UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~

~~Amendment No. 1~~10-Q

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

For the quarterly period ended ~~March 31, 2021~~June 30, 2022

☐ 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		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~~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~~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 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 ☒

As of ~~June 10, 2021,~~July 29, 2022, there were ~~12,664,627~~16,094,882 shares of the Company’s common stock, par value $0.0001, outstanding.

Table of Contents

~~EXPLANATORY NOTE~~ALFI, INC.

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~~

~~ALFI, INC.~~

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION:

Item 1.	Financial Statements:	32
	Consolidated Balance Sheets as of ~~March 31, 2021~~June 30, 2022 (Unaudited) and December 31, ~~2020~~2021	2
	Consolidated Statements of Operations for the Three Months Ended June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)	3
	~~Condensed~~ Consolidated ~~Statement~~Statements of ~~Operations~~ Changes in Stockholders’ Equity (Deficit) for the Three Months Ended ~~March 31, 2021~~June 30, 2022 (Unaudited) and ~~March 31, 2020~~June 30, 2021 (Unaudited)	4
	Consolidated ~~Statement~~Statements of ~~Changes in Stockholders’ Equity (Deficit)~~Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)	5
	~~Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2021 (Unaudited) and March 31, 2020 (Unaudited)~~	6
	Notes to Consolidated Financial Statements (Unaudited)	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2316
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2723
Item 4.	Controls and Procedures	2723

PART II - OTHER INFORMATION:		2925

Item 1.	Legal Proceedings	2925
Item 1A.	Risk Factors	2926
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2926
Item 3.	Defaults Upon Senior Securities	3027
Item 4.	Mine Safety Disclosures	3027
Item 5.	Other Information	3027
Item 6.	Exhibits	3128

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Balance Sheets


	Unaudited				Unaudited
	Mar 31, 2021		Dec 31, 2020		Jun 30, 2022		Dec 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	96,023	$	8,335	$	137,412	$	4,391,816
Accounts receivable		17,450		—		119,168		5,578
Prepaid expenses and other		—		793		1,221,067		926,170
Total current assets		113,473		9,128		1,477,647		5,323,564
Property and equipment, net		310,778		506,294		2,437,934		4,031,904
Intangible assets, net		844,264		888,271		624,234		712,247
Operating lease right-of-use asset, net		135,357		149,032		70,525		95,765
Other assets		7,940		7,940
Assets held for sale and other assets						44,354		1,209,525
Total assets	$	1,411,812	$	1,560,665	$	4,654,694	$	11,373,005
Liabilities and Stockholders’ Deficit

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	1,173,677	$	1,000,876	$	3,368,155	$	2,264,582
Debt, related parties		5,727,154		3,728,808
Debt payable, related parties						1,745,617		—
Lease liability		138,670		152,646		72,332		98,175
Interest payable, related parties		222,722		116,600		16,300		—
Total current liabilities		7,262,223		4,998,930		5,202,404		2,362,757
Total liabilities		7,262,223		4,998,930		5,202,404		2,362,757

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
Stockholders' Equity (Deficit)
Common stock, $0.0001 par value, 80,000,000 shares authorized, 16,094,882 and 16,069,347 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively						1,623		1,620
Additional paid-in capital		2,372,819		2,076,150		39,251,992		37,967,926
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
Accumulated (deficit)						(37,801,328)		(26,959,301)
Common stock held in treasury at cost, $0.0001 par value, 137,650 and 137,650 shares at June 30, 2022 and December 31, 2021, respectively						(1,999,997)		(1,999,997)
Total stockholders' equity (deficit)						(547,710)		9,010,248
Total liabilities and stockholders' equity (deficit)					$	4,654,694	$	11,373,005

See accompanying notes to the 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


	Three months		Three months		Six months		Six months
	ended Jun 30,		ended Jun 30,		ended Jun 30,		ended Jun 30,
	2022		2021		2022		2021
Revenues	$	129,302	$	936	$	192,605	$	18,386

Operating expenses
Compensation and benefits		1,473,201		1,197,742		3,259,830		2,080,953
Other general and administrative		2,688,297		2,311,290		5,843,029		3,563,149
Loss on disposal of property and equipment		849,337		—		849,337		—
Depreciation and amortization		416,073		248,173		832,645		495,488
Total operating expenses		5,426,908		3,757,205		10,784,841		6,139,590

Operating loss		(5,297,606)		(3,756,269)		(10,592,236)		(6,121,204)

Other income (expense)
Other income		41,914		16,334		43,973		29,351
Interest expense		(293,734)		(561,786)		(293,764)		(918,700)
Total other expense		(251,820)		(545,453)		(249,791)		(889,349)

Net loss before provision for income taxes		(5,549,426)		(4,301,722)		(10,842,027)		(7,010,553)
Provision for income taxes		—		—		—		—
Net loss after provision for income taxes	$	(5,549,426)	$	(4,301,722)	$	(10,842,027)	$	(7,010,553)

Loss per share, basic and diluted	$	(0.34)	$	(0.42)	$	(0.67)	$	(0.95)

Weighted average shares outstanding, basic and diluted		16,094,882		10,244,608		16,086,370		7,351,845

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				Common		Stockholders'
	Preferred Stock			Common Stock			Paid-In		Accumulated		Stock Held		Equity
	Shares	Amount		Shares	Amount		Capital		Deficit		in Treasury		(Deficit)

Balance - January 1, 2021	2,500,000	$	2,500,000	4,441,582	$	444	$	2,076,151	$	(8,014,859)	$	—	$	(3,438,264)
Shares issued with debt	—		—	157,503		16		249,984		—		—		250,000
Share based compensation	—		—	—		—		46,684		—		—		46,684
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)
Shares issued with debt	—		—	315,007		32		499,968		—		—		500,000
Conversion of convertible	—		—	—		—		-		—		—		—
preferred stock to common	(2,500,000)		(2,500,000)	3,150,058		315		2,499,685		—		—		—
Shares issued for cash	—		—	4,291,045		429		10,993,471		10,993,900		—		—
Warrants issued for cash	—		—	—		—		4,738,750		—		—		4,738,750
Exercise of warrants	—		—	3,385,746		338		15,472,521		—		—		15,472,859
Shares issued for services	—		—	300,000		30		476,150		—		—		476,180
Share based compensation	—		—	—		—		85,256		—		—		85,256
Exercise of options	—		—	11,892		2		15,085		—		—		15,087
Net loss	—		—	—		—		—		(4,301,722)		—		(4,301,722)
Balance - June 30, 2021	0	$	0	16,052,833	$	1,606	$	37,153,705	$	(15,025,412)	$	0	$	22,129,899

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)


													Total
	Series Seed Convertible						Additional				Common		Stockholders'
	Preferred Stock			Common Stock			Paid-In		Accumulated		Stock Held		Equity
	Shares	Amount		Shares	Amount		Capital		Deficit		in Treasury		(Deficit)
Balance - January 1, 2022	—	$	—	16,069,347	$	1,620	$	37,967,926	$	(26,959,301)	$	(1,999,997)	$	9,010,248
Share based compensation	—		—	—		—		68,038		—		—		68,038
Exercise of options	—		—	25,535		3		23,072		—		—		23,075
Net loss	—		—	—		—		—		(5,292,601)		—		(5,292,601)
Balance - March 31, 2022	—		—	16,094,882		1,623		38,059,036		(32,251,902)		(1,999,997)		3,808,760
Warrants issued with debt	—		—	—		—		1,281,817		—		—		1,281,817
Share based compensation	—		—	—		—		(88,861)		—		—		(88,861)
Net loss	—		—	—		—		—		(5,549,426)		—		(5,549,426)
Balance - June 30, 2022	—	$	—	16,094,882	$	1,623	$	39,251,992	$	(37,801,328)	$	(1,999,997)	$	(547,710)

See accompanying notes to the consolidated financial statements

Table of Contents

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Three months

Three months

ended Mar 31,

ended Mar 31,

2021

2020
Operating activities




Net loss

$
(2,708,831)

$
(615,955)
Adjustments to reconcile net loss to net cash used in operating activities:




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:




Accounts receivable

(17,450)

—
Prepaid expenses and other assets

793

(5,278)
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




Capital expenditures

(7,791)

(1,016,265)
Acquisition of intangible assets

—

(181,169)
Net cash used in investing activities

(7,791)

(1,197,434)
Financing activities




Proceeds from related party debt payable

1,998,345

1,842,050
Net cash provided by financing activities

1,998,345

1,842,050
Net change in cash and cash equivalents

87,688

55,476
Cash and cash equivalents at the beginning of the period

8,335

38,890
Cash and cash equivalents at the end of the period

$
96,023

$
94,366

Supplemental disclosure of cash flow information

Cash paid for interest

$
—

$
—
Cash paid for income tax

$
—

$
—


	Six months		Six months
	ended Jun 30,		ended Jun 30,
	2022		2021
Operating activities
Net loss	$	(10,842,027)	$	(7,010,553)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		832,645		495,488
Loss on disposal of property and equipment		849,337		—
Amortization of debt discount		277,434		—
Shares issued with debt		—		750,000
Share based compensation		(20,823)		131,942
Share based payments for services		—		476,180
Amortization of operating lease right-of-use asset		25,240		27,109
Changes in assets and liabilities:
Accounts receivable		(113,590)		—
Prepaid expenses and other assets		(294,896)		(2,414,568)
Other assets		174,190		(47,410)
Accounts payable		1,103,573		(18,645)
Lease liability		(25,843)		(27,711)
Interest payable, related parties		16,300		(116,600)
Net cash used in operations		(8,018,460)		(7,754,769)
Investing activities
Capital expenditures		—		(51,697)
Sale of condominium, net		990,981		—
Net cash provided by (used in) investing activities		990,981		(51,697)
Financing activities
Proceeds from related party debt payable		2,750,000		2,548,344
Proceeds from issuance of common stock, net		—		15,732,649
Proceeds from exercise of warrants		—		15,472,859
Proceeds from exercise of options		23,075		15,085
Repayments of related party debt payable		—		(6,277,154)
Net cash provided by financing activities		2,773,075		27,491,783
Net change in cash and cash equivalents		(4,254,404)		19,685,318
Cash and cash equivalents at the beginning of the period		4,391,816		8,335
Cash and cash equivalents at the end of the period	$	137,412	$	19,693,653

Supplemental disclosure of cash flow information
Cash paid for interest	$	—	$	285,478
Cash paid for income tax	$	—	$	—

Supplemental disclosure of non-cash investing and financing activities
Conversion of convertible preferred stock to common stock	$	—	$	2,500,000

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

NOTE 1 BUSINESS DESCRIPTION BACKGROUND

Alfi, Inc. is a C-corporation incorporated in Delaware that operates in the technology sector; specifically, Software as a Service (“SaaS”) in the Digital Out Of Home (“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 (N.I.) Ltd, the results of which are presented on a consolidated basis in the financial statements included in this Quarterly Report on ~~form 10-Q/A~~Form 10-Q (this “Quarterly Report”). Alfi (N.I.) Ltd is a registered business in Belfast, Ireland. Collectively, the consolidated entity is referred to as the “Company” or “Alfi” throughout this Quarterly Report.

