EXPLANATORY NOTE

This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends the Quarterly Report on Form 10-Q of Alfi, Inc. as of and for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission (“SEC”) on August 16, 2021 (the ~~“Common Stock”~~“Original Filing”).

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

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

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

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

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

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

The accompanying financial statements for the quarterly period ended June 30, 2021, have been restated to correct the accounting errors and conform to current period presentation.The following items have been amended in this Amendment No. 1 in connection with such restatement: (i) Part I, Item 1. Financial Statements; (ii) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations; (iii) Part 1, Item 4. Controls and Procedures; and (iv) Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. In addition, the Company’s Principal Executive Officer and Principal Financial Officer have provided new certifications dated as of the date of the filing of this Amendment No. 1 (Exhibits 31.1, 31.2 and 32).

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

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

Table of Contents

ALFI, INC.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION:

Item 1.	Financial Statements:		2	3
	Consolidated Balance Sheets as of ~~March 31,~~June 30, 2021 (Unaudited) and December 31, 2020 ~~(Audited)~~		2	3
	Condensed Consolidated Statement of Operations for the Three Months Ended ~~March 31,~~June 30, 2021 (Unaudited) and ~~March 31,~~June 30, 2020 (Unaudited)		3	4
	Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended ~~March 31,~~June 30, 2021 (Unaudited)		4	5
	Consolidated Statement of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2021 (Unaudited) and ~~March 31,~~June 30, 2020 (Unaudited)		5	6
	Notes to Consolidated Financial Statements (Unaudited)		6	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29	30
Item 4.	Controls and Procedures		30

PART II - OTHER INFORMATION:			31	32

Item 1.	Legal Proceedings		31	32
Item 1A.	Risk Factors		31	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		31	32
Item 3.	Defaults Upon Senior Securities		31	33
Item 4.	Mine Safety Disclosures		31	33
Item 5.	Other Information		31	33
Item 6.	Exhibits		32
				34

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Balance ~~Sheet~~Sheets

Unaudited
March 31, December 31,
2021 2020
Assets
Current assets:
Cash and cash equivalents 96,021 8,335
Accounts receivable, net 17,450 -
Note receivable (related parties) - 1,830,000
Prepaid expenses and other - 793
Total current assets 113,471 1,839,128

Property and equipment, net of accumulated depreciation
of $54,979 and $46,081, respectively 116,368 117,474
Intangible assets, net of accumulated amortization
of $659,879 and $440,321, respectively 4,164,630 4,384,188
Other assets (complimentary devices), net 1,104,000 1,104,000
Other assets, net 7,940 7,940
Total assets 5,506,409 7,452,730

Liabilities
Current liabilities
Accounts payable 1,092,024 516,705
Current portion of long-term debt (related parties) 5,808,808 5,558,808
Derivative liability 278,825 229,712
Accrued interest 222,722 116,600
Total current liabilities 7,402,379 6,421,825

Long-term debt, net (related parties) - -
Total liabilities 7,402,379 6,421,825

Stockholders' Equity
Series Seed preferred stock, $0.0001 par, 2,500,000 shares issued as of March 31, 2021 and December 31, 2020, respectively. 2,500,000 shares authorized 2,500,000 2,500,000
Common stock, $0.0001 par, 4,599,084 and 4,441,523 shares issued as of March 31, 2021 and December 31, 2020, respectively. 80,000,000 shares authorized 460 444
Additional paid-in capital 2,274,855 2,024,871
Accumulated surplus (deficit) (6,671,285 ) (3,494,410 )
Total stockholders' equity (1,895,970 ) 1,030,905

Total liabilities and stockholders' equity 5,506,409 7,452,730


	Unaudited
	Jun 30,		Dec 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	19,693,653	$	8,335
Prepaid expenses and other		2,415,361		793
Total current assets		22,109,014		9,128

Property and equipment, net		150,519		506,294
Intangible assets, net		800,259		888,271
Operating lease right-of-use asset, net		121,924		149,032
Other assets		55,350		7,940
Total assets	$	23,237,065	$	1,560,666

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	982,231	$	1,000,876
Debt, related parties		—		3,728,808
Lease liability		124,935		152,646
Interest payable, related parties		—		116,600
Total current liabilities		1,107,166		4,998,930
Total liabilities		1,107,166		4,998,930

Stockholders' Equity (Deficit)
Series Seed convertible preferred stock, $0.0001 par value, 2,500,000 shares authorized, -0- and 2,500,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		—		2,500,000
Common stock, $0.0001 par value, 80,000,000 shares authorized, 16,052,833 and 4,441,582 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		1,606		444
Additional paid-in capital		37,153,705		2,076,150
Accumulated deficit		(15,025,412)		(8,014,858)
Total stockholders' equity (deficit)		22,129,899		(3,438,264)
Total liabilities and stockholders' equity (deficit)	$	23,237,065	$	1,560,666

See accompanying notes to the consolidated financial statements

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Alfi, Inc.

f/k/a Lectrefy, Inc.

~~Condensed~~

Consolidated Statement of Operations

Unaudited Unaudited
Three months Three months
ended March ended March
31, 2021 31, 2020
Revenues, net 17,450 -

Cost of sales, net 104,506 -

Gross margin (87,056 ) -

Operating expenses
General and administrative 2,770,415 -
Depreciation and amortization 228,456 9,563
Total operating expenses 2,998,871 9,563

Other income (expense)
Other income 15,965 9,152
Interest expense (106,913 ) (16,392 )
Total other income (expense) (90,948 ) (7,240 )

Net income (loss) before provision for income taxes (3,176,875 ) (16,803 )
Provision for income taxes - -
Net income (loss) after provision or income taxes (3,176,875 ) (16,803 )

Earnings (loss) per share (EPS) - basic (0.71 ) (0.01 )
Fully dilutive earnings (loss) per share (DEPS) (0.71 ) (0.01 )

Weighted average common shares outstanding 4,480,037 3,150,000
Weighted average shares (fully diluted) 8,309,373 6,359,121

(Unaudited)

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


	Three months		Three months		Six months		Six months
	ended Jun 30,		ended Jun 30,		ended Jun 30,		ended Jun 30,
	2021		2020		2021		2020
Revenues	$	936	$	—	$	18,386	$	—

Operating expenses
Compensation and benefits		1,197,742		202,936		2,080,953		372,705
Other general and administrative		2,311,291		271,384		3,563,150		701,973
Depreciation and amortization		248,173		199,791		495,488		209,355
Total operating expenses		3,757,205		674,111		6,139,590		1,284,032

Operating loss		(3,756,269)		(674,111)		(6,121,204)		(1,284,032)

Other income (expense)
Other income		16,334		53,745		29,351		64,104
Interest expense		(561,786)		(70,037)		(918,700)		(86,429)
Total other expense		(545,453)		(16,291)		(889,349)		(22,325)

Net loss before provision for income taxes		(4,301,722)		(690,402)		(7,010,553)		(1,306,357)
Provision for income taxes						0		—
Net loss	$	(4,301,722)	$	(690,402)	$	(7,010,553)	$	(1,306,357)

Loss per share, basic and diluted	$	(0.42)	$	(0.22)	$	(0.95)	$	(0.41)

Weighted average shares outstanding, basic and diluted		10,244,608		3,150,750		7,351,845		3,150,404

Alfi, Inc.
f/k/a Lectrefy, Inc.
Consolidated Statement of Changes to Stockholders' Equity

Unaudited
Total
Series Seed Additional Accumulated Stockholders'
Preferred Stock Common Stock Paid-In Surplus Equity
Shares Amount Shares Amount Capital (Deficit) (Deficit)
Balance at April 4, 2018 (date of inception) - $ - - $ - $ - $ - $ -
Issuance of series Seed preferred stock 1,500,000 1,500,000 - - - - 1,500,000
Issuance of common stock - - 3,150,000 315 - - 315
Current year net income (loss) - - - - - (2,186 ) (2,186 )
Balance at December 31, 2018 1,500,000 1,500,000 3,150,000 315 - (2,186 ) $ 1,498,129
Issuance of series Seed preferred stock 1,000,000 1,000,000 - - - - 1,000,000
Issuance of common stock - - - - - - -
Current year net income - - - - - 66,735 66,735
Balance at December 31, 2019 2,500,000 2,500,000 3,150,000 315 - 64,549 $ 2,564,864
Issuance of common stock - - 1,291,523 129 2,024,871 - 2,025,000
Current year net income - - - - - (3,558,959 ) (3,558,959 )
Balance at December 31, 2020 2,500,000 2,500,000 4,441,523 444 2,024,871 (3,494,410 ) 1,030,905
Issuance of common stock - - 157,561 16 249,984 - 250,000
Current year net income - - - - - (3,176,875 ) (3,176,875 )
Balance at March 31, 2021 2,500,000 $ 2,500,000 4,599,084 $ 460 $ 2,274,855 $ (6,671,285 ) $ (1,895,970 )

See accompanying notes to the consolidated financial statements

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Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statement of ~~Cashflows~~Changes to Stockholders’ Equity (Deficit)

(Unaudited)

Unaudited Unaudited
Three months Three months
ended March ended March
31, 2021 31, 2020
Operating activities
Net income (loss) $ (3,176,875 ) $ (16,803 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense 228,456 9,563
Stock based compensation 299,113 -
Changes in assets and liabilities:
Other assets (complimentary devices) - -
Accounts receivable (17,450 ) -
Prepaid expenses and other assets 793 -
Accounts payable 575,319 11,428
Accrued interest 106,122 15,916
Net cash used in operations (1,984,522 ) 20,104

Investing activities
Acquisition of property, plant, and equipment, net (7,792 ) -
Acquisition of intangible assets, net - (1,046,678 )
Net cash provided by investing activities (7,792 ) (1,046,678 )

Financing activities
Proceeds from issuance of preferred stock - -
Proceeds from related party note payable, net 2,080,000 1,082,050
Net cash provided by financing activities 2,080,000 1,082,050

Net change in cash and cash equivalents 87,686 55,476
Cash and cash equivalents at the beginning of the period 8,335 38,890
Cash and cash equivalents at the end of the period 96,021 94,366


											Total
	Series Seed Convertible						Additional				Stockholders’
	Preferred Stock			Common Stock			Paid-In		Accumulated		Equity
	Shares	Amount		Shares	Amount		Capital		Deficit		(Deficit)

Balance - January 1, 2020	2,500,000	$	2,500,000	3,150,058	$	315	$	—	$	(2,467,584)	$	32,731
Net loss	—		—	—		—		—		(615,955)		(615,955)
Balance - March 31, 2020	2,500,000		2,500,000	3,150,058		315		—		(3,083,539)		(583,224)
Share based compensation	—		—	—		—		14,358		—		14,358
Net loss	—		—	—		—		—		(690,402)		(690,402)
Balance - June 30, 2020	2,500,000	$	2,500,000	3,150,058	$	315	$	14,358	$	(3,773,941)	$	(1,259,268)


	Series Seed Convertible						Additional				Stockholders’
	Preferred Stock			Common Stock			Paid-In		Accumulated		Equity
	Shares	Amount		Shares	Amount		Capital		(Deficit)		(Deficit)
Balance - January 1, 2021	2,500,000	$	2,500,000	4,441,582	$	444	$	2,076,151	$	(8,014,859)	$	(3,438,264)
Shares issued with debt	—		—	157,503		16		249,984		—		250,000
Share based compensation	—		—	—		—		46,684		—		46,684
Net loss	—		—	—		—		—		(2,708,831)		(2,708,831)
Balance - March 31, 2021	2,500,000		2,500,000	4,599,085		460		2,372,819		(10,723,690)		(5,850,411)
Shares issued with debt	—		—	315,007		32		499,968		—		500,000
Conversion of convertible
preferred stock to common	(2,500,000)		(2,500,000)	3,150,058		315		2,499,685		—		—
Shares issued for cash	—		—	4,291,045		429		10,993,471		—		10,993,900
Warrants issued for cash	—		—	—		—		4,738,750		—		4,738,750
Exercise of warrants	—		—	3,385,746		338		15,472,521		—		15,472,859
Shares issued for services	—		—	300,000		30		476,150		—		476,180
Share based compensation	—		—	—		—		85,256		—		85,256
Exercise of options	—		—	11,892		2		15,085		—		15,087
Net loss	—		—	—		—		—		(4,301,722)		(4,301,722)
Balance - June 30, 2021	—	$	—	16,052,833	$	1,606	$	37,153,705	$	(15,025,412)	$	22,129,899

