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~~September 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~~CFN ENTERPRISES 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~~ACCELERIZE INC.
(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,~~November 6, 2019, was 99,679,709.

When used in this quarterly report, the terms ~~“Accelerize,~~“CFN Enterprises,” “the Company,” “we,” “our,” and “us” refer to ~~Accelerize~~CFN Enterprises 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~~CFN Enterprises 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, and in our quarterly report on Form 10-Q as filed with the SEC on August 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.

CFN ENTERPRISES INC.

(F/K/A 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	2123

Item 4. Controls and Procedures	2831

PART II - OTHER INFORMATION:	2831

~~Item 1A. Risk Factors~~	28

Item 6. Exhibits	3031

SIGNATURES	3132

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CFN ENTERPRISES INC.

(F/K/A ACCELERIZE INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,			December 31,				September 30,			December 31,
		2019			2018				2019			2018
		(Unaudited)							(Unaudited)
Assets	Assets							Assets

Current assets
Cash		$	1,251,087		$	27,295			$	975,434		$	27,295
Restricted cash			50,000			50,000				-			50,000
Accounts receivable, net			51,560			-				231,503			-
Prepaid expenses and other current assets			32,500			-				3,401			-
Current assets of discontinued operations			40,710			2,336,311				-			2,336,311
Total current assets			1,425,857			2,413,606				1,210,338			2,413,606

Other assets
Property and equipment			3,738			-				3,369			-
Goodwill			3,804,817							3,225,817			-
Other intangible assets										558,475			-
Noncurrent assets of discontinued operations			-			160,246				-			160,246
Total other assets			3,808,555			160,246				3,787,661			160,246
Total assets		$	5,234,412		$	2,573,852			$	4,997,999		$	2,573,852

Liabilities and Stockholders' Equity (Deficit)	Liabilities and Stockholders' Equity (Deficit)							Liabilities and Stockholders' Equity (Deficit)

Current liabilities
Accounts payable and accrued expenses		$	152,633		$	-			$	186,572		$	-
Deferred revenues			21,340			-				45,041			-
Current liabilities of discontinued operations			383,023			6,861,284				76,028			6,861,284
Total current liabilities			556,996			6,861,284				307,641			6,861,284
Long-term note payable										482,698			-
Noncurrent liabilities of discontinued operations			-			9,185,743				-			9,185,743
Total liabilities			556,996			16,047,027				790,339			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
Series A Preferred stock, $0.001 par value, 500 shares authorized, 500 and 0 shares issued and outstanding as of September 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 September 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 September 30, 2019 and December 31, 2018, respectively										99,679			66,179
Additional paid-in capital			34,013,702			29,498,125				34,031,326			29,498,125
Accumulated deficit			(29,362,096	)		(42,960,124	)			(29,836,426	)		(42,960,124	)
Accumulated other comprehensive income			(73,873	)		(77,355	)			(86,923	)		(77,355	)
Total stockholders' equity (deficit)			4,677,416			(13,473,175	)			4,207,660			(13,473,175	)
Total liabilities and stockholders' equity (deficit)		$	5,234,412		$	2,573,852
Total liabilities and stockholders' equity									$	4,997,999		$	2,573,852

See accompanying notes to unaudited condensed consolidated financial statements

CFN ENTERPRISES INC.

(F/K/A ACCELERIZE INC.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended						For the Nine Months Ended
	June 30,			June 30,			June 30,			June 30,			September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018			2019			2018			2019			2018


Net revenues	$	62,720		$	-		$	62,720		$	-		$	568,992		$	-		$	631,712		$	-
Cost of revenue		33,449			-			33,449			-			381,277			-			414,726			-
Gross profit		29,271			-			29,271			-			187,715			-			216,986			-

Operating expenses:
Selling, general and administrative		605,828			245,125			894,829			702,832			600,663			313,536			1,495,492			1,016,368
Total operating expenses		605,828			245,125			894,829			702,832			600,663			313,536			1,495,492			1,016,368

Loss from operations		(576,557	)		(245,125	)		(865,558	)		(702,832	)		(412,948	)		(313,536	)		(1,278,506	)		(1,016,368	)

Other income (expense):
Interest expense														(2,514	)		-			(2,514	)		-
Interest income		56			25			112			36			19			25			131			61
Total other income (expense)		56			25			112			36			(2,495	)		25			(2,383	)		61

Net loss before provision for income taxes		(576,501	)		(245,100	)		(865,446	)		(702,796	)		(415,443	)		(313,511	)		(1,280,889	)		(1,016,307	)
Provision for (benefit from) income taxes		-			-			-			-
Net income (loss) from continuing operations		(576,501	)		(245,100	)		(865,446	)		(702,796	)
Provision for income taxes														-			-			-			-
Net loss from continuing operations														(415,443	)		(313,511	)		(1,280,889	)		(1,016,307	)
Gain (loss) from discontinued operations, net of tax		15,194,741			(1,318,944	)		14,470,049			(2,117,707	)		1,113			(1,649,626	)		14,471,162			(3,767,333	)
Net income (loss)	$	14,618,240		$	(1,564,044	)	$	13,604,603		$	(2,820,503	)	$	(414,330	)	$	(1,963,137	)	$	13,190,273		$	(4,783,640	)
Preferred stock interest		6,575			-			6,575			-			60,000			-			66,575			-
Net income (loss) available to common shareholders	$	14,611,665		$	(1,564,044	)	$	13,598,028		$	(2,820,503	)	$	(474,330	)	$	(1,963,137	)	$	13,123,698		$	(4,783,640	)

Net loss from continuing operations per share, basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.00	)	$	(0.00	)	$	(0.02	)	$	(0.02	)

Net income (loss) from discontinued operations per share, basic and diluted	$	0.22		$	(0.02	)	$	0.21		$	(0.03	)	$	0.00		$	(0.02	)	$	0.18		$	(0.06	)
Weighted average number of common shares outstanding, basic and diluted		69,861,028			65,939,709			68,030,538			65,939,709			99,679,709			66,177,101			78,696,193			66,019,709

See accompanying notes to unaudited condensed consolidated financial statements

CFN ENTERPRISES INC.

