UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
DC 20549
 
 FORM
10-K
 
 [X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For the
fiscal year ended December 31, 2007
  or
  [   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
  For the
transition period from ___________
  Commission
File Number 000-52635
  ACCELERIZE
      NEW MEDIA, INC.(Exact
      Name of Registrant as Specified in Its
Charter)
 
 Delaware
              
              20-3858769(State
      of Incorporation)
              
              (IRS
      Employer Identification No.)
  12121
      Wilshire Blvd. , Suite 322,
                Los
      Angeles, CA 90025(Address
      of Principal Executive Offices) (Zip Code)
  Registrants telephone
Number, Including Area Code: (310)
903 4001
 
 
 Securities
to be registered pursuant to Section 12(b) of the Act: None
  Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value
$0.001
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes [  ]  No
[X]
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes
[  ]  No [X]
  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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]
  
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definition of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.  (Check one):
 
 Large
accelerated filer
[   ]                                                                    Accelerated
filer [  ]
 
 Non-accelerated
filer
[   ]                                                                      Smaller
reporting company [X]
 (Do not
check if a smaller reporting company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes [  ]  No [
X]
  The
aggregate market value of the voting shares of the registrant held by
non-affiliates on June 30, 2007 was $3,379,7161. For purposes of this calculation, an
aggregate of 11,500,000 shares of common stock were held by the directors and
officers of the registrant on June 30, 2007 and have been included in the number
of shares of common stock held by affiliates.
 
 The
number of the registrant’s shares of common stock outstanding as of March 31,
2008: 24,101,260.
   
 1 On such
date our shares of Common Stock were not yet quoted on the Over-The-Counter
Bulletin Board, or the OTC.BB, or traded on any other stock exchange. The
aggregate market value provided above is based on a price of $0.35 per share,
which is a fixed price at which such non-affiliates were able to sell their
shares until January 9, 2008, when our Common Stock commenced quoting on the
OTC.BB.
 In this
Annual Report on Form 10-K, the terms the “Company,” “Accelerize”, “we”, “us” or
“our” refers to Accelerize New Media, Inc., unless the context indicates
otherwise.
  WARNING CONCERNING FORWARD
LOOKING STATEMENTS
  THIS
ANNUAL REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
OTHER FEDERAL SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”,
“EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE
ARE MAKING FORWARD LOOKING STATEMENTS. FOR EXAMPLE, WHEN WE DISCUSS THE INTERNET
MARKET TRENDS, AND SPECIFICALLY, THE GROWTH IN ON-LINE ADVERTISING, BUSINESS
NETWORKS AND RSS, AND OUR EXPECTATIONS BASED ON SUCH TRENDS, WE ARE USING
FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR
PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT
GUARANTEED TO OCCUR AND MAY NOT OCCUR.  ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS
AS A RESULT OF VARIOUS FACTORS.
 
 IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN OUR
FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, GENERAL MARKET CONDITIONS,
INCLUDING THE RECENT DOWNTURN IN ECONOMY AND THE GROWTH IN CONSUMER DEBT,
REGULATORY DEVELOPMENTS AND OTHER CONDITIONS WHICH ARE NOT WITHIN OUR
CONTROL.
 
 OTHER
RISKS MAY ADVERSELY IMPACT US, AS DESCRIBED MORE FULLY IN THIS ANNUAL REPORT
UNDER “ITEM 1A. RISK FACTORS.”
 
 YOU
SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
 
 EXCEPT AS
REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD
LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
 
 
 
 ACCELERIZE
      NEW MEDIA, INC.
                2007
      ANNUAL REPORT ON FORM 10-KTable
      of ContentsPART
      IPageItem
      1.
              Business
              1Item
      1A.
              Risk
      Factors
              7Item
      1B.
              Unresolved
      Staff Comments
              14Item
      2.
              Properties
              14Item
      3.
              Legal
      Proceedings
              14Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              14PART
      IIItem
      5.
              Market
      For Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities`
              14Item
      6.
              Selected
      Financial Data
              15Item
      7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              15Item
      7A.
              Quantitative
      and Qualitative Disclosures About Market Risk
              22Item
      8.
              Financial
      Statements and Supplementary Data
              22Item
      9.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              22Item
      9A.
              Controls
      and Procedures
              22Item
      9B.
              Other
      Information
              22PART
      IIIItem
      10.
              Directors,
      Executive Officers and Corporate Governance
              22Item
      11.
              Executive
      Compensation
              25Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              28Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              29Item
      14.
              Principal
      Accountant Fees and Services
              30PART
      IVItem
      15.
              Exhibits
      and Financial Statement Schedules
              30
 
 
 
 PART I
  Item
1.  Business
  Overview
 
 We offer
a comprehensive online media solution for clients to reach their target audience
on the internet. We provide lead generation and customer acquisition solutions
via our network of financial, news, and business networking portals, and also
through real simple syndication, or RSS feeds, blogs, targeted e-mail, banners,
search engine optimization, debt settlement referrals, and co-registration
opportunities. We also provide our content to other companies in a variety of
formats including re-branded portals, investor relations pages, and RSS feeds.
We primarily make money from the following three lines of business: (1) Online
advertising - We
make our content network  available without charge to users, and we
generate revenue through the sale of display advertisements; advertisers pay us
a fee each time a user views or clicks on an ad displayed within our content
network; (2) Debt settlement referrals - We receive fees for providing
sales and marketing support in connection with debt settlement solutions offered
by debt settlement agencies to consumers in the United States; and (3) Lead
generation - Utilizing our internally
designed and developed lead generation platform, we provide reputable vendors of
notable products and services with opportunities to contact qualified and
interested potential customers, essentially crafting high-quality new-business
leads for the product and service vendors, i.e., delivering buyers to sellers,
in return for the lead fees we receive as our compensation.
  We own
and operate an extensive portfolio of 6,477 domain names (commonly referred to
as URLs), and we use this portfolio to build consumer-based portals, microsites,
and landing pages which are attractive and useful to our users because of the
unique information items therein offered.  This  drives
significant new and recurring user traffic to our websites and allows us to
generate highly relevant responses and leads for our online advertising, debt
settlement referral, and lead generation customers.
 
 Our
principal offices are located at: 12121 Wilshire Blvd., Suite 322, Los Angeles,
CA 90025, and  our telephone number there is: (310) 903 4001. Our
corporate website is: www.accelerizenewmedia.com.
 
 Our
History
 
 We were
incorporated on November 22, 2005 under the laws of the State of Delaware. Prior
to our incorporation we operated as a sole proprietorship owned by one of the
members of our current management team, which was doing business as Accelerize
New Media.
 
 On January 2, 2007, we acquired
substantially all of the assets and assumed some, but not all, of the
liabilities of the Debt Reduction Group, or TDRG, an internet marketing business
focused at identifying debt and mortgage leads from forms hosted on TDRG’s
network of websites, and selling such leads to third parties or processing the
leads within TDRG in connection with TDRG’s debt settlement referral business.
The previous owners of TDRG, Mr. Damon Stein and Mr. Daniel Goldberg, were
retained by us and presently hold positions as our General Counsel and
Chief Marketing Officer, respectively.
 
 On
December 22, 2006, we filed a registration statement on Form SB-2 with the
Securities and Exchange Commission, or the SEC, which registration statement
became effective on May 9, 2007. At the same time we became a reporting company
under the Securities Exchange Act of 1934. On December 18, 2007, the Financial
Industry Regulatory Authority informed us that its staff decided to clear our
request for an unpriced quotation on the Over-The-Counter Bulletin Board, or the
OTC.BB, and on January 9, 2008, our Common Stock commenced trading on the OTC.BB
under the symbol ACLZ.OB.
 
 On April 1, 2007, we opened our office
in Santa Ana, CA,which houses
our lead generation division.
Concurrently, our web-portal developments continued their early organic growth
patterns and by the end of April 2007, www.secfilings.com had recorded in excess
of 10,000 year-to-date new member enrollments, despite the fact that the
portal’s marketing efforts had not yet begun.
 
 
 1
 
 How
we market our services
  We market our services via organic and
search engine marketing, or SEM, direct sales by our sales team, financial data
portals, blogs and RSS feeds.
 
 ●
              organic
      search listings are results based on factors such as keyword relevancy
      within a web page. These are the listings generally found on the left hand
      side in search engines, and are not influenced by direct financial
      payments, only by effective search engine
  optimization.
 
 ●
              paid
      search marketing consists of placing ads for products or services on
      search engines and on content sites across the Internet. These ads are
      typically small snippets of text linked to merchandise pages. Payment is
      made when users click through to the site from the
  ad.
 
 ●
              our
      blog sites are complements to our financial portals, delivering up-to-date
      news and analysis which then refers the user to our portals for more
      detailed information. Using blogs allows us to benefit from the real-time
      nature of blog search listings, so that current information in our blogs
      can appear in a wide variety of sites and blog aggregation search engines,
      often within minutes of the initial
posting.
 
 ●
              our
      financial portals generate sales leads for complementary financial
      services including our investor relations web solutions, financial data
      feeds, and debt consolidation services. Our IR web solutions and debt
      consolidation sales teams market and sell our products directly to public
      companies and consumers through traditional sales channels including phone
      and email. We market our financial portals via free RSS feeds of financial
      information that are widely disseminated throughout the internet in
      traditional and blog search engines and
  websites.
 
 ●
              we
      market our debt-settlement referral services through online advertising in
      search engines, web portals, email newsletters, and other
      financial-related websites. The ads drive interested consumers to our
      portfolio of websites acquired with TDRG. If interested, the consumer will
      submit information and request a free consultation from one of our debt
      consultants. The debt consultant will contact the consumer to discuss in
      more detail the services offered by the debt settlement agency. If the
      consumer is interested, the debt consultant will prepare a detailed
      proposal outlining a debt reduction solution for the consumer. Once a
      consumer signs up for the program, the debt settlement agency takes over
      ownership of the client and handles all customer service and
      implementation of the debt program.
 
 How
we support our services
  Web
development, server and database development/maintenance and financial data
processes are carried out in-house and via a number of partners described
below:
 
 Web Development, Server and
Database Development/Maintenance, and Financial Data
Partners
 
 ●
              Try
      Catch Consulting Inc. supports our portals and web-based solutions, our
      financial/customer/alert data and our technical infrastructure through
      development, database/server administration, and ongoing maintenance. Try
      Catch was instrumental in helping us to develop several pivotal
      technologies, including our e-mail alert engine, the financial data
      process known as extract, transform and load, or ETL process, and the core
      web portal platform, which is the basis for all of our web-based
      solutions.
  ●
              Verio
      Inc. hosts our servers, concentrating solely upon managed hosting, an
      advanced type of dedicated hosting. Unlike basic dedicated hosting,
      managed hosting offers system level administration and support,
      comprehensive Internet infrastructure and extensive services that relieve
      IT departments of many critical, and costly responsibilities. These
      services typically include advanced monitoring, load balancing, elevated
      security, data storage, stress testing, industry-leading technical
      expertise and content delivery.
  ●
              Zerolag
      Communications Inc. provides secure, managed web hosting, server
      collocation, and IT security to select clients. Zerolag provides our
      debt-settlement referral business with data back up, elevated security,
      data storage, email, and hosting. Chosen for their security due to our
      debt-settlement referral business’s financial data, they provide three
      core layers of protection for our debt-settlement referral business’s
      server: regular software updates, firewall protection, and intrusion
      detection systems, or IDS. In addition, all of our debt-settlement
      referral business’s data is backed up remotely on a daily basis to prevent
      data loss.
  2
 Financial Data Used to
Support Web Properties and Products
 
 ●
              Hemscott
      Inc. is a leading independent provider of financial data in the U.S. and
      Canada. Hemscott delivers detailed numerical, statistical and general
      business information to us, to help us meet our analytical, compliance and
      research needs.
  ●
              Global
      Securities Information, Inc. helps legal and financial firms to fulfill
      their research requirements. We use GSI's SEC filing service, which is a
      real time data feed of SEC filings submitted to the SEC via EDGAR service.
      This relationship ensures that we have the most up-to-date SEC filing
      data possible with no downtime or missed filings. We
      retrieve this feed on a regular basis, identify any new SEC filings and
      add them to our system. Our own supporting processes then retrieve
      additional information based on the core SEC filing data provided by
      GSI.
  Advertising
Partners
 
 ●
              Zacks
      Investment Research Inc. markets segments of our ad inventory. Zacks is a
      Chicago based firm with 25 years of experience in providing institutional
      and individual investors with the analytical tools and financial
      information necessary to the success of their investment
      process.
  ●
              Opt-Intelligence
      Inc., in partnership with Zacks, assists us with real-time consumer
      opt-in advertising (commonly called Co-registration). Opt-Intelligence
      clients include TheStreet.com, Match.com and StarMagazine.com. Their
      advertiser list includes Circuit City, eBay, Wal-Mart, The Home Depot,
      NASCAR, Nokia and Procter & Gamble. Co-registration is the practice of
      one organization, on its own subscription and membership registration
      forms, offering subscriptions, memberships, or leads to another
      organization.
  Web
Properties
  Our web properties include a large
portfolio of domain names, micro-sites, financial data portals and investor
relations portals, including, among others: www.secfilings.com,
www.dowindustrials.com,  www.executivedisclosure.com,
www.secinvestor.com,
www.executiveinvestigator.com,  www.10ksb.com,  www.debt.tv,
www.knockoutdebt.com, and www.bankruptcy.tv.  A more comprehensive
list and detailed explanation of our web properties is available at our
corporate website: www.accelerizenewmedia.com.
 
 On September 5, 2007, we launched our
“Ping and Post” proprietary lead generation system, which provides lead
generation, campaign management, lead acquisition and management, buyer contract
management, and optimize lead routing.
 
 On October 1, 2007, our refined and
improved version of www.secfilings.com was deployed and made instantly available
to our public users, and shortly thereafter we began recording significant daily
and monthly increases in our new member enrollments. Since October 1, 2007, and
continuing through and beyond December 31, 2007, our universe of user enrollees
and subscribers at www.secfilings.com remains robust and growing.
   Financial Data
Portals
  We offer several free, pre-defined
alerts with respect to, among other things, initial public offerings, annual and
quarterly reports, insider trading filings and a free customizable alert service
that requires registration. Real-time alerts of SEC filings and relevant news
are delivered to users via email, RSS and wireless application protocol, or WAP.
The alert service allows the user/customer to create unlimited alerts using a
number of different filters and combinations of filters. Alerts can contain
notifications of any filing type, company summary and news/press releases about
specific companies.
  3
  Our financial data portals
include:
  ●
              www.SECFilings.com,
      a financial business networking portal delivering free, accurate SEC data
      and user-generated content. Users can retrieve historical filings,
      subscribe to free email alerts and RSS feeds, and can track SEC filings by
      company, industry or person; and
  ●
              www.ExecutiveDisclosure.com,
      a financial and business networking portal offering free access to
      in-depth information regarding the executive compensation (salaries,
      bonuses, option grants, and stock award data) provided by all
      publicly-held companies.  Users are able to subscribe to email
      and RSS alerts, and research executives by name, company or
      industry.
  Domain
Portfolio
  We own
and operate an extensive portfolio of 6,477 domain names (commonly referred to
as URLs) and apply these to provide useful information for our users, building
traffic to our websites, and generating advertising and lead generation revenues
from our customers.  A comprehensive list and detailed explanation of
our domain properties is available at www.accelerizenewmedia.com.
  Micro-sites
  A
micro-site is an individual web page or cluster of pages which is meant to
function as an auxiliary supplement to a primary website. The micro-site's main
landing page most likely has its own URL. www.Form10-k.com is an example of one
of our "micro-site" properties, offering to customers and users select
functionality from our main portals including the ability to search, download
documents and login to their portal accounts.
  Investor Relations
Portals
  Our
Investor Relations, or IR, solution provides web-based tools which enable a
public company to stay in touch with its stockholders via real time email
alerts, real time press releases, RSS feeds, SEC filings and more. We offer our
investor relations clients the opportunity to mix and match modules to quickly
create custom solutions. www.ShareHolderTools.com is our web-based portal for
managing IR module subscriptions.
  Online
Marketing
  We help
our clients to achieve revenue, profit, market share, and customer loyalty
objectives through Internet strategies and systems. We have the knowledge and
tools available to deliver cost effective solutions that can assist our clients
in achieving their online marketing goals, including:
  ●
              Web
      Marketing Services, which consists of web design and development of
      websites;
  ●
              Paid
      Search, which consists of placing ads for products or services on search
      engines and on content websites across the
  Internet;
  ●
              Publisher
      Network, which consists of email marketing firms and websites;
      and
  ●
              Search
      Engine Optimization, which consists of a set of methods aimed at improving
      the ranking of a website in search engine
  listings.
  Financial Data
Solutions
  We syndicate
and share with others a wealth of public topical financial data in a variety of
formats, including company profiles, financials, SEC filings, annual and
quarterly reports, executive compensation, press releases, and
news.
  4
 EDGAR Filing
Services
  We are a
reseller of Excel Filings, LLC (www.excelfilings.com), and through
this relationship we can deliver fast, cost-effective SEC EDGAR® filing
services for publicly traded companies. Excel Filings is a full-service EDGAR
filing agent that strives to offer the most technologically-advanced filing
methods available.
  RSS
Solutions
  Utilizing
our financial portal network technology we offer a robust set of tools to use
RSS in order to assist our clients in reaching current and potential
shareholders with new information and also to utilize RSS feeds within our
clients' own organization. RSS is a simple Extensible Markup Language, or
XML-based system that allows users to subscribe to their favorite websites.
Using RSS, a webmaster can put its content into a standardized format, which can
be viewed and organized through a RSS-aware software.
  Our
website properties are the primary source for our lead generation and
advertising. The websites are designed to connect / “point” to each other, with
the goal of keeping the user within our network. The longer the user stays
within the network, the more valuable that user becomes to potential
advertisers.
  Industry/Market
Trends
  We
believe that our business depends upon the continuing consumer and business use
of the internet as a tool facilitating research, communications, and transaction
completions, especially in the following segments:
  ●
              RSS
  ●
              Business
      Networking
  ●
              Internet
      Content Providers
  RSS.
 