See accompanying notes to the consolidated financial statements

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Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statement of Cash Flows

(Unaudited)


	Six months		Six months
	ended Jun 30,		ended Jun 30,
	2021		2020
Operating activities
Net loss	$	(7,010,553)	$	(1,306,357)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		495,488		209,355
Shares issued with debt		750,000		—
Share based compensation		131,942		14,358
Share based payments for services		476,180		—
Amortization of operating lease right-of-use asset		27,109		29,165
Changes in assets and liabilities:
Prepaid expenses and other assets		(2,414,568)		2,250
Other assets		(47,410)		65
Accounts payable and accrued expenses		(18,645)		(8,671)
Lease liability		(27,711)		(28,677)
Interest payable, related parties		(116,600)		42,446
Net cash used in operating activities		(7,754,769)		(1,046,067)
Investing activities
Capital expenditures		(51,697)		(1,026,857)
Acquisition of intangible assets		—		(307,728)
Net cash used in investing activities		(51,697)		(1,334,585)
Financing activities
Proceeds from related party debt payable		2,548,344		2,383,533
Proceeds from issuance of common stock, net		15,732,649		—
Proceeds from exercise of warrants		15,472,859		—
Proceeds from exercise of options		15,085		—
Repayments of related party debt payable		(6,277,154)		—
Net cash provided by financing activities		27,491,783		2,383,533
Net change in cash and cash equivalents		19,685,318		2,882
Cash and cash equivalents at the beginning of the period		8,335		38,890
Cash and cash equivalents at the end of the period	$	19,693,653	$	41,772

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

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

See accompanying notes to the consolidated financial statements

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ALFI, INC.

f/k/a LECTREFY, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
~~MARCH 31, 2021 (Unaudited)~~

NOTE 1 BUSINESS DESCRIPTION BACKGROUND

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

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

On September 18, 2018, Lectrefy, NI(N.I.) Ltd was organized in Belfast, Ireland. On February 4, 2020, Lectrefy, NI(N.I.) Ltd’s name was changed to Alfi ~~NI Ltd, registered in Belfast, Ireland.~~(N.I.) Ltd. On February 13, 2020, Lectrefy Inc., the Delaware ~~C-corporation operating~~corporation, registered its name change to Alfi, Inc. in the ~~state~~State of ~~Florida as a foreign entity name was restated as~~ Florida.

Alfi ~~Inc.~~

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

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

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

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

target.

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

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

NOTE 2 ~~GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS~~SIGNIFICANT ACCOUNTING POLICIES

Consolidation

AsThe consolidated financial statements include the accounts of ~~March 31, 2021, the Company had cash of $96,021~~Alfi, Inc. and has a monthly cash run rate of approximately $500,000. As of the date of this Report, the Company has not yet generated substantial revenue from customers and business activity has mainly consisted of cash outflows associated with its ~~capital project. 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~~wholly owned subsidiary, Alfi (N.I.) Ltd. Collectively, these entities make up the consolidated financial ~~statements.~~statements during the periods presented in this Quarterly Report. All significant intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

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

~~Accordingly, the accompanying consolidated~~ financial statements ~~have been prepared~~ in ~~conformity~~accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)~~, which contemplate continuation of~~ requires management to make estimates and assumptions that affect the ~~Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying~~reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Revenue Recognition

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

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

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

Through June 30, 2021, the Company had distributed approximately 1,500 devices (tablets and kiosks) at 0 cost to rideshare, mall, and airport owners. It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner that the Alfi-enabled device engages with and to whom The Company delivers advertising and content.

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

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 3 months or less from the purchase date to be cash equivalents.

Property and Equipment

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

Property and equipment also includes office equipment recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which for office equipment is three to five years.

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

Intangible Assets

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

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Prepaid Expenses and Other Assets

The Company records up-front payments for insurance and professional services as prepaid expenses. During June 2021, the Company prepaid $2,240,000 for 10,000 Lenovo tablets. The devices were received in July 2021.

Fair Value of Financial Instruments

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

Loss Per Share

The Company computes basic net loss per share by dividing net loss per share available to stockholders of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into the Common Stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted loss per share excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of Common Stock during the period.

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


	June 30,	June 30,
	2021	2020
Convertible Series (“Seed”) Preferred stock	—	3,150,058
Warrants	1,091,866	—
Employee stock options	666,571	196,883
Total potentially dilutive securities	1,758,437	3,346,941

Common Stock

The Company issued 3,150,058 shares of Common Stock on April 4, 2018 to the Company’s founders. At June 30, 2021 and December 31, 2020, outstanding shares of Common Stock totaled 16,052,833 and 4,441,582, respectively. During the six-month period ended June 30, 2021, the Company issued 4,291,045 shares of Common Stock for cash in its initial public offering, which was completed on May 6, 2021 (“IPO”), 3,385,746 shares of Common Stock upon exercise of warrants issued in connection with the IPO, and 3,150,058 shares of Common Stock from conversion of all outstanding shares of the Company’s Series Seed Preferred Stock, $0.0001 par value per share (the “Series Seed Preferred Stock”), to shares of Common Stock. The Company paid 0 dividends on Common Stock issued through June 30, 2021. The Company accounts for Common Stock issued with debt, issued for services, and issued as share based compensation at fair value.

Convertible Instruments

Through June 30, 2021, the Company did not record or issue convertible notes with beneficial conversion features and did not record debt discounts related to beneficial conversion features. During 2020 and 2019, the Company issued Series Seed Preferred Stock, which was convertible into Common Stock on a 1:1.260023 basis at the option of the holder and is classified as stockholders’ equity on the balance sheet at December 31, 2020. When converted into Common Stock by Series Seed Preferred Stock holders, its fair value approximates the existing carrying (book) value of the Series Seed Preferred Stock as stated.

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

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earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional.

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

Thus, 0 embedded derivatives were identified on the conversion option of the Series Seed Preferred Stock at June 30, 2021 and December 31, 2020. In May 2021, 2,500,000 shares of Series Seed Preferred Stock converted into 3,150,058 shares of Common Stock. There were 0 outstanding shares of Series Seed Preferred Stock on June 30, 2021.

Common Stock Purchase Warrants

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

Stock based compensation

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

Income Taxes

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

Forward Stock Split

~~Subsequent to~~On March ~~31, 2021, in May~~1, 2021, the Company ~~completed an initial public offering yielding gross proceed to the Company if approximately $17,800,000 from sale of common~~enacted a forward stock ~~and warrants~~split on ~~the Nasdaq Capital Market. The capital raise included funding for working capital to launch and expand operations~~a 1.260023:1.000000 basis. Share amounts reflected in ~~accordance with its business model.~~ this Quarterly Report are presented post-split, unless otherwise noted.

NOTE 3 ~~SIGNIFICANT ACCOUNTING POLICIES~~GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

~~Revenue Recognition~~

~~Under Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”~~As of August 16, 2021 (the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021), the Company had not yet generated substantial revenue from ~~contracts~~customers and business activity has mainly consisted of cash outflows associated with ~~customers~~its business development activities. These conditions indicate that there is ~~measured based on~~substantial doubt about the ~~consideration specified in the contract with the customer.~~

~~Alfi intends~~Company’s ability to generate revenues from three sources. First, Alfi will sell advertising and content on its Alfi-enabled tablets and other devices such as kiosks. Second, Alfi will also license its technology to other companiescontinue as a ~~Software-as-a-Service (SaaS) product. Third, Alfi will also sell~~going concern within one year from the ~~aggregated data reflecting viewer engagement it derives~~issuance date of the consolidated financial statements.

The Company’s primary source of operating funds since inception through April 2021 was cash proceeds from ~~users~~the private placements of ~~an Alfi-enabled device to advertisers~~preferred equity and ~~content providers. Alfi has different customers for each of~~debt securities. During the six months ended June 30, 2021, the Company completed its revenue streams: (1) companies that buy content space, like CNN, NBC, etc., or companies that buy ad space like Coke, Ford, etc.; (2) companies that pay a per screen fee on a SaaS basis to operate Alfi software on their network, where they sell ads & content and on their own devices; and (3) companies that purchase viewer engagement data on a subscription basis.

With respect to Alfi-enabled tablets or devices placed into service by Alfi, Alfi will recognize revenue on a cost per thousand impression (CPM) basis for both the content and advertisements. Alfi will have a contract with both the advertiser and the content provider that will specify the amounts to be paid to Alfi for displaying the advertisement or content. The number of impressions the advertiser or content provider is willing to pay and the duration of each campaign is set by the advertiser or content provider. Content and advertisements are provided to Alfi by companies desiring to deliver content for viewer engagement. In general, Alfi does not pay for content,IPO yielding net proceeds to the ~~extent it does,~~Company of approximately $15.7 million from the ~~cost~~sale of ~~acquiring content would be expensed as cost~~Common Stock and warrants and approximately $15.5

Table of ~~sales. Alfi will recognize revenue under these contracts upon~~Contents

million from the ~~validated delivery~~exercise of ~~impressions~~warrants. The capital raised included funding for working capital to ~~the end user of the Alfi-enabled device.~~

~~With respect to SaaS licenses, Alfi expects to enter into license agreements with third parties that place their own devices for advertising together with the remote management access~~launch and data reporting that the Alfi platform provides. These licenses may be for a specified duration or on a renewable subscription basis. Alfi will charge these third parties on a monthly, per screen fee for use of the Alfi platform. Alfi will recognize the revenue from these licenses on a monthly basis in accordance with Topic 606.

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

~~Alfi has distributed and activated into~~expand operations over 1,000 devices tablets and kiosks at no cost to rideshare, mall, or airport owner(s). It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner that the Alfi-enabled device engages with and to whom Alfi delivers advertising and content. It is projected that Alfi will begin selling advertising and content for those tablets placed into operation in the third quarter of 2021.

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

The contract with a rideshare, mall or airport owner for placing a device in service will not provide for payment from such party to Alfi. With respect to a kiosk in a mall or airport, Alfi may be paid a separate service fee to maintain the device, but Alfi does not anticipate that to be a material source of revenue. Alfi’s contract with a device host may provide that we will pay a revenue sharing amount, or fee, based on the revenue Alfi derives from that device. Alfi will expense that fee in Cost of Sales in accordance with its ~~Cost~~business model.

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

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not ~~be required to return tablets distributed by Alfi at~~necessarily represent realizable or settlement values. The consolidated financial statements do not include any ~~time. Removing a tablet~~adjustment that might result from the ~~vehicle or returning it to Alfi would automatically cancel~~outcome of this uncertainty.

NOTE 4 RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Prior Period Restatements

On March 11, 2022, the opportunity for a rideshare to receive commissions. Thus, Alfi does not anticipate that a rideshare would seek to return a tablet. Kiosks, because of their high cost, may either be returned to Alfi or purchased by the facility owner at the endAudit Committee of the ~~contract.~~

~~For~~Company’s Board of Directors and the ~~three~~Company’s management concluded that the previously issued audited financial statements for the years ended December 31, 2019 and ~~twelve months~~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 ~~December 31, 2020,~~June 30, 2021 (collectively, the “Prior Period Financial Statements”), should no longer be relied upon as a result of the accounting errors described below and should be restated. Similarly, any previously furnished or filed reports, press releases, earnings releases, investor presentations or other communications describing the Prior Period Financial Statements and related financial information should not be relied upon.

In connection with the Company’s evaluation of the issues and findings identified in the Company’s previously disclosed internal independent investigation (the “Investigation”), the Company ~~had earned~~reviewed the Prior Period Financial Statements and ~~recorded $17,450 and $-0- revenue during each period, respectively. Net revenue consisted of one customer concentration, which represented 100% of sales for~~identified the ~~three months ended March 31, 2021.~~

~~Accounts Receivable~~

following accounting errors:

The Company ~~records accounts receivable at~~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 ~~net realizable value. At~~balance sheets as of December 31, 2019 and 2020, March 31, 2021, and December 31, 2020, the Company had recorded net customer accounts receivable of $17,450 and $-0-, respectively. The Company makes periodic assessment of collectability of accounts receivable balances. Net accounts receivable consisted of one customer concentration at March 31, 2021 and December 31, 2020, respectively. The Company believes there to be no allowance for doubtful accounts as of March 31, 2021 and December 31, 2020, respectively.June 30, 2021.