(F/K/A ACCELERIZE INC.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	For the Three Months Ended					For the Six Months Ended					For the Three Months Ended						For the Nine Months Ended
	June 30,		June 30,			June 30,		June 30,			September 30,			September 30,			September 30,			September 30,
	2019		2018			2019		2018			2019			2018			2019			2018


Net income (loss)	$	14,618,240	$	(1,564,044	)	$	13,604,603	$	(2,820,503	)	$	(414,330	)	$	(1,963,137	)	$	13,190,273		$	(4,783,640	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		551		(31,147	)		3,482		(13,517	)		(13,050	)		(7,166	)		(9,568	)		(20,683	)
Total other comprehensive income (loss), net of tax		551		(31,147	)		3,482		(13,517	)		(13,050	)		(7,166	)		(9,568	)		(20,683	)
Comprehensive income (loss)	$	14,618,791	$	(1,595,191	)	$	13,608,085	$	(2,834,020	)	$	(427,380	)	$	(1,970,303	)	$	13,180,705		$	(4,804,323	)

See accompanying notes to unaudited condensed consolidated financial statements

CFN ENTERPRISES INC.

(F/K/A 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

	Three Months Ended September 30, 2019
																		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, June 30, 2019		500	$	1		3,000	$	3		99,679,709	$	99,679	$	34,013,702	$	(29,362,096	)	$	(73,873	)	$	4,677,416

Fair value of warrants issued with promissory notes		-		-		-		-		-		-		17,624		-			-			17,624
Preferred stock interest		-		-		-		-		-		-		-		(60,000	)		-			(60,000	)
Net loss		-		-		-		-		-		-		-		(414,330	)		-			(414,330	)
Foreign currency translation		-		-		-		-		-		-		-		-			(13,050	)		(13,050	)
Balance, September 30, 2019		500	$	1		3,000	$	3		99,679,709	$	99,679	$	34,031,326	$	(29,836,426	)	$	(86,923	)	$	4,207,660

	Nine Months Ended September 30, 2019
																		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, 2018		-	$	-		-	$	-		66,179,709	$	66,179	$	29,498,125	$	(42,960,124	)	$	(77,355	)	$	(13,473,175	)

Fair value of options and restricted stock awards		-		-		-		-		-		-		70,963		-			-			70,963
Fair value of warrants		-		-		-		-		-		-		126,810		-			-			126,810
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		62,294		-			-			62,294
Fair value of repricing adjustment		-		-		-		-		-		-		104,638		-			-			104,638
Conversion of debt into Series A Preferred Stock		500		1		-		-		-		-		499,999		-			-			500,000
Issuance of Series B Preferred Stock for acquisition of CFN		-		-		3,000		3		-		-		686,997		-			-			687,000
Issuance of common stock for 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
Preferred stock interest		-		-		-		-		-		-		-		(66,575	)		-			(66,575	)
Net income		-		-		-		-		-		-		-		13,190,273			-			13,190,273
Foreign currency translation		-		-		-		-		-		-		-		-			(9,568	)		(9,568	)
Balance, September 30, 2019		500	$	1		3,000	$	3		99,679,709	$	99,679	$	34,031,326	$	(29,836,426	)	$	(86,923	)	$	4,207,660

	Three Months Ended September 30, 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, June 30, 2018		-	$	-		-	$	-		65,939,709	$	65,938	$	28,543,529	$	(34,363,187	)	$	(55,057	)	$	(5,808,777	)

Fair value of options and restricted stock awards		-		-		-		-		240,000		240		37,137		-			-			37,377
Fair value of warrants		-		-		-		-		-		-		101,836		-			-			101,836
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		689,281		-			-			689,281
Net loss		-		-		-		-		-		-		-		(1,963,137	)		-			(1,963,137	)
Foreign currency translation		-		-		-		-		-		-		-		-			(7,166	)		(7,166	)
Balance, September 30, 2018		-	$	-		-	$	-		66,179,709	$	66,178	$	29,371,783	$	(36,326,324	)	$	(62,223	)	$	(6,950,586	)

	Nine Months Ended September 30, 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		-		-		-		-		240,000		240		113,058		-			-			113,298
Fair value of warrants		-		-		-		-		-		-		229,401		-			-			229,401
Fair value of warrants issued with promissory notes		-		-		-		-		-		-		2,727,577		-			-			2,727,577
Net loss		-		-		-		-		-		-		-		(4,783,640	)		-			(4,783,640	)
Foreign currency translation		-		-		-		-		-		-		-		-			(20,683	)		(20,683	)
Balance, September 30, 2018		-	$	-		-	$	-		66,179,709	$	66,178	$	29,371,783	$	(36,326,324	)	$	(62,223	)	$	(6,950,586	)

See accompanying notes to unaudited condensed consolidated financial statements

CFN ENTERPRISES INC.

