075 of previously granted warrants to employees were forfeited during the three months ended June 30, 2019.

As of June 30, 2019, and December 31, 2018, there were 12,627,109 and 16,110,517 warrants issued and outstanding, respectively, with a weighted average exercise price $0.66 and $0.62, respectively.

The Company recorded expenses of $37,691 and $66,515 during the three months ended June 30, 2019 and 2018, respectively, related to warrants granted. The Company recorded expenses of $126,810 and $127,565 during the six months ended June 30, 2019 and 2018, respectively, related to warrants granted. As of June 30, 2019, there is no remaining unrecorded compensation expense relating to warrants granted.

Options

The following summarizes the Company’s stock option activity for the six months ended June 30, 2019.

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)
Outstanding at December 31, 2018		7,232,500		$	0.40		3.45
Granted		-
Forfeited/cancelled		(102,500	)		1.07
Exercised		-
Outstanding at June 30, 2019 (unaudited)		7,130,000		$	0.39		2.92
Vested and expected to vest at June 30, 2019 (unaudited)		7,125,801		$	0.39		2.92
Exercisable at June 30, 2019 (unaudited)		7,125,801		$	0.39		2.92

As of June 30, 2019, and December 31, 2018, there were 7,130,000 and 7,232,500 options, respectively, issued and outstanding with a weighted average exercise price of $0.39 and $0.40, respectively.

The Company recorded expenses of $4,385 and $7,619 during the three months ended June 30, 2019 and 2018, respectively, related to stock options. The Company recorded expenses of $10,963 and $15,922 during the six months ended June 30, 2019 and 2018, respectively, related to stock options. Employees with unvested stock options all left the Company in connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business on June 18, 2019. As a result, no further options are expected to vest, and the total compensation cost related to non-vested awards not yet recognized amounted to $0 at June 30, 2019.

15

NOTE 6: DISCONTINUED OPERATIONS

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

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the unaudited condensed consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of June 30, 2019 and December 31, 2018, and consist of the following:

	June 30,		December 31,
	2019		2018
	(Unaudited)
Current assets of discontinued operations
Accounts receivable, net [1]	$	-	$	2,081,551
Prepaid expenses and other assets		40,710		254,760
Total current assets of discontinued operations	$	40,710	$	2,336,311
Noncurrent assets of discontinued operations
Property and equipment, net [2]	$	-	$	52,035
Other assets		-		108,211
Total noncurrent assets of discontinued operations	$	-	$	160,246
Current liabilities of discontinued operations
Accounts payable and accrued expenses	$	383,023	$	3,018,394
Deferred revenues [3]		-		443,650
Credit facility, short term [4]		-		3,399,240
Total current liabilites of discontinued operations	$	383,023	$	6,861,284
Noncurrent liabilities of discontinued operations
Credit facility, net of unamortized financing costs [4]	$	-	$	5,888,155
Other loan, related party net of unamortized financing costs [5]		-		386,686
Other long-term loan, net of unamortized financing costs [5]		-		2,273,402
Other liabilities		-		637,500
Total noncurrent liabilites of discontinued operations	$	-	$	9,185,743

[1] The Company’s accounts receivable was due primarily from advertisers and marketers. Collateral was not required. The Company also maintained allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviewed these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserved for those accounts deemed uncollectible or likely to become uncollectible. When receivables were determined to be uncollectible, principal amounts of such receivables outstanding were deducted from the allowance. The allowance for doubtful accounts amounted to $300,000 and $245,736 at June 30, 2019 and December 31, 2018, respectively.

16

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

	June 30,		December 31,
	2019		2018
	(Unaudited)
Computer equipment and software	$	-	$	422,441
Office furniture and equipment		-		123,932
Leasehold improvements		-		288,937
		-		835,310
Less: accumulated depreciation		-		(783,275	)
	$	-	$	52,035

Depreciation expense from discontinued operations amounted to $20,998 and $11,653 for the three-months ended June 30, 2019 and 2018, respectively. Depreciation expense amounted to $31,366 and $25,712 for the six-months ended June 30, 2019 and 2018, respectively. The deprecation expense for each period is reflected as a component of discontinued operations.

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

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

	June 30,		December 31,
	2019		2018
	(Unaudited)
Saas Capital Loan	$	-	$	4,810,135
Less: deferred financing costs		-		(100,867	)
Saas Capital Loan, net		-		4,709,268
Beedie Credit Agreement	$	-	$	6,000,000
Less: deferred financing costs		-		(1,421,873	)
Beedie Credit Agreement, net		-		4,578,127
Total outstanding	$	-	$	10,810,135
Less: deferred financing costs		-		(1,522,740	)
Total credit facility loans	$	-	$	9,287,395
Short-term balance	$	-	$	3,399,240
Long-term balance		-		5,888,155
Total credit facility loans	$	-	$	9,287,395

17

SAAS Capital Loan

On May 5, 2016, the Company entered into a loan and security agreement, or the SaaS Capital Loan, with SaaS Capital Funding II, LLC, or SaaS Capital, to borrow up to a maximum of $8,000,000. Initial amounts borrowed accrued interest at the rate of 10.25% per annum with future amounts borrowed bearing interest at the greater of 10.25% or 9.21% plus the three-year treasury rate at the time of advance. Accrued interest on amounts borrowed was payable monthly for the first six months and thereafter 36 equal monthly payments of principal and interest is payable. Prepayments were 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.

The fair value of the warrants previously issued in connection with the SaaS Capital Loan were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the three months ended June 30, 2019 and 2018, $50,085 and $49,997, respectively, of debt discount was amortized into interest expense. During the six months ended June 30, 2019 and 2018, $100,867 and $98,414, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

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

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

Beedie Credit Agreement

On January 25, 2018, the Company entered into a non-revolving term credit agreement, or the Beedie Credit Agreement, with Beedie Investments Limited, or Beedie, to borrow up to a maximum of $7,000,000. Outstanding principal will accrue interest at the rate of 12% per annum increasing to 14% per annum if the Company’s gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal was payable monthly in arrears. The Company paid Beedie a commitment fee of $175,000 and paid to Beedie a monthly standby fee of 0.325% on the unadvanced and available amount.

The fair value of the warrants previously issued in connection with the Beedie Credit Agreement were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the three months ended June 30, 2019 and 2018, $1,391,678 and $110,249, respectively, of debt discount was amortized into interest expense. During the six months ended June 30, 2019 and 2018, $1,571,181 and $181,074, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

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

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

18

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

	June 30,		December 31,
	2019		2018
	(Unaudited)
2018 Promissory Notes	$	-	$	1,450,000
August 2018 Promissory Notes		-		1,500,000
Less: deferred financing costs		-		(676,598	)
Other long-term loans, net	$	-	$	2,273,402
2018 Promissory Notes, related party	$	-	$	550,000
Less: deferred financing costs		-		(163,314	)
	$	-	$	386,686

2018 Promissory Notes

On May 31, 2018, and June 15, 2018, the Company borrowed an aggregate of $2,000,000, respectively, from thirteen lenders, or the 2018 Lenders, and issued promissory notes, or the 2018 Promissory Notes, for the repayment of the amounts borrowed. The 2018 Lenders are all accredited investors, one of the 2018 Lenders is an affiliate of the Company’s director, Greg Akselrud, two of the 2018 Lenders are related to the Company’s Chairman and Chief Executive Officer, Brian Ross, and two of the 2018 Lenders are the Company’s employees. The 2018 Promissory Notes are unsecured, have a maturity date of May 30, 2021 and all principal is due upon maturity. Amounts borrowed accrue interest at 12% per annum and accrued interest is payable monthly. The Company also issued to the 2018 Lenders six-year warrants to purchase an aggregate of 3,000,000 shares of the Company’s Common Stock at an exercise price of $0.35 per share.

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

August 2018 Promissory Notes

On August 31, 2018, the Company borrowed an aggregate of $1,500,000 from ten lenders, or the August 2018 Lenders and issued promissory notes, or the August 2018 Promissory Notes, for the repayment of the amounts borrowed. The August 2018 Lenders are all accredited investors. The August 2018 Promissory Notes are unsecured, have a maturity date of August 30, 2021 and all principal is due upon maturity. Amounts borrowed accrue interest at 12% per annum and accrued interest is payable monthly. The Company also issued to the August 2018 Lenders six-year warrants to purchase an aggregate of 1,500,000 shares of the Company’s common stock exercisable for cash at an exercise price of $0.35 per share.

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

19

The fair value of the warrants previously issued in connection with the 2018 Promissory Notes and the August 2018 Promissory Notes were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the three months ended June 30, 2019 and 2018, $755,411 and $20,478, respectively, of debt discount was amortized into interest expense. During the six months ended June 30, 2019 and 2018, $839,912 and $20,478, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying unaudited condensed consolidated statements of operations. The results of the discontinued operations of the CAKE Business for the three and six months ended June 30, 2019 and 2018 have been reflected as discontinued operations in the consolidated statements of operations, and consist of the following:

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2019			2018			2019			2018
Net revenues	$	4,175,485		$	5,397,678		$	9,001,307		$	11,390,426
Cost of revenue		2,034,098			2,469,136			3,863,471			4,822,996
Gross profit		2,141,387			2,928,542			5,137,836			6,567,430
Operating expenses:
Research and development		484,560			987,776			1,263,808			2,110,399
Sales and marketing		1,160,198			1,061,708			2,016,637			2,232,192
General and administrative		1,726,524			1,661,152			3,086,805			3,203,331
Total operating expenses		3,371,282			3,710,636			6,367,250			7,545,922
Loss from operations		(1,229,895	)		(782,094	)		(1,229,414	)		(978,492	)
Other income (expense):
Gain on sale of discontinued operations		19,473,080			-			19,473,080			-
Interest income		34			-			34			750
Interest expense		(3,048,478	)		(536,850	)		(3,773,651	)		(1,139,965	)
Total other income (expense)		16,424,636			(536,850	)		15,699,463			(1,139,215	)
Net income (loss) from discontinued operations before provision for income taxes		15,194,741			(1,318,944	)		14,470,049			(2,117,707	)
Provision for (benefit from) income taxes		-			-			-			-
Net income (loss) from discontinued operations	$	15,194,741		$	(1,318,944	)	$	14,470,049		$	(2,117,707	)

The following is a summary of the gain on sale of discontinued operations of the CAKE Business reflected above during the three and six months ended June 30, 2019. 

Gross proceeds received	$	20,892,667
Less: value of net assets sold
Accounts receivable		1,979,342
Prepaid and other current assets		51,363
Property and equipment		20,986
ROU lease asset		1,458,922
Other assets		39,702
Accounts payable and accrued expenses		(344,787	)
Deferred revenue		(138,112	)
ROU lease liability		(1,612,412	)
Other liabilities		(35,417	)
Total net assets sold		1,419,587
Gain on sale of CAKE Business	$	19,473,080

NOTE 7: COMMITMENTS AND CONTINGENCIES

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

The Company leases office space in Santa Monica, California, under a short-term lease expiring on July 31, 2019 for $1,000 per month. Subsequent to the quarter ended June 30, 2019, the Company has renewed the terms of the lease for a period of one year through July 31, 2020.    

During August 2017, the Company entered into an amendment to its original January 2014 lease for certain office space in Newport Beach.  Pursuant to the lease amendment, effective March 1, 2018, the premises shall be expanded to include an additional 1,332 usable square feet such that the premises shall consist of 11,728 usable square feet in the aggregate. In addition, pursuant to the terms of the lease amendment, the Company extended the term of the lease agreement until June 30, 2023. Commencing on March 1, 2018, the initial base rent for the premises will be $38,702 per month for the first year and increasing to $44,566 per month by the end of the term. This lease was transferred to Constellation upon the sale of the CAKE Business that closed on June 18, 2019. The Company has no further obligations under this lease.

20

During July 2014, the Company entered into a five-year lease for certain office space in a business center in London, England, which commenced on July 30, 2014. The base rent is GBP 89,667 (approximately $115,000) per year and the estimated service charges for the lease are GBP 45,658 (approximately $56,000) per year. This lease expires on July 30, 2019 and thus is not affected by ASC 842. The Company has discontinued its operations associated with the CAKE Business it conducted at the Subsidiary in London and will be vacating the office when the lease expires.

Legal Proceedings

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

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, 2018. 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 owned and operated CAKE and getcake.com, a marketing technology company that provided a proprietary solution for advanced analytics, attribution and campaign optimization for digital marketers, and we sold this business on June 18, 2019. We contemporaneously acquired assets from Emerging Growth LLC related to its cannabis industry focused sponsored content and marketing business, or the CFN Business. Our initial ongoing operations will consist primarily of the CFN Business and we will continue to pursue strategic transactions and opportunities.

The CFN Business generates revenue through sponsored content, including articles, press releases, videos, podcasts, advertisements and other media, email advertisements and other marketing campaigns run on behalf of public and private companies in the cannabis industry, helping them reach accredited, retail and institutional investors. Most revenue is generated through contracts involving a monthly cash payment.

The CFN Business’ primary expenses come advertising on platforms like Twitter and Facebook and from employee salaries and contractor fees. The CFN Business’ content is primarily produced by a team of freelance writers and video content is produced through various vendors. The CFN Business also incurs hosting and development costs associated with maintaining and improving its website, web applications, and mobile applications. The CFN Business operates several media platforms, including CannabisFN.com, the CannabisFN iOS app, the CFN Media YouTube channel, the CFN Media podcast, and other venues. These properties are designed to educate and inform investors interested in the cannabis industry, as well as provide a platform for the clients of the CFN Business to reach investors. The CFN Business distributes content across numerous online platforms, including the CannabisFN.com website, press releases, financial news syndicates, search engines, YouTube, iTunes, Twitter, Instagram, Facebook, LinkedIn, and others.

The CFN Business targets the legal cannabis industry. According to Grand View Research, the global cannabis industry is expected to reach $146.4 billion by 2025, driven by the legalization of medical and adult-use cannabis across a growing number of jurisdictions. According to the Marijuana Index, there are approximately 400 public companies involved in the cannabis industry, which represents the primary target market of the CFN Business. The CFN Business’ services are designed to help private companies prepare to go public and public companies grow their shareholder base through sponsored content and marketing outreach. The success of the CFN Business depends on the legal status of cannabis, investor demand for cannabis investments, and numerous other external factors.

21

The CFN Business competes with other public relations firms for clients, as well as online publishers for investors. Public relations competition includes investor awareness firms like Stockhouse Publishing, Catalyst Xchange, Stonebridge Partners and Midan Ventures. Online publisher competition includes firms like New Cannabis Ventures, Leafly and High Times. The CFN Business is regulated by rules established by the SEC, FINRA, and certain federal and state cannabis regulations.

