Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Apr. 30, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Entity File Number | 001-40294 | |
Entity Registrant Name | Alfi, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 30-1107078 | |
Entity Address State Or Province | FL | |
Entity Address, Address Line One | 429 Lenox Avenue | |
Entity Address, City or Town | Miami Beach | |
Entity Address, Postal Zip Code | 33139 | |
City Area Code | (305) | |
Local Phone Number | 395-4520 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 16,094,882 | |
Entity Central Index Key | 0001833908 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $4.57 | |
Trading Symbol | ALFIW | |
Security Exchange Name | NASDAQ | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | ALF | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 10,066,498 | $ 8,335 |
Prepaid expenses and other | 1,394,651 | 793 |
Total current assets | 11,461,149 | 9,128 |
Property and equipment, net | 3,440,518 | 506,294 |
Intangible assets, net | 756,253 | 888,271 |
Operating lease right-of-use asset, net | 108,728 | 149,032 |
Assets held for sale and other assets | 1,183,752 | 7,940 |
Total assets | 16,950,400 | 1,560,665 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,050,623 | 1,000,876 |
Debt, related parties | 3,728,808 | |
Lease liability | 111,438 | 152,646 |
Interest payable, related parties | 116,600 | |
Total current liabilities | 1,162,061 | 4,998,930 |
Total liabilities | 1,162,061 | 4,998,930 |
Stockholders' Equity (Deficit) | ||
Series Seed convertible preferred stock, $0.0001 par value, 2,500,000 shares authorized, -0- and 2,500,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 2,500,000 | |
Common stock, $0.0001 par value, 80,000,000 shares authorized, 16,068,599 and 4,441,582 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 1,620 | 444 |
Additional paid-in capital | 37,895,961 | 2,076,150 |
Accumulated deficit | (20,109,245) | (8,014,859) |
Common stock held in treasury at cost, $0.0001 par 137,650 and 0 shares, respectively | (1,999,997) | |
Total stockholders' equity (deficit) | 15,788,339 | (3,438,265) |
Total liabilities and stockholders' equity (deficit) | $ 16,950,400 | $ 1,560,665 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheet | ||
Series Seed preferred stock, par value | $ 0.0001 | $ 0.0001 |
Series Seed preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Series Seed preferred stock, shares issued | 0 | 2,500,000 |
Series Seed preferred stock, shares outstanding | 0 | 2,500,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares issued | 16,068,599 | 4,441,582 |
Common stock, shares outstanding | 16,068,599 | 4,441,582 |
Common stock held in treasury at cost, shares | 137,650 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Consolidated Statement of Operations | ||||
Revenues | $ 112 | $ 18,498 | ||
Operating expenses | ||||
Compensation and benefits | 1,743,607 | $ 283,967 | 3,824,560 | $ 656,672 |
Other general and administrative | 3,126,452 | 181,565 | 6,689,601 | 883,538 |
Depreciation and amortization | 223,339 | 240,623 | 718,827 | 449,978 |
Total operating expenses | 5,093,398 | 706,155 | 11,232,988 | 1,990,188 |
Operating loss | (5,093,286) | (706,155) | (11,214,490) | (1,990,188) |
Other income (expense) | ||||
Other income | 9,542 | 110,726 | 38,892 | 174,830 |
Interest expense | (89) | (72,341) | (918,788) | (158,770) |
Total other income (expense) | 9,453 | 38,385 | (879,896) | 16,060 |
Net loss before provision for income taxes | (5,083,833) | (667,770) | (12,094,386) | (1,974,128) |
Net loss | $ (5,083,833) | $ (667,770) | $ (12,094,386) | $ (1,974,128) |
Earnings (loss) per share | $ (0.32) | $ (0.21) | $ (1.18) | $ (0.62) |
Earnings (loss) per share diluted | $ (0.32) | $ (0.21) | $ (1.18) | $ (0.62) |
Weighted average common shares outstanding | 16,035,827 | 3,181,559 | 10,246,506 | 3,160,789 |
Weighted average common shares outstanding diluted | 16,035,827 | 3,181,559 | 10,246,506 | 3,160,789 |
Consolidated Statement of Chang
Consolidated Statement of Changes to Stockholders' Equity - USD ($) | Series Seed Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Common Stock Held in Treasury | Total |
Beginning balance at Dec. 31, 2019 | $ 2,500,000 | $ 315 | $ (2,467,584) | $ 32,731 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 2,500,000 | 3,150,058 | ||||
Net loss | (615,955) | (615,955) | ||||
Ending balance at Mar. 31, 2020 | $ 2,500,000 | $ 315 | (3,083,539) | (583,224) | ||
Ending balance (in shares) at Mar. 31, 2020 | 2,500,000 | 3,150,058 | ||||
Beginning balance at Dec. 31, 2019 | $ 2,500,000 | $ 315 | (2,467,584) | 32,731 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 2,500,000 | 3,150,058 | ||||
Net loss | (1,974,128) | |||||
Ending balance at Sep. 30, 2020 | $ 2,500,000 | $ 318 | $ 53,713 | (4,441,711) | (1,887,680) | |
Ending balance (in shares) at Sep. 30, 2020 | 2,500,000 | 3,181,559 | ||||
Beginning balance at Dec. 31, 2019 | $ 2,500,000 | $ 315 | (2,467,584) | 32,731 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 2,500,000 | 3,150,058 | ||||
Ending balance at Dec. 31, 2020 | $ 2,500,000 | $ 444 | 2,076,150 | (8,014,859) | (3,438,265) | |
Ending balance (in shares) at Dec. 31, 2020 | 2,500,000 | 4,441,582 | ||||
Beginning balance at Mar. 31, 2020 | $ 2,500,000 | $ 315 | (3,083,539) | (583,224) | ||
Beginning balance (in shares) at Mar. 31, 2020 | 2,500,000 | 3,150,058 | ||||
Share based compensation | 14,358 | 14,358 | ||||
Net loss | (690,402) | (690,402) | ||||
Ending balance at Jun. 30, 2020 | $ 315 | 14,358 | (3,773,941) | (1,259,268) | ||
Ending balance (in shares) at Jun. 30, 2020 | 2,500,000 | 3,150,058 | ||||
Share based compensation | 14,358 | 14,358 | ||||
Shares issued for services | $ 3 | 24,997 | 25,000 | |||
Shares issued for services (in shares) | 31,501 | |||||
Net loss | (667,770) | (667,770) | ||||
Ending balance at Sep. 30, 2020 | $ 2,500,000 | $ 318 | 53,713 | (4,441,711) | (1,887,680) | |
Ending balance (in shares) at Sep. 30, 2020 | 2,500,000 | 3,181,559 | ||||
Beginning balance at Dec. 31, 2020 | $ 2,500,000 | $ 444 | 2,076,150 | (8,014,859) | (3,438,265) | |
Beginning balance (in shares) at Dec. 31, 2020 | 2,500,000 | 4,441,582 | ||||
Share based compensation | 46,685 | 46,685 | ||||
Shares issued with debt | $ 16 | 249,984 | 250,000 | |||
Shares issued with debt (in shares) | 157,503 | |||||
Net loss | (2,708,831) | (2,708,831) | ||||
Ending balance at Mar. 31, 2021 | $ 2,500,000 | $ 460 | 2,372,819 | (10,723,690) | (5,850,411) | |
Ending balance (in shares) at Mar. 31, 2021 | 2,500,000 | 4,599,085 | ||||
Beginning balance at Dec. 31, 2020 | $ 2,500,000 | $ 444 | 2,076,150 | (8,014,859) | $ (3,438,265) | |
Beginning balance (in shares) at Dec. 31, 2020 | 2,500,000 | 4,441,582 | ||||
Shares issued for services (in shares) | 472,510 | |||||
Ending balance at Jun. 30, 2021 | $ 1,606 | 37,153,706 | (15,025,412) | $ 22,129,900 | ||
Ending balance (in shares) at Jun. 30, 2021 | 16,052,833 | |||||
Beginning balance at Dec. 31, 2020 | $ 2,500,000 | $ 444 | 2,076,150 | (8,014,859) | (3,438,265) | |