(F/K/A ACCELERIZE INC.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended						For the Nine Months Ended
	June 30,			June 30,			September 30,			September 30,
	2019			2018			2019			2018

Cash flows from operating activities
Net income (loss)	$	13,604,603		$	(2,820,503	)	$	13,190,273		$	(4,783,640	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		31,563			346,858			52,132			461,893
Gain on sale of CAKE Business		(19,473,080	)		-			(19,473,080	)		-
Amortization of deferred financing cost		2,511,960			384,407			2,512,282			636,125
Provision for bad debt		54,264			(335,801	)		54,264			(202,221	)
Fair value of options and warrants		197,773			203,486			197,773			342,698
Loss on sale of fixed assets								-			997
Issuance of common stock as payment of interest		315,000			-			315,000			-

Changes in operating assets and liabilities:
Accounts receivable		(3,615	)		129,609			(183,558	)		764,381
Prepaid expenses and other current assets		172,155			(40,214	)		199,965			147,888
Other assets		28,095			12,388			68,482			13,346
Accounts payable and accrued expenses		(1,928,243	)		(188,443	)		(2,224,935	)		(415,072	)
Deferred revenue		(284,198	)		-			(260,497	)		264,065
Other liabilities		(602,083	)		416,393			(602,083	)		-

Net cash (used in) operating activities	$	(5,375,806	)	$	(1,891,820	)
Net cash used in operating activities								(6,153,982	)		(2,769,540	)

Cash flows from investing activities
Capitalized software for internal use		-			(750,000	)		-			(1,125,000	)
Purchase of property and equipment		(1,751	)		(28,698	)		(1,751	)		(31,579	)
Proceeds from sale of fixed assets								-			750
Proceeds from sale of CAKE Business		20,892,667			-			20,892,667			-
Payments for acquisition of subsidiary		(420,000	)		-			(420,000	)		-
Net cash provided by (used in) investing activities	$	20,470,916		$	(778,698	)		20,470,916			(1,155,829	)

Cash flows from financing activities
Principal repayments of credit facility and loan		(11,772,514	)		(2,163,212	)		(11,772,514	)		(2,402,652	)
Proceeds from credit facility		900,000			4,702,197			900,000			5,489,850
Payment of preferred stock interest								(35,000	)		-
Proceeds from promissory notes		-			1,000,000			500,000			3,500,000
Repayment of related party notes		(300,000	)					(300,000	)		-
Repayment of promissory notes		(2,700,000	)		-			(2,700,000	)		(1,000,000	)

Net cash (used in) provided by financing activities	$	(13,872,514	)	$	3,538,985			(13,407,514	)		5,587,198

Effect of exchange rate fluctuations on cash		1,196			(13,517	)		(11,281	)		(20,683	)

Net change in cash and restricted cash		1,223,792			854,950			898,139			1,641,146
Cash and restricted cash, beginning of the period		77,295			216,883			77,295			216,883
Cash and restricted cash, end of the period	$	1,301,087		$	1,071,833		$	975,434		$	1,858,029

Supplemental disclosure of cash flow information:
Interest paid	$	946,691		$	711,627		$	946,691		$	1,133,678
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		$	62,294		$	2,727,577
Capital expenditure included in accounts payable	$	-		$	1,299		$	-		$	1,739
Accrued payables and short-term note directly paid off by credit facility	$	-		$	623,399		$	-		$	680,149
Prepaid expenses reclassified to deferred financing costs	$	-		$	70,000		$	-		$	70,000
Deferred financing costs incurred in connection with promissory notes							$	-		$	75,000
Accrual of preferred stock interest	$	6,575		$	-		$	31,575		$	-
Accrued interest reclassed to credit facility	$	62,379		$	-		$	62,379		$	-
Warrant repricing adjustment	$	104,638		$	-		$	104,638		$	-
Conversion of notes payable to Series A Preferred Stock	$	500,000		$	-		$	500,000		$	-
Issuance of Series B Preferred Stock for acquisition of subsidiary	$	687,000		$	-		$	687,000		$	-
Issuance of common stock for acquisition of subsidiary	$	2,700,000		$	-		$	2,700,000		$	-

See accompanying notes to unaudited condensed consolidated financial statements

CFN ENTERPRISES INC.

(F/K/A ACCELERIZE INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Organization

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

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

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

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

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

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~~$902,697 and an accumulated deficit of ~~$29,362,096~~$29,836,426 as of ~~June~~September 30, 2019. The Company also had a net loss from continuing operations of ~~$865,446~~$1,280,889 during the ~~six~~nine months ended ~~June~~September 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~~September 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 and intangible assets, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

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~~had restricted cash as a result of its corporate card program through its ~~bank. The~~ bank, ~~requires a~~which required collateral ~~which is~~ placed in a money market ~~account and can be increased or decreased at any time at~~account. The corporate card program was terminated during the ~~discretion of~~three months ended September 30, 2019, which resulted in the ~~Company.~~restricted cash balance being transferred back to the Company for its general use. The Company’s restricted cash amounted to ~~$50,000~~$0 at ~~June~~September 30, 2019 and $50,000 at 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~~nine months ended ~~June~~September 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~~September 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~~$665,000 at ~~June~~September 30, 2019 that exceeded the FDIC insurance limit.

The Company's accounts receivable are due from customers located in the United ~~States.~~States and Canada. The Company had ~~two~~three customers who each accounted for ~~11.4%~~13.0%, 11.7% and 11.0% of its accounts receivable at ~~June~~September 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 relating to continuing operations amounted to ~~$60,698~~$148,738 and ~~$142,449~~$160,029 for the three and nine months ended ~~June~~September 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~~There were no advertising expenses ~~are all~~during 2018 relating to continuing operations. Advertising expenses reported as a component of discontinued operations amounted to $0 and $140,907 for the three ~~and six~~ months ended ~~June~~September 30, 2019 and ~~2018.~~2018, respectively, and $159,665 and $415,358 for the nine months ended September 30, 2019 and 2018, respectively.