~~Consolidation~~

~~The consolidated financial statements include the accounts~~
(a) The Company overstated the carrying value of tablets by incorrectly reporting them at cost with no allowance for depreciation, resulting in an overstatement of Alfi, Inc. and its wholly owned subsidiary. Collectively, these entities make up the consolidated financial statements during the periods presented in this Report. All significant intercompany balances and transactions have been eliminated in consolidation.
~~Use of Estimates~~
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
~~Cash Equivalents~~
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At March 31, 2021 and December 31, 2020, the Company had $96,021 and $8,335 in cash and cash equivalents, respectively.
~~Concentration of Credit Risk~~
The Company’s financial instruments that are exposed to a concentration of credit risk is cash. Generally, the Company’s cash in non-interest-bearing accounts may exceed FDIC insurance limits from time to time. The financial stability of these institutions is periodically reviewed by senior Management.
~~Complimentary Devices~~
~~The Company purchased approximately 9,600 Lenovo tablet hardware devices in 2020 (the “devices”), which are held for placement with rideshare and~~ other businesses. Alfi’s devices represent an incentive-based outreach program by which devices are provided complimentary to rideshare or other businesses that sign up for Alfi’s Software-as-a-Service (SaaS) product. As part of Alfi sales agreements with rideshare and other businesses, devices are provided as a complimentary product in exchange for monetization of the respective set of business consumer’s attention.

~~The Company records these devices at the lower of cost or fair market value. Devices are accounted for as Other~~ assets (complimentary devices), net, in its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021.
(b) 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.
(c) The Company did not recognize and report on its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021, an office lease in accordance with FASB Accounting Standards Update No. 2018-11, Leases (Topic 842).

The accompanying financial statements have been restated to correct the accounting errors and conform to current period presentation.

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Impact of the Restatements

The impact of the restatement on the consolidated balance sheet ~~until they are provided to a rideshare or other businesses. Upon being placed into service for consumer use, the Company expenses Other Assets (complimentary devices) to Cost~~as of ~~Sales.~~June 30, 2021 is presented below:


	As of June 30, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated
Assets
Current assets:
Cash and cash equivalents	$	19,693,653	$	—	$	19,693,653
Prepaid expenses and other		2,415,361		—		2,415,361
Total current assets		22,109,014		—		22,109,014
Property and equipment, net		150,519		—		150,519
Intangible assets, net		3,945,070		(3,144,811)		800,259
Other assets (complimentary devices), net		1,039,625		(1,039,625)		—
Operating lease right-of-use asset, net		—		121,924		121,924
Other assets		55,350		—		55,350
Total assets	$	27,299,578	$	(4,062,512)	$	23,237,065
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	982,230	$	1	$	982,231
Lease liability		—		124,935		124,935
Total current liabilities		982,230		124,936		1,107,166
Total liabilities		982,230		124,936		1,107,166
Stockholders' Equity (Deficit)
Common stock, $0.0001 par value, 80,000,000 shares
authorized, 16,052,833 shares issued and outstanding		1,604		2		1,606
Additional paid-in capital		37,679,500		(525,795)		37,153,705
Accumulated deficit		(11,363,756)		(3,661,656)		(15,025,412)
Total stockholders' equity (deficit)		26,317,348		(4,187,449)		22,129,899
Total liabilities and stockholders' equity (deficit)	$	27,299,578	$	(4,062,513)	$	23,237,065

~~Property and Equipment~~12

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

The impact of the related assets, which for office equipment is three to five years. The Company maintains a capitalization policy for individual items greater than $500 and an estimated useful life greater than one year.

~~Expenditures for major renewals and betterments that extend~~restatement on the ~~useful lives property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense~~consolidated balance sheet as ~~incurred. Property plant and equipment are tested for asset impairment on no less than a quarterly basis by Management.~~

~~Intangible Assets~~

The Company recognizes amortizable intangible assets associated with the costs to acquire or cost to complete its technology development projects. The Company places intangible assets into service upon the date in which they are available for use. Intangible assets are tested for asset impairment on no less than a quarterly basis by Management, of ~~which none were identified during the periods included in this Report.~~

~~Fair Value of Financial Instruments~~

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


	As of December 31, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated
Assets
Current assets:
Cash and cash equivalents	$	8,335	$	—	$	8,335
Note receivable (related parties)		1,830,000		(1,830,000)		—
Prepaid expenses and other		793		—		793
Total current assets		1,839,128		(1,830,000)		9,128
Property and equipment, net		117,474		388,820		506,294
Intangible assets, net		4,384,188		(3,495,917)		888,271
Other assets (complimentary devices), net		1,104,000		(1,104,000)		—
Operating lease right-of-use asset, net		—		149,032		149,032
Other assets		7,940		—		7,940
Total assets	$	7,452,730	$	(5,892,064)	$	1,560,666
Liabilities
Current liabilities:
Accounts payable	$	516,705	$	484,171	$	1,000,876
Debt payable, related parties		5,558,808		(1,830,000)		3,728,808
Derivative liability		229,712		(229,712)		—
Lease liability		—		152,646		152,646
Interest payable, related parties		116,600		—		116,600
Total current liabilities		6,421,825		(1,422,895)		4,998,930
Total liabilities		6,421,825		(1,422,895)		4,998,930
Stockholders’ Equity (deficit)
Series Seed convertible preferred stock, $0.0001 par value, 2,500,000 shares authorized, issued, and outstanding		2,500,000		—		2,500,000
Common stock, $0.0001 par value, 15,000,000 shares authorized, 4,441,582 shares issued and outstanding		444		—		444
Additional paid-in capital		2,024,871		51,279		2,076,150
Accumulated deficit		(3,494,410)		(4,520,448)		(8,014,858)
Total stockholders’ equity (deficit)		1,030,905		(4,469,169)		(3,438,264)
Total liabilities and stockholders’ equity (deficit)	$	7,452,730	$	(5,892,064)	$	1,560,666

~~Net Income (Loss) per Share~~13

Table of ~~Common Stock~~Contents

The ~~Company computes basic net loss per share by dividing net income (loss) per share available to common stockholders by~~impact of the ~~weighted average number~~restatements on the consolidated statement of ~~common shares outstanding~~operations for the ~~period and excludes~~quarter ended June 30, 2021 is presented below:


	For the Three Months Ended June 30, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated

Revenues	$	936	$	—	$	936
Cost of sales, net		161,377		(161,377)		—
Gross margin		(160,441)		160,441		—

Operating expenses
Compensation and benefits		—		1,197,742		1,197,742
Other general and administrative		4,255,404		(1,944,113)		2,311,291
Depreciation and amortization		229,317		18,856		248,173
Total operating expenses		4,484,721		(727,515)		3,757,205

Operating loss		—		(3,756,269)		(3,756,269)

Other income (expense)
Other income		14,478		1,856		16,334
Interest expense		(61,787)		(499,999)		(561,786)
Total other income (expense)		(47,309)		(498,144)		(545,453)

Net loss before provision for income taxes		(4,692,471)		389,812		(4,301,722)
Provision for income taxes		—		—		—
Net loss	$	(4,692,471)	$	389,812	$	(4,301,722)

Loss per share, basic and diluted	$	(0.44)	$	0.02	$	(0.42)

Weighted average shares outstanding, basic and diluted		10,701,717		(457,109)		10,244,608
Weighted average common shares, diluted

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The impact of the ~~effects~~restatements on the consolidated statement of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income (loss) per shareoperations for the ~~periods~~quarter ended ~~March 31, 2021 and December 31,~~June 30, 2020 ~~excludes potentially dilutive securities when their inclusion would be anti- dilutive, or if their exercise prices were greater than the average market price~~is presented below:


	For the Three Months Ended June 30, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated

Revenues	$	—	$	—	$	—
Cost of sales, net		—		—		—
Gross margin		—		—		—

Operating expenses
Compensation and benefits		—		202,936		202,936
Other general and administrative		—		271,384		271,384
Depreciation and amortization		5,859		193,932		199,791
Total operating expenses		5,859		668,252		674,111

Operating loss		—		(674,111)		(674,111)

Other income (expense)
Other income		—		53,745		53,745
Interest expense		(17,913)		(52,124)		(70,037)
Total other income (expense)		(17,913)		1,622		(16,291)

Net loss before provision for income taxes		(23,772)		(666,630)		(690,402)
Provision for income taxes		—		—		—
Net loss	$	(23,772)	$	(666,630)	$	(690,402)

Loss per share, basic and diluted	$	(0.01)	$	(0.21)		(0.22)

Weighted average shares outstanding, basic and diluted		3,150,000		750		3,150,750

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The impact of the ~~common stock during~~restatements on the ~~period.~~

~~Potentially dilutive securities excluded from~~consolidated statement of operations for the ~~computation~~six-month period ended June 30, 2021 is presented below:


	For the Six Months Ended June 30, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated

Revenues	$	18,386	$	—	$	18,386
Cost of sales, net		265,883		(265,883)		—
Gross margin		(247,497)		247,497		—

Operating expenses
Compensation and benefits		—		2,080,953		2,080,953
Other general and administrative		7,025,819		(3,462,669)		3,563,150
Depreciation and amortization		457,773		37,715		495,488
Total operating expenses		7,483,592		(1,344,001)		6,139,590

Operating loss		—		(6,121,204)		(6,121,204)

Other income (expense)
Other income		30,443		(1,092)		29,351
Interest expense		(168,700)		(750,000)		(918,700)
Total other income (expense)		(138,257)		(751,092)		(889,349)

Net loss before provision for income taxes		(7,869,346)		840,406		(7,010,553)
Provision for income taxes		—		—		—
Net loss	$	(7,869,346)	$	840,406	$	(7,010,553)

Loss per share, basic and diluted	$	(1.00)	$	0.04		(0.95)

Weighted average shares outstanding, basic and diluted		7,906,647		(554,802)		7,351,845

Table of ~~basic net income (loss) per share as of March 31, 2021 and 2020 are as follows:~~Contents

March 31, March 31,
2021 2020
Convertible Series (“Seed”) Preferred stock (1:1.260023 conversion) 3,150,058 3,150,058
Employee stock options 723,729 59,063
Total potentially dilutive securities 3,873,787 3,209,121

~~A reconciliation~~The impact of the ~~numerator and denominator~~restatements on the consolidated statement of operations for ~~basic and fully dilutive net income (loss) per share~~the six-month period ended June 30, 2020 is ~~as follows for periods ended March 31, 2021 and December 31, 2020, respectively:~~presented below:


	For the Six Months Ended June 30, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated

Revenues	$	—	$	—	$	—
Cost of sales, net		—		—		—
Gross margin		—		—		—

Operating expenses
Compensation and benefits		—		372,705		372,705
Other general and administrative		—		701,973		701,973
Depreciation and amortization		11,512		197,843		209,355
Total operating expenses		11,512		1,272,521		1,284,032

Operating loss		—		(1,284,032)		(1,284,032)

Other income (expense)
Other income		60,853		3,251		64,104
Interest expense		(35,416)		(51,013)		(86,429)
Total other income (expense)		25,437		(47,762)		(22,325)

Net loss before provision for income taxes		13,925		(1,320,283)		(1,306,357)
Provision for income taxes		—		—		—
Net loss	$	13,925	$	(1,320,283)	$	(1,306,357)

Loss per share, basic and diluted	$	0.00	$	(0.42)		(0.41)

Weighted average shares outstanding, basic and diluted		3,150,000		404		3,150,404

March 31, March 31,
2021 2020
Weighted average shares of common stock outstanding 4,480,037 3,150,000
Weighted average shares of potentially dilutive securities 3,829,336 3,209,121
Weighted average shares of common stock outstanding and potentially dilutive securities 8,309,373 6,359,121

March 31,
2021
March 31,
2020

Net income (loss) for the period (3,176,875 ) (16,803 )
Weighted average shares of common stock outstanding and potentially dilutive securities 8,309,373 6,359,121
Fully dilutive net income (loss) per share (0.71 ) (0.01 )

March 31,
2021 March 31,
2020
Net income (loss) for the period (3,176,875 ) (16,803 )
Weighted average shares of common stock outstanding 4,480,037 3,150,000
Basic net income (loss) per share (0.71 ) (0.01 )

~~Common Stock~~

The Company issued 3,150,000 shares of common stock on April 4, 2018 to Founders. At March 31, 2021 and December 31, 2020, outstanding shares of common stock totaled 4,599,084 and 3,150,058, respectively. The Company incurred no stock buybacks or treasury transactions during the periods included in this report. The Company paid no dividends on common stock issued during the periods ended March 31, 2021 and December 31, 2020, respectively. The Company accounts for common stock at par value. In 2021, the Company increased total authorized common shares from 15,000,000 to 80,000,000.

