UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: |
Not applicable |
(Former name or former address, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| The | ||
|
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 29, 2022, there were
ALFI, INC.
TABLE OF CONTENTS
|
| Page | ||
2 | ||||
Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021 | 2 | |||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |||
23 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
26 | ||||
27 | ||||
27 | ||||
27 | ||||
28 | ||||
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Alfi, Inc.
f/k/a Lectrefy, Inc.
Consolidated Balance Sheets
Unaudited |
| |||||
Jun 30, 2022 | Dec 31, 2021 | |||||
Assets |
|
|
|
| ||
Current assets: |
|
|
|
| ||
Cash and cash equivalents |
| $ | |
| $ | |
Accounts receivable |
| |
| | ||
Prepaid expenses and other |
| |
| | ||
Total current assets |
| |
| | ||
Property and equipment, net |
| |
| | ||
Intangible assets, net |
| |
| | ||
Operating lease right-of-use asset, net |
| |
| | ||
Assets held for sale and other assets |
| |
| | ||
Total assets |
| $ | |
| $ | |
Liabilities and Stockholders' Equity (Deficit) |
|
|
|
| ||
Current liabilities: |
|
|
|
| ||
Accounts payable and accrued expenses |
| $ | |
| $ | |
Debt payable, related parties |
| |
| — | ||
Lease liability |
| |
| | ||
Interest payable, related parties |
| |
| — | ||
Total current liabilities | | | ||||
Total liabilities |
| |
| | ||
Stockholders' Equity (Deficit) |
|
|
|
| ||
Common stock, $ |
| |
| | ||
Additional paid-in capital |
| |
| | ||
Accumulated (deficit) |
| ( |
| ( | ||
Common stock held in treasury at cost, $ | ( | ( | ||||
Total stockholders' equity (deficit) |
| ( |
| | ||
Total liabilities and stockholders' equity (deficit) |
| $ | |
| $ | |
See accompanying notes to the consolidated financial statements
2
Alfi, Inc.
f/k/a Lectrefy, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months | Three months |
| Six months | Six months | ||||||||
ended Jun 30, | ended Jun 30, |
| ended Jun 30, | ended Jun 30, | ||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Revenues |
| $ | |
| $ | | $ | | $ | | ||
Operating expenses |
|
|
|
| ||||||||
Compensation and benefits | | | | | ||||||||
Other general and administrative |
| |
| | | | ||||||
Loss on disposal of property and equipment | | — | | — | ||||||||
Depreciation and amortization |
| |
| | | | ||||||
Total operating expenses |
| |
| | | | ||||||
Operating loss | ( | ( | ( | ( | ||||||||
|
| |||||||||||
Other income (expense) |
|
| ||||||||||
Other income |
| |
| | | | ||||||
Interest expense |
| ( |
| ( | ( | ( | ||||||
Total other expense |
| ( |
| ( | ( | ( | ||||||
|
|
|
| |||||||||
Net loss before provision for income taxes |
| ( |
| ( | ( | ( | ||||||
Provision for income taxes |
| — |
| — | — | — | ||||||
Net loss after provision for income taxes |
| $ | ( |
| $ | ( | $ | ( | $ | ( | ||
|
|
|
| |||||||||
Loss per share, basic and diluted |
| ( |
| ( | ( | ( | ||||||
Weighted average shares outstanding, basic and diluted |
| |
| | | | ||||||
See accompanying notes to the consolidated financial statements
3
Alfi, Inc.
f/k/a Lectrefy, Inc.
Consolidated Statement of Changes to Stockholders’ Equity (Deficit)
(Unaudited)
Total | ||||||||||||||||||||||
Series Seed Convertible | Additional | Common | Stockholders' | |||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Accumulated | Stock Held | Equity | |||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| in Treasury |
| (Deficit) | |||||||
Balance - January 1, 2021 |
| |
| $ | |
| |
| $ | |
| $ | |
| $ | ( |
| $ | — |
| $ | ( |
Shares issued with debt |
| — |
| — |
| |
| |
| |
| — |
| — |
| | ||||||
Share based compensation |
| — |
| — |
| — |
| — |
| |
| — |
| — |
| | ||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Balance - March 31, 2021 |
| |
| |
| |
| |
| |
| ( |
| — |
| ( | ||||||
Shares issued with debt |
| — |
| — |
| |
| |
| |
| — |
| — |
| | ||||||
Conversion of convertible |
| — |
| — |
| — |
| — |
| - |
| — |
| — |
| — | ||||||
preferred stock to common |
| ( |
| ( |
| |
| |
| |
| — |
| — |
| — | ||||||
Shares issued for cash |
| — |
| — |
| |
| |
| |
| |
| — |
| — | ||||||
Warrants issued for cash |
| — | — |
| — | — | | — | — | | ||||||||||||
Exercise of warrants | — | — | | | | — | — | | ||||||||||||||
Shares issued for services | — | — | | | | — | — | | ||||||||||||||
Share based compensation | — | — | — | — | | — | — | | ||||||||||||||
Exercise of options | — | — | | | | — | — | | ||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Balance - June 30, 2021 | | $ | | | $ | | $ | | $ | ( | $ | | $ | | ||||||||
Total | ||||||||||||||||||||||
Series Seed Convertible | Additional | Common | Stockholders' | |||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Accumulated | Stock Held | Equity | |||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| in Treasury |
| (Deficit) | |||||||
Balance - January 1, 2022 |
| — | $ | — |
| | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Share based compensation | — | — | — | — | | — | — | | ||||||||||||||
Exercise of options | — | — | | | | — | — | | ||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Balance - March 31, 2022 |
| — | — |
| | | | ( | ( | | ||||||||||||
Warrants issued with debt |
| — |
| — |
| — |
| — |
| | — |
| — |
| | |||||||
Share based compensation | — | — | — | — | ( | — | — | ( | ||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Balance - June 30, 2022 | — | $ | — |
| | $ | | $ | | $ | ( | $ | ( | $ | ( | |||||||
See accompanying notes to the consolidated financial statements
4
Alfi, Inc.
f/k/a Lectrefy, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six months | Six months | |||||
ended Jun 30, | ended Jun 30, | |||||
| 2022 |
| 2021 | |||
Operating activities |
|
|
|
| ||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
| ||
Depreciation and amortization |
| |
| | ||
Loss on disposal of property and equipment | | — | ||||
Amortization of debt discount | | — | ||||
Shares issued with debt |
| — |
| | ||
Share based compensation | ( | | ||||
Share based payments for services | — | | ||||
Amortization of operating lease right-of-use asset | | | ||||
Changes in assets and liabilities: |
| |||||
Accounts receivable | ( | — | ||||
Prepaid expenses and other assets | ( | ( | ||||
Other assets |
| |
| ( | ||
Accounts payable |
| |
| ( | ||
Lease liability |
| ( |
| ( | ||
Interest payable, related parties | | ( | ||||
Net cash used in operations |
| ( |
| ( | ||
Investing activities |
|
|
|
| ||
Capital expenditures | — | ( | ||||
Sale of condominium, net | | — | ||||
Net cash provided by (used in) investing activities |
| |
| ( | ||
Financing activities |
|
|
|
| ||
Proceeds from related party debt payable |
| |
| | ||
Proceeds from issuance of common stock, net | — | | ||||
Proceeds from exercise of warrants | — | | ||||
Proceeds from exercise of options | | | ||||
Repayments of related party debt payable |
| — |
| ( | ||
Net cash provided by financing activities | | | ||||
Net change in cash and cash equivalents | ( | | ||||
Cash and cash equivalents at the beginning of the period |
| |
| | ||
Cash and cash equivalents at the end of the period | $ | | $ | | ||
Supplemental disclosure of cash flow information | ||||||
Cash paid for interest | $ | — | $ | | ||
Cash paid for income tax | $ | — | $ | — | ||
Supplemental disclosure of non-cash investing and financing activities | ||||||
Conversion of convertible preferred stock to common stock | $ | — | $ | | ||
See accompanying notes to the consolidated financial statements
5
ALFI, INC.