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

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

Alfi seeks to provide solutions that bring transparency and accountability to the DOOH advertising marketplace. Alfi uses artificial intelligence and big data analytics to measure and disseminate audience presence and audience demographics. The Company’s computer vision technology is powered by proprietary artificial intelligence, to determine the relevant demographic and geospecific information of 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 profile and/or geolocation. By delivering the advertisements most relevant to the audience in front of the device, Alfi connects its advertising customers to the viewers they seek to target.

The Company’s initial focus iswas to place Alfi-enabled devices in malls, airports, rideshares and taxis. ~~In addition, the~~The Company ~~has begun offering~~recently shifted its ~~software solution~~focus to ~~other DOOH media operators as~~prioritize placement of its devices in rideshares with a ~~SaaS product.~~view toward growing that business to operate it profitably.

The Company’s primary activities since inception have been research and development, managing collaborations, and raising capital.

NOTE 2 ~~SIGNIFICANT ACCOUNTING POLICIES~~

~~Consolidation~~BASIS OF PRESENTATION

The accompanying interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission (the “SEC”) rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the ~~accounts~~Company’s financial position, results of ~~Alfi, Inc.~~operations and cash flows, in conformity with generally accepted accounting principles. The Company filed audited consolidated financial statements as of and for the fiscal years ended December 31, 2021, 2020 and 2019, which included all information and notes necessary for such complete presentation in conjunction with its ~~wholly owned subsidiary, Alfi (N.I.~~Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) ~~Ltd. Collectively, these entities make up~~.

The results of operations for the interim periods ended June 30, 2022 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021, which are contained in the Annual Report. For further discussion, see Note 2 – “Significant Accounting Policies” to the consolidated financial statements ~~during the periods presented in this Quarterly Report. All significant intercompany balances~~ and ~~transactions are eliminated in consolidation.~~

~~Use~~“Management’s Discussion and Analysis of ~~Estimates~~

~~The preparation~~Financial Condition and Results of ~~financial statements in accordance with accounting principles generally accepted~~Operations – Critical Accounting Policies and Estimates” in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Table of Contents~~

~~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 from the purchase date to be cash equivalents.~~

~~Property and Equipment~~

~~Property and equipment 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.~~

Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

~~Intangible Assets~~

The Company’s intangible assets include capitalized software development and patent acquisition costs associated with creation of its technology. The Company places intangible assets into service upon the date in which they are available for use. Intangible assets are amortized over a 5 year useful life for capitalized software development costs and a 15 year useful life for patent acquisition costs. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

~~Table of Contents~~

~~Fair Value of Financial Instruments~~

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. Fair values approximate carrying values for cash, accounts payable, notes payable, fixed assets, and amortizable intangible assets.

~~Loss Per Share~~

The Company computes basic net loss per share by dividing net loss per share available to 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 loss per share excludes potentially dilutive securities when their inclusion would be 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 loss per share as of are as follows:~~Annual Report.

March 31,

March 31,

2021

2020
Convertible Series (“Seed”) Preferred stock

3,150,058

3,150,058
Warrants

—

—
Employee stock options

433,927

59,064
Total potentially dilutive securities

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~~

The Company has determined that the embedded conversion options should not be bifurcated from their host instruments and the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments (the beneficial conversion feature) based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

Thus, 0 embedded derivatives were identified on the conversion option of Series Seed Preferred Stock at March 31, 2021 and December 31, 2020. In May 2021, 2,500,000 shares of Series Seed Preferred Stock converted into 3,150,058 shares of Common Stock.

~~Common Stock Purchase Warrants~~

The Company accounts for warrants to purchase its Common Stock in accordance with ASC 815. Proceeds from the issuance of warrants indexed to the Company’s own stock are classified in stockholders’ equity (deficit).

~~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. The Company has not recorded any unrecognized tax benefits. The Company’s policy is to 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.

~~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 this Quarterly Report are presented post-split, unless otherwise noted.~~

NOTE 3 GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As of ~~June 10, 2021 (the Original Filing~~the date of ~~the Company’s~~this Quarterly Report, ~~on Form 10-Q for the quarter ended March 31, 2021),~~ the Company ~~had~~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.

Table of Contents

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~~During 2021, the Company completed its ~~IPO~~initial public offering (“IPO”) yielding net proceeds to the Company of approximately $15.7 million from the sale of ~~Common Stock~~the Company’s common stock, par value $0.0001 (the “Common Stock”), and warrants and approximately $16.0 million from the exercise of warrants. The capital ~~raise~~raised included funding for working capital to launch and expand operations in accordance with its business model.

On April 12, 2022, the Company entered into a Credit and Security Agreement (as may be amended from time to time, the “Credit Agreement”) with a related party lender pursuant to which the Company could borrow under a revolving line of credit up to $2,500,000 for up to one year. On June 27, 2022, the Company and the related party lender entered into Amendment No. 1 to the Credit and Security Agreement (“Amendment No. 1”) and an Amended and Restated Non-Revolving Line of Credit Note (the “Amended Note”), pursuant to which the non-revolving line of credit available to the Company from the related party lender was increased to $2,750,000. The Company’s ability to draw on the non-revolving line of credit, to the extent available under the Credit Agreement, is in the related party lender’s sole discretion and subject to the Company requesting such additional funds from the related party lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and related documents, and that no default under the Credit Agreement has occurred and is continuing under the Credit Agreement.

Through June 30, 2022, the related party lender funded to the Company $2,750,000 under the Credit Agreement. The Amended Note matures on the earlier of: (i) the date upon which the Company consummates a debt or equity financing in an amount equal to or greater than $4,000,000 or (ii) April 12, 2023.

The Company ~~intends~~has borrowed the maximum amount available under the Credit Agreement. Since its inception, the Company has generated only nominal revenue from customers and business activity and currently has very limited cash on hand. The Company is endeavoring to raise additional capital through ~~private placements of~~ debt ~~and~~or equity ~~securities,~~financing, but there ~~can be~~is no assurance that ~~these funds~~additional capital 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,~~capital to sustain operations, then it will have ~~to develop and implement a plan~~ to further extend payables, reduce overhead, or scale back its current business plan until ~~sufficient~~such additional capital is raised, ~~to support further operations.~~any of which could have a material adverse effect on the Company. There is no assurance that such a plan will be successful. If the Company is unable to raise sufficient additional capital to sustain operations, then the Company will be required to pursue other alternatives which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

~~Table of Contents~~

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

~~Table of Contents~~

NOTE 4 RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Prior Period Restatements

On March 11, 2022, the Audit Committee (the “Audit Committee”) of the Company’s Board of Directors (the “Board”) and the Company’s management concluded that the 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.

Table of Contents

In connection with the Company’s evaluation of the issues and findings identified in the Company’s previously disclosed internal independent investigation (the “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 FASB Accounting Standards Update No. 2018-11, Leases (Topic 842).

~~The accompanying~~On May 16, 2022, the Company filed interim consolidated financial statements ~~have been~~ restated to correct the accounting errors and conform to current period ~~presentation.~~

~~Table of Contents~~

~~Impact of~~presentation in an Amendment No. 1 to the ~~Restatements~~

~~The impact of the restatement~~Quarterly Report on ~~the consolidated balance sheet as of March 31, 2021 is presented 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

~~Table of Contents~~

~~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

~~Table of Contents~~

~~The impact of the restatements on the consolidated statement of operations~~Form 10-Q/A for the quarter and six months 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

~~Table of Contents~~

June 30, 2021. The ~~impact of the restatements on the~~interim consolidated ~~statement of operations~~financial statements for the ~~quarter~~periods 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

~~Table of Contents~~

~~The impact of the restatements on the consolidated statement of cash flows for the quarter ended March 31,~~June 30, 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

included in this Quarterly Report reflect all such restatements.

NOTE 5 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:

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 was not 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 fair value. The determination of fair value and the assessment of a ~~measurement’s~~measurement's placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and 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 method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods.

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An increase or decrease in volatility or interest free rate, in isolation, can significantly increase or decrease the fair value of financial assets and liabilities. Changes in the values of the assets and liabilities are recorded as a component of other income (expense) on the accompanying consolidated statement of operations.

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Non-financial assets that are measured on a non-recurring basis include our intellectual property and property and equipment which are measured using fair value techniques whenever events or changes in circumstances indicate a condition of impairment exists.

NOTE 6 DEBT ~~PAYABLE~~ – RELATED PARTIES

~~During 2019 and 2020,~~On April 12, 2022, the Company entered into ~~six promissory note agreements~~the Credit Agreement with ~~a related party~~Lee Aerospace, Inc. (“Lee Aerospace”), as lender, pursuant to which the Company could borrow under a non-revolving line of credit up to $2,500,000 for up to one year. The lender is wholly owned by an entity which is majority owned and controlled by James Lee, the Company’s Chairman of the Board. Mr. Lee is also President of the lender. In addition, Mr. Lee and the lender, together, beneficially own over 30% of the Common Stock. Mr. Lee also was appointed as the Company’s Interim Chief Executive Officer effective July 22, 2022.

On June 27, 2022, the Company and the related party lender entered into Amendment No. 1 and the Amended Note, pursuant to which the non-revolving line of credit available to the Company from the related party lender was increased to $2,750,000. The Amendment No. 1 and the Amended Note do not otherwise amend the terms of the Credit Agreement and related documents. Through June 30, 2022, the related party lender funded to the Company $2,750,000 under the Credit Agreement.

The Company’s ability to draw on the non-revolving line of credit, to the extent available under the Credit Agreement, is in the related party lender’s sole discretion and subject to the Company requesting such additional funds from the related party lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and related documents, and that no default under the Credit Agreement has occurred and is continuing under the Credit Agreement. The Amended Note matures on the earlier of (i) the date upon which the Company consummates a debt or equity financing in an amount equal to or greater than $4,000,000 or (ii) April 12, 2023. Borrowings under the Credit Agreement are collateralized by a security interest in the Company’s assets. Interest on the unpaid principal amount accrues an annual rate of 6% through October 12, 2022 and an annual rate of 9% thereafter, except that in event of default additional penalty interest at an annual ~~interest~~ rate of ~~5%. Borrowings pursuant to those agreements were $2,500,000 at March 31, 2021 and December 31, 2020.~~

~~During~~3% will accrue on borrowings through October 12, 2022. In connection with the ~~year ended December 31, 2020,~~Credit Agreement, the Company issued a ~~related party provided financing of approximately $950,000 for the Company’s purchase of 7,600 tablets. Payment was due~~warrant to the related party ~~upon the closing of the Company’s IPO. There was no stated interest rate or additional repayment terms.~~

~~On December 30, 2020, the Company entered into a $2,000,000 bridge loan agreement with a related party. As of December 31, 2020, $251,654 had been funded~~lender on ~~the bridge loan. The terms of the bridge loan included repayment of principal on or before June 30, 2021, and an annual interest rate of 18%. In addition~~April 12, 2022, pursuant to ~~repayment of principal and interest under the bridge loan, the Company issued to~~which the related party ~~1,260,023~~lender may purchase up to 1,250,000 shares of the Common ~~Stock.~~Stock at a price of $1.51 per share. The warrant is exercisable on or after July 12, 2022 and expires on April 12, 2025. Management valued ~~this issuance of shares~~the warrant at ~~$2,000,000~~$1,281,817 and recorded that amount inas a debt discount. The debt discount is being amortized and recorded as interest ~~expense.~~expense over the term of the Amended Note.