Beginning balance (in shares) at Dec. 31, 2020 | 2,500,000 | 4,441,582 | ||||
Treasury shares purchased | $ (1,999,997) | |||||
Treasury shares purchased (in shares) | (137,650) | |||||
Net loss | $ (12,094,386) | |||||
Ending balance at Sep. 30, 2021 | $ 1,620 | 37,895,961 | (20,109,245) | $ (1,999,997) | 15,788,339 | |
Ending balance (in shares) at Sep. 30, 2021 | 16,068,599 | |||||
Beginning balance at Mar. 31, 2021 | $ 2,500,000 | $ 460 | 2,372,819 | (10,723,690) | (5,850,411) | |
Beginning balance (in shares) at Mar. 31, 2021 | 2,500,000 | 4,599,085 | ||||
Share based compensation | 85,258 | 85,258 | ||||
Shares issued with debt | $ 32 | 499,968 | 500,000 | |||
Shares issued with debt (in shares) | 315,007 | |||||
Conversion of preferred stock to common | $ (2,500,000) | $ 315 | 2,499,685 | |||
Conversion of preferred stock to common (in shares) | (2,500,000) | 3,150,058 | ||||
Shares issued for cash | $ 429 | 10,993,471 | 10,993,900 | |||
Shares issued for cash (in shares) | 4,291,045 | |||||
Warrants issued for cash | 4,738,750 | 4,738,750 | ||||
Exercise of warrants | $ 338 | 15,472,521 | 15,472,859 | |||
Exercise of warrants (in shares) | 3,385,746 | |||||
Exercise of options | $ 2 | 15,085 | 15,087 | |||
Exercise of options (in shares) | 11,892 | |||||
Shares issued for services | $ 30 | 476,150 | 476,180 | |||
Shares issued for services (in shares) | 300,000 | |||||
Net loss | (4,301,722) | (4,301,722) | ||||
Ending balance at Jun. 30, 2021 | $ 1,606 | 37,153,706 | (15,025,412) | 22,129,900 | ||
Ending balance (in shares) at Jun. 30, 2021 | 16,052,833 | |||||
Share based compensation | 184,005 | 184,005 | ||||
Exercise of warrants | $ 14 | 558,250 | 558,264 | |||
Exercise of warrants (in shares) | 121,733 | |||||
Treasury shares purchased | (1,999,997) | (1,999,997) | ||||
Treasury shares purchased (in shares) | (137,650) | |||||
Shares issued for services (in shares) | 31,683 | |||||
Net loss | (5,083,833) | (5,083,833) | ||||
Ending balance at Sep. 30, 2021 | $ 1,620 | $ 37,895,961 | $ (20,109,245) | $ (1,999,997) | $ 15,788,339 | |
Ending balance (in shares) at Sep. 30, 2021 | 16,068,599 |
Consolidated Statements of Cash
Consolidated Statements of Cashflows - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Operating activities | |||||
Net loss | $ (12,094,386) | $ (1,974,128) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation and amortization | $ 223,339 | $ 240,623 | 718,827 | 449,978 | |
Shares issued with debt | 750,000 | ||||
Share based compensation | 315,947 | 28,716 | |||
Share based payments for services | 476,180 | 25,000 | |||
Amortization of operating lease right-of-use asset | 40,305 | 43,376 | |||
Changes in assets and liabilities: | |||||
Prepaid expenses and other assets | (1,393,858) | 2,793 | |||
Other assets | (72,375) | 65 | |||
Accounts payable and accrued expenses | 49,746 | 77,692 | |||
Lease liability | (41,208) | (42,644) | |||
Interest payable, related parties | (116,600) | 70,804 | |||
Net cash used in operating activities | (11,367,422) | (1,318,348) | |||
Investing activities | |||||
Capital expenditures | (3,521,029) | (995,045) | |||
Purchase of condominium | (1,103,437) | ||||
Acquisition of intangible assets | (307,728) | ||||
Net cash used in investing activities | (4,624,466) | (1,302,773) | |||
Financing activities | |||||
Proceeds from related party debt payable | 2,548,346 | 2,640,687 | |||
Proceeds from issuance of common stock, net | 15,732,649 | ||||
Proceeds from exercise of warrants | 16,031,122 | ||||
Proceeds from exercise of options | 15,085 | ||||
Repayments of related party debt payable | (6,277,154) | ||||
Purchase of treasury shares | (1,999,997) | ||||
Net cash provided by financing activities | 26,050,051 | 2,640,687 | |||
Net change in cash and cash equivalents | 10,058,163 | 19,567 | |||
Cash and cash equivalents at the beginning of the period | 8,335 | 38,890 | $ 38,890 | ||
Cash and cash equivalents at the end of the period | $ 10,066,498 | $ 58,457 | 10,066,498 | $ 58,457 | $ 8,335 |
Supplemental disclosure of cash flow information | |||||
Cash paid for interest | 285,478 | ||||
Supplemental disclosure of non-cash investing and financing activities | |||||
Conversion of preferred stock to common stock | $ 2,500,000 |
BUSINESS DESCRIPTION BACKGROUND
BUSINESS DESCRIPTION BACKGROUND | 9 Months Ended |
Sep. 30, 2021 | |
BUSINESS DESCRIPTION BACKGROUND | |
BUSINESS DESCRIPTION BACKGROUND | 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 (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 is to place Alfi-enabled devices in malls, airports, rideshares and taxis. In addition, the Company has begun offering its software solution to other DOOH media operators as a SaaS product. The Company’s primary activities since inception have been research and development, managing collaborations, and raising capital. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 SIGNIFICANT ACCOUNTING POLICIES Consolidation The consolidated financial statements include the accounts of Alfi, Inc. and its wholly owned subsidiary, Alfi (N.I.) Ltd. Collectively, these entities make up the consolidated financial statements during the periods presented in this Quarterly Report. All significant intercompany balances and transactions are eliminated in consolidation. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted 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. 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 September 30, 2021, the Company has distributed and activated into operations over 4,200 devices (tablets and kiosks) at no cost to rideshare, mall, or airport owner(s). It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner, that the Alfi-enabled device engages with and to whom 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. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three 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 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. Prepaid Expenses and Other Assets The Company records up-front payments for insurance and professional services as prepaid expenses. Assets Held for Sale and Other Assets Assets held for sale and other assets include a condominium purchased in August 2021 and sold in April 2022. The purchase and sale price 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: September 30, September 30, 2021 2020 Convertible Series (“Seed”) Preferred stock — 3,150,058 Warrants 970,133 — Employee stock options 542,618 196,883 Total potentially dilutive securities 1,512,751 3,346,941 Common Stock The Company issued 3,150,058 shares of Common Stock on April 4, 2018 to the Company’s founders. At September 30, 2021 and December 31, 2020, outstanding shares of Common Stock totaled 16,068,599 and 4,441,582, respectively. During the nine-month period ended September 30, 2021, the Company issued 4,291,045 shares of Common Stock for cash in its initial public offering, which was completed on May 6, 2021 (“IPO”), 3,507,479 shares of Common Stock upon exercise of warrants issued in connection with the IPO, and 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. During the three months ended September 30, 2021, the Company repurchased 137,650 shares of its Common Stock for $1,999,997. The Company paid no dividends on Common Stock issued through September 30, 2021. The Company accounts for Common Stock issued with debt, issued for services, and issued as share based compensation at fair value. Convertible Instruments Through September 30, 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 is 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 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. 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, no embedded derivatives were identified on the conversion option of Series Seed Preferred Stock at September 30, 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. There were no outstanding shares of Series Seed Preferred Stock on September 30, 2021. 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 Quartely 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. |