f/k/a LECTREFY, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BUSINESS DESCRIPTION BACKGROUND
Alfi, Inc. is a C-corporation incorporated in Delaware that operates in the technology sector; specifically, Software as a Service (“SaaS”) in the Digital Out Of Home (“DOOH”) Smart Advertising segment. This segment includes artificial intelligence, machine deep learning, edge computing, Big Data, telecommunications, and the Internet of Things (IoT). Alfi, Inc. includes its wholly owned subsidiary Alfi (N.I.) Ltd, the results of which are presented on a consolidated basis in the financial statements included in this Quarterly Report on Form 10-Q (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. became qualified to do business in Florida. On January 31, 2020, Lectrefy, Inc. 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. 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 was to place Alfi-enabled devices in malls, airports, rideshares and taxis. The Company recently shifted its focus to prioritize placement of its devices in rideshares with a view toward growing that business to operate it profitably.
The Company’s primary activities since inception have been research and development, managing collaborations, and raising capital.
NOTE 2 BASIS OF PRESENTATION
The accompanying interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission (the “SEC”) rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. The Company filed audited consolidated financial statements as of and for the fiscal years ended December 31, 2021, 2020 and 2019, which included all information and notes necessary for such complete presentation in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”).
The results of operations for the interim periods ended June 30, 2022 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021, which are contained in the Annual Report. For further discussion, see Note 2 – “Significant Accounting Policies” to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Annual Report.
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.
6
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 2021, the Company completed its initial public offering (“IPO”) yielding net proceeds to the Company of approximately $
On April 12, 2022, the Company entered into a Credit and Security Agreement (as may be amended from time to time, the “Credit Agreement”) with a related party lender pursuant to which the Company could borrow under a revolving line of credit up to $
Through June 30, 2022, the related party lender funded to the Company $
The Company has borrowed the maximum amount available under the Credit Agreement. Since its inception, the Company has generated only nominal revenue from customers and business activity and currently has very limited cash on hand. The Company is endeavoring to raise additional capital through debt or equity financing, but there is no assurance that additional capital will be available on terms acceptable to the Company or will be sufficient to enable the Company to complete its development activities or sustain operations. If the Company is unable to raise sufficient additional capital to sustain operations, then it will have to further extend payables, reduce overhead, or scale back its current business plan until such additional capital is raised, any of which could have a material adverse effect on the Company. There is no assurance that such a plan will be successful. If the Company is unable to raise sufficient additional capital to sustain operations, then the Company will be required to pursue other alternatives which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.
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.
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.
7
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). |
On May 16, 2022, the Company filed interim consolidated financial statements restated to correct the accounting errors and conform to current period presentation in an Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the quarter and six months ended June 30, 2021. The interim consolidated financial statements for the periods ended June 30, 2021, included in this Quarterly Report reflect all such restatements.
NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company also follows a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable based on an entity’s own assumptions, as there is little, if any, related market activity (e.g., cash flow modeling inputs based on assumptions).
The risk-free interest rate is the United States Treasury rate on the measurement date having a term equal to the remaining contractual life of the instrument. The volatility is a measure of the amount by which the comparable companies’ share price has fluctuated or is expected to fluctuate. Since the Common Stock was not publicly traded prior to the IPO, an average of the historical volatility of comparative companies was used.
Level 3 financial assets and liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of fair value. The determination of fair value and the assessment of a measurement's 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.
8
Non-financial assets that are measured on a non-recurring basis include our intellectual property and property and equipment which are measured using fair value techniques whenever events or changes in circumstances indicate a condition of impairment exists.
NOTE 6 DEBT – RELATED PARTIES
On April 12, 2022, the Company entered into the Credit Agreement with Lee Aerospace, Inc. (“Lee Aerospace”), as lender, pursuant to which the Company could borrow under a non-revolving line of credit up to $
On June 27, 2022, the Company and the related party lender entered into Amendment No. 1 and the Amended Note, pursuant to which the non-revolving line of credit available to the Company from the related party lender was increased to $
The Company’s ability to draw on the non-revolving line of credit, to the extent available under the Credit Agreement, is in the related party lender’s sole discretion and subject to the Company requesting such additional funds from the related party lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and related documents, and that no default under the Credit Agreement has occurred and is continuing under the Credit Agreement. The Amended Note matures on the earlier of (i) the date upon which the Company consummates a debt or equity financing in an amount equal to or greater than $
Debt payable, related parties at June 30, 2022 of $
During the three and six months ended June 30, 2021, the Company accrued interest expense on debt payable to related parties of $
| ● | The Company entered into |
| ● | Lee Aerospace provided financing of approximately $ |
| ● | The Company entered into a $ |
| ● | During the year ended December 31, 2021, the Company entered into bridge loans totaling $ |
9
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 June 30, 2022, and December 31, 2021, cash balances in excess of FDIC requirements were $-
Litigation, Claims, and Assessments
The Company is in legal proceedings, claims and assessments. Such matters are subject to many uncertainties, and outcomes are not predictable.
On December 2, 2021, the Company and certain of its present and former officers and directors were named as defendants in a putative class action lawsuit styled Steppacher v. Alfi, Inc., et al., Case No. 1:21-cv-24232, brought in the United States District Court for the Southern District of Florida. On December 15, 2021, the Company, certain of its present and former officers and directors, and the underwriters in the IPO were named as defendants in a second putative class action styled Kleinschmidt v. Alfi, Inc., et al., Case No. 1:21-cv-24338, also brought in the United States District Court for the Southern District of Florida.
The complaints in both actions allege that the Company and other named defendants violated Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to allegedly false and misleading statements included in the registration statement and prospectus supplements issued in connection with the IPO (the “Offering Documents”) in May 2021, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, by allegedly making false and materially misleading statements and failing to disclose material adverse facts in the Company’s public filings with the SEC. Both complaints assert that the putative plaintiff class includes: (i) persons or entities, other than the defendants, the officers and directors of the Company, members of their immediate families, their legal representatives, and any entity in which they had a controlling interest, among others, who purchased or acquired the Common Stock or warrants to purchase the Common Stock pursuant and/or traceable to the Offering Documents; and (ii) persons or entities, other than the defendants, who purchased or acquired the Company’s securities between May 4, 2021, and November 15, 2021 (both dates inclusive). The plaintiffs seek unspecified compensatory damages, including interest, and costs and expenses, including attorney’s and expert fees. On February 3, 2022, the court consolidated the two actions under the caption Steppacher, Jr., et al. v. Alfi, Inc. et al., Case No. 21-cv-24232-KMW. Three putative stockholders (or groups of stockholders) moved to be appointed as lead plaintiff, and the court appointed Candido Rodriguez as lead plaintiff. The consolidated actions are now captioned Rodriguez, et al. v. Alfi, Inc., et al., Case No. 21-cv-24232-KMW. The Company intends to vigorously defend these actions. The Company is currently unable to estimate the costs and timing of the resolution of this matter.
