UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM 10-Q~~

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

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

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

For the transition period from to

Commission File Number: 001-40294

Alfi, Inc.

(Exact name of registrant as specified in its charter)


Delaware		30-1107078
(State or other jurisdiction of ~~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)

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

~~Not applicable~~

Not applicable

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

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


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

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

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



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

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

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

As of ~~June 10, 2021,~~July 29, 2022, there were ~~12,355,194~~16,094,882 shares of the Company’s common stock, par value $0.0001, ~~(the “Common Stock”).~~outstanding.

Table of Contents

ALFI, INC.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION:

Item 1.	Financial Statements:		2
	Consolidated Balance Sheets as of ~~March 31, 2021~~June 30, 2022 (Unaudited) and December 31, ~~2020 (Audited)~~2021		2
	~~Condensed~~ Consolidated ~~Statement~~Statements of Operations for the Three Months Ended ~~March 31, 2021~~June 30, 2022 (Unaudited) and ~~March 31, 2020~~June 30, 2021 (Unaudited)		3
	Consolidated ~~Statement~~Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended ~~March 31,~~June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)		4
	Consolidated ~~Statement~~Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited) ~~and March 31, 2020 (Unaudited)~~		5
	Notes to Consolidated Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29	23
Item 4.	Controls and Procedures		30	23

PART II - OTHER INFORMATION:			31	25

Item 1.	Legal Proceedings		31	25
Item 1A.	Risk Factors		31	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		31	26
Item 3.	Defaults Upon Senior Securities		31	27
Item 4.	Mine Safety Disclosures		31	27
Item 5.	Other Information		31	27
Item 6.	Exhibits		32
				28

Table of Contents

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, 2022		Dec 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	137,412	$	4,391,816
Accounts receivable		119,168		5,578
Prepaid expenses and other		1,221,067		926,170
Total current assets		1,477,647		5,323,564
Property and equipment, net		2,437,934		4,031,904
Intangible assets, net		624,234		712,247
Operating lease right-of-use asset, net		70,525		95,765
Assets held for sale and other assets		44,354		1,209,525
Total assets	$	4,654,694	$	11,373,005

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	3,368,155	$	2,264,582
Debt payable, related parties		1,745,617		—
Lease liability		72,332		98,175
Interest payable, related parties		16,300		—
Total current liabilities		5,202,404		2,362,757
Total liabilities		5,202,404		2,362,757
Stockholders' Equity (Deficit)
Common stock, $0.0001 par value, 80,000,000 shares authorized, 16,094,882 and 16,069,347 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		1,623		1,620
Additional paid-in capital		39,251,992		37,967,926
Accumulated (deficit)		(37,801,328)		(26,959,301)
Common stock held in treasury at cost, $0.0001 par value, 137,650 and 137,650 shares at June 30, 2022 and December 31, 2021, respectively		(1,999,997)		(1,999,997)
Total stockholders' equity (deficit)		(547,710)		9,010,248
Total liabilities and stockholders' equity (deficit)	$	4,654,694	$	11,373,005

See accompanying notes to the consolidated financial statements

Table of Contents

Alfi, Inc.

f/k/a Lectrefy, Inc.

~~Condensed~~

Consolidated ~~Statement~~Statements 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,
	2022		2021		2022		2021
Revenues	$	129,302	$	936	$	192,605	$	18,386

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

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

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

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

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

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

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

Table of Contents

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

Balance - January 1, 2021	2,500,000	$	2,500,000	4,441,582	$	444	$	2,076,151	$	(8,014,859)	$	—	$	(3,438,264)
Shares issued with debt	—		—	157,503		16		249,984		—		—		250,000
Share based compensation	—		—	—		—		46,684		—		—		46,684
Net loss	—		—	—		—		—		(2,708,831)		—		(2,708,831)
Balance - March 31, 2021	2,500,000		2,500,000	4,599,085		460		2,372,819		(10,723,690)		—		(5,850,411)
Shares issued with debt	—		—	315,007		32		499,968		—		—		500,000
Conversion of convertible	—		—	—		—		-		—		—		—
preferred stock to common	(2,500,000)		(2,500,000)	3,150,058		315		2,499,685		—		—		—
Shares issued for cash	—		—	4,291,045		429		10,993,471		10,993,900		—		—
Warrants issued for cash	—		—	—		—		4,738,750		—		—		4,738,750
Exercise of warrants	—		—	3,385,746		338		15,472,521		—		—		15,472,859
Shares issued for services	—		—	300,000		30		476,150		—		—		476,180
Share based compensation	—		—	—		—		85,256		—		—		85,256
Exercise of options	—		—	11,892		2		15,085		—		—		15,087
Net loss	—		—	—		—		—		(4,301,722)		—		(4,301,722)
Balance - June 30, 2021	0	$	0	16,052,833	$	1,606	$	37,153,705	$	(15,025,412)	$	0	$	22,129,899


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

See accompanying notes to the consolidated financial statements

Table of Contents

Alfi, Inc.

f/k/a Lectrefy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


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

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

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

See accompanying notes to the consolidated financial statements

Table of Contents

ALFI, INC.

f/k/a LECTREFY, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
~~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 (this “Quarterly Report”). Alfi NI(N.I.) Ltd is a registered business in Belfast, Ireland. Collectively, the ~~combined~~ consolidated entity is referred to as the “Company” or “Alfi” throughout this Quarterly Report.

The ~~Company’s~~Company's timeline of events relative to its current formation above began on April 4, 2018, when Lectrefy, Inc., a Florida corporation, was ~~organized.~~incorporated. On July 6, 2018, Lectrefy, Inc. 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 Delaware was registered as a foreign entity~~became qualified to do business in ~~the State of~~ Florida. On January 31, 2020, Lectrefy, Inc. ~~of Delaware’s~~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. ~~Delaware C-corporation operating~~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 iswas to place ~~its~~ Alfi-enabled devices in malls, airports, rideshares ~~retailers, malls,~~ and ~~airports.~~taxis. The Company recently shifted its focus to prioritize placement of its devices in rideshares with a view toward growing that business to operate it profitably.

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

NOTE 2 BASIS OF PRESENTATION

The accompanying interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission (the “SEC”) rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the ~~date~~Company’s financial position, results of ~~this~~operations and cash flows, in conformity with generally accepted accounting principles. The Company filed audited consolidated financial statements as of and for the fiscal years ended December 31, 2021, 2020 and 2019, which included all information and notes necessary for such complete presentation in conjunction with its Annual Report on Form 10-K for the ~~Company has approximately 9,600 tablets either held as Other Assets (complimentary devices)~~year ended December 31, 2021 (the “Annual Report”).