 Real Simple Syndication is an effective
marketing tool that enables publishers to distribute content to users quickly
and efficiently. According to the largest RSS syndication service in the U.S.,
Google's FeedBurner, it currently syndicates 1,468,265 feeds from some 823,198
publishers. According to the same source, the popularity of RSS is growing, with
a 385% traffic growth rate last year. We expect these trends to continue as more
consumers embrace this technology.
 
 We believe Consumers see RSS as a way
to view information from across the web in one centralized location. A 2005
survey sponsored by Yahoo! showed that 39% of Internet users have consumed RSS
in some form. The study also found the average RSS users tended to be young,
educated, affluent and tech savvy males. In particular, conscious RSS users tend
to be college graduates with an average annual household income of $74,116
compared to an average Internet-wide user income of around $62,655. We believe
that this is a growing and lucrative demographic, particularly in the financial
industry.
  Business
Networking.
 
 As the Internet becomes a more
integrated part of consumers’ and businesses’ everyday lives, it is no surprise
that its use continues to flourish. Today, business networking sites provide
consumers a way to connect with like-minded and demographically-similar
individuals to share their opinions and their passions. We believe that savvy
marketers, from various industries, such as financial institutions and
sophisticated consumer goods retailers are taking note of the phenomenon and
tapping the power of these wired influencers to spread their
messages.
 
 5
 Internet Content
Providers.
 
 The number of Internet content
providers has rapidly grown over the past few years, thanks to the advent of
social media and blogging. In July 2006, the Pew Internet & American Life
Project estimated that the U.S. blog population has grown to about 12 million
American adults, or 8% of U.S. adult Internet users. Meanwhile, the number of
blog readers was estimated as 57 million adults, or 39% of the U.S. adult
internet users population. We expect a continued growth in the number of online
publishers and readers.
 
 Content providers also continue to
benefit from increased online ad spending. eMarketer has predicted that online
ad spending in 2008 would reach $25.8 billion - a 23% increase over last year.
The research firm also indicated that, “while a floundering economy will
certainly affect online ad spending, accounting for the revised estimate, the
Internet will support continued ad spending growth even as other media may
falter." We expect a continued growth in online advertising that will continue
to out-pace traditional advertising for the foreseeable future.
 
 We
believe that we have positioned Accelerize to be the source for accurate,
financial content distribution. Accelerize New Media Inc.'s content network of
Financial Information Portals allows professionals and investors to research and
track corporate intelligence, executive compensation data and real-time SEC
filings.
  Intellectual
Property
  Our employees are required to execute
confidentiality and non-use agreements that transfer any rights they may have in
copyrightable works or patentable technologies to us. In addition, prior to
entering into discussions with potential business partners or customers
regarding our business and technologies, we generally require that such parties
enter into nondisclosure agreements with us. If these discussions result in a
license or other business relationship, we also generally require that the
agreement setting forth the parties’ respective rights and obligations include
provisions for the protection of our intellectual property rights. For example,
the standard language in our agreements provides that we retain ownership of all
patents and copyrights in our technologies and requires our customers to display
our copyright and trademark notices. We do not currently have any registered or
pending patents or trademarks, except the trademark “Knockout Debt” (USPTO Reg.
No. 2,810,014).
 
 Competition
  Our
primary competitors include:
  Edgar Online, Inc., which
provides financial and business information of global companies contained in
their SEC filings in a user-friendly format; and
  TheStreet.com, Inc., which
provides financial news and analysis to individual and professional investors,
through electronic publishing, securities research and
brokerage.
  Other
large competitors in the business information industry are Reuters, Standard & Poor’sandThomson
Financial. Competition for information focused on financial data or
credit risk comes from companies such as S&P’s Capital IQ, Dun & Bradstreet and
Factset. Competition
for legal information comes from companies such as Thompson’s Global Securities
Information. Other competitors include companies such as 10-K Wizard Technology, which
focus on simple SEC data offerings, and MSN Money and Yahoo! Finance, which are
more focused on serving individual investors.
 
 We
believe that we can compete in attracting users who are individual investors to
our sites, because our services are free to the user. The principal competitive
factors relating to attracting and retaining users include the quality and
relevance of our search results, and the usefulness, accessibility, integration
and personalization of the online services that we offer as well as the overall
user experience on our website.  In the case of attracting advertisers, the
principal competitive factors are the reach, effectiveness and efficiency of our
marketing services as well as the creativity of the marketing solutions that we
offer. The majority of our competitors, however, have significantly greater
resources, and brand recognition than we do, and most of our competitors
offer more extensive search features than we presently offer. We believe,
however, that based on our free use, content and features of the products and
services that we provide, we remain highly competitive in the financial and
business information market.
  6
 Government
Regulation
  Although
there are currently relatively few laws and regulations directly applicable to
the Internet, it is possible that new laws and regulations will be adopted in
the United States and elsewhere. The adoption of restrictive laws or regulations
could slow or otherwise affect Internet growth. The application of existing laws
and regulations governing Internet issues such as property ownership, libel and
personal privacy is also subject to substantial uncertainty. There can be no
assurance that current or new government laws and regulations, or the
application of existing laws and regulations (including laws and regulations
governing issues such as property ownership, taxation, defamation and personal
injury), will not expose us to significant liabilities, slow Internet growth or
otherwise hurt us financially.
  Employees
  As of
December 31, 2007, we had 20 full-time employees, and 4 consultants, including
all of our executive officers. None of our employees are covered by collective
bargaining agreements, and we believe our relationships with our employees to be
good.
  
 Item
1A. Risk Factors
 
 We
have a limited operating history and, therefore, predicting our future
performance is difficult.
 
 We were incorporated in November 2005.
Our limited operating history makes it difficult to evaluate our business and
prospects. We have encountered, and expect to continue to encounter, many of the
difficulties and uncertainties often faced by early stage companies. You should
consider our business and prospects in light of the risks, uncertainties and
difficulties frequently encountered by early stage companies, including limited
capital, delays in product development, marketing and sales obstacles and
delays, inability to gain customer acceptance of our products and services,
inability to attract and retain high-quality and talented executives and other
personnel and significant competition. We cannot be certain that we will
successfully address these risks. If we are unable to address these risks, our
business may not grow, our stock price may suffer and/or we may be unable to
stay in business.
 
 We
have a history of losses, and we expect to continue to operate at a loss and to
have negative cash flow from operations for the foreseeable future.
 
 We have a history of continuing losses
and negative cash flow from operations. At December 31, 2006 and December 31,
2007, we had cumulative net losses of approximately $2.4 million and $3.3
million, respectively. Our operations have been financed primarily through
proceeds from the issuance of equity and borrowings under promissory notes. On
December 31, 2006 and December 31, 2007, we had approximately $414,000 and
$951,000 in cash, respectively. We expect that our expenses will increase
substantially as we continue to develop and market our products and services. In
addition, we expect that as a public company our general and administrative
expenses will increase significantly. As a result, we expect to continue to
incur losses for the foreseeable future.
  Because we expect to continue to
incur net losses, we may not be able to implement our business strategy and the
price of our stock may decline.
  While we
are hopeful of becoming profitable by the end of 2008, there is no assurance
that this objective can be attained. Accordingly, our ability to operate our
business and implement our business strategy may be hampered by negative cash
flows in the future, and the value of our stock may decline as a result. Our
capital requirements may vary materially from those currently planned if, for
example, we incur unforeseen capital expenditures, unforeseen operating expenses
or make investments to maintain our competitive position. If this is the case,
we may have to delay or abandon some or all of our development plans or
otherwise forego market opportunities. We will need to generate significant
additional revenues to be profitable in the future, and we may not generate
sufficient revenues to be profitable on either a quarterly or annual basis in
the future.
  7
 Our
quarterly financial results will fluctuate, making it difficult to forecast our
results of operation.
 
 Our
revenues and operating results may vary significantly from quarter to quarter
due to a number of factors, many of which are beyond our control,
including:
  ●
              Variability
      in demand and usage for our products and
  services;
  ●
              Market
      acceptance of new and existing services offered by us, our competitors and
      potential competitors;
  ●
              Governmental
      regulations affecting the use of the Internet, including regulations
      concerning intellectual property rights and security features;
      and
 
 ●
              The
      recent downturn in the economy which led to a large increase in home
      foreclosures and a substantial growth in consumer debt. Our debt
      settlement referral business is based on helping consumers to resolve
      their debt related problems. Therefore, any downturn in the economy
      should lead to a larger number of consumers with a growing amount of debt,
      which should increase revenues within our debt settlement referral
      business.
 
 Our
limited operating history and unproven business model further contribute to the
difficulty of making meaningful quarterly comparisons. Our current and future
levels of expenditures are based primarily on our growth plans and estimates of
expected future revenues. If our operating results fall below the expectation of
investors, our stock price will likely decline significantly.
  We
face intense competition from other providers of business and financial
information.
 
 We compete with many providers of
business and financial information, including other Internet companies, for
consumers' and advertisers' attention and spending. Our primary competitors are
Edgar Online, Inc. and The Street.com, Inc., both of which provide services
similar to ours and each of which has a well-established market presence. These
and other competitors have substantially greater capital, longer operating
histories, greater brand recognition, larger customer bases and significantly
greater financial, technical and marketing resources than we do. These
competitors may also engage in more extensive development of their technologies,
adopt more comprehensive marketing and advertising campaigns than we can. Our
competitors may develop products and service offerings that we do not offer or
that are more sophisticated or more cost effective than our own. For these and
other reasons, our competitors' products and services may achieve greater
acceptance in the marketplace than our own, limiting our ability to gain market
share and customer loyalty and to generate sufficient revenues to achieve a
profitable level of operations. Our failure to adequately address any of the
above factors could harm our business and operating results.
 
 In
addition, as the barriers to entry in our market segment are not substantial, an
unlimited number of new competitors could emerge, thereby making our goal of
establishing a market presence even more difficult. Because our management
expects competition in our market segment to continue to intensify, there can be
no assurances we will ever establish a competitive position in our market
segment.
  We
may not be successful in increasing our brand awareness.
  Our
future success will depend, in part, on our ability to increase brand awareness
of our websites. In order to build brand awareness, we must succeed in our
marketing efforts, provide high quality services and increase traffic to our
websites. There is no assurance that we will be able to achieve these
goals.
  We
may not be successful in improving our existing products or in developing new
products.
  We have
not yet completed development and testing of certain proposed new products and
proposed enhancements to our systems, some of which are still in the planning
stage or in relatively early stages of development. Our success will depend in
part upon our ability to timely introduce new products into the marketplace. We
must commit considerable time, effort and resources to complete development of
our proposed products, service tools and product enhancements. Our product
development efforts are subject to all of the risks inherent in the development
of new products and technology, including unanticipated delays, expenses and
difficulties, as well as the possible insufficiency of funding to complete
development.
  8
 Our
product development efforts may not be successfully completed. In addition,
proposed products may not satisfactorily perform the functions for which they
are designed, they may not meet applicable price or performance objectives and
unanticipated technical or other problems may occur which result in increased
costs or material delays in development. Despite testing by Accelerize and
potential end users, problems may be found in new products, tools and services
after the commencement of commercial delivery, resulting in loss of, or delay
in, market acceptance and other potential damages.
  We
may not be successful in developing new and enhanced services and features for
our websites.
  Our
market is characterized by rapidly changing technologies, evolving industry
standards, frequent new product and service introductions and changing customer
demands. To be successful, we must adapt to the rapidly changing market by
continually enhancing our existing services and adding new services to address
customers' changing demands. We could incur substantial costs if we need to
modify our services or infrastructure to adapt to these changes. Our business
could be adversely affected if we were to incur significant costs without
generating related revenues or if we cannot adapt rapidly to these changes. Our
business could also be adversely affected if we experience difficulties in
introducing new or enhanced services or if these services are not favorably
received by users. We may experience technical or other difficulties that could
delay or prevent us from introducing new or enhanced
services.
  Our
operations depend on third parties and our systems are susceptible to delays,
failures and errors, which could adversely impact our operations and financial
results.
  Our
operations depend on receipt of timely feeds from our content providers, and any
failure or delay in the transmission or receipt of such feeds could disrupt our
operations. We also depend on Web browsers, ISPs and online service providers to
provide access over the Internet to our product and service offerings. Many of
these providers have experienced significant outages or interruptions in the
past, and could experience outages, delays and other difficulties due to system
failures unrelated to our systems. These types of interruptions could continue
or increase in the future.
  Our
digital distribution activities are managed by sophisticated software and
computer systems. We must continually develop and update these systems over time
as our business and business needs grow and change, and these systems may not
adequately reflect the current needs of our business. We may encounter delays in
developing these systems, and the systems may contain undetected errors that
could cause system failures. Any system error or failure that causes
interruption in availability of products or content or an increase in response
time could result in a loss of potential or existing business services
customers, users, advertisers or content providers. If we suffer sustained or
repeated interruptions, our products, services and Web sites could be less
attractive to such entities or individuals and our business could be
harmed.
  Our servers are hosted in Englewood,
Colorado. Verio, Inc., handles the failover process we have put in
place. We intend to notify Verio immediately of any outage and upon such
notice they are assigned to immediately implement our failover strategy. We may
not have adequate business interruption insurance to compensate us for losses
that may occur from a system outage. Despite our efforts, our network
infrastructure and systems could be subject to service interruptions or damage
and any resulting interruption of services could harm our business, operating
results and reputation.
 
 Our
future performance and success depend on our ability to retain our key
personnel.
 
 Our future performance and success is
heavily dependent upon the continued active participation of our current senior
management team, including, our President and Chief Executive Officer, Brian
Ross, our Chief Technology Officer, Chris Meredith, our General Counsel, Damon
Stein and our Chief Marketing Officer, Dan Goldberg. The loss of any of their
services could have a material adverse effect on our business development and
our ability to execute our growth strategy, resulting in loss of sales and a
slower rate of growth. We do not maintain any "key person" life insurance for
any of our employees.
  9
 We
may be subject to infringement claims on proprietary rights of third parties for
software and other content that we distribute or make available to our
customers.
  We may be
liable or alleged to be liable to third parties for software and other content
that we distribute or make available to our customers:
  ●
              If
      the content or the performance of our services violates third party
      copyright, trademark, or other intellectual property rights;
      or
  ●
              If
      our customers violate the intellectual property rights of others by
      providing content through our
services.
  Any
alleged liability could harm our business by damaging our reputation, requiring
us to incur legal expenses in defense, exposing us to awards of damages and
costs including treble damages for willful infringement and diverting
management's attention which could have an adverse effect on our business,
results of operations and financial condition.
  We cannot
assure you that third parties will not claim infringement by us with respect to
past, current, or future technologies. Participants in our markets may be
increasingly subject to infringement claims as the number of services and
competitors in our industry segment grows. In addition, these risks are
difficult to quantify in light of the continuously evolving nature of laws and
regulations governing the Internet. Any claim relating to proprietary rights,
whether meritorious or not, could be time-consuming, result in costly
litigation, cause service upgrade delays or require us to enter into royalty or
licensing agreements, and we cannot assure you that we will have adequate
insurance coverage or that royalty or licensing agreements will be available on
terms acceptable to us or at all. Further, we plan to offer our services and
applications to customers worldwide including customers in foreign countries
that may offer less protection for our intellectual property than the United
States. Our failure to protect against misappropriation of our intellectual
property, or claims that we are infringing the intellectual property of third
parties could have a negative effect on our business, revenues, financial
condition and results of operations.
  Dilutive
securities may adversely impact our stock price.
 
 As of
March 31, 2007, the following securities issuable, convertible or exercisable
into shares of our Common Stock were outstanding:
  ●
              5,400,000
      shares of Common Stock issuable upon the possible conversion of
      outstanding 10% Series A Convertible Preferred
  Stock;
 
 ●
              11,887,500
      shares of Common Stock issuable upon the possible conversion of
      outstanding 8% Series B Convertible Preferred
  Stock;
  ●
              816,138
      shares of Common Stock issuable in payment of PIK dividends by our 10%
      Series A Convertible Preferred Stock holders, or the Series A PIK
      Dividends;
  ●
              585,122
      shares of Common Stock issuable in payment of PIK dividends by our 8%
      Series B Convertible Preferred Stock holders, or the Series B PIK
      Dividends;
  ●
              Warrants
      to purchase up to a total of 1,850,000 shares of our Common Stock at a
      price of $0.15 per share, or the Series A Warrants;
  and
  ●
              Warrants
      to purchase up to a total of 5,499,375 shares of our Common Stock at a
      price of $0.35 per share, or the Series B Warrants;
  and
  ●
              up
      to 10,000,000 shares of Common Stock issuable under our stock option
      plan.
 
 10
 These
securities represent as of March 31, 2007, approximately 77.5% of our Common
Stock on a fully diluted as converted basis. The exercise of these options or
warrants and the conversion of the preferred stock, both of which have fixed
prices, may materially adversely affect the market price of our Common Stock and
will have a dilutive effect on our existing stockholders.
 