On April 27, 2022, Ryan Dodgson filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Ryan Dodgson, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-21318, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duties; (iv) unjust enrichment; (v) abuse of control; (vi) gross mismanagement; and (vii) waste of corporate assets, in connection with alleged improper corporate transactions, an alleged pattern and practice of abuse of control of the Company and allegedly deficient internal controls, among other things. The complaint also seeks contribution under Section 11(f) of the Securities Act and Section 21D of the Exchange Act as to the defendants, and seeks contribution under Sections 10(b) and 21D of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests a declaration that the defendants have breached or aided and abetted the breach of their fiduciary duties to the Company, an award of damages to the Company, restitution, and an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ and experts’ fees, costs and expenses, and alleged improvements to the Company’s corporate governance and internal procedures regarding compliance with laws. The Company is currently unable to estimate the costs and timing of the resolution of this matter.
During February and March 2022,
10
Other Matters
As previously disclosed, on November 9, 2021, the Company received a letter from the staff of the SEC indicating that the Company, its affiliates and agents may possess documents and data relevant to an ongoing investigation being conducted by the staff of the SEC and notifying the Company that such documents and data should be reasonably preserved and retained until further notice. The materials to be preserved and retained include documents and data created on or after April 1, 2018 that: (i) were created, modified or accessed by certain named former and current officers and directors of the Company or any other officer or director of the Company; or (ii) relate or refer to the condominium or the sports tournament sponsorship identified in the Company’s Current Report on Form 8-K filed on November 1, 2021, or financial reporting and disclosure controls, policies or procedures. On March 8, 2022, the Company received a subpoena from the SEC relating to the investigation. The Company intends to cooperate fully with the SEC in this matter. The Company is currently unable to estimate the costs and timing of the resolution of this matter.
The Company’s former Chief Executive Officer and former Chief Financial Officer have made claims that the Company indemnify and advance the legal fees and expenses incurred by them in connection with the Investigation (see Note 11) and the putative class action litigations, the derivative action, and the SEC investigation, each referred to above. With respect to the advancement of fees and expenses incurred in connection with the Investigation prior to December 31, 2021, the amount of such fees and expenses that is subject to advancement is approximately $
NOTE 8 STOCKHOLDERS’ EQUITY
Common shares issued before the IPO were recorded at estimated fair value. In May 2021, the Company completed its IPO of its Common Stock. The Common Stock is listed on the Nasdaq Capital Market under the symbol “ALF”.
In 2018, the Company created the Series Seed Preferred Stock, $
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
Common Stock
The Company is authorized to issue
During the six months ended June 30, 2021, the Company arranged two bridge loans with related party investors. The Company issued
11
During the six months ended June 30, 2021, the Company also issued
Initial Public Offering
On May 3, 2021, the Company’s registration statement on Form S-1 (File No. 333-251959) was declared effective by the SEC and the Company completed its IPO on May 6, 2021. In connection with the IPO, the Company issued and sold
On May 3, 2021, pursuant to the underwriting agreement for the IPO, the Company issued to the underwriters warrants to purchase up to an aggregate of
Warrants Issued and Exercised
Warrants to purchase
During the six months ended June 30, 2022, the Company issued a warrant to purchase up to
Share Buy-Back
On June 23, 2021, the Company announced a $
Employee Equity (Stock) Incentive Plan
The Company has a stock equity incentive plan, the Alfi, Inc. 2018 Stock 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 2018 Plan for grants is not to exceed
On June 30, 2022 and 2021, total Common Stock options and under the 2018 Plan were
12
Stock option and warrant valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from the Company’s historical stock prices and an index of historical stock prices for comparable entities. For warrants and stock options issued to non- employees, the Company accounts for the expected life based on the contractual life of the 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.
Potentially dilutive securities excluded from the computation of basic net loss per share as of are as follows:
| Jun 30, 2022 |
| Jun 30, 2021 | |
Warrants | | | ||
Employee stock options |
| |
| |
Total potentially dilutive securities |
| |
| |
NOTE 9 PROPERTY AND EQUIPMENT
Property and equipment, net of accumulated depreciation, consists of the following:
| Jun 30, 2022 |
| Dec 31, 2021 | |||
Tablets | $ | | $ | | ||
Office furniture and fixtures |
| |
| | ||
Property and equipment, gross |
| |
| | ||
Less accumulated depreciation |
| ( |
| ( | ||
Property and equipment, net | $ | | $ | | ||
The Company incurred depreciation expense of $
During the three months ended June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that
During the three months ended June 30, 2022, the Company recorded a charge of $
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
13
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 amortization of these intangible assets. The Company estimated a
Intangible assets, net of accumulated amortization, consists of the following:
| Jun 30, 2022 |
| Dec 31, 2021 | |||
|
|
| ||||
Capitalized software | $ | | $ | | ||
Patents |
| |
| | ||
Intangible assets, gross |
| |
| | ||
|
|
| ||||
Less accumulated amortization |
| ( |
| ( | ||
|
|
| ||||
Intangible assets, net | $ | | $ | | ||
The Company incurred amortization expense of $
Future amortization of intangible assets as of June 30, 2022, is as follows:
2022 |
| $ | |
2023 | | ||
2024 | | ||
2025 | | ||
2026 | | ||
Thereafter | | ||
| $ | |
NOTE 11 CHANGES IN MANAGEMENT
Replacement of Executive Officers and Board Members
As previously disclosed in the Company’s filings with the SEC, on October 22, 2021 the Board placed each of Paul Pereira, the Company’s then President and Chief Executive Officer, Dennis McIntosh, the Company’s then Chief Financial Officer and Treasurer, and Charles Pereira, the Company’s then Chief Technology Officer, on paid administrative leave and authorized an Investigation into certain corporate transactions and other matters.
Also as previously disclosed, since placing the former executives on leave, the Board has appointed: (i) James Lee as Chairman of the Board (effective October 22, 2021), replacing Mr. P. Pereira in such role; (ii) new management personnel, including Peter Bordes as Interim Chief Executive Officer (serving in such role from October 22, 2021 until July 22, 2022), Mr. Lee as Interim Chief Executive Officer (effective July 22, 2022), Louis Almerini as Interim Chief Financial Officer (effective November 8, 2021) and David Gardner as Chief Technology Officer (serving in such role from October 27, 2021 until July 1, 2022); (iii) Allen Capsuto as an independent director of the Company and Chair of the Audit Committee (serving in such roles from November 1, 2021 until July 14, 2022); (iv) Patrick Dolan as an independent director of the Company (effective November 1, 2021) and a member of each of the Compensation Committee and the Nominating and Corporate Governance Committee of the Board (effective December 29, 2021); and (v) Jeremy D. Daniel as an independent director of the Company and Chair of the Audit Committee (effective July 14, 2022).
