UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

Amendment No. 1

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

For the quarterly period ended ~~June 30,~~March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to ��

Commission File Number: 001-40294

Alfi, Inc.

(Exact name of registrant as specified in its charter)


Delaware		30-1107078
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

429 Lenox Avenue ~~Suite 547~~		33139
Miami Beach, Florida
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: ~~(305)~~(305) 395-4520

Not applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	ALF	The NASDAQ Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $4.57	ALFIW	The NASDAQ Stock Market LLC

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 ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically ~~if any,~~ every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒☐ No ☐☒

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



Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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

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

~~Securities registered pursuant to Section 12(b) of the Act:~~


~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common stock, par value $0.0001 per share~~	~~ALF~~	~~The NASDAQ Stock Market LLC~~
~~Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $4.57~~	~~ALFIW~~	~~The NASDAQ Stock Market LLC~~

As of ~~August 16,~~June 10, 2021, there were ~~16,174,324~~12,664,627 shares of the Company’s ~~Common Stock,~~common stock, par value $0.0001 ~~(the “Common Stock”) and 783,808 warrants~~ outstanding.

Table of Contents

~~ALFI, INC.~~EXPLANATORY NOTE

This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends the Quarterly Report on Form 10-Q of Alfi, Inc. as of and for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission (“SEC”) on June 10, 2021 (the “Original Filing”).

On March 11, 2022, the Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of Alfi, Inc. (the “Company”) and the Company’s management concluded that the Company’s previously issued audited financial statements for the years ended December 31, 2019 and 2020, included in the Company’s Registration Statement on Form S-1 (File No. 333-251959), and the Company’s previously issued interim financial statements included in the Company’s Quarterly Reports on Forms 10-Q for the quarters ended March 31, 2021 and June 30, 2021 (collectively, the “Prior Period Financial Statements”), should no longer be relied upon as a result of the accounting errors described below and should be restated. Similarly, any previously furnished or filed reports, press releases, earnings releases, investor presentations or other communications describing the Prior Period Financial Statements and related financial information should not be relied upon.

In connection with the Company’s evaluation of the issues and findings identified in the Company’s previously disclosed internal independent investigation, the Company reviewed the Prior Period Financial Statements and identified the following accounting errors:

(a)The Company incorrectly capitalized certain general and administrative expenses incurred during the years ended December 31, 2018, 2019, and 2020, and incorrectly included those costs in intangible assets in its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021.

(b)The Company overstated the carrying value of tablets by incorrectly reporting them at cost with no allowance for depreciation, resulting in an overstatement of other assets (complimentary devices), net, in its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021.

(c)The Company overstated total assets and total liabilities as of December 31, 2020, by incorrectly recording a note receivable (related parties) and a liability included in current portion of long-term debt (related parties). This note receivable represents a bridge loan provided to the Company by certain related parties that was executed in December 2020 but not fully funded until April 2021.

(d)The Company did not recognize and report on its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021, an office lease in accordance with Financial Accounting Standards Board Accounting Standards Update No. 2018-11, Leases (Topic 842).

The accompanying financial statements for the quarterly period ended March 31, 2021, have been restated to correct the accounting errors and conform to current period presentation. The following items have been amended in this Amendment No. 1 in connection with such restatement: (i) Part I, Item 1. Financial Statements; (ii) Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations; (iii) Part 1, Item 4. Controls and Procedures; and (iv) Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. In addition, the Company’s Principal Executive Officer and Principal Financial Officer have provided new certifications dated as of the date of the filing of this Amendment No. 1 (Exhibits 31.1, 31.2 and 32).

As a result of the factors described above, the Company’s management has concluded that a material weakness existed in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. See Part I, Item 4. Controls and Procedures included in this Amendment No. 1.

Except as described above, no other information included in the Original Filing is being amended or updated by this Amendment No. 1. This Amendment No. 1 continues to describe the conditions as of the date of the Original Filing. Except as expressly contained herein, we have not updated, modified or supplemented the disclosures contained in the Original Filing and this Amendment No. 1 does not purport to reflect any information or events subsequent to the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Balance ~~Sheet~~

Unaudited


June 30,

December 31,


2021

2020
Assets




Current assets:




Cash and cash equivalents

19,693,653

8,335
Accounts receivable, net

—

—
Note receivable (related parties)

—

1,830,000
Prepaid expenses and other

2,415,361

793
Total current assets

22,109,014

1,839,128

Property and equipment, net of accumulated depreciation of $92,441 and $46,081, respectively

150,519

117,474
Intangible assets, net of accumulated amortization of $879,439 and $440,321, respectively

3,945,070

4,384,188
Other assets (complimentary devices), net

1,039,625

1,104,000
Other assets, net

55,350

7,940
Total assets

27,299,578

7,452,730

Liabilities




Current liabilities




Accounts payable

982,230

516,705
Current portion of long-term debt (related parties)

—

5,558,808
Derivative liability

—

229,712
Accrued interest

—

116,600
Total current liabilities

982,230

6,421,825

Long-term debt, net (related parties)

—

—
Total liabilities

982,230

6,421,825

Stockholders' Equity




Series Seed preferred stock, $0.0001 par, -0- shares issued as of June 30, 2021, and December 31, 2020, respectively. 2,500,000 shares authorized

—

2,500,000
Common stock, $0.0001 par, 16,040,941 and 4,441,523 shares issued as of June 30, 2021, and December 31, 2020, respectively. 80,000,000 shares authorized

1,604

444
Additional paid-in capital

37,679,500

2,024,871
Accumulated surplus (deficit)

(11,363,756)

(3,494,410)
Total stockholders' equity

26,317,348

1,030,905

Total liabilities and stockholders' equity

27,299,578

7,452,730

~~See accompanying notes to the consolidated financial statements~~

~~Table of Contents~~

~~Alfi, Inc.~~

~~f/k/a Lectrefy, Inc.~~

~~Condensed Consolidated Statement of Operations~~Sheets

Unaudited

Unaudited

Unaudited

Unaudited

Three months

Three months

Six months

Six months

ended June 30,

ended June 30,

ended June 30,

ended June 30,


2021

2020

2021

2020
Revenues, net

936

—

18,386

—

Cost of sales, net

161,377

—

265,883

—

Gross margin

(160,441)

—

(247,497)

—

Operating expenses





General and administrative

4,255,404

—

7,025,819

—
Depreciation and amortization

229,317

5,859

457,773

11,512
Total operating expenses

4,484,721

5,859

7,483,593

11,512

Other income (expense)





Other income

14,478

—

30,443

60,853
Interest expense

(61,787)

(17,913)

(168,700)

(35,416)
Total other income (expense)

(47,309)

(17,913)

(138,257)

25,437

Net income (loss) before provision for income taxes

(4,692,471)

(23,772)

(7,869,346)

13,925
Provision for income taxes

—

—
Net income (loss) after provision or income taxes

(4,692,471)

(23,772)

(7,869,346)

13,925
Earnings (loss) per share

(0.44)

(0.01)

(1.00)

0
Weighted average common shares outstanding

10,701,717

3,150,000

7,906,647

3,150,000


	Unaudited
	Mar 31, 2021		Dec 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	96,023	$	8,335
Accounts receivable		17,450		—
Prepaid expenses and other		—		793
Total current assets		113,473		9,128
Property and equipment, net		310,778		506,294
Intangible assets, net		844,264		888,271
Operating lease right-of-use asset, net		135,357		149,032
Other assets		7,940		7,940
Total assets	$	1,411,812	$	1,560,665
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses	$	1,173,677	$	1,000,876
Debt, related parties		5,727,154		3,728,808
Lease liability		138,670		152,646
Interest payable, related parties		222,722		116,600
Total current liabilities		7,262,223		4,998,930
Total liabilities		7,262,223		4,998,930

Stockholders' Deficit
Series Seed convertible preferred stock , $0.0001 par value, 2,500,000 shares authorized, issued, and outstanding at March 31, 2021 and December 31, 2020, respectively		2,500,000		2,500,000
Common stock, $0.0001 par value, 80,000,000 shares authorized, 4,599,085 and 4,441,582 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		460		444
Additional paid-in capital		2,372,819		2,076,150
Accumulated deficit		(10,723,690)		(8,014,859)
Total stockholders' deficit		(5,850,411)		(3,438,265)
Total liabilities and stockholders' deficit	$	1,411,812	$	1,560,665

See accompanying notes to the ~~condensed~~ consolidated financial statements

Table of Contents

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statements of Operations

(Unaudited)


	Three months		Three months
	ended Mar 31,		ended Mar 31,
	2021		2020
Revenues	$	17,450	$	—

Operating expenses
Compensation and benefits		883,211		169,769
Other general and administrative		1,251,859		430,589
Depreciation and amortization		247,315		9,563
Total operating expenses		2,382,385		609,921

Operating loss		(2,364,935)		(609,921)

Other income (expense)
Other income		13,018		10,358
Interest expense		(356,914)		(16,392)
Total other expense, net		(343,896)		(6,034)

Net loss before provision for income taxes		(2,708,831)		(615,955)
Provision for income taxes		—		—
Net loss	$	(2,708,831)	$	(615,955)

Loss per share, basic and diluted	$	(0.61)	$	(0.20)

Weighted average shares outstanding,
basic and diluted		4,459,082		3,150,058

See accompanying notes to the consolidated financial statements

Table of Contents

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statement of Changes to Stockholders’ Equity (Deficit)

(Unaudited)


											Total
	Series Seed Convertible						Additional				Stockholders'
	Preferred Stock			Common Stock			Paid-In		Accumulated		Equity
	Shares	Amount		Shares	Amount		Capital		Deficit		(Deficit)
Balance - January 1, 2020	2,500,000	$	2,500,000	3,150,058	$	315		—	$	(2,467,584)	$	32,731
Net loss	—		—	—		—		—		(615,955)		(615,955)
Balance - March 31, 2020	2,500,000	$	2,500,000	3,150,058	$	315	$	—	$	(3,083,539)	$	(583,224)


											Total
	Series Seed Convertible						Additional				Stockholders'
	Preferred Stock			Common Stock			Paid-In		Accumulated		Equity
	Shares	Amount		Shares	Amount		Capital		Deficit		(Deficit)
Balance - January 1, 2021	2,500,000	$	2,500,000	4,441,582	$	444	$	2,076,150	$	(8,014,859)	$	(3,438,265)
Shares issued with debt	—		—	157,503		16		249,984		—		250,000
Share based compensation	—		—	—		—		46,685		—		46,685
Net loss	—		—	—		—		—		(2,708,831)		(2,708,831)
Balance - March 31, 2021	2,500,000	$	2,500,000	4,599,085	$	460	$	2,372,819	$	(10,723,690)	$	(5,850,411)

See accompanying notes to the consolidated financial statements

Table of Contents

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Unaudited

Total

Series Seed

Additional

Accumulated

Stockholders'

Preferred Stock

Common Stock

Paid-In

Surplus

Equity



Shares

Amount


Shares

Amount

Capital

(Deficit)

(Deficit)
Balance at December 31, 2019

2,500,000

2,500,000

3,150,000

315

—

64,549

$
2,564,864
Net income (loss)

—

—

—

—

—

37,697

37,697
Balance at March 31, 2020

2,500,000

2,500,000

3,150,000

315

—

102,246

2,602,561
Net loss

(23,772)

Balance at June 30, 2020

2,500,000

2,500,000

3,150,000

315

—

78,474

2,602,561

Balance at December 31, 2020

2,500,000

2,500,000

4,441,523

444

2,024,871

(3,494,410)

1,030,905
Shares issued with debt

157,561

16

249,984

250,000
Net loss

(3,176,875)

(3,176,875)
Balance at March 31, 2021

2,500,000

2,500,000

4,599,084

460

2,274,855

(6,671,285)

(1,895,970)
Shares issued for cash

—

—

4,291,045

429

15,732,252

—

15,732,681
Exercise of warrants

—

—

3,385,746

338

15,472,521

—

15,472,859
Shares issued with debt

315,008

32

499,968

—

500,000
Shares issued for services

300,000

30

599,970

—

600,000
Options

—

—

600,249

—

600,249
Conversion of preferred stock to common

(2,500,000)

(2,500,000)

3,150,058

315

2,499,685

—

—
Net loss

—

—

—

—

—

(4,692,471)

(4,692,471)
Balance at June 30, 2021

$
—

$
—

$
16,040,941

$
1,604

$
37,679,500

$
(11,363,756)

$
26,317,348

~~See accompanying notes to the consolidated financial statements~~

~~Table of Contents~~

~~Alfi, Inc.~~

~~f/k/a Lectrefy, Inc.~~

~~Consolidated Statement of Cashflows~~


	Unaudited		Unaudited
	Six months		Six months		Three months		Three months
	ended June 30,		ended June 30,		ended Mar 31,		ended Mar 31,
	2021		2020		2021		2020
Operating activities
Net income (loss)	$	(7,869,346)	$	13,925
Net loss					$	(2,708,831)	$	(615,955)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		457,773		11,512
Stock based compensation		1,663,908		—
Depreciation and amortization						247,315		9,563
Shares issued with debt						250,000		—
Share based compensation						46,684		—
Amortization of operating lease right-of-use asset						13,675		14,707
Changes in assets and liabilities:
Other assets (complimentary devices)		64,375		(1,256,500)
Accounts receivable		—		—		(17,450)		—
Prepaid expenses and other assets		(2,414,568)		2,315		793		(5,278)
Accounts payable		465,526		74,325
Accrued interest		(116,600)		35,413
Net cash used in operations		(7,748,932)		(1,119,010)