The results of operations for the interim periods ended June 30, 2022 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in ~~operation currently being used by customers.~~conjunction with the audited consolidated financial statements for the year ended December 31, 2021, which are contained in the Annual Report. For further discussion, see Note 2 – “Significant Accounting Policies” to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Annual Report.

NOTE 23 GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

~~As of March 31, 2021, the Company had cash of $96,021 and has a monthly cash run rate of approximately $500,000.~~ 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 ~~capital project.~~business development activities. These conditions indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the consolidated financial statements.

Table of Contents

The Company’s primary source of operating funds since inception ~~has been~~through April 2021 was cash proceeds from the private placements of preferred equity and debt securities. During 2021, the Company completed its initial public offering (“IPO”) yielding net proceeds to the Company of approximately $15.7 million from the sale of the Company’s common stock, par value $0.0001 (the “Common Stock”), and warrants and approximately $16.0 million from the exercise of warrants. The capital raised included funding for working capital to launch and expand operations in accordance with its business model.

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

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

The Company ~~intends~~has borrowed the maximum amount available under the Credit Agreement. Since its inception, the Company has generated only nominal revenue from customers and business activity and currently has very limited cash on hand. The Company is endeavoring to raise additional capital through ~~private placements of~~ debt ~~and~~or equity ~~securities,~~financing, but there ~~can be~~is no assurance that ~~these funds~~additional capital will be available on terms acceptable to the Company or will be sufficient to enable the Company to ~~fully~~ complete its development activities or sustain operations. If the Company is unable to raise sufficient additional ~~funds,~~capital to sustain operations, then it will have ~~to develop and implement a plan~~ to further extend payables, reduce overhead, or scale back its current business plan until ~~sufficient~~such additional capital is raised, ~~to support further operations.~~any of which could have a material adverse effect on the Company. There ~~can be~~is no assurance that such a plan will be successful.

If the Company is unable to raise sufficient additional capital to sustain operations, then the Company will be required to pursue other alternatives which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

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

~~Subsequent to~~NOTE 4 RESTATEMENTS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Prior Period Restatements

On March 11, 2022, the Audit Committee (the “Audit Committee”) of the Company’s Board of Directors (the “Board”) and the Company’s management concluded that the previously issued audited financial statements for the years ended December 31, ~~2021, in May 2021, the Company completed an initial public offering yielding gross proceed to the Company if approximately $17,800,000 from sale of common stock~~2019 and ~~warrants on the Nasdaq Capital Market. The capital raise~~2020, included ~~funding for working capital to launch and expand operations in accordance with its business model.~~

~~NOTE 3 SIGNIFICANT ACCOUNTING POLICIES~~

~~Revenue Recognition~~

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

~~Alfi intends to generate revenues from three sources. First, Alfi will sell advertising and content~~Company’s Registration Statement 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.Form S-1 (File No. 333-251959), 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, 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 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 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 operationCompany’s previously issued interim financial statements included 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~~Company’s Quarterly Reports on ~~devices, when they are physically placed into service, devices are expensed in accordance with~~Forms 10-Q for 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 of Sales policy. In general, a rideshare will not be required to return tablets distributed by Alfi at any time. Removing a tablet from the vehicle or returning it to Alfi would automatically cancel the opportunity for a rideshare to receive commissions. Thus, Alfi does not anticipate that a rideshare would seek to return a tablet. Kiosks, because of their high cost, may either be returned to Alfi or purchased by the facility owner at the end of the contract.

~~For the three and twelve months~~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.

Table of Contents

In connection with the Company’s evaluation of the issues and findings identified in the Company’s previously disclosed internal independent investigation (the “Investigation”), the Company ~~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.~~following accounting errors:

~~Accounts Receivable~~

~~The Company records accounts receivable at its net realizable value. At~~
(a) The Company incorrectly capitalized certain general and administrative expenses incurred during the years ended December 31, 2018, 2019, and 2020, and incorrectly included those costs in intangible assets in its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021.
(b) The Company overstated the carrying value of tablets by incorrectly reporting them at cost with no allowance for depreciation, resulting in an overstatement of other assets (complimentary devices), net, in its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021.
(c) The Company overstated total assets and total liabilities as of December 31, 2020, by incorrectly recording a note receivable (related parties) and a liability included in current portion of long-term debt (related parties). This note receivable represents a bridge loan provided to the Company by certain related parties that was executed in December 2020 but not fully funded until April 2021.
(d) The Company did not recognize and report on its balance sheets as of December 31, 2019 and 2020, March 31, 2021, and June 30, 2021, an office lease in accordance with FASB Accounting Standards Update No. 2018-11, Leases (Topic 842).

On May 16, 2022, the Company 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.

~~Consolidation~~

~~The~~filed interim consolidated financial statements ~~include~~restated to correct the ~~accounts of Alfi, Inc.~~accounting errors 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) on the consolidated balance sheet until they are provided to a rideshare or other businesses. Upon being placed into service for consumer use, the Company expenses Other Assets (complimentary devices) to Cost of Sales.

~~Property and Equipment~~

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

Expenditures for major renewals and betterments that extend the useful lives property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense 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.

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

The Company computes basic net loss per share by dividing net income (loss) per share available to common stockholders 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 common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income (loss) per share for the periods ended March 31, 2021 and December 31, 2020 excludes potentially dilutive securities when their inclusion would be anti- dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

~~Potentially dilutive securities excluded from the computation of basic net income (loss) per share as of March 31, 2021 and 2020 are as follows:~~

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 of the numerator and denominator for basic and fully dilutive net income (loss) per share is as follows for periods ended March 31, 2021 and December 31, 2020, respectively:~~

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.

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

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

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 an Amendment No. 1 to 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 basedQuarterly Report 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~~Form 10-Q/A for the ~~year~~quarter and six months ended ~~December 31, 2020.~~June 30, 2021. 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~~interim consolidated financial ~~statements. Based on current conditions,~~statements for 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,~~periods ended June 30, 2021, ~~the Company effected a forward stock split on a ratio of 1.260023 to 1.000000 basis. Share amounts reflected~~included in this Quarterly Report ~~are presented post-split, unless otherwise noted.~~reflect all such restatements.

~~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 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.

Table of Contents

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 PAYABLE~~6 DEBT – RELATED ~~PARTY~~PARTIES

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

On June 27, 2022, the Company and the related party ~~note payable transaction (the “Notes”) for cash advances associated with Alfi product development costs.~~lender entered into Amendment No. 1 and the Amended Note, pursuant to which the non-revolving line of credit available to the Company from the related party lender was increased to $2,750,000. The Amendment No. 1 and the Amended Note do not otherwise amend the terms of the Credit Agreement and related documents. Through June 30, 2022, the related party lender funded to the Company $2,750,000 under the Credit Agreement.