Debt payable, related parties at June 30, 2022 of $1,745,617 is comprised of $2,750,000 payable pursuant to the Credit Agreement, net of unamortized debt discount of $1,004,383. During the three and six months ended June 30, 2022, the Company accrued interest expense on debt payable to related parties of $293,734 and $293,734, respectively.

During the ~~year~~three and six months ended ~~December 31, 2020, the Company received a cash advance of $27,154 from a related party. The cash advances carried 0 specified repayment term, interest rate, or security interest.~~

~~During the three-month period ended March 31,~~June 30, 2021, the Company ~~entered into bridge loans totaling $250,000 with~~accrued interest expense on debt payable to related ~~party investors. Terms~~parties of ~~the bridge loans with related party included repayment of principal on or before June 30, 2021,~~$561,786 and an annual interest rate of 18%. In addition to repayment of principal and interest under the bridge loans, the Company issued 157,503 shares of Common Stock. 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 loan lenders. Management valued these issuances of shares at $500,000 and recorded that amount in interest expense.

$918,700, respectively. All borrowings from related parties outstanding immediately prior to the IPO in May 2021 were paid in full upon completion of the ~~Company’s~~IPO. Debt payable to related parties immediately prior to the IPO ~~in May 2021.~~included the following notes and loans:

●	The Company entered into 6 promissory note agreements with a Lee Aerospace pursuant to which the Company could borrow up to $2,500,000 at an annual interest rate of 5%. Borrowings pursuant to those agreements were $2,500,000.

●	Lee Aerospace provided financing of approximately $950,000 for the Company’s purchase of 7,600 tablets. Payment was due to the Lee Aerospace upon the closing of the IPO. There was no stated interest rate or additional repayment terms.

●	The Company entered into a $2,000,000 bridge loan agreement with Lee Aerospace. The terms of the bridge loan included repayment of principal on or before June 30, 2021, and an annual interest rate of 18%.

●

During the year ended December 31, 2021, the Company entered into bridge loans totaling $800,000 with related party investors. Terms of the bridge loans with related parties 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 loans, the Company issued 472,510 shares of Common Stock. Management valued these issuances of shares at $750,000 and recorded that amount in interest expense.

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NOTE 7 COMMITMENTS AND CONTINGENCIES

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. At ~~March 31, 2021~~June 30, 2022, and December 31, ~~2020,~~2021, cash balances in excess of FDIC requirements were $-0- and ~~$-0-,~~$4,141,816, respectively.

Litigation, Claims, and Assessments

The Company ~~may be involved~~is in legal proceedings, claims and ~~assessments arising in the ordinary course of business.~~assessments. Such matters are subject to many uncertainties, and outcomes are not ~~predictable~~predictable.

On December 2, 2021, the Company and certain of its present and former officers and directors were named as defendants in a putative class action lawsuit styled Steppacher v. Alfi, Inc., et al., Case No. 1:21-cv-24232, brought in the United States District Court for the Southern District of Florida. On December 15, 2021, the Company, certain of its present and former officers and directors, and the underwriters in the IPO were named as defendants in a second putative class action styled Kleinschmidt v. Alfi, Inc., et al., Case No. 1:21-cv-24338, also brought in the United States District Court for the Southern District of Florida.

The complaints in both actions allege that the Company and other named defendants violated Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), with ~~assurance.~~respect to allegedly false and misleading statements included in the registration statement and prospectus supplements issued in connection with the IPO (the “Offering Documents”) in May 2021, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, by allegedly making false and materially misleading statements and failing to disclose material adverse facts in the Company’s public filings with the SEC. Both complaints assert that the putative plaintiff class includes: (i) persons or entities, other than the defendants, the officers and directors of the Company, members of their immediate families, their legal representatives, and any entity in which they had a controlling interest, among others, who purchased or acquired the Common Stock or warrants to purchase the Common Stock pursuant and/or traceable to the Offering Documents; and (ii) persons or entities, other than the defendants, who purchased or acquired the Company’s securities between May 4, 2021, and November 15, 2021 (both dates inclusive). The plaintiffs seek unspecified compensatory damages, including interest, and costs and expenses, including attorney’s and expert fees. On February 3, 2022, the court consolidated the two actions under the caption Steppacher, Jr., et al. v. Alfi, Inc. et al., Case No. 21-cv-24232-KMW. Three putative stockholders (or groups of stockholders) moved to be appointed as lead plaintiff, and the court appointed Candido Rodriguez as lead plaintiff. The consolidated actions are now captioned Rodriguez, et al. v. Alfi, Inc., et al., Case No. 21-cv-24232-KMW. The Company intends to vigorously defend these actions. The Company is currently unable to estimate the costs and timing of the resolution of this matter.

On April 27, 2022, Ryan Dodgson filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Ryan Dodgson, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-21318, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duties; (iv) unjust enrichment; (v) abuse of control; (vi) gross mismanagement; and (vii) waste of corporate assets, in connection with alleged improper corporate transactions, an alleged pattern and practice of abuse of control of the Company and allegedly deficient internal controls, among other things. The complaint also seeks contribution under Section 11(f) of the Securities Act and Section 21D of the Exchange Act as to the defendants, and seeks contribution under Sections 10(b) and 21D of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests a declaration that the defendants have breached or aided and abetted the breach of their fiduciary duties to the Company, an award of damages to the Company, restitution, and an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ and experts’ fees, costs and expenses, and alleged improvements to the Company’s corporate governance and internal procedures regarding compliance with laws. The Company is currently unable to estimate the costs and timing of the resolution of this matter.

During February and March 2022, 2 former employees filed breach of contract claims against the Company. The Company is currently unable to estimate the costs and timing of arbitration of these claims.

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Other Matters

As previously disclosed, on November 9, 2021, the Company received a letter from the staff of the SEC indicating that the Company, its affiliates and agents may possess documents and data relevant to an ongoing investigation being conducted by the staff of the SEC and notifying the Company that such documents and data should be reasonably preserved and retained until further notice. The materials to be preserved and retained include documents and data created on or after April 1, 2018 that: (i) were created, modified or accessed by certain named former and current officers and directors of the Company or any other officer or director of the Company; or (ii) relate or refer to the condominium or the sports tournament sponsorship identified in the Company’s Current Report on Form 8-K filed on November 1, 2021, or financial reporting and disclosure controls, policies or procedures. On March 8, 2022, the Company received a subpoena from the SEC relating to the investigation. The Company intends to cooperate fully with the SEC in this matter. The Company is currently unable to estimate the costs and timing of the resolution of this matter.

The Company’s former Chief Executive Officer and former Chief Financial Officer have made claims that the Company indemnify and advance the legal fees and expenses incurred by them in connection with the Investigation (see Note 11) and the putative class action litigations, the derivative action, and the SEC investigation, each referred to above. With respect to the advancement of fees and expenses incurred in connection with the Investigation prior to December 31, 2021, the amount of such fees and expenses that is subject to advancement is approximately $147,000. The former officers have also demanded advancement of fees and expenses of additional amounts of approximately $636,000 for the period January 1, 2022 through June 30, 2022. Additional amounts may be subject to claims for advancement and indemnification, but the Company is unable to estimate the amount of additional fees and expenses that may be subject to advancement or indemnification.

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 Nasdaq Capital Market under the symbol “ALF”.

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In 2018, the Company created ~~a class of~~the Series Seed Preferred Stock, $0.0001 par value per share (the “Series Seed Preferred Stock”), and 2,500,000 shares of Series Seed Preferred Stock were authorized. During 2018 and 2019, 2,500,000 shares of Series Seed Preferred Stock were issued to ~~an investor~~Lee Aerospace in exchange for $2,500,000 cash consideration. Shares of Series Seed Preferred Stock ~~convert~~converted to Common Stock at a ratio of ~~1:1.260023~~1.260023:1 at any time at the option of the holder. Holders of Series Seed Preferred Stock had preferential liquidation rights in the event of the Company’s dissolution. Shares of Series Seed Preferred ~~Stock~~stock bore 0 interest or dividend payments to its holders. The Series Seed Preferred Stock had a buyout feature if not converted into Common Stock by the holder. Series Seed Preferred Stock could be bought out by the Company if full return of principal iswas made to ~~the holder~~investor ($2,500,000), plus an additional 1x return of capital to the holder ($2,500,000). On December 31, 2020, 2,500,000 Series Seed Preferred Stock shares were issued and ~~outstanding.~~outstanding. In May 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. During the year ended December 31, 2021, and the six months ended June 30, 2022, 0 preferred stock was issued by the Company, and 0 shares of preferred stock were outstanding as of June 30, 2022.

Dividends

Holders of preferred stock are not entitled to dividend payment but do have liquidation preference in the event of dissolution of the Company. Holders of Common Stock are not entitled to 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 Stock or preferred stock) through ~~March 31, 2021.~~June 30, 2022.

Common Stock

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

During the ~~year~~six months ended December 31, 2020, the Company issued 31,501 shares of 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 shares at $25,000 and recorded that amount in other general and administrative expense.

During the year ended December 31, 2020, the Company issued 1,260,023 shares of Common Stock to related party investors in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued this issuance of shares at $2,000,000 and recorded that amount in interest expense.

~~During the quarter ended March 31,~~June 30, 2021, the Company arranged two bridge loans with related party investors. The Company issued ~~157,503~~472,510 shares of Common Stock in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued these issuances of shares at ~~$250,000~~$750,000 and recorded that amount in interest expense.

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During ~~April 2021,~~ the Company entered into additional bridge loans with related party and non-related party investors. The Company issued 315,007 shares of Common Stock in exchange for this bridge loan financing. Management valued these issuances of shares at $500,000 and recorded that amount in interest expense.

~~During April and May~~six months ended June 30, 2021, the Company also issued 300,000 shares of Common Stock in connection with certain vendor contracts. Management valued this issuance of shares at $476,180 and recorded that amount in other general and administrative expense.

~~Employee Equity (Stock) Incentive Plan~~

~~The Company has a stock equity incentive plan, the 2018 Plan,~~ (See Note 11 Changes in which, at its sole discretion, it may award employees of the Company Common Stock or Common Stock options, among other awards, as an incentive for performance. Total shares of Common Stock reserved under the 2018 Plan for employee grants is not to exceed 1,575,029 shares. During the three months ended March 31, 2021 and 2020, respectively, the Company granted 197,668 and -0- Common Stock options under the 2018 Plan.

At March 31, 2021 and December 31, 2020, total Common Stock options issued under the 2018 Plan were 433,927 and 236,259, respectively. At March 31, 2021, weighted average strike price per employee stock option was approximately $1.52 per share. Management recorded stock-based compensation expense associated with the issuance of employee stock options of $46,684 and $-0- for the three months ended March 31, 2021 and 2020, respectively.

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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, 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.Management.)

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 ~~Securities and Exchange Commission (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 of Common Stock pursuant to the full exercise 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. Net IPO proceeds of approximately $15.7 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~~

On May 3, 2021, 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.

Warrants Issued and Exercised

Warrants to purchase 4,477,612 shares of Common Stock were issued in connection with the Company’s May 2021 IPO. As of December 31, 2021, warrant holders have exercised warrants to purchase 3,508,227 shares of Common Stock providing Alfi with $16,034,189 in additional funding. As of December 31, 2021, there were warrants to purchase 969,385 shares of Common Stock outstanding.