Other assets						—		65
Accounts payable and accrued expenses						172,802		5,828
Lease liability						(13,976)		(14,463)
Interest payable, related parties						106,122		16,393
Net cash used in operating activities						(1,902,866)		(589,140)
Investing activities
Acquisition of property, plant, and equipment, net		(51,701)		—
Acquisition of intangible assets, net		—		(1,418,583)
Capital expenditures						(7,791)		(1,016,265)
Acquisition of intangible assets						—		(181,169)
Net cash used in investing activities		(51,701)		(1,418,583)		(7,791)		(1,197,434)

Financing activities
Proceeds from issuance of preferred stock		—		—
Proceeds from issuance of common stock, net of deferred offering costs		30,949,003		—
Proceeds from issuance of warrants, net		42,910		—
Proceeds from related party note payable		2,580,000		2,539,745
Repayments of related party note payable		(6,085,962)		—
Proceeds from related party debt payable						1,998,345		1,842,050
Net cash provided by financing activities		27,485,951		2,539,745		1,998,345		1,842,050

Net change in cash and cash equivalents		19,685,318		2,152		87,688		55,476
Cash and cash equivalents at the beginning of the period		8,335		38,890		8,335		38,890
Cash and cash equivalents at the end of the period		19,693,653		41,042	$	96,023	$	94,366

Supplemental disclosure of cash flow information
Cash paid for interest					$	—	$	—
Cash paid for income tax					$	—	$	—

See accompanying notes to the consolidated financial statements

Table of Contents

ALFI, INC.

f/k/a LECTREFY, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE 30, 2021, AND DECEMBER 31, 2020~~

NOTE 1 BUSINESS DESCRIPTION BACKGROUND

Alfi, Inc. is a C-corporation ~~formed~~incorporated in Delaware that operates in the technology sector; specifically, Software as a Service ~~(SaaS)~~(“SaaS”) in the Digital Out Of Home ~~(DOOH)~~(“DOOH”) Smart Advertising segment. This segment includes artificial intelligence, machine & deep learning, edge computing, Big Data, telecommunications, and the Internet of Things (IoT). Alfi, Inc. includes its wholly owned subsidiary Alfi NI(N.I.) Ltd, the results of which are presented on a ~~combined~~consolidated basis in the ~~consolidated~~ financial statements included in this ~~Report.~~Quarterly Report on form 10-Q/A (this “Quarterly Report”). Alfi NI(N.I.) Ltd is a registered business in Belfast, Ireland. Collectively, the ~~combined~~ consolidated entity is referred to as the “Company” or “Alfi” throughout this Quarterly Report.

The ~~Company’s~~Company's timeline of events relative to its current formation above began on April 4, 2018, when Lectrefy, Inc., a Florida corporation, was ~~organized.~~incorporated. On July 6, 2018, Lectrefy, ~~Inc,~~Inc., a Delaware corporation, was ~~organized.~~incorporated. On July 11, 2018, Lectrefy, Inc. of, the Florida corporation, was merged into athe newly created entity Lectrefy, Inc. ~~of Delaware.~~, the Delaware corporation. On July 25, 2018, Lectrefy, Inc. of, the Delaware corporation, became qualified to do business in Florida. On January 31, 2020, Lectrefy, Inc. of, the Delaware corporation, changed its name to Alfi, Inc.

On September 18, 2018, Lectrefy, NI(N.I.) Ltd was organized in Belfast, Ireland. On February 4, 2020, Lectrefy, ~~NI Ltd.’s~~(N.I.) Ltd’s name was changed to Alfi NI(N.I.) Ltd. On February 13, 2020, Lectrefy Inc. the Delaware corporation, registered itits name change to Alfi, Inc. in the State of ~~Florida~~Florida.

Alfi seeks to ~~Alfi, Inc.~~

~~In 2019,~~provide solutions that bring transparency and accountability to the Company’s software product received initial certification compliance with GDPR government regulatory standards, the highest level of privacy compliance certification available in its jurisdiction. As of June 2020, the Company’s products were fully developed and are currently being deployed to customers.

~~The Company~~DOOH advertising marketplace. Alfi uses artificial intelligence and big data analytics to measure and ~~predict human response. Its~~disseminate audience presence and audience demographics. The Company’s computer vision technology is powered by proprietary artificial intelligence, to determine the ~~age, gender, ethnicity, geolocation,~~relevant demographic and ~~emotion~~geospecific information of ~~someone~~the audience in front of an Alfi-enabled device, such as a tablet or kiosk. ~~Its software~~Alfi can then deliver in real-time, the advertisements to that particular viewer based on the viewer’s demographic ~~and psychographic profile. It delivers~~profile and/or geolocation. By delivering the ~~right content,~~advertisements most relevant to the right person at the right time in a responsible and ethical manner. By delivering advertisements a viewer wants, the Company provides its advertising customers the viewers they want, and the result is higher click through rates, or CTRs and higher CPM, cost per thousand, rates.

The Company has created an enterprise grade, multimedia state-of-the-art computer vision and machine learning platform, generating powerful advertising recommendations and insights. Multiple technologies work together in its software with viewer privacy and reporting objectives as the Company’s two goals. The software uses a facial fingerprinting process to make demographic determinations. As such, the Company makes no attempt to identify the individualaudience in front of the ~~screen. By providing age, gender, ethnicity and geolocation information, brand owners have all~~device, Alfi connects its advertising customers to the ~~data~~viewers they ~~need for meaningful interaction.~~

The Company solves the problem of providing real time, accurate and rich reporting on customer demographics, usage, interactivity, and engagement while never storing any personal identifiable information of its users. No viewer is ever required, or requested,seek to enter any information about themselves on any Alfi-enabled device. Alfi was designed to be fully compliant with all privacy regulations. Alfi is fully compliant with the GDPR, General Data Protection Regulation, in Europe, the CCPA, California Consumer Privacy Act, and HIPAA, the Health Insurance Portability and Accountability Act.target.

The Company’s initial focus is to place ~~its~~ Alfi-enabled devices in malls, airports, rideshares ~~retailers, malls,~~ and ~~airports.~~taxis. In addition, the Company has begun offering its software solution to other DOOH media operators as a SaaS product.

The Company’s primary activities since inception have been research and development, managing collaborations, and raising capital. ~~As of the date of this Report, the Company has approximately 9,600 tablets either held as Other Assets (complimentary devices) or in operation currently being used by customers.~~

~~Table of Contents~~

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

~~Revenue Recognition~~

Under Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer.

Alfi generates revenues from 3 sources. First, Alfi sells advertising and content on its Alfi-enabled tablets and other devices such as kiosks. Second, Alfi licenses its technology to other companies as a Software-as-a-Service (SaaS) product. Third, Alfi looks to sell the aggregated data reflecting viewer engagement it derives from users of an Alfi-enabled device to advertisers and content providers. Alfi has different customers for each of its revenue streams: (1) companies that buy content space, like CNN, NBC, etc., or companies that buy ad space like Coke, Ford, etc.; (2) companies that pay a per screen fee on a SaaS basis to operate Alfi software on their network, where they sell ads & content and on their own devices; and (3) companies that purchase viewer engagement data on a subscription basis.

With respect to Alfi-enabled tablets or devices placed into service by Alfi, Alfi recognizes revenue on a cost per thousand impressions (CPM), an ad placed, or share-of-voice basis depending on the advertiser’s or content provider’s request. Alfi has contracts with both the advertisers and content providers that specify the amounts to be paid to Alfi for displaying advertising or content. The number of impressions, frequency of ad placement or share of voice the advertiser or content provider is willing to pay and the duration of each campaign is set by the advertiser or content provider. Content and advertisements are provided to Alfi by companies desiring to deliver content for viewer engagement. In general, Alfi does not pay for content, to the extent it does, the cost of acquiring content is be expensed as cost of sales. Alfi will recognize revenue under these contracts upon the validated delivery of impressions to the end user of the Alfi-enabled device.

With respect to SaaS licenses, Alfi enters into license agreements with third parties that place their own devices for advertising together with the remote management access and data reporting that the Alfi platform provides. Additionally, Alfi may form a partnership where the revenues are shared with the licensee. Licenses may be for a specified duration or on a renewable subscription basis. Alfi charges these third parties a monthly, per screen fee, or other partnership arrangement for use of the Alfi platform. Alfi recognizes the revenue from these licenses or partnership revenue share agreements monthly in accordance with Topic 606.

Alfi believes that the aggregated data of viewer engagement has significant value for advertisers and content providers. Alfi looks to sell such data to third parties on a subscription basis and recognize revenue as the subscription payments are received depending on the nature of the contract. For subscriptions that are prepaid, revenue is recognized as earned; with respect to subscriptions that are not prepaid, revenue is recognized when the data is delivered to the subscriber.

Alfi has distributed and activated into operations over 1,500 devices tablets and kiosks at 0 cost to rideshare, mall, or airport owner(s). It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner that the Alfi-enabled device engages with and to whom Alfi delivers advertising and content. It is projected that Alfi will begin selling advertising and content for those tablets placed into operation in the third quarter of 2021.

Alfi has recognized revenue from its rideshare sources. This revenue source for rideshares began at the end of the second quarter. Additionally, revenues from advertiser and content providers for rideshare and SaaS revenue share partnerships are projected for the third quarter of 2121. Irrespective of revenue generation on devices, when they are physically placed into service, devices are expensed in accordance with the Company’s Cost of Sales policy.

The contracts with a rideshare, mall or airport owners for placing a device in service does not trigger a payment from such party to Alfi. With respect to a kiosk in a mall or airport, Alfi may be paid a separate service fee to maintain the device, but Alfi does not anticipate that to be a material source of revenue. Alfi’s contract with a device host may provide that Alfi pays a revenue sharing amount, or fee, based on the revenue Alfi derives from that device. Alfi will expense that fee in Cost of Sales in accordance with its Cost of Sales policy. In general, a rideshare will not be required to return tablets distributed by Alfi at any time. Removing a tablet from the vehicle or returning it to Alfi would automatically cancel the opportunity for a rideshare to receive commissions. Thus, Alfi does not anticipate that a rideshare would seek to return a tablet. Kiosks, because of their high cost, may either be returned to Alfi or purchased by the facility owner at the end of the contract.

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Revenue Recognition

Under Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts with Customers” (“Topic 606”), revenue from contracts with customers is measured based on the consideration specified in the contract with the customer.

With respect to Alfi-enabled tablets placed in rideshares or devices placed into service by Alfi, Alfi will recognize revenue on a cost per thousand (“CPM”) basis or a related basis for both the content and advertisements delivered. Alfi contracts (also called insertion orders) for both the advertiser and the content provider specify the amounts to be paid to Alfi for displaying the advertisement or content. Content and advertisements are provided to Alfi by companies desiring to deliver content for viewer engagement.

With respect to SaaS licenses, Alfi has entered into two license agreements with third parties to use Alfi-placed devices on customer property and share in advertising revenues. Under these agreements, the customer and Alfi work together to generate advertising revenue, and the devices have remote management access and data reporting that the Alfi platform provides. Alfi began to earn revenue from advertisers during the fourth quarter of 2021. Alfi will recognize the revenue from these contracts monthly, in accordance with Topic 606.

Through March 31, 2021, the Company had distributed approximately 1,000 devices (tablets and kiosks) at 0 cost to rideshare, mall, and airport owners. It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner that the Alfi-enabled device engages with and to whom the Company delivers advertising and content.

The Company recognizes revenue when earned from rideshare sources, advertisers, and content providers. Each contract for placing a device in service with rideshare, mall, or airport owners generally does not trigger a payment from such party to the Company. The Company’s contract with a device host may provide that the Company pays a revenue sharing amount, or fee, based on the revenue the Company derives from that device. The Company will expense that fee in other general and administrative expenses. Removing a tablet from the vehicle or returning it to the Company would automatically cancel the opportunity for a rideshare to receive commissions.

Accounts Receivable

The Company records accounts receivable at its net realizable value.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 3 months or less ~~when purchased~~from the purchase date to be cash equivalents. ~~On June 30, 2021, and December 31, 2020, the Company had $19,693,653 and $8,335 in cash and cash equivalents, respectively.~~

~~Concentration of Credit Risk~~

Generally, the Company’s cash balances, which are deposited in non-interest-bearing accounts may exceed FDIC insurance limits from time to time. The financial stability of these institutions is periodically reviewed by senior Management.

~~Complimentary Devices~~

The Company purchased approximately 9,600 Lenovo tablet hardware devices in 2020 (the “devices”), which are held for placement with rideshare and other businesses. In June of 2021, Alfi also order an additional 10,000 devices from Lenovo, which were received in July 2021. Alfi’s devices represent an incentive-based outreach program by which devices are provided complimentary to rideshare or other businesses that sign up for Alfi’s Software-as-a-Service (SaaS) product. As part of Alfi sales agreements with rideshare and other businesses, devices are provided as a complimentary product in exchange for monetization of the respective set of business consumer’s attention.

The Company records these devices at the lower of cost or fair market value. Devices are accounted for as Other assets (complimentary devices) on the consolidated balance sheet until they are provided to a rideshare or other businesses. Upon being placed into service for consumer use, the Company expenses Other Assets (complimentary devices) to Cost of Sales.

Property and Equipment

Property ~~plant~~ and equipment ~~consists~~includes tablets recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over estimated useful lives of three years.