 Acquisitions
of businesses and our failure to successfully integrate these businesses can
disrupt our business, dilute your holdings in us and harm our financial
condition and operating results.
  In
January 2007 we acquired substantially all of the assets of TDRG. We intend to
pursue future strategic acquisitions of complementary companies, products or
technologies using our available cash and stock. Such acquisitions could disrupt
our business. In addition, your holdings in our company would be diluted if we
issue equity securities in connection with any acquisition as we did with the
TDRG acquisition when we issued approximately 18% of our then outstanding shares
of Common Stock. Acquisitions involve numerous other risks,
including:
  ●
              problems
      combining the acquired operations, technologies or
    products;
  ●
              unanticipated
      costs or liabilities;
  ●
              diversion
      of management’s attention;
  ●
              adverse
      effects on existing business relationships with suppliers and
      customers;
 
 ●
              risks
      associated with entering markets in which we have no or limited prior
      experience; and
  ●
              potential
      loss of key employees, particularly those of the acquired
      organizations.
  Further,
products that we acquire from third parties often require significant
expenditures of time and resources to upgrade and integrate with our existing
product suite. If we fail to integrate acquired applications into our product
offering in a timely manner, we may be unable to fully realize the expected
benefits of the acquisition. We may not be able to successfully integrate any
business, technologies or personnel that we have acquired or that we might
acquire in the future, and this could harm our financial condition and operating
results.
  We
may be exposed to potential risks relating to our internal control over
financial reporting and our ability to have those controls attested to by our
independent registered public accounting firm.
  As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, as amended, the SEC
adopted rules requiring public companies to include a report of management on
the company's internal control over financial reporting in their annual reports,
including Form 10-K. In addition, the independent registered public accounting
firm auditing a company's financial statements must also attest to and report on
the operating effectiveness of the company's internal controls. We were not yet
subject to these requirements, and as a newly public company we benefit from a
transition period provided by the SEC and are not required to comply with
internal control over financial reporting requirements, both in the case of
management’s report and for our accounting firm’s attestation, until our annual
report on Form 10-K for the fiscal year ending December 31, 2008.
  While we
expect to expend significant resources over the next few months in developing
the necessary documentation and testing procedures required by Section 404 of
Sarbanes-Oxley Act of 2002, there is a risk that we will not be able to comply
with all of the requirements imposed by this rule. In the event we identify
significant deficiencies or material weaknesses in our internal controls that we
cannot remediate in a timely manner or we are unable to receive an unqualified
attestation from our independent registered public accounting firm with respect
to our internal controls, investors and others may lose confidence in the
reliability of our financial statements and our stock price and ability to
obtain equity or debt financing as needed could suffer.
  11
 In
addition, in the event that our independent registered public accounting firm is
unable to rely on our internal controls in connection with their audit of our
financial statements, and in the further event that they are unable to devise
alternative procedures in order to satisfy themselves as to the material
accuracy of our financial statements and related disclosures, it is possible
that we would receive a qualified or an adverse audit opinion on those financial
statements which could also adversely affect the market price of our Common
Stock and our ability to secure additional financing as needed.
  We
have not voluntarily implemented various corporate governance measures, in the
absence of which, stockholders may have more limited protections against
interested director transactions, conflicts of interest and similar
matters.
  Federal
legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the
adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the New York Stock Exchange or The Nasdaq Stock Market, on
which their securities are listed. Among the corporate governance measures that
are required under the rules of national securities exchanges are those that
address board of directors' independence, audit committee oversight, and the
adoption of a code of ethics. We have not yet adopted some of these corporate
governance measures and, since our securities are not listed on a national
securities exchange, we are not required to do so. We have not adopted corporate
governance measures such as an audit or other independent committees of our
board of directors. We intend to expand our board membership to include
additional independent directors and we may then seek to establish an audit and
other committees of our board of directors. It is possible that if we were to
adopt some or all of these corporate governance measures, stockholders would
benefit from somewhat greater assurances that internal corporate decisions were
being made by disinterested directors and that policies had been implemented to
define responsible conduct. For example, in the absence of audit, nominating and
compensation committees comprised of at least a majority of independent
directors, decisions concerning matters such as compensation packages to our
senior officers and recommendations for director nominees may be made by a
majority of directors who have an interest in the outcome of the matters being
decided. Prospective investors should bear in mind our current lack of corporate
governance measures in formulating their investment decisions.
  Government
regulation could adversely affect our business prospects.
  We do not
know with certainty how existing laws governing issues such as property
ownership, copyright and other intellectual property issues, taxation, illegal
or obscene content, retransmission of media, personal privacy and data
protection will apply to the Internet or to the distribution of multimedia and
other proprietary content over the Internet. Most of these laws were adopted
before the advent of the Internet and related technologies and therefore do not
address the unique issues associated with the Internet and related technologies.
Depending on how these laws developed and are interpreted by the judicial
system, they could have the effect of:
  ●
              Limiting
      the growth of the Internet;
  ●
              Creating
      uncertainty in the marketplace that could reduce demand for our products
      and services;
  ●
              Increasing
      our cost of doing business;
  ●
              Exposing
      us to significant liabilities associated with content distributed or
      accessed through our products or services;
or
  ●
              Leading
      to increased product and applications development costs, or otherwise harm
      our business.
  Because
of this rapidly evolving and uncertain regulatory environment, both domestically
and internationally, we cannot predict how existing or proposed laws and
regulations might affect our business.
 
 
 12
 The
limited market for our Common Stock will make our stock price more
volatile.  Therefore, you may have difficulty selling your
shares.
 
 The market for our Common Stock is
limited and we cannot assure you that a larger market will ever be developed or
maintained. Currently, our Common Stock is traded on the
OTCBB.  Securities traded on the OTCBB typically have low trading
volumes.  Market fluctuations and volatility, as well as general
economic, market and political conditions, could reduce our market
price.  As a result, this may make it difficult or impossible for our
shareholders to sell our Common Stock.
 
 There
are no restrictions on the sale of our outstanding Common
Stock.  Sales by existing shareholders may depress the share price of
our Common Stock and may impair our ability to raise additional capital through
the sale of equity securities when needed.
 
 As of March 31, 2008 we had 24,101,260
shares of Common Stock issued and outstanding, of which 21,024,657 shares were
freely tradeable under Rule 144 under the Securities Act, or registered for
re-sale. The possibility that substantial amounts of outstanding Common Stock
may be sold in the public market may adversely affect prevailing market prices
for our Common Stock.  This could negatively affect the market price
of our Common Stock and could impair our ability to raise additional capital
through the sale of equity
securities.
 
 Our Common Stock is subject to the “penny stock” rules of the SEC,
and the trading market in our Common Stock is limited.  This makes
transactions in our Common Stock cumbersome and may reduce the value of your
shares.
 
 The SEC has adopted Rule 3a51-1 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions.  For any transaction involving a penny stock, unless
exempt, Rule 15g-9 requires:
 
 ·
              that
      a broker or dealer approve a person's account for transactions in penny
      stocks; and
 ·
              the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny
      stock
 to
      be purchased.
 
 In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:
 
 ·
              obtain
      financial information and investment experience objectives of the person;
      and
 ·
              make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in
      financial matters to be capable of evaluating the risks of transactions in
      penny
      stocks.
   
 The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the SEC relating to the penny stock market,
which, in highlight form:
 
 ·
              sets
      forth the basis on which the broker or dealer made the suitability
      determination; and
 ·
              that
      the broker or dealer received a signed, written statement from the
      investor prior to the transaction.
 
 Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in its market value.
 
 Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
 
 13
 Item
1.B. Unresolved Staff Comments.
 
 None.
 
 Item
2. Properties.
 
 We currently lease real property in
both Los Angeles and Santa Ana.  Our Los Angeles office is a three
year lease that commenced on July 1, 2007 and expires on June 30,
2010.  Our debt settlement referral division is located in our Los
Angeles office.  Our Santa Ana office is a month-to-month sublease
that commenced on September 5, 2007.  The Santa Ana office is home to
our lead generation division. Some of our operations are carried out from the
employees’ and consultants’ respective homes and offices. We also sublet a
portion of the Los Angeles office. We believe that our offices are sufficient
for our current needs.
 
 Item
3. Legal Proceedings.
  We are
currently not a party to any material pending litigation, government
investigation or any other legal proceedings.
 
 Item
4. Submission of Matters to a Vote of Security Holders.
 
 None
 
 PART
II
 
 Item
5.  Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
 
 Our Common Stock began quotation on
the Over-the-Counter Bulletin Board on January 9, 2008, and is currently quoted
under the symbol "ACLZ.OB". Prior to such date our common stock was not traded
on any established public trading market, nor was it quoted on any automated
quotation system.
 
 Stockholders
 
 As of March 31, 2008, there were 83
stockholders of record of our Common Stock.
 
 Dividend
Policy
 
 We have not declared or paid any cash
dividends on our Common Stock since inception and we do not intend to pay any
cash dividends in the foreseeable future. We intend to retain any future
earnings for use in the operation and expansion of our business. Any future
decision to pay dividends on Common Stock will be at the discretion of our Board
of Directors and will be dependent upon our fiscal condition, results of
operations, capital requirements and other factors our Board of Directors may
deem relevant.
  The
holders of our 10% Series A Preferred Stock are entitled to receive a cumulative
preferential dividend of 10% per annum on the stated value of the 10% Series A
Preferred Stock owned by them. The dividend is payable at the Company’s option
in cash or shares of Common Stock valued at $0.15 per share. The Company does
not intend to pay any cash dividend in the near future. Dividends are payable on
a quarterly basis on each of September 1, December 1, March 1, and June 1, and
commenced September 1, 2006.
 
 The
holders of our 8% Series B Preferred Stock are entitled to receive a cumulative
preferential dividend of 8% per annum on the stated value of the 8% Series A
Preferred Stock owned by them. The dividend is payable at the Company’s option
in cash or shares of Common Stock valued at $0.35 per share. The Company does
not intend to pay any cash dividend in the near future. Dividends are payable on
a quarterly basis on each of September 1, December 1, March 1, and June 1, and
commenced December 1, 2007.
 
 14
 Unregistered
issuance of Securities
  On December 1, 2007 we issued 140,546
shares of Common Stock as PIK Dividends to the holders of our Series A Preferred
and 347,786 shares of Common Stock as PIK Dividends to the holders of our Series
B Preferred.
 
 Item
6. Selected Financial Data.
 
 Not
Applicable.
 
 Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
 
 The following information should be
read in conjunction with our consolidated financial statements and accompanying
notes included in this Annual Report on Form 10-K.
 
 Overview
 
 Weoffer
comprehensive online media solutions for our clients,
including financial institutions and other sophisticated vendors of high-quality
consumer goods and services, to reach their target audiences on the
Internet. As of
December 31, 2007, we owned and operated an extensive portfolio of 6,477 domain
names (commonly referred to as URLs), and we use this substantial body of
on-line domain properties to build consumer-based portals, microsites, and
landing pages which are attractive and useful to our users because of the
uniquefree
information items offered therein.To our
advertiser customers, we provide advertising exposure to qualified and
interested parties, along with lead generation and customer acquisition
solutions, via our network of financial, news, and business networking portals,
and through RSS feeds, blogs, targeted e-mail campaigns, banners, search engine
optimization, and co-registration opportunities. In addition, we
provide sales and marketing support in connection with debt settlement
solutions offered by debt settlement agencies to consumers across the United
States.
 
 We were incorporated in Delaware on
November 22, 2005, and commenced operations on that date.  In January
2006 we commenced selling our lead generation systems and recognized our
initial revenues.
 
 On January 2, 2007, we acquired
substantially all of the assets and assumed some, but not all of the liabilities
of TDRG, a privately-held Internet marketing business focused on debt settlement
referrals.
 
 On December 22, 2006, we filed a
registration statement on Form SB-2 with the SEC, which registration statement
became effective on May 9, 2007. At the same time we became a reporting company
under the Securities Exchange Act of 1934. On December 18, 2007, the Financial
Industry Regulatory Authority informed us that its staff decided to clear our
request for an unpriced quotation on the Over-The-Counter Bulletin Board, or the
OTC.BB, and on January 9, 2008, our Common Stock commenced trading on the OTC.BB
under the symbol ACLZ.OB.
 
 
 15
 Results
of Operation
 
 ACCELERIZE
      NEW MEDIA, INC.RESULTS
      OF OPERATIONSIncrease/
              
              
              Increase/Year
      ended
              
              
              (Decrease)
              
              
              (Decrease)December
      31,
              
              
              in
      $ 2007
              
              
              in
      % 20072007
              
              
              2006
              
              
              vs
      2006
              
              
              vs
      2006Revenues
              
              $
              1,030,509
              
              
              $
              199,214
              
              
              $
              831,295
              
              
              
              417.3
              %Operating
      expenses:Selling,
      general & administrative
              
              
              4,047,516
              
              
              
              2,563,348
              
              
              
              1,484,168
              
              
              
              57.9
              %Total
      operating expenses
              
              
              4,047,516
              
              
              
              2,563,348
              
              
              
              1,484,168
              
              
              
              57.9
              %Operating
      loss
              
              
              (3,017,007
              )
              
              
              (2,364,134
              )
              
              
              (652,873
              )
              
              
              27.6
              %Other
      income (expense):Interest
      income (expense), net
              
              
              18,253
              
              
              
              (521
              )
              
              
              17,732
              
              
              NM18,253
              
              
              
              (521
              )
              
              
              17,732
              
              
              NMNet
      loss
              
              
              (2,998,754
              )
              
              
              (2,364,655
              )
              
              
              (634,099
              )
              
              
              26.8
              %Less
      dividends issued for series A and B preferred stock
              
              
              296,977
              
              
              
              44,596
              
              
              
              252,381
              
              
              
              565.9
              %Net
      loss attributable to common stock
              
              $
              (3,295,731
              )
              
              $
              (2,409,251
              )
              
              $
              (886,480
              )
              
              
              36.8
              %NM:
      Not Meaningful
 
 
 16
  Revenues
 
 Revenues
primarily consist of fees generated from lead generations and, to a lesser
extent, from traffic revenues generated from our portfolio of web sites. Our
increase in revenues during the year ended December 31, 2007 when compared to
the prior year is primarily due to the acquisition of the operations of TDRG
effective January 1, 2007 which increased revenue by approximately $617,000 and,
to a lesser extent, from increased fees generated from lead generations from
other sources and from traffic revenues generated from our portfolio of web
sites.
 
 Selling,
General, and Administrative Expenses
 
 Selling,
general, and administrative expenses primarily consists of consultant fees
related to the marketing and enhancement of our websites, advertising, as well
as other general and administrative expenses, such as payroll expenses,
necessary to support our existing and anticipated growth in our revenues and
legal and professional fees. The increase in selling, general and administrative
expenses during the year ended December 31, 2007 when compared to the prior year
is primarily due to the following:
 
 ·
              an
      increase in amortization of website development costs of approximately
      $170,000;·
              an
      increase in legal and professional fees of approximately $204,000
      associated with the preparation and filing of a registration statement and
      interim filings;·
              an
      increase in selling, general and administrative expenses associated with
      assuming the operations of TDRG of approximately
  $630,000;·
              an
      increase in cash compensation  and related employer taxes and
      benefits to new and existing employees of approximately $941,000 primarily
      to expand the marketing of our products and services;
  and·
              an
      increase in the marketing program expenditures of approximately
      $1,110,000;These
      increases were offset by:·
              A
      decrease in expenses associated with the issuance of stock for
      compensation to employees of $1,550,000, which occurred during
      2006.
 
 Liquidity
and Capital Resources
 
 At
December 31, 2007, our cash amounted to approximately $951,000 and our working
capital amounted to approximately $368,000.
 
 During
the year ended December 31, 2007, we used cash in our operating activities
amounting to approximately $2.8 million. Our cash used in operating activities
was comprised of our net loss of approximately $3.0 million adjusted for the
following:
 
 ·
              Fair
      value of options granted to employees of approximately $94,000;
      and·
              Amortization
      of capitalized web development and depreciation of fixed assets of
      approximately $199,000.Additionally,
      the following variations in operating assets and liabilities impacted our
      cash used in operating activity:·
              Increase
      in accounts receivable of approximately $27,000, primarily due to an
      increase in our revenues;·
              Increase
      in prepaid expenses of approximately $203,000, primarily from the
      acquisition of a domain name registration in October
  2007;·
              Decrease
      in accounts payable and accrued expenses of approximately $72,000,
      primarily from paying our obligations in a more timely manner in 2007;
      and·
              Increase
      in deferred revenue of approximately $223,000, resulting from the
      assumption of the operations of
TDRG.
 
 17
 During
the year ended December 31, 2007, we incurred website development costs of
approximately $295,000 in connection with the development and enhancement of our
websites.
 
 During
the year ended December 31, 2006, we used cash in operating activities amounting
to approximately $523,000. Our cash generated from operating activities was
comprised of our net loss of approximately $2.4 million adjusted for the
following:
 
 ·
              Fair
      value of shares issued to employees hired for services of approximately
      $1.55 million; and·
              Amortization
      of capitalized web development of approximately
$59,000.Additionally,
      the following variations in operating assets and liabilities impacted our
      cash used in operating activity:·
              Increase
      in accounts payable and accrued expenses of approximately $247,000,
      primarily from delaying certain payments to our vendors in
      2006.
 
 During
the year ended December 31, 2006, we incurred website development costs of
approximately $142,000 in connection with the launch of our portfolio of
websites.
 
 During
year ended December 31, 2007, we generated cash from financing activities of
approximately $3,615,000, which primarily consisted of the proceeds from
issuance of shares of Series B Preferred Stock of approximately $3,761,000 and
the proceeds from notes payable of approximately $400,000, offset by the payment
of financing fees of approximately $516,000 related to the issuance of shares of
Series B Preferred Stock and the payment to former member of approximately
$29,000.
 
 During
the year ended December 31, 2006, we generated cash from financing activities of
$1,059,000, which primarily consisted of proceeds from issuance of shares of
common stock of $350,000 and the proceeds from the issuance of shares of Series
A Preferred Stock of approximately $810,000, offset by the payment of financing
fees of approximately $116,000 related to the issuance of shares of Series A
Preferred Stock.
 
 Capital
Raising Transactions
  We have
undertaken the following transactions to provide working capital for our
Company:
 
 Common
Stock
 
 On and before January 1, 2006 we issued
15,500,000 shares of Common Stock, $0.001 par value per share, to founders
and consultants for services rendered, which included, among other things,
programming, graphic design, sales, marketing, business development and
introductions and administrative services.
 
 Between January 1, 2006 and January 31,
2006 we issued an additional 3,500,000 shares of Common Stock for $0.10 per
share, resulting in gross proceeds to us of $350,000.
 
 On each of January 1, 2007 and January
2, 2008 we issued an aggregate of 1,750,000 shares of Common Stock (for a total
of 3,500,000 shares) to Damon Stein and Dan Goldberg in connection with our
acquisition of TDRG, which was closed on January 1, 2007.
 
 Between September 1, 2006 and March 31,
2008 we issued an aggregate of 816,138 shares of our Common Stock as PIK
Dividends to our Series A Preferred Stock holders.
 