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~~Convertible Instruments~~

~~U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria.~~ The ~~criteria include circumstances in which (a) the economic characteristics and risks~~impact of the ~~embedded derivative instrument are not clearly and closely related to~~restatements on the ~~economic characteristics and risks~~consolidated statement of cash flows for the six-month period ended June 30, 2021 is presented below:


	For the Six Months Ended June 30, 2021
	As Previously		Restatement
	Reported		Adjustments		As Restated
Operating activities
Net loss	$	(7,869,346)	$	858,793	$	(7,010,553)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		457,773		37,715		495,488
Shares issued with debt		—		750,000		750,000
Share based compensation		1,663,908		(1,531,966)		131,942
Share based payments for services		—		476,180		476,180
Amortization of operating lease right-of-use asset		—		27,109		27,109
Changes in assets and liabilities:
Other assets (complimentary devices)		64,375		(64,375)		—
Prepaid expenses and other assets		(2,414,568)		—		(2,414,568)
Other assets		—		(47,410)		(47,410)
Accounts payable		465,526		(484,171)		(18,645)
Lease liability		—		(27,711)		(27,711)
Interest payable, related parties		(116,600)		—		(116,600)
Net cash used in operations		(7,748,932)		(5,837)		(7,754,769)
Investing activities
Capital expenditures		(51,701)		4		(51,697)
Net cash used in investing activities		(51,701)		4		(51,697)
Financing activities
Proceeds from related party debt payable		2,580,000		(31,656)		2,548,344
Proceeds from issuance of common stock, net		30,949,003		(15,216,354)		15,732,649
Proceeds from issuance of warrants, net		42,910		(42,910)		—
Proceeds from exercise of warrants		—		15,472,859		15,472,859
Proceeds from exercise of options		—		15,085		15,085
Repayments of related party debt payable		(6,085,962)		(191,192)		(6,277,154)
Net cash provided by financing activities		27,485,951		5,832		27,491,783
Net change in cash and cash equivalents		19,685,318		—		19,685,318
Cash and cash equivalents at the beginning of the period		8,335		—		8,335
Cash and cash equivalents at the end of the period	$	19,693,653	$	—	$	19,693,653

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The impact of the ~~host contract, (b)~~restatements on the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional.

~~The Company has determined that the embedded conversion options should not be bifurcated from their host instruments and the Company records, when necessary, discounts to convertible notes~~consolidated statement of cash flows for the intrinsic value of conversion options embedded in debt instruments (the beneficial conversion feature) based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.six-month period ended June 30, 2020 is presented below:


	For the Six Months Ended June 30, 2020
	As Previously		Restatement
	Reported		Adjustments		As Restated
Operating activities
Net income (loss)	$	13,925	$	(1,320,282)	$	(1,306,357)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		11,512		197,843		209,355
Share based compensation		—		14,358		14,358
Amortization of operating lease right-of-use asset		—		29,165		29,165
Changes in assets and liabilities:
Other assets (complimentary devices)		(1,256,500)		1,256,500		—
Prepaid expenses and other assets		2,315		(65)		2,250
Other assets		—		65		65
Accounts payable		74,325		(82,996)		(8,671)
Lease liability		—		(28,677)		(28,677)
Interest payable, related parties		35,413		7,033		42,446
Net cash used in operations		(1,119,010)		72,943		(1,046,067)
Investing activities
Capital expenditures		—		(1,026,857)		(1,026,857)
Acquisition of intangible assets		(1,418,583)		1,110,855		(307,728)
Net cash used in investing activities		(1,418,583)		83,998		(1,334,585)
Financing activities
Proceeds from related party debt payable		2,539,745		(156,212)		2,383,533
Net cash provided by financing activities		2,539,745		(156,212)		2,383,533
Net change in cash and cash equivalents		2,152		730		2,882
Cash and cash equivalents at the beginning of the period		38,890		—		38,890
Cash and cash equivalents at the end of the period	$	41,042	$	730	$	41,772

During the periods ended March 31, 2021 and December 31, 2020, the Company did not record or issue convertible notes with beneficial conversion features and did not record debt discounts related to beneficial conversion features. During 2020 and 2019, the Company issued Convertible Series Seed Preferred stock which has option for stockholders to convert into common stock on a 1:1.260023 basis, and is classified as stockholders’ equity on the balance sheet at March 31, 2021 and December 31, 2020, respectively. If converted into common stock by Series Seed stockholders, its fair value would approximate the existing carrying (book) value of the Series Seed Preferred stock as stated. Thus, no embedded derivatives were identified on the conversion option of Convertible Series Seed Preferred stock at March 31, 2021 or December 31, 2020, respectively. In May 2020, Convertible Series Seed Preferred Stock converted 2,500,000 shares into 3,150,058 shares of common stock.

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

The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedging relationships and the types of relationships designated are based on the exposures hedged. At March 31, 2021 and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges.

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

~~Stock based compensation~~

The Company maintains a stock equity incentive plan under which they may grant non-qualified stock options, incentive stock options, stock appreciation rights, stock awards, performance and performance-based awards, or stock units to employees, non-employee directors and consultants.

~~Income Taxes~~

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

~~Change in Accounting Estimate / Prior Period Reclassifications~~

Certain prior period amounts have been reclassified to conform to current period presentation, including a change in the estimated useful life of capitalized platform production costs (see Note 10). Management originally determined 10 years as a reasonable useful life estimate for these assets, but has revised it to 5 years based on external market competition and other technological factors. The Company made the change as part of its standard review of its accounting policies in connection with the audit for the year ended December 31, 2020. The Company has considered the change in estimated useful life a change in accounting estimate under GAAP, and has accounted for it prospectively in the consolidated financial statements. Based on current conditions, the Company believes its revised estimated useful life allocation reasonable for these assets.

~~Recent Accounting Pronouncements~~

There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

~~Forward Stock Split~~

~~On March 1, 2021, the Company effected a forward stock split on a ratio of 1.260023 to 1.000000 basis. Share amounts reflected in this Report are presented post-split, unless otherwise noted.~~

~~Subsequent Events~~

~~The Company evaluates events that have occurred after the balance sheet date through June 10, 2021. See Note 14.~~

NOTE 45 FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

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

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

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

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

~~Significant observable and unobservable inputs include stock price, exercise price, annual risk-free rate, term, and expected volatility, and are classified within~~complexity. Level 3 valuations may require the

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use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management's assumptions could vary depending on the asset or liability valued and the valuation ~~hierarchy.~~ method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods.

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

operations.

Non-financial assets that are measured on a non-recurring basis include our intellectual property and property and equipment which are measured using fair value techniques whenever events or changes in circumstances indicate a condition of impairment exists. ~~The estimated fair value of prepaid expenses, accounts payable and accrued expenses approximates their individual carrying amounts due to the short-term nature of these measurements.~~

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

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

As of March 31, 2021
Embedded conversion derivative liability on employee stock options $ 278,825 $ - $ - $ 278,825
Total as of March 31, 2021 $ 278,825 $ - $ - $ 278,825

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

Balance at December 31, 2019 $ -0-
Fair value of employee stock options issued in 2020 229,712
Balance at December 31, 2020 $ 229,712
Fair value of employee stock options issued in 2021 49,113
Balance at March 31, 2021 278,825

NOTE ~~5 NOTES~~6 DEBT PAYABLE – RELATED ~~PARTY~~

PARTIES

During 2019 and 2020, the Company entered into six promissory note agreements with a related party ~~note payable transaction (the “Notes”) for cash advances associated with Alfi product development costs.~~pursuant to which the Company could borrow up to $2,500,000 at an annual interest rate of 5%. Borrowings pursuant to those agreements were $2,500,000 at December 31, 2020.

~~Unpaid principal on~~During the ~~Notes as of March 31, 2021 and~~year ended December 31, 2020, ~~are $5,808,808 and $5,558,808, respectively. These balances are summarized below:~~

~~Senior~~a related party ~~note~~

~~Advances under~~provided financing of approximately $950,000 for the ~~senior~~Company’s purchase of 7,600 tablets. Payment was due to the related party note payable (“Senior Note”) totaled $-0-, $1,812,718 and $759,090 for periods ending March 31, 2021, December 31, 2020 and 2019, respectively, and are classified as a currently liability on the balance sheet. The Senior Note’s original maturity date was December 31, 2020. An extension to the maturity date was granted by lender to the earlier of June 30, 2021 or the occurrence of certain events, includingupon the closing of the Company’s ~~initial public offering.~~

The Senior Note bears a fixed annual interest rate of 5% per year. For the three months ended March 31, 2021 and 2020, the Company incurred interest expense associated with the Senior Note of $32,147 and $16,392, respectively. Accrued unpaid interest totaled $148,747 and $116,600 at March 31, 2021 and December 31, 2020, respectively.

~~During the years ended December 31, 2020 and 2019, the Company made no repayments to the related party lender on the Senior Note.~~

~~The total outstanding unpaid principal balance on the Senior Note at March 31, 2021 and December 31, 2020 was $2,571,808 and $2,571,808, respectively. In May 2021, the Senior Note was repaid in full.~~

~~On January 15, 2020, as security for the full and prompt payment when due of all indebtedness of the Borrower, created under the Senior Note~~ , existing holders of common stock granted to Lee Aerospace, LLC, a security interest in 2,137,400 shares of Alfi common stock; representing the Senior Note’s collateral. In addition, the Senior Note is secured by a pledge of the Company’s intellectual property.

~~Additional advances by related parties~~

During the twelve months ended December 31, 2020, the Company received two related party advances totaling approximately $37,000 cash consideration. These related party advances carry no specified repayment term, interest rate, or security interest, and are payable only after holder of the Senior Note ~~, referenced above, is repaid in full.~~

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

On December 30, 2020, the Company entered into a $2,000,000 bridge loan agreement with a related ~~party investors.~~party. As of December 31, 2020, ~~$170,000~~$251,654 had been funded on the bridge ~~loan and $1,830,000 remained unfunded to the Company as of December 31, 2020.~~loan. The terms of the bridge loan ~~with related party include~~included repayment of principal on or before June 30, 2021, and an annual interest rate of 18%. In addition to repayment of principal and interest under the bridge loan, the Company issued to the ~~investors 1,260,063~~related party 1,260,023 shares of ~~common stock. The remaining $1,830,000 was funded~~Common Stock. Management valued this issuance of shares at $2,000,000 and recorded that amount in ~~full in January 2021.~~ interest expense.

During the ~~three months~~year ended ~~March~~December 31, ~~2021 and~~ 2020, the Company ~~incurred~~received a cash advance of $27,154 from an affiliated person. The cash advances carried no specified repayment term, interest expense on bridge loan of $75,211 and $-0-, respectively. Outstanding principal associated with bridge loan from related party investor at March 31, 2021 and December 31, 2020 was $2,000,000 and $2,000,000, respectively. In May 2020, this bridge funding was paid in full.rate, or security interest.

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

During April 2021, the Company entered into bridge loans with related party and non-related party investors for an additional aggregate amount of $500,000, with an 18% interest rate. In addition to paying the interest and principal, the Company issued ~~investors 157,561~~315,007 shares of ~~common stock. Outstanding principal associated with~~Common Stock to the bridge loan lenders. Management valued these issuances of shares at $500,000 and recorded that amount in interest expense.

All borrowings from related ~~party investor at March 31, 2021 and December 31, 2020 was $250,000 and $-0-, respectively. In May 2020, the related party bridge loan was~~parties were paid in full .

~~NOTE 6 INCOME TAXES~~

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

~~The Company has recorded no provision for income taxes or accrued a deferred tax asset (or liability)~~IPO in the consolidated financial statements, on the basis that, although expected, the likelihood of the Company realizing any tax benefit (or liability) in the future cannot be calculated as of the date of this Report. As of the date of this Report, the Company is in compliance with all required local, state, and federal tax filings.May 2021.