GOING CONCERN AND MANAGEMENT'S
GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | 9 Months Ended |
Sep. 30, 2021 | |
GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | |
GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | NOTE 3 GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS 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. During the nine months ended September 30, 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 $15.5 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. The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There is no assurance that such a plan will be successful. 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. |
RESTATEMENTS OF PREVIOUSLY ISSU
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 9 Months Ended |
Sep. 30, 2021 | |
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | |
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 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. 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 financial statements as of December 31, 2020 have been restated to correct the accounting errors and conform to current period presentation. Impact of the Restatements The impact of the restatements 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, 80,000,000 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 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2021 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 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 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. 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. 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. |
DEBT - RELATED PARTIES
DEBT - RELATED PARTIES | 9 Months Ended |
Sep. 30, 2021 | |
DEBT - RELATED PARTIES | |
DEBT - RELATED PARTIES | NOTE 6 DEBT – RELATED PARTIES During 2019 and 2020, the Company entered into six promissory note agreements with a related party 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 at December 31, 2020. During the year ended December 31, 2020, a related party provided financing of approximately $950,000 for the Company’s purchase of 7,600 tablets. Payment was due 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 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 to repayment of principal and interest under the bridge loan, the Company issued to the related party 1,260,023 shares of Common Stock. Management valued this issuance of shares at $2,000,000 and recorded that amount in interest expense. During the year ended December 31, 2020, the Company received a cash advance of $27,154 from a related party. The cash advances carried no specified repayment term, interest rate, or security interest. During the nine-month period ended September 30, 2021, the Company entered into bridge loans totaling $800,000 with related party investors. Terms of the bridge loans with the 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. A summary of borrowings from related parties follows. Interest Lender Loan Payable Rate Accrual Balance at January 1, 2019 $ — $ — Note borrowings Affiliated entity 759,091 5 % 8,358 Balance at December 31, 2019 $ 759,091 $ 8,358 Interest on prior borrowings N/A 38,059 Note borrowings Affiliated entity 1,740,909 5 % 66,576 Tablet financing Affiliated entity 950,000 N/A — Bridge loan Affiliated entity 251,654 18 % 3,138 Bridge loan Affiliated entity 27,154 N/A — Balance at December 31, 2020 $ 3,728,808 $ 116,130 Interest on prior borrowings N/A 60,256 Bridge loans Affiliated entities 1,748,346 18 % 83,399 Bridge loans Affiliated persons 800,000 18 % 25,693 Repayments (6,277,154) (285,478) Balance at September 30, 2021 $ — $ — All borrowings from related parties were paid in full upon completion of the Company’s IPO in May 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 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 September 30, 2021 and December 31, 2020, cash balances in excess of FDIC requirements were $9,816,498 and $- 0 -, respectively. Litigation, Claims, and Assessments The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. See Note 11 Subsequent Events for further discussion. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 9 Months Ended |
Sep. 30, 2021 | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
STOCKHOLDERS' EQUITY (DEFICIT) | 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”. In 2018, the Company created a class of 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 was issued to an investor in exchange for $2,500,000 cash consideration. Shares of Series Seed Preferred Stock converted to Common Stock at a ratio of 1:1.260023 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 bore no 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 is made to the holder ($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. 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 nine-month period ended September 30, 2021, no preferred stock was issued by the Company, and no shares of preferred stock were outstanding at September 30, 2021. 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 no dividend payment made on any class of stock (Common Stock or 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 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 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 nine-month period ended September 30, 2021, the Company arranged two bridge loans with related party investors. The Company issued 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 $750,000 and recorded that amount in interest expense. During the nine-month period ended September 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. 