~~Unpaid principal~~The Company’s ability to draw on the ~~Notes as~~non-revolving line of ~~March 31, 2021 and December 31, 2020 are $5,808,808 and $5,558,808, respectively. These balances are summarized below:~~

~~Senior~~credit, to the extent available under the Credit Agreement, is in the related party ~~note~~

~~Advances~~lender’s sole discretion and subject to the Company requesting such additional funds from the related party lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and related documents, and that no default under the ~~senior related party note payable (“Senior Note”) totaled $-0-, $1,812,718~~Credit Agreement has occurred and ~~$759,090 for periods ending March 31, 2021, December 31, 2020 and 2019, respectively, and are classified as a currently liability~~is continuing under the Credit Agreement. The Amended Note matures 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~~(i) the date upon which the Company consummates a debt or equity financing in an amount equal to or greater than $4,000,000 or (ii) April 12, 2023. Borrowings under the ~~occurrence of certain events, including the closing of~~Credit Agreement are collateralized by a security interest in the Company’s ~~initial public offering.~~

~~The Senior Note bears a fixed~~assets. Interest on the unpaid principal amount accrues an annual ~~interest~~ rate of ~~5% per year. For~~6% through October 12, 2022 and an annual rate of 9% thereafter, except that in event of default additional penalty interest at an annual rate of 3% will accrue on borrowings through October 12, 2022. In connection with the ~~three months ended March 31, 2021 and 2020,~~Credit Agreement, 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~~issued a warrant to the related party lender on April 12, 2022, pursuant to which the ~~Senior~~related party lender may purchase up to 1,250,000 shares of the Common Stock at a price of $1.51 per share. The warrant is exercisable on or after July 12, 2022 and expires on April 12, 2025. Management valued the warrant at $1,281,817 and recorded that amount as a debt discount. The debt discount is being amortized and recorded as interest expense over the term of the Amended Note.

~~The total outstanding unpaid principal balance on~~Debt payable, related parties at June 30, 2022 of $1,745,617 is comprised of $2,750,000 payable pursuant to 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~~Credit Agreement, net of ~~all indebtedness~~unamortized debt discount 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~~

$1,004,383. During the ~~twelve~~three and six months ended ~~December 31, 2020,~~June 30, 2022, the Company ~~received two~~accrued interest expense on debt payable to related ~~party advances totaling approximately $37,000 cash consideration. These related party advances carry no specified repayment term, interest rate, or security interest,~~parties of $293,734 and ~~are payable only after holder of the Senior Note~~ ~~, referenced above, is repaid in full.~~

$293,734, respectively.

During the ~~twelve~~three and six 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 is 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.

~~On December 30, 2020, the Company entered into a $2,000,000 bridge loan with related party investors.~~ As of December 31, 2020, $170,000 had been funded on the bridge loan and $1,830,000 remained unfunded to the Company as of December 31, 2020. The terms of the bridge loan with related party include 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 shares of common stock. The remaining $1,830,000 was funded in full in January 2021. During the three months ended March 31, 2021 and 2020, the Company incurred~~accrued interest expense on ~~bridge loan~~debt payable to related parties of ~~$75,211~~$561,786 and ~~$-0-,~~$918,700, respectively. ~~Outstanding principal associated with bridge loan~~All borrowings from related ~~party investor at March 31,~~parties outstanding immediately prior to the IPO in May 2021 ~~and December 31, 2020 was $2,000,000 and $2,000,000, respectively. In May 2020, this bridge funding was~~were paid in ~~full.~~

~~During the three months ended March 31, 2021, the Company entered into a $250,000 bridge loan with related party investors. Terms~~full upon completion of the ~~bridge loan with~~IPO. Debt payable to related ~~party includes~~parties immediately prior to the IPO included the following notes and loans:

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

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

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

●

During the year ended December 31, 2021, the Company entered into bridge loans totaling $800,000 with related party investors. Terms of the bridge loans with related parties included repayment of principal on or before June 30, 2021, and an annual interest rate of 18%. In addition to repayment of principal and interest under the bridge loans, the Company issued 472,510 shares of Common Stock. Management valued these issuances of shares at $750,000 and recorded that amount in interest expense.

Table of principal on or before June 30, 2021, and an annual interest rate of 18%. In addition to repayment of principal and interest under the bridge loan with related party, the Company issued investors 157,561 shares of common stock. Outstanding principal associated with bridge loan 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 paid in full .Contents

~~NOTE 6 INCOME TAXES~~

~~The Company files Federal and state tax returns in as a C-corporation, To 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) 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.

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, 2021~~these institutions is periodically reviewed by senior management. At June 30, 2022, and December 31, ~~2020, respectively, the Company granted 53,353~~2021, cash balances in excess of FDIC requirements were $-0- and ~~611,913 common stock options under the Plan.~~$4,141,816, 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 issuance 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.

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

Florida. On December 15, 2021, the Company, certain of its present and former officers and directors, and the underwriters in the IPO were named as defendants in a second putative class action styled Kleinschmidt v. Alfi, Inc., et al.

~~Related Parties~~

, Case No. 1:21-cv-24338, also brought in the United States District Court for the Southern District of Florida.

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

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

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

Table of Contents

Other Matters

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

The Company’s former Chief Executive Officer and former Chief Financial Officer have made claims that the Company indemnify and advance the legal fees and expenses incurred by them in connection with the Investigation (see Note 11) and the putative class action litigations, the derivative action, and the SEC investigation, each referred to above. With respect to the advancement of fees and expenses incurred in connection with the Investigation prior to December 31, 2021, the amount of such fees and ~~December 31, 2020, respectively (see Note 5~~expenses that is subject to advancement is approximately $147,000. The former officers have also demanded advancement of fees and ~~Note 13).~~expenses of additional amounts of approximately $636,000 for the period January 1, 2022 through June 30, 2022. Additional amounts may be subject to claims for advancement and indemnification, but the Company is unable to estimate the amount of additional fees and expenses that may be subject to advancement or indemnification.