Income Taxes

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

Foreign Currency Translation

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

Software Development Costs

At December 31, 2018, the Company impaired the entire balance of unamortized internal-use software development costs which amounted to approximately $4,725,000 and did not capitalize internal-use software development costs in 2019. Costs incurred in the research and development of software products and significant upgrades and enhancements thereto during the preliminary project stage and the post-implementation operation stage are expensed as incurred. Costs incurred for maintenance and relatively minor upgrades and enhancements are expensed as incurred. Prior to the December 31, 2018 impairment, costs associated with the application development stage of new software products and significant upgrades and enhancements thereto were capitalized when 1) management implicitly or explicitly authorized and committed to funding a software project and 2) it was probable that the project would be completed and the software would be used to perform the function intended. The Company capitalized internal-use software development costs of $375,000 and ~~$750,000~~$1,125,000 during the three and ~~six-month~~nine-month periods ended ~~June~~September 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~~$105,000 and ~~$321,146~~$426,146 during the three and ~~six-month~~nine-month periods ended ~~June~~September 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~~and nine-month periods ended ~~June~~September 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.

Goodwill

The Company’s goodwill represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from business acquisitions. Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level. There was no impairment recorded during the three and nine months ended September 30, 2019 or 2018.

Long-Lived Assets

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There was no impairment of long-lived assets identified during the three and nine months ended September 30, 2019 or 2018.

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~~September 30, 2019, the Company had ~~7,130,000~~6,595,000 outstanding stock options and ~~12,627,109~~8,127,184 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of ~~June~~September 30, 2018, the Company had ~~7,245,000~~7,237,500 outstanding stock options and ~~11,469,341~~25,045,517 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

Share-Based Payment

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

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

Common stock awards

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

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 5,6, Stockholders’ Deficit.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This guidance will be effective for public entities for fiscal years beginning after December 15, 2018 including the interim periods within those fiscal years. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. The Company has adopted this standard on January 1, 2019 and recognized assets and liabilities arising from any leases that meet the requirements under this standard on the adoption date and included qualitative and quantitative disclosures in the Company’s notes to the 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 Company is currently assessing the impact of the standard ~~has no impact~~ on ~~the Company’s~~its financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective in the first quarter of fiscal 2019. Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option. 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~~standard is to eliminate the diversity in practice related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows. For public business entities, this ~~ASU~~standard is effective for annual and interim reporting periods beginning after December 15, 2017. The Company has adopted this standard on January 1, 2018, and it has had no material impact on its financial statements.

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

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date. The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. This Company has adopted this standard on January 1, 2019 and it has had no impact in the Company’s 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~~September 30, 2019 and December 31, 2018.

	June 30,			December 31,		September 30,			December 31,
	2019			2018		2019			2018
	(Unaudited)					(Unaudited)

Computer equipment and software	$	8,139		$	-	$	8,139		$	-

		8,139			-		8,139			-

Less: accumulated depreciation		(4,401	)		-		(4,770	)		-

	$	3,738		$	-	$	3,369		$	-

Depreciation expense from continuing operations ~~amounted to $197~~ for the three and ~~six~~nine months ended ~~June~~September 30, ~~2019.~~2019 amounted to $368 and $565, respectively. There was no depreciation expense from continuing operations during 2018.

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		Purchase Allocation
Property and equipment	$	2,183	$	2,183
Other intangible assets				579,000
Goodwill		3,804,817		3,225,817
	$	3,807,000	$	3,807,000

Intangible assets acquired represent amounts allocated to customers contracts of $7,000 and marketing-related intangible assets of $572,000, for an aggregate total of $579,000. The intangible assets related to customer contracts are being amortized over a period of approximately 5 months and the marketing-related intangible assets are being amortized over 10 years. Amortization expense for intangible assets for both the three and nine months ended September 30, 2019 amounted to $20,525. Estimated future amortization of intangible assets as of September 30, 2019 is as follows.

	Year Ended
	December 31,
2019 (remainder of)	$	16,751
2020		57,200
2021		57,200
2022		57,200
2023		57,200
Thereafter		312,924
Total	$	558,475

The following are the unaudited pro forma results of operations for the three and ~~six~~nine months ended ~~June~~September 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)						Pro Forma Combined Financials (Unaudited)
	Six Months Ended June 30, 2019			Six Months Ended June 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018

Revenue from continuing operations	$	1,055,843		$	1,033,378		$	1,687,555		$	1,552,730

Net loss from continuing operations	$	(717,591	)	$	(407,473	)	$	(1,160,045	)	$	(575,749	)

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

	Pro Forma Combined Financials (Unaudited)						Pro Forma Combined Financials (Unaudited)
	Thee Months Ended June 30, 2019			Three Months Ended June 30, 2018			Thee Months Ended September 30, 2019			Thee Months Ended September 30, 2018

Revenue from continuing operations	$	667,356		$	545,153		$	568,992		$	545,582

Net loss from continuing operations	$	(458,887	)	$	(426,537	)	$	(415,443	)	$	(247,501	)

Net loss from continuing operations per common share - basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.00	)	$	(0.00	)

NOTE 5: NOTE PAYABLE

On September 10, 2019, the Company entered into a promissory note payable whereby the Company borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly on the first business day of December, March, June and September commencing December 1, 2019. Outstanding principal on the note is due in full on September 30, 2022.

Future scheduled maturities of long-term debt are as follows.