Our principal offices are located at 2601 Ocean Park Boulevard, Suite 310, Santa Monica, California 90405. Our telephone number there is: (310) 314-8804. 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." 

Results of Operations for the Three Months Ended June 30, 2019 and 2018

The following are the results of our operations for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018:

	For the Three Months Ended
	June 30,			June 30,
	2019			2018			Change
Net revenues	$	62,720		$	-		$	62,720
Cost of revenue		33,449			-			33,449
Gross profit		29,271			-			29,271
Operating expenses:
Selling, general and administrative		605,828			245,125			360,703
Total operating expenses		605,828			245,125			360,703
Loss from operations		(576,557	)		(245,125	)		(331,432	)
Other income (expense):
Interest income		56			25			31
Total other income (expense)		56			25			31
Net loss before provision for income taxes		(576,501	)		(245,100	)		(331,401	)
Provision for (benefit from) income taxes		-			-			-
Net income (loss) from continuing operations		(576,501	)		(245,100	)		(331,401	)
Gain (loss) from discontinued operations, net of tax		15,194,741			(1,318,944	)		16,513,685
Net income (loss)	$	14,618,240		$	(1,564,044	)	$	16,182,284

Net Revenues

Subsequent to the closing of the Asset Purchase Agreement with Constellation on June 18, 2019, which resulted in the sale of our CAKE Business and discontinuation of our operations previously recorded under this line of business, our net revenues from continuing operations consists of revenue generated from customer contracts acquired in the Emerging Growth Agreement which closed on June 20, 2019. Subsequent to this date, our revenues are generated from the sale of promotional service packages to customers ranging from 3 to 6 months. We offer different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. Our revenue for the three months ended June 30, 2019 represents revenue recognized for the period from June 21, 2019 through June 30, 2019. We expect this be our primary source of revenue going forward.

22

Costs of Revenue

Our cost of revenue represents costs incurred associated with performing services under our customer contracts acquired under the Emerging Growth Agreement. Our cost of revenue for the three months ended June 30, 2019 represents revenue recognized for the period from June 21, 2019 through June 30, 2019. We expect for our cost of revenue to increase proportionately with increases in revenues recognized in future periods.

Operating Expenses

Our operating expenses for the three months ended June 30, 2019 increased by $360,703 as compared to the prior year period due primarily to additional legal and professional fees associated with the closing of the Asset Purchase Agreement and the Emerging Growth Agreement and the reporting regulatory requirements associated with the transaction. Continuing operating expenses presented during the three months ended June 30, 2018 reflect administrative expenses associated with business insurance, legal and accounting fees that we will continue to incur.

Discontinued Operations

Effective June 18, 2019, we sold substantially all of our assets associated with the CAKE Business for total proceeds of $20,892,667. Accordingly, we had a gain from discontinued operations during the three months ended June 30, 2019 of $15,194,741, which represented the gain on the sale of the net assets of $19,473,080 offset by the loss from discontinued operations of $1,229,895 as well as interest expense associated with discontinued operations of $3,048,478. The loss from discontinued operations during the three months ended June 30, 2018 represents the prior year results from the CAKE Business reclassified as discontinued operations.

Results of Operations for the Six Months Ended June 30, 2019 and 2018

The following are the results of our operations for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018:

	For the Six Months Ended
	June 30,			June 30,
	2019			2018			Change
Net revenues	$	62,720		$	-		$	62,720
Cost of revenue		33,449			-			33,449
Gross profit		29,271			-			29,271
Operating expenses:
Selling, general and administrative		894,829			702,832			191,997
Total operating expenses		894,829			702,832			191,997
Loss from operations		(865,558	)		(702,832	)		(162,726	)
Other income (expense):
Interest income		112			36			76
Total other income (expense)		112			36			76
Net loss before provision for income taxes		(865,446	)		(702,796	)		(162,650	)
Provision for (benefit from) income taxes		-			-			-
Net income (loss) from continuing operations		(865,446	)		(702,796	)		(162,650	)
Gain (loss) from discontinued operations, net of tax		14,470,049			(2,117,707	)		16,587,756
Net income (loss)	$	13,604,603		$	(2,820,503	)	$	16,425,106

Net Revenues

Subsequent to the closing of the Asset Purchase Agreement with Constellation on June 18, 2019, which resulted in the sale of our CAKE Business and discontinuation of our operations previously recorded under this line of business, our net revenues consist of revenue generated from customer contracts acquired in the Emerging Growth Agreement which closed on June 20, 2019. Subsequent to this date, our revenues are generated from the sale of promotional service packages to customers ranging from 3 to 6 months. We offer different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. Our revenue for the six months ended June 30, 2019 represents revenue recognized for the period from June 21, 2019 through June 30, 2019. We expect this be our primary source of revenue going forward.

23

Costs of Revenue

Our cost of revenue represents costs incurred associated with performing services under our customer contracts acquired under the Emerging Growth Agreement. Our cost of revenue for the six months ended June 30, 2019 represents revenue recognized for the period from June 21, 2019 through June 30, 2019. We expect for our cost of revenue to increase proportionately with increases in revenues recognized in future periods.

Operating Expenses

Our operating expenses for the six months ended June 30, 2019 increased by $191,997 as compared to the prior year period due primarily to additional legal and professional fees associated with the closing of the Asset Purcahse Agreement and the Emerging Growth Agreement and the reporting regulatory requirements associated with the transaction. Continuing operating expenses presented during the six months ended June 30, 2018 reflect administrative expenses associated with business insurance, legal and accounting fees that we will continue to incur.

Discontinued Operations

Effective June 18, 2019, we sold substantially all of our assets associated with the CAKE Business for total proceeds of $20,892,667. Accordingly, we had a gain from discontinued operations during the six months ended June 30, 2019 of $14,470,049, which represented the gain on the sale of the net assets of $19,473,080 offset by the loss from discontinued operations of $1,229,414 as well as interest expense associated with discontinued operations of $3,773,651. The loss from discontinued operations during the six months ended June 30, 2018 represents the prior year results from the CAKE Business reclassified as discontinued operations.

Liquidity and Capital Resources

On May 15, 2019, we entered into the Asset Purchase Agreement to sell substantially all of our assets related to the CAKE Business. We received gross cash proceeds of $20,892,667 for the sale of this business, less payments totaling $20,190,869 for the payoff of existing debt, transaction costs, and certain vendor payables, leaving us with a net increase to cash of $701,798. Concurrent with this agreement, we also entered into the Emerging Growth Agreement where we acquired certain assets from Emerging Growth, LLC related to its sponsored content and marketing business for purchase price consideration consisting in part of $420,000 in cash. Our plan to continue as a going concern includes raising capital in the form of debt or equity, growing the business acquired under the Emerging Growth Agreement and managing and reducing operating and overhead costs. We cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for us to raise additional capital on an immediate basis.

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

24

The following is a summary of our cash flows from operating, investing and financing activities for the six months ended June 30, 2019 and 2018.

	Six Months Ended
	June 30,			June 30,
	2019			2018
Cash flows used in operating activities	$	(5,375,806	)	$	(1,891,820	)
Cash flows provided by (used in) investing activities	$	20,470,916		$	(778,698	)
Cash flows provided by (used in) financing activities	$	(13,872,514	)	$	3,538,985

As of June 30, 2019, we had unrestricted cash of $1,251,087.

Net cash used in operating activities was approximately $5.4 million during the six months ended June 30, 2019, compared with approximately $1.9 million during the same period in 2018. The increase in cash used in operating activities was primarily due to a decrease in accounts payable and accrued expenses due to a large number of liabilities being paid at the time of closing of the Asset Purchase Agreement on June 18, 2019.

Net cash provided by investing activities amounted to approximately $20.4 million during the six months ended June 30, 2019, compared with cash used in investing activities of approximately $0.8 million during the same period in 2018. Cash provided by investing activities in 2019 consisted primarily of proceeds from the sale of the CAKE Business of approximately $20.9 million, offset by cash used of $420,000 for the acquisition of assets pursuant to the Emerging Growth Agreement. During the six months ended June 30, 2018, our cash used in investing activities consisted primarily of expenditures for software capitalized for internal use. These expenditures related to the discontinued operations of the CAKE Business and will ne be recurring.

Net cash used in financing activities was approximately $13.9 million for the six months ended June 30, 2019, compared to net cash provided by financing activities of approximately $3.5 million for the same period in 2018. Cash used in financing activities in 2019 consisted of payments of approximately $11.8 million to repay the principal amounts outstanding under our credit facilities, repayment of promissory notes of $2.7 million and repayment of related party notes of $300,000. These repayments occurred at the time of closing of the Asset Purchase Agreement on June 18, 2019 for the sale of the CAKE Business. These cash used in financing activities in 2019 was offset by proceeds from credit facility borrowings of $900,000. During the six months ended June 30, 2018, our cash provided by financing activities was approximately $3.4 million, which consisted of proceeds from borrowings under the credit facility of approximately $4.7 million and borrowings under promissory notes of $1 million, offset by repayments of principal under the credit facility of approximately $2.1 million.

Description of Indebtedness

As of June 18, 2019, upon the closing of the Asset Purchase Agreement for the sale of the CAKE Business, all existing debt was either paid off or settled through the exchange of outstanding principal into Series A Preferred Stock. Therefore, as of June 30, 2019, we had no outstanding debt.

The following is a summary of our outstanding debt prior to the closing of the Asset Purchase Agreement on June 18, 2019, and the related transactions during the six months ended June 30, 2019.

SAAS Capital Loan

On May 5, 2016, we entered into the SaaS Capital Loan with SaaS Capital to borrow up to a maximum of $8,000,000. Initial amounts borrowed accrued interest at the rate of 10.25% per annum with future amounts borrowed bearing interest at the greater of 10.25% or 9.21% plus the three-year treasury rate at the time of advance. Accrued interest on amounts borrowed was payable monthly for the first six months and thereafter 36 equal monthly payments of principal and interest is payable. Prepayments will be subject to a 10%, 6% or 3% of principal premium if prepaid prior to 12 months, between 12 and 24 months, or between 24 months and maturity, respectively.

The fair value of the warrants previously issued in connection with the SaaS Capital Loan were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the three months ended June 30, 2019 and 2018, $50,085 and $49,997, respectively, of debt discount was amortized into interest expense. During the six months ended June 30, 2019 and 2018, $100,867 and $98,414, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

25

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

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

Beedie Credit Agreement

On January 25, 2018, we entered into the Beedie Credit Agreement with Beedie to borrow up to a maximum of $7,000,000. Outstanding principal accrued interest at the rate of 12% per annum increasing to 14% per annum if our gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal was payable monthly in arrears. We paid Beedie a commitment fee of $175,000 and paid to Beedie a monthly standby fee of 0.325% on the unadvanced and available amount.

The fair value of the warrants previously issued in connection with the Beedie Credit Agreement were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the three months ended June 30, 2019 and 2018, $1,391,678 and $110,249, respectively, of debt discount was amortized into interest expense. During the six months ended June 30, 2019 and 2018, $1,571,181 and $181,074, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

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

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

2018 Promissory Notes

On May 31, 2018, and June 15, 2018, we borrowed an aggregate of $2,000,000, respectively, from the 2018 Lenders and the 2018 Promissory Notes for the repayment of the amounts borrowed. The 2018 Lenders were all accredited investors, one of the 2018 Lenders is an affiliate of our director, Greg Akselrud, two of the 2018 Lenders are related to our Chairman and Chief Executive Officer, Brian Ross, and two of the 2018 Lenders were our employees. The 2018 Promissory Notes were unsecured, had a maturity date of May 30, 2021 and all principal is due upon maturity. Amounts borrowed accrued interest at 12% per annum and accrued interest was payable monthly. We also issued to the 2018 Lenders six-year warrants to purchase an aggregate of 3,000,000 shares of our common stock at an exercise price of $0.35 per share.

26

All amounts outstanding under the 2018 Promissory Notes were paid in full or settled through the exchange of outstanding amounts into Series A Preferred Stock on July 18, 2019 upon the closing of the Asset Purchase Agreement with Constellation.

August 2018 Promissory Notes

On August 31, 2018, we borrowed an aggregate of $1,500,000 from the August 2018 Lenders and issued the August 2018 Promissory Notes for the repayment of the amounts borrowed. The August 2018 Lenders were all accredited investors. The August 2018 Promissory Notes were unsecured, had a maturity date of August 30, 2021 and all principal was due upon maturity. Amounts borrowed accrued interest at 12% per annum and accrued interest was payable monthly. We also issued to the August 2018 Lenders six-year warrants to purchase an aggregate of 1,500,000 shares of our common stock exercisable for cash at an exercise price of $0.35 per share.

All amounts outstanding under the August 2018 Promissory Notes were paid in full or settled through the exchange of outstanding amounts into Series A Preferred Stock on July 18, 2019 upon the closing of the Asset Purchase Agreement with Constellation.

The fair value of the warrants previously issued in connection with the 2018 Promissory Notes and the August 2018 Promissory Notes were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the three months ended June 30, 2019 and 2018, $755,411 and $20,478, respectively, of debt discount was amortized into interest expense. During the six months ended June 30, 2019 and 2018, $839,912 and $20,478, respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in June 2019, any remaining discount balances were recorded as interest expense.

Obligations Under Preferred Stock

On June 20, 2019, existing debtholders with outstanding principal balances totaling $500,000 from the above 2018 Promissory Notes and August 2018 Promissory Notes were issued an aggregate of 500 shares of Series A Preferred Stock, each with a stated value per share of $1,000, as conversion of $500,000 worth of outstanding promissory notes. The Series A Preferred Stock bears interest at 12% per annum, and is convertible into our common stock at the election of the holder at a conversion price per share to be mutually agreed between us and the holder in the future, and be redeemable at our option following the third year after issuance, without voting rights or a liquidation preference.

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

Other outstanding obligations at June 30, 2019

Warrants

As of June 30, 2019, 12,627,109 shares of our common stock are issuable pursuant to the exercise of warrants.

Options

As of June 30, 2019, 7,130,000 shares of our common stock are issuable pursuant to the exercise of options.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements. 

27

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 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. Based upon that evaluation, our principal executive officer and principal financial officer concluded that as of June 30, 2019, our disclosure controls and procedures were ineffective due to the departure of our entire accounting department upon the closing of the sale of the CAKE Business on June 18, 2019. As a result, as of June 30, 2019, we had inadequate segregation of duties and monitoring controls, as well as insufficient written polies and procedures.