NOTE 8 STOCKHOLDERS’ EQUITY

~~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~~value. In May 2021, the Company completed its IPO 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~~the Series Seed ~~stock (“~~Preferred ~~stock”). Par~~Stock, $0.0001 par value ~~for the Preferred stock is $0.0001~~ per share (the “Series Seed Preferred Stock”), and 2,500,000 shares of Series Seed Preferred ~~stock~~Stock were authorized. During 2018 and 2019, 2,500,000 shares of Series Seed Preferred ~~stock was~~Stock were issued to ~~an investor~~Lee Aerospace 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 1.260023:1 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~~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 iswas made to investor ($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~~Common Stock at a conversion ratio of 1:1.260023. During the year ended December 31, 2021, and the six months ended June 30, 2022, 0 preferred stock ~~upon~~was issued by the ~~consummation~~Company, and 0 shares of ~~the Company’s initial public offering.~~preferred stock were outstanding as of June 30, 2022.

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, 2022.

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 effected. Common Stock share numbers contained herein in this Quarterly Report are presented on a post-split basis unless specifically noted otherwise.

During the ~~twelve~~six months ended ~~December 31, 2020,~~June 30, 2021, the Company arranged two bridge loans with related party investors. The Company issued ~~31,500~~472,510 shares of common stock to an unaffiliated third party in exchange for services associated with investment relations and fundraising, and to support the development of revenue producing contracts. Management valued this issuance of common shares as stock-based compensation ~~expense in fiscal year 2020 for approximately $25,000.~~

~~During the twelve months ended December 31, 2020, the Company issued 1,260,063 shares of common stock to an investor~~Common Stock in exchange for bridge loan funding necessary to procure ongoing business operations. Management valued ~~this issuance~~these issuances of ~~common~~ shares ~~as stock-based compensation~~ ~~expense during~~at $750,000 and recorded that amount in interest expense.

Table of Contents

During the ~~twelve~~six months ended ~~December 31, 2020 for approximately $2,000,000.~~

~~During the three months ended March 31,~~June 30, 2021, the Company also issued ~~157,561~~300,000 shares of ~~common stock to an investor~~Common Stock in ~~exchange for bridge loan funding necessary to procure ongoing business operations.~~connection with certain vendor contracts. Management valued this issuance of ~~common~~ shares ~~as stock-based compensation~~ ~~expense~~at $476,180 and recorded that amount in other general and administrative expense. (See Note 11 Changes in Management.)

Initial Public Offering

On May 3, 2021, the Company’s registration statement on Form S-1 (File No. 333-251959) was declared effective by the 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, the Company issued to the underwriters warrants to purchase up to an aggregate of 186,567 shares of Common Stock (“Underwriter’s Warrants”). The Underwriter’s Warrants may be exercised beginning on May 3, 2022 until May 3, 2026. The initial exercise price of each Underwriter’s Warrant is $5.19 per share.

Warrants Issued and Exercised

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

During the six months ended June 30, 2022, the Company issued a warrant to purchase up to 1,250,000 shares of the Common Stock at a price of $1.51 per share in connection with the Credit Agreement (see Note 6 Debt - Related Parties). NaN warrants were exercised by warrant holders during the ~~three~~six months ended ~~March 31, 202~~June 30, 2022. As of June 30, 2022, there were warrants to purchase 2,219,385 shares of Common Stock outstanding.

Share Buy-Back

On June 23, 2021, the Company announced a $2.0 million buy-back of its Common Stock. The buyback was completed on July 9, 2021, with the Company acquiring 137,650 shares of Common Stock, for ~~approximately $250,000.~~an aggregate price of $1,999,997, which are recorded as treasury stock. The Company did not purchase any of its shares of Common Stock during the six months ended June 30, 2022.

Employee Equity (Stock) Incentive Plan

The Company ~~created an employee~~has a stock ~~ownership~~equity incentive plan, the Alfi, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), in 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 ended ~~March 31,~~June 30, 2022 and 2021, ~~and 2020,~~respectively, the Company ~~issued approximately 53,353~~granted -0- and ~~59,063 common stock~~251,500 Common Stock options ~~to employees in each period, respectively. At March 31, 2021 and December 31, 2020, total unexercised common stock options issued to employees~~ under the ~~Company’s employee stock option ownership incentive plan was 723,729~~2018 Plan. During the six-month periods ended June 30, 2022 and ~~670,376, respectively.~~June 30, 2021, respectively, the Company granted -0- and 449,168 Common Stock options under the 2018 Plan.

~~Weighted~~On June 30, 2022 and 2021, total Common Stock options issued and outstanding under the 2018 Plan were 338,534 and 673,535, respectively, and weighted average strike price per employee stock option iswas approximately ~~$1.01~~$2.33 and $2.20 per ~~share.~~share, respectively. Management recorded credits of $88,861 and $20,823 in stock option expense for the three and six months ended June 30, 2022, respectively, due to the cancellation of 91,405 options due to forfeitures. Management recorded stock-based compensation expense associated with the issuance of employee stock options of ~~$49,113~~$85,256 and ~~$229,712~~$131,942 for the ~~periods ending March 31,~~three and six months ended June 30, 2021, ~~and December 31, 2020,~~ respectively. At March 31, 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 employee stock conversion options. Considerable management judgment is necessary to estimate the fair value of employee

NaN employees exercised stock options ~~issued employees. Accordingly, actual results could vary significantly from management’s estimates.~~

~~As of~~during the ~~date of this Report, no employee~~three months ended June 30, 2022. During the six months ended June 30, 2022, 2 employees exercised stock options ~~were exercised by participants~~and received 25,535 shares of ~~the plan.~~Common Stock.

~~Stock Option and Warrant Valuation~~Table of Contents

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

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

~~Forward stock split~~


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

~~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, 2022		Dec 31, 2021

Tablets	$	4,064,001	$	5,314,005
Office furniture and fixtures		333,671		349,672
Property and equipment, gross		4,397,672		5,663,677

Less accumulated depreciation		(1,959,738)		(1,631,773)

Property and equipment, net	$	2,437,934	$	4,031,904

The Company incurred depreciation expense of ~~$8,898~~$372,067 and ~~$23,915~~$204,167 for the three ~~and twelve~~ months ended ~~March 31,~~June 30, 2022, and June 30, 2021, respectively, and ~~December 31, 2020,~~$744,633 and $407,476 for the six months ended June 30, 2022, and June 20, 2021, respectively.

~~A summary~~During the three months ended June 30, 2022, the Company reviewed the carrying value of tablets for impairment and concluded that 5,600 tablets distributed to rideshare drivers were no longer in service and may not be returned to the Company. The Company recorded a charge of $833,337 for the loss on disposal associated with these tablets. At June 30, 2022, property ~~plant~~ and equipment ~~balances as~~includes approximately 16,000 tablets including 13,300 Lenovo tablet hardware devices available for distribution and approximately 2,700 tablets placed with rideshare and other businesses. Tablets are provided to rideshare and other businesses at no charge but remain the property of ~~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~~placement of the Alfi-enabled device.