 Between December 1, 2007 and March 31,
2008 we issued an aggregate of 585,122 shares of our Common Stock as PIK
Dividends to our Series B Preferred Stock holders.
 
 10%
Series A Convertible Preferred Stock
  Between August 2006 and October, 2006
we issued an aggregate of 54,000 shares of 10% Series A Convertible Preferred
Stock resulting in gross proceeds to us of $810,000. In addition, we issued to
the holders of the Series A Preferred Stock seven-year Warrants to purchase an
aggregate of up to 810,000 shares of our Common Stock at an exercise price of
$0.15 per share.
 
 18
 8%
Series B Convertible Preferred Stock
 
 On August
31, 2007 we completed an offering consisting of 40 Units, or the Units, offered
at a price of $105,000 per Unit. Each Unit was comprised of 3,000 shares of 8%
Series B Convertible Preferred Stock, and Warrants to purchase up to 105,000
shares of our Common Stock for a period of seven years with an exercise price of
$0.35 per share. The Units were sold to certain accredited investors for
aggregate gross proceeds of $4,160,625, of which $416,062.50 were paid as
commission to the placement agent, Skyebanc, Inc., and an additional $100,000
was paid to Skyebanc, Inc. as reimbursement for their expenses; Skyebanc also
received warrants to purchase 1,188,750 shares of our Common Stock, with an
exercise price of $0.35 per share. In addition, we issued 4 Units to certain of
our existing shareholders in consideration of forgiveness of a $400,000 debt
which was owed by us to such shareholders and additional $20,000 paid in cash by
such shareholders.
 
 Warrants
 
 During January 2007, we issued warrants
to purchase up to 500,000 shares of Common Stock to the previous owners of TDRG,
which may be earned based upon certain milestones related to target revenues and
operating margins covering 18 months after closing. The warrants are exercisable
at a price of $0.15 per share. The warrants expire in January 2012.
 
 In connection with the issuance of the
Series A Preferred Stock, we issued warrants to purchase up to 810,000 shares of
Common Stock exercisable at a price of $0.15 per share to the
investors.  The warrants will expire in October 2013.
  In
connection with the issuance of the Series B Preferred Stock, we issued warrants
to purchase up to 4,160,625 shares of Common Stock exercisable at a price of
$0.35 per share to the investors.  The warrants will expire in June
2014. Skyebanc, the placement agent for the offering also received seven year
warrants to purchase up to 1,188,750 shares of Common Stock at an exercisable
price of $0.35 per share.  The warrants will expire in June
2014.
 
 The line of credit lenders described
below also received seven year warrants to purchase up to 200,000 shares of
Common Stock at an exercisable price of $0.35 per share
 
 $500,000
Line of Credit.
 
 During
April 2007, we entered into a line of credit with five existing stockholders of
the Company, each of which agreed to lend us up to $100,000 for a total line of
credit of $500,000. Draws on the line of credit accrue interest at the rate of
10% per annum (computed on the basis of a 360-day year) and are payable in
monthly installments. The principal and any remaining interest are payable at
maturity. Draws on the line of credit are evidenced by promissory notes signed
and delivered by us in connection with each respective draw. Under the
promissory notes, an Event of Default occurs if we breach, fail to perform, or
fail to observe any material covenant, term or provision under the note, in case
of bankruptcy, reorganization, insolvency or liquidation, or if we fail to pay
interest or principal when due and fail to make such payment within 45 days
after receipt of a written notice to such extent. The principal and interest may
be prepaid in whole or in part without penalty. During the year ended December
31, 2007 we drew an aggregate of $400,000 from three different lenders, which
funds were used for working capital purposes.  During June, 2007, the
total outstanding amounts due under the line of credit were converted into
11,429 shares of our Series B Preferred Stock.  The actual stock
certificates were issued to the creditors with the closing of the Series B
Preferred Stock at August 31, 2007.  In association with the notes
payable, the Company incurred interest expense of $4,194 during the year ended
December 31, 2007. This line of credit is no longer active.
 
 We used the cash proceeds from the
offerings and the line of credit advances to finance our on going operations,
including, development, sales, marketing and support services.
 
 19
 Stock
Options
 
 During year ended December 31, 2007,
the Company granted to certain of its employees options to purchase 7,542,500
shares of Common Stock under the Accelerize New Media Stock Option
Plan.
 
 Off-Balance
Sheet Arrangements
 
 We have no off-balance sheet
arrangements.
 
 Critical
Accounting Policies
 
 Revenue
Recognition
 
 The Company recognizes revenue on
arrangements in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue
Recognition.” Revenue is recognized only when the price is fixed or
determinable, persuasive evidence of an arrangement exists, the service is
performed, and collectibility of the resulting receivable is reasonably
assured.
 
 The Company’s traffic revenues are
generated from the pay-per-click, cost-per-action listings, and banner ad sales
of its portfolio of web sites. When an online user navigates to one of the
Company’s owned and operated Web sites and clicks and or visits on a particular
listing/web page or completes the specified action, the Company receives a
fee.
 
 The Company’s lead generation network
revenues are primarily generated using third-party distribution networks to
deliver the merchant advertisers’ listings. The distribution network includes
search engines, shopping engines, directories, destination sites, Internet
domains or Web sites, and other targeted Web-based content. The Company
generates revenue upon delivery of a qualified lead to the Company’s merchant
advertisers or partner. Other revenues include the Company’s lead generation web
services, paid search optimization, landing page development services, and
creative design.
 
 Since January 1, 2007, the Company
generates a substantial portion of its revenues from fees earned from the sale
and marketing of debt reduction solutions offered to consumers by debt
settlement agencies. The consumers generally enter in a debt solution program
with a debt settlement agency which provides for monthly payments by the
consumers over a period of up to 3 years. The commission earned by the Company
will vary between 7.5% and 8.9% of the total debt of the consumer to be
negotiated by the respective debt settlement agency. For consumers enrolled
prior to March 1, 2007 the Company receives its fees from debt settlement
agencies upon payment by consumers to the debt settlement agencies within the
first 8 months of the debt solution program, assuming that all consumers make
all their payments. This payment was subject to a partial refund by the Company
to the debt settlement agencies if (1) the debt settlement agency does not
receive all scheduled monthly payments for the duration of the contract during
the first 15 months of such contract or (2) the debt settlement agencies issues
a refund to the consumer over the term of the respective contract. For consumers
enrolled since March 1, 2007, the Company receives its fee from debt settlement
agencies upon payment by consumers to the debt settlement agencies within the
first 18 months of the debt solution program, assuming that all consumers make
all their payments.  Accordingly, the fee earned by the Company is
recognized over the terms of the underlying contract between the debt settlement
agencies and the consumer, which is generally 3 years. Consequently, the Company
defers the fees received from the debt settlement agency in excess of the
revenues recognized over the term of the underlying contract between the debt
settlement agencies and the consumer. Such excess amounted to approximately
$641,000 at December 31, 2007 and is recorded as deferred revenue on the balance
sheet.
 
 Since September 2007, the payment to
the Company is subject to a partial refund only if a debt settlement agency
issues a refund to the consumer over the term of the respective
contract.
 
 During June 2005, TDRG outsourced the
debt solution administration of its existing clients to a debt settlement
agency. This administration includes implementation, customer service, and the
actual debt negotiation. Pursuant to the outsourcing arrangement, the debt
settlement agency paid TDRG (and after January 1, 2007 to the Company) 45% of
the fees collected from the consumers and retains 5% of such fees as a reserve
for possible cancellations, returns, and legal fees. Funds available under the
reserve were paid as follows: 50% in June 2006, and 25% to the Company, in
January 2007 and June 2007, respectively. The Company recognizes fees pursuant
to this arrangement as revenues when it receives the funds from the debt
settlement agency.
 
 20
 The Company also generates revenues, to
a lesser extent, by selling leads it generates to synergistic companies
operating in the debt consumer market segment, and from ads appearing on its
network of web sites.
 
 Website Development
Costs
 
 The Company has capitalized certain
internal use software and website development costs amounting to approximately
$437,000 as of December 31, 2007.  The estimated useful life of costs
capitalized is evaluated for each specific project and ranges from one to three
years.
 
 Share-based
Payment
 
 In December 2004, the Financial
Accounting Standards Board, or FASB, issued SFAS No. 123(R), "Share-Based
Payment," or SFAS No. 123(R), which replaced SFAS No. 123 and superseded
Accounting Principles Board, or  APB, Opinion No. 25, “Accounting for
Stock Issued to employees”. Under SFAS No. 123(R), companies are required to
measure the compensation costs of share-based compensation arrangements based on
the grant-date fair value and recognize the costs in the financial statements
over the period during which employees are required to provide services.
Share-based compensation arrangements include stock options, restricted share
plans, performance-based awards, share appreciation rights and employee share
purchase plans. In March 2005 the SEC, issued Staff Accounting Bulletin No. 107,
“Disclosures about Fair Value of Financial Instruments,” or SAB 107. SAB 107
expresses views of the staff regarding the interaction between SFAS No. 123(R)
and certain SEC rules and regulations and provides the staff's views regarding
the valuation of share-based payment arrangements for public companies. SFAS No.
123(R) permits public companies to adopt its requirements using one of two
methods. Companies may elect to apply this statement either prospectively, or on
a modified version of retrospective application under which financial statements
for prior periods are adjusted on a basis consistent with the pro forma
disclosures required for those periods under SFAS 123.  Effective with
its fiscal 2006, the Company has adopted the provisions of SFAS No. 123 (R) and
related interpretations as provided by SAB 107 prospectively. As such,
compensation cost is measured on the date of grant as its fair value.Such compensation
amounts, if any, are amortized over the respective vesting periods or period of
service of the option grant.
 
 Going
Concern
 
 We have generated revenues since
inception but they were not an adequate source of cash to fund future
operations. Historically we have relied on private placement issuances of
equity.
 
 It is likely that we will need to raise
additional working capital to fund our ongoing operations and growth. The amount
of our future capital requirements depends primarily on the rate at which we
increase our revenues and correspondingly decrease our use of cash to fund
operations. Cash used for operations will be affected by numerous known and
unknown risks and uncertainties including, but not limited to, our ability to
successfully market our products and services and the degree to which
competitive products and services are introduced to the market. As long as our
cash flow from operations remains insufficient to completely fund operations, we
will continue depleting our financial resources and seeking additional capital
through equity and/or debt financing. If we raise additional capital through the
issuance of debt, this will result in increased interest expense. If we raise
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of our company held by existing stockholders will be
reduced and those stockholders may experience significant dilution. In addition,
new securities may contain rights, preferences or privileges that are senior to
those of our common stock.
 
 There can be no assurance that
acceptable financing to fund our ongoing operations can be obtained on suitable
terms, if at all. If we are unable to obtain the financing necessary to support
our operations, we may be unable to continue as a going concern. In that event,
we may be forced to cease operations and our stockholders could lose their
entire investment in our company.
 
 
 21
 Item
7A.  Quantitative and Qualitative Disclosures About Market
Risk
 
 Not
applicable.
 
 Item
8.  Financial Statements and Supplementary Data
 
 The information required by this item
is included in Item 15 of this Annual Report on Form 10-K.
 
 Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
 
 None.
 
 Item
9A.  Controls and Procedures
 
 Evaluation
of Disclosure Controls and Procedures.
 
 We maintain a system of disclosure
controls and procedures that are designed for the purposes of ensuring that
information required to be disclosed in our SEC reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer or CEO, and Chief Financial
Officer, or CFO, as appropriate to allow timely decisions regarding required
disclosures.
  As of the end of the period covered by
this report, we carried out an evaluation, under the supervision and with the
participation of our CEO and CFO, of 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 on that evaluation, our CEO and CFO concluded
that our disclosure controls and procedures are effective.
 
 Changes in Internal Control Over
Financial Reporting.
 
 There has been no change in our
internal control over financial reporting during the year ended December 31,
2007 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
 
 Item
9B.  Other Information
 
 None.
 
 PART
III
 
 Item
10.  Directors, Executive Officers and Corporate
Governance
 
 The following table sets forth the
names, ages and principal position of our executive officers and directors as of
March 31, 2008:
  Name
              Age
              PositionBrian
      Ross
              33
              President,
      Chief Executive Officer, Treasurer, DirectorChris
      Meredith
              37
              Chief
      Technology Officer, Assistant Treasurer, Assistant Secretary,
      DirectorDaniel
      Minton
              32
              Head
      of Financial PortalsDamon
      Stein
              32
              General
      Counsel, Head of the Debt Division and SecretaryDan
      Goldberg
              36
              Chief
      Marketing Officer
  Brian Ross. Mr. Ross has
served as our President, Chief Executive Officer and director since November
2005. He served as Senior Vice President of Business Development for iMall, Inc.
from 1994 and became Director of Investor Relations in June 1997. iMall, Inc.
was acquired by Excite@Home in October 1999. Mr. Ross then served as a Business
Development Manager in Excite@Home’s E-Business Services Group until December
1999. After the sale of iMall, Mr. Ross was a founding investor of GreatDomains
Inc. which was sold in October 2000 to Verisign. From March 2000, he was
Director of Business Development for Prime Ventures Inc., a leading Venture
Partner firm focusing on early stage companies in Southern California. In July
2004, Mr. Ross became a founding investor in E-force Media, a diversified online
marketing company where he acted as interim Director of Business Development.
Mr. Ross attended the University of Santa Barbara.
  22
 Chris Meredith. Mr. Meredith
founded Accelerize’s predecessors in 2001 to provide cutting-edge Internet
development services. Mr. Meredith served as our Chief Technology Officer since
November 2005, and as a director since December 2006. Mr. Meredith brings over
ten years of Internet technology and product development in the financial,
competitive intelligence, marketing and telecommunications industries. He was
instrumental in creating Accelerize’s core consumer product EDGAR Index, an
RSS-based SEC filing alert service. Prior to his work at Accelerize, Mr.
Meredith led product development at Intelligence Data, a division of Thompson
Financial. Mr. Meredith also led product development at mBLAST marketing portal
and Senior Technical Lead at TNCI, a leading telecommunications provider. Mr.
Meredith attended the University of Massachusetts, Amherst and Massachusetts
College of Art, and received a Diploma in Professional Photography from New
England School of Photography.
  Daniel Minton. Mr. Minton
manages our website, Accelerize.com, since our inception. Mr. Minton started in
the world of new media in the late 1990s as lead programmer for Watershed
Consulting, and developing core solutions for Accelerize. In 2002 Watershed
Consulting was hired by The Coleman Company to develop an Outdoor Recreation
Community on the Internet. He was instrumental in designing the National
Recreation Database which was published as the Coleman Outernet. From 2004 until
he joined our company, Mr. Minton served as Vice President of Seed Advertising
where he was responsible for all lead generation initiatives, sales, and
interactive marketing. Mr. Minton attended Washington State University, where he
studied English and Philosophy. Mr. Minton’s responsibility at Accelerize
include all lead generation initiatives, as well as on line advertising and
media purchasing.
 
 Damon Stein. Mr. Stein has
served as our General Counsel since January 2007. He worked as Director of
Marketing/Player Affairs at Beach Sports Group, LLC, a successful sports agency,
from 1997 through 2001. After working as a sports agent, Mr. Stein served as a
Contract Lawyer for Alschuler, Grossman, Stein & Kahan before joining TDRG
in 2002. Mr. Stein was a founder and partner, and served as General
Counsel/President for TDRG until it was acquired by us. Mr. Stein was integrally
responsible for growing TDRG from a startup company to a prominent debt
negotiation and Internet marketing firm. While at TDRG, Mr. Stein was
responsible for legal and financial affairs, while also aiding in many marketing
initiatives. Mr. Stein received his BA from the University of California at
Berkeley. He was then awarded an academic scholarship to Pepperdine University
where he received his JD/MBA. Mr. Stein is licensed to practice law in
California.
  Dan Goldberg. Mr. Goldberg has served as our
Chief Marketing Officer since January 2007, overseeing online marketing
efforts, branding, and business development. From February 2002  through
January 2007, Mr. Goldberg served as Chief Marketing Officer and President of
TDRG, which was recently acquired by us. Mr. Goldberg was a founder and partner
of TDRG, overseeing marketing, online initiatives, business development, and
operations. Before founding TDRG, Mr. Goldberg was a founding member and partner
of NetStar Ventures, a $20 million venture capital fund investing in early stage
Internet and technology companies. Mr. Goldberg was responsible for growing the
portfolio's companies, raising capital, investment selection, and business
development initiatives. Prior to joining NetStar, Mr. Goldberg was Director of
Business Development for Excite@Home's EBusiness Services
division and was responsible for developing distribution for EBS' proprietary
E-commerce solution. Before Excite@Home acquired iMALL, Mr.
Goldberg was responsible for iMALL's retailing division and managed its joint
venture with Universal Studios. Earlier, he was the basketball product manager
for Upper Deck Authenticated, the leading sports memorabilia company. Mr.
Goldberg received a BA from Rutgers University and earned an MBA in Marketing
and Finance from Drexel University.
  Section
16(a) Beneficial Ownership Reporting Compliance
 
 Section 16(a) of the Securities
Exchange Act of 1934 requires that our executive officers, directors and persons
who own more than ten percent of a registered class of our equity securities
file reports of ownership on Form 3 and changes in ownership ion From 4 or 5
with the SEC. Such executive officers, directors and ten percent stockholders
are also required by the SEC rules to furnish to us copies of all Section 16(a)
reports that they file. Based solely on its review of the copies of such forms
received by us, or written representations from certain reporting persons that
they were not required to file a Form 5, we believe that during the fiscal year
ended December 31, 2007 , our executive officers, directors and ten percent
stockholders complied with all Section 16(a) filing requirements applicable to
such persons.
 
 23
 Directors
Compensation
  Our
directors do not receive compensation for their services as directors but are
reimbursed for their reasonable expenses for attending board and board committee
meetings.
  Committees
of the Board of Directors
  Our Board
of Directors has not yet established any committees, including an Audit
Committee, a Compensation Committee or a Nominating Committee. We plan to expand
our board in the future and we will seek to establish an Audit Committee and a
Compensation Committee, but this will depend on our ability to attract and
retain new directors. The functions of such committees are currently being
undertaken by the entire board as a whole.
 