Subsequent to June 30, 2019, we have taken steps to enhance and improve the design of our disclosure controls by hiring consultants to address the segregation of duties and monitoring issues, and to develop written controls and procedures in order for our disclosure controls and procedures to become effective during the quarter ended September 30, 2019.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2019, we sold the CAKE Business which resulted in the departure of our accounting department. We have hired outside consultants to assist with the preparation of our financial statements and public filings, as well as the day-to-day accounting requirements of the company.

PART II - OTHER INFORMATION

Item 1A. Risk Factors.

In addition to the risk factors described under “Item 1A. Risk Factors” contained in our annual report on Form 10-K as filed with the SEC on April 16, 2019, following the acquisition of the CFN Business we are subject to the following additional risks:

We are no longer engaged in the CAKE Business and our future results of operations will be dependent solely on the CFN Business and differ materially from our previous results.

The CAKE Business generated substantially all of our total revenue for the year ended December 31, 2018, and substantially all of our total revenue for the three months ended March 31, 2019. Accordingly, our future financial results will differ materially from our previous results and our future financial results will be dependent currently on the CFN Business. Any downturn in the CFN Business, or if we fail to bring overhead costs in line with our reduced operations, could have a material adverse effect on our future operating results and financial condition and could materially and adversely affect the market price of our common stock. We will continue to incur the expenses of complying with public company reporting requirements notwithstanding the decrease in the size of our operations following the sale of the CAKE Business.

After the closing of the sale of the CAKE Business, we will continue to be required to comply with the applicable reporting requirements of the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act. The expense of complying with these requirements will represent a greater percentage of our revenues and overall operating expenses post-closing than they did prior to the sale of the CAKE Business because of our reduced operations following the completion of the sale of the CAKE Business.

28

Following the closing of the sale of the CAKE Business, we are subject to a two-year non-solicitation and a five-year non-competition covenant under the Asset Purchase Agreement, which may limit our ability to operate.

We are subject to a two-year non-solicitation covenant and a five year non-competition covenant made in the Asset Purchase Agreement. During such two-year period, we will be restricted from causing any person that has an existing or potential business relationship with the CAKE Business to terminate or modify or impair such relationship, to cause or encourage any employee of the CAKE Business to leave the CAKE Business, to hire anyone who has left the employment of the CAKE Business within 90 days of such departure, or to interfere with any person’s relationship with the CAKE Business. During such five-year period, we will be restricted from engaging in any business activities or investing in any business that compete with the CAKE Business. While we do not believe these limitations will negatively affect the CFN Business, these restrictions may adversely impact our future opportunities.

Issuance of securities in connection with the acquisition of the CFN Business and to certain holders of our promissory notes will cause additional dilution to our existing stockholders and may adversely impact our stock price.

In connection with our acquisition of the CFN, we issued 30,000,000 shares of our common stock, and preferred stock with an aggregate stated value of $3,000,000, which will bear interest at 6% per annum and be convertible into our common stock at a conversion price to be mutually agreed in the future. In addition, we issued an aggregate of 3,000,000 shares of our common stock in connection with an amendment to our outstanding promissory notes, and we issued, in consideration of the cancellation of an aggregate principal amount of $500,000 of our existing promissory notes, 50,000 shares of preferred stock with a stated value per share of $1,000, which will bear interest at 12% per annum, and be convertible into our common stock at a conversion price to be mutually agreed in the future. The issuance of our common stock in connection with the CFN Business acquisition and the promissory note amendments and the potential issuance of common stock upon conversion of the preferred stock to be issued may materially adversely affect the market price of our common stock and will have a dilutive effect on our existing stockholders.

The CFN Business provides services to persons engaged in the cannabis industry. Cannabis remains illegal under Federal law.

Despite the development of a regulated cannabis industry under the laws of certain states, these state laws regulating medical and adult cannabis use are in conflict with the Federal Controlled Substances Act, which classifies cannabis as a Schedule I controlled substance and makes cannabis use and possession illegal on a national level. The United States Supreme Court has ruled that the Federal government has the right to regulate and criminalize cannabis, even for medical purposes, and thus Federal law criminalizing the use of cannabis preempts state laws that regulate its use. Although the prior administration determined that it was not an efficient use of resources to direct Federal law enforcement agencies to prosecute those lawfully abiding by state laws allowing the use and distribution of medical and recreational cannabis, on January 4, 2018, the current administration issued the Sessions Memo announcing a return to the rule of law and the rescission of previous guidance documents. The Sessions Memo rescinds the Cole Memo which was adopted by the Obama administration as a policy of non-interference with marijuana-friendly state laws. The Sessions Memo shifts federal policy from a hands-off approach adopted by the Obama administration to permitting federal prosecutors across the country to decide how to prioritize resources to regulate marijuana possession, distribution and cultivation in states where marijuana use is regulated. There can be no assurance that federal prosecutors will not prosecute and dedicate resources to regulate marijuana possession, distribution and cultivation in states where marijuana use is regulated which may cause states to reconsider their regulation of marijuana which would have a detrimental effect on the marijuana industry. Following our acquisition of the CFN Business, any such change in state laws based upon the Sessions Memo and the Federal government’s enforcement of Federal laws could cause significant financial damage to us and our stockholders.

As the possession and use of cannabis is illegal under the Federal Controlled Substances Act, following our acquisition of the CFN Business, we may be deemed to be aiding and abetting illegal activities through the services and data that we provide to cannabis dispensaries, cultivators and consumers. As a result, we may be subject to enforcement actions by law enforcement authorities, which would materially and adversely affect our business.

Under Federal law, and more specifically the Federal Controlled Substances Act, the possession, use, cultivation, and transfer of cannabis is illegal. The CFN Businesss provides services to customers that are engaged in the business of possession, use, cultivation, and/or transfer of cannabis. As a result, law enforcement authorities, in their attempt to regulate the illegal use of cannabis, may seek to bring an action or actions against us, including, but not limited, to a claim of aiding and abetting another’s criminal activities. The Federal aiding and abetting statute provides that anyone who “commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.” As a result of such an action, we may be forced to cease operations and our investors could lose their entire investment. Such an action would have a material negative effect on our business and operations.

29

Item 6.  Exhibits

2.1	Asset Purchase Agreement, dated May 15, 2019, by and between Accelerize Inc. and CAKE Software Inc. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
2.2	Asset Purchase Agreement, dated May 15, 2019, between Emerging Growth LLC and Accelerize Inc. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
3.1	Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2019).
3.2	Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2019).
10.1	Sixth Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of May 1, 2019 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
10.2	Payment Deferral Agreement between Accelerize Inc. and Saas Captial Funding II, LLC, dated as of May 2, 2019(incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
10.3	Form of Amendment to Promissory Note (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
10.4	Form of Exchange Agreement (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
10.5	Seventh Amending Agreement between Accelerize Inc. and Beedie Investments Limited, dated as of May 15, 2019 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
10.6	Consent Letter, Agreement and Waiver between Accelerize Inc. and SaaS Capital Funding II, LLC, dated as of May 15, 2019 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on May 20, 2019).
31.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14(a) and15d-14(a).*
32.1	Certification of Principal Executive Officer and 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 June 30, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Comprehensive Loss, (iv) the Statements of Changes in Stockholders’ Deficit, (v) the Statements of Cash Flows, and (vi) related notes to these financial statements.*

*	Filed herewith.
**	Furnished herewith.

30

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: August 16, 2019	By:	/s/ Brian Ross
		Brian Ross President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

31

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 June 30, 2019 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: August 16, 2019

/s/ Brian Ross

Brian Ross

President and Chief Executive Officer

(Principal Executive Officer and Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report (the “Report”) of Accelerize Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof, I, Brian Ross, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

Date: August 16, 2019

By: /s/ Brian Ross

Brian Ross

President and Chief Executive Officer

(Principal Executive Officer and Principal Financial Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 16, 2019
Document Information [Line Items]
Entity Registrant Name	ACCELERIZE INC.
Entity Central Index Key	0001352952
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		99,679,709
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Assets
Cash	$ 1,251,087	$ 27,295
Restricted cash	50,000	50,000
Accounts receivable, net	51,560
Prepaid expenses and other current assets	(32,500)
Current assets of discontinued operations	(40,710)	(2,336,311)
Total current assets	1,425,857	2,413,606
Other assets
Property and equipment	3,738
Goodwill	3,804,817
Noncurrent assets of discontinued operations		160,246
Total other assets	3,808,555	160,246
Total assets	5,234,412	2,573,852
Liabilities and Stockholders' Equity (Deficit)
Accounts payable and accrued expenses	152,633
Deferred revenues	21,340
Current liabilities of discontinued operations	383,023	6,861,284
Total current liabilities	556,996	6,861,284
Noncurrent liabilities of discontinued operations		9,185,743
Total liabilities	556,996	16,047,027
Commitments and contingencies
Stockholders' equity (deficit)
Common stock, $0.001 par value, 500,000,000 shares authorized, 99,679,709 and 66,179,709 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	99,679	66,179
Additional paid-in capital	34,013,702	29,498,125
Accumulated deficit	(29,362,096)	(42,960,124)
Accumulated other comprehensive income	(73,873)	(77,355)
Total stockholders' equity (deficit)	4,677,416	(13,473,175)
Total liabilities and stockholders' equity (deficit)	5,234,412	2,573,852
Series A Preferred Stock [Member]
Stockholders' equity (deficit)
Preferred stock	1
Series B Preferred Stock [Member]
Stockholders' equity (deficit)
Preferred stock	$ 3

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, shares authorized (in shares)	2,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	99,679,709	66,179,709
Common stock, shares outstanding (in shares)	99,679,709	66,179,709
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	500	500
Preferred stock, shares issued (in shares)	500	0
Preferred stock, shares outstanding (in shares)	500	0
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	3,000	3,000
Preferred stock, shares issued (in shares)	3,000	0
Preferred stock, shares outstanding (in shares)	3,000	0

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net revenues	$ 62,720		$ 62,720
Cost of revenue	33,449		33,449
Gross profit	29,271		29,271
Operating expenses:
Selling, general and administrative	605,828	245,125	894,829	702,832
Total operating expenses	605,828	245,125	894,829	702,832
Loss from operations	(576,557)	(245,125)	(865,558)	(702,832)
Other income (expense):
Interest income	56	25	112	36
Total other income (expense)	56	25	112	36
Net loss before provision for income taxes	(576,501)	(245,100)	(865,446)	(702,796)
Provision for (benefit from) income taxes
Net income (loss) from continuing operations	(576,501)	(245,100)	(865,446)	(702,796)
Gain (loss) from discontinued operations, net of tax	15,194,741	(1,318,944)	14,470,049	(2,117,707)
Net income (loss)	14,618,240	(1,564,044)	13,604,603	(2,820,503)
Preferred stock interest	6,575		6,575
Net income (loss) available to common shareholders	$ 14,611,665	$ (1,564,044)	$ 13,598,028	$ (2,820,503)
Net loss from continuing operations per share, basic and diluted (in dollars per share)	$ (0.01)	$ 0	$ (0.01)	$ (0.01)
Net income (loss) from discontinued operations per share, basic and diluted (in dollars per share)	$ 0.22	$ (0.02)	$ 0.21	$ (0.03)
Weighted average number of common shares outstanding, basic and diluted (in shares)	69,861,028	65,939,709	68,030,538	65,939,709

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net income (loss)	$ 14,618,240	$ (1,564,044)	$ 13,604,603	$ (2,820,503)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	551	(31,147)	3,482	(13,517)
Total other comprehensive income (loss), net of tax	551	(31,147)	3,482	(13,517)
Comprehensive income (loss)	$ 14,618,791	$ (1,595,191)	$ 13,608,085	$ (2,834,020)

XML

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($)	Preferred Stock [Member] Series A Preferred Stock [Member]	Preferred Stock [Member] Series B Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2017			65,939,709
Balance at Dec. 31, 2017			$ 65,938	$ 26,301,747	$ (31,542,684)	$ (41,540)	$ (5,216,539)
Fair value of options and restricted stock awards				38,303			38,303
Fair value of warrants				61,050			61,050
Fair value of warrants issued with promissory notes				1,156,695			1,156,695
Net loss					(1,256,459)		(1,256,459)
Foreign currency translation						17,630	17,630
Balance (in shares) at Mar. 31, 2018			65,939,709
Balance at Mar. 31, 2018			$ 65,938	27,557,795	(32,799,143)	(23,910)	(5,199,320)
Balance (in shares) at Dec. 31, 2017			65,939,709
Balance at Dec. 31, 2017			$ 65,938	26,301,747	(31,542,684)	(41,540)	(5,216,539)
Net loss							(2,820,503)
Fair value of repricing adjustment
Balance (in shares) at Jun. 30, 2018			65,939,709
Balance at Jun. 30, 2018			$ 65,938	28,543,529	(34,363,187)	(55,057)	(5,808,777)
Balance (in shares) at Mar. 31, 2018			65,939,709
Balance at Mar. 31, 2018			$ 65,938	27,557,795	(32,799,143)	(23,910)	(5,199,320)
Fair value of options and restricted stock awards				37,619			37,619
Fair value of warrants				66,515			66,515
Fair value of warrants issued with promissory notes				881,600			881,600
Net loss					(1,564,044)		(1,564,044)
Foreign currency translation						(31,147)	(31,147)
Balance (in shares) at Jun. 30, 2018			65,939,709
Balance at Jun. 30, 2018			$ 65,938	28,543,529	(34,363,187)	(55,057)	(5,808,777)
Balance (in shares) at Dec. 31, 2018			66,179,709
Balance at Dec. 31, 2018			$ 66,179	29,498,125	(42,960,124)	(77,355)	(13,473,175)
Fair value of options and restricted stock awards				36,578			36,578
Fair value of warrants				89,119			89,119
Fair value of warrants issued with promissory notes				44,670			44,670
Net loss					(1,013,637)		(1,013,637)
Foreign currency translation						2,931	2,931
Fair value of repricing adjustment				104,638			104,638
Balance (in shares) at Mar. 31, 2019			66,179,709
Balance at Mar. 31, 2019			$ 66,179	29,773,130	(43,973,761)	(74,424)	(14,208,876)
Balance (in shares) at Dec. 31, 2018			66,179,709
Balance at Dec. 31, 2018			$ 66,179	29,498,125	(42,960,124)	(77,355)	(13,473,175)
Net loss							13,604,603
Fair value of repricing adjustment							104,638
Preferred stock interest							(6,575)
Balance (in shares) at Jun. 30, 2019	500	3,000	99,679,709
Balance at Jun. 30, 2019	$ 1	$ 3	$ 99,679	34,013,702	(29,362,096)	(73,873)	4,677,416
Balance (in shares) at Mar. 31, 2019			66,179,709
Balance at Mar. 31, 2019			$ 66,179	29,773,130	(43,973,761)	(74,424)	(14,208,876)
Fair value of options and restricted stock awards				34,385			34,385
Fair value of warrants				37,691			37,691
Net loss					14,618,240		14,618,240
Foreign currency translation						551	551
Conversion of debt into Series A Preferred Stock (in shares)	500
Conversion of debt into Series A Preferred Stock	$ 1			499,999			500,000
Issuance of Series B Preferred Stock for acquisition of CFN		$ 3		686,997			687,000
Issuance of common stock for acquistion of CFN (in shares)			30,000,000
Issuance of common stock for acquistion of CFN			$ 30,000	2,670,000			2,700,000
Issuance of common stock as payment of interest (in shares)			3,500,000
Issuance of common stock as payment of interest			$ 3,500	311,500			315,000
Preferred stock interest					(6,575)		(6,575)
Balance (in shares) at Jun. 30, 2019	500	3,000	99,679,709
Balance at Jun. 30, 2019	$ 1	$ 3	$ 99,679	$ 34,013,702	$ (29,362,096)	$ (73,873)	$ 4,677,416
Issuance of Series B Preferred Stock for acquisition of CFN (in shares)		3,000