During the six months ended June 30, 2022, the Company issued a warrant to purchase up to 1,250,000 shares of the Common Stock at a price of $1.51 per share in connection with the Credit Agreement (see Note 6 Debt - Related Parties). NaN warrants were exercised by warrant holders during the six months ended June 30, 2022. As of June ~~10,~~30, 2022, there were warrants to purchase 2,219,385 shares of Common Stock outstanding.

Share Buy-Back

On June 23, 2021, the Company announced a $2.0 million buy-back of its Common Stock. The buyback was completed on July 9, 2021, with the Company acquiring 137,650 shares of Common Stock, for an aggregate price of $1,999,997, which are recorded as treasury stock. The Company did not purchase any of its shares of Common Stock during the six months ended June 30, 2022.

Employee Equity (Stock) Incentive Plan

The Company has a stock equity incentive plan, the Alfi, Inc. 2018 Stock Incentive Plan (the ~~Original Filing date~~“2018 Plan”), in which, at its sole discretion, it may award employees Common Stock or Common Stock options, among other awards, as an incentive for performance. Total shares of Common Stock reserved under the 2018 Plan for grants is not to exceed 1,575,029 shares. During the three months ended June 30, 2022 and 2021, respectively, the Company granted -0- and 251,500 Common Stock options under the 2018 Plan. During the six-month periods ended June 30, 2022 and June 30, 2021, respectively, the Company granted -0- and 449,168 Common Stock options under the 2018 Plan.

On June 30, 2022 and 2021, total Common Stock options issued and outstanding under the 2018 Plan were 338,534 and 673,535, respectively, and weighted average strike price per employee stock option was approximately $2.33 and $2.20 per share, respectively. Management recorded credits of $88,861 and $20,823 in stock option expense for the three and six months ended June 30, 2022, respectively, due to the cancellation of 91,405 options due to forfeitures. Management recorded stock-based compensation expense associated with the issuance of employee stock options of $85,256 and $131,942 for the three and six months ended June 30, 2021, respectively.

NaN employees exercised stock options during the three months ended June 30, 2022. During the six months ended June 30, 2022, 2 employees exercised stock options and received 25,535 shares of Common Stock.

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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 the Company’s historical stock prices and an index of historical stock prices for comparable entities. For warrants and stock options issued to non- employees, the Company accounts for the expected life based on the contractual life of the ~~Company’s Quarterly Report on Form 10-Q~~warrants and stock options. For employees, the Company accounts for the ~~quarter ended March 31, 2021), no warrants had been exercised and there were 4,477,612 warrants outstanding.~~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.

Potentially dilutive securities excluded from the computation of basic net loss per share as of are as follows:


	Jun 30, 2022	Jun 30, 2021
Warrants	2,219,385	1,091,866
Employee stock options	338,534	673,535
Total potentially dilutive securities	2,557,919	1,765,401

NOTE 9 PROPERTY AND EQUIPMENT

Property and equipment, net of accumulated depreciation, consists of the following:


					Jun 30, 2022		Dec 31, 2021
	Mar 31, 2021		Dec 31, 2020
Tablets	$	972,050	$	972,050	$	4,064,001	$	5,314,005
Office furniture and fixtures		199,052		191,261		333,671		349,672
Property and equipment, gross		1,171,102		1,163,311		4,397,672		5,663,677

Less accumulated depreciation		(860,324)		(657,017)		(1,959,738)		(1,631,773)

Property and equipment, net	$	310,778	$	506,294	$	2,437,934	$	4,031,904

The Company incurred depreciation expense of ~~$203,308~~$372,067 and ~~$9,563~~$204,167 for the three months ended ~~March 31,~~June 30, 2022, and June 30, 2021, respectively, and ~~2020,~~$744,633 and $407,476 for the six months ended June 30, 2022, and June 20, 2021, respectively.

~~Property~~During the three months ended June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that 5,600 tablets distributed to rideshare drivers were no longer in service and may not be returned to the Company. The Company recorded a charge of $833,337 for the loss on disposal associated with these tablets. At June 30, 2022, property and equipment includes approximately 16,000 tablets including 13,300 Lenovo tablet hardware devices ~~purchased during 2020~~available for distribution and ~~held for placement~~approximately 2,700 tablets placed with rideshare and other businesses. Tablets are provided to rideshare and other businesses at no charge but remain the property of the Company and must be returned to the Company upon termination of the rideshare or other use agreement. The Company may pay a revenue share or commission to such third party for the placement of the Alfi-enabled device.

~~Table~~During the three months ended June 30, 2022, the Company recorded a charge of ~~Contents~~$16,000 for the loss on disposal of furniture and fixtures located in its Belfast, N.I. office. The Company is in negotiations with its landlord to terminate the Belfast, N.I. office lease.

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 June 2020, the Company created and developed the proprietary software that is the basis of its 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

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advertising services it is engaged to provide. The Company determined that the application development phase for this software began in May 2018 and ended in June 2020, and its first release of production software was activated in a tablet in July 2020.

On July 1, 2020 forward, the Company commenced ~~depreciation~~amortization 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		Jun 30, 2022		Dec 31, 2021

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

Less accumulated amortization		(132,020)		(88,013)		(352,050)		(264,037)

Intangible assets, net	$	844,264	$	888,271	$	624,234	$	712,247

~~Amortization~~The Company incurred amortization expense of $44,006 and $44,006 for the ~~three months~~three-month periods ended ~~March 31,~~June 30, 2022, and June 30, 2021, respectively and ~~2020, was $44,006~~$88,012 and ~~$-0-,~~$88,012 for the six-month periods ended June 30, 2022, and June 30, 2021, respectively.

Future amortization of intangible assets as of ~~March 31, 2021,~~June 30, 2022, is as follows:

2021

$
132,019
2022

176,025
2023

176,025
2024

176,025
2025

92,820
Thereafter

91,350
Total

$
844,264


2022	$	88,012
2023		176,025
2024		176,025
2025		92,820
2026		9,616
Thereafter		81,736
	$	624,234

NOTE 11 ~~SUBSEQUENT EVENTS~~CHANGES IN MANAGEMENT

~~The Company~~Replacement of Executive Officers and Board Members

As previously disclosed in the Company’s filings with the SEC, on October 22, 2021 the Board placed each of Paul Pereira, the Company’s then President and Chief Executive Officer, Dennis McIntosh, the Company’s then Chief Financial Officer and Treasurer, and Charles Pereira, the Company’s then Chief Technology Officer, on paid administrative leave and authorized an Investigation into certain corporate transactions and other matters.

Also as previously disclosed, since placing the former executives on leave, the Board has ~~disclosed events that have occurred after the balance sheet date of March 31, 2021 through June 10, 2021 (the Original Filing date~~appointed: (i) James Lee as Chairman of the ~~Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,~~Board (effective October 22, 2021)~~. See Note 6 Debt Payable Related Parties for discussion of additional bridge loan financing obtained~~, replacing Mr. P. Pereira in ~~April~~such role; (ii) new management personnel, including Peter Bordes as Interim Chief Executive Officer (serving in such role from October 22, 2021 until July 22, 2022), Mr. Lee as Interim Chief Executive Officer (effective July 22, 2022), Louis Almerini as Interim Chief Financial Officer (effective November 8, 2021) and ~~Note 8 Stockholders’ Equity (Deficit) for discussion~~David Gardner as Chief Technology Officer (serving in such role from October 27, 2021 until July 1, 2022); (iii) Allen Capsuto as an independent director of the ~~Company’s May~~Company and Chair of the Audit Committee (serving in such roles from November 1, 2021 ~~IPO.~~until July 14, 2022); (iv) Patrick Dolan as an independent director of the Company (effective November 1, 2021) and a member of each of the Compensation Committee and the Nominating and Corporate Governance Committee of the Board (effective December 29, 2021); and (v) Jeremy D. Daniel as an independent director of the Company and Chair of the Audit Committee (effective July 14, 2022).

Furthermore, Mr. P. Pereira resigned as a director and from all positions he held with the Company, Mr. McIntosh resigned from all positions he held with the Company, and Mr. C. Pereira’s employment with the Company was terminated.

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Findings of the Investigation

The Investigation was conducted by a special committee of the Board (the “Special Committee”) consisting of Mr. Capsuto, the then Audit Committee Chair, who was appointed to the Special Committee on November 8, 2021. The Special Committee retained outside legal counsel to assist in conducting the Investigation, and such counsel retained additional advisors to provide forensic accounting services, computer forensics and e-discovery services and other legal services.

The Investigation found, among other things, that the Company’s former senior management caused the Company to enter into certain transactions and certain agreements that were not approved by the Board, some of which included the unauthorized issuance of shares of Common Stock, as follows:

●

The Company’s former senior management caused the Company to purchase a condominium in Miami Beach, Florida for a purchase price of approximately $1.1 million without the Board’s knowledge or approval. After the conclusion of the Investigation, the Company sold the condominium for a price of $1.1 million on April 15, 2022. Net proceeds after commissions and other expenses of the sale were $990,000.

●

The Company’s former senior management caused the Company to enter into an agreement to sponsor a sports tournament for two years, for a $640,000 sponsorship fee, which the Company paid $320,000 in cash and $320,000 through the issuance of 31,683 shares of Common Stock, without the Board’s knowledge or approval. 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. In addition, of the $320,000 in cash paid by the Company, $295,000 was converted to a charitable contribution and the remaining $25,000 was retained by the tournament organizer.

●

The Company’s former senior management caused the Company to enter into agreements with 3 vendors: (i) an investor relations firm to provide investor relations and strategic consulting services and capital introductions; (ii) a consultant to provide financial and business advice; and (iii) a start-up call center to provide customer service, sales, and onboarding services. Pursuant to these agreements, cash payments totaling approximately $1,200,000 were made to these vendors and 300,000 shares of Common Stock were issued to them without the Board’s knowledge or approval.

These findings and other conduct by the Company’s former senior management were previously disclosed in the Company’s Current Report on Form 8-K filed on February 23, 2022.

The Investigation found the Company’s internal control over financial reporting to be deficient with respect to: (i) the disbursement process for third-party vendors; (ii) the review and approval process for significant vendor contracts; (iii) the use of Company credit cards by executives; (iv) the supervision and approval of travel and entertainment expenses incurred by executives; (v) the segregation of duties in connection with the payment and recording of invoices and related bank reconciliations; (vi) the lack of a sufficient accounting manual; and (vii) guidelines for the capitalization of fixed assets.

NOTE 12 SUBSEQUENT EVENTS

Changes in Executive Officers and Board Members

David Gardner, the Company’s Chief Technology Officer, resigned from such position effective July 1, 2022 in order to pursue other opportunities to accommodate personal circumstances.

Allen Capsuto resigned as a director of the Company and Chair of the Audit Committee, effective July 14, 2022. Mr. Capsuto’s resignation was not because of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Jeremy D. Daniel was appointed by the Board to serve as a director of the Company, to fill the vacancy on the Board created by Mr. Capsuto’s resignation, and as Chair of the Audit Committee, effective July 14, 2022.

James Lee, the Chairman of the Board, was appointed by the Board to serve as the Company’s Interim Chief Executive Officer, effective July 22, 2022.