Property and equipment also includes office equipment recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which for office equipment is three to five years. ~~The Company maintains a capitalization policy for individual items greater than $500 and an estimated useful life greater than one year.~~

Table of ~~which none were identified during the periods included in this Report.~~Contents

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to Management. The respective carrying value (net book value) of certain on-balance- sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable notes payable, fixed assets, and amortizable intangible assets.management. Fair values approximate carrying values for cash, accounts payable, notes payable, fixed assets, and amortizable intangible ~~assets at June 30, 2021, and December 31, 2020, respectively.~~assets.

~~Net Income (Loss) per~~Loss Per Share ~~of Common Stock~~

The Company computes basic net loss per share by dividing net ~~income (loss)~~loss per share available to ~~Common Stock holders~~stockholders of the Company’s common stock, $0.001 par value per share (the “Common Stock”), by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into the Common Stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted ~~income (loss)~~loss per share ~~for the periods ended June 30, 2021, and December 31, 2020,~~ excludes potentially dilutive securities when their inclusion would be ~~anti- dilutive,~~anti-dilutive, or if their exercise prices were greater than the average market price of Common Stock during the period.

Potentially dilutive securities excluded from the computation of basic net ~~income (loss)~~loss per share as of ~~June 30, 2021, and 2020~~ are as follows:


	June 30,	June 30,	March 31,	March 31,
	2021	2020	2021	2020
Convertible Series (“Seed”) Preferred stock	0	3,150,058	3,150,058	3,150,058
Warrants	905,299	0	—	—
Employee stock options	1,032,432	448,888	433,927	59,064
Total potentially dilutive securities	1,937,731	3,598,946	3,583,985	3,209,122

Common Stock

The Company issued 3,150,058 shares of Common Stock on April 4, 2018 to the Company’s founders. At March 31, 2021 and December 31, 2020, outstanding shares of Common Stock totaled 4,599,085 and 4,441,582, respectively. The Company paid 0 dividends on Common Stock issued through March 31, 2021. During May 2021, the Company issued 4,291,045 shares of Common Stock and 4,291,045 warrants to purchase shares of Common Stock at a price of $4.57 per share for cash in its initial public offering, which was completed on May 6, 2021 (“IPO”). The Company also issued 3,150,058 shares of Common Stock from conversion of all outstanding shares of the Company’s Series Seed Preferred Stock, $0.0001 par value per share (the “Series Seed Preferred Stock”), to shares of Common Stock. The Company accounts for common stock at fair value. Pursuant to the underwriting agreement for the IPO, the Company also issued to the underwriters warrants to purchase up to an aggregate of 186,567 shares of Common Stock (“Underwriter's Warrants”). The Underwriter’s Warrants may be exercised beginning on May 3, 2022 until May 3, 2026. The initial exercise price of each Underwriter’s Warrant is $5.19 per share. The Company accounts for Common Stock issued with debt, issued for services, and issued as share based compensation at fair value.

Convertible Instruments

Through March 31, 2021, the Company did not record or issue convertible notes with beneficial conversion features and did not record debt discounts related to beneficial conversion features. During 2020 and 2019, the Company issued Series Seed Preferred Stock, which was convertible into Common Stock on a 1:1.260023 basis at the option of the holder and is classified as stockholders’ equity on the balance sheet at March 31, 2021 and December 31, 2020. When converted into Common Stock by Series Seed Preferred Stock holders, its fair value approximates the existing carrying (book) value of the Series Seed Preferred Stock as stated.

U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional.

~~Table of Contents~~

During the periods ended June 30, 2021, and December 31, 2020, the Company did not record or issue convertible notes with beneficial conversion features and did not record debt discounts related to beneficial conversion features. During 2020 and 2019, the Company issued Convertible Series Seed Preferred stock which has option for stockholders to convert into Common Stock on a 1:1.260023 basis and is classified as stockholders’ equity on the balance sheet at June 30, 2021, and December 31, 2020, respectively. If converted into Common Stock by Series Seed stockholders, its fair value would approximate the existing carrying (book) value of the Series Seed Preferred stock as stated. Thus, 0 embedded derivatives were identified on the conversion option of ~~Convertible~~ Series Seed Preferred ~~stock~~Stock at ~~June 30,~~March 31, 2021 orand December 31, ~~2020, respectively.~~2020. In May 2021, ~~Convertible~~2,500,000 shares of Series Seed Preferred Stock converted ~~2,500,000 shares~~ into 3,150,058 shares of Common Stock. ~~Convertible Series Seed Preferred Stock is still authorized for issuance under Alfi's charter and there were 0 outstanding shares on June 30,2021.~~

Common Stock Purchase Warrants ~~and Other Derivative Financial Instruments~~

The Company accounts for ~~derivative instruments~~warrants to purchase its Common Stock in accordance with ASC ~~815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded~~815. Proceeds from the issuance of warrants indexed to the Company’s own stock are classified in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedging relationships and the types of relationships designated are based on the exposures hedged. On June 30, 2021, and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges.

~~The Company adopted Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815)~~stockholders’ equity (deficit). ~~The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.~~

Stock based compensation

The Company maintains a stock equity incentive plan, the Alfi, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), under which it may grant non-qualified stock options, incentive stock options, stock appreciation rights, stock awards, performance and performance-based awards, or stock units to employees, non-employee directors and consultants. The Company measures compensation expense for stock-based grants at fair value. Compensation expense is recognized over the vesting period relevant to the award.

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will be realized. The Company carries a 100% valuation reserve against deferred tax assets. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ~~As of June 30, 2021, and December 31, 2020, the~~The Company has not recorded any unrecognized tax benefits. The Company’s policy is to ~~classify assessments, if any, for~~record tax-related interest as interest expense and tax-related penalties as general and administrative expenses in the statements of operations. The Company did not recognize any such penalties or interest during the periods presented under this Quarterly Report.

~~Change~~Forward Stock Split

On March 1, 2021, the Company enacted a forward stock split on a 1.260023:1.000000 basis. Share amounts reflected in ~~Accounting Estimate / Prior Period Reclassifications~~this Quarterly Report are presented post-split, unless otherwise noted.

~~Certain prior period amounts have been reclassified~~NOTE 3 GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As of June 10, 2021 (the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021), the Company had not yet generated substantial revenue from customers and business activity has mainly consisted of cash outflows associated with its business development activities. These conditions indicate that there is substantial doubt about the Company’s ability to ~~conform to current period presentation, including a change in the estimated useful life of capitalized platform production costs (see Note 10). Management originally determined ten years~~continue as a ~~reasonable useful life estimate for these assets and revised it to~~ ~~five years~~ ~~based on external market competition and other technological factors. The Company made~~going concern within one year from the ~~change as part~~issuance date of its standard review of its accounting policies in connection with the audit for the year ended December 31, 2020. The Company has considered the change in estimated useful life a change in accounting estimate under GAAP and has accounted for it prospectively in the consolidated financial statements. ~~Based on current conditions,~~

The Company’s primary source of operating funds since inception through April 2021 was cash proceeds from the private placements of preferred equity and debt securities. In May 2021, the Company ~~believes~~completed its ~~revised estimated useful life allocation reasonable~~IPO yielding net proceeds to the Company of approximately $15.7 million from sale of Common Stock and warrants. The capital raise included funding for working capital to launch and expand operations in accordance with its business model.

The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these ~~assets.~~funds will be available on terms acceptable to the Company or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There is no assurance that such a plan will be successful.

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Impact of the Restatements

The impact of the restatement on ~~a ratio~~the consolidated balance sheet as of ~~1.260023 to 1.000000 basis. Share amounts reflected in this Report are~~March 31, 2021 is presented ~~post-split, unless otherwise noted.~~below:


		As of March 31, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated
Assets
Current assets:
Cash and cash equivalents	$	96,021	$	2	$	96,023
Accounts receivable		17,450		—		17,450
Total current assets		113,471		2		113,473
Property and equipment, net		116,368		194,410		310,778
Intangible assets, net		4,164,630		(3,320,366)		844,264
Other assets (complimentary devices), net		1,104,000		(1,104,000)		—
Operating lease right-of-use asset, net		—		135,357		135,357
Other assets		7,940		—		7,940
Total assets	$	5,506,409	$	(4,094,597)	$	1,411,812
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses	$	1,092,024	$	81,653	$	1,173,677
Debt payable, related parties		5,808,808		(81,654)		5,727,154
Lease liability		—		138,670		138,670
Interest payable, related parties		222,722		—		222,722
Total current liabilities		7,402,379		(140,156)		7,262,223
Total liabilities		7,402,379		(140,156)		7,262,223
Stockholders' Deficit
Series Seed convertible preferred stock, $0.0001 par value,
2,500,000 shares authorized, issued, and outstanding		2,500,000		—		2,500,000
Common stock, $0.0001 par value, 80,000,000 shares
authorized, 4,599,085 shares issued and outstanding		460		—		460
Additional paid-in capital		2,274,855		97,964		2,372,819
Accumulated deficit		(6,671,285)		(4,052,405)		(10,723,690)
Total stockholders' deficit		(1,895,970)		(3,954,441)		(5,850,411)
Total liabilities and stockholders' deficit	$	5,506,409	$	(4,094,597)	$	1,411,812

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The impact of the restatement on the consolidated balance sheet as of December 31, 2020 is presented below:


	As of December 31, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated
Assets
Current assets:
Cash and cash equivalents	$	8,335	$	—	$	8,335
Note receivable (related parties)		1,830,000		(1,830,000)		—
Prepaid expenses and other		793		—		793
Total current assets		1,839,128		(1,830,000)		9,128
Property and equipment, net		117,474		388,820		506,294
Intangible assets, net		4,384,188		(3,495,917)		888,271
Other assets (complimentary devices), net		1,104,000		(1,104,000)		—
Operating lease right-of-use asset, net		—		149,032		149,032
Other assets		7,940		—		7,940
Total assets	$	7,452,730	$	(5,892,065)	$	1,560,665
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	516,705	$	484,171	$	1,000,876
Debt payable, related parties		5,558,808		(1,830,000)		3,728,808
Derivative liability		229,712		(229,712)		—
Lease liability		—		152,646		152,646
Interest payable, related parties		116,600		—		116,600
Total current liabilities		6,421,825		(1,422,895)		4,998,930
Total liabilities		6,421,825		(1,422,895)		4,998,930
Stockholders' Equity (deficit)
Series Seed convertible preferred stock, $0.0001 par value, 2,500,000 shares authorized, issued, and outstanding		2,500,000		—		2,500,000
Common stock, $0.0001 par value, 15,000,000 shares authorized, 4,441,582 shares issued and outstanding		444		—		444
Additional paid-in capital		2,024,871		51,279		2,076,150
Accumulated deficit		(3,494,410)		(4,520,449)		(8,014,859)
Total stockholders' equity (deficit)		1,030,905		(4,469,170)		(3,438,265)
Total liabilities and stockholders' equity (deficit)	$	7,452,730	$	(5,892,065)	$	1,560,665

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The impact of the restatements on the consolidated statement of operations for the quarter ended March 31, 2021 is presented below:


	For the Three Months Ended March 31, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated
Revenues	$	17,450	$	—	$	17,450
Cost of sales, net		104,506		(104,506)		—
Gross margin		(87,056)		87,056		—

Operating expenses
Compensation and benefits		—		883,211		883,211
Other general and administrative		2,770,415		(1,518,556)		1,251,859
Depreciation and amortization		228,456		18,859		247,315
Total operating expenses		2,998,871		(616,486)		2,382,385

Operating loss		—		(2,364,935)		(2,364,935)

Other income (expense)
Other income		15,965		(2,947)		13,018
Interest expense		(106,913)		(250,001)		(356,914)
Total other expense		(90,948)		(252,948)		(343,896)

Net loss before provision for income taxes		(3,176,875)		450,594		(2,708,831)
Provision for income taxes		—		—		—
Net loss	$	(3,176,875)	$	450,594	$	(2,708,831)

Loss per share, basic and diluted	$	(0.71)	$	0.10	$	(0.61)

Weighted average shares outstanding, basic and diluted		4,480,037		(20,955)		4,459,082

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The impact of the restatements on the consolidated statement of operations for the quarter ended March 31, 2020 is presented below:


	For the Three Months Ended March 31, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated
Revenues	$	—	$	—	$	—
Cost of sales, net		—		—
Gross margin		—		—		—

Operating expenses
Compensation and benefits		—		169,769		169,769
Other general and administrative		—		430,589		430,589
Depreciation and amortization		9,563		—		9,563
Total operating expenses		9,563		600,358		609,921

Operating loss		—		(609,921)		(609,921)

Other income (expense)
Other income		9,152		1,206		10,358
Interest expense		(16,392)		—		(16,392)
Total other income (expense)		(7,240)		1,206		(6,034)

Net loss before provision for income taxes		(16,803)		(599,152)		(615,955)
Provision for income taxes
Net loss	$	(16,803)	$	(599,152)	$	(615,955)

Loss per share, basic and diluted	$	(0.01)	$	(0.19)	$	(0.20)

Weighted average shares outstanding, basic and diluted		3,150,000		58		3,150,058

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The impact of the restatements on the consolidated statement of cash flows for the quarter ended March 31, 2021 is presented below:


	For the Three Months Ended March 31, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated
Operating activities
Net loss	$	(3,176,875)	$	468,044	$	(2,708,831)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization		228,456		18,859		247,315
Shares issued with debt		—		250,000		250,000
Share based compensation		299,113		(252,429)		46,684
Amortization of operating lease right-of-use asset		—		13,675		13,675
Changes in assets and liabilities:
Accounts receivable		(17,450)		—		(17,450)
Prepaid expenses and other assets		793		—		793
Accounts payable		575,319		(402,517)		172,802
Lease liability		—		(13,976)		(13,976)
Interest payable, related parties		106,122		—		106,122
Net cash used in operations		(1,984,522)		81,656		(1,902,866)
Investing activities
Capital expenditures		(7,792)		1		(7,791)
Net cash used in investing activities		(7,792)		1		(7,791)
Financing activities
Proceeds from related party debt payable		2,080,000		(81,655)		1,998,345
Net cash provided by financing activities		2,080,000		(81,655)		1,998,345
Net change in cash and cash equivalents		87,686		2		87,688
Cash and cash equivalents at the beginning of the period		8,335		0		8,335
Cash and cash equivalents at the end of the period	$	96,021	$	2	$	96,023

Table of Contents

The impact of the restatements on the consolidated statement of cash flows for the quarter ended March 31, 2020 is presented below:


	For the Three Months Ended March 31, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated
Operating activities
Net loss	$	(16,803)	$	(599,152)	$	(615,955)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization		9,563		—		9,563
Amortization of operating lease right-of-use asset		—		14,707		14,707
Changes in assets and liabilities:
Prepaid expenses and other assets		—		(5,278)		(5,278)
Other assets - non-current		—		65		65
Accounts payable		11,428		(5,600)		5,828
Lease liability		—		(14,463)		(14,463)
Interest payable, related parties		15,916		477		16,393
Net cash used in operations		20,104		(609,244)		(589,140)
Investing activities
Capital expenditures		—		(1,016,265)		(1,016,265)
Acquisition of intangible assets, net		(1,046,678)		865,509		(181,169)
Net cash used in investing activities		(1,046,678)		(150,756)		(1,197,434)
Financing activities
Proceeds from related party debt payable		1,082,050		760,000		1,842,050
Net cash provided by financing activities		1,082,050		760,000		1,842,050
Net change in cash and cash equivalents		55,476		—		55,476
Cash and cash equivalents at the beginning of the period		38,890		—		38,890
Cash and cash equivalents at the end of the period	$	94,366	$	—	$	94,366

NOTE 35 FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company also follows a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 describes three levels of inputs that may be used to measure fair ~~value~~:value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable based on an entity’s own assumptions, as there is little, if any, related market activity (e.g., cash flow modeling inputs based on assumptions).

The risk-free interest rate is the United States Treasury rate on the measurement date having a term equal to the remaining contractual life of the instrument. The volatility is a measure of the amount by which the comparable companies’ share price has fluctuated or is expected to fluctuate. Since the Common Stock ~~has~~was not ~~been~~ publicly traded prior to the IPO, an average of the historical volatility of comparative companies was used.

Level 3 financial assets and liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of ~~the~~ fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s Chief Financial Officer determines valuation policies and procedures, as applicable.

~~Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the~~value. The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires ~~significant judgment or estimation. Changes in fair value measurements categorized within~~judgment. Level 3 valuations often involve a higher degree of ~~the fair value hierarchy are analyzed each period based on changes in estimates or assumptions~~judgment and ~~recorded as appropriate.~~

~~Significant observable and unobservable inputs include stock price, exercise price, annual risk-free rate, term, and expected volatility, and are classified within~~complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management's assumptions could vary depending on the asset or liability valued and the valuation ~~hierarchy.~~ method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods.

~~Table of Contents~~

The following tables present the derivative financial instruments, the Company’s only financial liabilities measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of June 30, 2021, and December 31, 2020:

As of December 31, 2020

Amount

Level 1

Level 2

Level 3
Embedded conversion derivative liability on employee stock options

$
229,712

$
—

$
—

$
229,712
Total as of December 31, 2020

$
229,712

$
—

$
—

$
229,712

As of June 30, 2021

Embedded conversion derivative liability on employee stock options

$
0

$
—

$
—

$
0
Total as of June 30, 2021

$
0

$
—

$
—

$
0

NOTE ~~4 NOTES~~6 DEBT PAYABLE – RELATED ~~PARTY~~PARTIES

During 2019 and 2020, the Company entered into six promissory note agreements with a related party ~~note payable transaction (the “Notes”) for cash advances associated with Alfi product development costs.~~

~~Unpaid principal on~~pursuant to which the ~~Notes as~~Company could borrow up to $2,500,000 at an annual interest rate of ~~June 30,~~5%. Borrowings pursuant to those agreements were $2,500,000 at March 31, 2021 and December 31, ~~2020, were $-0- and $5,558,808, respectively. These balances are summarized below:~~

~~Senior related party note~~

Advances under the senior related party note payable (“Senior Note”) totaled $-0-, $1,812,718 and $759,090 for periods ending June 30, 2021, December 31, 2020, and 2019, respectively, and are classified as a currently liability on the balance sheet. The Senior Note’s original maturity date was December 31, 2020. ~~An extension to the maturity date was granted by lender to the earlier of June 30, 2021, or the occurrence of certain events, including the closing of the Company’s initial public offering.~~

The Senior Note bore a fixed annual interest rate of 5% per year. For the six months ended June 30, 2021, and 2020, the Company incurred interest expense associated with the Senior Note of $110,709 and $48,888 respectively. Accrued unpaid interest totaled $-0- and $116,600 on June 30, 2021, and December 31, 2020, respectively. On May 7, 2021, the Senior Note was repaid in full.

~~Additional advances by related parties~~

During the ~~twelve months~~year ended December 31, 2020, the Company received 2 related party cash advances totaling approximately $37,000. These related party advances carried no specified repayment term, interest rate, or security interest, and were payable only after holder of the Senior Note, referenced above, is repaid in full. In May 2021, this related party advance was repaid in full. On June 30, 2021, the balance of this related party advance was $-0-.

During the twelve months ended December 31, 2020, the Company purchased approximately 9,600 tablet devices with cash from an unaffiliated third-party vendor. Of the 9,600 tablet devices, 7,600 tablets were purchased by a related party ~~on behalf~~provided financing of approximately $950,000 for the ~~Company.~~Company’s purchase of 7,600 tablets. Payment ~~terms associated with the approximate 7,600 tablet devices purchased by related party on behalf of the Company requires a fixed repayment of $125 per device,~~was due to the related party ~~by Alfi~~ upon the closing of the Company’s ~~initial public offering.~~IPO. There iswas no stated interest rate or additional repayment terms included therein this tablet purchase agreement. Collateral for the tablet device purchase agreement pledged by the Company to related party include the approximate 7,600 physical tablet hardware devices. In May 2021, the tablet device advance from related party was paid in full. Outstanding principal balance on advances for purchased tablet devices was $-0- and $950,000 on June 30, 2021, and December 31, 2020, respectively.terms.

On December 30, 2020, the Company entered into a $2,000,000 bridge loan agreement with a related ~~party investors.~~party. As of December 31, 2020, ~~$170,000~~$251,654 had been funded on the bridge ~~loan and $1,830,000 remained unfunded to the Company.~~loan. The terms of the bridge loan ~~with related party include~~included repayment of principal on or before June 30, 2021, and an annual interest rate of 18%. In addition to repayment of principal and interest under the bridge loan, the Company issued to the ~~investors~~related party 1,260,023 shares of Common Stock. ~~The remaining~~

~~Table~~Management valued this issuance of ~~Contents~~

~~$1,830,000 was funded~~shares at $2,000,000 and recorded that amount in ~~full in January 2021.~~ interest expense.

During the ~~six months~~year ended ~~June 30, 2021, and~~December 31, 2020, the Company ~~incurred~~received a cash advance of $27,154 from a related party. The cash advances carried 0 specified repayment term, interest expense on bridge loan of $118,800 and $-0-, respectively. In May 2021, this bridge funding was paid in full. Outstanding principal balance on bridge loan from related party investor on June 30, 2021, and December 31, 2020, was $-0- and $2,000,000, respectively.rate, or security interest.

During the ~~six months~~three-month period ended ~~June 30,~~March 31, 2021, the Company entered ~~two~~into bridge ~~loans:~~loans totaling $250,000 ~~and $500,000,~~ with related party investors. Terms of the bridge loans with related party included repayment of principal on or before June 30, 2021, and an annual interest rate of 18%. In addition to repayment of principal and interest under the bridge ~~loan with related party,~~loans, the Company issued ~~investors 157,561 and 315,008~~157,503 shares of Common Stock. ~~In May~~Management valued these issuances of shares at $250,000 and recorded that amount in interest expense.

Subsequent to March 31, 2021, in April 2021, the Company entered into bridge loans with related party and non-related party investors for an additional aggregate amount of $500,000, with an 18% interest rate. In addition to paying the interest and principal, the Company issued 315,007 Common Stock shares to the bridge ~~loans~~loan lenders. Management valued these issuances of shares at $500,000 and recorded that amount in interest expense.

All borrowings from related parties were paid in ~~full. Outstanding principal balance on bridge loan from related party investors on June 30, 2021, and December 31, 2020, was $-0- and -0- respectively.~~

~~NOTE 5 INCOME TAXES~~

~~The Company files Federal and state tax returns in as a C-corporation, to~~full upon completion of the Company’s ~~knowledge, no returns are subject to examination by taxing authorities.~~IPO in May 2021.

The Company has recorded 0 provision for income taxes or accrued a deferred tax asset (or liability) in the consolidated financial statements, on the basis that, although expected, the likelihood of the Company realizing any tax benefit (or liability) in the future cannot be calculated as of the date of this Report. As of the date of this Report, the Company follows all required local, state, and federal tax filings.

NOTE 67 COMMITMENTS AND CONTINGENCIES

~~Operating leases~~Concentration of Credit Risk

~~During~~Generally, the ~~three-month periods ended June 30, 2021, and 2020, the Company had office leases~~Company’s cash balances, which are deposited in ~~Miami, FL, Denver, CO, and Belfast, Northern Ireland. Rent expense under those leases totaled approximately $198,000 and $50,000 during the three months ended June 30, 2021, and 2020, respectively.~~

~~Employee Equity (Stock) Incentive Plan~~

non-interest-bearing accounts may exceed FDIC insurance limits from time to time. The ~~Company has an employee equity stock incentive plan in which, at its sole discretion, it may award employees~~financial stability of ~~the Company Common Stock or Common Stock options, as an incentive for performance (the “Plan”). Total shares of Common Stock reserved under the plan for employee grants~~these institutions is ~~not to exceed 1,575,029 shares of Common Stock. During the six-month period ended June 30, 2021, and the twelve-month period end December~~periodically reviewed by senior management. At March 31, ~~2020, respectively, the Company granted 544,168 and 429,200 Common Stock options under the Plan.~~

~~On June 30,~~ 2021 and December 31, 2020, ~~total Common Stock options issued under the Plan~~cash balances in excess of FDIC requirements were ~~1,032,432~~$-0- and ~~488,264,~~$-0-, respectively. Weighted average strike price per employee stock option is approximately $2.00 per share. Management recorded stock-based compensation expense associated with the issuance of employee stock options of $600,249 for the six months ended June 30, 2021.

~~As of the date of this Report, 1 employee exercised stock options and received 11,892 restricted common shares.~~

~~License Agreement~~

The Company has finalized 2 SaaS licensing agreements with customers for using its technology services in fiscal year 2021and expects revenue to be realized in the second half of the year. The Company currently has agreements with rideshare drivers for placement of its tablet devices in their vehicles (See Note 3).

Litigation, Claims, and Assessments

The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. ~~There are no such matters as~~

NOTE 8 STOCKHOLDERS’ EQUITY (DEFICIT)

Common shares issued before the IPO were recorded at estimated fair value. In May 2021, the Company completed its IPO of its Common Stock, creating liquidity and a visible fair market value for its Common Stock. The Common Stock is listed on the ~~date of this Report.~~Nasdaq Capital Market under the symbol “ALF”.

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Table of Contents

~~Related Parties~~

~~The Company entered into agreements with related parties during the six months and twelve months ended June 30, 2021, and December 31, 2020, respectively (see Note 4 and Note 12).~~

~~NOTE 7 STOCKHOLDERS’ EQUITY~~

As of December 31, 2020, there was not a viable market for Common Stock to determine its fair value; therefore, management estimated the fair value to be utilized in the determining the fair value of issued conversion options. In estimating the fair value, management considered the estimated fair value of assets received in exchange for equity instruments and placement agents’ assessments of the underlying common shares relating to our issuance of our senior convertible preferred stock. Considerable management judgment is necessary to estimate the fair value, accordingly, actual results could vary significantly from management’s estimates.

On June 30, 2021, the Company’s records reflect the May 2021 initial public offering on the Nasdaq Capital Market, creating liquidity and a visible fair market value for its stock, ticker symbol “ALF”.