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income (loss)	$ 13,604,603	$ (2,820,503)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	31,563	346,858
Gain on sale of CAKE Business	(19,473,080)
Amortization of deferred financing cost	2,511,960	384,407
Provision for bad debt	54,264	(335,801)
Fair value of options and warrants	197,773	203,486
Issuance of common stock as payment of interest	315,000
Changes in operating assets and liabilities:
Accounts receivable	(3,615)	129,609
Prepaid expenses and other current assets	172,155	(40,214)
Other assets	28,095	12,388
Accounts payable and accrued expenses	(1,928,243)	(188,443)
Deferred revenue	(284,198)
Other liabilities	(602,083)	416,393
Net cash (used in) operating activities	(5,375,806)	(1,891,820)
Cash flows from investing activities
Capitalized software for internal use		(750,000)
Purchase of property and equipment	(1,751)	(28,698)
Proceeds from sale of CAKE Business	20,892,667
Payments for acquisition of subsidiary	(420,000)
Net cash provided by (used in) investing activities	20,470,916	(778,698)
Cash flows from financing activities
Principal repayments of credit facility and loan	(11,772,514)	(2,163,212)
Proceeds from credit facility	900,000	4,702,197
Proceeds from promissory notes		1,000,000
Repayment of related party notes	(300,000)
Repayment of promissory notes	(2,700,000)
Net cash (used in) provided by financing activities	(13,872,514)	3,538,985
Effect of exchange rate fluctuations on cash	1,196	(13,517)
Net change in cash and restricted cash	1,223,792	854,950
Cash and restricted cash, beginning of the period	77,295	216,883
Cash and restricted cash, end of the period	1,301,087	1,071,833
Supplemental disclosure of cash flow information:
Interest paid	946,691	711,627
Income taxes paid
Supplemental disclosure of non-cash investing and financing information:
Fair value of warrants issued in connection with line of credit and promissory notes	44,670	2,038,296
Capital expenditure included in accounts payable		1,299
Accrued payables and short-term note directly paid off by credit facility		623,399
Prepaid expenses reclassified to deferred financing costs		70,000
Accrual of preferred stock interest	6,575
Accrued interest reclassed to credit facility	62,379
Warrant repricing adjustment	104,638
Conversion of notes payable to Series A Preferred Stock	500,000
Common Stock [Member]
Supplemental disclosure of non-cash investing and financing information:
Issuance of Series B Preferred Stock for acquisition of subsidiary	2,700,000
Series B Preferred Stock [Member]
Supplemental disclosure of non-cash investing and financing information:
Issuance of Series B Preferred Stock for acquisition of subsidiary	$ 687,000

XML

Note 1 - Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

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

NOTE

1:

ORGANIZATION AND BASIS OF PRESENTATION

Organization

Accelerize Inc., a Delaware corporation, incorporated on

November 22, 2005,

or the Company, owned and operated CAKE, a Software-as-a-Service platform providing online tracking and analytics solutions for advertisers and online marketers. The Company provided software solutions for businesses interested in expanding their online advertising spend.

On

May 15, 2019,

the Company entered into an asset purchase agreement, or the Asset Purchase Agreement, with CAKE Software, Inc., a Delaware corporation and a subsidiary of Constellation Software Inc., an Ontario, Canada corporation (TSX: CSU), or Constellation, pursuant to which the Company agreed to sell substantially all of the assets associated with its CAKE and Journey by CAKE business, or the CAKE Business, to Constellation for a base purchase price of

$19,400,000

plus or minus an estimated closing date adjustment based on the net tangible assets of the CAKE Business at the closing, a holdback of

$500,000

adjusted pursuant to the terms of the Asset Purchase Agreement and payable on the

first

anniversary of the closing date, and a

three

year earnout equal to

30%

of the amount that the annual net revenue of the CAKE Business exceeds

$13,750,000

and payable within

120

days on each of the first,

second

and

third

end of month anniversaries of the closing date. The sale of the assets of the CAKE Business pursuant to the Asset Purchase Agreement closed on

June 18, 2019,

and the Company received proceeds of

$20,892,667,

net of the estimated closing date adjustment.

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

On

May 15, 2019,

the Company entered into the Emerging Growth Agreement with Emerging Growth, LLC, or the Seller, pursuant to which the Company acquired certain assets from the Seller related to its sponsored content and marketing business for a purchase price consideration consisting of

$420,000

in cash,

30,000,000

shares of the Company’s common stock, and

3,000

shares of Series B preferred stock with a total stated value of

$3,000,000

which bears interest at

6%

per annum and is convertible into the Company’s common stock at a conversion price to be mutually agreed in the future, without voting rights or a liquidation preference except with respect to default interest. The securities were issued pursuant to an exemption under Section

4

(a)(

2

) of the Securities Act of

1933,

as amended. The closing of the purchase of the assets pursuant to the Emerging Growth Agreement occurred on

June 20, 2019.

Subsequent to the closing of the Asset Purchase Agreement on

June 18, 2018,

the Company’s continuing operations consist of the sponsored content and marketing business from the assets acquired pursuant to the Emerging Growth Agreement.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next

12

months as of the date these financial statements are issued.  

The Company had working capital of

$868,861

and an accumulated deficit of

$29,362,096

as of

June 30, 2019. 

The Company also had a net loss from continuing operations of

$865,446

during the

six

months ended 

June 30, 2019.

As discussed above, on

May 15, 2019,

the Company entered into the Asset Purchase Agreement with Constellation under which all the net assets associated with the CAKE Business were sold. The proceeds from the Asset Purchase Agreement were used to pay off the Company’s existing debt, as well as to acquire certain assets in the Emerging Growth Agreement from the Seller related to its sponsored content and marketing business. Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing the business acquired under the Emerging Growth Agreement and managing and reducing operating and overhead costs. The Company cannot provide any assurance that unforeseen circumstances that could occur at any time within the next

twelve

months or thereafter will

not

increase the need for the Company to raise additional capital on an immediate basis.

These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do

not

include any adjustments to the amounts and classification of assets and liabilities that

may

be necessary should the Company be unable to continue as a going concern.  

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the results of operations of the Company and Cake Marketing UK Ltd., or the Subsidiary. The Company discontinued its operations associated with its CAKE Business and the operations of its Subsidiary in

May 2019.

These accounts have been presented as discontinued operations in the accompanying unaudited condensed consolidated financial statements. Continuing operations presented in periods prior reflect administrative expenses associated with business insurance, legal and accounting fees that the Company will continue to incur. All material intercompany accounts and transactions between the Company and its Subsidiary have been eliminated in consolidation.

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

December 31, 2018

and

2017,

respectively, which are included in the Company’s

December 31, 2018

Annual Report on Form

10

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

April 16, 2019.  

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

may

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

June 30, 2019

are

not

necessarily indicative of results for the entire year ending

December 31, 2019.

XML

Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

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

Financial Statement Reclassification

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

6

).

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of

three

months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank. The bank requires a collateral which is placed in a money market account and can be increased or decreased at any time at the discretion of the Company.  The Company’s restricted cash amounted to

$

50,000

at

June 30, 2019

and

December 31, 2018. 

The restricted cash balance of

$50,000

is included as a component of total cash and restricted cash in the beginning and ending balances as presented on the accompanying unaudited condensed consolidated statement of cash flows for the

six

months ended

June 30, 2019

and

2018.

Accounts Receivable

The Company’s account receivables are due from customers relating to contracts to provide investor relation services. Collateral is currently

not

required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that

may

affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. There was

no

allowance for doubtful accounts as of

June 30, 2019

or

December 31, 2018.

Concentration of Credit Risks

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

The Company’s cash and cash equivalents accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to

$250,000.

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

$1,034,000

at

June 30, 2019

that exceeded the FDIC insurance limit.

The Company's accounts receivable are due from customers located in the United States. The Company had

two

customers who each accounted for

11.4%

of its accounts receivable at

June 30, 2019

and

none

at

December 31, 2018. 

Revenue Recognition

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

606,

the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle,

five

basic criteria must be met before revenue can be recognized: (

1

) identify the contract with a customer; (

2

) identify the performance obligations in the contract; (

3

) determine the transaction price; (

4

) allocate the transaction price to performance obligations in the contract; and (

5

) recognize revenue when or as the Company satisfies a performance obligation.

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

Prior to the Company discontinuing the operations of its CAKE Business in

May 2019,

the Company’s SaaS revenues were generated from implementation and training fees and a monthly license fee, supplemented by per transaction fees paid by customers for monthly platform usage. The initial term of the customer contract were generally

one

year with

one

of

two

general cancellation policies. Each party could cancel the contract within the initial period or after the initial period, with

30

-days’ prior notice. The Company did

not

provide any general right of return for its delivered items. Services associated with the implementation and training fees had standalone value to the Company’s customers, as there are

third

-party vendors who offer similar services to the Company’s services. Accordingly, they qualified as separate units of accounting. The Company allocated a fair value to each element deliverable at the recognition date and recognized such value when the services are provided. The Company bases the fair value of the implementation and training fees on

third

-party evidence and the monthly license fee on vendor-specific objective evidence. Fees charged by

third

-party vendors for implementation and training services do

not

vary significantly from the fees charged by the Company. Services associated with implementation and training fees were generally rendered within a month from the initial contract date. The value attributed to the monthly license fees as well as the fees associated with monthly transaction-based platform usage were recognized in the corresponding period.

Subsequent to the closing of the Emerging Growth Agreement on

June 20, 2019,

the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from

3

to

6

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

Fair Value of Financial Instruments

The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic

820,

Fair Value Measurements and Disclosures, or ASC

820.

ASC

820

establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

ASC

820

defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC

820

requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

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

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

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

Additional Disclosures Regarding Fair Value Measurements

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

Advertising

The Company expenses advertising costs as incurred. Advertising expenses amounted to

$60,698

and

$142,449

for the

three

months ended

June 30, 2019

and

2018,

respectively. Advertising expenses amounted to

$159,665

and

$276,107

for the

six

months ended

June 30, 2019

and

2018,

respectively. These advertising expenses are all reported as a component of discontinued operations for the

three

and

six

months ended

June 30, 2019

and

2018.

Income Taxes

Income taxes are accounted for in accordance with the provisions of ASC Topic

740,

Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but

no

less than quarterly.

Foreign Currency Translation

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

Software Development Costs

At

December 31, 2018,

the Company impaired the entire balance of unamortized internal-use software development costs which amounted to approximately

$4,725,000

and did

not

capitalize internal-use software development costs in

2019.

Costs incurred in the research and development of software products and significant upgrades and enhancements thereto during the preliminary project stage and the post-implementation operation stage are expensed as incurred. Costs incurred for maintenance and relatively minor upgrades and enhancements are expensed as incurred. Prior to the

December 31, 2018

impairment, costs associated with the application development stage of new software products and significant upgrades and enhancements thereto were capitalized when

1

) management implicitly or explicitly authorized and committed to funding a software project and

2

) it was probable that the project would be completed and the software would be used to perform the function intended. The Company capitalized internal-use software development costs of

$375,000

and

$750,000

during the

three

and

six

-month periods ended

June 30, 2018.

The Company amortized such costs once the new software products and significant upgrades and enhancements were completed. The Company’s amortization expenses associated with capitalized software development costs amounted to

$216,146

and

$321,146

during the

three

and

six

-month periods ended

June 30, 2018

and was reflected in cost of revenues. There were

no

expenses associated with capitalized software development costs during the

three

or

six

-month periods ended

June 30, 2019.

The amortization expenses above are reported as a component of discontinued operations.

Property and Equipment

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of

five

years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. 

Basic and Diluted Earnings Per Share

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

June 30, 2019,

the Company had

7,130,000

outstanding stock options and

12,627,109

outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of

June 30, 2018,

the Company had

7,245,000

outstanding stock options and

11,469,341

outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

Share-Based Payment

The Company accounts for stock-based compensation in accordance with ASC Topic

718,

Compensation-Stock Compensation, or ASC

718.

Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

The Company has elected to use the Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC

718

requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Common stock awards

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

Warrants

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are

not

puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is

not

a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note

5,

Stockholders’ Deficit.  

Recent Accounting Pronouncements

In

February 2016,

the FASB issued ASU

2016

-

02,

“Leases” (Topic

842

).  This guidance will be effective for public entities for fiscal years beginning after

December 15, 2018

including the interim periods within those fiscal years. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of

12

months or less.  All other leases will fall into

one

of

two

categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. The Company has adopted this standard on

January 1, 2019

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

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles-Goodwill and Other (Topic

350

), which simplifies the goodwill impairment test. The effective date for ASU

2017

-

04

is for fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

This standard has

no

impact on the Company’s financial statements.

 In

January 2016,

the FASB issued ASU

No.

 

2016

-

01,

Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.

The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective in the

first

quarter of fiscal

2019.

Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option. This standard has

no

impact on the Company’s financial statements.

In

November 2016,

the FASB issued ASU

No.

 

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash

. The objective of this ASU is to eliminate the diversity in practice related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows. For public business entities, this ASU is effective for annual and interim reporting periods beginning after

December 

15,

2017.

The Company has adopted this standard on

January 1, 2018,

and it has had

no

material impact on its financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation - Stock Compensation (Topic

718

)

:

 

Scope of Modification Accounting

(ASU

2016

-

09

),which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

This pronouncement is effective for annual reporting periods beginning after

December 15, 2017.