During the three months ended ~~March 31, 2021~~June 30, 2022, the Company recorded a charge of $16,000 for the loss on disposal of furniture and ~~December 31, 2020, respectively.~~fixtures located in its Belfast, N.I. office. The Company is in negotiations with its landlord to terminate the Belfast, N.I. office lease.

NOTE 10 INTANGIBLE ASSETS – INTELLECTUAL PROPERTY

Intellectual Property – Software Development and Patent ~~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

Table of Contents

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 amortization 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 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 ~~production~~software 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 of March 31, 2021 and December 31, 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 for technical deployment. They have to first go through an activation process, which includes deleting existing software from the device and installation~~consists of the ~~Alfi platform, before being placed into service. Upon activating~~following:


	Jun 30, 2022		Dec 31, 2021

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

Less accumulated amortization		(352,050)		(264,037)

Intangible assets, net	$	624,234	$	712,247

The Company incurred amortization expense of $44,006 and $44,006 for the ~~first tablet device in July 2020,~~three-month periods ended June 30, 2022, and June 30, 2021, respectively and $88,012 and $88,012 for the ~~Company placed its platform into service~~six-month periods ended June 30, 2022, and ~~began accruing amortization. Up until this point, Alfi was still incurring platform production costs.~~

June 30, 2021, respectively.

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


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

~~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)~~

CHANGES IN MANAGEMENT

~~Tablets~~ Replacement of Executive Officers and Board Members

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

Also as previously disclosed, since placing the former executives on leave, the Board has appointed: (i) James Lee as Chairman of the Board (effective October 22, 2021), replacing Mr. P. Pereira in such role; (ii) new management personnel, including Peter Bordes as Interim Chief Executive Officer (serving in such role from October 22, 2021 until July 22, 2022), Mr. Lee as Interim Chief Executive Officer (effective July 22, 2022), Louis Almerini as Interim Chief Financial Officer (effective November 8, 2021) and David Gardner as Chief Technology Officer (serving in such role from October 27, 2021 until July 1, 2022); (iii) Allen Capsuto as an independent director of the Company and Chair of the Audit Committee (serving in such roles from November 1, 2021 until July 14, 2022); (iv) Patrick Dolan as an independent director of the Company (effective November 1, 2021) and a member of each of the Compensation Committee and the Nominating and Corporate Governance Committee of the Board (effective December 29, 2021); and (v) Jeremy D. Daniel as an independent director of the Company and Chair of the Audit Committee (effective July 14, 2022).

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

Table of Contents

Findings of the Investigation

The ~~Company purchased approximately 9,600 Lenovo tablet hardware devices~~Investigation was conducted by a special committee of the Board (the “Special Committee”) consisting of Mr. Capsuto, the then Audit Committee Chair, who was appointed to the Special Committee on November 8, 2021. The Special Committee retained outside legal counsel to assist in ~~2020 (the “devices”), which are held for placement with rideshare~~conducting the Investigation, and such counsel retained additional advisors to provide forensic accounting services, computer forensics and e-discovery services and other ~~businesses. As part~~legal services.

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

●

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

●

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

●

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

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

The Investigation found the Company’s internal control over financial reporting to be deficient with ~~rideshares, malls~~respect to: (i) the disbursement process for third-party vendors; (ii) the review and ~~airport owners, devices are provided as~~approval process for significant vendor contracts; (iii) the use of Company credit cards by executives; (iv) the supervision and approval of travel and entertainment expenses incurred by executives; (v) the segregation of duties in connection with the payment and recording of invoices and related bank reconciliations; (vi) the lack of a ~~complimentary product. Alfi may pay a revenue share or commission to such third party~~sufficient accounting manual; and (vii) guidelines for the ~~placement~~capitalization of ~~the Alfi-enabled device. See Note 3 for a discussion of revenue recognition from such placement.~~fixed assets.

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 1412 SUBSEQUENT EVENTS

Changes in Executive Officers and Board Members

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

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

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

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

Table of Contents

Litigation, Claims, and Assessments

On July 28, 2022, Victor Farish filed a Verified Shareholder Derivative Complaint on behalf of the Company styled Victor Farish, derivatively on behalf of Alfi, Inc., Plaintiff, v. Paul Pereira, Dennis McIntosh, Charles Pereira, Peter Bordes, John M. Cook, II, Justin Elkouri, Allison Ficken, Jim Lee, Richard Mowser, and Frank Smith, Defendants, and Alfi, Inc., Nominal Defendant, Case 1:22-cv-22361, in the United States District Court for the Southern District of Florida. The complaint alleges, as to the individual defendants: (i) violations of Section 10(b) and Rule 10b-5 of the Exchange Act; (ii) violations of Section 20(a) of the Exchange Act; (iii) breach of fiduciary duty; (iv) aiding and abetting breach of fiduciary duty; (v) unjust enrichment; (vi) waste of corporate assets; (vii) abuse of control; and (viii) gross mismanagement, in connection with allegedly making and/or authorizing false and misleading statements and material omissions regarding the Company’s business, prospects, and internal controls and allegedly failing to establish and/or oversee sufficient internal controls and/or reasonable information, oversight, and reporting systems concerning critical Company operations, including the adequacy of its public reporting. The complaint also seeks contribution under Section 11(f) of the Securities Act as to defendants Mr. P. Pereira, Mr. McIntosh, Mr. Bordes, Mr. Cook, Mr. Elkouri, Ms. Ficken, Mr. Lee, Mr. Mowser, and Mr. Smith, and seeks contribution under Section 21D(f)(5) of the Exchange Act as to defendants Mr. P. Pereira and Mr. McIntosh. Plaintiff requests an award of damages against defendants, an award of punitive damages, an award of plaintiff’s costs and disbursements in the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses, and an order directing the defendants to account for all damages allegedly caused by them and all profits and special benefits and unjust enrichment they have allegedly obtained as a result of their allegedly unlawful conduct. On July 29, 2022, the Court sua sponte dismissed the complaint without prejudice finding that the complaint does not properly plead a claim and giving Plaintiff until August 11, 2022 to file an amended complaint addressing the deficiencies in its original complaint. The Company ~~evaluates events that have occurred after~~is currently unable to estimate the ~~balance sheet date through June 10, 2021.~~costs and timing of the resolution of this matter.