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”) 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. On May 3, 2021, pursuant to the underwriting agreement for the IPO, we 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 September 30, 2021, warrant holders have exercised warrants to purchase 3,507,479 shares of Common Stock, providing Alfi with $16,031,122 in additional funding. As of September 30, 2021, there were warrants outstanding to purchase 970,133 shares of Common Stock. Share Buy-Back On June 23, 2021, Alfi announced a $2.0 million buy-back of its Common Stock. The buyback was completed on July 9, 2021, with Alfi acquiring 137,650 shares of Common Stock, for an aggregate price of $1,999,997, which are recorded as treasury stock. Employee Equity (Stock) Incentive Plan The Company has a stock equity incentive plan, the 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 plan for employee grants is not to exceed 1,575,029 shares. During the three months ended September 30, 2021 and 2020, respectively, the Company granted -0- and -0- Common Stock options under the 2018 Plan. During the nine months ended September 30, 2021 and 2020, respectively, the Company granted 449,168 and 137,819 Common Stock options under the 2018 Plan. On September 30, 2021, and December 31, 2020, total Common Stock options issued and outstanding under the 2018 Plan were 542,618 and 236,259, respectively. During the three and nine-month periods ended September 30, 2021, weighted average strike price per employee stock option as of September 30, 2021, was approximately $2.49 per share. Management recorded stock-based compensation expense associated with the issuance of employee stock options of $184,005 and $14,358 for the three months ended September 30, 2021 and 2020, respectively, and $315,947 and $28,716 for the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021, one employee exercised stock options and received 11,892 restricted shares of Common Stock, and 130,917 options were cancelled due to employee terminations. 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. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 9 PROPERTY AND EQUIPMENT Property and equipment, net of accumulated depreciation, consists of the following: Sep 30, 2021 Dec 31, 2020 Tablets $ 4,364,496 $ 972,050 Office furniture and fixtures 319,846 191,261 Property and equipment, gross 4,684,342 1,163,311 Less accumulated depreciation (1,243,824) (657,017) Property and equipment, net $ 3,440,518 $ 506,294 The Company incurred depreciation expense of $179,333 and $196,617 for the three-month periods ended September 30, 2021, and 2020, respectively, and $586,809 and $405,971 for the nine-month periods ended September 30, 2021 and 2020, respectively. Property and equipment includes approximately 25,000 and 9,600 Lenovo tablet hardware devices at September 30, 2021 and December 31, 2020, respectively, including approximately 16,500 tablets purchased for $3,392,446 during the three-month period ended September 30, 2021. 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. |
INTANGIBLE ASSETS - INTELLECTUA
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY | |
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY | 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 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 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: Sep 30, 2021 Dec 31, 2020 Capitalized software $ 832,045 $ 832,045 Patents 144,239 144,239 Intangible assets, gross 976,284 976,284 Less accumulated amortization (220,031) (88,013) Intangible assets, net $ 756,253 $ 888,271 The Company incurred amortization expense of $44,006 and $44,006 for the three-month periods ended September 30, 2021 and 2020, respectively and $132,018 and $44,006 for the nine-month periods ended September 30, 2021 and 2020, respectively. Future amortization of intangible assets as of September 30, 2021, is as follows: 2021 $ 44,006 2022 176,025 2023 176,025 2024 176,025 2025 92,820 Thereafter 91,351 $ 756,253 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 11 SUBSEQUENT EVENTS Warrants Exercised During the quarter ended December 31, 2021, warrant holders exercised warrants to purchase 748 shares of Common Stock, providing $3,418 in additional capital. 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 outstanding to purchase 969,385 shares of Common Stock. Changes in Management 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 appointed: (i) James Lee as Chairman of the Board, replacing Mr. P. Pereira in such role; (ii) new management personnel, including Peter Bordes as Interim Chief Executive Officer, Louis Almerini as Interim Chief Financial Officer and David Gardner as Chief Technology Officer; (iii) two new independent directors to the Board, Allen Capsuto and Patrick Dolan; and (iv) Mr. Capsuto as Chair of the Audit Committee and Mr. Dolan as a member of the Compensation Committee (the “Compensation Committee”) and the Nominating and Corporate Governance Committee of the Board (the “Nominating and Corporate Governance Committee”). 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. Findings of the Investigation The Investigation was conducted by a special committee of the Board (the “Special Committee”) consisting of Mr. Capsuto, the 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 approximately $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 three 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. Litigation, Claims, and Assessments The Company may be involved in legal proceedings, claims and assessments. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. 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., Kleinschmidt v. Alfi, Inc., et al., Steppacher, Jr., et al. v. Alfi, Inc. et al., Rodriguez, et al. v. Alfi, Inc., et al., 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, During February and March 2022, two 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. 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 and the putative class action litigations 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 $339,000 for the period from January 1, 2022 through March 31, 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. Credit and Security Agreement – Related Party On April 12, 2022, the Company entered into a Credit and Security Agreement (the “Credit Agreement”) with a related party lender. Pursuant to the agreement, the Company may borrow up to $2,500,000 for up to one year. Through May 10, 2022, the lender has funded to the Company $1,000,000 under the Credit Agreement. Prior to the maturity date, the Company may borrow an additional $1.5 million under the Credit Agreement, 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. The line of credit 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 at 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 rate of 3% will accrue on borrowings through October 12, 2022. In connection with the Credit Agreement, the Company issued a warrant to the lender pursuant to which the lender may purchase up to 1,250,000 shares of the Common Stock at a price of $1.51 per share. The warrant can be exercised commencing on the three-month anniversary of the Credit Agreement (i.e., on July 12, 2022) and expires on April 12, 2025. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Consolidation | Consolidation The consolidated financial statements include the accounts of Alfi, Inc. and its wholly owned subsidiary, Alfi (N.I.) Ltd. Collectively, these entities make up the consolidated financial statements during the periods presented in this Quarterly Report. All significant intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted 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. |