	Year Ended
	December 31,

2019 (remainder of)	$	-
2020		-
2021		-
2022		500,000
Total	$	500,000

In connection with the promissory note payable on September 10, 2019, the Company issued warrants to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.10 per share. The warrants expire on September 10, 2024 and are fully vested upon issuance. The note was discounted by $17,624 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized as interest expense through the maturity date, which amounted to $322 for the three and nine months ended September 30, 2019. As of September 30, 2019, the net book value of the promissory note amounted to $482,698 including the principal amount outstanding of $500,000 net of the remaining discount of $17,302.

The warrants issued with the promissory note were valued using the Black-Scholes pricing method using the following assumptions below.

Expected life in years			5
Stock price volatility			114.20%
Risk free interest rate			1.58%
Expected dividends			None
Estimated forfeiture rate			None

NOTE 5:6: STOCKHOLDERS’ DEFICIT

Common Stock

On June 20, 2019, the Company issued an aggregate of 3,500,000 restricted shares of common stock to certain promissory note holders as consideration for early payment of the promissory notes. The value of the shares issued amounted to $315,000 and was recorded as interest expense during the ~~three and six~~nine months ended ~~June~~September 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~~an aggregate total of 240,000 restricted shares of its common stock to its non-employee directors as partial director compensation, at a value of $0.50 per share, vesting in 4 equal quarterly increments commencing on July 1, 2018 and ~~July 1, 2017, to each of its non-employee directors as partial annual compensation for services as a director. As of~~ending June 30, ~~2019 and 2018, these restricted shares were fully issued.~~2019. The Company recorded expenses of $0 and $30,000 during the three ~~month periods~~months ended ~~June~~September 30, 2019 and 2018, respectively, and $60,000 and $90,000 during the ~~six~~nine months ended ~~June~~September 30, 2019 and ~~2018.~~2018, respectively. There was no remaining unrecorded compensation expense related to restricted stock as of September 30, 2019.

Preferred Stock

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

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

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

For the three and ~~six~~nine months ended ~~June~~September 30, 2019, the Company incurred ~~$6,575~~$60,000 and $66,575, respectively, of interest from the outstanding preferred stock.

Warrants

~~There were no exercises of warrants during~~The following summarizes the ~~six~~Company’s warrant activity for the nine months ended ~~June~~September 30, ~~2019 or 2018.~~2019.

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

Outstanding at December 31, 2018		25,045,517		$	0.53		4.16
Granted		1,000,000			0.13
Forfeited/cancelled		(17,918,333	)		0.50
Outstanding at September 30, 2019 (unaudited)		8,127,184		$	0.56		3.38

Vested and expected to vest at September 30, 2019 (unaudited)		8,127,184		$	0.56		3.38

Exercisable at September 30, 2019 (unaudited)		8,127,184		$	0.56		3.38

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)7), pursuant to ASU 2017-11 which allows instruments with a down round feature to qualify for equity classification, the Company recognized the value of the feature when it was activated and there was an actual reduction of the strike price or conversion feature. The reduction in income of such 7,935,000 warrants amounted to $104,638 and was capitalized as deferred financing costs during the three-month period ended March 31, 2019. In connection with the closing of the Asset Purchase Agreement for the sale of the CAKE Business on June 18, 2019, the above warrants were cancelled.

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

During the three ~~months~~and nine-month periods ended ~~March 31,~~September 30, 2018, the Company issued ~~200,000~~3,835,000 and ~~4,500,000~~12,135,000 warrants ~~exercisable~~related to its loans, 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~~$689,281 and ~~$1,099,861,~~$2,727,577, respectively, and were recognized as deferred financing costs and amortized using the effective interest method over the ~~terms~~term 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~~$0 and ~~$66,515~~$101,836 during the three months ended ~~June~~September 30, 2019 and 2018, respectively, related to warrants ~~granted.~~granted for compensation. The Company recorded expenses of $126,810 and ~~$127,565~~$229,400 during the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively, related to warrants ~~granted.~~granted for compensation. As of ~~June~~September 30, 2019, all outstanding warrants were fully vested and there iswas no remaining unrecorded compensation ~~expense relating to warrants granted.~~expense.

Options

The following summarizes the Company’s stock option activity for the ~~six~~nine months ended ~~June~~September 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

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

Outstanding at December 31, 2018		7,232,500		$	0.40		3.45
Forfeited/cancelled		(637,500	)		1.00
Outstanding at September 30, 2019 (unaudited)		6,595,000		$	3.40		2.60

Vested and expected to vest at September 30, 2019 (unaudited)		6,595,000		$	0.34		2.60

Exercisable at September 30, 2019 (unaudited)		6,595,000		$	0.34		2.60

~~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~~$0 and ~~$7,619~~$7,376 during the three months ended ~~June~~September 30, 2019 and 2018, respectively, related to stock options. The Company recorded expenses of $10,963 and ~~$15,922~~$23,298 during the ~~six~~nine months ended ~~June~~September 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~~September 30, 2019.

NOTE 6:7: DISCONTINUED OPERATIONS

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

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

	June 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
	(Unaudited)				(Unaudited)
Current assets of discontinued operations
Accounts receivable, net [1]	$	-	$	2,081,551	$	-	$	2,081,551
Prepaid expenses and other assets		40,710		254,760		-		254,760
Total current assets of discontinued operations	$	40,710	$	2,336,311	$	-	$	2,336,311

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

Current liabilities of discontinued operations
Accounts payable and accrued expenses	$	383,023	$	3,018,394	$	76,028	$	3,018,394
Deferred revenues [3]		-		443,650		-		443,650
Credit facility, short term [4]		-		3,399,240		-		3,399,240
Total current liabilites of discontinued operations	$	383,023	$	6,861,284	$	76,028	$	6,861,284

Noncurrent liabilities of discontinued operations
Credit facility, net of unamortized financing costs [4]	$	-	$	5,888,155	$	-	$	5,888,155
Other loan, related party net of unamortized financing costs [5]		-		386,686		-		386,686
Other long-term loan, net of unamortized financing costs [5]		-		2,273,402		-		2,273,402
Other liabilities		-		637,500		-		637,500
Total noncurrent liabilites of discontinued operations	$	-	$	9,185,743	$	-	$	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~~$0 and $245,736 at ~~June~~September 30, 2019 and December 31, 2018, respectively.