NOTE 7 COMMITMENTS AND CONTINGENCIES

Concentration of Credit Risk

~~Operating leases~~

~~During~~Generally, the ~~three months periods ended March 31, 2021 and 2020, the Company had two operating leases for office space~~Company’s cash balances, which are deposited in ~~Miami, Florida and Belfast, Ireland.~~

~~Rent expense under the operating leases totaled approximately $135,000 and $25,000 during the three months ended March 31, 2021 and 2020, respectively.~~

~~Employee Equity (Stock) Incentive Plan~~

non-interest-bearing accounts may exceed FDIC insurance limits from time to time. The ~~Company created an employee stock ownership plan in which, at its sole discretion, it may award employees~~financial stability of ~~the Company common stock as an incentive for performance (the “Plan”). 1,575,029 shares of common stock are reserved for issuance under the Plan. During the periods ended March 31,~~these institutions is periodically reviewed by senior management. At June 30, 2021 and December 31, 2020, ~~respectively, the Company granted 53,353~~cash balances in excess of FDIC requirements were $19,443,653 and ~~611,913 common stock options under the Plan.~~$-0-, respectively.

At March 31, 2021 and December 31, 2020, total common stock options issued under the Plan was 723,729 and 670,376, respectively. Weighted average strike price per employee stock option is approximately $1.01 per share. Management recorded stock-based compensation expense associated with the issuanceTable of ~~employee stock options of $49,113 and $229,712 for the three and twelve months ended March 31, 2021 and December 31, 2020, respectively.~~Contents

~~As of the date of this Report, no employee stock options were exercised.~~

~~License Agreement~~

The Company expects to finalize license agreements with customers for its technology services in fiscal year 2021. The Company currently has agreements with rideshare and other businesses for placement of its Software-as-a-service (SaaS) and technology products into tablet devices and smart screens (See Note 3).

Litigation, Claims, and Assessments

The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. ~~There are no such matters as of March 31, 2021.~~

~~Related Parties~~

~~The Company entered into agreements with related parties during the three and twelve months ended March 31, 2021 and December 31, 2020, respectively (see Note 5 and Note 13).~~

NOTE 8 STOCKHOLDERS’ EQUITY (DEFICIT)

~~As of March 31, 2021, there is not a viable market for~~Common shares issued before the Company’s common stock to determine its fair value; therefore, management estimated the fair value to be utilized in the determining the fair value of issued conversion options. In estimating the fair value, management considered theIPO were recorded at estimated fair value. In May 2021, the Company completed its IPO of its Common Stock, creating liquidity and a visible fair market value ~~of assets received in exchange~~ for ~~equity instruments and placement agents’ assessments of~~its Common Stock. The Common Stock is listed on the ~~underlying common shares relating to our issuance of our senior convertible preferred stock. Considerable management judgment is necessary to estimate~~Nasdaq Capital Market under the ~~fair value. Accordingly, actual results could vary significantly from management’s estimates.~~symbol “ALF”.

In 2018, the Company created a class of ~~Preferred~~ Series Seed ~~stock (“~~Preferred ~~stock”). Par value for the Preferred stock is $0.0001 per share~~Stock and 2,500,000 shares of Series Seed Preferred ~~stock~~Stock were authorized. During 2018 and 2019, 2,500,000 shares of Series Seed Preferred ~~stock~~Stock was issued to an investor in exchange for $2,500,000 cash consideration. ~~At March 31, 2021 and December 31, 2020, total~~Shares of Series Seed Preferred ~~stock shares issued and outstanding were 2,500,000~~Stock converted to Common Stock at a ratio of 1:1.260023 at any time at the ~~end~~option of ~~each period.~~

the holder. Holders of Series Seed Preferred ~~stockholders have~~Stock had preferential liquidation rights in the event of the Company’s dissolution. ~~The~~Shares of Series Seed Preferred ~~stock shares convert to common stock at a ratio of 1:1.260023 at any time and from time to time in the sole discretion of the holder. Preferred stock shares bear no~~Stock bore 0 interest or dividend payments to its ~~Holders.~~

holders. The Series Seed Preferred ~~stock has~~Stock had a buyout feature if not converted into ~~common stock~~Common Stock by ~~investor.~~the holder. Series Seed Preferred ~~stock can~~Stock could be bought out by the Company if full return of principal is made to ~~investor~~the holder ($2,500,000), plus an additional 1x return of capital to ~~investor~~the holder ($2,500,000). ~~The Preferred stock will convert to common stock upon an IPO.~~

~~As of March 31, 2021 and~~On December 31, 2020, no2,500,000 Series Seed Preferred ~~stock~~Stock shares ~~had been converted into common stock by its holders.~~were issued and outstanding. In May ~~2020,~~2021, 2,500,000 shares of ~~convertible preferred series seed stock~~Series Seed Preferred Stock were converted by into 3,150,058 shares of ~~common stock upon the consummation~~Common Stock at a conversion ratio of ~~the Company’s initial public offering.~~1:1.260023.

Dividends

Holders of ~~Preferred~~preferred stock are not entitled to ~~any~~ dividend payment but do have liquidation preference in the event of dissolution of the Company. Holders of ~~common stock~~Common Stock are not entitled to ~~any~~ dividend payments but would receive such payments in the event dividend payments were made to stockholders. There ~~were no~~was 0 dividend

~~payments~~ payment made on any class of stock ~~(common~~ (Common Stock or ~~preferred) for the three and twelve months ended March 31, 2021 and December 31, 2020.~~ preferred stock) through June 30, 2021.

Common Stock

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

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

During the ~~twelve months~~year ended December 31, 2020, the Company issued ~~1,260,063~~1,260,023 shares of ~~common stock~~Common Stock to ~~an investor~~related party investors in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued this issuance of ~~common~~ shares ~~as stock-based compensation~~ ~~expense during the twelve months ended December 31, 2020 for approximately $2,000,000.~~at $2,000,000 and recorded that amount in interest expense.

During the ~~three months~~quarter ended March 31, 2021, the Company arranged bridge loans with related party investors. The Company issued ~~157,561~~157,503 shares of ~~common stock to an investor~~Common Stock in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued these issuances of shares at $250,000 and recorded that amount in interest expense.

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

During April and May 2021, the Company also issued 300,000 shares of Common Stock in connection with certain vendor contracts. Management valued this issuance of ~~common~~ shares ~~as stock-based compensation~~ ~~expense during the three months ended March 31, 202 for approximately $250,000.~~

at $476,180 and recorded that amount in other general and administrative expense.

Initial Public Offering

Table of Contents

On May 3, 2021, the Company’s registration statement on Form S-1 (File No. 333-251959) was declared effective by the Securities and Exchange Commission (the “SEC”) and the Company completed its IPO on May 6, 2021. In connection with the IPO, the Company issued and sold 4,291,045 shares of Common Stock and warrants to purchase 4,291,045 shares of Common Stock (including 559,701 shares of Common Stock and warrants to purchase 559,701 shares of Common Stock pursuant to the full exercise of the underwriters’ overallotment option), at the combined public offering price of $4.15 for aggregate gross proceeds of approximately $17.8 million , before deducting underwriting discounts and commissions and other estimated offering expenses payable by Alfi. Net IPO proceeds of approximately $15.7 million were allocated $11.0 million to Common Stock and $4.7 million to warrants. The warrants were exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance and have an exercise price of $4.57 per share.

On May 3, 2021, pursuant to the underwriting agreement for the IPO, we issued to the underwriters warrants to purchase up to an aggregate of 186,567 shares of Common Stock (“Underwriter’s Warrants”). The Underwriter’s Warrants may be exercised beginning on May 3, 2022 until May 3, 2026. The initial exercise price of each Underwriter’s Warrant is $5.19 per share.

Warrants Issued and Exercised

Warrants to purchase 4,477,612 shares of Common Stock were issued in connection with the Company’s May 2021 IPO. Through June 30, 2021, warrant holders had exercised warrants to purchase 3,385,746 shares of Common Stock providing Alfi with approximately $15.5 million in additional working capital. As of June 30, 2021, there were warrants outstanding to purchase 1,091,866 shares of Common Stock. As of August 13, 2021, warrant holders have exercised a total of 3,507,237 warrants providing a total of approximately $16.0 million in additional funding. As of August 13, 2021, there were warrants outstanding to purchase 970,375 shares of Common Stock.

Share Buy-Back

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

Employee Equity (Stock) Incentive Plan

The Company ~~created an employee~~has a stock ~~ownership~~equity incentive plan, inthe 2018 Plan, under which, at its sole discretion, it may award employees of the Company ~~common stock~~Common Stock or Common Stock options, among other awards, as an incentive for ~~performance (the “Plan”).~~performance. Total shares of ~~common stock~~Common Stock reserved under the 2018 Plan for employee ~~stock options~~grants is not to exceed 1,575,029 shares.

During the ~~three months~~three-month periods ended ~~March 31,~~June 30, 2021 and June 30, 2020, respectively, the Company ~~issued approximately 53,353~~granted 251,500 and ~~59,063 common stock~~137,819 Common Stock options ~~to employees in each period, respectively. At March 31,~~under the 2018 Plan. During the six-month periods ended June 30, 2021 and June 30, 2020, respectively, the Company granted 449,168 and 137,819 Common Stock options under the 2018 Plan.

On June 30, 2021, and December 31, 2020, total ~~unexercised common stock~~Common Stock options issued ~~to employees~~ under the ~~Company’s employee stock option ownership incentive plan was 723,729~~2018 Plan were 673,535 and ~~670,376,~~236,259, respectively.

Weighted average strike price per employee stock option isas of June 30, 2021, was approximately ~~$1.01~~$2.20 per share. Management recorded stock-based compensation expense associated with the issuance of employee stock options of ~~$49,113~~$85,256 and ~~$229,712~~14,358 for the ~~periods ending March 31,~~three months ended June 30, 2021 and ~~December 31,~~2020, respectively, and $131,942 and $14,358 for the six months ended June 30, 2021 and 2020, respectively. ~~At March 31,~~

During the three months ended June 30, 2021, ~~there is not a viable market for the Company’s common stock to determine its fair value; therefore, management estimated the fair value to be utilized in the determining the fair value of issued~~1 employee ~~stock conversion options. Considerable management judgment is necessary to estimate the fair value of employee~~exercised stock options ~~issued employees. Accordingly, actual results could vary significantly from management’s estimates.~~

Asand received 11,892 restricted shares of ~~the date of this Report, no employee stock options were exercised by participants of the plan.~~

~~Stock Option and Warrant Valuation~~

Common Stock.

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

~~Forward stock split~~Table of Contents

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

NOTE 9 PROPERTY AND EQUIPMENT

Property and equipment, ~~balances,~~ net of accumulated depreciation, ~~at March 31, 2021 and December 31, 2020 were $116,368 and $117,474, respectively, and consist~~consists of ~~equipment purchases~~ the ~~Company made for IT server and other depreciable computer hardware assets. These assets were assigned a 5-year average useful life.~~following:


	Jun 30, 2021		Dec 31, 2020

Tablets	$	972,050	$	972,050
Office furniture and fixtures		242,960		191,261
Property and equipment, gross		1,215,010		1,163,311

Less accumulated depreciation		(1,064,491)		(657,017)

Property and equipment, net	$	150,519	$	506,294

The Company incurred depreciation expense of ~~$8,898~~$204,168 and ~~$23,915~~$199,791 for the ~~three and twelve months~~three-month periods ended ~~March 31,~~June 30, 2021, and ~~December 31,~~June 30, 2020, respectively, and $407,476 and $209,355 for the six-month periods ended June 30, 2021, and June 20, 2020, respectively.

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

Property and equipment balance at December 31, 2019, net of accumulated depreciation $ 107,744
Additions 33,645
Depreciation expense (23,915 )
Property and equipment balance at December 31, 2020, net of accumulated depreciation $ 117,474
Additions 7,792
Depreciation expense (8,898 )
Property and equipment balance at March 31, 2021, net of accumulated depreciation $ 116,368

~~Accumulated depreciation recorded as~~must be returned to the Company upon termination of ~~March 31, 2021 and December 31, 2020 totaled $54,979 and $46,081, respectively.~~the rideshare or other use agreement. The Company ~~incurred no fixed asset dispositions~~may pay a revenue share or ~~identified asset impairments during~~commission to such third party for the ~~periods ended March 31, 2021 and December 31, 2020, respectively.~~placement of the Alfi-enabled device.