Furthermore, Mr. P. Pereira resigned as a director and from all positions he held with the Company, Mr. McIntosh resigned from all positions he held with the Company, and Mr. C. Pereira’s employment with the Company was terminated.
14
Findings of the Investigation
The Investigation was conducted by a special committee of the Board (the “Special Committee”) consisting of Mr. Capsuto, the then Audit Committee Chair, who was appointed to the Special Committee on November 8, 2021. The Special Committee retained outside legal counsel to assist in conducting the Investigation, and such counsel retained additional advisors to provide forensic accounting services, computer forensics and e-discovery services and other legal services.
The Investigation found, among other things, that the Company’s former senior management caused the Company to enter into certain transactions and certain agreements that were not approved by the Board, some of which included the unauthorized issuance of shares of Common Stock, as follows:
| ● | The Company’s former senior management caused the Company to purchase a condominium in Miami Beach, Florida for a purchase price of approximately $ |
| ● | The Company’s former senior management caused the Company to enter into an agreement to sponsor a sports tournament for |
| ● | The Company’s former senior management caused the Company to enter into agreements with |
These findings and other conduct by the Company’s former senior management were previously disclosed in the Company’s Current Report on Form 8-K filed on February 23, 2022.
The Investigation found the Company’s internal control over financial reporting to be deficient with respect to: (i) the disbursement process for third-party vendors; (ii) the review and approval process for significant vendor contracts; (iii) the use of Company credit cards by executives; (iv) the supervision and approval of travel and entertainment expenses incurred by executives; (v) the segregation of duties in connection with the payment and recording of invoices and related bank reconciliations; (vi) the lack of a sufficient accounting manual; and (vii) guidelines for the capitalization of fixed assets.
NOTE 12 SUBSEQUENT EVENTS
Changes in Executive Officers and Board Members
David Gardner, the Company’s Chief Technology Officer, resigned from such position effective July 1, 2022 in order to pursue other opportunities to accommodate personal circumstances.
Allen Capsuto resigned as a director of the Company and Chair of the Audit Committee, effective July 14, 2022. Mr. Capsuto’s resignation was not because of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Jeremy D. Daniel was appointed by the Board to serve as a director of the Company, to fill the vacancy on the Board created by Mr. Capsuto’s resignation, and as Chair of the Audit Committee, effective July 14, 2022.
James Lee, the Chairman of the Board, was appointed by the Board to serve as the Company’s Interim Chief Executive Officer, effective July 22, 2022.
15
Litigation, Claims, and Assessments
On July 28, 2022, Victor Farish filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Victor Farish, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-22361, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the individual defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duty; (iv) aiding and abetting breach of fiduciary duty; (v) unjust enrichment; (vi) waste of corporate assets; (vii) abuse of control; and (viii) gross mismanagement, in connection with allegedly making and/or authorizing false and misleading statements and material omissions regarding the Company’s business, prospects, and internal controls and allegedly failing to establish and/or oversee sufficient internal controls and/or reasonable information, oversight, and reporting systems concerning critical Company operations, including the adequacy of its public reporting. The complaint also seeks contribution under Section 11(f) of the Securities Act as to defendants Mr. P. Pereira, Mr. McIntosh, Mr. Bordes, Mr. Cook, Mr. Elkouri, Ms. Ficken, Mr. Lee, Mr. Mowser, and Mr. Smith, and seeks contribution under Section 21D(f)(5) of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests an award of damages against defendants, an award of punitive damages, an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses, and an order directing the defendants to account for all damages allegedly caused by them and all profits and special benefits and unjust enrichment they have allegedly obtained as a result of their allegedly unlawful conduct. On July 29, 2022, the Court sua sponte dismissed the complaint without prejudice finding that the complaint does not properly plead a claim and giving Plaintiff until August 11, 2022 to file an amended complaint addressing the deficiencies in its original complaint. The Company is currently unable to estimate the costs and timing of the resolution of this matter.
Credit and Security Agreement – Related Party
On August 5, 2022, the Company and the related party lender, Lee Aerospace, entered into Amendment No. 2 to Credit and Security Agreement (“Amendment No. 2”), pursuant to which the non-revolving line of credit available to the Company from the related party lender under the Credit Agreement was increased by $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context requires otherwise, references to the “Company,” “Alfi,” “we,” “us” and “our” refer to Alfi, Inc., a Delaware corporation and its wholly owned subsidiary, Alfi (N.I.), Ltd, formed in Belfast, Northern Ireland on September 18, 2018. Unless otherwise noted, the share and per share information in this Quarterly Report reflect a forward stock split of the Common Stock privately held before the IPO at a ratio of 1.260023:1 effective on March 15, 2021.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward–looking statements in this Quarterly Report include statements regarding our business and technology development, our strategy, future operations, anticipated financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. In some cases, you can identify forward-looking statements because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These forward-looking statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that
16
may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.
We discuss many of these risks in other filings we make from time to time with the SEC. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report, which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.
Investors should read this Quarterly Report, and the documents that we reference in this Quarterly Report and have filed with the SEC, with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Overview
We seek to provide solutions that bring transparency and accountability to the DOOH advertising marketplace. Alfi uses artificial intelligence and big data analytics to measure and disseminate audience presence and audience demographics. Our computer vision technology is powered by proprietary artificial intelligence, to determine the relevant demographic and geospecific information of the audience in front of an Alfi-enabled device, such as a tablet or kiosk. Alfi can then deliver in real-time, the advertisements to that particular viewer based on the viewer’s demographic profile and/or geolocation. Alfi is designed to deliver the right marketing content, to the right person at the right time in a responsible and ethical manner. By delivering the advertisements most relevant to the audience in front of the device, we connect our advertising customers to the viewers they seek to target. The result is higher click through rates (“CTRs”), higher QR code scans and higher cost per thousand rates (“CPMs”).
Alfi seeks to solve the problems facing advertisers in the DOOH marketplace, as its proprietary technology is designed to measure the audience when an advertisement is displayed. Our data rich reporting functionality is able to inform the advertiser exactly when someone viewed each ad, as well as the general demographic and geospecific characteristics of the viewing audience. Alfi gives large and small businesses access to data-driven insights by expanding their advertising capabilities, providing analytical sophistication and delivering it all over multiple devices. In addition to the traditional Content Management System model that delivers adverts on a scheduled loop, Alfi’s technology is able to first analyze the audience and determine the most relevant content to be displayed.
Alfi has created an enterprise grade, multimedia computer vision and machine learning platform, capable of generating powerful advertising recommendations and insights. Multiple technologies work together with viewer privacy and data-rich reporting as our primary objectives. Alfi is able to use a facial fingerprinting process to make demographic determinations. As such, Alfi makes no attempt to identify the individual in front of the screen. Brand owners do not need to know someone’s name or invade their privacy to gain a deeper understanding of the consumers who view their content. By providing age, gender and geolocation information, we believe brand owners should have the pertinent data they need for meaningful insight. From an analytics perspective, these data points are intended to provide meaningful reporting instead of arbitrary calculations based on estimates of ad engagement.
Alfi seeks to solve the problem of providing real time, accurate and rich reporting on customer demographics, usage, interactivity and engagement while never storing any personally identifiable information. No viewer is ever required, or requested by us, to enter any information about themselves on any Alfi-enabled device.