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

	June 30,		December 31,			September 30,		December 31,
	2019		2018			2019		2018
	(Unaudited)					(Unaudited)

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

		-		835,310			-		835,310

Less: accumulated depreciation		-		(783,275	)		-		(783,275	)

	$	-	$	52,035		$	-	$	52,035

Depreciation expense from discontinued operations amounted to ~~$20,998~~$0 and ~~$11,653~~$10,035 for the ~~three-months~~three months ended ~~June~~September 30, 2019 and 2018, respectively. Depreciation expense amounted to ~~$31,366~~$31,042 and ~~$25,712~~$35,747 for the ~~six-months~~nine months ended ~~June~~September 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,			September 30,		December 31,
	2019		2018			2019		2018
	(Unaudited)					(Unaudited)

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

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

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

Short-term balance	$	-	$	3,399,240		$	-	$	3,399,240
Long-term balance		-		5,888,155			-		5,888,155
Total credit facility loans	$	-	$	9,287,395		$	-	$	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~~September 30, 2019 and 2018, ~~$50,085~~$0 and ~~$49,997,~~$49,996, respectively, of debt discount was amortized into interest expense. During the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, $100,867 and ~~$98,414,~~$148,410, 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~~September 30, 2019 and 2018, ~~$1,391,678~~$0 and ~~$110,249,~~$129,727, respectively, of debt discount was amortized into interest expense. During the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, $1,571,181 and ~~$181,074,~~$310,801, 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,			September 30,		December 31,
	2019		2018			2019		2018
	(Unaudited)					(Unaudited)

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


2018 Promissory Notes, related party	$	-	$	550,000		$	-	$	550,000
Less: deferred financing costs		-		(163,314	)		-		(163,314	)
	$	-	$	386,686		$	-	$	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~~September 30, 2019 and 2018, ~~$755,411~~$0 and ~~$20,478,~~$69,124, respectively, of debt discount was amortized into interest expense. During the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, $839,912 and ~~$20,478,~~$89,602, 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~~nine months ended ~~June~~September 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						For the Three Months Ended						For the Nine Months Ended
	June 30,			June 30,			June 30,			June 30,			September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018			2019			2018			2019			2018


Net revenues	$	4,175,485		$	5,397,678		$	9,001,307		$	11,390,426		$	-		$	5,292,304		$	9,001,307		$	16,682,730
Cost of revenue		2,034,098			2,469,136			3,863,471			4,822,996			-			2,042,435			3,863,471			6,865,431
Gross profit		2,141,387			2,928,542			5,137,836			6,567,430			-			3,249,869			5,137,836			9,817,299

Operating expenses:
Research and development		484,560			987,776			1,263,808			2,110,399			-			1,033,707			1,263,808			3,144,106
Sales and marketing		1,160,198			1,061,708			2,016,637			2,232,192			-			1,127,055			2,016,637			3,359,247
General and administrative		1,726,524			1,661,152			3,086,805			3,203,331			(1,113	)		2,058,823			3,085,692			5,262,154
Total operating expenses		3,371,282			3,710,636			6,367,250			7,545,922			(1,113	)		4,219,585			6,366,137			11,765,507

Loss from operations		(1,229,895	)		(782,094	)		(1,229,414	)		(978,492	)		1,113			(969,716	)		(1,228,301	)		(1,948,208	)

Other income (expense):
Gain on sale of discontinued operations		19,473,080			-			19,473,080			-			-			-			19,473,080			-
Interest income		34			-			34			750			-			(247	)		34			503
Interest expense		(3,048,478	)		(536,850	)		(3,773,651	)		(1,139,965	)		-			(679,663	)		(3,773,651	)		(1,819,628	)
Total other income (expense)		16,424,636			(536,850	)		15,699,463			(1,139,215	)		-			(679,910	)		15,699,463			(1,819,125	)

Net income (loss) from discontinued operations before provision for income taxes		15,194,741			(1,318,944	)		14,470,049			(2,117,707	)		1,113			(1,649,626	)		14,471,162			(3,767,333	)
Provision for (benefit from) income taxes		-			-			-			-			-			-			-			-
Net income (loss) from discontinued operations	$	15,194,741		$	(1,318,944	)	$	14,470,049		$	(2,117,707	)	$	1,113		$	(1,649,626	)	$	14,471,162		$	(3,767,333	)

The following is a summary of the gain on sale of discontinued operations of the CAKE Business reflected above during the ~~three and six~~nine months ended ~~June~~September 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 7:8: 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~~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~~expired on July 30, ~~2019 and thus is not affected by ASC 842.~~2019. The Company has discontinued its operations associated with the CAKE Business it conducted at the Subsidiary in London and ~~will be vacating~~has vacated the office ~~when~~upon the ~~lease expires.~~expiration of the lease.

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.

NOTE 9: SUBSEQUENT EVENTS

Effective October 22, 2019, the Company filed a certificate of amendment with the Secretary of State of the State of Delaware pursuant to which the corporate name was changed from Accelerize Inc. to CFN Enterprises Inc. In connection with the name change, the trading symbol of CFN Enterprises Inc. on the OTCQB was changed from ALCZ to CNFN with the symbol change effective on October 24, 2019.