Revenue Recognition | 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 September 30, 2021, the Company has distributed and activated into operations over 4,200 devices (tablets and kiosks) at no cost to rideshare, mall, or airport owner(s). It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner, that the Alfi-enabled device engages with and to whom 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less from the purchase date to be cash equivalents. |
Property and Equipment | 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 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 | 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. |
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets The Company records up-front payments for insurance and professional services as prepaid expenses. |
Assets Held for Sale and Other Assets | Assets Held for Sale and Other Assets Assets held for sale and other assets include a condominium purchased in August 2021 and sold in April 2022. The purchase and sale price |
Fair Value of Financial Instruments | 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 | 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: September 30, September 30, 2021 2020 Convertible Series (“Seed”) Preferred stock — 3,150,058 Warrants 970,133 — Employee stock options 542,618 196,883 Total potentially dilutive securities 1,512,751 3,346,941 |
Common Stock | Common Stock The Company issued 3,150,058 shares of Common Stock on April 4, 2018 to the Company’s founders. At September 30, 2021 and December 31, 2020, outstanding shares of Common Stock totaled 16,068,599 and 4,441,582, respectively. During the nine-month period ended September 30, 2021, the Company issued 4,291,045 shares of Common Stock for cash in its initial public offering, which was completed on May 6, 2021 (“IPO”), 3,507,479 shares of Common Stock upon exercise of warrants issued in connection with the IPO, and 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. During the three months ended September 30, 2021, the Company repurchased 137,650 shares of its Common Stock for $1,999,997. The Company paid no dividends on Common Stock issued through September 30, 2021. The Company accounts for Common Stock issued with debt, issued for services, and issued as share based compensation at fair value. |
Convertible Instruments | Convertible Instruments Through September 30, 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 is 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 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. 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, no embedded derivatives were identified on the conversion option of Series Seed Preferred Stock at September 30, 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. There were no outstanding shares of Series Seed Preferred Stock on September 30, 2021. |
Common Stock Purchase Warrants | 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 | 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 | 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 Quartely Report. |
Forward Stock Split | 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. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Summary of potentially dilutive securities excluded from the computation of basic net income (loss) per share | Potentially dilutive securities excluded from the computation of basic net loss per share as of are as follows: September 30, September 30, 2021 2020 Convertible Series (“Seed”) Preferred stock — 3,150,058 Warrants 970,133 — Employee stock options 542,618 196,883 Total potentially dilutive securities 1,512,751 3,346,941 |
RESTATEMENTS OF PREVIOUSLY IS_2
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | |
Summary of impact of the Restatements | The impact of the restatements 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, 80,000,000 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 |
DEBT PAYABLE - RELATED PARTIES
DEBT PAYABLE - RELATED PARTIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
DEBT - RELATED PARTIES | |
Summary of borrowings from related parties | A summary of borrowings from related parties follows. Interest Lender Loan Payable Rate Accrual Balance at January 1, 2019 $ — $ — Note borrowings Affiliated entity 759,091 5 % 8,358 Balance at December 31, 2019 $ 759,091 $ 8,358 Interest on prior borrowings N/A 38,059 Note borrowings Affiliated entity 1,740,909 5 % 66,576 Tablet financing Affiliated entity 950,000 N/A — Bridge loan Affiliated entity 251,654 18 % 3,138 Bridge loan Affiliated entity 27,154 N/A — Balance at December 31, 2020 $ 3,728,808 $ 116,130 Interest on prior borrowings N/A 60,256 Bridge loans Affiliated entities 1,748,346 18 % 83,399 Bridge loans Affiliated persons 800,000 18 % 25,693 Repayments (6,277,154) (285,478) Balance at September 30, 2021 $ — $ — |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
summary of property plant and equipment balances | Sep 30, 2021 Dec 31, 2020 Tablets $ 4,364,496 $ 972,050 Office furniture and fixtures 319,846 191,261 Property and equipment, gross 4,684,342 1,163,311 Less accumulated depreciation (1,243,824) (657,017) Property and equipment, net $ 3,440,518 $ 506,294 |
INTANGIBLE ASSETS - INTELLECT_2
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY | |
Summary of intangible assets, net of accumulated amortization | Sep 30, 2021 Dec 31, 2020 Capitalized software $ 832,045 $ 832,045 Patents 144,239 144,239 Intangible assets, gross 976,284 976,284 Less accumulated amortization (220,031) (88,013) Intangible assets, net $ 756,253 $ 888,271 |
Summary of future amortization of intangible assets | 2021 $ 44,006 2022 176,025 2023 176,025 2024 176,025 2025 92,820 Thereafter 91,351 $ 756,253 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($)$ / shares | Sep. 30, 2021USD ($)item$ / shares | Sep. 30, 2022$ / shares | Dec. 31, 2020$ / shares | |
Revenue Recognition | ||||
Number of devices tablets and kiosks entity has distributed and activated into operations | item | 4,200 | |||
Cost to rideshare, mall, or airport owner | $ 0 | |||
Revenue | $ 112 | $ 18,498 | ||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.001 | $ 0.0001 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Cash and cash Equivalents (Details) | Sep. 30, 2021M |
Complimentary Devices | |
Number Of Lenovo Tablet Hardware Devices Purchased | 3 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) | Jul. 01, 2020 | Sep. 30, 2021 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 15 years | |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 5 years | 5 years |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - Office equipment | 9 Months Ended |
Sep. 30, 2021 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Assets Held for Sale and Other Assets (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | |
Sale price of condominium | $ 1,103,437 |
Purchase price of condominium | $ 1,103,437 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Loss Per Share (Details) - $ / shares | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2022 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common stock, par value | $ 0.0001 | $ 0.001 | $ 0.0001 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,512,751 | 3,346,941 | ||
Preferred Series Seed stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,150,058 | |||
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 970,133 | |||
Employee stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 542,618 | 196,883 |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - Common Stock (Details) - USD ($) | Jun. 23, 2021 | May 06, 2021 | Apr. 04, 2018 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2018 | Dec. 31, 2020 |
Class of Stock [Line Items] | ||||||||
Shares issued for cash (in shares) | 472,510 | |||||||
Common stock, shares outstanding | 16,068,599 | 16,068,599 | 4,441,582 | |||||
Treasury shares acquired | 137,650 | 137,650 | ||||||
Treasury shares acquired value | $ 1,999,997 | $ 1,999,997 | $ 1,999,997 | |||||
Series Seed preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued for cash (in shares) | 3,150,058 | |||||||
Common stock, shares outstanding | 4,291,045 | 4,291,045 | ||||||
Dividends on common stock | $ 0 | |||||||
IPO | ||||||||
Class of Stock [Line Items] | ||||||||
Stock Issued During Period, Shares, Warrants Exercised | 3,507,479 | |||||||
Number of shares issued upon conversion of outstanding preferred stock | 3,150,058 | |||||||
Founders | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued for cash (in shares) | 3,150,058 |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES - Convertible Instruments (Details) | 1 Months Ended | 12 Months Ended | ||
May 31, 2021shares | Dec. 31, 2020USD ($)shares | Sep. 30, 2021USD ($)shares | Dec. 31, 2018 | |
Class of Stock [Line Items] | ||||
Embedded derivative | $ | $ 0 | $ 0 | ||
Preferred Series Seed stock | ||||
Class of Stock [Line Items] | ||||
Conversion ratio | 1.260023 | 1.260023 | 1.260023 | |
Number of preferred stock converted into common stock | 2,500,000 | 2,500,000 | ||
Outstanding shares | 0 | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares issued upon conversion | 3,150,058 |
SIGNIFICANT ACCOUNTING POLIC_12
SIGNIFICANT ACCOUNTING POLICIES - Forward Stock Split (Details) | Mar. 01, 2021 |
SIGNIFICANT ACCOUNTING POLICIES | |
Forward stock split ratio | 1.260023 |
GOING CONCERN AND MANAGEMENT'_2
GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS (Details) - USD ($) | May 03, 2021 | Sep. 30, 2021 |
Proceeds from exercise of warrants | $ 16,031,122 | |
IPO | ||
Proceeds from Initial Public Offering | $ 15,700,000 | 15,700,000 |
Proceeds from exercise of warrants | $ 15,500,000 |
RESTATEMENTS OF PREVIOUSLY IS_3
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS - Consolidated Balance Sheet (Details) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||||||||
Cash and cash equivalents | $ 10,066,498 | $ 8,335 | ||||||
Prepaid expenses and other | 1,394,651 | 793 | ||||||
Total current assets | 11,461,149 | 9,128 | ||||||
Property and equipment, net | 3,440,518 | 506,294 | ||||||
Intangible assets, net | 756,253 | 888,271 | ||||||
Operating lease right-of-use asset, net | 108,728 | 149,032 | ||||||
Other assets | 7,940 | |||||||
Total assets | 16,950,400 | 1,560,665 | ||||||
Current liabilities: | ||||||||
Accounts payable | 1,000,876 | |||||||
Debt payable, related parties | 3,728,808 | |||||||
Lease liability | 111,438 | 152,646 | ||||||
Interest payable, related parties | 116,600 | |||||||
Total current liabilities | 1,162,061 | 4,998,930 | ||||||
Total liabilities | 1,162,061 | 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 | |||||||
Common stock, $0.0001 par value, 15,000,000 shares authorized, 4,441,582 shares issued and outstanding | 1,620 | 444 | ||||||
Additional paid-in capital | 37,895,961 | 2,076,150 | ||||||
Accumulated deficit | (20,109,245) | (8,014,859) | ||||||
Total stockholders' equity (deficit) | 15,788,339 | $ 22,129,900 | $ (5,850,411) | (3,438,265) | $ (1,887,680) | $ (1,259,268) | $ (583,224) | $ 32,731 |
Total liabilities and stockholders' equity (deficit) | $ 16,950,400 | 1,560,665 | ||||||
As Previously Reported | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 8,335 | |||||||
Note receivable (related parties) | 1,830,000 | |||||||
Prepaid expenses and other | 793 | |||||||
Total current assets | 1,839,128 | |||||||
Property and equipment, net | 117,474 | |||||||
Intangible assets, net | 4,384,188 | |||||||
Other assets (complimentary devices), net | 1,104,000 | |||||||
Other assets | 7,940 | |||||||
Total assets | 7,452,730 | |||||||
Current liabilities: | ||||||||
Accounts payable | 516,705 | |||||||
Debt payable, related parties | 5,558,808 | |||||||
Derivative liability | 229,712 | |||||||
Interest payable, related parties | 116,600 | |||||||
Total current liabilities | 6,421,825 | |||||||
Total liabilities | 6,421,825 | |||||||
Stockholders' Equity (deficit) | ||||||||
Series Seed convertible preferred stock, $0.0001 par value, 2,500,000 shares authorized, issued, and outstanding | 2,500,000 | |||||||
Common stock, $0.0001 par value, 15,000,000 shares authorized, 4,441,582 shares issued and outstanding | 444 | |||||||
Additional paid-in capital | 2,024,871 | |||||||
Accumulated deficit | (3,494,410) | |||||||
Total stockholders' equity (deficit) | 1,030,905 | |||||||
Total liabilities and stockholders' equity (deficit) | 7,452,730 | |||||||
Restatement Adjustments | ||||||||
Current assets: | ||||||||
Note receivable (related parties) | (1,830,000) | |||||||
Total current assets | (1,830,000) | |||||||
Property and equipment, net | 388,820 | |||||||
Intangible assets, net | (3,495,917) | |||||||
Other assets (complimentary devices), net | (1,104,000) | |||||||
Operating lease right-of-use asset, net | 149,032 | |||||||
Total assets | (5,892,065) | |||||||
Current liabilities: | ||||||||
Accounts payable | 484,171 | |||||||
Debt payable, related parties | (1,830,000) | |||||||
Derivative liability | (229,712) | |||||||
Lease liability | 152,646 | |||||||
Total current liabilities | (1,422,895) | |||||||
Total liabilities | (1,422,895) | |||||||
Stockholders' Equity (deficit) | ||||||||
Additional paid-in capital | 51,279 | |||||||
Accumulated deficit | (4,520,449) | |||||||
Total stockholders' equity (deficit) | (4,469,170) | |||||||
Total liabilities and stockholders' equity (deficit) | $ (5,892,065) |
RESTATEMENTS OF PREVIOUSLY IS_4
RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS - Consolidated Balance Sheet (Parenthetical) (Details) - $ / shares | Sep. 30, 2022 | Sep. 30, 2021 | May 06, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheet | ||||
Series Seed preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Series Seed convertible preferred stock, shares authorized | 2,500,000 | 2,500,000 | ||