Our initial focus was to place our Alfi-enabled devices in malls, airports rideshares and taxis. We recently shifted our focus to prioritize placement of devices in rideshares with a view toward growing that business to operate it profitably.
Currently, we intend to charge customers solely based on a CPM, or ads delivered, model. As we continue to prove Alfi in the marketplace, we expect to charge customers based on a combination of CPM and CTR, and we expect we will generate higher CPM rates than typical DOOH advertising platforms because of our unique ability to only deliver ads to the customer’s desired demographic. In addition, we also intend to provide the aggregated data to the brands so they can make more informed advertising decisions.
17
Recent Developments
Credit and Security Agreement – Related Party
On June 27, 2022, the Company and a related party lender, Lee Aerospace, entered into Amendment No. 1 to the Credit Agreement and the Amended Note, pursuant to which the non-revolving line of credit available to the Company from the lender was increased to $2,750,000 (see Note 6 Debt – Related Parties). The Amendment No. 1 and the Amended Note do not otherwise amend the terms of the Credit Agreement and related documents. Through June 30, 2022, the related party lender funded to the Company $2,750,000 under the Credit Agreement.
Warrants Issued
During the six months ended June 30, 2022, the Company issued a warrant to purchase up to 1,250,000 shares of the Common Stock at a price of $1.51 per share in connection with the Credit Agreement (see Note 6 Debt – Related Parties). No warrants were exercised by warrant holders during the six months ended June 30, 2022. As of June 30, 2022, there were warrants to purchase 2,219,385 shares of Common Stock outstanding.
Changes in Executive Officers and Board Members
David Gardner, the Company’s Chief Technology Officer, resigned from such position effective July 1, 2022 in order to pursue other opportunities to accommodate personal circumstances.
Allen Capsuto resigned as a director of the Company and Chair of the Audit Committee, effective July 14, 2022. Mr. Capsuto’s resignation was not because of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Jeremy D. Daniel was appointed by the Board to serve as a director of the Company, to fill the vacancy on the Board created by Mr. Capsuto’s resignation, and as Chair of the Audit Committee, effective July 14, 2022.
James Lee, the Chairman of the Board, was appointed by the Board to serve as the Company’s Interim Chief Executive Officer, effective July 22, 2022.
Impact of COVID-19
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.
COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the COVID-19 outbreak on businesses and the economy in the United States is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businesses and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.
Results of Operations
Revenues
In general, the Company earns revenue from rideshares or SaaS contracts with operating companies who maintain their own network and lease the Alfi platform.
18
Operating Expenses
Compensation and benefits expenses include compensation expenses related to our executive, finance, and administrative personnel (including salaries, commissions, bonuses, stock-based compensation, payroll taxes, and contract labor costs). Other general and administrative expenses include communications and technology costs, professional fees, selling and marketing fees, legal fees, and rent and occupancy expense.
Three-Month Period Ended June 30, 2022, Compared to Three-Month Period Ended June 30, 2021
For the three months ended June 30, 2022, the Company’s net loss increased to $5,549,426, an increase of $1,247,704 compared with the net loss of $4,301,722 for the three months ended June 30, 2021. The increase was primarily due to higher operating expenses, as discussed below.
Three months | Three months | |||||||||||
ended Jun 30, | ended Jun 30, | |||||||||||
| 2022 |
| 2021 |
| $ Change |
| % Change | |||||
Revenues |
| $ | 129,302 |
| $ | 936 | $ | 128,366 | N/M | |||
|
|
|
|
| ||||||||
Operating expenses |
|
| ||||||||||
Compensation and benefits |
| 1,473,201 |
| 1,197,742 | 275,459 | 23.0 | % | |||||
Other general and administrative | 2,688,297 | 2,311,290 | 377,007 | 16.3 | % | |||||||
Loss on disposal of property and equipment | 849,337 | — | 849,337 | N/M | ||||||||
Depreciation and amortization |
| 416,073 |
| 248,173 | 167,900 | 67.7 | % | |||||
Total operating expenses |
| 5,426,908 |
| 3,757,205 | 1,669,703 | 44.4 | % | |||||
|
|
|
|
| ||||||||
Operating loss |
| (5,297,606) |
| (3,756,269) | (1,541,337) | 41.0 | % | |||||
Other income (expense) |
|
| ||||||||||
Other income |
| 41,914 | 16,334 | 25,580 | 156.6 | % | ||||||
Interest expense |
| (293,734) | (561,786) | 268,052 | (47.7) | % | ||||||
Total other expense |
| (251,820) | (545,453) | 293,633 | (53.8) | % | ||||||
|
|
|
| |||||||||
Net loss before provision for income taxes |
| (5,549,426) | (4,301,722) | (1,247,704) | 29.0 | % | ||||||
Provision for income taxes | — | — | — | 0.0 | % | |||||||
Net loss after provision for income taxes | $ | (5,549,426) | $ | (4,301,722) | $ | (1,247,704) | 29.0 | % | ||||
Revenues
For the three months ended June 30, 2022 and 2021, net revenues were $129,302 and $936, respectively. The Company earned revenues from customers for advertising delivered through Alfi-owned devices.
Compensation Expenses
For the three months ended June 30, 2022 and 2021, compensation and benefits expenses were $1,473,201 and $1,197,742, respectively. The increase of $275,459 reflected higher salary and contract labor costs related to increased headcount to support operating the Company’s technology platform. The Company initiated changes during the three months ended June 30, 2022, including outsourcing certain jobs, to reduce compensation expenses for future periods.
Other General and Administrative Expenses
For the three months ended June 30, 2022 and 2021, other general and administrative expenses were $2,688,297 and $2,311,290, respectively. The increase of $377,007 reflected higher legal fees related to litigation, claims, and assessments (see Note 7 Commitments and Contingencies), increases in incentive and revenue-sharing payments to drivers and data network charges resulting
19
from an increase in the number of tablets in operation, and higher audit fees related to the restatement of Prior Period Financial Statements. These increases were partially offset by reductions in marketing and other expenses.
Loss on Disposal of Property and Equipment
During the three months ended June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that 5,600 tablets distributed to rideshare drivers were no longer in service and may not be returned to the Company. The Company recorded a charge of $833,337 for the loss on disposal associated with these tablets.
In addition, during the three months ended June 30, 2022, the Company recorded a charge of $16,000 for the loss on disposal of furniture and fixtures located in its Belfast, N.I. office. The Company is in negotiations with its landlord to terminate the Belfast, N.I. office lease.
Depreciation and Amortization Expenses
Depreciation and amortization expense for the three months ended June 30, 2022 and 2021 were $416,073 and $248,173, respectively. The three months ended June 30, 2022 included depreciation expense for additional tablets purchased since June 30, 2021.
Other Income (Expense)
Interest expense was $293,734 and $561,786 for the three months ended June 30, 2022, and 2021, respectively. During the three months ended June 30, 2022, the Company entered into a Credit Agreement with a related party pursuant to which it borrowed $2,750,000, and it accrued interest expense on this borrowing of $293,734. The Company incurred interest expense of $561,786 during the three months ended June 30, 2021, in connection with related party debt outstanding prior to its IPO. The Company repaid all related party debt in May 2021 with a portion of the cash proceeds from its IPO.