In 2018, the Company created a class of ~~Preferred~~ Series Seed ~~stock (“~~Preferred ~~stock”). Par value for the Preferred stock is $0.0001 per share~~Stock and 2,500,000 shares of Series Seed Preferred ~~stock~~Stock were authorized. During 2018 and 2019, 2,500,000 shares of Series Seed Preferred ~~stock was~~Stock were issued to an investor in exchange for $2,500,000 cash consideration. Shares of Series Seed Preferred ~~stock shares~~Stock convert to Common Stock at a ratio of 1:1.260023 at any time ~~and from time to time in~~at the ~~sole discretion~~option of the holder. Holders of Series Seed Preferred ~~stockholders have~~Stock had preferential liquidation rights in the event of the Company’s dissolution. Shares of Series Seed Preferred ~~stock shares bear~~Stock bore 0 interest or dividend payments to its ~~Holders.~~holders. The Series Seed Preferred ~~stock has~~Stock had a buyout feature if not converted into Common Stock by ~~investor.~~the holder. Series Seed Preferred ~~stock can~~Stock could be bought out by the Company if full return of principal is made to ~~investor~~the holder ($2,500,000), plus an additional 1x return of capital to ~~investor~~the holder ($2,500,000). On December 31, 2020, 2,500,000 Series Seed Preferred Stock shares were issued and outstanding. In May 2021, 2,500,000 shares of ~~preferred stock~~Series Seed Preferred Stock were converted into 3,150,058 shares of Common Stock at a conversion ratio of 1:~~1.260023. On June 30, 2021, and December 31, 2020, total preferred stock shares~~ ~~issued~~ ~~and~~ ~~outstanding~~ ~~were -0- and 2,500,000, respectively. For the six months ended June 30, 2021, 0 preferred stock was issued by the company.~~1.260023.

Dividends

Holders of ~~Preferred~~preferred stock are not entitled to ~~any~~ dividend payment but do have liquidation preference in the event of dissolution of the Company. Holders of Common Stock are not entitled to ~~any~~ dividend payments but would receive such payments in the event dividend payments were made to stockholders. There was 0 dividend payment made on any class of stock ~~(common~~(Common Stock or ~~preferred) for the six and twelve months ended June 30, 2021, and December~~preferred stock) through March 31, ~~2020, respectively.~~2021.

Common Stock

The Company is authorized to issue 80,000,000 shares of Common Stock, par value $0.0001. In 2018, ~~3,150,000~~3,150,058 shares of Common Stock were issued to the three management members who are ~~Founders,~~the Company’s founders, at par. In March 2021, a 1.260023 to 1 forward stock split was affected. Common Stock share numbers contained herein in this Quarterly Report are presented on a post-split basis unless specifically noted otherwise.

During the ~~twelve months~~year ended December 31, 2020, the Company issued ~~31,500~~31,501 shares of ~~common stock~~Common Stock to an unaffiliated third party in exchange for services associated with investment relations and fundraising, and to support the development of revenue producing contracts. Management valued this issuance of ~~common~~ shares ~~as stock-based compensation expense~~at $25,000 and recorded that amount in ~~fiscal year 2020 for approximately $25,000.~~other general and administrative expense.

During the ~~twelve months~~year ended December 31, 2020, the Company issued 1,260,023 shares of Common Stock to a related party ~~investor~~investors in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued this issuance of ~~common~~ shares ~~as stock-based compensation expense during the twelve months ended December 31, 2020, for approximately $2,000,000.~~at $2,000,000 and recorded that amount in interest expense.

During the ~~six months~~quarter ended ~~June 30,~~March 31, 2021, the Company arranged ~~two~~ bridge loans with related party investors. The Company issued ~~157,561 and 315,008~~157,503 shares of Common Stock ~~respectively,~~ in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued these issuances of ~~common~~ shares ~~as stock-based compensation expense during the six months ended June 30, 2021, for approximately $750,000.~~at $250,000 and recorded that amount in interest expense.

Table of Contents

Stock option and warrant valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices for comparable entities. For warrants and stock options issued to ~~non- employees,~~non-employees, the Company accounts for the expected life based on the contractual life of the warrants and stock options. For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.

~~Forward stock split~~Initial Public Offering

~~In March 2021, a 1.260023 to 1 forward stock split was affected. Common stock share numbers contained herein in this Report are presented on a post-split basis unless specifically noted otherwise.~~

~~Initial public offering~~

On May 3, 2021, the Company’s registration statement on Form S-1 (File No. 333-251959) was declared effective by the ~~SEC.~~Securities and Exchange Commission (the “SEC”) and the Company completed its IPO on May 6, 2021. In connection with the IPO, the Company issued and sold 4,291,045 shares of Common Stock and warrants to purchase 4,291,045 shares of Common Stock (including 559,701 shares of Common Stock and warrants to purchase 559,701 shares ~~issued~~of Common Stock pursuant to the full exercise ~~in full~~ of the underwriters' overallotment option), at the combined public offering price of $4.15 ~~per share~~ for aggregate gross proceeds of approximately $17.8 million, ~~less~~before deducting underwriting discounts and commissions and other estimated offering ~~cost of $2.1million providing net~~expenses payable by Alfi. Net IPO proceeds of approximately $15.7 ~~million.~~

million were allocated $11.0 million to Common Stock and $4.7 million to warrants. The warrants were exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance and have an exercise price of $4.57 per share. Pursuant to the underwriting agreement for the IPO, the Company also issued to the underwriters warrants to purchase up to an aggregate of 186,567 shares of Common Stock (“Underwriter’s Warrants”). The Underwriter’s Warrants ~~Exercised~~

may be exercised beginning on May 3, 2022 until May 3, 2026. The initial exercise price of each Underwriter’s Warrant is $5.19 per share. As of June ~~30,~~10, 2021 ~~warrant holders have~~(the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021), no warrants had been exercised 3,385,746 warrants providing Alfi with $15,472,859 in additional working capital. As of August 13, 2021, warrant holders have exercised a total of 3,507,237 warrants providing a total of $16,028,073 in additional funding. As of August 13, 2021,and there were ~~783,808~~4,477,612 warrants outstanding.

NOTE 89 PROPERTY AND EQUIPMENT

Property and equipment, ~~balances,~~ net of accumulated depreciation, ~~on June 30, 2021, and December 31, 2020, were $150,519 and $117,474, respectively, and consist~~consists of ~~equipment purchases~~ the ~~Company made for IT server and other depreciable computer hardware assets. These assets were assigned a 5-year average useful life.~~following:


	Mar 31, 2021		Dec 31, 2020
Tablets	$	972,050	$	972,050
Office furniture and fixtures		199,052		191,261
Property and equipment, gross		1,171,102		1,163,311

Less accumulated depreciation		(860,324)		(657,017)

Property and equipment, net	$	310,778	$	506,294

The Company incurred depreciation expense of ~~$18,656~~$203,308 and ~~$23,915~~$9,563 for the ~~six and twelve~~three months ended ~~June 30,~~March 31, 2021 and ~~December 31,~~ 2020, respectively.

~~Table of Contents~~

~~A summary of property plant~~Property and equipment ~~balances as~~includes Lenovo tablet hardware devices purchased during 2020 and held for placement with rideshare and other businesses. Tablets are provided to rideshare and other businesses at no charge, but remain the property of ~~June 30, 2021,~~the Company and ~~December 31, 2020, is as follows:~~

Property and equipment balance on December 31, 2019, net of accumulated depreciation

$
107,744
Additions

33,645
Depreciation expense

(23,915)
Property and equipment balance on December 31, 2020, net of accumulated depreciation

$
117,474
Additions

51,701
Depreciation expense

(18,656)
Property and equipment balance on June 30, 2021, net of accumulated depreciation

$
150,519

~~Accumulated depreciation recorded as~~must be returned to the Company upon termination of ~~June 30, 2021, and December 31, 2020, totaled $92,441 and $46,081, respectively.~~the rideshare or other use agreement. The Company ~~incurred 0 fixed asset dispositions~~may pay a revenue share or ~~identified asset impairments during~~commission to such third party for the ~~periods ended June 30, 2021, and December 31, 2020, respectively.~~

~~NOTE 9 INTANGIBLE ASSETS – INTELLECTUAL PROPERTY~~

~~Intellectual Property – Patent and Production Costs~~

The Company’s intellectual property includes patent and platform production costs associated with creation of its technology (see Note 1). Included in capitalized patent costs are the legal and logistics expenses directly associated with patent development, acquisition, and filing. Included in capitalized platform production costs are the direct labor, design, testing, acquisition, and allocation for administrative overhead associated with software development. Upon being placed into service in July 2020 for beta testing, capitalized patent and platform production costs and their anticipated useful lives are summarized as follows:

Capitalized

Useful

Cost

Life
Patent Acquisition Costs

$
650,000

15 years
Production Costs

$
4,174,509

5 years
Total Intangible Assets (IP), gross

$
4,824,509

~~The Company assigned a~~ ~~15-year~~ ~~estimated useful life for patent acquisition costs, and a~~ ~~5-year~~ estimated useful life for technology platform production costs. The Company has been awarded a patent and has patents pending with the United States Patent Trademark Office (USPTO). Patents have a legal lifespan of 20 years. Between 2018 and 2020, the Company incurred production costs associated with its technology platform.

~~Management’s determination of useful life estimate for patent acquisition costs is reasonable given the statutory periods for patents of 20 years. Management selected a~~ ~~5-year~~ ~~useful life for production costs as a conservative expectation~~placement of the length of time the Company expects its technology product set to produce future cash flows considering that there are no software or version upgrades. However, with new upgrades to the Alfi platform we believe that the useful life will be extended out further. (See Note 2, Change in Accounting Estimate / Prior Period Reclassifications).

~~A summary of intangible asset, net of accumulated amortization, balances as of June 30, 2021, and December 31, 2020, are as follows:~~

Intangible asset balance on December 31, 2019, net of accumulated amortization

$
3,198,051
Additions

1,626,458
Amortization expense

(440,321)
Intangible asset balance on December 31, 2020, net of accumulated amortization

$
4,384,188
Additions

0
Amortization expense

(439,118)
Intangible asset balance on June 30, 2021, net of accumulated amortization

$
3,945,070

Alfi-enabled device.

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Table of Contents

~~When Alfi acquires devices, they are not ready for technical deployment. They must first go~~NOTE 10 INTANGIBLE ASSETS – INTELLECTUAL PROPERTY

Intellectual Property – Software Development and Patent Acquisition Costs

The Company’s intellectual property includes capitalized software development and patent acquisition costs associated with creation of its technology (see Note 1). During the period between the Company’s formation in 2018 through an activation process, which includes deleting existing software from the device and installation of the Alfi platform, before being placed into service. Upon activating the first tablet device in JulyJune 2020, the Company ~~placed~~created and developed the proprietary software that is the basis of its ~~platform into service~~ability to deliver targeted digital advertising. The Company considers this software to be internal-use software, as it is used exclusively by the Company on devices it controls to deliver the advertising services it is engaged to provide. The Company determined that the application development phase for this software began in May 2018 and ~~began accruing amortization. Up until this point, Alfi~~ended in June 2020, and its first release of production software was ~~still incurring platform production~~activated in a tablet in July 2020.

On July 1, 2020 forward, the Company commenced depreciation of these intangible assets. The Company estimated a 5-year useful life for capitalized software development costs and a 15-year useful life for patent acquisition costs. Management selected a 5-year useful life for software development costs as an expectation of the length of time the Company expects its technology product set to produce future cash flows assuming that there are no significant software or version upgrades. All software development costs incurred beyond June 30, 2020 are being expensed.

Intangible assets, net of accumulated amortization, consists of the following:


	Mar 31, 2021		Dec 31, 2020

Capitalized software	$	832,045	$	832,045
Patents		144,239		144,239
Intangible assets, gross		976,284		976,284

Less accumulated amortization		(132,020)		(88,013)

Intangible assets, net	$	844,264	$	888,271

Amortization expense for the three months ended March 31, 2021 and 2020, was $44,006 and $-0-, respectively.

Future amortization of intangible assets as of ~~June 30,~~March 31, 2021, is as follows:

Year 1

$
439,117
Year 2

$
878,235
Year 3

$
878,235
Year 4

$
878,235
Year 5

$
459,641
Thereafter

$
411,607
Total

$
3,945,070


2021	$	132,019
2022		176,025
2023		176,025
2024		176,025
2025		92,820
Thereafter		91,350
Total	$	844,264

~~The Company recorded intangible assets, net of accumulated amortization, of $3,945,070 and $4,384,188, respectively, as of June 30, 2021, and December 31, 2020.~~

~~Amortization expense for the three months ended June 30, 2021, and 2020 were $439,118 and -$0-, respectively.~~

Accumulated amortization for periods ended June 30, 2021, and December 31, 2020, were $879,439 and $440,321, respectively. NaN asset impairment expense or intangible asset dispositions were incurred during fiscal year either period presented under this Report.

~~Intangible assets, net of accumulated amortization totaled $3,945,070 and $4,384,188 as of June 30, 2021, and December 31, 2020, respectively.~~

~~NOTE 10 OTHER ASSETS (COMPLIMENTARY DEVICES)~~

~~Tablets~~

The Company purchased approximately 9,600 Lenovo tablet hardware devices in 2020 (the “devices”), which are held for placement with rideshare and other businesses. As part of Alfi’s agreements with rideshares, malls and airport owners, devices are provided as a complimentary product. Alfi may pay a revenue share or commission to such third party for the placement of the Alfi-enabled device. See Note 2 for a discussion of revenue recognition from such placement.

The Company records these assets at the lower of cost or fair market value. Devices are accounted for as Other Assets (Complimentary Devices) on the consolidated balance sheet until they are provided to a rideshare or other businesses for use. Upon being placed into service, the Company expenses these assets to Cost of Sales.

On June 30, 2021, and December 31, 2020, the Company had approximately 8,100 and 8,600 devices on-hand at the end of both periods, respectively. During the three and twelve months ended June 30, 2021, and December 31, 2020, the Company placed approximately -0- and 1,500 devices into service with rideshare or other businesses, respectively.