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Litigation, Claims, and Assessments

On July 28, 2022, Victor Farish filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Victor Farish, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-22361, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the individual defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duty; (iv) aiding and abetting breach of fiduciary duty; (v) unjust enrichment; (vi) waste of corporate assets; (vii) abuse of control; and (viii) gross mismanagement, in connection with allegedly making and/or authorizing false and misleading statements and material omissions regarding the Company’s business, prospects, and internal controls and allegedly failing to establish and/or oversee sufficient internal controls and/or reasonable information, oversight, and reporting systems concerning critical Company operations, including the adequacy of its public reporting. The complaint also seeks contribution under Section 11(f) of the Securities Act as to defendants Mr. P. Pereira, Mr. McIntosh, Mr. Bordes, Mr. Cook, Mr. Elkouri, Ms. Ficken, Mr. Lee, Mr. Mowser, and Mr. Smith, and seeks contribution under Section 21D(f)(5) of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests an award of damages against defendants, an award of punitive damages, an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses, and an order directing the defendants to account for all damages allegedly caused by them and all profits and special benefits and unjust enrichment they have allegedly obtained as a result of their allegedly unlawful conduct. On July 29, 2022, the Court sua sponte dismissed the complaint without prejudice finding that the complaint does not properly plead a claim and giving Plaintiff until August 11, 2022 to file an amended complaint addressing the deficiencies in its original complaint. The Company is currently unable to estimate the costs and timing of the resolution of this matter.

Credit and Security Agreement – Related Party

On August 5, 2022, the Company and the related party lender, Lee Aerospace, entered into Amendment No. 2 to Credit and Security Agreement (“Amendment No. 2”), pursuant to which the non-revolving line of credit available to the Company from the related party lender under the Credit Agreement was increased by $500,000, to an aggregate of $3,250,000, and such increased availability became evidenced by a convertible note. In connection with Amendment No. 2, the Company and the related party lender entered into a Non-Revolving Line of Credit Convertible Note in an aggregate principal amount of $500,000 (the “Convertible Note”) and a three-year warrant to purchase 375,000 shares of the Common Stock. Each of the Convertible Note and warrant are convertible or exercisable, respectively, for shares of Common Stock commencing November 5, 2022, at a conversion price of $1.635 per share under the Convertible Note and an exercise price of $1.51 per share under the warrant. The conversion price of the Convertible Note and the exercise price of the Warrant are subject to anti-dilution adjustments for stock splits, stock dividends and similar corporate actions, but not for other dilutive equity issuances. The warrant may be exercised for cash or on a cashless basis. Except as set forth above, Amendment No. 2 and the Convertible Note do not otherwise amend the terms of the Credit Agreement and related documents. The related party lender has funded to the Company the maximum amount, which is $3,250,000, under the Credit Agreement.

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 (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 reflect a forward stock split of the Common Stock privately held before the IPO at a ~~percentage~~ratio of ~~1.260023~~1.260023:1 effective on March 15, 2021.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act ~~of 1933, as amended (the “Securities Act”),~~ and Section 21E of the Exchange ~~Act of 1934, as amended (the “Exchange Act”),~~Act. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward–looking statements in this Quarterly Report include statements regarding our business and technology development, our strategy, future operations, anticipated financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. In some cases, you can identify forward-looking statements because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “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 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

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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 SEC. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report, 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.

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.

Overview

We seek to provide solutions that bring transparency and accountability to the DOOH advertising marketplace. Alfi uses artificial intelligence and big data analytics to measure and disseminate audience presence and audience demographics. Our computer vision technology is powered by proprietary artificial intelligence, to determine the relevant demographic and geospecific information of 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 profile and/or geolocation. Alfi 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 most relevant to the audience in front of the device, we connect our advertising customers to the viewers they seek to target. The result is higher click through rates (“CTRs”), higher QR code scans and higher cost per thousand rates (“CPMs”).

Alfi seeks to solve the problems facing advertisers in the DOOH marketplace, as its proprietary technology is designed to measure the audience when an advertisement is displayed. Our data rich reporting functionality is able to inform the advertiser exactly when someone viewed each ad, as well as the general demographic and geospecific characteristics of the viewing audience. Alfi gives large and small businesses access to data-driven insights by expanding their advertising capabilities, by providing analytical sophistication and by delivering it all over multiple devices. In addition to the traditional Content Management System model that delivers adverts on a scheduled loop, Alfi’s technology is able to first analyze the audience and determine the most relevant content to be displayed.

Alfi has created an enterprise grade, multimedia computer vision and machine learning platform, capable of generating powerful advertising recommendations and insights. Multiple technologies work together with viewer privacy and data-rich reporting as our primary objectives. Alfi is able to use a facial fingerprinting process to make demographic determinations. As such, Alfi makes no attempt to identify the individual in front of the screen. Brand owners do not need to know someone’s name or invade their privacy to gain a deeper understanding of the consumers who view their content. By providing age, gender and geolocation information, we

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believe brand owners should have the pertinent data they need for meaningful insight. From an analytics perspective, these data points are intended to provide meaningful reporting instead of arbitrary calculations based on estimates of ad engagement.

Alfi seeks to solve the problem of providing real time, accurate and rich reporting on customer demographics, usage, interactivity and engagement while never storing any personally identifiable information. No viewer is ever required, or requested by us, to enter any information about themselves on any Alfi-enabled device.

Our initial focus iswas to place our Alfi-enabled devices in malls, airports rideshares and taxis. We ~~also have begun offering~~recently shifted our ~~software solution~~focus to ~~other DOOH media operators as~~prioritize placement of devices in rideshares with a ~~SaaS product.~~view toward growing that business to operate it profitably.

Currently, we intend to charge customers solely based on a CPM, or ads delivered, model. As we continue to prove Alfi in the marketplace, we expect to charge customers based on a combination of CPM and CTR, and we expect we will generate higher CPM rates than typical DOOH advertising platforms because ~~we have the~~of our unique ability to only deliver ads to the customer’s desired demographic. In addition, we also intend to provide the aggregated data to the brands so they can make more informed advertising decisions.

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Recent Developments

~~Initial Public Offering~~Credit and Security Agreement – Related Party

On ~~May 3, 2021,~~June 27, 2022, the ~~Company’s registration statement on Form S-1 (File~~Company and a related party lender, Lee Aerospace, entered into Amendment No. ~~333-251959) was declared effective by~~1 to the ~~SEC~~Credit Agreement and the Amended Note, pursuant to which the non-revolving line of credit available to the Company ~~completed its IPO on May~~from the lender was increased to $2,750,000 (see Note 6 ~~2021. In~~Debt – Related Parties). The Amendment No. 1 and the Amended Note do not otherwise amend the terms of the Credit Agreement and related documents. Through June 30, 2022, the related party lender funded to the Company $2,750,000 under the Credit Agreement.

Warrants Issued

During the six months ended June 30, 2022, the Company issued a warrant to purchase up to 1,250,000 shares of the Common Stock at a price of $1.51 per share in connection with the ~~IPO,~~Credit Agreement (see Note 6 Debt – Related Parties). No warrants were exercised by warrant holders during the ~~Company issued and sold 4,291,045~~six months ended June 30, 2022. As of June 30, 2022, there were warrants to purchase 2,219,385 shares of Common Stock outstanding.

Changes in Executive Officers and ~~warrants~~Board Members

David Gardner, the Company’s Chief Technology Officer, resigned from such position effective July 1, 2022 in order to ~~purchase 4,291,045 shares~~pursue other opportunities to accommodate personal circumstances.

Allen Capsuto resigned as a director of ~~Common Stock (including 559,701 shares~~the Company and Chair of ~~Common Stock and warrants to purchase 559,701 shares~~the Audit Committee, effective July 14, 2022. Mr. Capsuto’s resignation was not because of ~~Common Stock pursuant~~a disagreement with the Company on any matter relating to the ~~full exercise~~Company’s operations, policies or practices.

Jeremy D. Daniel was appointed by the Board to serve as a director of the ~~underwriters' overallotment option), at~~Company, to fill the ~~combined public offering price of $4.15 for aggregate gross proceeds of approximately $17.8 million, before deducting underwriting discounts~~vacancy on the Board created by Mr. Capsuto’s resignation, 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 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 10, 2021 (the Original Filing dateas Chair of the Audit Committee, effective July 14, 2022.

James Lee, the Chairman of the Board, was appointed by the Board to serve as the Company’s ~~Quarterly Report on Form 10-Q for the quarter ended March 31, 2021), no warrants had been exercised and there were 4,477,612 warrants outstanding.~~Interim Chief Executive Officer, effective July 22, 2022.

Impact of COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of 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 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 businesses and the economy in the United States is expected to 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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Results of Operations

Revenues

In general, ~~Alfi~~the Company earns revenue from rideshares or SaaS contracts with operating companies who maintain their own network and lease the Alfi platform.

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Operating Expenses

Compensation and benefits expenses include compensation expenses related to our executive, finance, and administrative personnel (including salaries, commissions, bonuses, stock-based compensation, payroll taxes, and contract labor costs). Other general and administrative expenses include communications and technology costs, professional fees, selling and marketing fees, legal fees, and rent and occupancy expense.

Three-Month Period Ended ~~March 31, 2021, compared~~June 30, 2022, Compared to Three-Month Period Ended ~~March 31, 2020~~June 30, 2021

Three months

Three months

ended Mar 31,

ended Mar 31,


2021

2020

$Change

% Change

Revenues

$
17,450

$
—

$
17,450

N/M

Operating expenses









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

247,315

9,563

237,752

N/M

Total operating expenses

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

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

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,~~June 30, 2022, the Company’s net loss increased to $5,549,426, an increase of $1,247,704 compared with the net loss of $4,301,722 for the three months ended June 30, 2021. The increase was primarily due to higher operating expenses, as discussed below.


	Three months		Three months
	ended Jun 30,		ended Jun 30,
	2022		2021		$ Change		% Change
Revenues	$	129,302	$	936	$	128,366	N/M

Operating expenses
Compensation and benefits		1,473,201		1,197,742		275,459	23.0	%
Other general and administrative		2,688,297		2,311,290		377,007	16.3	%
Loss on disposal of property and equipment		849,337		—		849,337	N/M
Depreciation and amortization		416,073		248,173		167,900	67.7	%
Total operating expenses		5,426,908		3,757,205		1,669,703	44.4	%

Operating loss		(5,297,606)		(3,756,269)		(1,541,337)	41.0	%

Other income (expense)
Other income		41,914		16,334		25,580	156.6	%
Interest expense		(293,734)		(561,786)		268,052	(47.7)	%
Total other expense		(251,820)		(545,453)		293,633	(53.8)	%

Net loss before provision for income taxes		(5,549,426)		(4,301,722)		(1,247,704)	29.0	%
Provision for income taxes		—		—		—	0.0	%
Net loss after provision for income taxes	$	(5,549,426)	$	(4,301,722)	$	(1,247,704)	29.0	%

Revenues

For the three months ended June 30, 2022 and 2021, ~~and 2020,~~ net revenues were ~~$17,450~~$129,302 and ~~$-0-,~~$936, respectively. The Company earned revenues from customers for advertising delivered through Alfi-owned devices.