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 from 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.

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,~~www.cfnenterprisesinc.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.~~"CNFN."

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

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

	For the Three Months Ended									For the Three Months Ended
	June 30,			June 30,						September 30,			September 30,
	2019			2018			Change			2019			2018			Change


Net revenues	$	62,720		$	-		$	62,720		$	568,992		$	-		$	568,992
Cost of revenue		33,449			-			33,449			381,277			-			381,277
Gross profit		29,271			-			29,271			187,715			-			187,715

Operating expenses:
Selling, general and administrative		605,828			245,125			360,703			600,663			313,536			287,127
Total operating expenses		605,828			245,125			360,703			600,663			313,536			287,127

Loss from operations		(576,557	)		(245,125	)		(331,432	)		(412,948	)		(313,536	)		(99,412	)

Other income (expense):
Interest expense											(2,514	)		-			(2,514	)
Interest income		56			25			31			19			25			(6	)
Total other income (expense)		56			25			31			(2,495	)		25			(2,520	)

Net loss before provision for income taxes		(576,501	)		(245,100	)		(331,401	)		(415,443	)		(313,511	)		(101,932	)
Provision for (benefit from) income taxes		-			-			-
Net income (loss) from continuing operations		(576,501	)		(245,100	)		(331,401	)
Provision for income taxes											-			-			-
Net loss from continuing operations											(415,443	)		(313,511	)		(101,932	)
Gain (loss) from discontinued operations, net of tax		15,194,741			(1,318,944	)		16,513,685			1,113			(1,649,626	)		1,650,739
Net income (loss)	$	14,618,240		$	(1,564,044	)	$	16,182,284
Net loss										$	(414,330	)	$	(1,963,137	)	$	1,548,807

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~~September 30, 2019 represents revenue ~~recognized for the period from June 21, 2019 through June 30, 2019.~~related to this line of business. We expect this be our primary source of revenue going forward.

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~~September 30, 2019 ~~represents revenue recognized for the period from June 21, 2019 through June 30, 2019.~~related to this line of business. 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~~September 30, 2019 increased by ~~$360,703~~$287,127 as compared to the prior year period due primarily to additional legal and professional fees associated with ~~the closing of~~regulatory requirements during 2019 associated with the Asset Purchase Agreement and the Emerging Growth ~~Agreement and the reporting regulatory requirements associated with the transaction.~~Agreement. Continuing operating expenses presented during the three months ended ~~June~~September 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,~~During the three months ended September 30, 2019, we had a small 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~~$1,113 due to adjustments made to certain accrued liabilities associated with ~~discontinued operations of $3,048,478.~~our Subsidiary. The loss from discontinued operations during the three months ended ~~June~~September 30, 2018 represents the prior year results from the CAKE Business reclassified as discontinued operations.

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

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

	For the Six Months Ended									For the Nine Months Ended
	June 30,			June 30,						September 30,			September 30,
	2019			2018			Change			2019			2018			Change


Net revenues	$	62,720		$	-		$	62,720		$	631,712		$	-		$	631,712
Cost of revenue		33,449			-			33,449			414,726			-			414,726
Gross profit		29,271			-			29,271			216,986			-			216,986

Operating expenses:
Selling, general and administrative		894,829			702,832			191,997			1,495,492			1,016,368			479,124
Total operating expenses		894,829			702,832			191,997			1,495,492			1,016,368			479,124

Loss from operations		(865,558	)		(702,832	)		(162,726	)		(1,278,506	)		(1,016,368	)		(262,138	)

Other income (expense):
Interest expense											(2,514	)		-			(2,514	)
Interest income		112			36			76			131			61			70
Total other income (expense)		112			36			76			(2,383	)		61			(2,444	)

Net loss before provision for income taxes		(865,446	)		(702,796	)		(162,650	)		(1,280,889	)		(1,016,307	)		(264,582	)
Provision for (benefit from) income taxes		-			-			-
Net income (loss) from continuing operations		(865,446	)		(702,796	)		(162,650	)
Provision for income taxes											-			-			-
Net loss from continuing operations											(1,280,889	)		(1,016,307	)		(264,582	)
Gain (loss) from discontinued operations, net of tax		14,470,049			(2,117,707	)		16,587,756			14,471,162			(3,767,333	)		18,238,495
Net income (loss)	$	13,604,603		$	(2,820,503	)	$	16,425,106		$	13,190,273		$	(4,783,640	)	$	17,973,913

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~~nine months ended ~~June~~September 30, 2019 represents revenue recognized for the period from June 21, 2019 through ~~June~~September 30, 2019. We expect this be our primary source of revenue going forward.

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~~nine months ended ~~June~~September 30, 2019 represents revenue recognized for the period from June 21, 2019 through ~~June~~September 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~~nine months ended ~~June~~September 30, 2019 increased by ~~$191,997~~$479,124 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.~~these transactions. Continuing operating expenses presented during the ~~six~~nine months ended ~~June~~September 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~~nine months ended ~~June~~September 30, 2019 of ~~$14,470,049,~~$14,471,162, which ~~represented~~includes the gain on ~~the~~ sale of the ~~net assets~~CAKE Business of $19,473,080 offset by losses from the ~~loss from discontinued operations of $1,229,414 as well as interest expense associated with discontinued operations of $3,773,651.~~CAKE business through June 18, 2019. The loss from discontinued operations during the ~~six~~nine months ended ~~June~~September 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. In September 2019, we received proceeds of $500,000 from a note payable. Our plan to continue as a going concern includes raising additional 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.