Six-Month Period Ended June 30, 2022, Compared to Six-Month Period Ended June 30, 2021
For the six months ended June 30, 2022, the Company’s net loss increased to $10,842,027, an increase of $3,831,474 compared with the net loss of $7,010,553 for the six months ended June 30, 2021. The increase was primarily due to higher operating expenses, as discussed below.
20
Six months | Six months | |||||||||||
ended Jun 30, | ended Jun 30, | |||||||||||
| 2022 |
| 2021 |
| $Change | % Change |
| |||||
|
| |||||||||||
Revenues | $ | 192,605 | $ | 18,386 | $ | 174,219 |
| N/M | ||||
|
| |||||||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
| ||
Compensation and benefits |
| 3,259,830 |
| 2,080,953 |
| 1,178,877 |
| 56.7 | % | |||
Other general and administrative |
| 5,843,029 |
| 3,563,149 |
| 2,279,880 |
| 64.0 | % | |||
Loss on disposal of property and equipment |
|
| 849,337 |
|
| — |
| 849,337 |
| N/M | ||
Depreciation and amortization |
|
| 832,645 |
|
| 495,488 |
| 337,157 |
| 68.0 | % | |
Total operating expenses |
| 10,784,841 |
| 6,139,590 |
| 4,645,251 |
| 75.7 | % | |||
|
| |||||||||||
Operating loss |
|
| (10,592,236) |
|
| (6,121,204) |
| (4,471,032) |
| 73.0 | % | |
Other income (expense) |
|
|
|
|
|
|
|
|
| |||
Other income |
|
| 43,973 |
| 29,351 |
| 14,622 |
| 49.8 | % | ||
Interest expense |
|
| (293,764) |
| (918,700) |
| 624,936 |
| (68.0) | % | ||
Total other expense |
|
| (249,791) |
| (889,349) |
| 639,558 |
| (71.9) | % | ||
Net loss before provision for income taxes |
|
| (10,842,027) |
| (7,010,553) |
| (3,831,474) |
| 54.7 | % | ||
Provision for income taxes |
| — |
| — |
| — |
| 0.0 | % | |||
Net loss after provision for income taxes | $ | (10,842,027) | $ | (7,010,553) | $ | (3,831,474) |
| 54.7 | % | |||
Revenues
For the six months ended June 30, 2022 and 2021, net revenues were $192,605 and $18,386, respectively. During the six months ended June 30, 2022, the Company earned revenues from customers for advertising delivered through Alfi-owned devices. The revenues earned during the six months ended June 30, 2021 related to Alfi’s first SaaS contract revenue generated from a retailer that paid Alfi for the cost of the initial pilot for the company.
Compensation Expenses
For the six months ended June 30, 2022 and 2021, compensation and benefits expenses were $3,259,830 and $2,080,953, respectively. The increase of $1,178,877 reflected higher salary and contract labor costs related to increased headcount to support operating the Company’s technology platform. The Company initiated changes during the six months ended June 30, 2022, including outsourcing certain jobs, to reduce compensation expenses for future periods.
Other General and Administrative Expenses
For the six months ended June 30, 2022 and 2021, other general and administrative expenses were $5,843,029 and $3,563,149, respectively. The increase of $2,279,880 was largely due to significantly higher legal and professional fees related to the Company’s previously disclosed internal independent investigation (see Note 4 Restatements of Previously Issued Financial Statements) and litigation, claims, and assessments (see Note 7 Commitments and Contingencies). Additionally, increases in incentive and revenue-sharing payments to drivers and data network charges resulting from an increase in the number of tablets in operation were offset by reductions in recruiting, marketing, and other expenses.
Loss on Disposal of Property and Equipment
During the six months ended June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that 5,600 tablets distributed to rideshare drivers were no longer in service and may not be returned to the Company. The Company recorded a charge of $833,337 for the loss on disposal associated with these tablets.
21
In addition, during the six months ended June 30, 2022, the Company recorded a charge of $16,000 for the loss on disposal of furniture and fixtures located in its Belfast, N.I. office. The Company is in final negotiations with its landlord to terminate the Belfast, N.I. office lease.
Depreciation and Amortization Expenses
Depreciation and amortization expense for the six months ended June 30, 2022 and 2021 were $832,645 and $495,488, respectively. The six months ended June 30, 2022 included depreciation expense for additional tablets purchased since June 30, 2021.
Other Income (Expense)
Interest expense was $293,764 and $918,700 for the six months ended June 30, 2022, and 2021, respectively. During April 2022, the Company entered into a Credit Agreement with a related party pursuant to which it borrowed $2,750,000, and it accrued interest expense on this borrowing of $293,734. The Company incurred interest expense of $918,700 during the six months ended June 30, 2021, in connection with related party debt outstanding prior to its IPO. The Company repaid all related party debt in May 2021 with a portion of the cash proceeds from its IPO.
Liquidity and Capital Resources
As of the date of this Quarterly Report, the Company has not yet generated substantial revenue from customers and business activity has mainly consisted of cash outflows associated with its business development activities. These conditions indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the consolidated financial statements.
The Company’s primary source of operating funds since inception through April 2021 was cash proceeds from the private placements of preferred equity and debt securities. During 2021, the Company completed its IPO yielding net proceeds to the Company of approximately $15.7 million from the sale of Common Stock and warrants and approximately $16.0 million from the exercise of warrants. The capital raised included funding for working capital to launch and expand operations in accordance with its business model.
On April 12, 2022, the Company entered into the Credit Agreement with a related party lender, Lee Aerospace, pursuant to which the Company could borrow under a non-revolving line of credit up to $2,500,000 for up to one year. On June 27, 2022, the Company and the related party lender entered into Amendment No. 1 and an Amended Note, pursuant to which the non-revolving line of credit available to the Company from the lender was increased to $2,750,000. The Company’s ability to draw on the non-revolving line of credit, to the extent available under the Credit Agreement, is in the lender’s sole discretion and subject to the Company requesting such additional funds from the lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and related documents, and that no default under the Credit Agreement has occurred and is continuing under the Credit Agreement.
Through June 30, 2022, the lender funded to the Company $2,750,000 under the Credit Agreement. The Amended Note matures on the earlier of: (i) the date upon which the Company consummates a debt or equity financing in an amount equal to or greater than $4,000,000 or (ii) April 12, 2023.
The Company has borrowed the maximum amount available under the Credit Agreement. Since its inception, the Company has generated only nominal revenue from customers and business activity and currently has very limited cash on hand. The Company is endeavoring to raise additional capital through debt or equity financing, but there is no assurance that additional capital will be available on terms acceptable to the Company or will be sufficient to enable the Company to complete its development activities or sustain operations. If the Company is unable to raise sufficient additional capital to sustain operations, then it will have to further extend payables, reduce overhead, or scale back its current business plan until such additional capital is raised, any of which could have a material adverse effect on the Company. There is no assurance that such a plan will be successful. If the Company is unable to raise sufficient additional capital to sustain operations, then the Company will be required to pursue other alternatives which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.
22
Off-Balance Sheet Arrangements
We did not have, during the period presented, and we do not currently have, any relationships with any organizations or financial partnerships, such as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies and Significant Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements as well as the reported expenses during the reporting periods. Actual results may differ materially from these estimates.