~~Initial public offering~~

Credit and Security Agreement – Related Party

On ~~May 3, 2021,~~August 5, 2022, the ~~Company’s registration statement on Form S-1(File~~Company and the related party lender, Lee Aerospace, entered into Amendment No. ~~333-251959~~ 2 to Credit and Security Agreement (“Amendment No. 2”), pursuant to which the non-revolving line of credit available to the Company from the related party lender under the Credit Agreement was ~~declared effective~~increased by ~~the SEC.~~$500,000, to an aggregate of $3,250,000, and such increased availability became evidenced by a convertible note. In connection with ~~the IPO,~~Amendment No. 2, 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 and warrants to purchase 559,701 shares issued pursuant to~~ the exercise in full of the underwriters' overallotment option) at the combined public offering price of $4.15 for aggregate gross proceeds of approximately $17.8 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company.

~~Bridge loan agreement~~

~~Subsequent to March 31, 2021, in April 2021, the Company~~related party lender entered into ~~related party and non-related party promissory notes, associated with its bridge loans (see~~a Non-Revolving Line of Credit Convertible Note ~~5) for~~in an ~~additional~~ aggregate principal amount of $500,000 ~~with~~(the “Convertible Note”) and a three-year warrant to purchase 375,000 shares of the Common Stock. Each of the Convertible Note and warrant are convertible or exercisable, respectively, for shares of Common Stock commencing November 5, 2022, at a conversion price of $1.635 per share under the Convertible Note and an ~~18% interest rate. In addition~~exercise price of $1.51 per share under the warrant. The conversion price of the Convertible Note and the exercise price of the Warrant are subject to ~~paying~~anti-dilution adjustments for stock splits, stock dividends and similar corporate actions, but not for other dilutive equity issuances. The warrant may be exercised for cash or on a cashless basis. Except as set forth above, Amendment No. 2 and the ~~interest~~Convertible Note do not otherwise amend the terms of the Credit Agreement and ~~principal,~~related documents. The related party lender has funded to the Company ~~issued 315,006 common stock shares to~~ the ~~bridge loan lenders. In May 2020,~~maximum amount, which is $3,250,000, under the ~~bridge loan from related parties was repaid in full.~~Credit Agreement.

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

Unless the context requires otherwise, references to the “Company,” “Alfi,” “we,” “us” and “our” refer to Alfi, Inc., a Delaware corporation and its ~~wholly-owned~~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~~ratio of ~~1.260023~~1.260023:1 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,~~ and Section 21E of the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”).~~Act. Forward-looking statements generally relate to future events or our future financial or operating ~~performance and may~~performance. Forward–looking statements in this Quarterly Report include statements ~~concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for,~~regarding our business and ~~the markets in which we operate),~~technology development, our strategy, future operations, anticipated financial ~~results, the impact~~position, estimated revenues and losses, projected costs, prospects, plans and objectives of COVID-19 on our business, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, and capital expenditures, sales and marketing initiatives and competition.

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

These forward-looking statements are not ~~guaranteeing~~guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that

Table of Contents

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.

Overview

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

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

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

Alfi has created an enterprise grade, multimedia computer vision and machine learning platform, capable of generating powerful advertising recommendations and insights. Multiple technologies work together ~~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 iswas to place our Alfi-enabled devices in malls, airports rideshares and ~~airports. According~~taxis. We recently shifted our focus 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~~prioritize placement of devices in ~~these locations~~rideshares with a view toward growing that business to ~~determine market receptivity to smart screens. From our testing, Alfi has been able to achieve CTRs, of between 6% and 9%, but believes~~operate it ~~could achieve CTRs exceeding 15% as Alfi- enabled devices are deployed more widely. By comparison, according to Acquiso in 2018, the average CTR for a display banner ad was less than 1%.~~profitably.

~~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~~of our unique 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.

Table of Contents

Recent Developments

~~Alfi will generate revenues in three different fashions. First, Alfi will sell advertising~~Credit and ~~content on its Alfi-enabled tablets~~Security Agreement – Related Party

On June 27, 2022, the Company and ~~other devices such as kiosks. Second, Alfi will also license its technology~~a related party lender, Lee Aerospace, entered into Amendment No. 1 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 advertiserCredit Agreement and the ~~content provider that will specify~~Amended Note, pursuant to which the ~~amounts~~non-revolving line of credit available to ~~be paid~~the Company from the lender was increased to ~~Alfi for displaying the advertisement or content.~~$2,750,000 (see Note 6 Debt – Related Parties). The ~~number of impressions the advertiser or content provider is willing to pay~~Amendment No. 1 and the ~~duration~~Amended Note do not otherwise amend the terms of ~~each campaign is set by~~ the ~~advertiser or content provider. Content~~Credit Agreement and ~~advertisements are provided to Alfi by companies desiring to deliver content for viewer engagement. In general, Alfi does not pay for content,~~related documents. Through June 30, 2022, the related party lender funded to the ~~extent it does,~~Company $2,750,000 under the ~~cost of acquiring content would be expensed as cost of sales. Alfi will recognize revenue under these contracts upon~~Credit Agreement.

Warrants Issued

During the ~~validated delivery of impressions~~six months ended June 30, 2022, the Company issued a warrant to ~~the end user~~purchase up to 1,250,000 shares 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 forCommon Stock at a ~~specified duration or on a renewable subscription basis. Alfi will charge these third parties on a monthly,~~price of $1.51 per ~~screen fee for use of the Alfi platform. Alfi will recognize the revenue from these licenses on a monthly basis~~share in ~~accordance with Topic 606.~~

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.

~~Recent Developments~~

~~Initial Public Offering~~

~~On May 3, 2021, the Company’s registration statement on Form S-1(File No. 333-251959 ) was declared effective by the SEC. In~~ connection with the ~~IPO,~~Credit Agreement (see Note 6 Debt – Related Parties). No warrants were exercised by warrant holders during the ~~Company issued and sold 4,291,045 shares~~six months ended June 30, 2022. As of ~~common stock and~~June 30, 2022, there were warrants to purchase ~~4,291,045~~2,219,385 shares of ~~common stock (including 559,701 shares~~Common Stock outstanding.

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

David Gardner, the Company’s Chief Technology Officer, resigned from such position effective July 1, 2022 in order to ~~purchase 559,701 shares issued pursuant~~pursue other opportunities to accommodate personal circumstances.

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

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

Impact of COVID-19

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public ~~offering price~~health officials to recommend precautions to mitigate the spread of ~~$4.15 for aggregate gross proceeds~~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 ~~approximately $17.8 million, before deducting underwriting discounts~~people to move and ~~commissions~~travel.