As of June 30, 2021, and December 31, 2020, Other assets (Complimentary Devices) totaled $1,039,625 and $1,104,000, respectively, at the end of each period. As of June 30, 2021, and December 31, 2020, the cost of the tablets on-hand approximated their fair market value. The Company recorded cost of sales associated with Other assets (Complimentary Devices) of approximately $64,375 and -$0- for the six months ended June 30, 2021, and 2020, respectively. Additionally, during June 2021, the Company ordered 10,000 additional tablets from Lenovo and recognize that commitment of $2,240,000 as a prepaid expense at June 30, 2021.

~~Table of Contents~~

~~A summary of Other assets (complimentary devices) balances as of June 30, 2021, and December 31, 2020, are as follows:~~

Other assets (complimentary devices) balance on December 31, 2019, net

$
0
Purchase of Other assets (complimentary devices)

1,256,500
Other assets (complimentary devices) expensed to cost of sales

(152,500)
Other assets (complimentary devices) balance on December 31, 2020, net

$
1,104,000
Other assets (complimentary devices) expensed to cost of sales

(64,375)
Other assets (complimentary devices) balance on June 30, 2021, net

$
1,039,625

~~When tablets are placed into service with a rideshare or other business, legal ownership transfers to such entity.~~

~~NOTE 11 OTHER INCOME~~

During the three months ended June 30, 2021, and 2020, the Company realized and collected approximately $18,775 and $-0-as a foreign tax credit for increasing the value the software not yet sold, associated with its wholly owned subsidiary Alfi NI Ltd. This amount was recorded as other income in the consolidated statement of operations for the three months ended June 30, 2021, and 2020. The Company’s subsidiary will also receive a development credit in the third quarter of 2021, timing and amount dependent on statutory allowances.

~~NOTE 12 NOTE RECEIVABLE RELATED PARTY~~

During the twelve months ended December 31, 2020, the Company incurred a related party note receivable associated with its bridge loan (see Note 5) of $1,830,000. During the six months ended June 30, 2021, the balance of the note receivable with related party was funded to the Company in full. The balance of the related party note receivable on June 30, 2021, and December 31, 2020, was -$0- and $1,830,000, respectively.

~~NOTE 13 PREPAID EXPENSES AND OTHER~~

The balance of prepaid expenses on June 30, 2021, and December 31, 2020, was $2,415,361 and $793 respectively. During June 2021, the Company prepaid $2,240,000 for 10,000 Lenovo devices (tablets). The devices were received in July 2021 and are held in a warehouse. In addition to the devices, the Company has $175,361 in retainers and deposits.

NOTE 1411 SUBSEQUENT EVENTS

~~Outstanding Warrants and Warrant Exercises~~

From July, 2021 to August 13, 2021, warrant holders exercised 121,491 warrants providing Alfi with $555,214 in additional working capital. As of August 13, 2021, there were 783,808 warrants outstanding and warrant holders have exercised a total of 3,507,237 warrants providing a total of $16,028,073 in additional working capital.

~~Share Buy-Back~~

~~On June 23, 2021, Alfi announced a $2.0M buy-back of its stock. The buy-back was completed on July 9, 2021, with Alfi acquiring 137,650 shares that are recorded as treasury stock by Alfi.~~

~~Office Condo~~

The Company ~~signed a contract to acquire~~has disclosed events that have occurred after the balance sheet date of March 31, 2021 through June 10, 2021 (the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021). See Note 6 Debt Payable Related Parties for discussion of additional ~~office space~~bridge loan financing obtained in April 2021 and Note 8 Stockholders’ Equity (Deficit) for ~~$1,100,000 in Miami Beach, FL on July 12, 2021. The purchase is expected to close late August.~~discussion of the Company’s May 2021 IPO.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context requires otherwise, references to the “Company,” “Alfi,” “we,” “us” and “our” refer to Alfi, Inc., a Delaware corporation and its wholly owned subsidiary, Alfi ~~NI Ltd.~~(N.I.), Ltd, formed in Belfast, Northern Ireland on September 18, 2018. Unless otherwise noted, the share and per share information in this Quarterly Report ~~on Form 10-Q~~ reflect a forward stock split of the Common Stock privately held before the IPO at a percentage of 1.260023 effective on March 15, 2021.

Cautionary ~~Note~~Statement Regarding Forward-Looking Statements

Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this report and have filed with the SEC, including our Registration Statement on Form S-1, as amended, (File No. 333-251959) filed with the SEC, with the understanding that our actual future results may be materially different from what we expect. We qualify all our forward-looking statements by these cautionary statements.

This Quarterly Report ~~on Form 10-Q~~ contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ~~(“Securities~~(the “Securities Act”), and Section 21E of the ~~Securities~~ Exchange Act of 1934, as ~~amended.~~amended (the “Exchange Act”), Forward-looking statements generally relate to future events or our future financial or operating ~~performance and may~~performance. Forward–looking statements in this Quarterly Report include statements ~~concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for,~~regarding our business and ~~the markets in which we operate),~~technology development, our strategy, future operations, anticipated financial ~~results, the impact~~position, estimated revenues and losses, projected costs, prospects, plans and objectives of COVID-19 on our business, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, and capital expenditures, sales and marketing initiatives and competition.

management. In some cases, you can identify forward-looking statements because they contain words such as “may,~~” “might,” “will,~~” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,~~” “suggests,~~” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.

These forward-looking statements are not ~~guaranteeing~~guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

We discuss many of these risks in other filings we make from time to time with the ~~Securities and Exchange Commission (the “SEC”).~~SEC. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report, ~~on Form 10-Q,~~ which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.

~~Overview~~Investors should read this Quarterly Report, and the documents that we reference in this Quarterly Report and have filed with the SEC, with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

~~Alfi is a Delaware corporation, incorporated in July 2018, to solve some of the most significant problems facing the global digital advertising industry.~~Overview

We seek to provide solutions that bring transparency and accountability to the ~~digital out of home, or “DOOH,”~~DOOH advertising marketplace. Alfi uses artificial intelligence and big data analytics to measure and ~~predict human response.~~disseminate audience presence and audience demographics. Our computer vision technology is powered by proprietary artificial intelligence, to determine the ~~age, gender, ethnicity, geolocation,~~relevant demographic and ~~emotion~~geospecific information of ~~someone~~the audience in front of an Alfi-enabled device, such as a tablet or kiosk. Alfi can then deliver in real-time, the advertisements to that particular viewer based on the viewer’s demographic ~~and psychographic profile.~~profile and/or geolocation. Alfi ~~delivers~~is designed to deliver the right marketing content, to the right person at the right time in a responsible and ethical manner. By delivering the advertisements ~~a viewer wants,~~most relevant to the audience in front of the device, we ~~deliver~~connect our advertising customers to the viewers they ~~want, and the~~seek to target. The result is higher click through rates ~~or CTRs~~(“CTRs”), higher QR code scans and higher ~~CPM,~~ cost per thousand ~~rates.~~rates (“CPMs”).

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believe brand owners should have ~~all of~~ the pertinent data they need for meaningful interaction. The artificial intelligence and machine learning components of Alfi also gather retina tracking data, keyword recognition and voice intonation without compromising the privacy of the end-user.insight. From an analytics perspective, these data points ~~give~~are intended to provide meaningful reporting instead of arbitrary calculations based on estimates of ad engagement.

Alfi ~~solves~~seeks to solve the problem of providing real time, accurate and rich reporting on customer demographics, usage, interactivity and engagement while never storing any ~~personal~~personally identifiable information. No viewer is ever required, or requested by us, to enter any information about themselves on any Alfi-enabled device. Alfi was designed to be fully compliant with all privacy regulations. Alfi is fully compliant with the General Data Protection Regulation, in Europe, California Consumer Privacy Act, and the Health Insurance Portability and Accountability Act.

Our initial focus ~~continues~~is to place our Alfi-enabled devices in malls, airports rideshares and ~~airports. According~~taxis. We also have begun offering our software solution to ~~Harvard Business School study published in February 2018, Americans are estimated~~other DOOH media operators as a SaaS product.

Currently, we intend to have spent more than 37 billion hours waiting in rideshares. Alfi has been beta testing Alfi-enabled devices in these locations to determine market receptivity to smart screens. From our testing, Alfi has been able to achieve CTRs, of between 6% and 9%, but believes it could achieve CTRs exceeding 15% as Alfi- enabled devices are deployed more widely. By comparison, according to Acquiso in 2018, the average CTR for a display banner ad was less than 1%.

~~We began generating revenue from our Alfi-enabled devices (kiosks) in the first quarter of 2021 and are in the process of rolling out our rideshare tablets. Based on current customer requests, we now~~ charge customers ~~in one of the following ways:~~solely based on a CPM, or ads ~~placed, or share-of-voice.~~delivered, model. As we continue to ~~expand~~prove Alfi in the ~~market,~~marketplace, we expect to charge customers based on a combination of CPM ~~share-of-voice,~~ and CTR, and ~~that~~we expect we will generate higher CPM rates than typical DOOH advertising platforms because we ~~will~~have the ability to only deliver ads to the customer’s desired demographic. In addition, we ~~will~~also intend to provide the aggregated data to the brands ~~on a subscription basis,~~ so they can make more informed advertising decisions.

Alfi generates revenues in three different fashions. First, Alfi sells advertising and content on its Alfi-enabled tablets and other devices such as kiosks. Second, Alfi licenses its technology to other companies as a Software-as-a-Service (SaaS) product. Third, Alfi sells the aggregated data reflecting viewer engagement it derives from users of an Alfi-enabled device to advertisers and content providers. Alfi has different customers for each of its revenue streams: (1) companies that buy content space, like CNN, NBC, etc., or companies that buy ad space like Coke, Ford, etc.; (2) companies that pay a per screen fee on a SaaS basis to operate Alfi software on their network, where they sell ads and content and on their own devices; and (3) companies that purchase viewer engagement data on a subscription basis.

With respect to Alfi-enabled tablets placed in rideshares or devices placed into service by Alfi, Alfi will recognize revenue on a cost per thousand impression (CPM) basis or a related basis based on a customer’s request – ad placed, CPM or share-of-voice, for both the content and advertisements. Alfi has contracts (insertion orders) for both the advertiser and the content provider that specify the amounts to be paid to Alfi for displaying the advertisement or content. The number of impressions, share-of-voice or ad placed by the advertiser or content provider is willing to pay and the duration of each campaign is set by the advertiser or content provider on the insertion order. Content and advertisements are provided to Alfi by companies desiring to deliver content for viewer engagement. Additionally, Alif is in the process of engaging programmatic ad providers to operate in its tablets and kiosks. In general, Alfi does not pay for content, to the extent it does, the cost of acquiring content is expensed as cost of sales. Alfi recognizes revenue under these contracts upon the validated delivery of impressions, share-of-voice purchased, or ads placed / viewed on the Alfi-enabled devices.

With respect to SaaS licenses, Alfi has enter into two signed license agreements with third parties; both agreements use Alfi placed devices on customer’s property and share in advertising revenues. The customer and Alfi work together for advertising revenue generation and the devices have remote management access and data reporting that the Alfi platform provides. Alfi expects that revenue from these two contracts will begin in the fourth quarter of 2021. Alfi will recognize the revenue from these contracts monthly, in accordance with Topic 606.

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Alfi believes that the aggregated data of viewer engagement has significant value for advertisers and content providers. Alfi plans to offer such data to third parties on a subscription basis and recognize revenue as the subscription payments are received depending on the nature of the contract, beginning in the first quarter of 2022. For subscriptions that are prepaid, revenue will be recognized as earned; with respect to subscriptions that are not prepaid, revenue will be recognized when the data is delivered to the subscriber.

As of June 30, 2021 Alfi has distributed and is in the process of activating 1,500 devices tablets and kiosks at no cost to rideshare, mall, or airport owner(s). Alfi has 8,100 devices on hand and placed an order for an additional 10,000 devices bringing the total devices used in rideshares to 19,600. It is the viewers of the Alfi-enabled device, rather than the rideshare driver, mall or airport owner that the Alfi-enabled device engages with and to whom Alfi delivers advertising and content. It is projected that Alfi will begin selling advertising and content for those tablets placed into operation in the third quarter of 2021.

Alfi has not yet recognized revenue from any of its three potential revenue sources. Irrespective of revenue generation on devices, when they are physically placed into service, devices are expensed in accordance with the Company’s Cost of Sales policy.

Recent Developments

Initial Public Offering

On May 3, 2021, the Company’s registration statement on Form ~~S-1(File~~S-1 (File No. 333-251959) was declared effective by the ~~SEC.~~SEC and the Company completed its IPO on May 6, 2021. In connection with the IPO, the Company issued and sold 4,291,045 shares of Common Stock and warrants to purchase 4,291,045 shares of Common Stock (including 559,701 shares of Common Stock and warrants to purchase 559,701 shares ~~issued~~of Common Stock pursuant to the full exercise ~~in full~~ of the underwriters' overallotment option), at the combined public offering price of $4.15 for aggregate gross proceeds of approximately $17.8 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by Alfi.

The warrants were exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance and have an exercise price of $4.57 per share. Pursuant to the underwriting agreement for the IPO, the Company also issued to the underwriters warrants to purchase up to an aggregate of 186,567 shares of Common Stock (“Underwriter’s Warrants”). The Underwriter's Warrants ~~Exercised~~

may be exercised beginning on May 3, 2022 until May 3, 2026. The initial exercise price of each Underwriter’s Warrant is S5.19 per share. As of June ~~30,~~10, 2021 ~~warrant holders have~~(the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021), no warrants had been exercised 3,385,746 warrants providing Alfi with $15,472,859 in additional funding. As of August 13, 2021, warrant holders have exercised a total of 3,507,237 warrants providing a total of $16,028,073 in additional funding. As of August 13, 2021,and there were ~~783,808~~4,477,612 warrants outstanding.