The Company has adopted this standard on

January 1, 2018

and it has had

no

material impact on its financial statements.

In

June 2018,

the FASB issued ASU

2018

-

07,

Compensation - Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting,

to expand the scope of Topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic

505

-

50,

Equity - Equity-Based Payments to Non-Employees

. Under ASU

2018

-

07,

equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date. The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. This Company has adopted this standard on

January 1, 2019

and it has had

no

impact in the Company’s condensed consolidated financial statements.

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

XML

Note 3 - Property and Equipment

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

3:

PROPERTY AND EQUIPMENT

The Company’s property and equipment relating to continuing operations consisted of the following at

June 30, 2019

and

December 31, 2018.

	June 30,			December 31,
	2019			2018
	(Unaudited)
Computer equipment and software	$	8,139		$	-
		8,139			-
Less: accumulated depreciation		(4,401	)		-
	$	3,738		$	-

Depreciation expense from continuing operations amounted to

$197

for the

three

and

six

months ended

June 30, 2019.

There was

no

depreciation expense from continuing operations during

2018.

 

XML

Note 4 - Acquisitions

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

NOTE

4:

ACQUISITONS

On

May 15, 2019,

the Company entered into the Emerging Growth Agreement with Emerging Growth, LLC (see Note

1

), which closed on

June 20, 2019.

Pursuant to the terms of the Emerging Growth Agreement, the Company acquired certain assets from the Seller related to its sponsored content and marketing business for a purchase price consideration consisting of

$420,000

in cash,

30,000,000

shares of the Company’s common stock valued at

$2,700,000,

and

3,000

shares of Series B preferred stock valued at 

$687,000.

As a result, the total purchase price amounted to

$3,807,000.

A summary of the purchase price allocation at fair value is below.  The business combination accounting is

not

yet complete and the amounts assigned to the net assets acquired are provisional.  Therefore, this

may

result in future adjustments to the provisional amounts as new information is obtained about facts and circumstances that existed at the acquisition date.

	Purchase Allocation
Property and equipment	$	2,183
Goodwill		3,804,817
	$	3,807,000

The following are the unaudited pro forma results of operations for the

three

and

six

months ended

June 30, 2019

and

2018,

as if the assets purchased in the Emerging Growth Agreement had been acquired on

January 1, 2018. 

The pro forma results include estimates and assumptions which management believes are reasonable.  However, pro forma results do include any anticipated cost savings or other effects of the planned integration of these entities, and are

not

necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated.

	Pro Forma Combined Financials (Unaudited)
	Six Months Ended June 30, 2019			Six Months Ended June 30, 2018
Revenue from continuing operations	$	1,055,843		$	1,033,378
Net loss from continuing operations	$	(717,591	)	$	(407,473	)
Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)

	Pro Forma Combined Financials (Unaudited)
	Thee Months Ended June 30, 2019			Three Months Ended June 30, 2018
Revenue from continuing operations	$	667,356		$	545,153
Net loss from continuing operations	$	(458,887	)	$	(426,537	)
Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)

XML

Note 5 - Stockholders' Deficit

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

5:

STOCKHOLDERS’ DEFICIT

Common Stock

On

June 20, 2019,

the Company issued an aggregate of

3,500,000

restricted shares of common stock to certain promissory note holders as consideration for early payment of the promissory notes. The value of the shares issued amounted to

$315,000

and was recorded as interest expense during the

three

and

six

months ended

June 30, 2019.

On

June 20, 2019,

the Company issued

30,000,000

restricted shares of common stock to Emerging Growth, LLC as part of the acquisition under the Emerging Growth Agreement (see Note

4

). The value of the stock amounted to

$2,700,000

and was recorded as part of the acquisition price of the net assets acquired under the Emerging Growth Agreement.

Restricted Stock Issued as Compensation

During

2018

and

2017,

the Company issued

120,000

restricted shares of its common stock, at a value of

$0.50

per share, vesting in

4

equal quarterly increments commencing on

July 1, 2018

and

July 1, 2017,

to each of its non-employee directors as partial annual compensation for services as a director. As of

June 30, 2019

and

2018,

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

$30,000

during the

three

month periods ended

June 30, 2019

and

2018

and

$60,000

during the

six

months ended

June 30, 2019

and

2018.

Preferred Stock

The Company is authorized to issue

2,000,000

shares of preferred stock with a par value of

$0.001

per share, of which

500

have been authorized as Series A Preferred Stock and

3,000

have been authorized as Series B Preferred Stock.

On

June 20, 2019,

the Company issued to certain of its promissory noteholders an aggregate of

500

shares of Series A Preferred Stock, each with a stated value per share of

$1,000,

as conversion of

$500,000

worth of outstanding promissory notes. The Series A Preferred Stock bears interest at

12%

per annum, and is convertible into the Company’s common stock at the election of the holder at a conversion price per share to be mutually agreed between the Company and the holder in the future, and be redeemable at the Company’s option following the

third

year after issuance, without voting rights or a liquidation preference.

On

June 20, 2019,

the Company issued

3,000

shares of Series B Preferred Stock to Emerging Growth, LLC, each with a stated value of

$1,000

per share, as part of the Emerging Growth Agreement. The aggregate fair value of

$687,000

was recorded as part of the acquisition price of the net assets acquired from Emerging Growth, LLC (see Note

4

). The Series B Preferred Stock bears interest at

6%

per annum and is convertible into the Company’s common stock at the election of Emerging Growth, LLC at a conversion price per share to be mutually agreed between the Company and Emerging Growth, LLC in the future, without voting rights or a liquidation preference, except with respect to accrued penalty interest.

For the

three

and

six

months ended

June 30, 2019,

the Company incurred

$6,575

of interest from the outstanding preferred stock.

Warrants

There were

no

exercises of warrants during the

six

months ended

June 30, 2019

or

2018.

During the

three

months ended

March 31, 2019,

the Company issued

500,000

warrants exercisable at a price of

$0.15

per share which expire on

January 25, 2024.

The fair value of these warrants amounted to

$44,670,

and was recognized as deferred financing costs using the effective interest method during the

three

-month period ended

March 31, 2019.

Additionally, per the down round feature of

7,935,000

warrants issued in connection with the Beedie Credit Agreement (see Note

6

), pursuant to ASU

2017

-

11

which allows instruments with a down round feature to qualify for equity classification, the Company recognized the value of the feature when it was activated and there was an actual reduction of the strike price or conversion feature. The reduction in income of such

7,935,000

warrants amounted to

$104,638

and was capitalized as deferred financing costs during the

three

-month period ended

March 31, 2019.

During the

three

months ended

March 31, 2018,

the Company issued

200,000

and

4,500,000

warrants exercisable at a price of

$0.35

per share and which expire on

January 25, 2028

and

January 25, 2024,

respectively. The fair value of these warrants amounted to

$56,834

and

$1,099,861,

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

58,824

warrants expired. 

There were

no

warrants granted during the

three

months ended

June 30, 2019.

In connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business, warrants to purchase an aggregate of

9,668,333

shares of the Company’s common stock were cancelled. In addition,

3,250,075

of previously granted warrants to employees were forfeited during the

three

months ended

June 30, 2019.

As of

June 30, 2019,

and

December 31, 2018,

there were

12,627,109

and

16,110,517

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

$0.66

and

$0.62,

respectively.

The Company recorded expenses of

$37,691

and

$66,515

during the

three

months ended

June 30, 2019

and

2018,

respectively, related to warrants granted. The Company recorded expenses of

$126,810

and

$127,565

during the

six

months ended

June 30, 2019

and

2018,

respectively, related to warrants granted. As of

June 30, 2019,

there is

no

remaining unrecorded compensation expense relating to warrants granted.

Options

The following summarizes the Company’s stock option activity for the

six

months ended

June 30, 2019.

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)
Outstanding at December 31, 2018		7,232,500		$	0.40		3.45
Granted		-
Forfeited/cancelled		(102,500	)		1.07
Exercised		-
Outstanding at June 30, 2019 (unaudited)		7,130,000		$	0.39		2.92
Vested and expected to vest at June 30, 2019 (unaudited)		7,125,801		$	0.39		2.92
Exercisable at June 30, 2019 (unaudited)		7,125,801		$	0.39		2.92

As of

June 30, 2019,

and

December 31, 2018,

there were

7,130,000

and

7,232,500

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

$0.39

and

$0.40,

respectively.

The Company recorded expenses of

$4,385

and

$7,619

during the

three

months ended

June 30, 2019

and

2018,

respectively, related to stock options. The Company recorded expenses of

$10,963

and

$15,922

during the

six

months ended

June 30, 2019

and

2018,

respectively, related to stock options. Employees with unvested stock options all left the Company in connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business on

June 18, 2019.

As a result,

no

further options are expected to vest, and the total compensation cost related to non-vested awards

not

yet recognized amounted to

$0

at

June 30, 2019.

XML

Note 6 - Discontinued Operations

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE

6:

DISCONTINUED OPERATIONS

During

May 2019,

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

1

).

In accordance with the provisions of ASC

205

-

20,

the Company has separately reported the assets and liabilities of the discontinued operations in the unaudited condensed consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of

June 30, 2019

and

December 31, 2018,

and consist of the following:

	June 30,		December 31,
	2019		2018
	(Unaudited)
Current assets of discontinued operations
Accounts receivable, net [1]	$	-	$	2,081,551
Prepaid expenses and other assets		40,710		254,760
Total current assets of discontinued operations	$	40,710	$	2,336,311
Noncurrent assets of discontinued operations
Property and equipment, net [2]	$	-	$	52,035
Other assets		-		108,211
Total noncurrent assets of discontinued operations	$	-	$	160,246
Current liabilities of discontinued operations
Accounts payable and accrued expenses	$	383,023	$	3,018,394
Deferred revenues [3]		-		443,650
Credit facility, short term [4]		-		3,399,240
Total current liabilites of discontinued operations	$	383,023	$	6,861,284
Noncurrent liabilities of discontinued operations
Credit facility, net of unamortized financing costs [4]	$	-	$	5,888,155
Other loan, related party net of unamortized financing costs [5]		-		386,686
Other long-term loan, net of unamortized financing costs [5]		-		2,273,402
Other liabilities		-		637,500
Total noncurrent liabilites of discontinued operations	$	-	$	9,185,743

[1] The Company’s accounts receivable was due primarily from advertisers and marketers. Collateral was not required. The Company also maintained allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviewed these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserved for those accounts deemed uncollectible or likely to become uncollectible. When receivables were determined to be uncollectible, principal amounts of such receivables outstanding were deducted from the allowance. The allowance for doubtful accounts amounted to $300,000 and $245,736 at June 30, 2019 and December 31, 2018, respectively.

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

	June 30,		December 31,
	2019		2018
	(Unaudited)
Computer equipment and software	$	-	$	422,441
Office furniture and equipment		-		123,932
Leasehold improvements		-		288,937
		-		835,310
Less: accumulated depreciation		-		(783,275	)
	$	-	$	52,035

Depreciation expense from discontinued operations amounted to

$20,998

and

$11,653

for the

three

-months ended

June 30, 2019

and

2018,

respectively. Depreciation expense amounted to

$31,366

and

$25,712

for the

six

-months ended

June 30, 2019

and

2018,

respectively. The deprecation expense for each period is reflected as a component of discontinued operations.

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

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

	June 30,		December 31,
	2019		2018
	(Unaudited)
Saas Capital Loan	$	-	$	4,810,135
Less: deferred financing costs		-		(100,867	)
Saas Capital Loan, net		-		4,709,268
Beedie Credit Agreement	$	-	$	6,000,000
Less: deferred financing costs		-		(1,421,873	)
Beedie Credit Agreement, net		-		4,578,127
Total outstanding	$	-	$	10,810,135
Less: deferred financing costs		-		(1,522,740	)
Total credit facility loans	$	-	$	9,287,395
Short-term balance	$	-	$	3,399,240
Long-term balance		-		5,888,155
Total credit facility loans	$	-	$	9,287,395

SAAS Capital Loan

On

May 5, 2016,

the Company entered into a loan and security agreement, or the SaaS Capital Loan, with SaaS Capital Funding II, LLC, or SaaS Capital, to borrow up to a maximum of

$8,000,000.

Initial amounts borrowed accrued interest at the rate of

10.25%

per annum with future amounts borrowed bearing interest at the greater of

10.25%

or

9.21%

plus the

three

-year treasury rate at the time of advance. Accrued interest on amounts borrowed was payable monthly for the

first

six

months and thereafter

36

equal monthly payments of principal and interest is payable. Prepayments were 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.

The fair value of the warrants previously issued in connection with the SaaS Capital Loan were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the

three

months ended

June 30, 2019

and

2018,

$50,085

and

$49,997,

respectively, of debt discount was amortized into interest expense. During the

six

months ended

June 30, 2019

and

2018,

$100,867

and

$98,414,

respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in

June 2019,

any remaining discount balances were recorded as interest expense.

On

May 15, 2019,

the Company entered into a consent letter, agreement and waiver of the SaaS Capital Loan to, among other things, provide that upon the closing of the Asset Purchase Agreement with Constellation, the Company will pay to SaaS Capital the outstanding principal balance and accrued but unpaid interest due under the SaaS Capital Loan plus

$250,000

in fees, SaaS Capital will release its liens related to the Company’s CAKE Business assets , SaaS Capital’s warrants to purchase an aggregate of

1,733,333

shares of the Company’s common stock will be cancelled, and fees payable under the terms of the SaaS Capital Loan in the aggregate amount of

$495,186

will be payable to SaaS Capital from the holdback and earnout payments payable by Constellation under the Asset Purchase Agreement in which the Company granted to SaaS Capital a security interest.

All amounts outstanding under the SaaS Capital Loan were paid in full on

June 18, 2019

upon the closing of the Asset Purchase Agreement with Constellation. The total amount paid to satisfy the remaining obligation under the SaaS Capital Loan as of the closing date amounted to

$4,576,123,

consisting of the remaining principal balance outstanding of

$4,252,209,

as well as interest and fees of

$323,914.

Beedie Credit Agreement

On

January 25, 2018,

the Company entered into a non-revolving term credit agreement, or the Beedie Credit Agreement, with Beedie Investments Limited, or Beedie, to borrow up to a maximum of

$7,000,000.

Outstanding principal will accrue interest at the rate of

12%

per annum increasing to

14%

per annum if the Company’s gross margins fall below amounts specified in the Beedie Credit Agreement. Accrued interest on outstanding principal was payable monthly in arrears. The Company paid Beedie a commitment fee of

$175,000

and paid to Beedie a monthly standby fee of

0.325%

on the unadvanced and available amount.