COVID-19 has adversely affected the Company’s financial condition and ~~other estimated offering expenses payable by us.~~

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

Results of Operations

Revenues

~~Revenues, net~~

~~Alfi expects to have three main~~In general, the Company 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.

Table of Contents

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.

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

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

~~Revenues, net~~

For the three months ended ~~March 31, 2021~~June 30, 2022, the Company’s net ~~revenues~~loss increased ~~by $17,450 or 100%, when~~to $5,549,426, an increase of $1,247,704 compared towith the net loss of $4,301,722 for the three months ended ~~March 31, 2020.~~June 30, 2021. The increase was primarily due to higher operating expenses, as discussed below.


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

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

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

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

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

Revenues

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

Compensation Expenses

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

Other General and Administrative Expenses

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

Table of Contents

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

Loss on Disposal of Property and Equipment

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

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

Depreciation and Amortization Expenses

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

Other Income (Expense)

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

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

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

Table of Contents


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

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

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

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

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

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

Revenues

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

Compensation Expenses

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, ~~cost~~compensation and benefits expenses were $3,259,830 and $2,080,953, respectively. The increase of ~~goods sold~~$1,178,877 reflected higher salary and contract labor costs related to increased headcount to support operating the Company’s technology platform. The Company initiated changes during the six months ended June 30, 2022, including outsourcing certain jobs, to reduce compensation expenses for future periods.

Other General and Administrative Expenses

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

Loss on Disposal of Property and Equipment

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

Table of Contents

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

Depreciation and Amortization Expenses

Depreciation and amortization expense for the six months ended June 30, 2022 and 2021 were $832,645 and $495,488, respectively. The six months ended June 30, 2022 included depreciation expense for additional tablets purchased since June 30, 2021.

Other Income (Expense)

Interest expense was $293,764 and $918,700 for the six months ended June 30, 2022, and 2021, respectively. During April 2022, the Company entered into a Credit Agreement with a related party pursuant to which it borrowed $2,750,000, and it accrued interest expense on this borrowing of $293,734. The Company incurred interest expense of ~~$104,506 represent a 100% increase when compared to~~$918,700 during the ~~three~~six 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,~~June 30, 2021, operating expenses increased from $9,563 to $2,998,871, 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 and depreciation, compensation expense, as independent contractors became full time employees effective March 1, 2021 and stock-based compensation incurred in connection with ~~the bridge loan agreements.~~

~~Other Expense~~

For the three 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~~debt outstanding prior to its IPO. The Company repaid all related party debt in May 2021 with a portion of the ~~three months ended March 31,2021 the net loss increased~~cash proceeds from ($16,802) to ($3,176,875), an increase of ($3,160,072) vs. the three months ended March 31, 2020. The increase is primarily due to stock-based compensation (a non-cash expense) and general increases in all other expense categories as Alfi prepared for the IPO and launch of its ~~technology platforms~~.

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

On April 12, 2022, the Company entered into the Credit Agreement with a related party ~~debt financing. Post IPO, all outstanding debt, including~~lender, Lee Aerospace, pursuant to which the ~~Senior Related Party~~Company could borrow under a non-revolving line of credit up to $2,500,000 for up to one year. On June 27, 2022, the Company and the related party lender entered into Amendment No. 1 and an Amended Note, ~~and all Bridge Loan Agreements, totaling $5,808,808 was paid off~~pursuant to which the non-revolving line of credit available to the Company from the ~~IPO proceeds.~~

~~Alfi’s operating needs include the planned costs~~lender was increased to operate our business, including amounts required to fund working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our$2,750,000. The Company’s ability to ~~successfully commercialize our products~~draw on the non-revolving line of credit, to the extent available under the Credit Agreement, is in the lender’s sole discretion and ~~services, competing technological~~subject to the Company requesting such additional funds from the lender in accordance with the Credit Agreement, the accuracy of the Company’s representations in the Credit Agreement and ~~market developments,~~related documents, and that no default under the ~~need~~Credit Agreement has occurred and is continuing under the Credit Agreement.

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

The Company has borrowed the maximum amount available under the Credit Agreement. Since its inception, the Company has generated only nominal revenue from customers and business activity and currently has very limited cash on hand. The Company is endeavoring to ~~enhance~~raise additional capital through debt or ~~complement our product and service offerings.~~

~~We believe~~equity financing, but there is no assurance that ~~our current cash balances and our anticipated cash flows from operations~~additional capital will be available on terms acceptable to the Company or will be sufficient to ~~fund~~enable the Company to complete its development activities or sustain operations. If the Company is unable to raise sufficient additional capital to sustain operations, then it will have to further extend payables, reduce overhead, or scale back its current business plan until such additional capital is raised, any of which could have a material adverse effect on the Company. There is no assurance that such a plan will be successful. If the Company is unable to raise sufficient additional capital to sustain operations, then the Company will be required to pursue other alternatives which may include selling assets, selling or merging its business, ceasing operations or filing a petition for ~~the next 12 months.~~bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

Table of Contents

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.~~

estimates.

We believe that the assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, useful lives of long-lived assets and stock-based compensation expense have the greatest potential impact on our ~~condensed~~ consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ materially from these estimates.

Our significant accounting policies are more fully described in our ~~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, 2022. 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, 2022. Based on such evaluation, our Interim Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as ~~appropriate~~of June 30, 2022.

As noted in Note 4 to ~~allow timely decisions regarding required~~the consolidated financial statements included in this Quarterly Report, the Company concluded that Prior Period Financial Statements should no longer be relied upon and should be restated. As such, management believes material weaknesses exist in its internal controls over financial reporting as of June 30, 2022. The Company does not have a sufficient complement of personnel commensurate with the accounting and reporting requirements of a public company. The material weaknesses

Table of Contents

identified relate to inadequate controls that address segregation of certain accounting duties and reconciliation and analysis of certain key accounts. We have concluded that these material weaknesses arose because, as a pre-revenue private company recently formed, we did not have the necessary personnel to design effective components of internal control, including risk assessment control activities information/communication and monitoring to satisfy the accounting and financial reporting requirements of a public company.

In light of the conclusion that the Company’s internal disclosure controls were ineffective as of June 30, 2022, it has applied additional procedures and processes as necessary to ensure the reliability of financial reporting in regard to this Quarterly Report. Accordingly, the Company believes, based on its knowledge, that: (i) this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this Quarterly Report; and (ii) the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this Quarterly Report.

Changes in Internal Control Over Financial Reporting

~~There was~~Except as disclosed in Note 4 to the consolidated financial statements included 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, 2021~~June 30, 2022 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.