NOTE 10 INTANGIBLE ASSETS – INTELLECTUAL PROPERTY

Intellectual Property – Software Development and Patent ~~and Production~~Acquisition Costs

The ~~Company's~~Company’s intellectual property includes capitalized software development and patent ~~and platform production~~acquisition costs associated with creation of its technology (see Note 1). ~~Included~~During the period between the Company’s formation in ~~capitalized patent costs are~~2018 through June 2020, the ~~legal~~Company created and ~~logistics expenses directly associated with patent~~developed the proprietary software that is the basis of its ability to deliver targeted digital advertising. The Company considers this software to be internal-use software, as it is used exclusively by the Company on devices it controls to deliver the advertising services it is engaged to provide. The Company determined that the application development ~~acquisition,~~phase for this software began in May 2018 and ~~filing. Included~~ended in ~~capitalized platform~~June 2020, and its first release of production ~~costs are the direct labor, design, testing, acquisition, and allocation for administrative overhead associated with~~ software ~~development. Upon being placed into service~~was activated in a tablet in July 2020.

On July 1, 2020 forward, the Company commenced depreciation of these intangible assets. The Company estimated a 5-year useful life for ~~beta testing,~~ capitalized ~~patent and platform production~~software development costs and ~~their anticipated useful lives are summarized as follows:~~

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

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

Management’s determination of useful life estimate for patent acquisition costs is reasonable given the statutory periods for patents of 20 years. Management selected a 5-year useful life for productionsoftware development costs as ~~a conservative~~an expectation of the length of time the Company expects its technology product set to produce future cash flows ~~considering~~assuming that there are no significant software or version upgrades. ~~However, with new upgrades to the Alfi platform we believe that the useful life will be extended out further. (See Note 3, Change in Accounting Estimate / Prior Period Reclassifications).~~All software development costs incurred beyond June 30, 2020 are being expensed.

~~A summary of intangible asset,~~Intangible assets, net of accumulated amortization, ~~balances as~~consists of ~~March 31,~~the following:


	Jun 30, 2021		Dec 30, 2021

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

Less accumulated amortization		(176,025)		(88,013)

Intangible assets, net	$	800,259	$	888,271

The Company incurred amortization expense of $44,006 and $-0- for the three-month periods ended June 30, 2021, and ~~December 31,~~June 30, 2020, ~~are as follows:~~

Intangible asset balance at December 31, 2019, net of accumulated amortization $ 3,198,051
Additions 1,626,458
Amortization expense (440,321 )
Intangible asset balance at December 31, 2020, net of accumulated amortization $ 4,384,188
Additions -0-
Amortization expense (219,558 )
Intangible asset balance at March 31, 2021, net of accumulated amortization $ 4,164,630

~~When Alfi acquires devices, they are not ready~~respectively and $88,012 and $-0- for ~~technical deployment. They have to first go through an activation process, which includes deleting existing software from~~ the ~~device~~six-month periods ended June 30, 2021, and ~~installation~~June 30, 2020, respectively.

Table of the Alfi platform, before being placed into service. Upon activating the first tablet device in July 2020, the Company placed its platform into service and began accruing amortization. Up until this point, Alfi was still incurring platform production costs.Contents

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

Year 1 $ 658,677
Year 2 $ 878,235
Year 3 $ 878,235
Year 4 $ 878,235
Year 5 $ 459,641
Thereafter $ 411,607
Total $ 4,164,630


2021	$	88,012
2022		176,025
2023		176,025
2024		176,025
2025		92,820
Thereafter		91,351
	$	800,259

~~The Company recorded intangible assets, net of accumulated amortization, of $4,164,630 and $4,384,188, respectively, as of March 31, 2021 and December 31, 2020,.~~

~~Amortization expense for the three months ended March 31, 2021 and 2020 were $219,558 and $-0-, respectively.~~

Accumulated amortization for periods ended March 31, 2021 and December 31, 2020 were $659,879 and $440,321, respectively. No asset impairment expense or intangible asset dispositions were incurred during fiscal year either period presented under this Report.

~~Intangible assets, net of accumulated amortization totaled $4,164,630 and $4,384,188 as of March 31, 2021 and December 31, 2020, respectively.~~

~~NOTE 11 OTHER ASSETS (COMPLIMENTARY DEVICES)~~

~~Tablets~~

The Company purchased approximately 9,600 Lenovo tablet hardware devices in 2020 (the “devices”), which are held for placement with rideshare and other businesses. As part of Alfi’s agreements with rideshares, malls and airport owners, devices are provided as a complimentary product. Alfi may pay a revenue share or commission to such third party for the placement of the Alfi-enabled device. See Note 3 for a discussion of revenue recognition from such placement.

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

At March 31, 2021 and December 31, 2020, the Company had approximately 8,600 devices on-hand at the end of both periods, respectively. During the three and twelve months ended March 31, 2021 and December 31, 2020, the Company placed approximately -0- and 1,000 devices into service with rideshare or other businesses, respectively.

As of March 31, 2021 and December 31, 2020, Other Assets (Complimentary Devices) totaled $1,104,000, respectively, at the end of each period. As of March 31, 2021 and December 31, 2020, the cost of the tablets on-hand approximated their fair market value. The Company recorded cost of sales associated with Other Assets (Complimentary Devices) of approximately $-0- - for the three months ended March 31, 2021 2020, respectively.

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

Other assets (complimentary devices) balance at December 31, 2019, net $ -0-
Purchase of Other assets (complimentary devices) 1,256,500
Other assets (complimentary devices) expensed to cost of sales (152,500 )
Other assets (complimentary devices) balance at December 31, 2020, net $ 1,104,000
Other assets (complimentary devices) expensed to cost of sales -0-
Other assets (complimentary devices) balance at March 31, 2021, net $ 1,104,000

When tablets are placed into service with a rideshare or other business, legal ownership transfers to such entity. As of March 31, 2021, there were approximately 7,600 tablets held as collateral with a related party (see Note 5).

~~NOTE 12 OTHER INCOME~~

During the three months ended March 31, 2021 and 2020, the Company realized and collected approximately $15,965 and $-0-, essentially a foreign tax credit for increasing the value the software not yet sold, associated with its wholly owned subsidiary Alfi NI Ltd. This amount was recorded as other income in the consolidated statement of operations for the three months ended March 31, 2021 and 2020.

In addition to the VAT refund received, during the three months ended March 31, 2021 and 2020, respectively, the Company also realized and collected approximately $-0- and $9,152 in development credits associated with its wholly owned subsidiary Alfi NI Ltd to encourage software development in Northern Ireland. This amount was recorded as other income in the consolidated statement of operations for the three months ended March 31, 2021 and 2020, respectively.

~~NOTE 13 NOTE RECEIVABLE RELATED PARTY~~

~~During the twelve months ended December 31, 2020, the Company incurred a related party note receivable associated with its bridge loan (see Note 5) of $1,830,000.~~

~~During the three months ended March 31, 2021, the balance of the note receivable with related party was funded to the Company in full.~~

~~The balance of the related party note receivable at March 31, 2021 and December 31, 2020 was $-0- and $1,830,000, respectively.~~

NOTE 1411 SUBSEQUENT EVENTS

~~Subsequent Events~~

The Company ~~evaluates~~has disclosed events that have occurred after the balance sheet date of June 30, 2021 through ~~June 10, 2021.~~

~~Initial public offering~~

~~On May 3,~~August 16, 2021 (the Original Filing date of the Company’s ~~registration statement~~Quarterly Report on Form ~~S-1(File No. 333-251959 ) was declared effective by~~10-Q for the ~~SEC. In connection with the IPO, the~~quarter ended June 30, 2021).

The Company ~~issued and sold 4,291,045 shares of common stock and warrants~~signed a contract to purchase ~~4,291,045 shares of common stock (including 559,701 shares and warrants to~~a condominium for $1,100,000 in Miami Beach, FL on July12, 2021. The purchase ~~559,701 shares issued pursuant to~~was completed in August 2021. The Company sold the ~~exercise~~condominium in ~~full of the underwriters' overallotment option) at the combined public offering~~April 2022 for a gross sales price of ~~$4.15 for aggregate gross proceeds of~~ approximately ~~$17.8 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company.~~$1.1 million.

~~Bridge loan agreement~~

Subsequent to March 31, 2021, in April 2021, the Company entered into related party and non-related party promissory notes, associated with its bridge loans (see Note 5) for an additional aggregate amount of $500,000, with an 18% interest rate. In addition to paying the interest and principal, the Company issued 315,006 common stock shares to the bridge loan lenders. In May 2020, the bridge loan from related parties was repaid in full.

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~~wholly owned subsidiary, Alfi ~~NI Ltd. Formed in~~(N.I.) Ltd, formed in Belfast, Northern Ireland on September 18, 2018. Unless otherwise noted, the share and per share information in this Quarterly Report ~~on Form 10-Q~~ reflect a forward stock split of the ~~common stock~~Common Stock privately held before the IPO at a percentage of 1.260023 effective on March 15, 2021.

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

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

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

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

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

Investors should read this Quarterly Report, ~~on Form 10-Q~~ and the documents that we reference in this ~~report~~Quarterly Report and have filed with the SEC, ~~including our Registration Statement on Form S-1, as amended, (File No. 333-251959) filed with the SEC on January 8, 2021~~ 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.

Table of Contents

Overview

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

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

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

Alfi has created an enterprise grade, multimedia computer vision and machine learning platform, capable of generating powerful advertising recommendations and insights. Multiple technologies work together ~~in Alfi~~ with viewer privacy and data-rich reporting ~~objectives~~ as our ~~two goals.~~primary objectives. Alfi ~~uses~~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 ~~don’t~~do not need to know ~~your~~someone’s name ~~and~~or invade ~~your~~their privacy to gain a deeper understanding of the consumers who view their content. By providing age, gender ~~ethnicity~~ and geolocation information, we believe brand owners should have ~~all of~~ the pertinent data they need for meaningful interaction. The artificial intelligence and machine learning components of Alfi also gather retina tracking data, keyword recognition and voice intonation without compromising the privacy of the end-user.insight. From an analytics perspective, these data points ~~give~~are intended to provide meaningful reporting instead of arbitrary calculations based on estimates of ad engagement.

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

Our initial focus is to place our Alfi-enabled devices in malls, airports rideshares and ~~airports. According~~taxis. We also have begun offering our software solution to Harvard Business School study published in February 2018, Americans are estimated to have spent more than 37 billion hours waiting. Alfi has been beta testing Alfi-enabled devices in these locations to determine market receptivity to smart screens. From our testing, Alfi has been able to achieve CTRs, of between 6% and 9%, but believes it could achieve CTRs exceeding 15%other DOOH media operators as ~~Alfi- enabled devices are deployed more widely. By comparison, according to Acquiso in 2018, the average CTR for~~ a ~~display banner ad was less than 1%.~~SaaS product.

~~We began generating revenue from our Alfi-enabled devices in the first quarter of 2021.~~ Currently, we intend to charge customers solely based on a CPM, or ads delivered, model. As we continue to prove Alfi in the ~~market,~~marketplace, we expect to charge customers based on a combination of CPM and CTR, and ~~that~~we expect we will generate higher CPM rates than typical DOOH advertising platforms because we ~~will~~have the ability to only deliver ads to the customer’s desired demographic. In addition, we ~~will~~also intend to provide the aggregated data to the brands ~~on a subscription basis,~~ so they can make more informed advertising decisions.

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

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

With respect to SaaS licenses, Alfi expects to enter into license agreements with third parties that place their own devices for advertising together with the remote management access and data reporting that the Alfi platform provides. These licenses may be for a specified duration or on a renewable subscription basis. Alfi will charge these third parties on a monthly, per screen fee for use of the Alfi platform. Alfi will recognize the revenue from these licenses on a monthly basis in accordance with Topic 606.

Alfi has distributed and activated into operations over 1,000 devices tablets and kiosks at no cost to rideshare, mall, or airport owner(s). It is the viewers of the Alfi-enabled device, rather than the rideshare, mall or airport owner that the Alfi-enabled device engages with and to whom Alfi delivers advertising and content. It is projected that Alfi will begin selling advertising and content for those tablets placed into operation in the third quarter of 2021.

Recent Developments

Initial Public Offering

On May 3, 2021, the Company’s registration statement on Form S-1(File No. ~~333-251959 )~~333-251959) was declared effective by the ~~SEC.~~SEC and the Company completed its IPO on May 6, 2021. In connection with the IPO, the Company issued and sold 4,291,045 shares of ~~common stock~~Common Stock and warrants to purchase 4,291,045 shares of ~~common stock~~Common Stock (including 559,701 shares of Common Stock and warrants to purchase 559,701 shares ~~issued~~of Common Stock pursuant to the full exercise ~~in full~~ of the ~~underwriters'~~underwriters’ overallotment option), at the combined public offering price of $4.15 for aggregate gross proceeds of approximately $17.8 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by ~~us.~~Alfi. The warrants were exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance and have an exercise price of $4.57 per share.