The fair value of the warrants previously issued in connection with the Beedie Credit Agreement were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the

three

months ended

June 30, 2019

and

2018,

$1,391,678

and

$110,249,

respectively, of debt discount was amortized into interest expense. During the

six

months ended

June 30, 2019

and

2018,

$1,571,181

and

$181,074,

respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in

June 2019,

any remaining discount balances were recorded as interest expense.

On

May 15, 2019,

the Company entered into a

seventh

amendment of the Beedie Credit Agreement to, among other things, provide that upon the closing of the Asset Purchase Agreement with Constellation, the Company will pay to Beedie the outstanding principal balance and accrued but unpaid interest due under the Beedie Credit Agreement, Beedie will release its liens related to the Company’s CAKE Business assets, Beedie’s warrants to purchase an aggregate of

7,935,000

 shares of the Company’s common stock will be cancelled, and fees payable under the terms of the Beedie Credit Agreement in the aggregate amount of

$1,015,862

will be payable to Beedie from the holdback and earnout payments payable by Constellation under the Asset Purchase Agreement in which the Company granted to Beedie a security interest.

All amounts outstanding under the Beedie Credit Agreement were paid in full on

June 18, 2019

upon the closing date of the Asset Purchase Agreement with Constellation. The total amount paid to satisfy the remaining obligation under the Beedie Credit Agreement as of the closing date amounted to

$7,033,208,

consisting of the remaining principal balance outstanding of

$6,962,379,

as well as interest and fees of

$70,829.

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

	June 30,		December 31,
	2019		2018
	(Unaudited)
2018 Promissory Notes	$	-	$	1,450,000
August 2018 Promissory Notes		-		1,500,000
Less: deferred financing costs		-		(676,598	)
Other long-term loans, net	$	-	$	2,273,402
2018 Promissory Notes, related party	$	-	$	550,000
Less: deferred financing costs		-		(163,314	)
	$	-	$	386,686

2018

Promissory Notes

On

May 31, 2018,

and

June 15, 2018,

the Company borrowed an aggregate of

$2,000,000,

respectively, from

thirteen

lenders, or the

2018

Lenders, and issued promissory notes, or the

2018

Promissory Notes, for the repayment of the amounts borrowed. The

2018

Lenders are all accredited investors,

one

of the

2018

Lenders is an affiliate of the Company’s director, Greg Akselrud,

two

of the

2018

Lenders are related to the Company’s Chairman and Chief Executive Officer, Brian Ross, and

two

of the

2018

Lenders are the Company’s employees. The

2018

Promissory Notes are unsecured, have a maturity date of

May 30, 2021

and all principal is due upon maturity. Amounts borrowed accrue interest at

12%

per annum and accrued interest is payable monthly. The Company also issued to the

2018

Lenders

six

-year warrants to purchase an aggregate of

3,000,000

shares of the Company’s Common Stock at an exercise price of

$0.35

per share.

All amounts outstanding under the

2018

Promissory Notes were paid in full or settled through the exchange of outstanding amounts into Series A Preferred Stock on

June 18, 2019

upon the closing of the Asset Purchase Agreement with Constellation. There was

no

gain or loss associated with this transaction.

August 2018

Promissory Notes

On

August 31, 2018,

the Company borrowed an aggregate of

$1,500,000

from

ten

lenders, or the

August 2018

Lenders and issued promissory notes, or the

August 2018

Promissory Notes, for the repayment of the amounts borrowed. The

August 2018

Lenders are all accredited investors. The

August 2018

Promissory Notes are unsecured, have a maturity date of

August 30, 2021

and all principal is due upon maturity. Amounts borrowed accrue interest at

12%

per annum and accrued interest is payable monthly. The Company also issued to the

August 2018

Lenders

six

-year warrants to purchase an aggregate of

1,500,000

shares of the Company’s common stock exercisable for cash at an exercise price of

$0.35

per share.

All amounts outstanding under the

August 2018

Promissory Notes were paid in full or settled through the exchange of outstanding amounts into Series A Preferred Stock on

June 18, 2019

upon the closing of the Asset Purchase Agreement with Constellation. There was

no

gain or loss associated with this transaction.   

The fair value of the warrants previously issued in connection with the

2018

Promissory Notes and the

August 2018

Promissory Notes were recorded as discounts to the notes payable and were being amortized into interest expense over the maturity periods. During the

three

months ended

June 30, 2019

and

2018,

$755,411

and

$20,478,

respectively, of debt discount was amortized into interest expense. During the

six

months ended

June 30, 2019

and

2018,

$839,912

and

$20,478,

respectively, of debt discount was amortized into interest expense. At the time the outstanding loan balances were settled in

June 2019,

any remaining discount balances were recorded as interest expense.

In accordance with the provisions of ASC

205

-

20,

the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying unaudited condensed consolidated statements of operations. The results of the discontinued operations of the CAKE Business for the

three

and

six

months ended

June 30, 2019

and

2018

have been reflected as discontinued operations in the consolidated statements of operations, and consist of the following:

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2019			2018			2019			2018
Net revenues	$	4,175,485		$	5,397,678		$	9,001,307		$	11,390,426
Cost of revenue		2,034,098			2,469,136			3,863,471			4,822,996
Gross profit		2,141,387			2,928,542			5,137,836			6,567,430
Operating expenses:
Research and development		484,560			987,776			1,263,808			2,110,399
Sales and marketing		1,160,198			1,061,708			2,016,637			2,232,192
General and administrative		1,726,524			1,661,152			3,086,805			3,203,331
Total operating expenses		3,371,282			3,710,636			6,367,250			7,545,922
Loss from operations		(1,229,895	)		(782,094	)		(1,229,414	)		(978,492	)
Other income (expense):
Gain on sale of discontinued operations		19,473,080			-			19,473,080			-
Interest income		34			-			34			750
Interest expense		(3,048,478	)		(536,850	)		(3,773,651	)		(1,139,965	)
Total other income (expense)		16,424,636			(536,850	)		15,699,463			(1,139,215	)
Net income (loss) from discontinued operations before provision for income taxes		15,194,741			(1,318,944	)		14,470,049			(2,117,707	)
Provision for (benefit from) income taxes		-			-			-			-
Net income (loss) from discontinued operations	$	15,194,741		$	(1,318,944	)	$	14,470,049		$	(2,117,707	)

The following is a summary of the gain on sale of discontinued operations of the CAKE Business reflected above during the

three

and

six

months ended

June 30, 2019. 

Gross proceeds received	$	20,892,667
Less: value of net assets sold
Accounts receivable		1,979,342
Prepaid and other current assets		51,363
Property and equipment		20,986
ROU lease asset		1,458,922
Other assets		39,702
Accounts payable and accrued expenses		(344,787	)
Deferred revenue		(138,112	)
ROU lease liability		(1,612,412	)
Other liabilities		(35,417	)
Total net assets sold		1,419,587
Gain on sale of CAKE Business	$	19,473,080

XML

Note 7 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

7:

COMMITMENTS AND CONTINGENCIES

On

June 20, 2019,

the Company entered into a Lease Agreement with Emerging Growth, LLC for the lease of office space in Whitefish, Montana, for a period of

one

year at a rate of

$1,500

per month. Management has elected a policy to exclude leases with an initial term of

12

months or less from the balance sheet presentation required under ASC

842.

As a result, the office lease has been excluded from balance sheet presentation as it has an original term of

12

months or less.   

The Company leases office space in Santa Monica, California, under a short-term lease expiring on

July 31, 2019

for

$1,000

per month. Subsequent to the quarter ended

June 30, 2019,

the Company has renewed the terms of the lease for a period of

one

year through

July 31, 2020.    

During

August 2017,

the Company entered into an amendment to its original

January 2014

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

March 1, 2018,

the premises shall be expanded to include an additional

1,332

usable square feet such that the premises shall consist of

11,728

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

June 30, 2023. 

Commencing on

March 1, 2018,

the initial base rent for the premises will be

$38,702

per month for the

first

year and increasing to

$44,566

per month by the end of the term. This lease was transferred to Constellation upon the sale of the CAKE Business that closed on

June 18, 2019.

The Company has

no

further obligations under this lease.

During

July 2014,

the Company entered into a

five

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

July 30, 2014.

The base rent is GBP

89,667

(approximately

$115,000

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

45,658

(approximately

$56,000

) per year. This lease expires on

July 30, 2019

and thus is

not

affected by ASC

842.

The Company has discontinued its operations associated with the CAKE Business it conducted at the Subsidiary in London and will be vacating the office when the lease expires.

Legal Proceedings

From time to time, the Company

may

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

not

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

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

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

Reclassification, Policy [Policy Text Block]

Financial Statement Reclassification

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

6

).

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of

three

months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank. The bank requires a collateral which is placed in a money market account and can be increased or decreased at any time at the discretion of the Company.  The Company’s restricted cash amounted to

$

50,000

at

June 30, 2019

and

December 31, 2018. 

The restricted cash balance of

$50,000

is included as a component of total cash and restricted cash in the beginning and ending balances as presented on the accompanying unaudited condensed consolidated statement of cash flows for the

six

months ended

June 30, 2019

and

2018.

Receivable [Policy Text Block]

Accounts Receivable

The Company’s account receivables are due from customers relating to contracts to provide investor relation services. Collateral is currently

not

required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that

may

affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. There was

no

allowance for doubtful accounts as of

June 30, 2019

or

December 31, 2018.

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.

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

$1,034,000

at

June 30, 2019

that exceeded the FDIC insurance limit.

The Company's accounts receivable are due from customers located in the United States. The Company had

two

customers who each accounted for

11.4%

of its accounts receivable at

June 30, 2019

and

none

at

December 31, 2018. 

Revenue [Policy Text Block]

Revenue Recognition

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

606,

the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle,

five

basic criteria must be met before revenue can be recognized: (

1

) identify the contract with a customer; (

2

) identify the performance obligations in the contract; (

3

) determine the transaction price; (

4

) allocate the transaction price to performance obligations in the contract; and (

5

) recognize revenue when or as the Company satisfies a performance obligation.

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

Prior to the Company discontinuing the operations of its CAKE Business in

May 2019,

the Company’s SaaS revenues were generated from implementation and training fees and a monthly license fee, supplemented by per transaction fees paid by customers for monthly platform usage. The initial term of the customer contract were generally

one

year with

one

of

two

general cancellation policies. Each party could cancel the contract within the initial period or after the initial period, with

30

-days’ prior notice. The Company did

not

provide any general right of return for its delivered items. Services associated with the implementation and training fees had standalone value to the Company’s customers, as there are

third

-party vendors who offer similar services to the Company’s services. Accordingly, they qualified as separate units of accounting. The Company allocated a fair value to each element deliverable at the recognition date and recognized such value when the services are provided. The Company bases the fair value of the implementation and training fees on

third

-party evidence and the monthly license fee on vendor-specific objective evidence. Fees charged by

third

-party vendors for implementation and training services do

not

vary significantly from the fees charged by the Company. Services associated with implementation and training fees were generally rendered within a month from the initial contract date. The value attributed to the monthly license fees as well as the fees associated with monthly transaction-based platform usage were recognized in the corresponding period.

Subsequent to the closing of the Emerging Growth Agreement on

June 20, 2019,

the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from

3

to

6

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

Fair Value of Financial Instruments, 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 Text Block]

Advertising

The Company expenses advertising costs as incurred. Advertising expenses amounted to

$60,698

and

$142,449

for the

three

months ended

June 30, 2019

and

2018,

respectively. Advertising expenses amounted to

$159,665

and

$276,107

for the

six

months ended

June 30, 2019

and

2018,

respectively. These advertising expenses are all reported as a component of discontinued operations for the

three

and

six

months ended

June 30, 2019

and

2018.

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

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

Software Development Costs

At

December 31, 2018,

the Company impaired the entire balance of unamortized internal-use software development costs which amounted to approximately

$4,725,000

and did

not

capitalize internal-use software development costs in

2019.

Costs incurred in the research and development of software products and significant upgrades and enhancements thereto during the preliminary project stage and the post-implementation operation stage are expensed as incurred. Costs incurred for maintenance and relatively minor upgrades and enhancements are expensed as incurred. Prior to the

December 31, 2018

impairment, costs associated with the application development stage of new software products and significant upgrades and enhancements thereto were capitalized when

1

) management implicitly or explicitly authorized and committed to funding a software project and

2

) it was probable that the project would be completed and the software would be used to perform the function intended. The Company capitalized internal-use software development costs of

$375,000

and

$750,000

during the

three

and

six

-month periods ended

June 30, 2018.

The Company amortized such costs once the new software products and significant upgrades and enhancements were completed. The Company’s amortization expenses associated with capitalized software development costs amounted to

$216,146

and

$321,146

during the

three

and

six

-month periods ended

June 30, 2018

and was reflected in cost of revenues. There were

no

expenses associated with capitalized software development costs during the

three

or

six

-month periods ended

June 30, 2019.

The amortization expenses above are reported as a component of discontinued operations.

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

five

years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. 

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). As of

June 30, 2019,

the Company had

7,130,000

outstanding stock options and

12,627,109

outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of

June 30, 2018,

the Company had

7,245,000

outstanding stock options and

11,469,341

outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

Share-based Payment Arrangement [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 Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC

718

requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Common Stock For Services [Policy Text Block]

Common stock awards

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

Warrants [Policy Text Block]

Warrants

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are

not

puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is

not

a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note

5,

Stockholders’ Deficit.  

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

February 2016,

the FASB issued ASU

2016

-

02,

“Leases” (Topic

842

).  This guidance will be effective for public entities for fiscal years beginning after

December 15, 2018

including the interim periods within those fiscal years. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of

12

months or less.  All other leases will fall into

one

of

two

categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. The Company has adopted this standard on

January 1, 2019

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

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles-Goodwill and Other (Topic

350

), which simplifies the goodwill impairment test. The effective date for ASU

2017

-

04

is for fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

This standard has

no

impact on the Company’s financial statements.

 In

January 2016,

the FASB issued ASU

No.

 

2016

-

01,

Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.

The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective in the

first

quarter of fiscal

2019.

Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option. This standard has

no

impact on the Company’s financial statements.

In

November 2016,

the FASB issued ASU

No.

 

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash

. The objective of this ASU is to eliminate the diversity in practice related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows. For public business entities, this ASU is effective for annual and interim reporting periods beginning after

December 

15,

2017.

The Company has adopted this standard on

January 1, 2018,

and it has had

no

material impact on its financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation - Stock Compensation (Topic

718

)

:

 

Scope of Modification Accounting

(ASU

2016

-

09

),which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

This pronouncement is effective for annual reporting periods beginning after

December 15, 2017.