~~Share Buy-Back~~Impact of COVID-19

On ~~June 23, 2021, Alfi~~January 30, 2020, the World Health Organization (“WHO”) announced a ~~$2.0M buy-back~~global health emergency caused by a new strain of ~~its stock.~~the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The ~~buy-back was completed~~spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.

COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the COVID-19 outbreak on ~~July 9, 2021, with Alfi acquiring 137,650 shares that are recorded as treasury stock.~~

~~Office Condo~~

~~The Company signed a contract to acquire additional office space for $1,100,000~~businesses and the economy in ~~Miami Beach, FL on July 12, 2021. The purchase~~the United States is expected to ~~close late August.~~continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businesses and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.

In addition, the Company is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of the distribution of efficacious vaccines across the world and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta variant and the Omicron variant, will impact the stability of economic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business.

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~~Operating Expenses~~

~~General and administrative expenses consist primarily of~~include compensation expenses related to our executive, finance, and administrative personnel (including salaries, commissions, bonuses, stock-based compensation, payroll taxes, and ~~taxes),~~contract labor costs). Other general and administrative expenses include communications and technology costs, professional fees, selling and marketing fees, ~~amortization & depreciation,~~ legal fees, and rent ~~expense, general~~ and ~~administrative costs, and fees for vendors, independent contractors and bad debt~~occupancy expense.

~~Three Months~~Three-Month Period Ended ~~June 30,~~March 31, 2021, compared to ~~three months ending June 30,~~Three-Month Period Ended March 31, 2020


	Unaudited	Unaudited	Three months		Three months
	Three months	Three months	ended Mar 31,		ended Mar 31,
	ended June 30,	ended June 30,	2021		2020		$Change		% Change
	2021	2020
Revenues, net	936	—

Cost of sales, net	161,377	—

Gross margin	(160,441)	—
Revenues			$	17,450	$	—	$	17,450	N/M

Operating expenses
General and adminstrative	4,255,404	—
Compensation and benefits				883,211		169,769		713,442	420.2	%
Other general and administrative				1,251,859		430,589		821,270	190.7	%
Depreciation and amortization	229,317	5,859		247,315		9,563		237,752	N/M
Total operating expenses	4,484,721	5,859		2,382,385		609,921		1,772,464	290.6	%

Operating loss				(2,364,935)		(609,921)		(1,755,014)	287.7	%

Other income (expense)
Other income	14,478	—		13,018		10,358		2,660	25.7	%
Interest expense				(356,914)		(16,392)		(340,522)	N/M
Total other expense				(343,896)		(6,034)		(337,862)	N/M

Interest expense	(61,787)	(17,913)

Total other income (expense)	(47,309)	(17,913)

Net income (loss)	(4,692,471)	(23,772)

Earnings (loss) per share (EPS) - basic	(0.44)	(0.01)

Weighted average common shares outstanding	10,701,717	3,150,000
Net loss before provision for income taxes				(2,708,831)		(615,955)		(2,092,876)	339.8	%
Provision for income taxes				—		—		—	N/M
Net loss			$	(2,708,831)	$	(615,955)	$	(2,092,876)	339.8	%

Revenues

For the three months ended March 31, 2021 and 2020, net revenues were $17,450 and $-0-, respectively. The increase of $17,450 was due to Alfi’s first SaaS contract revenue generated from a retailer that is paying Alfi for the cost of the initial pilot for the company.

Operating Expenses

For the three months ended March 31, 2021 and 2020, total operating expenses were $2,382,385 and $609,921, respectively, an increase of $1,772,464. Compensation and benefits expense increased as independent contractors became full time employees effective March 1, 2021. Other general and administrative expenses increased due to higher costs related to the Company’s growth and launch of its technology platform and preparation for listing as a public company. The increase in other general and administrative expenses reflected higher recruiting fees, marketing expense, rent, software development costs, and taxes and license fees incurred during the three-month period ended March 31, 2021. Depreciation and amortization charges increased as the three months ended March 31, 2021 included additional depreciation charges for tablets acquired during 2020.

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~~Revenues, net~~Operating Loss

For the three months ended ~~June 30,~~March 31, 2021, ~~net revenues were $936,~~the operating loss increased from $609,921 to $2,364,935, an increase of $1,755,014 compared ~~to -0- revenues realized for~~with the three months ~~ending June 30,~~ended March 31, 2020. The increase was primarily due to higher operating expenses related to the Company’s growth and launch of its technology platform and preparation for listing as a public company.

Other Income (Expense)

Other income of $13,018 and $10,358 for the three-month periods ended March 31, 2021, and March 31, 2020, respectively, included realized and collected foreign tax credits associated with its wholly owned subsidiary Alfi ~~began its rideshared program roll-out in~~(N.I.) Ltd of $15,960 and $9,152, respectively. Interest expense of $356,914 and $16,392 for the ~~second quarter in Miami, Florida. As of June 30,~~three-month periods ended March 31, 2021 and 2020, respectively, rose primarily due to additional interest expense incurred for related-party financing provided during the ~~Company has installed 500 tablets as it begins its roll-out implementation plan across fourteen major metro areas in the United States.~~three months ended March 31, 2021.

~~Cost of Sales~~Net Loss

For the three months ended June 30, 2021, cost of goods sold expense of $161,377 represent a 100% increase when compared to the three months ended June 30, 2020. The increase is primarily due to material and labor costs for SaaS contracts and the rideshare rollouts.

~~Operating Expenses~~

For the three months ended June 30, 2021, operating expenses increased to $4,484,721 from $5,859 an increase of $4,478,862 when compared to the three months ended June 30, 2020. The increases are primarily due to staffing and general business launch expenses post-IPO and changes in amortization and depreciation. Alfi continues to staff up with full time employees to support the company’s launch and stock-based compensation incurred as a component of the bridge loan agreements.

~~Other Expense~~

For the three months ended June 30,2021, other expense increased to ($47,309) from ($17,913) an increase of ($29,396) for the three months ended June 30, 2020. The increase is primarily due to interest expense associated with related party financing.

~~Net Loss~~

~~For the three months ended June 30,~~March 31, 2021, the net loss increased from $615,955 to ~~($4,692,471) from ($23,772),~~$2,708,831, an increase of ~~($4,668,699) vs.~~$2,092,876 compared with the ~~three months~~three-month period ended ~~June 30,~~March 31, 2020. The increase iswas primarily due to ~~stock-based compensation (a non-cash expense)~~higher operating expenses related to the Company’s growth and ~~general increases in all other expense categories as Alfi expanded its staff, prepared for its IPO, and launched~~launch of its technology ~~platform.~~platform and preparation for listing as a public company.

Liquidity and Capital Resources

From the inception of Alfi in 2018 until our IPO, Alfi’s liquidity was provided by equity and related party debt financing. Post IPO, all outstanding debt, including the Senior Related Party Note and all Bridge Loan Agreements, totaling $5,808,808 were paid off utilizing a portionAs of the ~~IPO proceeds.~~ date of this Quarterly Report, the Company has not yet generated substantial revenue from customers and business activity has mainly consisted of cash outflows associated with its business development activities. These conditions indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the consolidated financial statements.

The ~~IPO proceeds and~~Company’s primary source of operating funds since inception through April 2021 was cash proceeds from the ~~exercise~~private placements of ~~warrants through June 30,~~preferred equity and debt securities. In May 2021, ~~totaled~~the Company completed its IPO yielding net proceeds to the Company of approximately ~~$24.9 million.~~ $15.7 million from sale of Common Stock and warrants. The capital raised included funding for working capital to launch and expand operations in accordance with its business model.

The Company ~~is using~~intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to ~~acquire staff, tablet, and kiosk devises, make marketing investments, effect a stock buyback and fund general operating costs.~~

~~Alfi’s operating needs include~~ the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our future capital requirements and adequacy of available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, enter collaborations with other companies,Company or ~~acquire other companies or technologies to enhance and/or complement our product and service offerings. We believe that our current cash balances and our anticipated cash flows from operations~~ will be sufficient to ~~fund~~enable the Company ~~for~~to fully complete its development activities or sustain operations. If the ~~next twelve months.~~Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There is no assurance that such a plan will be successful.

Off-Balance Sheet Arrangements

We did not have, during the period presented, and we do not currently have, any relationships with any organizations or financial partnerships, such as structured finance or special purpose entities, ~~that~~which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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our critical accounting policies and estimates. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ materially from these estimates.

Our significant accounting policies are more fully described in our ~~condensed~~ consolidated financial statements (Note 3)2) included ~~elsewhere~~ in this ~~quarterly report.~~Quarterly Report.

Recently Issued Accounting Standards

Our analysis of recently issued accounting standards are more fully described in our ~~condensed~~ consolidated financial statements (Note 3)2) included ~~elsewhere~~ in this ~~quarterly report.~~Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~As a~~Not applicable to smaller reporting ~~company, as defined Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.~~companies.

Item 4. Controls and Procedures

~~(a)~~

~~Evaluation and Disclosure Controls and Procedures~~

~~Management, specifically~~Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our ~~chief~~management, including our principal executive officer and ~~chief~~principal financial officer, as appropriate to allow timely decisions regarding disclosure.

Our Interim Chief Executive Officer and Interim Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of ~~June 30, 2021 (the “Evaluation Date”). Based upon~~March 31, 2021. In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that ~~evaluation,~~disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the ~~chief~~desired objectives, and the Company necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Our management, with the participation of our Interim Chief Executive Officer and Interim Chief Financial Officer, who serve as our principal executive officer and principal financial and accounting officer, respectively, has evaluated the ~~chief financial officer concluded that, as~~effectiveness of ~~the Evaluation Date,~~ our disclosure controls and procedures ~~are~~as of March 31, 2021. Based on such evaluation, our Interim Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2021.

As noted in Note 4 to the consolidated financial statements included in this Quarterly Report, the Company concluded that the Prior Period Financial Statements should no longer be relied upon and should be restated. As such, management believes material weaknesses exist in its internal controls over financial reporting as of March 31, 2021. The Company does not have a sufficient complement of personnel commensurate with the accounting and reporting requirements of a public company. The material weaknesses identified relate to inadequate controls that address segregation of certain accounting duties and reconciliation and analysis of certain key accounts. We have concluded that these material weaknesses arose because, as a pre-revenue private company recently formed, we did not have the necessary personnel to design effective components of internal control, including risk assessment control activities information/communication and monitoring to satisfy the accounting and financial reporting requirements of a public company.

In light of the conclusion that the Company’s internal disclosure controls were ineffective as of March 31, 2021, it has applied additional procedures and processes as necessary to ensure ~~that information required~~the reliability of financial reporting in regard to ~~be disclosed~~this Quarterly Report. Accordingly, the Company believes, based on its knowledge, that: (i) this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by ~~us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms~~this Quarterly Report; and (ii) ~~are accumulated~~the financial statements, and ~~communicated~~other financial information included in this Quarterly Report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this Quarterly Report.

Changes in Internal Control Over Financial Reporting

Except as disclosed in Note 4 to ~~management, specifically our chief executive officer and chief~~the consolidated financial ~~officer, as appropriate to allow timely decisions regarding required disclosure.~~

~~(b)~~

~~Changes~~statements included in this Quarterly Report, there have been no changes in ~~Internal Control Over Financial Reporting~~

~~There was no change in our~~ internal control over financial reporting (as defined in Rules 13a-15(f) orand 15d-15(f) under the Exchange Act) ~~identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred~~ during the fiscal quarter ended ~~June 30,~~March 31, 2021 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

~~None.~~None through June 10, 2021 (the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021).

Item 1A. Risk Factors

~~As a~~Not applicable to smaller reporting ~~company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.~~companies.

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

Unregistered Sale of Equity Securities

On August 1, 2018, November 21, 2018, January 23, 2019 and April 18, 2019, the Company issued 1,000,000, 500,000, 500,000 and 500,000 shares, respectively, of Series Seed Preferred Stock to an investor in exchange for $2,500,000 cash consideration. On May 3, 2021, 2,500,000 shares of Series Seed Preferred Stock were converted into 3,150,058 shares of Common Stock at a conversion ratio of 1:1.260023. The Series Seed Preferred Stock, and the shares of Common Stock issued upon conversion of the shares of Series Seed Preferred Stock, were issued in a transaction not involving a public offering, in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act. See Note 8 to our consolidated financial statements included in this Quarterly Report.

In connection with bridge loans entered into on December ~~31,~~30, 2020, March 22, 2021, and April 1, 2021, ~~for aggregate gross proceeds of $2.75 million,~~the Company issued to the lenders, who are all accredited investors, ~~received on a pro rata basis,~~an aggregate of 1,732,532 shares of Common Stock. ~~This issuance was exempt~~The shares of Common Stock were issued in a transaction not involving a public offering, in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. See Note 78 to our consolidated financial ~~statements.~~statements included in this Quarterly Report.

On March 31, 2020 and May 13, 2021, the Company issued to an investor relations firm 31,501 and 150,000 shares, respectively, of Common Stock, pursuant to agreements with such firm. On May 13, 2021, the Company issued to a consultant 150,000 shares of Common Stock, pursuant to an agreement with such consultant. These shares of Common Stock were issued in a transaction not involving a public offering, in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act. See Note 8 to our consolidated financial statements included in this Quarterly Report.