We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, useful lives of long-lived assets and stock-based compensation expense have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ materially from these estimates.
Our significant accounting policies are more fully described in our consolidated financial statements (Note 2) included in this Quarterly Report.
Recently Issued Accounting Standards
Our analysis of recently issued accounting standards are more fully described in our consolidated financial statements (Note 2) included in this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable to smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.
Our Interim Chief Executive Officer and Interim Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of June 30, 2022. In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and the Company necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.
Our management, with the participation of our Interim Chief Executive Officer and Interim Chief Financial Officer, who serve as our principal executive officer and principal financial and accounting officer, respectively, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022. Based on such evaluation, our Interim Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2022.
As noted in Note 4 to the consolidated financial statements included in this Quarterly Report, the Company concluded that Prior Period Financial Statements should no longer be relied upon and should be restated. As such, management believes material weaknesses exist in its internal controls over financial reporting as of June 30, 2022. The Company does not have a sufficient complement of personnel commensurate with the accounting and reporting requirements of a public company. The material weaknesses
23
identified relate to inadequate controls that address segregation of certain accounting duties and reconciliation and analysis of certain key accounts. We have concluded that these material weaknesses arose because, as a pre-revenue private company recently formed, we did not have the necessary personnel to design effective components of internal control, including risk assessment control activities information/communication and monitoring to satisfy the accounting and financial reporting requirements of a public company.
In light of the conclusion that the Company’s internal disclosure controls were ineffective as of June 30, 2022, it has applied additional procedures and processes as necessary to ensure the reliability of financial reporting in regard to this Quarterly Report. Accordingly, the Company believes, based on its knowledge, that: (i) this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this Quarterly Report; and (ii) the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this Quarterly Report.
Changes in Internal Control Over Financial Reporting
Except as disclosed in Note 4 to the consolidated financial statements included in this Quarterly Report, there have been no changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management will seek to remediate the material weaknesses described above through hiring additional qualified accounting and financial reporting personnel, and designing and implementing financial reporting systems, processes, policies and internal controls.
24
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are party to the legal proceedings described below. We are unable to provide any assurances as to the ultimate outcome of these proceedings and intend to vigorously defend these matters.
Litigation
On December 2, 2021, the Company and certain of its present and former officers and directors were named as defendants in a putative class action lawsuit styled Steppacher v. Alfi, Inc., et al., Case No. 1:21-cv-24232, brought in the United States District Court for the Southern District of Florida. On December 15, 2021, the Company, certain of its present and former officers and directors, and the underwriters in the Company’s IPO were named as defendants in a second putative class action styled Kleinschmidt v. Alfi, Inc., et al., Case No. 1:21-cv-24338, also brought in the United States District Court for the Southern District of Florida. The complaints in both actions allege that the Company and other named defendants violated Sections 11 and 15 of the Securities Act with respect to allegedly false and misleading statements included in the registration statement and prospectus supplements issued in connection with the Offering Documents in May 2021, and Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by allegedly making false and materially misleading statements and failing to disclose material adverse facts in the Company’s public filings with the SEC. Both complaints assert that the putative plaintiff class includes: (i) persons or entities, other than the defendants, the officers and directors of the Company, members of their immediate families, their legal representatives, and any entity in which they had a controlling interest, among others, who purchased or acquired the Common Stock or warrants to purchase the Common Stock pursuant and/or traceable to the Offering Documents; and (ii) persons or entities, other than the defendants, who purchased or acquired the Company’s securities between May 4, 2021, and March 11, 2022 (both dates inclusive). The plaintiffs seek unspecified compensatory damages, including interest, and costs and expenses, including attorney’s and expert fees. On February 3, 2022, the court consolidated the two actions under the caption Steppacher, Jr., et al. v. Alfi, Inc. et al., Case No. 21-cv-24232-KMW. Three putative stockholders (or groups of stockholders) moved to be appointed as lead plaintiff, and the court appointed Candido Rodriguez as lead plaintiff. The consolidated actions are now captioned Rodriguez, et al. v. Alfi, Inc., et al., Case No. 21-cv-24232-KMW.
On April 27, 2022, Ryan Dodgson filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Ryan Dodgson, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-21318, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duties; (iv) unjust enrichment; (v) abuse of control; (vi) gross mismanagement; and (vii) waste of corporate assets, in connection with alleged improper corporate transactions, an alleged pattern and practice of abuse of control of the Company and allegedly deficient internal controls, among other things. The complaint also seeks contribution under Section 11(f) of the Securities Act and Section 21D of the Exchange Act as to the defendants, and seeks contribution under Sections 10(b) and 21D of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests a declaration that the defendants have breached or aided and abetted the breach of their fiduciary duties to the Company, an award of damages to the Company, restitution, and an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ and experts’ fees, costs and expenses, and alleged improvements to the Company’s corporate governance and internal procedures regarding compliance with laws.
On July 28, 2022, Victor Farish filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Victor Farish, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-22361, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the individual defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duty; (iv) aiding and abetting breach of fiduciary duty; (v) unjust enrichment; (vi) waste of corporate assets; (vii) abuse of control; and (viii) gross mismanagement, in connection with allegedly making and/or authorizing false and misleading statements and material omissions regarding the Company’s business, prospects, and internal controls and allegedly failing to establish and/or oversee sufficient internal controls and/or reasonable information, oversight, and reporting systems concerning critical Company operations, including the adequacy of its public reporting. The complaint also seeks contribution under Section 11(f) of the Securities Act as to defendants Mr. P. Pereira, Mr. McIntosh, Mr. Bordes, Mr. Cook, Mr. Elkouri, Ms. Ficken, Mr. Lee, Mr. Mowser, and Mr. Smith, and
25
seeks contribution under Section 21D(f)(5) of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests an award of damages against defendants, an award of punitive damages, an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses, and an order directing the defendants to account for all damages allegedly caused by them and all profits and special benefits and unjust enrichment they have allegedly obtained as a result of their allegedly unlawful conduct. On July 29, 2022, the Court sua sponte dismissed the complaint without prejudice finding that the complaint does not properly plead a claim and giving Plaintiff until August 11, 2022 to file an amended complaint addressing the deficiencies in its original complaint. The Company is currently unable to estimate the costs and timing of the resolution of this matter.
Arbitration
On February 23, 2022, Fred Figueroa, a former Executive Assistant at the Company, filed a Demand for Arbitration against the Company with the American Arbitration Association (“AAA”), alleging overtime violations of the Fair Labor Standards Act, as amended, and breach of contract claims involving alleged termination without cause in violation of Mr. Figueroa’s employment agreement. In his Demand for Arbitration, Mr. Figueroa seeks damages in the amount of $81,000 for base salary and 5,000 shares of Common Stock in the amount of $16,650 pursuant to a stock option award from the Company, as well as attorneys’ fees and costs. The arbitration proceeding was initiated pursuant to the arbitration provision in Mr. Figueroa’s employment agreement with the Company. The Company is in the process of responding to Mr. Figueroa’s claims. The Company is currently unable to estimate the costs and timing of the arbitration, including any potential damages, if Mr. Figueroa were to prevail on any of his claims.