 Audit
Committee Financial Expert
 
 Currently
no member of our board is an audit committee financial expert. We do not
currently have the resources to recruit a board member who would also be a
financial expert. We may start our recruiting process for such board member
during 2008 assuming that our financial position improves.
  Code
of Ethics
 
 We have adopted a Code of Business
Conduct Ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. We will provide a copy of our Code of
Ethics upon request.
 
 Employment
Agreements
 
 We have written employment agreement
with most of our employees. The main terms of the executive employment or
consulting agreements of Brian Ross, our President, Chief Executive Officer,
Treasurer, and Director, Chris Meredith, our Chief Technology Officer and
Director, Damon Stein, our General Counsel and Secretary, and Dan Goldberg, our
Chief Marketing Officer, are summarized below.
  Mr.
Ross’s employment agreement is effective as of January 1, 2007 and continues
until the earlier of January 1, 2010 or its earlier termination or expiration.
The agreement is renewable for additional periods thereafter. Under the
agreement Mr. Ross is entitled to an annual base salary of $90,000. If the
company does not make monthly salary payments during the term of his employment,
such salary will accrue without interest. Mr. Ross is entitled to other
benefits, including, reimbursement for reasonable business expenses and health
insurance premiums. In addition, Mr. Ross will be entitled to receive
non-qualified stock options to purchase up to 2,000,000 shares of the company.
The agreement may be terminated by either party without cause upon a 30-day
prior written notice. If the company elects to terminate Mr. Ross’s employment
without cause during the term, he shall be entitled to severance payment of the
greater of the remaining payments due on the term of the agreement or an annual
base salary of one year. The company may also terminate the agreement and Mr.
Ross’s employment upon his illness or disability for a continuous period of more
than 45 days, his death or for cause. The agreement contains customary
non-solicitation, non-competition, no recruiting, confidentiality and assignment
of work product provisions.
  24
 Mr.
Meredith’s employment agreement is effective as of January 1, 2007 and continues
until the earlier of January 1, 2010 or its earlier termination or expiration.
The agreement is renewable for additional periods thereafter. Under the
agreement Mr. Meredith is entitled to an annual base salary of $150,000. Mr.
Meredith is entitled to other benefits, including, reimbursement for reasonable
business expenses and health insurance premiums. In addition, Mr. Meredith will
be entitled to receive non-qualified stock options to purchase up to 200,000
shares of the company. The agreement may be terminated by either party without
cause upon a 30-day prior written notice. If the company elects to terminate Mr.
Meredith’s employment without cause during the term, he shall be entitled to
severance payment of the greater of the remaining payments due on the term of
the agreement or an annual base salary of one year. The company may also
terminate the agreement and Mr. Meredith’s employment upon his illness or
disability for a continuous period of more than 45 days, his death or for cause.
The agreement contains customary non-solicitation, non-competition, no
recruiting, confidentiality and assignment of work product
provisions
 
 Mr. Stein’s employment agreement is
effective as of January 1, 2007 and continues until the earlier of January 1,
2010 or its earlier termination or expiration, with an option to renew for
additional 2 years upon 60-day prior notice. The agreement is renewable for
additional periods thereafter. Under the agreement Mr. Stein is entitled to an
annual base salary of $120,000, which shall be increased to $140,000 if the
consultant Dan Goldberg goes to “Part-Time” status as this term is defined in
the consulting agreement between the company and Facility Consulting, LLC. Mr.
Stein is entitled to other benefits, including, reimbursement for reasonable
business expenses and health insurance premiums. In addition, Mr. Stein will be
entitled to receive non-qualified stock options to purchase up to 400,000 shares
of the company. The agreement may be terminated by either party without cause
upon a 30-day prior written notice. If the company elects to terminate Mr.
Stein’s employment without cause during the term, he shall be entitled to
severance payment of the greater of the remaining payments due on the term of
the agreement or an annual base salary of one year as well as any unvested
options or bonuses. The company may also terminate the agreement and Mr. Stein’s
employment immediately upon receipt of a written notice from Mr. Stein that he
intends to terminate his employment, and upon his illness or disability for a
continuous period of more than 45 days, his death or for cause. The agreement
contains customary non-solicitation, non-competition, no recruiting,
confidentiality and assignment of work product provisions.
 
 Mr. Goldberg provides his services to
the company through a consulting agreement between the company and Facility
Consulting, LLC. The consulting agreement is effective as of January 1, 2007 and
continues for 3 years thereafter, with an option to renew for an additional 2
years upon 60-days prior notice. The agreement is renewable for additional
periods thereafter. Under the agreement Mr. Goldberg is entitled to an annual
compensation of $120,000 for so long as he is engaged on a full-time basis,
which shall be reduced to $75,000 if Mr. Goldberg goes to “Part-Time” status as
this term is defined in the consulting agreement. Mr. Goldberg’s engagement will
be deemed part-time upon notice to that extent from either the President of the
Company or the consultant. For so long as he is engaged on a full-time basis,
Mr. Goldberg will be entitled to benefits such as reimbursement for reasonable
business expenses and health insurance premiums. In addition, Mr. Goldberg will
be entitled to receive non-qualified stock options to purchase up to 400,000
shares of the company. The agreement may be terminated by either party without
cause upon a 30-day prior written notice. If the company elects to terminate the
agreement without cause during the term, the consultant shall be entitled to
severance payment of the greater of the remaining payments due on the term of
the agreement or an annual base salary of one year as well as any unvested
options or bonuses. The company may also terminate the agreement for cause upon
a 30-day notice and immediately upon a written notice from Mr. Goldberg that he
intends to terminate the agreement. The agreement contains customary
non-solicitation, non-competition, no recruiting, confidentiality and assignment
of work product provisions.
 
 
 Item
11. Executive Compensation
 
 The following table sets forth, for the
last two completed fiscal years, all compensation paid, distributed or accrued,
including salary and bonus amounts, for services rendered to us by
(i)  all individuals serving as our principal executive officer, or
PEO, or acting in a similar capacity during the last completed fiscal year,
regardless of compensation level; (ii) all individuals serving as
our principal financial officer, or PFO, or acting in a similar capacity during
the last completed fiscal year, regardless of compensation level; (iii)our two most highly compensated executive officers other than the
PEO and PFO who were serving as executive officers at the end of the last
completed fiscal year; and (iv)one additional individual for
whom disclosure would have been provided pursuant to paragraph (iii) above but
for the fact that the individual was not serving as our executive officer at the
end of the last completed fiscal year, and whose total
compensation for 2006 and/or 2007 exceeded $100,000:
 
 25
  Summary
Compensation Table
 
 Name
      and Principal Position
              Year
              
              Salary
                ($)
              
              
              Bonus
                ($)
              
              
              Stock
      Awards
                ($)(6)(7)
              
              
              Option
      Awards
                ($)(1)
              
              
              Total
      ($)Brian
      Ross, President, Chief
                Executive
      Officer, and Treasurer(2)
              2006
              
              
              -
              
              
              
              -
              
              
              
              610,000
              
              
              
              -
              
              
              
              610,0002007
              
              
              90,000
              
              
              
              
              
              
              
              
              
              
              
              300,000
              (3)
              
              
              390,000Chris
      Meredith, Chief Technology Officer, Assistant Treasurer and Assistant
      Secretary (4)
              2006
              
              
              127,000
              
              
              
              -
              
              
              
              305,000
              
              
              
              -
              
              
              
              432,0002007
              
              
              137,500
              
              
              
              
              
              
              
              
              
              
              
              30,000
              (5)
              
              
              167,500Damon
      Stein, General Counsel, Head of the Debt Division and
      Secretary
              2007
              
              
              135,833
              
              
              
              
              
              
              
              
              
              
              
              60,000
              (8)
              
              
              180,000Dan
      Goldberg, Chief Marketing Officer
              2007
              
              
              91,875
              
              
              
              
              
              
              
              
              
              
              
              60,000
              (9)
              
              
              151,875Jeff
      McCollum
              2007
              
              
              118,750
              
              
              
              
              
              
              
              
              
              
              
              525,000
              (10)
              
              
              643,750
 
 (1)   The
dollar value recognized for the stock option awards was determined in accordance
with SFAS123(R). For a disclosure of the assumptions made in the valuation
please refer to footnote 6 in our financial statements filed under Item 8 of
this Annual Report on Form 10-K.
 
 (2)  
During the fiscal year ended December 31, 2006, Mr. Ross provided his services
to our company without being paid a salary. Mr. Ross’s employment agreement is
effective as of January 1, 2007 and continues until the earlier of January 1,
2010 or its earlier termination or expiration. See “Management Employment
Agreements.”
 
 26
 (3)  
Options to purchase 2,000,000 shares of our Common Stock at an exercise price of
$0.15 per share, vesting on a quarterly basis over a period of 24 months
(250,000 options every quarter) commencing April 1, 2007.
 
 (4)  
Mr. Meredith’s employment agreement is effective as of January 1, 2007 and
continues until the earlier of January 1, 2010 or its earlier termination or
expiration. See “Management Employment Agreements.”
 
 (5)  
Options to purchase 200,000 shares of our Common Stock at an exercise price of
$0.15 per share, vesting on a quarterly basis over a period of 24 months (25,000
options every quarter) commencing April 1, 2007.
 
 (6)  
The stock was paid for services rendered and was fully vested, and was not paid
under any plan.
 
 (7)  
The fair value of the shares issued to Messrs. Ross and Meredith was based on
the fair value of shares of Common Stock issued contemporaneously in a private
offering in January 2006.
 
 (8)  
Options to purchase 400,000 shares of our Common Stock at an exercise price of
$0.15 per share, vesting on a quarterly basis over a period of 24 months (50,000
options every quarter) commencing April 1, 2007.
 
 (9)  
Options to purchase 400,000 shares of our Common Stock at an exercise price of
$0.15 per share, vesting on a quarterly basis over a period of 24 months (50,000
options every quarter) commencing April 1, 2007.
 
 (10) 
Options to purchase 350,000 shares of our Common Stock at an exercise price of
$0.15per share, vesting on a quarterly basis over a period of 36 months
commencing January 1, 2008, as follows: (i) 1/1/08 – 25%, (ii) 4/1/08 – 33%,
(iii) 7/1/08 - 42%, (iv) 10/1/08 – 50%, (v) 1/1/09 – 58%, (vi) 4/1/09 – 67%,
(vii) 7/1/09 – 75%, (viii) 10/1/09 – 83%, (ix) 1/1/10 – 92%, and (x) 4/1/10 -
100%.
 
 
 Outstanding
Equity Awards at Fiscal Year-End
 
 The
following table presents the outstanding equity awards held as of December 31,
2007 by our Executive Officers and Directors.
 
 OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDSName
              Number
      of Securities Underlying Unexercised Options
                (#)
                Exercisable
              Number
      of Securities Underlying Unexercised Options
                (#)
                Unexercisable
              Option
      Exercise Price
                ($)
              Option
      Expiration DateBrian
      Ross
              1,000,000
              1,000,000
              $0.15
              1/1/2017Chris
      Meredith
              100,000
              100,000
              $0.15
              1/1/2017Damon
      Stein
              200,000
              200,000
              $0.15
              1/1/2017Dan
      Goldberg
              200,000
              200,000
              $0.15
              1/1/2017
  Directors
Compensation
 
 The two members of our Board of
Directors, Mr. Brian Ross and Mr. Chris Meredith are also executive officers of
Accelerize. They do not receive any additional compensation for their services
as directors, except reimbursement for their reasonable expenses for attending
board and board committee meetings. Their entire compensation is fully reflected
in the Summary Compensation Table above.
 
 27
 Limitation
on Liability
  Under our
certificate of incorporation, the personal liability of our directors for
monetary damages for breach of fiduciary duty is eliminated to the fullest
extent permissible under Delaware law.
  In
addition, our bylaws provide that we have the power to indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to any
action, suit or preceding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer, or employee of the company, or served at the request of the company as
a director, officer, employee or agent of another enterprise.
  Insofar
as the limitation of, or indemnification for, liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling us pursuant to the foregoing, or otherwise, we have been advised
that, in the opinion of the SEC, such limitation or indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
 
 
 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholders Matters.
 
 As of
March 31, 2008,we had 24,101,260 shares of our Common Stock issued and
outstanding. The following table sets forth information regarding the beneficial
ownership of our Common Stock as of March 31, 2008 by:
  ·
              each
      person known by us to be the beneficial owner of more than 5% of our
      Common Stock;
  ·
              each
      of our directors;
  ·
              each
      of our executive officers named in the compensation tables in Item 11;
      and
  ·
              All
      of our executive officers and directors as a
  group.
  
 AMOUNT
      AND NATURE OF BENEFICIAL OWNERSHIP (2)COMMON
      STOCK
              SERIES
      A PREFERRED
                STOCK
              SERIES
      B PREDERRED
                STOCKNAME
      (1)
              #
      OF
                SHARES
              %
      OF
                CLASS
              #
      OF
                SHARES
              %
      OF
                CLASS
              #
      OF
                SHARES
              %
      OF
                CLASS
              %
      OF VOTEBrian
      Ross (3)
              7,100,000
              28.3%
              -0-
              n/a
              -0-
              n/a
              16.8%Chris
      Meredith (4)
              3,150,000
              13.0%
              -0-
              n/a
              -0-
              n/a
              7.6%Daniel
      Minton (5)
              712,500
              2.9%
              -0-
              n/a
              -0-
              n/a
              1.7%Damon
      Stein (6)
              1,950,000
              8.0%
              -0-
              n/a
              -0-
              n/a
              4.7%Dan
      Goldberg (7)
              1,950,000
              8.0%
              -0-
              n/a
              -0-
              n/a
              4.7%All
      officers and directors as a group (five persons) (8)
              15,362,500
              62.2%
              -0-
              n/a
              -0-
              n/a
              36.7%Sharon
      Standowski (9)
              1,750,000
              7.3%
              -0-
              n/a
              -0-
              n/a
              4.2%Camien
      Advisors LLC (10)
              1,750,000
              7.3%
              -0-
              n/a
              -0-
              n/a
              4.2%
 
 28
 (1)
              Unless
      otherwise indicated, the business address of each person listed is in care
      of Accelerize New Media, Inc., 12121 Wilshire Blvd.
      , Suite 322, Los Angeles, CA
90025.
 (2)
              The
      percentages in the table have been calculated on the basis of treating as
      outstanding for a particular person, all shares of our common stock
      outstanding on that date and all shares of our common stock issuable to
      that holder in the event of exercise of outstanding options, warrants,
      rights or conversion privileges owned by that person at that date which
      are exercisable within 60 days of that date. Except as otherwise
      indicated, the persons listed have sole voting and investment power with
      respect to all shares of our common stock owned by them, except to the
      extent that power may be shared with a spouse. To our knowledge, none of
      the shares included are pledged as
security.
 (3)
              Includes
      1,000,000 options, exercisable at $.15 per
  share.
 (4)
              Includes
      100,000 options, exercisable at $.15 per
share.
 (5)
              Includes
      112,500 options, exercisable at $.15 per
share.
 (6)
              Includes
      200,000 options, exercisable at $.15 per
share.
 (7)
              Includes
      200,000 options, exercisable at $.15 per
share.
 (8)
              Includes
      1,612,500 options, exercisable at $.15 per
  share.
 (9)
              Ms.
      Standowski’s address is 307 Wildflower Court Jackson, New Jersey
      08527.
 (10)
              Camien
      Advisors LLC is a New York limited liability company. Mr. Leonard Dietz is
      the CEO of Camien Advisors LLC, and has sole voting and investment powers
      with regard to the shares of Camien Advisors
  LLC.
 
 Securities
authorized for issuance under equity compensation plans.
 
 The table below provides information
regarding all compensation plans as of the end of the most recently completed
fiscal year (including individual compensation arrangements) under which equity
securities of the registrant are authorized for issuance:
  
 Equity
      Compensation Plan InformationPlan
      category
              Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
                
                (a)
              Weighted-average
      exercise price of outstanding options, warrants and rights
                
                (b)
              Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))
                
                (c)Equity
      compensation plans approved by security holdersEquity
      compensation plans not approved by security holders
              7,542,500
              $0.16
              2,457,500Total
              7,542,500
              $0.16
              2,457,500
 
 
 Item
13. Certain Relationship and Related Party Transactions.
 
 There
were no relationships during 2007 or more currently, between us and any
director, executive officer or 5% shareholder, other than the employment and
consulting agreements, stock ownership and the TDRG acquisition, each described
above.
 
 29
 Item
14. Principal Accountant Fees and Services
 
 The following table summarizes the
fees of Sherb & Co. LLC, our independent registered public accounting firm,
billed for each of the last two fiscal years for audit services and other
services:
 
 Fee Category
              2007
              
              2006Audit
      Fees (1)
              $56,000
              
              $60,000Audit
      Related Fees
              -
              
              -Tax
      Fees (2)
              -
              
              5,000All
      Other Fees(3)
              6,000
              
              -Total
      Fees
              $62,000
              
              $65,000
 
 (1)  Consists
of fees for professional services rendered in connection with the review of our
three quarterly reports on Form 10-QSB and the financial statements included in
our annual report on Form 10-K
 (2)  Consists
of fees relating to our tax compliance and tax planning.
 (3)  Consists
of fees relating to review of our registration statement on form
SB-2.
 
 We do not
have an Audit Committee. Our Board of Directors pre-approves all auditing
services and permissible non-audit services provided to us by the independent
registered accounting firm.
 