On August 31, 2021, the Company issued to the organizer of a sports tournament 31,638 shares of Common Stock, pursuant to an agreement to sponsor such tournament. The shares of Common Stock were issued in a transaction not involving a public offering, in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act. The Company has since obtained, in connection with the Company’s termination of the sponsorship agreement, the return of the 31,683 shares of Common Stock.

Prior to our IPO, from May 1, 2020 through March 15, 2021, the Company issued pursuant to the 2018 Plan to employees, for services rendered or to be rendered, options to purchase an aggregate of 374,863 shares of Common Stock, at an average weighted exercise price of $1.63 per share, which vest over four years. The foregoing securities were issued in reliance upon an exemption from registration under Rule 701 promulgated under the Securities Act.

Use of Proceeds from our IPO & Over Allotment

On May 3, 2021, the SEC declared effective our registration statement on Form S-1 (333-251959), as amended, filed in connection with our IPO. Pursuant to the registration statement, we registered the offering and sale of: (i) 3,731,344 shares of Common Stock and warrants to purchase 3,731,344 shares of Common Stock, at a combined public offering price of $4.15; and (ii) an additional 559,701 shares of Common Stock and additional warrants to purchase 559,701 shares of Common Stock, at a combined public offering price of $4.15, pursuant to an over-allotment option granted to the underwriters in our IPO. Each warrant is exerciseable for one share of Common Stock at an exercise price of $4.57 per share. Kingswood Capital Markets, division of Benchmark Investments, Inc., served as the representative of the underwriters in our IPO.

~~Table of Contents~~

~~Issuer Purchases of Equity Securities~~

(c)

(d)

Total Number

Maximum Number

of Shares (or

(or Approximate

Units)

Dollar Value) of

(b)

Purchased as

Shares (or Units)

Average

Part of Publicly

that May Yet Be

(a) Total Number of

Price Paid

Announced

Purchased Under

Shares (or units)

per Share

Plans or

the Plans or
Period

Purchased

(or Unit)

Programs

Programs
Month #1 (April 1-30, 2021)








Month # 2 (May 1-31, 2021)








Month #3 (June 1-30, 2021)







$
2,000,000
Total

—

$
—

—

$
2,000,000

Form S-1 (333-251959).

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

2630


Exhibit		Description

3.1		Restated Certificate of Incorporation of Alfi, Inc. dated January 31, ~~2020~~ 2020. ⁽¹⁾

~~3.2~~3.2*		~~Form of~~Third Amended and Restated Certificate of Incorporation, ~~(1)~~effective May 3, 2021.

3.3		Bylaws of Lectrefy, Inc.~~(1)~~⁽²⁾

~~3.4~~3.4*		~~Form of~~ Amended and Restated Bylaws ~~(1)~~

4.1		Form of Common Stock Certificate ~~(1)~~⁽³⁾

4.2		Form of Warrant ~~Agency~~Agent Agreement (including form of Series A Warrant) ~~(1)~~between Alfi, Inc. and VStock Transfer, LLC ⁽⁴⁾

4.3		Form of Representative Warrant ⁽⁵⁾

10.1		Alfi, Inc. 2018 Stock Incentive Plan ~~(1)~~⁽⁶⁾

10.2		Agreement and Plan of Merger, dated July 11, 2018, ~~(1)~~between Lectrefy Inc., a Florida corporation, and Lectrefy Inc., a Delaware corporation ⁽⁷⁾

10.3		Series Seed Stock Investment Agreement, dated August 1, 2018, ~~(1)~~among Lectrefy Inc., the Purchasers and the Key Holders ⁽⁸⁾

10.4		Amendment No. 1 to Series Seed Stock Investment Agreement, dated October 31, 2019, ~~(1)~~between Lectrefy, Inc. and Lee Aerospace, Inc. ⁽⁹⁾

~~10.5~~10.5†		Executive Employment Agreement, ~~with Paul Pereira~~dated February 10, 2021, ~~(1)~~between Alfi, Inc. and Paul Pereira ⁽¹⁰⁾

~~10.6~~10.6†		Executive Employment Agreement, ~~with John Cook~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and John Cook, III ⁽¹¹⁾

~~10.7~~10.7†		Executive Employment Agreement, ~~with Charles Pereira~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and Charles Pereira ⁽¹²⁾

~~10.8~~10.8†		Executive Employment Agreement, ~~with Dennis McIntosh~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and Dennis McIntosh ⁽¹³⁾

10.9		Promissory Note, ~~with Lee Aerospace, Inc.~~ dated January 15, 2019, ~~(1)~~between Lectrefy Inc. and Lee Aerospace, Inc. ⁽¹⁴⁾

10.10		Security Agreement, ~~with Lee Aerospace, Inc.~~ dated January 15, 2020, ~~(1)~~between Lectrefy Inc. and Lee Aerospace, Inc. ⁽¹⁵⁾

10.11		Bridge Loan Agreement, dated December 30, 2020, ~~(1)~~among Alfi, Inc., Lee Aerospace, Inc., Paul Antonio Pereira and Dennis McIntosh ⁽¹⁶⁾

10.12		Letter Agreement Related to Purchase of Lenovo Tablets, dated March 19, 2020, ~~(1)~~between Alfi, Inc. and Lee Aerospace, Inc. ⁽¹⁷⁾

10.13		Bridge Loan Agreement, dated March 22, 2021, ~~(1)~~among Alfi, Inc., Lee Aerospace, Inc., Paul Antonio Pereira and Rachael Pereira ⁽¹⁸⁾

10.14		Bridge Loan Agreement, dated April 1, 2021, ~~(1)~~among Alfi, Inc., Lee Aerospace, Inc., Paul Antonio Pereira, Peter Bordes, Dennis McIntosh, Rachael Pereira, Charles Pereira and FLBT, LLC ⁽¹⁹⁾

10.15*		Promissory Note, dated August 8, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.


10.16*		First Amended and Restated Promissory Note, dated September 20, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.

10.17*		Promissory Note, dated October 25, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.

10.18*		Promissory Note, dated November 12, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.

10.19*		Promissory Note, dated November 26, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.

10.20*†		Form of Incentive Stock Option Award Agreement (under the Alfi, Inc. 2018 Stock Incentive Plan)

10.21*†		Stock Option Award Agreement, dated March 15, 2021, between Alfi, Inc. and Ronald Spears

31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		~~Certification~~Certifications of the Principal Executive Officer ~~Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

32.2**		~~Certification of~~and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


101.INS*		Inline XBRL Instance Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)

		Page
PART I – FINANCIAL INFORMATION:

Item 1.	Financial Statements:	23
	Consolidated Balance Sheets as of J~~une~~ ~~30,~~March 31, 2021 (Unaudited) and December 31, 2020 ~~(Audited)~~	23
	Condensed Consolidated Statement of Operations for the Three Months Ended J~~une~~ ~~30,~~March 31, 2021 (Unaudited) and ~~June 30,~~March 31, 2020 ~~(Unaudited)~~	3
	~~Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended June 30, 2021~~ (Unaudited)	4
	Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 (Unaudited)	5
	Consolidated Statement of Cash Flows for the Three Months Ended ~~June 30,~~March 31, 2021 (Unaudited) and ~~June 30,~~March 31, 2020 (Unaudited)	56
	Notes to Consolidated Financial Statements (Unaudited)	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1923
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2427
Item 4.	Controls and Procedures	2427

PART II - OTHER INFORMATION:		2529

Item 1.	Legal Proceedings	2529
Item 1A.	Risk Factors	2529
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2529
Item 3.	Defaults Upon Senior Securities	2630
Item 4.	Mine Safety Disclosures	2630
Item 5.	Other Information	2630
Item 6.	Exhibits	2731


	Unaudited
	June 30,	December 31,
	2021	2020
Assets
Current assets:
Cash and cash equivalents	19,693,653	8,335
Accounts receivable, net	—	—
Note receivable (related parties)	—	1,830,000
Prepaid expenses and other	2,415,361	793
Total current assets	22,109,014	1,839,128

Property and equipment, net of accumulated depreciation of $92,441 and $46,081, respectively	150,519	117,474
Intangible assets, net of accumulated amortization of $879,439 and $440,321, respectively	3,945,070	4,384,188
Other assets (complimentary devices), net	1,039,625	1,104,000
Other assets, net	55,350	7,940
Total assets	27,299,578	7,452,730

Liabilities
Current liabilities
Accounts payable	982,230	516,705
Current portion of long-term debt (related parties)	—	5,558,808
Derivative liability	—	229,712
Accrued interest	—	116,600
Total current liabilities	982,230	6,421,825

Long-term debt, net (related parties)	—	—
Total liabilities	982,230	6,421,825

Stockholders' Equity
Series Seed preferred stock, $0.0001 par, -0- shares issued as of June 30, 2021, and December 31, 2020, respectively. 2,500,000 shares authorized	—	2,500,000
Common stock, $0.0001 par, 16,040,941 and 4,441,523 shares issued as of June 30, 2021, and December 31, 2020, respectively. 80,000,000 shares authorized	1,604	444
Additional paid-in capital	37,679,500	2,024,871
Accumulated surplus (deficit)	(11,363,756)	(3,494,410)
Total stockholders' equity	26,317,348	1,030,905

Total liabilities and stockholders' equity	27,299,578	7,452,730


		Unaudited											Total
		Series Seed							Additional		Accumulated		Stockholders'
		Preferred Stock				Common Stock			Paid-In		Surplus		Equity
		Shares	Amount			Shares	Amount		Capital		(Deficit)		(Deficit)
Balance at December 31, 2019		2,500,000		2,500,000		3,150,000		315		—		64,549	$	2,564,864
Net income (loss)		—		—		—		—		—		37,697		37,697
Balance at March 31, 2020		2,500,000		2,500,000		3,150,000		315		—		102,246		2,602,561
Net loss												(23,772)
Balance at June 30, 2020		2,500,000		2,500,000		3,150,000		315		—		78,474		2,602,561

Balance at December 31, 2020		2,500,000		2,500,000		4,441,523		444		2,024,871		(3,494,410)		1,030,905
Shares issued with debt						157,561		16		249,984				250,000
Net loss												(3,176,875)		(3,176,875)
Balance at March 31, 2021		2,500,000		2,500,000		4,599,084		460		2,274,855		(6,671,285)		(1,895,970)
Shares issued for cash		—		—		4,291,045		429		15,732,252		—		15,732,681
Exercise of warrants		—		—		3,385,746		338		15,472,521		—		15,472,859
Shares issued with debt						315,008		32		499,968		—		500,000
Shares issued for services						300,000		30		599,970		—		600,000
Options						—		—		600,249		—		600,249
Conversion of preferred stock to common		(2,500,000)		(2,500,000)		3,150,058		315		2,499,685		—		—
Net loss		—		—		—		—		—		(4,692,471)		(4,692,471)
Balance at June 30, 2021	$	—	$	—	$	16,040,941	$	1,604	$	37,679,500	$	(11,363,756)	$	26,317,348


As of December 31, 2020	Amount		Level 1		Level 2		Level 3
Embedded conversion derivative liability on employee stock options	$	229,712	$	—	$	—	$	229,712
Total as of December 31, 2020	$	229,712	$	—	$	—	$	229,712

As of June 30, 2021
Embedded conversion derivative liability on employee stock options	$	0	$	—	$	—	$	0
Total as of June 30, 2021	$	0	$	—	$	—	$	0


Property and equipment balance on December 31, 2019, net of accumulated depreciation	$	107,744
Additions		33,645
Depreciation expense		(23,915)
Property and equipment balance on December 31, 2020, net of accumulated depreciation	$	117,474
Additions		51,701
Depreciation expense		(18,656)
Property and equipment balance on June 30, 2021, net of accumulated depreciation	$	150,519


	Capitalized		Useful
	Cost		Life
Patent Acquisition Costs	$	650,000	15 years
Production Costs	$	4,174,509	5 years
Total Intangible Assets (IP), gross	$	4,824,509


Intangible asset balance on December 31, 2019, net of accumulated amortization	$	3,198,051
Additions		1,626,458
Amortization expense		(440,321)
Intangible asset balance on December 31, 2020, net of accumulated amortization	$	4,384,188
Additions		0
Amortization expense		(439,118)
Intangible asset balance on June 30, 2021, net of accumulated amortization	$	3,945,070


Year 1	$	439,117
Year 2	$	878,235
Year 3	$	878,235
Year 4	$	878,235
Year 5	$	459,641
Thereafter	$	411,607
Total	$	3,945,070


Other assets (complimentary devices) balance on December 31, 2019, net	$	0
Purchase of Other assets (complimentary devices)		1,256,500
Other assets (complimentary devices) expensed to cost of sales		(152,500)
Other assets (complimentary devices) balance on December 31, 2020, net	$	1,104,000
Other assets (complimentary devices) expensed to cost of sales		(64,375)
Other assets (complimentary devices) balance on June 30, 2021, net	$	1,039,625


				(c)	(d)
				Total Number	Maximum Number
				of Shares (or	(or Approximate
				Units)	Dollar Value) of
		(b)		Purchased as	Shares (or Units)
		Average		Part of Publicly	that May Yet Be
	(a) Total Number of	Price Paid		Announced	Purchased Under
	Shares (or units)	per Share		Plans or	the Plans or
Period	Purchased	(or Unit)		Programs	Programs
Month #1 (April 1-30, 2021)
Month # 2 (May 1-31, 2021)
Month #3 (June 1-30, 2021)					$	2,000,000
Total	—	$	—	—	$	2,000,000