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Warrants Exercised

Warrants to purchase 4,477,612 shares of Common Stock were issued in connection with the Company’s May 2021 IPO. Through June 30, 2021, warrant holders had exercised warrants to purchase 3,385,746 shares of Common Stock, providing Alfi with approximately $15.5 million in additional working capital. As of June 30, 2021, there were warrants outstanding to purchase 1,091,866 shares of Common Stock. As of August 13, 2021, warrant holders have exercised warrants to purchase a total of 3,507,237 shares of Common Stock, providing a total of approximately $16.0 million in additional funding. As of August 13, 2021, there were warrants outstanding to purchase 970,375 shares of Common Stock.

Share Buy-Back

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

Impact of COVID-19

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

COVID-19 has adversely affected the Company’s financial condition and results of operations. The impact of the COVID-19 outbreak on businesses and the economy in the United States is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businesses and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.

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

Results of Operations

Revenues

~~Revenues, net~~

In general, Alfi ~~expects to have three main~~earns revenue ~~streams;~~from rideshares ~~via the Alfi Network,~~or SaaS contracts with operating companies who maintain their own network and lease the Alfi ~~platform,~~platform.

Operating Expenses

Compensation and ~~annual data subscriptions of Alfi’s impressions gathered from the platform.~~

~~Cost of Sales~~

~~The cost of goods sold~~benefits expenses consists costs associated with the operation of our technology platform, including compensation expenses related to our technology personnel (including salaries, commissions, bonuses, stock-based compensation and taxes), fees for independent contractors, computer hosting and technology-related subscription costs.

~~Operating Expenses~~

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

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Three-Month Period Ended June 30, 2021, Compared to Three-Month Period Ended June 30, 2020

~~Three Months Ended March 31, 2021 compared to three months ending March 31, 2020~~


	Three months		Three months
	ended Jun 30,		ended Jun 30,
	2021		2020		$ Change		% Change
Revenues	$	936	$	—	$	936		N/M

Operating expenses
Compensation and benefits		1,197,742		202,936		994,806		490.2	%
Other general and administrative		2,311,291		271,384		2,039,907		751.7	%
Depreciation and amortization		248,173		199,791		48,381		24.2	%
Total operating expenses		3,757,205		674,111		3,083,095		457.4	%

Operating loss		(3,756,269)		(674,111)		(3,082,158)		457.2	%

Other income (expense)
Other income		16,334		53,745		(37,412)		(69.6)	%
Interest expense		(561,786)		(70,037)		(491,750)		702.1	%
Total other expense		(545,453)		(16,291)		(529,161)		N/M

Net loss before provision for income taxes		(4,301,722)		(690,402)		(3,611,320)		523.1	%
Provision for income taxes
Net loss	$	(4,301,722)	$	(690,402)	$	(3,611,320)		523.1	%

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

Revenues ~~net~~

For the three months ended ~~March 31,~~June 30, 2021 and 2020, net revenues ~~increased by $17,450 or 100%~~were $936 and $-0-, ~~when compared to~~respectively. The Company entered into no transactions generating significant revenue during either quarter.

Operating Expenses

For the three months ended June 30, 2021 and 2020, total operating expenses were $3,757,205 and $674,111, respectively, an increase of $3,083,095. Compensation and benefits expense increased as independent contractors became full time employees effective March ~~31,~~1, 2021. Other general and administrative expenses increased due to higher costs related to the Company’s growth and launch of its technology platform and the Company’s IPO. The increase in other general and administrative expenses reflected higher investor relations, insurance, consulting, and marketing costs incurred during the three-month period ended June 30, 2021. Depreciation and amortization charges increased as the three-month period ended June 30, 2021 included additional depreciation charges for tablets acquired during 2020.

Other Income (Expense)

Other income of $16,334 and $56,745 for the three months ended June 30, 2021 and 2020, respectively, includes realized and collected foreign tax credits associated with its wholly owned subsidiary Alfi (N.I.) Ltd. Interest expense of $561,786 and $70,037 for the three months ended June 30, 2021 and 2020, respectively, rose due to additional related party debt payable preceding the Company’s IPO. All borrowings from related parties were paid in full upon completion of the IPO.

Net Loss

For the three months ended June 30, 2021, the net loss increased from $690,402 to $4,301,722, an increase of $3,611,320 compared with the three months ended June 30, 2020. The increase iswas primarily due to higher operating expenses related to the Company’s growth and launch of its technology platform and additional expenses incurred in connection with the IPO.

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Six-Month Period Ended June 30, 2021, Compared to Six-Month Period Ended June 30, 2020


	Six months		Six months
	ended Jun 30,		ended Jun 30,
	2021		2020		$ Change		% Change

Revenues	$	18,386	$	—	$	18,386	N/M

Operating expenses
Compensation and benefits		2,080,953		372,705		1,708,248	458.3	%
Other general and administrative		3,563,150		701,973		2,861,177	407.6	%
Depreciation and amortization		495,488		209,355		286,133	136.7	%
Total operating expenses		6,139,590		1,284,032		4,855,558	378.1	%

Operating loss		(6,121,204)		(1,284,032)		(4,837,171)	376.7	%

Other income (expense)
Other income		29,351		64,104		(34,753)	(54.2)	%
Interest expense		(918,700)		(86,429)		(832,271)	963.0	%
Total other expense		(889,349)		(22,325)		(867,025)	N/M

Net loss before provision for income taxes		(7,010,553)		(1,306,357)		(5,704,196)	436.6	%
Provision for income taxes		—		—		—	N/M
Net loss	$	(7,010,553)	$	(1,306,357)	$	(5,704,196)	436.6	%

Revenues, net

For the six months ended June 30, 2021 and 2020, net revenues were $18,386 and $-0-, respectively. The revenues earned during the six months ended June 30, 2021 related to Alfi’s first SaaS contract revenue generated from a retailer that ~~is paying~~paid Alfi for the cost of the initial pilot for the company. ~~We project that with the launch of the rideshare program in Orlando and Miami during the second quarter, Alfi will recognize ad revenue from that channel as well.~~

~~Cost of Sales~~

Operating Expenses

For the ~~three~~six months ended ~~March 31,~~June 30, 2021 ~~cost of goods sold expense of $104,506 represent a 100% increase when compared to the three months ended March 31, 2020. The increase is primarily due to material costs acquired for SaaS~~ and ~~rideshare roll-outs.~~

~~Operating Expenses~~

~~For the three months ended March 31, 2021~~2020, total operating expenses ~~increased from $9,563 to $2,998,871,~~were $6,139,590 and $1,284,032, respectively, an increase of ~~$2,989,302 when compared to the three months ended March 31, 2020. The increase is primarily due to changes in amortization~~$4,855,558. Compensation and ~~depreciation, compensation~~benefits expense increased as independent contractors became full time employees effective March 1, 2021. Other general and administrative expenses increased due to higher costs related to the Company’s growth and launch of its technology platform and the IPO. The increase in other general and administrative expenses reflected higher investor relations, insurance, recruiting, consulting, and marketing costs incurred during the six months ended June 30, 2021. Depreciation and amortization charges increased as the six months ended June 30, 2021 included additional depreciation charges for tablets acquired during 2020.

Operating Loss

For the six months ended June 30, 2021, the operating loss increased from $1,284,032 to $6,121,204, an increase of $4,837,171 compared with the six months ended June 30, 2020. The increase was primarily due to higher operating expenses related to the Company’s growth and ~~stock-based compensation~~launch of its technology platform and additional expenses incurred in connection with the ~~bridge loan agreements.~~IPO.

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Other Income (Expense)

Other ~~Expense~~income of $29,351 and $64,104 for the six months ended June 30, 2021 and 2020, respectively, included realized and collected foreign tax credits associated with its wholly owned subsidiary Alfi (N.I.) Ltd. Interest expense of $918,700 and $86,429 for the six months ended June 30, 2021 and 2020, respectively, rose primarily due to additional interest expense incurred from related-party financing provided during the 2021 months preceding the Company’s May 2021 IPO.

Net Loss

For the ~~three~~six months ended March 31,2021 other expense increased by ($83,708) to ($90,948) from ($7,240) for the three months ended March 31, 2020. The increase is primarily due to interest expense associated with related party financing.

~~Net Loss~~

~~For the three months ended March 31,2021~~June 30, 2021, the net loss increased from ~~($16,802)~~$1,306,357 to ~~($3,176,875),~~$7,010,553, an increase of ~~($3,160,072) vs.~~$5,704,196 compared with the ~~three~~six months ended ~~March 31,~~June 30, 2020. The increase iswas primarily due to ~~stock-based compensation (a non-cash expense) and general increases in all other expense categories as Alfi prepared for~~higher operating expenses related to the ~~IPO~~Company’s growth and launch of its technology ~~platforms~~.

platform and additional expenses incurred in connection with the Company’s May 2021 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.

~~From~~The Company’s primary source of operating funds since inception through April 2021 was cash proceeds from the ~~inception~~private placements of ~~Alfi in 2018 until our IPO, Alfi’s liquidity was provided by~~preferred equity and ~~related party~~ debt ~~financing. Post~~securities. During the six months ended June 30, 2021, the Company completed its IPO ~~all outstanding debt, including~~yielding net proceeds to the ~~Senior Related Party Note and all Bridge Loan Agreements, totaling $5,808,808 was paid off~~Company of approximately $15.7 million from the ~~IPO proceeds.~~

~~Alfi’s operating needs include~~sale of Common Stock and warrants and approximately $15.5 million from the ~~planned costs to operate our business, including amounts required to fund~~exercise of warrants. The capital raised included funding for working capital to launch and expand operations in accordance with its business model.

The Company intends to raise additional capital ~~expenditures. Our future capital requirements~~through private placements of debt and ~~the adequacy of our available~~equity securities, but there can be no assurance that these funds will ~~depend~~be available on ~~many factors, including our ability~~terms acceptable to ~~successfully commercialize our products and services, competing technological and market developments, and~~ the ~~need to enter into collaborations with other companies~~Company or ~~acquire other companies or technologies to enhance or complement our product and service offerings.~~

~~We believe that our current cash balances and our anticipated cash flows from operations~~ will be sufficient to ~~fund~~enable the ~~operations for~~Company to fully complete its development activities or sustain operations. If the ~~next 12 months.~~

Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There is no assurance that such a plan will be successful.

Off-Balance Sheet Arrangements

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

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 ~~accounting principles generally accepted in the United States, or~~U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements as well as the reported expenses during the reporting periods.

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

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 ~~condensed~~ consolidated financial statements. Therefore, we consider these to be

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

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

Recently Issued Accounting Standards

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Our Interim Chief Executive Officer and Interim Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of ~~March 31, 2021 (the “Evaluation Date”). Based upon~~June 30, 2021. In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that ~~evaluation,~~disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the 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 ~~the~~Interim Chief Financial Officer, ~~concluded that,~~who serve as ofour principal executive officer and principal financial and accounting officer, respectively, has evaluated the ~~Evaluation Date,~~effectiveness of our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) are recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) are accumulated and communicated to management, specificallyas of June 30, 2021. Based on such evaluation, our Interim Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as ~~appropriate~~of June 30, 2021.

As noted in Note 4 to ~~allow timely decisions regarding required~~the consolidated financial statements included in this Quarterly Report, the Company concluded that the Prior Period Financial Statements should no longer be relied upon and should be restated. As such, management believes material weaknesses exist in its internal controls over financial reporting as of June 30, 2021. The Company does not have a sufficient complement of personnel commensurate with the accounting and reporting requirements of a public company. The material weaknesses identified relate to inadequate controls that address segregation of certain accounting duties and reconciliation and analysis of certain key accounts. We have concluded that these material weaknesses arose because, as a pre-revenue private company recently formed, we did not have the necessary personnel to design effective components of internal control, including risk assessment control activities information/communication and monitoring to satisfy the accounting and financial reporting requirements of a public company.

