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ACLZ > SEC Filings for ACLZ > Form 10-Q on 13-Nov-2013All Recent SEC Filings

Show all filings for ACCELERIZE NEW MEDIA INC



Quarterly Report

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

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2012. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See "Cautionary Statement Regarding Forward Looking Information"' elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.


We own and operate CAKE, and, a cloud-based tracking and analytics platform providing advertisers, agencies and networks with business intelligence to increase return on investment on digital advertising spend, reduce operational cost, and manage lifetime value of customer acquisition. Our enterprise tracking application, CAKE, is a software-as-a-service, or SaaS, tracking and real-time reporting dashboard to manage media campaigns across mobile, affiliate, display, search and social.

CAKE is designed for affiliate marketers, agencies, advertisers and lead generation firms looking to simplify their business processes and improve return on investment. The CAKE platform was internally designed and developed by our team of online advertising industry veterans and top-tier software engineers. With a strong background in affiliate marketing and lead generation, the CAKE platform contains business rules and logic that make it a useful tool for online marketing professionals.

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

The CAKE platform's breath of capabilities provides opportunities in many of the major verticals like finance, travel, entertainment, and gaming. Recent product features and enhancements have also contributed to new opportunities in mobile and retail.

CAKE's mobile tracking technology allows a marketer to track application, or app, installs and more importantly events that take place within the app, so the digital marketer knows that the app was installed and what the user is doing within that app: for example, buying items, depositing funds, and referring friends. This all contributes to the marketer's understanding the value of that user and may effectively alter advertising spends to target profitable users.

Retail tracking is an opportunity CAKE has introduced into the suite of features. This enables retailers to track the effectiveness of an online campaign at the individual product or SKU level. Retail tracking provides insight into the real value or actual products that are being sold from a specific digital ad. This is important to enable marketers to track which products are being sold from the advertisement placements. In the retail market CAKE has developed a technology that is enabling advertisers to work directly with publishers in the affiliate channel cutting out traditional fully-managed affiliate networks. Advertisers today pay traditional fully-managed affiliate networks a license fee and commission to manage their affiliate relationships. By replacing the traditional fully-managed affiliate network with the CAKE platform advertisers now eliminate paying commission fees, develop direct relationships with the affiliates, and gain the transparency needed to make decisions to positively effect their digital spend return on investment.

Our revenue model is based on a monthly license, usage fee (based on volume of clicks, impressions, or leads), and a training and implementation fee. Clients purchase annual subscriptions with a discounted monthly usage program or a monthly subscription and usage fee. A majority of our revenues is derived from clients in the United States but we have seen 345% growth in revenues this past year from our European client base.

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

We have experienced in excess of 100% year on year growth since 2011 with minimal sales effort and limited marketing budget. The organic growth has been a result of providing the performance marketing industry a comprehensive suite of business intelligence tools through innovation and what we believe to be a superior product and customer experience.

Our success has also been seen with our revenues growing 61.1% from $1,570,948 during the third quarter of 2012 to $2,531,479 during the third quarter of 2013. This success has enabled us to eliminate all our interest-bearing debt as of September 30, 2013 and become a profitable company with cash and working capital of $1,030,099 and $1,693,894 as of September 30, 2013.

We intend to grow revenues by investing in sales and marketing efforts. We are currently hiring and will continue to hire sales executives globally to target specific verticals and accounts with both agencies and advertisers. Marketing will allocate significant budget to being present at tradeshows, industry publications, and providing the support documentation required by sales initiatives. Additional efforts will be made to speak at industry events and write for online publications increasing awareness of the CAKE suite of products and the thought leadership driving product development.

During November 2012, we formed Cake Marketing UK Ltd, a private limited company, which is our wholly-owned subsidiary located in the United Kingdom in order to better provide our services in the European market.

Our principal offices are located at 2244 West Coast Highway, Suite 250, Newport Beach, CA 92663. Our telephone number there is: (949) 515-2141. Our corporate website is:, the contents of which are not part of this quarterly report.

Our Common Stock is quoted on the Over-the-Counter Bulletin Board and OTCQB Marketplace under the symbol "ACLZ".

Business Environment


The business environment for our SaaS platform is characterized as follows:

? Larger advertisers are evaluating mission-critical software, such as ours, to manage their online performance-based initiatives. Such companies are factoring whether it is more beneficial to them to either develop their own technology or license it from third-parties, such as us;

? Advertisers are requesting more in-depth data related to performance of their online initiatives across publishers and channels as well as deploying our types of solutions, suited for channels with unique characteristics, such as mobile and social channels;

? As the online performance-based market grows, there are new entrants as solution providers, who are competing mostly on price and on richness of features and performance tools;

? We believe that our existing and potential customer base continues to look for more measurable results in their online performance-based growth and more flexible contractual terms; and

? We believe there are opportunities to increase our number of clients in Western and Central Europe, where companies are adopting and implementing online performance-based initiatives.

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