Compensation Expenses

For the three months ended June 30, 2022 and 2021, compensation and benefits expenses were $1,473,201 and $1,197,742, respectively. The increase of ~~$17,450~~$275,459 reflected higher salary and contract labor costs related to increased headcount to support operating the Company’s technology platform. The Company initiated changes during the three months ended June 30, 2022, including outsourcing certain jobs, to reduce compensation expenses for future periods.

Other General and Administrative Expenses

For the three months ended June 30, 2022 and 2021, other general and administrative expenses were $2,688,297 and $2,311,290, respectively. The increase of $377,007 reflected higher legal fees related to litigation, claims, and assessments (see Note 7 Commitments and Contingencies), increases in incentive and revenue-sharing payments to drivers and data network charges resulting

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from an increase in the number of tablets in operation, and higher audit fees related to the restatement of Prior Period Financial Statements. These increases were partially offset by reductions in marketing and other expenses.

Loss on Disposal of Property and Equipment

During the three months ended June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that 5,600 tablets distributed to rideshare drivers were no longer in service and may not be returned to the Company. The Company recorded a charge of $833,337 for the loss on disposal associated with these tablets.

In addition, during the three months ended June 30, 2022, the Company recorded a charge of $16,000 for the loss on disposal of furniture and fixtures located in its Belfast, N.I. office. The Company is in negotiations with its landlord to terminate the Belfast, N.I. office lease.

Depreciation and Amortization Expenses

Depreciation and amortization expense for the three months ended June 30, 2022 and 2021 were $416,073 and $248,173, respectively. The three months ended June 30, 2022 included depreciation expense for additional tablets purchased since June 30, 2021.

Other Income (Expense)

Interest expense was $293,734 and $561,786 for the three months ended June 30, 2022, and 2021, respectively. During the three months ended June 30, 2022, the Company entered into a Credit Agreement with a related party pursuant to which it borrowed $2,750,000, and it accrued interest expense on this borrowing of $293,734. The Company incurred interest expense of $561,786 during the three months ended June 30, 2021, in connection with related party debt outstanding prior to its IPO. The Company repaid all related party debt in May 2021 with a portion of the cash proceeds from its IPO.

Six-Month Period Ended June 30, 2022, Compared to Six-Month Period Ended June 30, 2021

For the six months ended June 30, 2022, the Company’s net loss increased to $10,842,027, an increase of $3,831,474 compared with the net loss of $7,010,553 for the six months ended June 30, 2021. The increase was primarily due to higher operating expenses, as discussed below.

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	Six months		Six months
	ended Jun 30,		ended Jun 30,
	2022		2021		$Change		% Change

Revenues	$	192,605	$	18,386	$	174,219	N/M

Operating expenses
Compensation and benefits		3,259,830		2,080,953		1,178,877	56.7	%
Other general and administrative		5,843,029		3,563,149		2,279,880	64.0	%
Loss on disposal of property and equipment		849,337		—		849,337	N/M
Depreciation and amortization		832,645		495,488		337,157	68.0	%
Total operating expenses		10,784,841		6,139,590		4,645,251	75.7	%

Operating loss		(10,592,236)		(6,121,204)		(4,471,032)	73.0	%

Other income (expense)
Other income		43,973		29,351		14,622	49.8	%
Interest expense		(293,764)		(918,700)		624,936	(68.0)	%
Total other expense		(249,791)		(889,349)		639,558	(71.9)	%

Net loss before provision for income taxes		(10,842,027)		(7,010,553)		(3,831,474)	54.7	%
Provision for income taxes		—		—		—	0.0	%
Net loss after provision for income taxes	$	(10,842,027)	$	(7,010,553)	$	(3,831,474)	54.7	%

Revenues

For the six months ended June 30, 2022 and 2021, net revenues were $192,605 and $18,386, respectively. During the six months ended June 30, 2022, the Company earned revenues from customers for advertising delivered through Alfi-owned devices. The revenues earned during the six months ended June 30, 2021 related to Alfi’s first SaaS contract revenue generated from a retailer that ~~is paying~~paid Alfi for the cost of the initial pilot for the company.

~~Operating~~Compensation Expenses

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, compensation and ~~2020, total operating~~benefits expenses were ~~$2,382,385~~$3,259,830 and ~~$609,921, respectively, an~~$2,080,953, respectively. The increase of ~~$1,772,464. Compensation~~$1,178,877 reflected higher salary and ~~benefits expense increased as independent contractors became full time employees effective March 1, 2021. Other general and administrative expenses increased due to higher~~contract labor costs related to increased headcount to support operating the Company’s ~~growth~~technology platform. The Company initiated changes during the six months ended June 30, 2022, including outsourcing certain jobs, to reduce compensation expenses for future periods.

Other General and ~~launch of its technology platform~~Administrative Expenses

For the six months ended June 30, 2022 and ~~preparation for listing as a public company. The increase in~~2021, other general and administrative expenses ~~reflected~~were $5,843,029 and $3,563,149, respectively. The increase of $2,279,880 was largely due to significantly higher legal and professional fees related to the Company’s previously disclosed internal independent investigation (see Note 4 Restatements of Previously Issued Financial Statements) and litigation, claims, and assessments (see Note 7 Commitments and Contingencies). Additionally, increases in incentive and revenue-sharing payments to drivers and data network charges resulting from an increase in the number of tablets in operation were offset by reductions in recruiting, ~~fees,~~ marketing, ~~expense, rent, software development costs,~~ and ~~taxes~~other expenses.

Loss on Disposal of Property and ~~license fees incurred during~~Equipment

During the ~~three-month period ended March 31, 2021. Depreciation and amortization charges increased as the three~~six months ended ~~March 31, 2021 included additional depreciation charges~~June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that 5,600 tablets ~~acquired during 2020.~~distributed to rideshare drivers were no longer in service and may not be returned to the Company. The Company recorded a charge of $833,337 for the loss on disposal associated with these tablets.

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~~Operating Loss~~

~~For~~In addition, during the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2022, the ~~operating~~Company recorded a charge of $16,000 for the loss ~~increased from $609,921~~on disposal of furniture and fixtures located in its Belfast, N.I. office. The Company is in final negotiations with its landlord to ~~$2,364,935, an increase of $1,755,014 compared with~~terminate the ~~three~~Belfast, N.I. office lease.

Depreciation and Amortization Expenses

Depreciation and amortization expense for the six months ended ~~March 31, 2020.~~June 30, 2022 and 2021 were $832,645 and $495,488, respectively. The ~~increase was primarily due to higher operating expenses related to the Company’s growth and launch of its technology platform and preparation~~six months ended June 30, 2022 included depreciation expense for ~~listing as a public company.~~additional tablets purchased since June 30, 2021.

Other Income (Expense)

~~Other income of $13,018~~Interest expense was $293,764 and ~~$10,358~~$918,700 for the ~~three-month periods~~six months ended ~~March 31,~~June 30, 2022, and 2021, respectively. During April 2022, the Company entered into a Credit Agreement with a related party pursuant to which it borrowed $2,750,000, and ~~March 31, 2020, respectively, included realized and collected foreign tax credits associated with its wholly owned subsidiary Alfi (N.I.) Ltd~~it accrued interest expense on this borrowing of ~~$15,960 and $9,152, respectively. Interest~~$293,734. The Company incurred interest expense of ~~$356,914 and $16,392 for the three-month periods ended March 31, 2021 and 2020, respectively, rose primarily due to additional interest expense incurred for related-party financing provided~~$918,700 during the ~~three~~six months ended ~~March 31, 2021.~~June 30, 2021, in connection with related party debt outstanding prior to its IPO. The Company repaid all related party debt in May 2021 with a portion of the cash proceeds from its IPO.

~~Net Loss~~

For the three months ended March 31, 2021, the net loss increased from $615,955 to $2,708,831, an increase of $2,092,876 compared with the three-month period 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.

Liquidity and Capital Resources

As of the 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 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~~During 2021, the Company completed its IPO yielding net proceeds to the Company of approximately $15.7 million from the sale of Common Stock and warrants and approximately $16.0 million from the exercise of warrants. The capital raised included funding for working capital to launch and expand operations in accordance with its business model.

On April 12, 2022, the Company entered into the Credit Agreement with a related party lender, Lee Aerospace, pursuant to which the Company could borrow under a non-revolving line of credit up to $2,500,000 for up to one year. On June 27, 2022, the Company and the related party lender entered into Amendment No. 1 and an Amended Note, pursuant to which the non-revolving line of credit available to the Company from the lender was increased to $2,750,000. The Company’s ability to draw on the non-revolving line of credit, to the extent available under the Credit Agreement, is in the lender’s sole discretion and subject to the Company requesting such additional funds from the lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and related documents, and that no default under the Credit Agreement has occurred and is continuing under the Credit Agreement.

Through June 30, 2022, the lender funded to the Company $2,750,000 under the Credit Agreement. The Amended Note matures on the earlier of: (i) the date upon which the Company consummates a debt or equity financing in an amount equal to or greater than $4,000,000 or (ii) April 12, 2023.

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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, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Significant Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements as well as the reported expenses during the reporting periods.

The accounting estimates that require our most significant, difficult, and subjective judgments have an impact on revenue recognition, financial instruments and the determination of share-based compensation and the useful lives of long-lived assets. We evaluate our estimates and judgments on an ongoing basis. Actual results may differ materially from these ~~estimates under different assumptions or conditions.~~estimates.

We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, useful lives of long-lived assets and stock-based compensation expense have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be

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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 consolidated financial statements (Note 2) included in this Quarterly Report.

Recently Issued Accounting Standards

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

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 management, including our principal executive officer and 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 ~~March 31, 2021.~~June 30, 2022. In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the 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 effectiveness of our disclosure controls and procedures as of ~~March 31, 2021.~~June 30, 2022. 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.~~June 30, 2022.

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.~~June 30, 2022. The Company does not have a sufficient complement of personnel commensurate with the accounting and reporting requirements of a public company. The material weaknesses

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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,~~June 30, 2022, it has applied additional procedures and processes as necessary to ensure the reliability of financial reporting in regard to 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 this Quarterly Report; and (ii) the financial statements, and 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 the consolidated financial statements included in this Quarterly Report, there have been no changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~March 31, 2021~~June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over

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financial reporting. Management will seek to remediate the material weaknesses described above through hiring additional qualified accounting and financial reporting personnel, and designing and implementing financial reporting systems, processes, policies and internal controls.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are party to the legal proceedings described below. We are unable to provide any assurances as to the ultimate outcome of these proceedings and intend to vigorously defend these matters.