In light of the conclusion that the Company’s internal disclosure controls were ineffective as of June 30, 2021, 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 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

~~Changes in Internal Control Over Financial Reporting~~

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Except as disclosed in Note 4 to the consolidated financial statements included elsewhere in this Quarterly Report, there have been no ~~change~~changes in ~~our~~ internal control over financial reporting (as defined in Rules 13a-15(f) orand 15d-15(f) under the Exchange Act) ~~identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) that occurred~~ during the fiscal quarter ended ~~March 31,~~June 30, 2021 that ~~has~~have materially affected, or isare 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.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None through August 16, 2021 (the Original Filing date of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021).

~~None.~~

Item 1A. Risk Factors

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

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

Unregistered Sale of Equity Securities

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

In connection with bridge loans entered into on December ~~31,~~30, 2020, March 22, 2021, and April 1, 2021, ~~for aggregate gross proceeds of $2.75 million,~~the Company issued to the lenders, ~~received, on a pro rata basis,~~who are all accredited investors, an aggregate of 1,732,532 shares of ~~common stock. This issuance was exempt~~Common Stock. The shares of Common Stock were issued in a transaction not involving a public offering, in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. See Note 58 to our consolidated financial ~~statements.~~statements included in this Quarterly Report.

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

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

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

Use of Proceeds from our IPO & Over Allotment

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

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On May 6, 2021, we completed our IPO selling 3,731,344 shares of ~~common stock~~Common Stock and warrants to purchase 3,731,344 shares of ~~common stock~~Common Stock at a combined public offering price of $4.15, for aggregate gross proceeds of approximately $15.5 million, prior to deducting underwriting discounts, commissions, and other offering expenses and excluding any exercise of the underwriters’ option to purchase any additional securities. ~~Subsequently, on~~On May 10, 2021, ~~we received an additional amount of $2.3M of gross proceeds, upon the closing of the underwriters’ exercise of its over-allotment option, bring the total IPO proceeds to $17.8M.~~

~~The underwriters of the offering were represented by~~ Kingswood Capital Markets exercised the over-allotment option for an aggregate of 559,701 shares of Common Stock, and warrants to purchase 559,701 shares of Common Stock, yielding gross proceeds to the Company of approximately $2.3 million, prior to deducting underwriting discounts, commissions, and other offering expenses.

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

From the effective date of our registration statement on Form S-1 (333-251959), the Company has incurred underwriting discounts, commissions, and other offering expenses in connection with the IPO totaling approximately $2.1 million, resulting in net offering proceeds from the IPO to us of approximately $15.7 million. No payments for such expenses were made directly or indirectly to: (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities or (iii) any of our affiliates.

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

Except for the use of proceeds to repurchase shares of Common Stock as discussed below, there has been no material change in the use of proceeds ~~from~~of our IPO asfrom the use of proceeds described in the ~~Prospectus~~prospectus filed with the SEC on May 5, 2021 pursuant to Rule 424(b)(4) under the Securities Act (the "Prospectus"), where we stated that we would use the proceeds to repay certain outstanding indebtedness, to acquire the balance of anyas part of our ~~Alfi-enabled tablets,~~registration statement on Form S-1 (333-251959).

Share Buy-back Program

On June 23, 2021, Alfi announced a $2.0 million buy-back of its Common Stock. The buy-back was completed on July 9, 2021, with Alfi acquiring 137,650 shares, at an average price of $14.5296 per share, and ~~the remaining amounts for product launch, general corporate purposes, including working capital, business development, sales and marketing activities and capital expenditures.~~recorded as treasury stock by Alfi.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

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

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

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

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

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

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

~~10.1~~ 4.3		Form of Representative Warrant ⁽⁵⁾

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

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

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

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

~~10.5~~ 10.5†		Executive Employment Agreement, ~~with Paul Pereira February 10, 2021 (1)~~

~~10.6~~		~~Employment Agreement with John Cook~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and Paul Pereira ⁽¹⁰⁾

~~10.7~~ 10.6†		Executive Employment Agreement, ~~with Charles Pereira~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and John Cook, III ⁽¹¹⁾

~~10.8~~ 10.7†		Executive Employment Agreement, ~~with Dennis McIntosh~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and Charles Pereira ⁽¹²⁾

~~10.9~~ 10.8†		Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Dennis McIntosh ⁽¹³⁾

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

~~10.10~~		~~Security Agreement with~~between Lectrefy Inc. and Lee Aerospace, Inc.⁽¹⁴⁾

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

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

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

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

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

31.1* 10.15*		Promissory Note, dated August 8, 2019, between Lectrefy, Inc. and Lee Aerospace, Inc.

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

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

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

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

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

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

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

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

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

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

101.INS*		Inline XBRL Instance Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

* Filed herewith.

** Furnished.

** ~~Furnished.~~

† Identifies a management contract or compensatory plan or arrangement.

(1)	~~Previously filed as an exhibit~~Incorporated by reference to ~~the~~Exhibit 3.1 to Alfi, Inc.’s Registration Statement on Form S-1, as amended ~~(SEC File No.:~~(No. 333-251959) ~~and incorporated herein~~.

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

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

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

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

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

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

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

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

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

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

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

Table of Contents

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

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

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

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

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

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

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

Table of Contents

SIGNATURES

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

	~~ALFI, INC.~~
			ALFI, INC.
~~Date: June 10, 2021~~	~~/s/ Paul Pereira~~
Date: May 16, 2022	~~Name:~~		~~Paul Pereira~~ /s/ Peter Bordes
	~~Title:~~ Name:	~~Chairman and~~ Peter Bordes
	Title:	Interim Chief Executive Officer
		(Principal Executive Officer)

Date: ~~June 10, 2021~~May 16, 2022	/s/ ~~Dennis McIntosh~~Louis Almerini
	Name:	~~Dennis McIntosh~~ Louis Almerini
	Title:	Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)


Delaware		30-1107078
(State or other jurisdiction of ~~incorporation or organization)~~ ~~429~~ ~~Lenox Avenue, Suite 547~~ ~~Miami Beach, Florida~~		(I.R.S. Employer
incorporation or organization)		Identification Number) ~~33139~~

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


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


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

	Unaudited
	March 31,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents		96,021			8,335
Accounts receivable, net		17,450			-
Note receivable (related parties)		-			1,830,000
Prepaid expenses and other		-			793
Total current assets		113,471			1,839,128

Property and equipment, net of accumulated depreciation
of $54,979 and $46,081, respectively		116,368			117,474
Intangible assets, net of accumulated amortization
of $659,879 and $440,321, respectively		4,164,630			4,384,188
Other assets (complimentary devices), net		1,104,000			1,104,000
Other assets, net		7,940			7,940
Total assets		5,506,409			7,452,730

Liabilities
Current liabilities
Accounts payable		1,092,024			516,705
Current portion of long-term debt (related parties)		5,808,808			5,558,808
Derivative liability		278,825			229,712
Accrued interest		222,722			116,600
Total current liabilities		7,402,379			6,421,825

Long-term debt, net (related parties)		-			-
Total liabilities		7,402,379			6,421,825

Stockholders' Equity
Series Seed preferred stock, $0.0001 par, 2,500,000 shares issued as of March 31, 2021 and December 31, 2020, respectively. 2,500,000 shares authorized		2,500,000			2,500,000
Common stock, $0.0001 par, 4,599,084 and 4,441,523 shares issued as of March 31, 2021 and December 31, 2020, respectively. 80,000,000 shares authorized		460			444
Additional paid-in capital		2,274,855			2,024,871
Accumulated surplus (deficit)		(6,671,285	)		(3,494,410	)
Total stockholders' equity		(1,895,970	)		1,030,905

Total liabilities and stockholders' equity		5,506,409			7,452,730

	Unaudited		Unaudited
	Three months		Three months
	ended March		ended March
	31, 2021		31, 2020
Revenues, net	17,450		-

Cost of sales, net	104,506		-

Gross margin	(87,056	)	-

Operating expenses
General and administrative	2,770,415		-
Depreciation and amortization	228,456		9,563
Total operating expenses	2,998,871		9,563

Other income (expense)
Other income	15,965		9,152
Interest expense	(106,913	)	(16,392	)
Total other income (expense)	(90,948	)	(7,240	)

Net income (loss) before provision for income taxes	(3,176,875	)	(16,803	)
Provision for income taxes	-		-
Net income (loss) after provision or income taxes	(3,176,875	)	(16,803	)

Earnings (loss) per share (EPS) - basic	(0.71	)	(0.01	)
Fully dilutive earnings (loss) per share (DEPS)	(0.71	)	(0.01	)

Weighted average common shares outstanding	4,480,037		3,150,000
Weighted average shares (fully diluted)	8,309,373		6,359,121

Alfi, Inc.
f/k/a Lectrefy, Inc.
Consolidated Statement of Changes to Stockholders' Equity

			Unaudited
														Total
	Series Seed								Additional		Accumulated			Stockholders'
	Preferred Stock				Common Stock				Paid-In		Surplus			Equity
	Shares		Amount		Shares		Amount		Capital		(Deficit)			(Deficit)
Balance at April 4, 2018 (date of inception)	-		$	-	-		$	-	$	-	$	-		$	-
Issuance of series Seed preferred stock		1,500,000		1,500,000		-		-		-		-			1,500,000
Issuance of common stock		-		-		3,150,000		315		-		-			315
Current year net income (loss)		-		-		-		-		-		(2,186	)		(2,186	)
Balance at December 31, 2018		1,500,000		1,500,000		3,150,000		315		-		(2,186	)	$	1,498,129
Issuance of series Seed preferred stock		1,000,000		1,000,000		-		-		-		-			1,000,000
Issuance of common stock		-		-		-		-		-		-			-
Current year net income		-		-		-		-		-		66,735			66,735
Balance at December 31, 2019		2,500,000		2,500,000		3,150,000		315		-		64,549		$	2,564,864
Issuance of common stock		-		-		1,291,523		129		2,024,871		-			2,025,000
Current year net income		-		-		-		-		-		(3,558,959	)		(3,558,959	)
Balance at December 31, 2020		2,500,000		2,500,000		4,441,523		444		2,024,871		(3,494,410	)		1,030,905
Issuance of common stock		-		-		157,561		16		249,984		-			250,000
Current year net income		-		-		-		-		-		(3,176,875	)		(3,176,875	)
Balance at March 31, 2021		2,500,000	$	2,500,000		4,599,084	$	460	$	2,274,855	$	(6,671,285	)	$	(1,895,970	)

	March 31, 2021			March 31, 2020
Net income (loss) for the period		(3,176,875	)		(16,803	)
Weighted average shares of common stock outstanding and potentially dilutive securities		8,309,373			6,359,121
Fully dilutive net income (loss) per share		(0.71	)		(0.01	)

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

As of March 31, 2021
Embedded conversion derivative liability on employee stock options	$	278,825	$	-	$	-	$	278,825
Total as of March 31, 2021	$	278,825	$	-	$	-	$	278,825

Balance at December 31, 2019	$	-0-
Fair value of employee stock options issued in 2020		229,712
Balance at December 31, 2020	$	229,712
Fair value of employee stock options issued in 2021		49,113
Balance at March 31, 2021		278,825

Property and equipment balance at December 31, 2019, net of accumulated depreciation	$	107,744
Additions		33,645
Depreciation expense		(23,915	)
Property and equipment balance at December 31, 2020, net of accumulated depreciation	$	117,474
Additions		7,792
Depreciation expense		(8,898	)
Property and equipment balance at March 31, 2021, net of accumulated depreciation	$	116,368

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

Intangible asset balance at December 31, 2019, net of accumulated amortization	$	3,198,051
Additions		1,626,458
Amortization expense		(440,321	)
Intangible asset balance at December 31, 2020, net of accumulated amortization	$	4,384,188
Additions		-0-
Amortization expense		(219,558	)
Intangible asset balance at March 31, 2021, net of accumulated amortization	$	4,164,630

Year 1	$	658,677
Year 2	$	878,235
Year 3	$	878,235
Year 4	$	878,235
Year 5	$	459,641
Thereafter	$	411,607
Total	$	4,164,630

Other assets (complimentary devices) balance at December 31, 2019, net	$	-0-
Purchase of Other assets (complimentary devices)		1,256,500
Other assets (complimentary devices) expensed to cost of sales		(152,500	)
Other assets (complimentary devices) balance at December 31, 2020, net	$	1,104,000
Other assets (complimentary devices) expensed to cost of sales		-0-
Other assets (complimentary devices) balance at March 31, 2021, net	$	1,104,000