Series Seed preferred stock, shares issued | 0 | 2,500,000 | ||
Series Seed preferred stock, shares outstanding | 0 | 2,500,000 | ||
Common stock, par value | $ 0.001 | $ 0.0001 | $ 0.0001 | |
Common Stock, Shares Authorized | 80,000,000 | 80,000,000 | ||
Common stock, shares issued | 16,068,599 | 4,441,582 | ||
Common stock, shares outstanding | 16,068,599 | 4,441,582 |
DEBT - RELATED PARTIES - Additi
DEBT - RELATED PARTIES - Additional advances by related parties (Details) | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2021shares | Sep. 30, 2021USD ($)M | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)itemshares | Dec. 31, 2019USD ($) | |
Related Party Transaction [Line Items] | |||||
Annual interest rate | 18.00% | ||||
Borrowings made | $ 2,548,346 | $ 2,640,687 | |||
Cash consideration | $ 27,154 | ||||
Number of Lenovo tablet hardware devices purchased | M | 3 | ||||
Shares issued for cash (in shares) | shares | 472,510 | ||||
Purchase of tablet devices | |||||
Related Party Transaction [Line Items] | |||||
Maximum borrowing capacity | $ 950,000 | ||||
Number of Lenovo tablet hardware devices purchased | item | 7,600 | ||||
Related party notes payable transaction | |||||
Related Party Transaction [Line Items] | |||||
Maximum borrowing capacity | $ 2,500,000 | $ 2,500,000 | |||
Annual interest rate | 5.00% | 5.00% | |||
Borrowings made | $ 2,500,000 | ||||
Bridge loan with related party investors | |||||
Related Party Transaction [Line Items] | |||||
Annual interest rate | 18.00% | ||||
Bridge loan | $ 2,000,000 | ||||
Amount funded on the bridge loan | $ 251,654 | ||||
Shares issued for cash (in shares) | shares | 1,260,023 | ||||
Valuation of shares | $ 750,000 | $ 2,000,000 | |||
Bridge loan one | |||||
Related Party Transaction [Line Items] | |||||
Outstanding advances on purchased tablet devices from related party | 800,000 | ||||
Outstanding principal associated with bridge loan from related party investor | $ 800,000 |
DEBT - RELATED PARTIES - Borrow
DEBT - RELATED PARTIES - Borrowings from related parties (Details) - USD ($) | 6 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||
Balance at the beginning | $ 3,728,808 | $ 3,728,808 | $ 759,091 | |
Repayments | (6,277,154) | |||
Balance at the end | 3,728,808 | $ 759,091 | ||
Annual interest rate | 18.00% | |||
Balance at the beginning | $ 116,130 | 116,130 | 8,358 | |
Interest on prior borrowings | 60,256 | 38,059 | ||
Repayments | (285,478) | |||
Balance at the end | 116,130 | 8,358 | ||
Affiliated entity | Note borrowings | ||||
Related Party Transaction [Line Items] | ||||
Borrowings | $ 1,740,909 | $ 759,091 | ||
Annual interest rate | 5.00% | 5.00% | ||
Borrowings | $ 66,576 | $ 8,358 | ||
Affiliated entity | Tablet financing | ||||
Related Party Transaction [Line Items] | ||||
Borrowings | 950,000 | |||
Affiliated entity | Bridge loan one | ||||
Related Party Transaction [Line Items] | ||||
Borrowings | $ 1,748,346 | $ 251,654 | ||
Annual interest rate | 18.00% | 18.00% | ||
Borrowings | $ 83,399 | $ 3,138 | ||
Affiliated entity | Bridge loan two | ||||
Related Party Transaction [Line Items] | ||||
Borrowings | $ 800,000 | $ 27,154 | ||
Annual interest rate | 18.00% | |||
Borrowings | $ 25,693 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cash balances in excess of FDIC requirements | $ 9,816,498 | $ 0 |
Employee Equity (Stock) Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock employee grant reserved | 1,575,029 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||
May 31, 2021shares | Jun. 30, 2021shares | Dec. 31, 2020shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Sep. 30, 2021shares | |
Class of Stock [Line Items] | ||||||
Series Seed preferred stock, shares authorized | 2,500,000 | 2,500,000 | ||||
Shares issued for cash (in shares) | 472,510 | |||||
Series Seed preferred stock, shares issued | 2,500,000 | 0 | ||||
Preferred stock, shares outstanding | 2,500,000 | 0 | ||||
Preferred Series Seed stock | ||||||
Class of Stock [Line Items] | ||||||
Series Seed preferred stock, shares authorized | 2,500,000 | |||||
Shares issued for cash (in shares) | 2,500,000 | 2,500,000 | ||||
Proceeds from issuance of preferred stock | $ | $ 2,500,000 | $ 2,500,000 | ||||
Series Seed preferred stock, shares issued | 0 | |||||
Preferred stock, shares outstanding | 0 | |||||
Conversion ratio | 1.260023 | 1.260023 | 1.260023 | |||
Interest payments on preferred stock | $ | $ 0 | |||||
Amount of return to investors for buying back | $ | $ 2,500,000 | |||||
Number of preferred stock converted into common stock | 2,500,000 | 2,500,000 | ||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Shares issued for cash (in shares) | 3,150,058 | |||||
Shares issued upon conversion | 3,150,058 |
STOCKHOLDERS' EQUITY (DEFICIT_2
STOCKHOLDERS' EQUITY (DEFICIT) - Dividends (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
Dividends on common stock paid | $ 0 |
Dividend payments on preferred stock | $ 0 |
STOCKHOLDERS' EQUITY (DEFICIT_3
STOCKHOLDERS' EQUITY (DEFICIT) - Common stock (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2018 | Sep. 30, 2022 | |
Class of Stock [Line Items] | |||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.001 | ||||
Common stock, shares authorized | 80,000,000 | 80,000,000 | |||||
Shares issued for cash (in shares) | 472,510 | ||||||
Number of shares issued to vendors | 300,000 | ||||||
Issuance of common shares in exchange for services | $ 476,180 | ||||||
Value of shares issued during the period to investors valued as stock-based compensation expense | $ 500,000 | $ 250,000 | |||||
Bridge loan with related party investors | |||||||
Class of Stock [Line Items] | |||||||
Shares issued for cash (in shares) | 1,260,023 | ||||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Shares issued for cash (in shares) | 3,150,058 | ||||||
Issuance of common shares in exchange for services (in shares) | 31,501 | ||||||
Number of shares issued to vendors | 300,000 | ||||||
Issuance of common shares in exchange for services | $ 25,000 | ||||||
Issuance of common shares as stock-based compensation expense | $ 476,180 | ||||||
Common Stock | Bridge loan with related party investors | |||||||
Class of Stock [Line Items] | |||||||
Shares issued with debt (in shares) | 472,510 | 1,260,023 | |||||
Value of shares issued during the period to investors valued as stock-based compensation expense | $ 750,000 | $ 2,000,000 |
STOCKHOLDERS' EQUITY (DEFICIT_4
STOCKHOLDERS' EQUITY (DEFICIT) - Initial public offering (Details) - USD ($) $ / shares in Units, $ in Millions | May 03, 2021 | Sep. 30, 2021 |
Class of Stock [Line Items] | ||
Warrants term | 5 years | |
IPO proceeds allocated to Common Stock | $ 11 | |
IPO proceeds allocated to warrants | $ 4.7 | |
Warrants exercise price | $ 4.57 | |
Over-Allotment Option | ||
Class of Stock [Line Items] | ||
Warrants issued | 559,701 | |
Price per share | $ 4.15 | |
Proceeds from Initial Public Offering | $ 17.8 | |
Aggregate warrants to purchase common stock shares | 186,567 | |
Warrants exercise price | $ 5.19 | |
IPO | ||