Litigation

~~None through June 10,~~On December 2, 2021, ~~(the Original Filing date~~the Company and certain of its present and former officers and directors were named as defendants in a putative class action lawsuit styled Steppacher v. Alfi, Inc., et al., Case No. 1:21-cv-24232, brought in the United States District Court for the Southern District of Florida. On December 15, 2021, the Company, certain of its present and former officers and directors, and the underwriters in the Company’s ~~Quarterly Report on Form 10-Q~~IPO were named as defendants in a second putative class action styled Kleinschmidt v. Alfi, Inc., et al., Case No. 1:21-cv-24338, also brought in the United States District Court for the ~~quarter ended March 31, 2021).~~

~~Item 1A. Risk Factors~~
~~Not applicable to smaller reporting companies.~~
~~Item 2. Unregistered Sales~~Southern District 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,~~Florida. The complaints in both actions allege that 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,other named defendants violated Sections 11 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)15 of the Securities ~~Act. See Note 8~~Act with respect to ~~our consolidated financial~~allegedly false and misleading statements included in ~~this Quarterly Report.~~
Inthe registration statement and prospectus supplements issued in connection with ~~bridge loans entered into on December 30, 2020, March 22,~~the Offering Documents in May 2021, and ~~April 1, 2021,~~Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by allegedly making false and materially misleading statements and failing to disclose material adverse facts in the Company’s public filings with the SEC. Both complaints assert that the putative plaintiff class includes: (i) persons or entities, other than the defendants, the officers and directors of the Company, ~~issued~~members of their immediate families, their legal representatives, and any entity in which they had a controlling interest, among others, who purchased or acquired the Common Stock or warrants to purchase the Common Stock pursuant and/or traceable to the ~~lenders,~~Offering Documents; and (ii) persons or entities, other than the defendants, who purchased or acquired the Company’s securities between May 4, 2021, and March 11, 2022 (both dates inclusive). The plaintiffs seek unspecified compensatory damages, including interest, and costs and expenses, including attorney’s and expert fees. On February 3, 2022, the court consolidated the two actions under the caption Steppacher, Jr., et al. v. Alfi, Inc. et al., Case No. 21-cv-24232-KMW. Three putative stockholders (or groups of stockholders) moved to be appointed as lead plaintiff, and the court appointed Candido Rodriguez as lead plaintiff. The consolidated actions are ~~all accredited investors,~~now captioned Rodriguez, et al. v. Alfi, Inc., et al., Case No. 21-cv-24232-KMW.
On April 27, 2022, Ryan Dodgson filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Ryan Dodgson, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-21318, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duties; (iv) unjust enrichment; (v) abuse of control; (vi) gross mismanagement; and (vii) waste of corporate assets, in connection with alleged improper corporate transactions, an ~~aggregate~~alleged pattern and practice of ~~1,732,532 shares~~abuse of ~~Common Stock.~~control of the Company and allegedly deficient internal controls, among other things. The ~~shares of Common Stock were issued in a transaction not involving a public offering, in reliance upon an exemption from registration~~complaint also seeks contribution under Section ~~4(a)(2)~~11(f) of the Securities Act and ~~Regulation D promulgated thereunder. See Note 8~~Section 21D of the Exchange Act as to ~~our consolidated financial statements included~~the defendants, and seeks contribution under Sections 10(b) and 21D of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests a declaration that the defendants have breached or aided and abetted the breach of their fiduciary duties to the Company, an award of damages to the Company, restitution, and an award of plaintiff’s costs and disbursements in ~~this Quarterly Report.~~the action, including reasonable attorneys’ and experts’ fees, costs and expenses, and alleged improvements to the Company’s corporate governance and internal procedures regarding compliance with laws.
On ~~March 31, 2020 and May 13, 2021,~~July 28, 2022, Victor Farish filed a Verified Shareholder Derivative Complaint on behalf of the Company ~~issued~~styled Victor Farish, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-22361, in the United States District Court for the Southern District of Florida. The complaint alleges, as to ~~an investor relations firm 31,501~~the individual defendants: (i) violations of Section 10(b) and ~~150,000 shares, respectively,~~Rule 10b-5 of ~~Common Stock, pursuant~~the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duty; (iv) aiding and abetting breach of fiduciary duty; (v) unjust enrichment; (vi) waste of corporate assets; (vii) abuse of control; and (viii) gross mismanagement, in connection with allegedly making and/or authorizing false and misleading statements and material omissions regarding the Company’s business, prospects, and internal controls and allegedly failing to ~~agreements with such firm. On May 13, 2021,~~establish and/or oversee sufficient internal controls and/or reasonable information, oversight, and reporting systems concerning critical Company operations, including the ~~Company issued to a consultant 150,000 shares~~adequacy of ~~Common Stock, pursuant to an agreement with such consultant. These shares of Common Stock were issued in a transaction not involving a~~its public ~~offering, in reliance upon an exemption from registration~~reporting. The complaint also seeks contribution under Section ~~4(a)(2)~~11(f) of the Securities ~~Act. See Note 8~~Act as 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 offeringdefendants Mr. P. Pereira, Mr. McIntosh, Mr. Bordes, Mr. Cook, Mr. Elkouri, Ms. Ficken, Mr. Lee, Mr. Mowser, and ~~sale of: (i) 3,731,344 shares of Common Stock~~Mr. Smith, 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.

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seeks contribution under Section 21D(f)(5) of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests an award of damages against defendants, an award of punitive damages, an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses, and an order directing the defendants to account for all damages allegedly caused by them and all profits and special benefits and unjust enrichment they have allegedly obtained as a result of their allegedly unlawful conduct. On ~~May 6, 2021, we completed our IPO selling 3,731,344~~July 29, 2022, the Court sua sponte dismissed the complaint without prejudice finding that the complaint does not properly plead a claim and giving Plaintiff until August 11, 2022 to file an amended complaint addressing the deficiencies in its original complaint. The Company is currently unable to estimate the costs and timing of the resolution of this matter.

Arbitration

On February 23, 2022, Fred Figueroa, a former Executive Assistant at the Company, filed a Demand for Arbitration against the Company with the American Arbitration Association (“AAA”), alleging overtime violations of the Fair Labor Standards Act, as amended, and breach of contract claims involving alleged termination without cause in violation of Mr. Figueroa’s employment agreement. In his Demand for Arbitration, Mr. Figueroa seeks damages in the amount of $81,000 for base salary and 5,000 shares of Common Stock in the amount of $16,650 pursuant to a stock option award from the Company, as well as attorneys’ fees and ~~warrants~~costs. The arbitration proceeding was initiated pursuant to ~~purchase 3,731,344 shares~~the arbitration provision in Mr. Figueroa’s employment agreement with the Company. The Company is in the process of ~~Common Stock~~responding to Mr. Figueroa’s claims. The Company is currently unable to estimate the costs and timing of the arbitration, including any potential damages, if Mr. Figueroa were to prevail on any of his claims.

On March 10, 2022, Charles Pereira, a former Chief Technology Officer of the Company, filed a Statement of Claim against the Company with the AAA, alleging various breaches of contract and torts with respect to his employment, his compensation, and the termination of his employment. In his Statement of Claim, Mr. Pereira seeks damages in an amount to be determined at ~~a combined public offering price of $4.15, for aggregate gross proceeds of approximately $15.5~~the hearing, but not less than $10 million ~~prior to deducting underwriting discounts, commissions,~~dollars, and certain declaratory relief and other ~~offering expenses~~money damages. The arbitration proceeding was initiated pursuant to the arbitration provision in Mr. Pereira’s employment agreement with the Company. The Company is currently unable to estimate the costs and ~~excluding any exercise~~timing of the ~~underwriters’ option~~arbitration, including any potential damages, if Mr. Pereira were to ~~purchase~~prevail on any ~~additional securities. On May 10,~~of his claims.

Other Matters

As previously disclosed, on November 9, 2021, ~~Kingswood Capital Markets exercised~~ the ~~over-allotment option for~~Company received a letter from the staff of the SEC indicating that the Company, its affiliates and agents may possess documents and data relevant to an ~~aggregate~~ongoing investigation being conducted by the staff of ~~559,701 shares~~the SEC and notifying the Company that such documents and data should be reasonably preserved and retained until further notice. The materials to be preserved and retained include documents and data created on or after April 1, 2018 that: (i) were created, modified or accessed by certain named former and current officers and directors of ~~Common Stock, and warrants to purchase 559,701 shares~~the Company or any other officer or director of ~~Common Stock, yielding gross proceeds~~the Company; or (ii) relate or refer to the ~~Company of approximately $2.3 million, prior to deducting underwriting discounts, commissions, and other offering expenses.~~

~~Total gross proceeds to us from our IPO, including~~condominium or the ~~over-allotment option, were approximately $17.8 million, prior to deducting underwriting discounts, commissions, and other offering expenses. The offering has terminated.~~

~~From~~sports tournament sponsorship identified in the ~~effective date of our registration statement~~Company’s Current Report on Form ~~S-1 (333-251959),~~8-K filed on November 1, 2021, or financial reporting and disclosure controls, policies or procedures. On March 8, 2022, the Company ~~has~~received a subpoena from the SEC relating to the investigation. The Company intends to cooperate fully with the SEC in this matter.

The Company’s former Chief Executive Officer and former Chief Financial Officer have made claims that the Company indemnify and advance the legal fees and expenses incurred ~~underwriting discounts, commissions, and other offering expenses~~by them in connection with the ~~IPO totaling~~Investigation (see Note 11) and the putative class action litigations, the derivative action, and the SEC investigation, each referred to above. With respect to the advancement of fees and expenses incurred in connection with the Investigation prior to December 31, 2021, the amount of such fees and expenses that is subject to advancement is approximately ~~$2.1 million, resulting in net offering proceeds from the IPO to us~~$147,000. The former officers have also demanded advancement of fees and expenses of additional amounts of approximately $15.7 million. No payments for such expenses were made directly or indirectly to: (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities or (iii) any of our affiliates.

We have used the net proceeds of our IPO to, among other things, repay related party debt payable, including approximately $5.4 million owed to Lee Aerospace, Inc., a corporation controlled by James Lee, one of our Board members and a greater than 10% stockholder, and a total of approximately $927,000 owed to Paul Pereira (our former Chief Executive Officer), Dennis McIntosh (our former Chief Financial Officer), Charles Pereira (our former Chief Technology Officer), Peter Bordes (our Interim CEO), Rachael Pereira (the wife of Paul Pereira) and three unaffiliated investors.

~~Through June 10, 2021 (the Original Filing date of the Company’s Quarterly Report on Form 10-Q~~$636,000 for the ~~quarter ended March 31, 2021), there has been no material change in~~period January 1, 2022 through June 30, 2022. Additional amounts may be subject to claims for advancement and indemnification, but the ~~use~~Company is unable to estimate the amount of ~~proceeds of our IPO from the use of proceeds described in the prospectus filed as part of our registration statement on Form S-1 (333-251959).~~additional fees and expenses that may be subject to advancement or indemnification.

Item ~~3. Defaults Upon Senior Securities~~1A. Risk Factors
~~None.~~Not applicable to smaller reporting companies.

Item ~~4. Mine Safety Disclosures~~
~~Not Applicable.~~
~~Item 5. Other Information~~2. Unregistered Sales of Equity Securities and Use of Proceeds
None.

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Item 3. Defaults Upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not Applicable.

Item 5. Other Information
None.

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Item 6. Exhibits

Exhibit
Number

Description
Reference

3.1

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

Incorporated by reference to Exhibit 3.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

3.2*3.2

Third Amended and Restated Certificate of Incorporation, effective May 3, ~~2021.~~2021

Incorporated by reference to Exhibit 3.2 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

3.3

Bylaws of Lectrefy, Inc.⁽²⁾

Incorporated by reference to Exhibit 3.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

3.4*3.4

Amended and Restated ~~Bylaws~~By-laws

Incorporated by reference to Exhibit 3.4 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

4.1

Form of Common Stock Certificate⁽³⁾

Incorporated by reference to Exhibit 4.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

4.2

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

Incorporated by reference to Exhibit 4.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

4.3

Form of ~~Representative~~Representative’s Warrant⁽⁵⁾

Incorporated by reference to Exhibit 1.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.1~~4.4

Warrant, dated April 12, 2022, issued by Alfi, Inc. to Lee Aerospace, Inc.