 
 PART
IV
 
 Item
15.  Exhibits and Financial Statement Schedules
 
 a.
              Index
      to Financial Statements and Financial Statement
  Schedules
 
 b.
              All
      other schedules for which provision is made in the applicable accounting
      regulations of the SEC are not required under the related instructions, or
      are inapplicable, and therefore have been
  omitted.
 
 c.
              Exhibits
 
 EXHIBIT
      NO.
              DESCRIPTION3.1
              Certificate
      of Incorporation dated November 22, 2005, as amended by Certificate of
      Designation dated August 8, 2006 (incorporated by reference to the
      Company’s Registration Statement on Form SB-2  (file no.
      333-139586)  filed on December 22, 2006.)3.2
              Certificate
      of Designation of 10% Series A Convertible Preferred Stock (incorporated
      by reference to Exhibit 3.1 to the Company’s Registration Statement on
      Form SB-2 (file no. 333-139586)  filed on December 22,
      2006.)3.3
              Certificate
      of Designation of 8% Series B Convertible Preferred Stock (incorporated by
      reference to Exhibit 10.1 to the Company’s Current Report on Form 10-QSB
      for the quarter ended June 30, 2007.)3.4
              By-laws
      of the Company (incorporated by reference to the Company’s Registration
      Statement on Form SB-2 (file no. 333-139586) filed on December 22,
      2006.)3.5
              Form of Common Stock
      Certificate (incorporated by reference to the Company’s
      Registration Statement on Form SB-2 (file no.
      333-139586)filed on December 22, 2006.)3.6
              Form of Preferred
      Stock Certificate (incorporated by reference to the Company’s
      Registration Statement on Form SB-2 (file no.
      333-139586)filed on December 22, 2006.)4.1
              Form of Subscription
      Agreement of 10% Series A Convertible Preferred Stock (incorporated
      by reference to the Company’s Registration Statement on Form SB-2 (file no.
      333-139586)filed on December 22,
2006.)
  30
 4.2
              Form of Common Stock
      Purchase Warrant for 10% Series A Convertible Preferred Stock
      (incorporated by reference to the Company’s Registration Statement
      on Form SB-2 (file no.
      333-139586)filed on December 22, 2006.)4.3
              Form of Subscription
      Agreement of 8% Series B Convertible Preferred Stock (incorporated
      by reference to the Company’s Quarterly Report on Form 10QSBfiled
      on August 13, 2007.)4.4
              Form of Common Stock
      Purchase Warrant for 8% Series B Convertible Preferred Stock
      (incorporated by reference to the Company’s Quarterly Report on
      Form 10QSBfiled
      on August 13, 2007.)10.1
              Form of Promissory
      Note (incorporated by reference to Amendment No.3 of the Company’s
      Registration Statement on Form SB-2 (file no.
      333-139586)filed on April 30, 2007.)10.2
              Form of Note
      Conversion Agreement (incorporated by reference to the Company’s
      Current Report on Form 8-Kfurnished on
      September 7, 2007.)10.3
              Form
      of Stock Option Agreement (incorporated by reference to the Company’s
      Registration Statement on Form SB-2 (file no. 333-139586) filed on
      December 22, 2006.)10.4
              Employment
      Agreement of Brian Ross (incorporated by reference to the Company’s
      Registration Statement on Form SB-2  (file no.
      333-139586)  filed on December 22, 2006.)10.5
              Employment
      Agreement of Chris Meredith (incorporated by reference to the
      Company’s Registration Statement on Form SB-2  (file no.
      333-139586)  filed on December 22, 2006.)10.6
              Employment
      Agreement of Damon Stein (incorporated by reference to Amendment No.1 to
      the Company’s Registration Statement on Form SB-2  (file no.
      333-139586)  filed on January 31, 2007.)10.7
              Employment
      Agreement of Dan Goldberg (incorporated by reference to Amendment No.1 to
      the Company’s Registration Statement on Form SB-2  (file no.
      333-139586)  filed on January 31, 2007.)10.8
              Form
      of Convertible Promissory Note (filed herewith)10.9
              Accelerize
      New Media, Inc. Stock Option Plan (incorporated by reference to the
      Company’s Registration Statement on Form SB-2 (file no. 333-139586) filed
      on December 22, 2006.)23.1
              Consent
      of Sherb & Co., LLP. (filed
      herewith)31.1
              Rule
      13a-14(a) Certification.  (filed herewith)31.2
              Rule
      13a-14(a) Certification.  (filed herewith)32.1
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002. (furnished
      herewith)32.2
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002. (furnished
      herewith)
 
 31
 SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 ACCELERIZE
NEW MEDIA, INC.
 
 By:              /S/ Brian
Ross
 Brian Ross
 President, Chief Executive Officer
and Treasurer
 
 Date: March 31, 2008
 
 In
accordance with the Exchange Act, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
 
 SIGNATURE
              TITLE
              DATEBy:
      /S/ Brian
      Ross
              President,
      Chief Executive Officer, Treasurer and Director
              March
      31, 2008By:
      /S/ Chris
      Meredith
              Chief
      Technology Officer, Assistant Treasurer, Assistant Secretary and
      Director
              March
      31, 2008
 
 
 32
 ACCELERIZE
NEW MEDIA, INC.
 
 FINANCIAL
STATEMENTS
 
 AS
OF DECEMBER 31, 2007
 
 IN
U.S. DOLLARS
 
 Index to Financial
Statements and Financial Statement Schedules
 
 The
      following consolidated financial statements and financial statement
      schedules are included on the pages indicated:PageReports
      of Independent Registered Public Accounting Firm
              F-2Balance
      Sheet as of December 31, 2007 and 2006
              F-3Statement
      of Operations for each of the two years in the period ended December 31,
      2007,
              F-4Statement
      of Shareholders’ Equity for each of the two years in the period ended
      December 31, 2007
              F-5Statement
      of Cash Flows for each of the two years in the period ended December 31,
      2007,
              F-6Notes
      to Consolidated Financial Statements
              F-8
      – F-19
 
 All other schedules for which provision
is made in the applicable accounting regulations of the SEC are not required
under the related instructions, or are inapplicable, and therefore have been
omitted.
 
 F-1
 Reports of Independent
Registered Public Accounting Firm
 
 
 Board of
Directors
 Accelerize
New Media, Inc.
 Los
Angeles, CA
 
 We have
audited the accompanying balance sheet of Accelerize New Media, Inc. as of
December 31, 2007 and 2006 and the related statements of operations,
stockholders' deficit and cash flows for the years ended December 31, 2007 and
2006.  These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Accelerize New Media, Inc. as of
December 31, 2007 and 2006 and the results of their operations and their cash
flows for the years ended December 31, 2007 and 2006, in conformity with
accounting principles generally accepted in the United States of
America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company has incurred
significant losses as more fully described in Note 1. These issues raise
substantial doubt about the Company's ability to continue as a going
concern.  Management's  plans
in  regard  to  these  matters  are  also  described  in
Note 1.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
 
 
 /s/
Sherb & Co., LLP
 Certified
Public Accountants
 
 New York,
New York
 March 25,
2008
  F-2
 Balance Sheet as of December
31, 2007 and 2006
 
 
 ACCELERIZE
      NEW MEDIA, INC.BALANCE
      SHEETDecember
      31,ASSETS
              
              2007
              
              
              2006Current
      Assets:Cash
              
              $
              951,317
              
              
              $
              414,270Accounts
      receivable, net of allowance for bad debt of $3,037 and $0
    atDecember
      31, 2007 and 2006, respectively
              
              
              50,499
              
              
              
              11,623Prepaid
      expenses
              
              
              5,487
              
              
              
              2,575Domain
      name rights
              
              
              162,740
              
              
              
              -Deferred
      tax asset
              
              
              80,026
              
              
              
              -Total
      current assets
              
              
              1,250,069
              
              
              
              428,468Website
      development costs, net of accumulated amortization of $210,411
      and$58,635
      at December 31, 2007 and 2006, respectively
              
              
              226,483
              
              
              
              82,911Fixed
      assets, net of accumulated depreciation of $10,689
              
              
              21,380
              
              
              
              -Goodwill
              
              
              580,547
              
              
              
              -Total
      assets
              
              $
              2,078,479
              
              
              $
              511,379LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses
              
              $
              214,578
              
              
              $
              249,430Payable
      to former member
              
              
              36,315
              
              
              
              -Deferred
      revenues- short-term
              
              
              550,992
              
              
              
              -Deferred
      tax liability
              
              
              80,026
              
              
              
              -Total
      current liabilities
              
              
              881,911
              
              
              
              249,430Deferred
      revenue- long-term
              
              
              90,307
              
              
              
              -Total
      liabilities
              
              
              972,218
              
              
              
              249,430Stockholders'
      Equity:Preferred
      stock, $0.001 par value, 2,000,000 shares authorized:Series
      A,  54,000 issued and outstanding at December 31,
      2007and
      2006, respectively
              
              
              728,567
              
              
              
              728,567Series
      B, 118,875 issued and outstanding at December 31, 2007 and0 shares
      issued and outstanding at December 31, 2006
              
              
              3,644,563
              
              
              
              -Common
      stock; $.001 par value; 100,000,000 shares authorized;21,779,294
      shares issued and outstanding  at December 31, 2007
      and19,140,027
      shares issued and outstanding at December 31, 2006
              
              
              21,779
              
              
              
              19,140Additional
      paid-in capital
              
              
              2,418,062
              
              
              
              1,925,220Accumulated
      deficit
              
              
              (5,706,710
              )
              
              
              (2,410,978
              )Total
      stockholders’ equity
              
              
              1,106,261
              
              
              
              261,949Total
      liabilities and stockholders’ equity
              
              $
              2,078,479
              
              
              $
              511,379
  See
      Notes to Financial Statements.
 
 F-3
 Statement of
Operations
 
 ACCELERIZE
      NEW MEDIA, INC.STATEMENTS
      OF OPERATIONSYear
      endedDecember
      31, 20072007
              
              
              2006Revenues
              
              $
              1,030,509
              
              
              $
              199,214Operating
      expenses:Selling,
      general and administrative
              
              
              4,047,516
              
              
              
              2,563,348Total
      operating expenses
              
              
              4,047,516
              
              
              
              2,563,348Operating
      loss
              
              
              (3,017,007
              )
              
              
              (2,364,134
              )Other
      income (expense):Interest
      income (expense)
              
              
              18,253
              
              
              
              (521
              )18,253
              
              
              
              (521
              )Net
      loss
              
              
              (2,998,754
              )
              
              
              (2,364,655
              )Less
      dividends issued for series A and B preferred stock
              
              
              296,977
              
              
              
              44,596Net
      loss attributable to common stock
              
              $
              (3,295,731
              )
              
              $
              (2,409,251
              )Basic
      and diluted loss per common share
              
              $
              (0.16
              )
              
              $
              (0.13
              )Basic
      and diluted weighted average commonshares
      outstanding
              
              
              21,124,349
              
              
              
              18,748,958See
      Notes to Financial Statements.
 
 F-4
 
 Statement of Changes in
Shareholders’ Equity
 From January 1, 2006 to
December 31, 2007
  Common
              
              
              
              
              
              
              
              
              TotalSeries
      A
              
              
              Series
      B
              
              
              
              
              
              
              
              
              Stock
              
              
              Additional
              
              
              Accumu-
              
              
              Stock-Preferred
      Stock
              
              
              Preferred
      Stock
              
              
              Common
      Stock
              
              
              to
      be
              
              
              Paid-in-
              
              
              lated
              
              
              holders’Shares
              
              
              $
              
              
              Shares
              
              
              $
              
              
              Shares
              
              
              $
              
              
              issued
              
              
              Capital
              
              
              Deficit
              
              
              EquityBalance,
      January 1, 2006
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -
              
              
              $
              20,000
              
              
              $
              (236
              )
              
              $
              (1727
              )
              
              $
              18,037-Common
      Stock to be issued
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (20,000
              )
              
              
              -
              
              
              
              -
              
              
              
              (20,000
              )Shares
      issued pursuant to private placements
              
              
              54,000
              
              
              
              728,567
              
              
              
              -
              
              
              
              -
              
              
              
              3,500,000
              
              
              
              3,500
              
              
              
              -
              
              
              
              346,500
              
              
              
              -
              
              
              
              1,078,567Shares
      issues for services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              15,500,000
              
              
              
              15,500
              
              
              
              -
              
              
              
              1,534,500
              
              
              
              -
              
              
              
              1,550,000Preferred
      Stock dividends
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              140,027
              
              
              
              140
              
              
              
              -
              
              
              
              20,864
              
              
              
              (21,004
              )
              
              
              -Fair
      value of warrants issued
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              23,592
              
              
              
              (23,592
              )
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,364,655
              )
              
              
              (2,364,655
              )Ending
      Balance, December 31, 2006
              
              
              54,00
              
              
              
              728,567
              
              
              
              -
              
              
              
              -
              
              
              
              19,140,027
              
              
              
              19,140
              
              
              
              -
              
              
              
              1,925,220
              
              
              
              (2,410,978
              )
              
              
              261,949Shares
      issued to DRG acquisition
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,750,000
              
              
              
              1,750
              
              
              
              -
              
              
              
              103,250
              
              
              
              -
              
              
              
              105,000Fair
      value of warrants issued
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              94,030
              
              
              
              (94,030
              )
              
              
              -Fair
      value of options granted
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              93,503
              
              
              
              -
              
              
              
              93,503Shares
      issued pursuant to private placement
              
              
              -
              
              
              
              -
              
              
              
              118,875
              
              
              
              3,644,563
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,644,563Preferred
      stock dividends
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              889,267
              
              
              
              889
              
              
              
              -
              
              
              
              202,059
              
              
              
              (202,948
              )
              
              
              -Net
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,998,754
              )
              
              
              (2,998,754
              )Ending
      balance, December 31, 2007
              
              
              54,000
              
              
              $
              728,567
              
              
              
              118,875
              
              
              $
              3,644,563
              
              
              
              21,779,294
              
              
              $
              21,779
              
              
              $
              -
              
              
              $
              2,418,062
              
              
              $
              (5,706,710
              )
              
              $
              1,106,261
  See Notes
to Financial Statements.
 
 F-5
 
 Statement of Cash
Flows
 
 ACCELERIZE
      NEW MEDIA, INC.STATEMENTS
      OF CASH FLOWSYear
      endedDecember
      31,2007
              
              
              2006Cash
      flows from operating activities:Net
      loss
              
              $
              (2,998,754
              )
              
              $
              (2,364,655
              )Adjustments
      to reconcile net loss to net cash provided byoperating
      activities:Depreciation
      and amortization
              
              
              199,395
              
              
              
              58,635Fair
      value of shares issued for services
              
              
              -
              
              
              
              1,550,000Fair
      value of options granted
              
              
              93,503
              
              
              
              -Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              (26,840
              )
              
              
              (11,623
              )Prepaid
      expenses
              
              
              (202,912
              )
              
              
              (2,575
              )Variation
      in deferred tax asset
              
              
              (80,026
              )
              
              
              -Accrued
      interest
              
              
              1,067
              
              
              
              -Accounts
      payable and accrued expenses
              
              
              (71,907
              )
              
              
              247,243Variation
      in deferred tax liability
              
              
              80,026
              
              
              
              -Deferred
      revenue
              
              
              223,384
              
              
              
              -Net
      cash used in operating activities
              
              
              (2,783,064
              )
              
              
              (522,975
              )Cash
      flows used in investing activity:Website
      development costs
              
              
              (295,018
              )
              
              
              (141,546
              )Net
      cash used in investing activity
              
              
              (295,018
              )
              
              
              (141,546
              )Cash
      flows from financing activities:Proceeds
      from notes payable
              
              
              400,000
              
              
              
              -Payment
      to former member
              
              
              (29,434
              )
              
              
              -Payment
      of financing fees
              
              
              (516,062
              )
              
              
              (81,443
              )Common
      stock to be issued
              
              
              -
              
              
              
              (20,000
              )Proceeds
      from issuance of shares of common stock
              
              
              -
              
              
              
              350,000Proceeds
      from issuance of shares of Preferred Stock A
              
              
              -
              
              
              
              810,010Proceeds
      from issuance of shares of Preferred Stock B
              
              
              3,760,625
              
              
              
              -Net
      cash provided by financing activities
              
              
              3,615,129
              
              
              
              1,058,567Net
      increase in cash
              
              
              537,047
              
              
              
              394,046Cash,
      beginning of year
              
              
              414,270
              
              
              
              20,224Cash,
      end of year
              
              $
              951,317
              
              
              $
              414,270
  F-6
 Supplemental
      disclosures of cash flow information:Cash
      paid for interest
              
              $
              4,194
              
              
              $
              521Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -Non-cash
      investing and financing activities:Beneficial
      conversion feature associated with issuanceof
      warrants related to Preferred Stock B
              
              $
              94,030
              
              
              $
              -Conversion
      of notes payable into shares ofPreferred
      Stock B
              
              $
              400,000
              
              
              $
              -Preferred
      stock dividends
              
              $
              202,948
              
              
              $
              21,004Goodwill
      results from acquisition and correspondingincrease
      in
              
              $
              580,547
              
              
              $
              -Assets
              
              $
              44,105
              
              
              $
              -Liabilities
              
              $
              519,652
              
              
              $
              -Common
      stock and additional paid-in capital
              
              $
              105,000
              
              
              $
              -See
      Notes to the Financial Statements
 
 
 
 F-7
 Notes to Financial
Statements
 
 
 NOTE
1: DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND GOING
CONCERN:
 
 Accelerize
New Media, Inc., orthe Company, a Delaware
Corporation, incorporated on November 22, 2005, is an online based media and
customer acquisition solutions provider.
 
 The
Company provides internet development services and turnkey customer acquisition
solutions for small to medium size U.S. companies. The Company focuses much of
its key web tool design using RSS, or Real Simple Syndication, technologies. RSS
is a web content syndication format that is rapidly being adopted as a standard
for use for Internet content query and customization.
 
 The
accompanying financial statements have been prepared on a going concern basis.
The Company has used net cash in its operating activities of approximately $2.8
million during the year ended December 31, 2007. The Company's ability to
continue as a going concern is dependent upon its ability to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due, to fund possible future
acquisitions, and to generate profitable operations in the future. Management
plans to continue to provide for its capital requirements by issuing additional
equity securities and debt. The outcome of these matters cannot be predicted at
this time and there are no assurances that if achieved, the Company will have
sufficient funds to execute its business plan or generate positive operating
results.
 