Table of Contents

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

~~None.~~Litigation

On December 2, 2021, the Company and certain of its present and former officers and directors were named as defendants in a putative class action lawsuit styled Steppacher v. Alfi, Inc., et al., Case No. 1:21-cv-24232, brought in the United States District Court for the Southern District of Florida. On December 15, 2021, the Company, certain of its present and former officers and directors, and the underwriters in the Company’s IPO were named as defendants in a second putative class action styled Kleinschmidt v. Alfi, Inc., et al., Case No. 1:21-cv-24338, also brought in the United States District Court for the Southern District of Florida. The complaints in both actions allege that the Company and other named defendants violated Sections 11 and 15 of the Securities Act with respect to allegedly false and misleading statements included in the registration statement and prospectus supplements issued in connection with the Offering Documents in May 2021, and Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by allegedly making false and materially misleading statements and failing to disclose material adverse facts in the Company’s public filings with the SEC. Both complaints assert that the putative plaintiff class includes: (i) persons or entities, other than the defendants, the officers and directors of the Company, members of their immediate families, their legal representatives, and any entity in which they had a controlling interest, among others, who purchased or acquired the Common Stock or warrants to purchase the Common Stock pursuant and/or traceable to the Offering Documents; and (ii) persons or entities, other than the defendants, who purchased or acquired the Company’s securities between May 4, 2021, and March 11, 2022 (both dates inclusive). The plaintiffs seek unspecified compensatory damages, including interest, and costs and expenses, including attorney’s and expert fees. On February 3, 2022, the court consolidated the two actions under the caption Steppacher, Jr., et al. v. Alfi, Inc. et al., Case No. 21-cv-24232-KMW. Three putative stockholders (or groups of stockholders) moved to be appointed as lead plaintiff, and the court appointed Candido Rodriguez as lead plaintiff. The consolidated actions are now captioned Rodriguez, et al. v. Alfi, Inc., et al., Case No. 21-cv-24232-KMW.

Table of Contents

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

Arbitration

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

On March 10, 2022, Charles Pereira, a former Chief Technology Officer of the Company, filed a Statement of Claim against the Company with the AAA, alleging various breaches of contract and torts with respect to his employment, his compensation, and the termination of his employment. In his Statement of Claim, Mr. Pereira seeks damages in an amount to be determined at the hearing, but not less than $10 million dollars, and certain declaratory relief and other money damages. The arbitration proceeding was initiated pursuant to the arbitration provision in Mr. Pereira’s employment agreement with the Company. The Company is currently unable to estimate the costs and timing of the arbitration, including any potential damages, if Mr. Pereira were to prevail on any of his claims.

Other Matters

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

Item 1A. Risk Factors

~~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.~~Proceeds

None.

~~Unregistered Sale~~

Table of ~~Equity Securities~~Contents

In connection with bridge loans entered into on December 31, 2020, March 22, 2021 and April 1, 2021, for aggregate gross proceeds of $2.75 million, the lenders received, on a pro rata basis, 1,732,532 shares of common stock. This issuance was exempt from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. See Note 5 to our consolidated financial statements.

~~Use of Proceeds from our IPO~~

On May 3, 2021, the SEC declared effective our registration statement on Form S-1(333-251959), as amended, filed in connection with our IPO. On May 6, 2021 we completed our IPO selling 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 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 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, a division of Benchmark Investments, Inc. There has been no material change in the use of proceeds from our IPO as described in the 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 any of our Alfi-enabled tablets, and the remaining amounts for product launch, general corporate purposes, including working capital, business development, sales and marketing activities and capital expenditures.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Table of Contents

Item 6. Exhibits

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

3.2	~~Form of~~Third Amended and Restated Certificate of Incorporation, ~~(1)~~effective May 3, 2021	Incorporated by reference to Exhibit 3.2 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

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

3.4	~~Form of~~ Amended and Restated ~~Bylaws (1)~~By-laws	Incorporated by reference to Exhibit 3.4 to Alfi, Inc.’s Annual Report on Form 10-K filed on May 16, 2022 (Commission File No. 001-40294).

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

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

~~10.1~~ 4.3	Form of Representative’s Warrant	Incorporated by reference to Exhibit 1.2 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

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

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

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

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

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

Table of Contents


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

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

~~10.7~~ 10.6*	Executive Employment Agreement, ~~with Charles Pereira~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and John Cook, III	Incorporated by reference to Exhibit 10.6 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.8~~ 10.7*	Executive Employment Agreement, ~~with Dennis McIntosh~~ dated February 10, 2021, ~~(1)~~between Alfi, Inc. and Charles Pereira	Incorporated by reference to Exhibit 10.7 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

~~10.9~~ 10.8*	Executive Employment Agreement, dated February 10, 2021, between Alfi, Inc. and Dennis McIntosh	Incorporated by reference to Exhibit 10.8 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

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

~~10.10~~	~~Security Agreement with~~between Lectrefy Inc. and Lee Aerospace, Inc.	Incorporated by reference to Exhibit 10.9 to Alfi, Inc.’s Registration Statement on Form S-1, as amended (No. 333-251959).

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

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

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

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

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

31.1* 10.15	Letter of Understanding, dated November 8, 2021, between Alfi, Inc. and CFO Financial Partners, LLC	Incorporated by reference to Exhibit 99.1 to Alfi, Inc.’s Current Report on Form 8-K filed on November 15, 2021 (Commission File No. 001-40294).

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

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

Table of Contents


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

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

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

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

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

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

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

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

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

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

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

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

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

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

Table of Contents

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

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

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

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

32.1** 32.1	~~Certification~~Certifications of 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		Furnished herewith.

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

101.CAL* 101.SCH	Inline XBRL Taxonomy Extension Schema

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~

101.SCH* 101.DEF	~~XBRL Taxonomy Extension Schema Document~~

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~

101.LAB* 101.LAB	Inline XBRL Taxonomy Extension ~~Labels~~Label Linkbase ~~Document~~

101.PRE* 101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~

104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

* ~~Filed herewith.~~Identifies a management contract or compensatory plan or arrangement.

** ~~Furnished.~~31

Table of Contents

~~(1)~~

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

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: August 15, 2022	~~Name:~~		~~Paul Pereira~~ /s/ James Lee
	~~Title:~~ Name:	~~Chairman and~~ James Lee
	Title:	Interim Chief Executive Officer
		(Principal Executive Officer)

Date: ~~June 10, 2021~~August 15, 2022	/s/ ~~Dennis McIntosh~~Louis Almerini
	Name:	~~Dennis McIntosh~~ Louis Almerini
	Title:	Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

	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