Incorporated by reference to Exhibit 99.3 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294).

4.5

Non-Revolving Line of Credit Convertible Note, dated August 5, 2022, between Alfi, Inc. and Lee Aerospace, Inc.

Incorporated by reference to Exhibit 99.2 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294).

4.6

Warrant, dated August 5, 2022, between Alfi, Inc. and Lee Aerospace, Inc.

Incorporated by reference to Exhibit 99.3 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294).

10.1*

Alfi, Inc. 2018 Stock Incentive Plan⁽⁶⁾

Incorporated by reference to Exhibit 10.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.2

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

Incorporated by reference to Exhibit 10.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).
��

10.3

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

Incorporated by reference to Exhibit 10.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

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10.4	Amendment No. 1 to Series Seed Stock Investment Agreement, dated October 31, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.⁽⁹⁾	Incorporated by reference to Exhibit 10.4 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.5†~~10.5*	Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Paul Pereira⁽¹⁰⁾	Incorporated by reference to Exhibit 10.5 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.6†~~10.6*	Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and John Cook, III⁽¹¹⁾	Incorporated by reference to Exhibit 10.6 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.7†~~10.7*	Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Charles Pereira⁽¹²⁾	Incorporated by reference to Exhibit 10.7 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.8†~~10.8*	Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Dennis McIntosh⁽¹³⁾	Incorporated by reference to Exhibit 10.8 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.9	Promissory Note, dated January 15, 2019, between Lectrefy Inc. and Lee Aerospace, Inc.⁽¹⁴⁾	Incorporated by reference to Exhibit 10.9 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.10	Security Agreement, dated January 15, 2020, between Lectrefy Inc. and Lee Aerospace, Inc.⁽¹⁵⁾	Incorporated by reference to Exhibit 10.10 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.11	Bridge Loan Agreement, dated December 30, 2020, among Alfi, Inc., Lee Aerospace, Inc., Paul Antonio Pereira and Dennis McIntosh⁽¹⁶⁾	Incorporated by reference to Exhibit 10.11 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.12	Letter Agreement Related to Purchase of Lenovo Tablets, dated March 19, 2020, between Alfi, Inc. and Lee Aerospace, Inc.⁽¹⁷⁾	Incorporated by reference to Exhibit 10.12 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.13	Bridge Loan Agreement, dated March 22, 2021, among Alfi, Inc., Lee Aerospace, Inc., Paul Antonio Pereira and Rachael Pereira⁽¹⁸⁾	Incorporated by reference to Exhibit 10.13 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.14	Bridge Loan Agreement, dated April 1, 2021, among Alfi, Inc., Lee Aerospace, Inc., Paul Antonio Pereira, Peter Bordes, Dennis McIntosh, Rachael Pereira, Charles Pereira and FLBT, LLC⁽¹⁹⁾	Incorporated by reference to Exhibit 10.14 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.15*10.15	~~Promissory Note,~~Letter of Understanding, dated ~~August~~November 8, ~~2019,~~2021, between ~~Lectrefy,~~Alfi, Inc. and ~~Lee Aerospace,~~CFO Financial Partners, LLC	Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on November 15, 2021 (Commission File No. 001-40294).

10.16*	Resignation Agreement, dated February 2, 2022, between Alfi, Inc. and Paul Pereira	Incorporated by reference to Exhibit 10.16 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

10.17*	Limited Release of Claims, dated as of February 2, 2022, between Alfi, Inc. and Paul Pereira	Incorporated by reference to Exhibit 10.17 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

3129

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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,~~Resignation Agreement, dated ~~November 12, 2019,~~February 2, 2022, between ~~Lectrefy,~~Alfi, Inc. and ~~Lee Aerospace, Inc.~~Dennis McIntosh	Incorporated by reference to Exhibit 10.18 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

10.19*	~~Promissory Note,~~Limited Release of Claims, dated ~~November 26, 2019,~~as of February 2, 2022, between ~~Lectrefy,~~Alfi, Inc. and ~~Lee Aerospace,~~Dennis McIntosh	Incorporated by reference to Exhibit 10.19 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

~~10.20*†~~10.20	Credit and Security Agreement, dated April 12, 2022, between Alfi, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294).

10.21	Non-Revolving Line of Credit Note, dated April 12, 2022, made by Alfi, Inc. in favor of Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.2 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294).

10.22	Patent Security Agreement, dated April 12, 2022, made by Alfi, Inc. in favor of Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.4 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294).

10.23	Trademark Security Agreement, dated April 12, 2022, made by Alfi, Inc. in favor of Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.5 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294).

10.24*	Consulting Agreement, dated as of March 15, 2021, between Alfi, Inc. and Ronald Spears	Incorporated by reference to Exhibit 10.1 to Alfi, Inc.’s Current Report on Form 8-K filed on May 10, 2021 (Commission File No. 001-40294).

10.25*	Form of Incentive Stock Option Award Agreement (under the Alfi, Inc. 2018 Stock Incentive Plan)	Incorporated by reference to Exhibit 10.25 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

~~10.21†~~10.26	Stock Option Award Agreement, dated March 15, 2021, between Alfi, Inc. and Ronald ~~Spears~~Spears.	Incorporated by reference to Exhibit 10.26 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

31.1*10.27	Promissory Note, dated August 8, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 10.27 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

10.28	First Amended and Promissory Note, dated September 20, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 10.28 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

10.29	Promissory Note, dated October 25, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 10.29 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

10.30	Promissory Note, dated November 12, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 10.30 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

10.31	Promissory Note, dated November 26, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 10.31 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

Table of Contents

10.32	Amendment No. 1 to Credit and Security Agreement, dated June 27, 2022, between Alfi, Inc. and Lee Aerospace, Inc.		Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on July 1, 2022 (Commission File No. 001-40294).

10.33	Amended and Restated Non-Revolving Line of Credit Note, dated June 27, 2022, made by Alfi, Inc. in favor of Lee Aerospace, Inc.		Incorporated by reference to Exhibit 99.2 to Alfi, Inc.’s Current Report on Form 8-K filed on July 1, 2022 (Commission File No. 001-40294).
		��
10.34	Amendment No. 2 to Credit and Security Agreement, dated August 5, 2022, between Alfi, Inc. and Lee Aerospace, Inc.		Incorporated by reference to Exhibit 99.1 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294).

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		Filed herewith.

31.2*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		Filed herewith.

32.1**32.1	Certifications of ~~the~~ Principal Executive Officer 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~~Furnished herewith.

101.CAL*101.INS	Inline XBRL ~~Taxonomy Extension Calculation Linkbase~~Instance Document		The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*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*101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase

104	Cover Page Interactive Data File ~~(Embedded within the~~(formatted as Inline XBRL ~~document and included~~with applicable taxonomy extension information contained in ~~Exhibit)~~Exhibits 101).

* ~~Filed herewith.~~

** Furnished.

† Identifies a management contract or compensatory plan or arrangement.

~~(1)~~

~~Incorporated by reference to Exhibit 3.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(2)~~

~~Incorporated by reference to Exhibit 3.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(3)~~

~~Incorporated by reference to Exhibit 3.4 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(4)~~

~~Incorporated by reference to Exhibit 4.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(5)~~

~~Incorporated by reference to Exhibit 1.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(6)~~

~~Incorporated by reference to Exhibit 10.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(7)~~

~~Incorporated by reference to Exhibit 10.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(8)~~

~~Incorporated by reference to Exhibit 10.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(9)~~

~~Incorporated by reference to Exhibit 10.4 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(10)~~

~~Incorporated by reference to Exhibit 10.5 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(11)~~

~~Incorporated by reference to Exhibit 10.6 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(12)~~

~~Incorporated by reference to Exhibit 10.7 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(13)~~

~~Incorporated by reference to Exhibit 10.8 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~Table of Contents~~

~~(14)~~

~~Incorporated by reference to Exhibit 10.9 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(15)~~

~~Incorporated by reference to Exhibit 10.10 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(16)~~

~~Incorporated by reference to Exhibit 10.11 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(17)~~

~~Incorporated by reference to Exhibit 10.12 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(18)~~

~~Incorporated by reference to Exhibit 10.13 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

~~(19)~~

~~Incorporated by reference to Exhibit 10.14 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).~~

3331

Table of Contents

SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALFI, INC.

Date: ~~May 16,~~August 15, 2022
/s/ ~~Peter Bordes~~James Lee

Name:
~~Peter Bordes~~James Lee

Title:
Interim Chief Executive Officer

(Principal Executive Officer)

Date: ~~May 16,~~August 15, 2022
/s/ Louis Almerini

Name:
Louis Almerini

Title:
Interim Chief Financial Officer

(Principal Financial and Accounting Officer)

3432


	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


	March 31,	March 31,
	2021	2020
Convertible Series (“Seed”) Preferred stock	3,150,058	3,150,058
Warrants	—	—
Employee stock options	433,927	59,064
Total potentially dilutive securities	3,583,985	3,209,122


		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


	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


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


Exhibit Number	Description	Reference

3.1	Restated Certificate of Incorporation of Alfi, Inc., dated January 31, ~~2020.~~ 2020⁽¹⁾	Incorporated by reference to Exhibit 3.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

3.2*3.2	Third Amended and Restated Certificate of Incorporation, effective May 3, ~~2021.~~2021	Incorporated by reference to Exhibit 3.2 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

3.3	Bylaws of Lectrefy, Inc.⁽²⁾	Incorporated by reference to Exhibit 3.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

3.4*3.4	Amended and Restated ~~Bylaws~~By-laws	Incorporated by reference to Exhibit 3.4 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

4.1	Form of Common Stock Certificate⁽³⁾	Incorporated by reference to Exhibit 4.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

4.2	Form of Warrant Agent Agreement (including form of Series A Warrant) between Alfi, Inc. and VStock Transfer, LLC⁽⁴⁾	Incorporated by reference to Exhibit 4.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

4.3	Form of ~~Representative~~Representative’s Warrant⁽⁵⁾	Incorporated by reference to Exhibit 1.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.1~~4.4	Warrant, dated April 12, 2022, issued by Alfi, Inc. to Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.3 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294).

4.5	Non-Revolving Line of Credit Convertible Note, dated August 5, 2022, between Alfi, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.2 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294).

4.6	Warrant, dated August 5, 2022, between Alfi, Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 99.3 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294).

10.1*	Alfi, Inc. 2018 Stock Incentive Plan⁽⁶⁾	Incorporated by reference to Exhibit 10.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

10.2	Agreement and Plan of Merger, dated July 11, 2018, between Lectrefy Inc., a Florida corporation, and Lectrefy Inc., a Delaware corporation⁽⁷⁾	Incorporated by reference to Exhibit 10.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).
��
10.3	Series Seed Stock Investment Agreement, dated August 1, 2018, among Lectrefy Inc., the Purchasers and the Key Holders⁽⁸⁾	Incorporated by reference to Exhibit 10.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).