 During
December 2006, the Company entered into an Asset Purchase Agreement to acquire a
substantial portion of the operating assets of The Debt Reduction Group, LLC, or
TDRG. Pursuant to the Asset Purchase Agreement, the Company acquired in January
2007 the accounts receivable and substantially all intangible assets of TDRG in
consideration of issuing 3,500,000 shares of its common stock to the managing
members of TDRG, of which 1,750,000 remained in escrow for up to a year to
secure payment of any claims for losses under indemnification provisions under
the purchase agreement, as well as granting 500,000 warrants to certain of
TDRG’s employees which may be earned based upon certain milestones related to
target revenues and operating margins covering 18 months after closing. The
Company consummated the transaction in January 2007.
 
 The
acquisition of the operations of TDRG was accounted for pursuant to the
Statement of Financial Accounting Standards, or SFAS No. 141, Business
Combinations, which provides that the assets and liabilities acquired and the
equity interest issued are initially recognized at the date of acquisition and
measured at the fair value of the net assets acquired and consideration
exchanged. Additionally, SFAS No. 141 provides that the results of operations of
the acquired entity after the effective date of acquisition be consolidated in
the results of operations of the acquirer.
 
 The total
aggregate purchase price of TDRG amounted to $624,652, which consisted of (i)
1,750,000 shares (not including additional shares to potentially be paid at a
later date upon certain conditions) of common stock valued at an aggregate of
$105,000 and (ii) assumption of $519,652 of liabilities. The purchase price has
initially been allocated as follows:
 
 Fair
      value of the unescrowed shares:
              
              $
              105,000Assets
      acquired:
              
              
              (44,105
              )Liabilities
      assumed:
              
              
              519,652Goodwill:
              
              $
              580,547
  The fair
value of the shares issued pursuant to this transaction was based on a valuation
of the Company’s shares prepared by an unrelated valuation specialist, using the
discounted cash flow approach.
  The
goodwill resulting from this transaction was primarily attributable to the
expected additional revenues and resulting increased margin from the combination
of the financial web sites of the Company and TDRG under one family of
complementary and coordinated financial portals.
 
 F-8
 NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of
Estimates
 
 The
preparation of 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.
 
 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.
 
 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 financial institutions
and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to
$100,000. During the year ended December 31, 2007, the Company has reached bank
balances exceeding the FDIC insurance limit. To reduce its risk associated with
the failure of such financial institutions, the Company periodically evaluates
the credit quality of the financial institutions in which it holds
deposits.
 
 The
Company's accounts receivable are due from a few customers, all located in the
United States. Three of the Company’s customers accounted for 12%, 12%, and 38%
of its accounts receivable at December 31, 2007. Two of the Company’s customers
accounted for 63% and 13% of its accounts receivable at December 31,
2006.
 
 Property and
Equipment
 
 Property
and equipment are recorded at cost and are depreciated on a straight-line basis
over their estimated useful lives of three years. Maintenance and repairs are
charged to expense as incurred. Significant renewals and betterments are
capitalized.
 
 Property
and equipment consist of the following:
 
 December 31, 2007Computer
      equipment and software
              
              $
              1,464Phone
      equipment
              
              
              19,155Office
      furniture and equipment
              
              
              11,45032,069Accumulated
      depreciation
              
              
              (10,689
              )$
              21,380
 
 Depreciation
expense amounted to approximately $10,689 during 2007.
 
 Revenue
Recognition
 
 The
Company recognizes revenue on arrangements in accordance with Securities and
Exchange Commission, or SEC Staff Accounting Bulletin No. 104 “Revenue
Recognition.” Revenue is recognized only when the price is fixed or
determinable, persuasive evidence of an arrangement exists, the service is
performed, and collectibility of the resulting receivable is reasonably
assured.
 
 F-9
 The
Company’s traffic revenues are generated from the pay-per-click, cost-per-action
listings, and banner ad sales of its portfolio of web sites. When an online user
navigates to one of the Company’s owned and operated Web sites and clicks and or
visits on a particular listing/web page or completes the specified action, the
Company receives a fee.
  The
Company’s lead generation network revenues are primarily generated using
third-party distribution networks to deliver the merchant advertisers’ listings.
The distribution network includes search engines, shopping engines, directories,
destination sites, Internet domains or Web sites, and other targeted Web-based
content. The Company generates revenue upon delivery of a qualified lead to the
Company’s merchant advertisers or partner. Other revenues include the Company’s
lead generation web services, paid search optimization, landing page development
services, and creative design.
 
 Since
January 1, 2007, the Company generates a substantial portion of its revenues
from fees earned from the sale and marketing of debt reduction solutions offered
to consumers by debt settlement agencies. The consumers generally enter in a
debt solution program with a debt settlement agency which provides for monthly
payments by the consumers over a period of up to 3 years. The commission earned
by the Company will vary between 7.5% and 8.9% of the total debt of the consumer
to be negotiated by the respective debt settlement agency. For consumers
enrolled prior to March 1, 2007 the Company receives its fees from debt
settlement agencies upon payment by consumers to the debt settlement agencies
within the first 8 months of the debt solution program, assuming that all
consumers make all their payments. This payment was subject to a partial refund
by the Company to the debt settlement agencies if (1) the debt settlement agency
does not receive all scheduled monthly payments for the duration of the contract
during the first 15 months of such contract or (2) the debt settlement agencies
issues a refund to the consumer over the term of the respective contract. For
consumers enrolled since March 1, 2007, the Company receives its fee from debt
settlement agencies upon payment by consumers to the debt settlement agencies
within the first 18 months of the debt solution program, assuming that all
consumers make all their payments.  Accordingly, the fee earned by the
Company is recognized over the terms of the underlying contract between the debt
settlement agencies and the consumer, which is generally 3 years. Consequently,
the Company defers the fees received from the debt settlement agency in excess
of the revenues recognized over the term of the underlying contract between the
debt settlement agencies and the consumer. Such excess amounted to approximately
$641,000 at December 31, 2007 and is recorded as deferred revenue on the balance
sheet.
 
 Since
September 2007, the payment to the Company is subject to a partial refund only
if a debt settlement agency issues a refund to the consumer over the term of the
respective contract.
 
 During
June 2005, TDRG outsourced the debt solution administration of its existing
clients to a debt settlement agency. This administration includes
implementation, customer service, and the actual debt negotiation. Pursuant to
the outsourcing arrangement, the debt settlement agency paid TDRG (and after
January 1, 2007 to the Company) 45% of the fees collected from the consumers and
retains 5% of such fees as a reserve for possible cancellations, returns, and
legal fees. Funds available under the reserve were paid as follows: 50% in June
2006, and 25% to the Company, in January 2007 and June 2007, respectively. The
Company recognizes fees pursuant to this arrangement as revenues when it
receives the funds from the debt settlement agency.
 
 The
Company also generates revenues, to a lesser extent, by selling leads it
generates to synergistic companies operating in the debt consumer market segment
and from ads appearing on its network of web sites.
 
 Customer
Concentration
 
 Three of
the Company's customers accounted for approximately 29%, 22%, and 11% of its
revenues during 2007. One of the Company’s customers accounted for 84% of the
Company’s revenue during 2006.
 
 Product
Concentration
 
 The
Company generates revenues as follows: (1) online sales and marketing services
to market debt solutions offered to consumers by a debt settlement agency, (2)
using third-party distribution networks to deliver the merchant advertisers’
listings, (3) the pay-per-click, cost-per-action listings, and banner ad sales
of its portfolio of web sites. When an online user navigates to one of the
Company’s owned and operated Web sites and clicks and or visits on a particular
listing/web page or completes the specified action, the Company receives a fee,
and (4) lead generation web services, paid search optimization, landing page
development services, and creative design.
 
 F-10
 Fair Value of Financial
Instruments
 
 The
carrying value of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses and the payable to former member approximate their
fair value based on the short-term maturity of these instruments.
 
 Advertising
 
 The
Company expenses advertising costs as incurred. Advertising expense amounted to
$1,255,793 and $146,373 during 2007 and 2006, respectively.
 
 Website Development
Costs
 
 The
Company has capitalized certain internal use software and website development
costs amounting to approximately $437,000 as of December 31,
2007.  The estimated useful life of costs capitalized is evaluated for
each specific project and ranges from one to three years.
 
 Income
Taxes
 
 Income
taxes are accounted for in accordance with the provisions of Statement of
Financial Accounting Standards, or SFAS No. 109, “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.
 
 Share-based
Payment
 
 In
December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 123(R), "Share-Based Payment," or SFAS No. 123(R) which replaced SFAS No.
123 and superseded Accounting Principles Board, or  APB Opinion No.
25. Under SFAS No. 123(R), companies are required to measure the compensation
costs of share-based compensation arrangements based on the grant-date fair
value and recognize the costs in the financial statements over the period during
which employees are required to provide services. Share-based compensation
arrangements include stock options, restricted share plans, performance-based
awards, share appreciation rights and employee share purchase plans. In March
2005 the SEC, issued Staff Accounting Bulletin No. 107, “Disclosures about Fair
Value of Financial Instruments,” or SAB 107. SAB 107 expresses views of the
staff regarding the interaction between SFAS No. 123(R) and certain SEC rules
and regulations and provides the staff's views regarding the valuation of
share-based payment arrangements for public companies. SFAS No. 123(R) permits
public companies to adopt its requirements using one of two methods. Companies
may elect to apply this statement either prospectively, or on a modified version
of retrospective application under which financial statements for prior periods
are adjusted on a basis consistent with the pro forma disclosures required for
those periods under SFAS 123.  Effective with its fiscal 2006, the
Company has adopted the provisions of SFAS No. 123 (R) and related
interpretations as provided by SAB 107 prospectively. As such, compensation cost
is measured on the date of grant as its fair value.Such compensation
amounts, if any, are amortized over the respective vesting periods or period of
service of the option grant.
 
 Segment
Reporting
 
 The
Company generates revenues from two sources: (1) internet development services
and turnkey customer acquisition solutions, and (2) sales and marketing services
to debt settlement agencies. The Company's chief operating decision-maker
evaluates the performance of the Company based upon revenues and expenses by
functional areas as disclosed in the Company's statements of
operations.
 
 F-11
 Recent Accounting
Pronouncements
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, orGAAP, and expands
disclosures about fair value measurements. This Statement applies under other
accounting pronouncements that require or permit fair value measurements, the
FASB having previously concluded in those accounting pronouncements that fair
value is a relevant measurement attribute. Accordingly, this Statement does not
require any new fair value measurements. However, for some entities, the
application of this Statement will change current practices. This Statement is
effective for financial statements for fiscal years beginning after November 15,
2007. Earlier application is permitted provided that the reporting entity has
not yet issued financial statements for that fiscal year. Management believes
this Statement will have no impact on the financial statements of the Company
once adopted.
 
 In
February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115”. This Statement permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the FASB’s long-term measurement
objectives for accounting for financial instruments. This Statement applies to
all entities, including not-for-profit organizations. Most of the provisions of
this Statement apply only to entities that elect the fair value option. However,
the amendment to SFAS No. 115, “Accounting for Certain Investments in the Debt
and Equity Securities,” applies to all entities with available-for-sale and
trading securities. Some requirements apply differently to entities that do not
report net income. The following are eligible items for the measurement option
established by this Statement:
  ·
              Recognized
      financial assets and financial liabilities except:·
              An
      investment in a subsidiary that the entity is required to
      consolidate·
              An
      interest in a variable interest entity that the entity is required to
      consolidate·
              Employers’
      and plans’ obligations (or assets representing net over funded positions)
      for pension benefits, other postretirement benefits (including health care
      and life insurance benefits), post employment benefits, employee stock
      option and stock purchase plans, and other forms of deferred compensation
      arrangements, as defined in SFAS No. 35, “Accounting and Reporting by
      Defined Benefit Pension Plans”, No. 87, “Employers’ Accounting for
      Pensions”, No. 106, “Employers’ Accounting for Postretirement Benefits
      Other Than Pensions”, No. 112, “Employers’ Accounting for Post employment
      Benefits”, No. 123 (revised December 2004), “Share-Based Payment”, No. 43,
      “Accounting for Compensated Absences”, No. 146, “Accounting for Costs
      Associated with Exit or Disposal Activities”, and No. 158, “Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans”,
      and APB Opinion No. 12, “Omnibus Opinion—1967”·
              Financial
      assets and financial liabilities recognized under leases as defined in
      FASB Statement No. 13, “Accounting for Leases” (This exception does not
      apply to a guarantee of a third-party lease obligation or a contingent
      obligation arising from a cancelled lease.)·
              Deposit
      liabilities, withdrawable on demand, of banks, savings and loan
      associations, credit unions, and other similar depository
      institutions·
              Financial
      instruments that are, in whole or in part, classified by the issuer as a
      component of shareholder’s equity (including “temporary equity”). An
      example is a convertible debt security
                with
      a noncontingent beneficial conversion feature.·
              Firm
      commitments that would otherwise not be recognized at inception and that
      involve only financial instruments·
              Nonfinancial
      insurance contracts and warranties that the insurer can settle by paying a
      third party to provide those goods or services·
              Host
      financial instruments resulting from separation of an embedded
      nonfinancial derivative instrument from a nonfinancial hybrid
      instrument.
 
 F-12
 The fair
value option established by this Statement permits all entities to choose to
measure eligible items at fair value at specified election dates. A business
entity shall report unrealized gains and losses on items for which the fair
value option has been elected in earnings (or another performance indicator if
the business entity does not report earnings) at each subsequent reporting date.
A not-for-profit organization shall report unrealized gains and losses in its
statement of activities or similar statement.
 The fair
value option:
  ·
              May
      be applied instrument by instrument, with a few exceptions, such as
      investments otherwise accounted for by the equity
method·
              Is
      irrevocable (unless a new election date occurs)·
              Is
      applied only to entire instruments and not to portions of
      instruments.
 
 This
Statement is effective as of the beginning of an entity’s first fiscal year that
begins after November 15, 2007. Early adoption is permitted as of the beginning
of a fiscal year that begins on or before November 15, 2007, provided the entity
also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements”.
No entity is permitted to apply this Statement retrospectively to fiscal years
preceding the effective date unless the entity chooses early adoption. The
choice to adopt early should be made after issuance of this Statement but within
120 days of the beginning of the fiscal year of adoption, provided the entity
has not yet issued financial statements, including required notes to those
financial statements, for any interim period of the fiscal year of adoption.
This Statement permits application to eligible items existing at the effective
date (or early adoption date).  Management believes this statement
will have no impact on the financial statements of the Company once
adopted.
  The FASB
issued SFAS Statement No. 141 (R) (revised 2007), “Business Combinations, and
No. 160, Noncontrolling Interests in Consolidated Financial Statements”. SFAS No. 141 (requires the
acquiring entity in a business combination to recognize all (and only) the
assets acquired and liabilities assumed in the transaction; establishes the
acquisition-date fair value as the measurement objective for all assets acquired
and liabilities assumed; and requires the acquirer to disclose to investors and
other users all of the information they need to evaluate and understand the
nature and financial effect of the business combination.  SFAS No.141
(R) is effective for fiscal years beginning after December 15,
2008.  The Company does not believe that SFAS No. 141 (R) will have
any impact on its financial statements.
  The FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements”.SFAS
No. 160 requires all entities to report noncontrolling (minority) interests in
subsidiaries in the same way—as equity in the consolidated financial statements.
Moreover, SFAS No.160 eliminates the diversity that currently exists in
accounting for transactions between an entity and noncontrolling interests by
requiring they be treated as equity transactions.  SFAS No.160 is
effective for fiscal years beginning after December 15, 2008.  The
Company does not believe that SFAS No. 160 will have any impact on its financial
statements.
  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). The outstanding options and warrants amounted to 14,931,875 at December
31, 2007, and have been excluded from the earnings per share computation due to
their anti-dilutive effect.
 
 The
following sets forth the computation of basic and diluted earnings per share for
the year ended December 31, 2007 and 2006:
 
 F-13
 For
      the year endedDecember
      31,2007
              
              
              2006Numerator:Net
      loss attributable to common stock
              
              $
              (3,295,731
              )
              
              $
              (2,409,251
              )Denominator:Denominator
      for basic earnings per share-Weighted
      average shares outstanding
              
              
              21,124,349
              
              
              
              18,748,958Denominator
      for diluted earnings per share-Weighted
      average shares outstanding
              
              
              21,124,349
              
              
              
              18,748,958Basic
      earnings per share
              
              $
              (0.16
              )
              
              $
              (0.13
              )Diluted
      earnings per share
              
              $
              (0.16
              )
              
              $
              (0.13
              )
 
 NOTE
3: PREPAID EXPENSES
 
 At
December 31, 2007, the prepaid expenses consisted primarily of insurance
expense.
 
 NOTE
4: DOMAIN NAME RIGHTS
 
 At
December 31, 2007, domain name rights were purchased for $200,000 and have a
useful life of one year from the date of purchase.  The Company
recognized amortization expense of approximately $37,000 in connection with the
domain name rights during 2007.
 
 NOTE
5: WEBSITE DEVELOPMENT COSTS
 
 Website
development costs, net of accumulated amortization are as follows at December
31, 2007:
 
 December
      31,2007
              
              
              2006Website
      development costs
              
              $
              436,564
              
              
              $
              141,546Less:
      accumulated amortization
              
              
              (210,081
              )
              
              
              (58,635
              )Website
      development costs, net
              
              $
              226,483
              
              
              $
              82,911
 
 Amortization
expense of the website development costs amounted to $151,446 and $58,635 during
the year ended December 31, 2007 and 2006, respectively.
 
 The
website development costs, net, as of December 31, 2007, will be amortized over
the future periods as follows:
   2008:
              
              $
              98,5782009:
              
              
              76,0522010:
              
              
              51,853$
              226,483
  NOTE
6: NOTES PAYABLE
 
 During
April 2007, the Company secured a line of credit with five existing stockholders
which provides for borrowings of up to $500,000.  The line of credit
borne interest at 10% per annum payable monthly.  During the year
ended December 31, 2007, the Company borrowed in aggregate $400,000 under the
line of credit. The notes issued pursuant to the line of credit matured on
October 4, 2007.  During June 2007, the outstanding amounts due under
the line of credit were converted into 11,429 shares of Series B Preferred
Stock. The actual stock certificates were issued to the creditors with the
closing of the Series B Preferred Stock at August 31, 2007. In connection with
the notes payable, the Company incurred interest expense of $4,194 during the
year ended December 31, 2007.
 