Class of Stock [Line Items] | ||
Shares issued | 4,291,045 | |
Proceeds from Initial Public Offering | $ 15.7 | $ 15.7 |
STOCKHOLDERS' EQUITY (DEFICIT_5
STOCKHOLDERS' EQUITY (DEFICIT) - Warrants Issued and Exercised (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2021 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Proceeds from warrants exercised | $ 16,031,122 | |
Issued | 4,477,612 | |
Exercised | 3,507,479 | |
Warrants outstanding | 970,133 |
STOCKHOLDERS' EQUITY (DEFICIT_6
STOCKHOLDERS' EQUITY (DEFICIT) - Share Buy-Back (Details) - USD ($) | Jun. 23, 2021 | Sep. 30, 2021 | Sep. 30, 2021 |
STOCKHOLDERS' EQUITY (DEFICIT) | |||
Buy-back of Common Stock announced | $ 2,000,000 | ||
Number of shares repurchased | 137,650 | 137,650 | |
Aggregate price on share repurchases | $ 1,999,997 | $ 1,999,997 | $ 1,999,997 |
STOCKHOLDERS' EQUITY (DEFICIT_7
STOCKHOLDERS' EQUITY (DEFICIT) - Employee Equity (Stock) Incentive Plan (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021USD ($)employeeshares | Jun. 30, 2021USD ($) | Sep. 30, 2020USD ($)shares | Sep. 30, 2021USD ($)employee$ / sharesshares | Sep. 30, 2020USD ($)shares | Dec. 31, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock, shares issued | 16,068,599 | 16,068,599 | 4,441,582 | |||
Common stock, shares outstanding | 16,068,599 | 16,068,599 | 4,441,582 | |||
Number of units issued | $ | $ 15,087 | |||||
Number of options cancelled | 130,917 | |||||
Employee Equity (Stock) Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock employee grant reserved | 1,575,029 | 1,575,029 | ||||
Number of shares granted | 0 | 0 | 449,168 | 137,819 | ||
Common stock options issued | 542,618 | 236,259 | ||||
Weighted average strike price per option | $ / shares | $ 2.49 | |||||
Stock based compensation expense - Employee stock option | $ | $ 184,005 | $ 14,358 | $ 315,947 | $ 28,716 | ||
Number of Employees exercised stock options | employee | 1 | 1 | ||||
Number of units issued | $ | $ 11,892 |
PROPERTY AND EQUIPMENT - Net of
PROPERTY AND EQUIPMENT - Net of accumulated depreciation (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,684,342 | $ 1,163,311 |
Less accumulated depreciation | (1,243,824) | (657,017) |
Property and equipment, net | 3,440,518 | 506,294 |
Tablets | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,364,496 | 972,050 |
Office furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 319,846 | $ 191,261 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)item | Sep. 30, 2020USD ($)item | |
PROPERTY AND EQUIPMENT | ||||
Depreciation expense | $ | $ 179,333 | $ 196,617 | $ 586,809 | $ 405,971 |
Number of lenovo tablet hardware devices | 25,000 | 9,600 | ||
Number of tablets purchased | 16,500 | 3,392,446 |
INTANGIBLE ASSETS - INTELLECT_3
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY (Details) - USD ($) | Jul. 01, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization expense | $ 44,006 | $ 44,006 | $ 132,018 | $ 44,006 | |
Capitalized software | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful Life | 5 years | 5 years | |||
Patent Acquisition Costs | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful Life | 15 years | ||||
Production Costs | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful Life | 5 years | ||||
Patents | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful Life | 15 years |
INTANGIBLE ASSETS - INTELLECT_4
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY - summary of intangible asset (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 976,284 | $ 976,284 |
Less accumulated amortization | (220,031) | (88,013) |
Intangible assets, net | 756,253 | 888,271 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 832,045 | 832,045 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 144,239 | $ 144,239 |
INTANGIBLE ASSETS - INTELLECT_5
INTANGIBLE ASSETS - INTELLECTUAL PROPERTY - Future amortization of intangible assets (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Future amortization of intangible assets | ||
2021 | $ 44,006 | |
2022 | 176,025 | |
2023 | 176,025 | |
2024 | 176,025 | |
2025 | 92,820 | |
Thereafter | 91,351 | |
Total | $ 756,253 | $ 888,271 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Oct. 12, 2022 | May 10, 2022USD ($) | Apr. 12, 2022USD ($)$ / sharesshares | Dec. 31, 2021USD ($)shares | Sep. 30, 2021USD ($)itemshares | Dec. 31, 2021USD ($)shares | Mar. 31, 2022USD ($) | May 03, 2021$ / shares | Mar. 31, 2021employee | Feb. 28, 2021employee |
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase | shares | 4,477,612 | |||||||||
Warrants outstanding | shares | 970,133 | |||||||||
Proceeds from warrants exercised | $ 16,031,122 | |||||||||
Number of new independent directors to the Board | item | 2 | |||||||||
Purchase price of condominium | $ 1,103,437 | |||||||||
Sale price of condominium | 1,103,437 | |||||||||
Net proceeds from sale of condominium after commissions and other expenses | $ 990,000 | |||||||||
Term for sponsorship of sports tournament | 2 years | |||||||||
Sponsorship fee | $ 640,000 | |||||||||
Sponsorship fee paid in cash | $ 320,000 | |||||||||
Sponsorship fee paid through issuance of shares | shares | 320,000 | |||||||||
Number of shares returned upon termination of sponsorship agreement | shares | 31,683 | |||||||||
Cash paid converted to charitable contribution | $ 295,000 | |||||||||
Amount retained by tournament organizer | $ 25,000 | |||||||||
Number of vendors | item | 3 | |||||||||
Cash payments made to vendors | $ 1,200,000 | |||||||||
Number of shares issued to vendors | shares | 300,000 | |||||||||
Number of former employees filed breach of contract claims | employee | 2 | 2 | ||||||||
Exercise price of warrants | $ / shares | $ 4.57 | |||||||||
Warrants, exercisable term | 5 years | |||||||||
Common Stock | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Issuance of shares | shares | 31,683 | |||||||||
Subsequent event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase | shares | 748 | |||||||||
Warrants outstanding | shares | 969,385 | 969,385 | ||||||||
Proceeds from warrants exercised | $ 3,418 | |||||||||
Subject to advancement | $ 147,000 | $ 147,000 | ||||||||
Advancement of fees and expenses of additional amounts. | $ 339,000 | |||||||||
Subsequent event | Line of Credit [Member] | Related party lender | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Maximum borrowing capacity | $ 2,500,000 | |||||||||
Term of debt | 1 year | |||||||||
Proceeds from debt | $ 1,000,000 | |||||||||
Available borrowing capacity | $ 1,500,000 | |||||||||
Minimum equity financing for maturity of line of credit | $ 4,000,000 | |||||||||
Interest rate per annum | 6.00% | 9.00% | ||||||||
Additional penalty interest rate in the event of default | 3.00% | |||||||||
Warrants issued | shares | 1,250,000 | |||||||||
Exercise price of warrants | $ / shares | $ 1.51 | |||||||||
Warrants, exercisable term | 3 months | |||||||||
Subsequent event | Alfi [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase | shares | 3,508,227 | |||||||||
Proceeds from warrants exercised | $ 16,034,189 |