The Company has adopted this standard on

January 1, 2018

and it has had

no

material impact on its financial statements.

In

June 2018,

the FASB issued ASU

2018

-

07,

Compensation - Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting,

to expand the scope of Topic

718

to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic

505

-

50,

Equity - Equity-Based Payments to Non-Employees

. Under ASU

2018

-

07,

equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date. The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. This Company has adopted this standard on

January 1, 2019

and it has had

no

impact in the Company’s condensed consolidated financial statements.

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

XML

Note 3 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30,			December 31,
	2019			2018
	(Unaudited)
Computer equipment and software	$	8,139		$	-
		8,139			-
Less: accumulated depreciation		(4,401	)		-
	$	3,738		$	-

XML

Note 4 - Acquisitions (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	Purchase Allocation
Property and equipment	$	2,183
Goodwill		3,804,817
	$	3,807,000

Business Acquisition, Pro Forma Information [Table Text Block]

	Pro Forma Combined Financials (Unaudited)
	Six Months Ended June 30, 2019			Six Months Ended June 30, 2018
Revenue from continuing operations	$	1,055,843		$	1,033,378
Net loss from continuing operations	$	(717,591	)	$	(407,473	)
Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)

	Pro Forma Combined Financials (Unaudited)
	Thee Months Ended June 30, 2019			Three Months Ended June 30, 2018
Revenue from continuing operations	$	667,356		$	545,153
Net loss from continuing operations	$	(458,887	)	$	(426,537	)
Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)

XML

Note 5 - Stockholders' Deficit (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)
Outstanding at December 31, 2018		7,232,500		$	0.40		3.45
Granted		-
Forfeited/cancelled		(102,500	)		1.07
Exercised		-
Outstanding at June 30, 2019 (unaudited)		7,130,000		$	0.39		2.92
Vested and expected to vest at June 30, 2019 (unaudited)		7,125,801		$	0.39		2.92
Exercisable at June 30, 2019 (unaudited)		7,125,801		$	0.39		2.92

XML

Note 6 - Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	June 30,		December 31,
	2019		2018
	(Unaudited)
Current assets of discontinued operations
Accounts receivable, net [1]	$	-	$	2,081,551
Prepaid expenses and other assets		40,710		254,760
Total current assets of discontinued operations	$	40,710	$	2,336,311
Noncurrent assets of discontinued operations
Property and equipment, net [2]	$	-	$	52,035
Other assets		-		108,211
Total noncurrent assets of discontinued operations	$	-	$	160,246
Current liabilities of discontinued operations
Accounts payable and accrued expenses	$	383,023	$	3,018,394
Deferred revenues [3]		-		443,650
Credit facility, short term [4]		-		3,399,240
Total current liabilites of discontinued operations	$	383,023	$	6,861,284
Noncurrent liabilities of discontinued operations
Credit facility, net of unamortized financing costs [4]	$	-	$	5,888,155
Other loan, related party net of unamortized financing costs [5]		-		386,686
Other long-term loan, net of unamortized financing costs [5]		-		2,273,402
Other liabilities		-		637,500
Total noncurrent liabilites of discontinued operations	$	-	$	9,185,743

Disposal Groups, Including Discontinued Operations, Statements of Operations [Table Text Block]

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2019			2018			2019			2018
Net revenues	$	4,175,485		$	5,397,678		$	9,001,307		$	11,390,426
Cost of revenue		2,034,098			2,469,136			3,863,471			4,822,996
Gross profit		2,141,387			2,928,542			5,137,836			6,567,430
Operating expenses:
Research and development		484,560			987,776			1,263,808			2,110,399
Sales and marketing		1,160,198			1,061,708			2,016,637			2,232,192
General and administrative		1,726,524			1,661,152			3,086,805			3,203,331
Total operating expenses		3,371,282			3,710,636			6,367,250			7,545,922
Loss from operations		(1,229,895	)		(782,094	)		(1,229,414	)		(978,492	)
Other income (expense):
Gain on sale of discontinued operations		19,473,080			-			19,473,080			-
Interest income		34			-			34			750
Interest expense		(3,048,478	)		(536,850	)		(3,773,651	)		(1,139,965	)
Total other income (expense)		16,424,636			(536,850	)		15,699,463			(1,139,215	)
Net income (loss) from discontinued operations before provision for income taxes		15,194,741			(1,318,944	)		14,470,049			(2,117,707	)
Provision for (benefit from) income taxes		-			-			-			-
Net income (loss) from discontinued operations	$	15,194,741		$	(1,318,944	)	$	14,470,049		$	(2,117,707	)

Disposal Groups, Including Discontinued Operations, Gain (Loss) on Sale [Table Text Block]

Gross proceeds received	$	20,892,667
Less: value of net assets sold
Accounts receivable		1,979,342
Prepaid and other current assets		51,363
Property and equipment		20,986
ROU lease asset		1,458,922
Other assets		39,702
Accounts payable and accrued expenses		(344,787	)
Deferred revenue		(138,112	)
ROU lease liability		(1,612,412	)
Other liabilities		(35,417	)
Total net assets sold		1,419,587
Gain on sale of CAKE Business	$	19,473,080

CAKE [Member]

Notes Tables

Discontinued Group, Including Discontinued Operations, Property and Equipment [Table Text Block]

	June 30,		December 31,
	2019		2018
	(Unaudited)
Computer equipment and software	$	-	$	422,441
Office furniture and equipment		-		123,932
Leasehold improvements		-		288,937
		-		835,310
Less: accumulated depreciation		-		(783,275	)
	$	-	$	52,035

Schedule of Debt [Table Text Block]

	June 30,		December 31,
	2019		2018
	(Unaudited)
Saas Capital Loan	$	-	$	4,810,135
Less: deferred financing costs		-		(100,867	)
Saas Capital Loan, net		-		4,709,268
Beedie Credit Agreement	$	-	$	6,000,000
Less: deferred financing costs		-		(1,421,873	)
Beedie Credit Agreement, net		-		4,578,127
Total outstanding	$	-	$	10,810,135
Less: deferred financing costs		-		(1,522,740	)
Total credit facility loans	$	-	$	9,287,395
Short-term balance	$	-	$	3,399,240
Long-term balance		-		5,888,155
Total credit facility loans	$	-	$	9,287,395

	June 30,		December 31,
	2019		2018
	(Unaudited)
2018 Promissory Notes	$	-	$	1,450,000
August 2018 Promissory Notes		-		1,500,000
Less: deferred financing costs		-		(676,598	)
Other long-term loans, net	$	-	$	2,273,402
2018 Promissory Notes, related party	$	-	$	550,000
Less: deferred financing costs		-		(163,314	)
	$	-	$	386,686

XML

Note 1 - Organization and Basis of Presentation (Details Textual) - USD ($)				3 Months Ended	6 Months Ended
	Jun. 20, 2019	Jun. 18, 2019	May 15, 2019	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Proceeds from Divestiture of Businesses, Net of Cash Divested, Total					$ 20,892,667
Payments to Acquire Businesses, Gross					420,000
Stock Issued During Period, Value, Acquisitions				$ 2,700,000
Working Capital (Deficit)				868,861	868,861
Retained Earnings (Accumulated Deficit), Ending Balance				$ (29,362,096)	(29,362,096)		$ (42,960,124)
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total					$ (865,446)
Common Stock [Member]
Stock Issued During Period, Shares, Acquisitions				30,000,000
Stock Issued During Period, Value, Acquisitions				$ 30,000
Preferred Stock [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, Acquisitions
Stock Issued During Period, Value, Acquisitions
Asset Purchase Agreement with CAKE Software [Member]
Business Combination, Consideration Transferred, Total			$ 19,400,000
Business Combination, Value, Adjustment to Term			$ 500,000
Earnout as Percentage of Revenue, Net			30.00%
Earnout Calculation Threshold Amount			$ 13,750,000
Proceeds from Divestiture of Businesses, Net of Cash Divested, Total		$ 20,892,667
Asset Purchased Agreement with Emerging Growth LLC [Member]
Business Combination, Consideration Transferred, Total			3,807,000
Payments to Acquire Businesses, Gross			$ 420,000
Asset Purchased Agreement with Emerging Growth LLC [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, Acquisitions	3,000		3,000
Stock Issued During Period, Value, Acquisitions	$ 687,000		$ 687,000
Preferred Stock, Dividend Rate, Percentage	6.00%		6.00%
Asset Purchased Agreement with Emerging Growth LLC [Member] | Common Stock and Series B Preferred Stock [Member]
Stock Issued During Period, Value, Acquisitions			$ 3,000,000
Asset Purchased Agreement with Emerging Growth LLC [Member] | Common Stock [Member]
Stock Issued During Period, Shares, Acquisitions	30,000,000		30,000,000
Stock Issued During Period, Value, Acquisitions	$ 2,700,000		$ 2,700,000
Asset Purchased Agreement with Emerging Growth LLC [Member] | Preferred Stock [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, Acquisitions			3,000

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Restricted Cash and Cash Equivalents, Current, Total	$ 50,000		$ 50,000		$ 50,000
Cash, FDIC Insured Amount	250,000		250,000
Cash, Uninsured Amount	1,034,000		1,034,000
Advertising Expense	60,698	$ 142,449	159,665	$ 276,107
Capitalized Computer Software, Net, Ending Balance	0		0		$ 4,725,000
Payments to Develop Software		375,000		750,000
Capitalized Computer Software, Amortization	$ 0	$ 216,146	$ 0	$ 321,146
Property, Plant and Equipment, Useful Life			5 years
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			7,130,000	7,245,000
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			12,627,109	11,469,341
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage					0.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Two Customers [Member]
Concentration Risk, Percentage			11.40%

XML

Note 3 - Property and Equipment (Details Textual) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Depreciation, Total	$ 197	$ 197	$ 0

XML

Note 3 - Property and Equipment - Property and Equipment (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Property and equipment, gross	$ 8,139
Less: accumulated depreciation	(4,401)
	3,738
Software Development [Member]
Property and equipment, gross	$ 8,139

XML

Note 4 - Acquisitions (Details Textual) - USD ($)			3 Months Ended	6 Months Ended
	Jun. 20, 2019	May 15, 2019	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018
Payments to Acquire Businesses, Gross				$ 420,000
Stock Issued During Period, Value, Acquisitions			$ 2,700,000
Common Stock [Member]
Stock Issued During Period, Shares, Acquisitions			30,000,000
Stock Issued During Period, Value, Acquisitions			$ 30,000
Asset Purchased Agreement with Emerging Growth LLC [Member]
Payments to Acquire Businesses, Gross		$ 420,000
Business Combination, Consideration Transferred, Total		$ 3,807,000
Asset Purchased Agreement with Emerging Growth LLC [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, Acquisitions	3,000	3,000
Stock Issued During Period, Value, Acquisitions	$ 687,000	$ 687,000
Asset Purchased Agreement with Emerging Growth LLC [Member] | Common Stock [Member]
Stock Issued During Period, Shares, Acquisitions	30,000,000	30,000,000
Stock Issued During Period, Value, Acquisitions	$ 2,700,000	$ 2,700,000

XML

Note 4 - Acquisitions - Summary of the Purchase Price Allocation at Fair Value (Details) - USD ($)	Jun. 30, 2019	May 15, 2019	Dec. 31, 2018
Goodwill	$ 3,804,817
Asset Purchased Agreement with Emerging Growth LLC [Member]
Property and equipment		$ 2,183
Goodwill		3,804,817
		$ 3,807,000

XML

Note 4 - Acquisitions - Unaudited Pro Forma Results of Operations (Details) - Asset Purchased Agreement with Emerging Growth LLC [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue from continuing operations	$ 667,356	$ 545,153	$ 1,055,843	$ 1,033,378
Net loss from continuing operations	$ (458,887)	$ (426,537)	$ (717,591)	$ (407,473)
Net loss from continuing operations per common share - basic and diluted (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.01)

XML

Note 5 - Stockholders' Deficit (Details Textual)			2 Months Ended	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 20, 2019 USD ($) $ / shares shares	May 15, 2019 USD ($) shares	Mar. 31, 2019 USD ($) $ / shares shares	Jun. 30, 2019 USD ($) $ / shares shares	Mar. 31, 2019 USD ($) $ / shares shares	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($) $ / shares shares	Jun. 30, 2019 USD ($) $ / shares shares	Jun. 30, 2018 USD ($) shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 $ / shares shares
Stock Issued During Period, Shares, Restricted Stock Award, Gross	3,500,000
Stock Issued During Period, Value, Restricted Stock Award, Gross | $	$ 315,000
Stock Issued During Period, Value, Acquisitions | $				$ 2,700,000
Preferred Stock, Shares Authorized				2,000,000				2,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares				$ 0.001				$ 0.001
Dividends, Preferred Stock, Total | $				$ 6,575				$ 6,575
Class of Warrant or Right, Exercised During Period								0	0
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares				$ 0.66				$ 0.66		$ 0.62
Warrants and Rights Outstanding | $				$ 12,627,109				$ 12,627,109		$ 16,110,517
Class of Warrant or Right, Expired During Period							58,824
Class of Warrant or Right, Grants in Period				0
Class Of Warrant Or Right Expense Recognized | $				$ 37,691		$ 66,515		$ 126,810	$ 127,565
Class of Warrant or Right, Unrecorded Compensation Expense | $				0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $				0				$ 0
Stock Option Plan [Member]
Share-based Payment Arrangement, Expense | $				$ 4,385		7,619		$ 10,963	15,922
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross								7,130,000		7,232,500
Share-based Compensation Arrangement by Share-based Payment Award, Option, Nonvested, Weighted Average Exercise Price, Ending Balance | $ / shares				$ 0.39				$ 0.39		$ 0.40
Warrants Expiring January 25, 2024 [Member]
Share-based Payment Arrangement, Expense | $					$ 104,638
Class of Warrant or Right, Issued During Period					500,000		200,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares			$ 0.15		$ 0.15
Warrants and Rights Outstanding | $			$ 44,670		$ 44,670		$ 56,834
Class of Warrant or Right Numbero of Securities Cancelled			7,935,000
Warrants Expiring January 25, 2028 [Member]
Class of Warrant or Right, Issued During Period							4,500,000
Warrants and Rights Outstanding | $							$ 1,099,861
Warrants Issued to Promissory Note Holders [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares							$ 0.35
Warrants in Connection to Asset Purchase Agreement for CAKE [Member]
Class of Warrant or Right, Expired During Period				9,668,333
Stock Warrants Issued to Employees [Member]
Class of Warrant or Right, Expired During Period				3,250,075
Convert 2018 Promissory Note to Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 1,000
Debt Conversion, Converted Instrument, Shares Issued	500
Debt Conversion, Original Debt, Amount | $	$ 500,000
Preferred Stock, Dividend Rate, Percentage	12.00%
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized				500				500		500
Preferred Stock, Par or Stated Value Per Share | $ / shares				$ 0.001				$ 0.001		$ 0.001
Series B Preferred Stock [Member]
Preferred Stock, Shares Authorized				3,000				3,000		3,000
Preferred Stock, Par or Stated Value Per Share | $ / shares				$ 0.001				$ 0.001		$ 0.001
Restricted Stock [Member] | Non-employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period										120,000	120,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares										$ 0.50	$ 0.50
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Vesting, Number of Equal Quarterly Increments										4	4
Share-based Payment Arrangement, Expense | $				$ 30,000		$ 30,000		$ 60,000	$ 60,000
Common Stock [Member]
Stock Issued During Period, Shares, Acquisitions				30,000,000
Stock Issued During Period, Value, Acquisitions | $				$ 30,000
Dividends, Preferred Stock, Total | $
Asset Purchased Agreement with Emerging Growth LLC [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, Acquisitions	3,000	3,000
Stock Issued During Period, Value, Acquisitions | $	$ 687,000	$ 687,000
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 1,000
Preferred Stock, Dividend Rate, Percentage	6.00%	6.00%
Asset Purchased Agreement with Emerging Growth LLC [Member] | Common Stock [Member]
Stock Issued During Period, Shares, Acquisitions	30,000,000	30,000,000
Stock Issued During Period, Value, Acquisitions | $	$ 2,700,000	$ 2,700,000