 NOTE
7: STOCKHOLDERS’ EQUITY
 
 Common
Stock
  In
January 2006, the Company issued 3,500,000 shares of common stock which
generated net proceeds of $350,000.
 
 F-14
 In
January 2006, the Company issued 15,500,000 shares to certain of its officers
for compensation valued at $1,550,000.
 
 During
2006, the Company paid dividends on its preferred stock. The dividends amounted
to 140,027 shares of the common stock, valued at $21,004.
 
 During
2007, the Company paid dividends on its preferred stock. The dividends amounted
to 889,267 shares of the common stock, valued at $202,948.
 
 Preferred Stock- Series
A
 
 Between
August 2006 and October 2006 the Company issued 54,000 shares of 10% Series A
Convertible Preferred Stock, or Series A Preferred Stock, with a par value of
$0.001 per share, resulting in gross proceeds of $728,567 to the Company after
financing fees of $81,433.
 
 The
holders of the Series A Preferred Stock are entitled to cumulative preferential
dividends at the rate of 10% per annum, payable quarterly in arrears on each of
September 1, December 1, March 1, and June 1, commencing on the first quarter
after the issuance date beginning September 1, 2006 in cash or shares of the
Company’s Common Stock. If the Company elects to pay any dividend in shares of
Common Stock, the number of shares of Common Stock to be issued to each holder
shall be an amount equal to the quotient of (i) the dividend payment divided by
(ii) $0.15 per share.
 
 The
shares of Series A Preferred Stock include a liquidation preference
corresponding to the amount invested. All issued or accrued but unpaid dividends
may also be converted at the election of the holder, and converted at $0.15 per
share. The shares of Series A Preferred Stock are convertible into shares of
common stock, at any time, at the option of the holder and a conversion price of
$0.15 per share, at an initial rate of conversion of 100 shares of common stock
for each one share of Series A Preferred Stock, subject to anti-dilution
provisions in the case of stock splits, dividends or if the Company issues
shares of common stock or other securities convertible into shares of common
stock at an effective price less than $0.15 per share. In the event a public
market is established for the Company’s common stock, the 10% Series A Preferred
Stock is subject to mandatory conversion by the Company upon a 30 day notice if
the average closing price of its common stock is $0.40 or more per share for 10
consecutive trading days and the average daily volume is at least 100,000
shares.
 
 The
Company granted the Series A Preferred Stockholders registration rights covering
the common shares underlying the Series A Preferred Stock and common stock
underlying warrants. Resalesof such underlying
shares were registered on a registration statement on Form SB-2 declared
effective by the SEC on May 9, 2007.
 
 Preferred Stock- Series
B
 
 Between
June 2007 and September 2007, the Company issued 118,875 shares of 8% Series B
Convertible Preferred Stock, or Series B Preferred Stock, with a par value of
$0.001 per share, which generated net proceeds of $3,244,563 to the Company,
after financing fees of $516,063 and conversion of notes payable of
$400,000.
 
 The
holders of the Series B Preferred Stock are entitled to cumulative preferential
dividends at the rate of 8% per annum, payable quarterly in arrears on each of
September 1, December 1, March 1, and June 1, commencing on December 1, 2007. If
the Company elects to pay any dividend in shares of Common Stock, the number of
shares of Common Stock to be issued to each holder shall be an amount equal to
the higher of (i) the average of the closing bid prices for the common stock
over the five trading days immediately prior to the dividend date or (ii)
$0.35.
 
 The
shares of Series B Preferred Stock include a liquidation preference
corresponding to the amount invested. All issued or accrued but unpaid dividends
may also be converted at the election of the Holder, and converted at $0.35 per
share. The shares of Series B Preferred Stock are convertible into shares of
common stock, at any time, at the option of the holder and a conversion price of
$0.35 per share, at an initial rate of conversion of 100 shares of common stock
for each one share of Series B Preferred Stock, subject to anti-dilution
provisions in the case of stock splits, dividends or if the Company issues
shares of common stock or other securities convertible into shares of common
stock at an effective price less than $0.35 per share.  In the event a
public market is established for the Company’s common stock, the Series B
Preferred Stock is subject to mandatory conversion by the Company upon a 30 day
notice if the average closing price of its common stock is $1.00 or more per
share for 10 consecutive trading days.
 
 F-15
 The
Company granted the Series B Preferred Stockholders registration rights covering
the common shares underlying the Series B Preferred Stock and common stock
underlying warrants. The Company agreed to use its best efforts to obtain a
ticker symbol under which its shares will be traded in the Over-The-Counter
Bulletin Board, or the OTC.BB. At such time as trading commences on the OTC.BB
the Company agreed to use its best efforts to file within 120 days a
registration statement covering the common shares into which the Series B shares
are convertible and the shares subject to Warrants.
 
 The
rights of the holders of the Series B Preferred Stock are subordinate to the
rights of the holders of Series A Preferred Stock.
 
 Warrants
 
 During
January 2007, the Company issued warrants to purchase 500,000 shares of common
stock to certain TDRG employees which may be earned based upon certain
milestones related to target revenues and operating margins covering 18 months
after closing. The warrants are exercisable at a price of $0.15 per share. The
warrants expire in January 2012.
 
 In
connection with the issuance of the Series A Preferred Stock, the Company issued
warrants to purchase 736,500 shares of common stock exercisable at a price of
$0.15 per share to the investors at September 30, 2006.  The warrants
expire in June 2013.
 
 The
placement agent for the Series A Preferred Stock offering also received seven
year warrants to purchase 484,667 shares of common stock at an exercisable price
of $0.15 per share.  The warrants expire June 2013.
 
 The fair
value of the warrants issued in connection with the issuance of the Series A
Preferred Stock amounted to $23,592.  The fair value is based on the
following assumptions, using Black Scholes Model: term: 7 years; exercise price
$0.15; risk-free interest rate: 4.85%; expected volatility: 69.40%; market
value: $0.06.
 
 In
connection with the issuance of the Series B Preferred Stock, the Company also
issued warrants to purchase 4,310,625 shares of common stock exercisable at a
price of $0.35 per share to the investors.  The warrants expire in
June 2014.
 
 The
placement agent for the Series B Preferred Stock offering also received seven
year warrants to purchase 1,188,750 shares of common stock at an exercisable
price of $0.35 per share.  The warrants expire June 2014.
 
 The fair
value of the warrants issued in connection with the issuance of the Series B
Preferred Stock amounted to $94,030.  The fair value is based on the
following assumptions, using Black Scholes Model: term: 7 years; exercise price
$0.35; risk-free interest rate: 4.95%; expected volatility: 69.40%; market
value: $0.06.
 
 The
expected volatility of the warrants issued in connection with the Series A and B
Preferred Stock was based on the average historical volatility of comparable
publicly-traded companies.
 
 The fair
value of the warrants was recorded as dividends for Series A and B Preferred
Stock, respectively, and as an increase to additional paid-in
capital.
 
 F-16
 Stock Option
Plan
 
 On
December 15, 2006, the Company's Board of Directors and stockholders approved
the Accelerize New Media, Inc. Stock Option Plan, or the Plan. The total number
of shares of capital stock of the Company that may be subject to options under
the Plan was initially 4,300,000 shares of common stock, and on May 16, 2007 was
increased to 10,000,000 shares of common stock, $.001 par value per share, from
either authorized but unissued shares or treasury shares. The individuals who
are eligible to receive option grants under the Plan are employees, directors
and other individuals who render services to the management, operation or
development of the Company or its subsidiaries and who have contributed or may
be expected to contribute to the success of the Company or a subsidiary. Every
option granted under the Plan shall be evidenced by a written stock option
agreement in such form as the Board shall approve from time to time, specifying
the number of shares of common stock that may be purchased pursuant to the
option, the time or times at which the option shall become exercisable in whole
or in part, whether the option is intended to be an incentive stock option or a
non-incentive stock option, and such other terms and conditions as the Board
shall approve.
 
 During
the year ended December 31, 2007, the Company granted 7,542,500 options to
certain of its employees.
 
 At
December 31, 2007, options to purchase 7,532,500 shares of Common Stock were
outstanding. The
outstanding options are exercisable at a weighted average price per share of
$0.15 per share. The options outstanding vest over periods ranging from two to
three years.
 
 During
2007 and 2006, the Company recorded a share-based payment expense amounting to
approximately $94,000 and $0, respectively, in connection with all
options granted at the respective measurement dates.
 
 The
share-based payment is based on the fair value of the outstanding options
amortized over the requisite period of service for option holders, which is
generally the vesting period of the options. The fair value of the options
granted during 2007 is based on the Black Scholes Model using the following
assumptions:
 
 Exercise
      price:
              
              $
              0.15
      to 0.35Market
      price at date of grant:
              
              $
              0.06
      to 0.75Expected
      volatility:
              
              
              69
              %Expected
      dividend rate:
              
              
              0
              %Risk-free
      interest rate:
              
              
              3.41
      to 4.54
              %
  The
expected volatility is based on the historical volatility of companies
comparable to the Company.
 
 The
weighted-average grant-date fair value of options granted during the year ended
December 31, 2007 amounted to $0.04.
 
 The
following table summarizes information concerning currently outstanding and
exercisable options as of December 31, 2007:
 
 Weighted
              
              
              WeightedAverage
      Exercise
              
              
              Average
      Contractual
              
              
              Aggregate
      IntrinsicOptions
              
              
              Price
              
              
              Terms
              
              
              ValueOutstanding
      at January 1, 2007
              
              
              -
              
              
              $
              -
              
              
              
              -
              
              
              $
              -Granted
              
              
              7,542,500
              
              
              
              0.16
              
              
              
              
              
              
              
              104,000Exercised
              
              
              -
              
              
              
              -Expired
              
              
              10,000
              
              
              
              0.15Outstanding
      at December 31, 2007
              
              
              7,532,500
              
              
              $
              0.16
              
              
              
              9.38
              
              
              $
              4,459,500Exercisable
      and vested at December 31, 2007
              
              
              1,729,161
              
              
              $
              0.15
              
              
              
              9.04
              
              
              $
              1,036,997
  The total
compensation cost related to non-vested awards not yet recognized amounted to
approximately $269,000 at December 31, 2007 and the Company expects that it will
be recognized over the following weighted-average period of 31
months.
 
 F-17
 If any
options granted under the Plan expire or terminate without having been exercised
or cease to be exercisable, such options will be available again under the Plan.
All employees of the Company and its subsidiaries are eligible to receive
non-qualified stock options. Non-employee directors and outside consultants who
provided bona-fide services not in connection with the offer or sale of
securities in a capital raising transaction are eligible to receive
non-qualified stock options. Incentive stock options may not be granted below
their fair market value at the time of grant or, if to an individual who
beneficially owns more than 10% of the total combined voting power of all stock
classes of the Company or a subsidiary, the option price may not be less than
110% of the fair value of the common stock at the time of grant. The expiration
date of an incentive stock option may not be longer than ten years from the date
of grant. Option holders, or their representatives, may exercise their vested
options up to three months after their employment termination or one year after
their death or permanent and total disability. The Plan provides for adjustments
upon changes in capitalization.
 
 The
Company’s policy is to issue shares pursuant to the exercise of stock options
from its available authorized but unissued shares of common stock. It does not
issue shares pursuant to the exercise of stock options from its treasury
shares.
 
 NOTE
8: INCOME TAXES
 
 A
reconciliation of the Company’s effective tax rate to the statutory federal rate
is as follows:
 
 2007
              
              2006Tax
      at U.S. statutory rate:
              
              35.0%
              
              35.0%State
      tax rate, net of federal benefits
              
              5.7
              
              4.4Change
      in valuation allowance
              
              (40.7)
              
              (39.4)Effective
      tax rate
              
              0.0%
              
              0.0%
 
 The tax
effects of principal temporary differences between the carrying amount of assets
and their tax bases are summarized below.
 
 Management
believes it is more likely than not that it will be able to offset its deferred
tax liability against its net operating losses.
 
 The
components of the deferred tax assets are as follows:
  Net
      operating losses
                
                $
                1,450,332Valuation
                
                
                (1,370,306
                )Total
      deferred tax-assets – current
                
                $
                80,026
 
 The
components of the deferred tax liability are as follows:
  Website
      development costs
                
                $
                75,689Amortization
      of goodwill
                
                
                4,337Total
      deferred tax-liability – current
                
                $
                80,026
 NOTE
9: COMMITMENTS
 
 On
January 27, 2004, the Company entered into a 3-year lease for a 2,769 square
foot office facility in Los Angeles, California, which commences on March 15,
2004. Under the terms of the lease, the Company is required to pay initial
monthly base rent of $6,092. The base rent will be increased annually by 3%. On
March 12, 2007, the lease was amended, extending the lease for another 3
years.  Under the new terms of the lease, the Company is required to
pay initial monthly base rent of $7,337, increasing annually by 4%.
 
 Since
January 2007, the Company subleases a portion of the office facility in Los
Angeles.  The sublease requires the sublessee to pay initial monthly
base rent of $1,200. On June 4, 2007, the sublease was amended, extending the
lease for another 3 years.   Under the new terms of the sublease,
the sublessee is required to pay 25% of the Company’s base rent of the
aforementioned lease.
 
 F-18
 On
September 24, 2007, the Company entered into a 6-month lease for a satellite
office in Santa Ana, California, which commenced October 1, 2007. Under the
terms of the lease, the Company is required to pay initial monthly base rent of
$4,800.
 
 Future
annual minimum payments, net of sublease income, required under operating lease
obligations at December 31, 2007 are as follows:
  Future
      Minimum
                
                
                Sublease
                
                
                Net
      MinimumLease
      Payments
                
                
                Income
                
                
                Lease
      Payments2008
                
                $
                146,377
                
                
                
                (22,008
                )
                
                $
                124,3692009
                
                
                102,996
                
                
                
                (22,008
                )
                
                
                80,9882010
                
                
                44,027
                
                
                
                (11,004
                )
                
                
                33,023
  On
January 1, 2007, the Company entered into 3-year employment agreements with
three of its officers and a 3-year consulting agreement with one of its
officers. The agreements are renewable for an additional two-year period at the
option of the applicable employee or consultant. The aggregate compensation to
be paid under such agreements amounts to $435,000 per year. If the employment or
consulting arrangement is terminated without cause by the Company, the Company
is under the obligation, subject to certain restrictions, to pay the equivalent
of one-year compensation, which ranges from $75,000 to $150,000, to the
respective employee or consultant. If the employment or consulting arrangement
is terminated with cause, the Company has no liability for further
payments.
 
 The
commitments under such agreements over the next two years are as
follows:
 
 Year
              
              Commitments2008
              
              $
              435,0002009
              
              
              435,000
  NOTE
10: PRO FORMA INFORMATION
 
 Supplemental
pro forma information that discloses the results of operations for the year
period ended December 31, 2006 as though the TDRG business combination had been
completed as of the beginning of the period being reported on is as
follows:
  Year
      endedDecember
      31, 2006Accelerize
              
              
              TDRG
              
              
              TotalRevenues
              
              $
              199,214
              
              
              $
              497,350
              
              
              $
              696,564Operating
      expenses:Selling,
      general & administrative
              
              
              2,563,348
              
              
              
              837,143
              
              
              
              3,400,491Total
      operating expenses
              
              
              2,563,348
              
              
              
              837,143
              
              
              
              3,400,491Operating
      loss
              
              
              (2,364,134
              )
              
              
              (339,793
              )
              
              
              (2,703,927
              )Other
      income (expense):Interest
      income
              
              
              -
              
              
              
              465
              
              
              
              465Other
      income
              
              
              -
              
              
              
              19,250
              
              
              
              19,250Interest
      expense- related party
              
              
              -
              
              
              
              (2,625
              )
              
              
              (2,625
              )Interest
      expense
              
              
              (521)
              
              
              
              (190
              )
              
              
              (711
              )(521)
              
              
              
              16,900
              
              
              
              16,379Net
      loss
              
              
              (2,364,655
              )
              
              
              (322,893
              )
              
              
              (2,687,548
              )Less
      dividends issued for series A and B  preferred
    stock
              
              
              44,596
              
              
              
              -
              
              
              
              44,596Net
      loss attributable to common stock
              
              $
              (2,409,251
              )
              
              $
              (322,893
              )
              
              $
              (2,732,144
              )Basic
      and diluted loss per common share
              
              $
              (0.13
              )
              
              $
              (0.18
              )
              
              $
              (0.13
              )Basic
      and diluted weighted average common shares outstanding
              
              
              18,748,958
              
              
              
              1,750,000
              
              
              
              20,498,958
  F-19
 NOTE
11: SUBSEQUENT EVENTS
 
 During
March 2008, the Company issued a convertible promissory note aggregating $80,000
to a stockholder.  The note bears interest at 10% per
annum.  Accrued interest may be payable, at the noteholder’s option,
in cash or in shares of common stock. If the accrued interest is paid in shares
of Common Stock, the number of shares issuable to satisfy the accrued
interest is primarily based on the closing price, as quoted on the
Over-The-Counter Bulletin Board of the trading day immediately prior to the
interest payment date.  The interest is payable commencing June 1,
2008 and every quarter thereafter, until the obligations under the convertible
promissory note are satisfied.  The convertible promissory note is due
on March 15, 2011.  The Company may prepay the convertible promissory
note : if prior to July 30, 2008, at a premium amounting to sum of 0.5% for each
full month remaining between the prepayment date and the maturity date and after
June 30, 2008 without premium.  The noteholder may convert, at his
option, the outstanding principal of the convertible promissory note, after July
30, 2008 and prior to maturity at the lesser of 1)  $0.75 or 2) the
average closing price of the Company’s common stock, but in no event less than
$0.50, or 3) the effective price per share of a subsequent financing of the
Company occurring prior to March 15, 2011.
 
 F-20