On March 10, 2022, Charles Pereira, a former Chief Technology Officer of the Company, filed a Statement of Claim against the Company with the AAA, alleging various breaches of contract and torts with respect to his employment, his compensation, and the termination of his employment. In his Statement of Claim, Mr. Pereira seeks damages in an amount to be determined at the hearing, but not less than $10 million dollars, and certain declaratory relief and other money damages. The arbitration proceeding was initiated pursuant to the arbitration provision in Mr. Pereira’s employment agreement with the Company. The Company is currently unable to estimate the costs and timing of the arbitration, including any potential damages, if Mr. Pereira were to prevail on any of his 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’s former Chief Executive Officer and former Chief Financial Officer have made claims that the Company indemnify and advance the legal fees and expenses incurred by them in connection with the Investigation (see Note 11) and the putative class action litigations, the derivative action, and the SEC investigation, each referred to above. With respect to the advancement of fees and expenses incurred in connection with the Investigation prior to December 31, 2021, the amount of such fees and expenses that is subject to advancement is approximately $147,000. The former officers have also demanded advancement of fees and expenses of additional amounts of approximately $636,000 for the period January 1, 2022 through June 30, 2022. Additional amounts may be subject to claims for advancement and indemnification, but the Company is unable to estimate the amount of additional fees and expenses that may be subject to advancement or indemnification.
Item 1A. Risk Factors
Not applicable to smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
26
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
27
Item 6. Exhibits
Exhibit |
| Description |
| Reference |
|
|
| ||
3.1 |
| Restated Certificate of Incorporation of Alfi, Inc., dated January 31, 2020 | Incorporated by reference to Exhibit 3.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |
|
|
| ||
3.2 |
| Third Amended and Restated Certificate of Incorporation, effective May 3, 2021 | Incorporated by reference to Exhibit 3.2 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | |
|
|
| ||
3.3 |
| Incorporated by reference to Exhibit 3.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
|
|
| ||
3.4 | Incorporated by reference to Exhibit 3.4 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | |||
4.1 | Incorporated by reference to Exhibit 4.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
4.2 | Incorporated by reference to Exhibit 4.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
4.3 | Incorporated by reference to Exhibit 1.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
4.4 | Warrant, dated April 12, 2022, issued by Alfi, Inc. to Lee Aerospace, Inc. | Incorporated by reference to Exhibit 99.3 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294). | ||
4.5 | Incorporated by reference to Exhibit 99.2 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294). | |||
4.6 | Warrant, dated August 5, 2022, between Alfi, Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 99.3 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294). | ||
10.1* | Incorporated by reference to Exhibit 10.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.2 | Incorporated by reference to Exhibit 10.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.3 | Incorporated by reference to Exhibit 10.3 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). |
28
10.4 | Incorporated by reference to Exhibit 10.4 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.5* | Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Paul Pereira | Incorporated by reference to Exhibit 10.5 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
10.6* | Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and John Cook, III | Incorporated by reference to Exhibit 10.6 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
10.7* | Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Charles Pereira | Incorporated by reference to Exhibit 10.7 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
10.8* | Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Dennis McIntosh | Incorporated by reference to Exhibit 10.8 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
10.9 | Promissory Note, dated January 15, 2019, between Lectrefy Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 10.9 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
10.10 | Security Agreement, dated January 15, 2020, between Lectrefy Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 10.10 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | ||
10.11 | Incorporated by reference to Exhibit 10.11 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.12 | Incorporated by reference to Exhibit 10.12 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.13 | Incorporated by reference to Exhibit 10.13 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.14 | Incorporated by reference to Exhibit 10.14 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959). | |||
10.15 | Letter of Understanding, dated November 8, 2021, between Alfi, Inc. and CFO Financial Partners, LLC | Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on November 15, 2021 (Commission File No. 001-40294). | ||
10.16* | Resignation Agreement, dated February 2, 2022, between Alfi, Inc. and Paul Pereira | Incorporated by reference to Exhibit 10.16 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.17* | Limited Release of Claims, dated as of February 2, 2022, between Alfi, Inc. and Paul Pereira | Incorporated by reference to Exhibit 10.17 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). |
29
10.18* | Resignation Agreement, dated February 2, 2022, between Alfi, Inc. and Dennis McIntosh | Incorporated by reference to Exhibit 10.18 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.19* | Limited Release of Claims, dated as of February 2, 2022, between Alfi, Inc. and Dennis McIntosh | Incorporated by reference to Exhibit 10.19 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.20 | Credit and Security Agreement, dated April 12, 2022, between Alfi, Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294). | ||
10.21 | Incorporated by reference to Exhibit 99.2 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294). | |||
10.22 | Patent Security Agreement, dated April 12, 2022, made by Alfi, Inc. in favor of Lee Aerospace, Inc. | Incorporated by reference to Exhibit 99.4 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294). | ||
10.23 | Incorporated by reference to Exhibit 99.5 to Alfi, Inc.’s Current Report on Form 8-K filed on April 18, 2022 (Commission File No. 001-40294). | |||
10.24* | Consulting Agreement, dated as of March 15, 2021, between Alfi, Inc. and Ronald Spears | Incorporated by reference to Exhibit 10.1 to Alfi, Inc.’s Current Report on Form 8-K filed on May 10, 2021 (Commission File No. 001-40294). | ||
10.25* | Form of Incentive Stock Option Award Agreement (under the Alfi, Inc. 2018 Stock Incentive Plan) | Incorporated by reference to Exhibit 10.25 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.26* | Stock Option Award Agreement, dated March 15, 2021, between Alfi, Inc. and Ronald Spears. | Incorporated by reference to Exhibit 10.26 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.27 | Promissory Note, dated August 8, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 10.27 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.28 | Incorporated by reference to Exhibit 10.28 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | |||
10.29 | Promissory Note, dated October 25, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 10.29 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.30 | Promissory Note, dated November 12, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 10.30 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
10.31 | Promissory Note, dated November 26, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc. | Incorporated by reference to Exhibit 10.31 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294). | ||
30
10.32 | Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on July 1, 2022 (Commission File No. 001-40294). | |||
10.33 | Incorporated by reference to Exhibit 99.2 to Alfi, Inc.’s Current Report on Form 8-K filed on July 1, 2022 (Commission File No. 001-40294). | |||
10.34 | Incorporated by reference to Exhibit 99.1 to Alfi, Inc.'s Current Report on Form 8-K filed on August 8, 2022 (Commission File No. 001-40294). | |||
31.1 | Filed herewith. | |||
31.2 | Filed herewith. | |||
32.1 |
| Furnished herewith. | ||
|
|
| ||
101.INS |
| Inline XBRL Instance Document | The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
|
|
| ||
101.SCH | Inline XBRL Taxonomy Extension Schema | |||
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase | ||
|
|
| ||
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase | ||
|
|
| ||
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase | ||
|
|
| ||
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
*Identifies a management contract or compensatory plan or arrangement.
31
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ALFI, INC. | |
|
|
|
Date: August 15, 2022 | /s/ James Lee | |
| Name: | James Lee |
| Title: | Interim Chief Executive Officer |
|
| (Principal Executive Officer) |
|
|
|
Date: August 15, 2022 | /s/ Louis Almerini | |
| Name: | Louis Almerini |
| Title: | Interim Chief Financial Officer |
|
| (Principal Financial and Accounting Officer) |
32