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

	Six Months Ended						Nine Months Ended
	June 30,			June 30,			September 30,			September 30,
	2019			2018			2019			2018
Cash flows used in operating activities	$	(5,375,806	)	$	(1,891,820	)	$	(6,153,982	)	$	(2,769,540	)
Cash flows provided by (used in) investing activities	$	20,470,916		$	(778,698	)	$	20,470,916		$	(1,155,829	)
Cash flows provided by (used in) financing activities	$	(13,872,514	)	$	3,538,985		$	(13,407,514	)	$	5,587,198

As of ~~June~~September 30, 2019, we had unrestricted cash of ~~$1,251,087.~~$975,434.

Net cash used in operating activities was approximately ~~$5.4~~$6.2 million during the ~~six~~nine months ended ~~June~~September 30, 2019, compared with approximately ~~$1.9~~$2.8 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, as well as a higher loss from continuing activities during 2019.

Net cash provided by investing activities amounted to approximately ~~$20.4~~$20.5 million during the ~~six~~nine months ended ~~June~~September 30, 2019, compared with cash used in investing activities of approximately ~~$0.8~~$1.2 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~~nine months ended ~~June~~September 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 nenot be recurring.

Net cash used in financing activities was approximately ~~$13.9~~$13.4 million for the ~~six~~nine months ended ~~June~~September 30, 2019, compared to net cash provided by financing activities of approximately ~~$3.5~~$5.6 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~~The cash used in financing activities in 2019 was offset by proceeds from credit facility borrowings of ~~$900,000.~~$900,000, as well as proceeds of $500,000 from a note payable in September 2019. During the ~~six~~nine months ended ~~June~~September 30, 2018, our cash provided by financing activities was approximately ~~$3.4~~$5.6 million, which consisted of proceeds from borrowings under the credit facility of approximately ~~$4.7~~$5.5 million and borrowings under promissory notes of $1$3.5 million, offset by repayments of principal under the credit facility of approximately ~~$2.1~~$2.4 million and repayments of promissory notes of $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 at the time was either paid off or settled through the exchange of outstanding principal into Series A Preferred Stock. ~~Therefore,~~

On September 10, 2019, we entered into a promissory note payable whereby we borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly on the first business day of December, March, June and September commencing December 1, 2019. Outstanding principal on the note is due in full on September 30, 2022.

In connection with the promissory note payable on September 10, 2019, we issued warrants to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.10 per share. The warrants expire on September 10, 2024 and are fully vested upon issuance. The note was discounted by $17,624 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized as interest expense through the maturity date, which amounted to $322 for the three and nine months ended September 30, 2019. As of ~~June~~September 30, 2019, ~~we had no~~the net book value of the promissory note amounted to $482,698 including the principal amount outstanding ~~debt.~~of $500,000 net of the remaining discount of $17,302.

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~~nine months ended ~~June~~September 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.

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.

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.

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.

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, each with a stated value of $1,000 per share, to Emerging Growth, LLC 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. 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~~September 30, 2019

Warrants

As of ~~June~~September 30, 2019, ~~12,627,109~~8,127,184 shares of our common stock are issuable pursuant to the exercise of warrants.

Options

As of ~~June~~September 30, 2019, ~~7,130,000~~6,595,000 shares of our common stock are issuable pursuant to the exercise of options.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 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~~September 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.effective.

Changes in Internal Control Over Financial Reporting

During the quarter ended ~~June~~September 30, 2019, ~~we sold~~in order to remediate the ~~CAKE Business which resulted in~~segregation of duties and other deficiencies initially created by the departure of our accounting ~~department. We have~~department in June 2019, we hired an outside bookkeeper and accounting consultants to ~~assist with~~perform our account reconciliations and other day-to-day accounting requirements. The internal control structure was also documented and assessed in the ~~preparation~~areas of financial reporting and disclosure controls as it relates to our continuing operations. In addition, we revised and improved the use of our ~~financial statements~~systems for getting appropriate approvals for purchases and ~~public filings, as well as the day-to-day accounting requirements of the company.~~other activities that require authorization.

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.

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.

Item 6. Exhibits

~~2.1~~3.1	~~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).~~Composite Copy of Certificate of Incorporation, as amended as of October 22, 2019.*

~~2.2~~3.2	~~Asset Purchase Agreement, dated May 15,~~Composite Copy of Certificate of Incorporation, as amended as of October 22, 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)~~(marked copy).*

~~3.1~~4.1	~~Certificate~~Form of ~~Designation of Preferences, Rights and Limitations of Series A Preferred Stock~~Warrant issued on September 12, 2019 (incorporated by reference to the Company’s Current Report on Form 8-K filed on ~~June 21,~~September 18, 2019).

~~3.2~~10.1	~~Certificate~~Form of ~~Designation of Preferences, Rights and Limitations of Series B Preferred Stock~~Promissory Note issued on September 12, 2019 (incorporated by reference to the Company’s Current Report on Form 8-K filed on ~~June 21,~~September 18, 2019).

~~10.1~~10.2	~~Sixth Amending~~Employment Agreement between Accelerize Inc. and ~~Beedie Investments Limited,~~Frank Lane, dated ~~as of May 1,~~June 21, 2019 (incorporated by reference to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed on ~~May 20,~~September 19, 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~~September 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.

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~~CFN ENTERPRISES INC.

Dated: ~~August 16,~~November 6, 2019	By:	/s/ Brian Ross
		Brian Ross President and Chief Executive Officer (Principal Executive Officer and Principal ~~Financial~~ Financial Officer)

3132

	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