XML

Note 5 - Stockholders' Equity - Stock Option Activity (Details) - $ / shares		6 Months Ended	12 Months Ended
		Jun. 30, 2019	Dec. 31, 2018
Outstanding balance, options (in shares)		7,232,500
Outstanding balance, weighted average price per share (in dollars per share)		$ 0.40
Outstanding balance, weighted average remaining contractual term (Year)		2 years 335 days	3 years 164 days
Granted, options (in shares)
Granted, weighted average price per share (in dollars per share)
Forfeited/cancelled, options (in shares)		(102,500)
Forfeited/cancelled, weighted average price per share (in dollars per share)		$ 1.07
Exercised, options (in shares)	[1]
Exercised, weighted average price per share (in dollars per share)	[1]
Outstanding balance, options (in shares)		7,130,000	7,232,500
Outstanding balance, weighted average price per share (in dollars per share)		$ 0.39	$ 0.40
Vested and expected to vest, options (in shares)		7,125,801
Vested and expected to vest, weighted average price per share (in dollars per share)		$ 0.39
Vested and expected to vest, weighted average remaining contractual term (Year)		2 years 335 days
Exercisable balance, options (in shares)		7,125,801
Exercisable balance, weighted average price per share (in dollars per share)		$ 0.39
Exercisable balance, weighted average remaining contractual term (Year)		2 years 335 days

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

XML

Note 6 - Discontinued Operations (Details Textual) - USD ($)						1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 18, 2019	May 15, 2019	Aug. 31, 2018	Jan. 25, 2018	May 05, 2016	Jun. 15, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Jun. 17, 2019	May 31, 2018
Depreciation, Total							$ 197		$ 197		$ 0
Amortization of Debt Issuance Costs									2,511,960	$ 384,407
Proceeds from Notes Payable, Total										1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 0.66		$ 0.66		$ 0.62
The 2018 Promissory Notes [Member]
Proceeds from Notes Payable, Total						$ 2,000,000
The 2018 Promissory Notes and August 2018 Promissory Notes [Member]
Amortization of Debt Issuance Costs							$ 755,411	$ 20,478	$ 839,912	20,478
Beedie Credit Agreement [Member] | Beedie Investments Limited [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 7,000,000
Debt Instrument, Interest Rate, Stated Percentage				12.00%
Amortization of Debt Issuance Costs							1,391,678	110,249	1,571,181	181,074
Debt Instrument, Fee Amount				$ 175,000
Interest Payable, Current		$ 1,015,862										$ 70,829
Repayments of Long-term Debt, Total	$ 7,033,208
Long-term Debt, Total												6,962,379
Debt Instrument, Interest Rate, Stated Percentage, If Gross Margin Falls Below Specified Amount				14.00%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage				0.325%
SaaS Capital [Member]
Interest Payable, Current		$ 495,186
SaaS Warrants [Member]
Class of Warrant or Right Numbero of Securities Cancelled		1,733,333
Beedie Warrant [Member]
Class of Warrant or Right Numbero of Securities Cancelled		7,935,000
The 2018 Warrants [Member]
Debt Instrument, Interest Rate, Stated Percentage													12.00%
Warrants and Rights Outstanding, Term													6 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights													3,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights													$ 0.35
August 2018 Warrants [Member]
Debt Instrument, Interest Rate, Stated Percentage			12.00%
Proceeds from Notes Payable, Total			$ 1,500,000
Warrants and Rights Outstanding, Term			6 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			1,500,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.35
SaaS Capital Loan [Member]
Line of Credit Facility, Maximum Borrowing Capacity					$ 8,000,000
Debt Instrument, Interest Rate, Stated Percentage					10.25%
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%
Amortization of Debt Issuance Costs							50,085	49,997	100,867	98,414
Debt Instrument, Fee Amount		$ 250,000
Interest Payable, Current												323,914
Repayments of Long-term Debt, Total	$ 4,576,123
Long-term Debt, Total												$ 4,252,209
CAKE [Member]
Accounts Receivable, Allowance for Credit Loss, Ending Balance							300,000		300,000		$ 245,736
Depreciation, Total							20,998	$ 11,653	31,366	$ 25,712
Long-term Debt, Total											9,287,395
CAKE [Member] | The 2018 Promissory Notes and August 2018 Promissory Notes [Member]
Long-term Debt, Total											$ 2,273,402

XML

Note 6 - Discontinued Operations - Assets and Liabilities of the Discontinued Operations (Details) - USD ($)		Jun. 30, 2019		May 15, 2019	Dec. 31, 2018
Total current assets of discontinued operations		$ 40,710			$ 2,336,311
Total noncurrent assets of discontinued operations					160,246
Total current liabilites of discontinued operations		383,023			6,861,284
Total noncurrent liabilites of discontinued operations					9,185,743
CAKE [Member]
Accounts receivable			[1]	$ 1,979,342	2,081,551	[1]
Prepaid expenses and other assets		40,710			254,760
Total current assets of discontinued operations		40,710			2,336,311
Property and equipment, net [2]	[2]				52,035
Other assets					108,211
Total noncurrent assets of discontinued operations					160,246
Accounts payable and accrued expenses		383,023			3,018,394
Deferred revenues [3]	[3]				443,650
Credit facility, short term [4]	[4]				3,399,240
Total current liabilites of discontinued operations		383,023			6,861,284
Credit facility, net of unamortized financing costs [4]	[4]				5,888,155
Other loan, related party net of unamortized financing costs [5]	[5]				386,686
Other long-term loan, net of unamortized financing costs [5]	[5]				2,273,402
Other liabilities					637,500
Total noncurrent liabilites of discontinued operations					$ 9,185,743

[1] The Company's accounts receivable was due primarily from advertisers and marketers. Collateral was not required. The Company also maintained allowances for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make payments. The Company periodically reviewed these estimated allowances, including an analysis of the customers' payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer's ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserved for those accounts deemed uncollectible or likely to become uncollectible. When receivables were determined to be uncollectible, principal amounts of such receivables outstanding were deducted from the allowance. The allowance for doubtful accounts amounted to $300,000 and $245,736 at June 30, 2019 and December 31, 2018, respectively.

[2] The Company's property and equipment consisted of the following. June 30, December 31, 2019 2018 (Unaudited) Computer equipment and software $ - $ 422,441 Office furniture and equipment - 123,932 Leasehold improvements - 288,937 - 835,310 Less: accumulated depreciation - (783,275 ) $ - $ 52,035

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

[4] A summary of the amounts previously outstanding under the Company's credit facilities are as follows: June 30, December 31, 2019 2018 (Unaudited) Saas Capital Loan $ - $ 4,810,135 Less: deferred financing costs - (100,867 ) Saas Capital Loan, net - 4,709,268 Beedie Credit Agreement $ - $ 6,000,000 Less: deferred financing costs - (1,421,873 ) Beedie Credit Agreement, net - 4,578,127 Total outstanding $ - $ 10,810,135 Less: deferred financing costs - (1,522,740 ) Total credit facility loans $ - $ 9,287,395 Short-term balance $ - $ 3,399,240 Long-term balance - 5,888,155 Total credit facility loans $ - $ 9,287,395

[5] A summary of the amounts previously outstanding under the Company's other long-term loans were as follows: June 30, December 31, 2019 2018 (Unaudited) 2018 Promissory Notes $ - $ 1,450,000 August 2018 Promissory Notes - 1,500,000 Less: deferred financing costs - (676,598 ) Other long-term loans, net $ - $ 2,273,402 2018 Promissory Notes, related party $ - $ 550,000 Less: deferred financing costs - (163,314 ) $ - $ 386,686

XML

Note 6 - Discontinued Operations - Property and Equipment (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Property and equipment, gross	$ 8,139
Less: accumulated depreciation	(4,401)
	3,738
CAKE [Member]
Property and equipment, gross		835,310
Less: accumulated depreciation		(783,275)
		52,035
Software Development [Member]
Property and equipment, gross	8,139
Software Development [Member] | CAKE [Member]
Property and equipment, gross		422,441
Furniture and Fixtures [Member] | CAKE [Member]
Property and equipment, gross		123,932
Leasehold Improvements [Member] | CAKE [Member]
Property and equipment, gross		$ 288,937

XML

Note 6 - Discontinued Operations - Line of Credit and Loans (Details) - CAKE [Member] - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Saas Capital Loan		$ 10,810,135
Less: deferred financing costs		(1,522,740)
Saas Capital Loan, net		9,287,395
Short-term balance		3,399,240
Long-term balance		5,888,155
SaaS Capital Loan [Member]
Saas Capital Loan		4,810,135
Less: deferred financing costs		(100,867)
Saas Capital Loan, net		4,709,268
The 2018 Promissory Notes [Member]
Saas Capital Loan		1,450,000
The August 2018 Promissory Notes [Member]
Saas Capital Loan		1,500,000
The 2018 Promissory Notes and August 2018 Promissory Notes [Member]
Less: deferred financing costs		(676,598)
Saas Capital Loan, net		2,273,402
Beedie Credit Agreement [Member]
Saas Capital Loan		6,000,000
Less: deferred financing costs		(1,421,873)
Saas Capital Loan, net		4,578,127
The 2018 Promissory Notes, Related Party [Member]
Saas Capital Loan		550,000
Less: deferred financing costs		(163,314)
Saas Capital Loan, net		$ 386,686

XML

Note 6 - Discontinued Operations - Results of the Discontinued Operations (Details) - CAKE [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net revenues	$ 4,175,485	$ 5,397,678	$ 9,001,307	$ 11,390,426
Cost of revenue	2,034,098	2,469,136	3,863,471	4,822,996
Gross profit	2,141,387	2,928,542	5,137,836	6,567,430
Research and development	484,560	987,776	1,263,808	2,110,399
Sales and marketing	1,160,198	1,061,708	2,016,637	2,232,192
General and administrative	1,726,524	1,661,152	3,086,805	3,203,331
Total operating expenses	3,371,282	3,710,636	6,367,250	7,545,922
Loss from operations	(1,229,895)	(782,094)	(1,229,414)	(978,492)
Gain on sale of discontinued operations	19,473,080		19,473,080
Interest income	34		34	750
Interest expense	3,048,478	536,850	3,773,651	1,139,965
Total other income (expense)	16,424,636	(536,850)	15,699,463	(1,139,215)
Net income (loss) from discontinued operations before provision for income taxes	15,194,741	(1,318,944)	14,470,049	(2,117,707)
Provision for (benefit from) income taxes
Net income (loss) from discontinued operations	$ 15,194,741	$ (1,318,944)	$ 14,470,049	$ (2,117,707)

XML

Note 6 - Discontinued Operations - Summary of the Gain on Sale of Discontinued Operations (Details) - CAKE [Member] - USD ($)	Jun. 30, 2019	[1]	May 15, 2019	Dec. 31, 2018	[1]
Gross proceeds received			$ 20,892,667
Accounts receivable			1,979,342	$ 2,081,551
Prepaid and other current assets			51,363
Property and equipment			20,986
ROU lease asset			1,458,922
Other assets			39,702
Accounts payable and accrued expenses			344,787
Deferred revenue			138,112
ROU lease liability			1,612,412
Other liabilities			35,417
Total net assets sold			1,419,587
Gain on sale of CAKE Business			$ 19,473,080

[1] The Company's accounts receivable was due primarily from advertisers and marketers. Collateral was not required. The Company also maintained allowances for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make payments. The Company periodically reviewed these estimated allowances, including an analysis of the customers' payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer's ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserved for those accounts deemed uncollectible or likely to become uncollectible. When receivables were determined to be uncollectible, principal amounts of such receivables outstanding were deducted from the allowance. The allowance for doubtful accounts amounted to $300,000 and $245,736 at June 30, 2019 and December 31, 2018, respectively.

XML

Note 7 - Commitments and Contingencies (Details Textual)			1 Months Ended		6 Months Ended
	Jun. 20, 2019 USD ($)	Mar. 01, 2018 USD ($) ft²	Jul. 31, 2014 USD ($)	Jul. 31, 2014 GBP (£)	Jun. 30, 2019 USD ($)	Jul. 31, 2019	Jul. 30, 2014
Office Space in Whitefish, Montana [Member]
Operating Lease Monthly Rent	$ 1,500
Office Space in Santa Monica, California [Member]
Operating Lease Monthly Rent					$ 1,000
Office Space in Santa Monica, California [Member] | Subsequent Event [Member]
Lessee, Operating Lease, Renewal Term						1 year
Office Space In Newport Beach California [Member]
Additional Area of Land | ft²		1,332
Area of Land | ft²		11,728
Office Space In Newport Beach California [Member] | Minimum [Member]
Operating Lease Monthly Rent		$ 38,702
Office Space In Newport Beach California [Member] | Maximum [Member]
Operating Lease Monthly Rent					$ 44,566
Office Space in London England [Member]
Operating Lease Monthly Rent			$ 115,000	£ 89,667
Lessee, Operating Lease, Term of Contract							5 years
Operating Lease Service Charges			$ 56,000	£ 45,658