by Benny Taubman, OOH TODAY Reporter
A Boat and a Bankruptcy
In the time since its over $15 million IPO nearly 19 months ago on May 3, 2021, AI and SaaS company Alfi Inc. has declared chapter 7 bankruptcy, had its stock delisted, fired three top executives over misappropriation of corporate funds (its CEO, CTO, and CFO), been investigated by the SEC, and endured litigation in a multitude of lawsuits. Safe to say: Alfi has had a choppy ride. Unfortunately for the company’s shareholders and other investors, the actions of the company’s leadership and board have cost them millions of dollars, time, and resources.
Further rubbing salt into the wound, Alfi’s insurmountable troubles have not stopped its deposed ex-Chairman, ex-President, and ex-CEO, Dr. Paul Antonio Pereira, from flexing his 56-foot, luxury yacht named “Tug” on his LinkedIn page. In 8 posts uploaded to the business-oriented social media site, Dr. Pereira showcases the boat’s opulent kitchen, bedroom, and 5-screen cockpit. Also on LinkedIn – although he retains a profile banner brandishing the company – Dr. Pereira has removed his affiliation with Alfi on LinkedIn’s “Experience” feature.
So, considering that many in the OOH industry once considered Alfi an innovative and revolutionary new company with technology that could impact the entire field, one is left to ponder what led to its spectacular fall from grace.
Alfi Sets Sail
Alfi was founded in 2018 and sought to reinvent DOOH through AI and machine learning technologies that enabled real-time facial detection capabilities. The idea was that, with this technology, cameras on DOOH faces would analyze an individual’s appearance and show them custom ads based on their characteristics such as age, gender, and clothing items.
Strictly from its product, one might raise a few ethical concerns. Although Alfi’s software is compliant with privacy laws that restrict the collection and storage of people’s personal data and self-reportedly does not “track or identify” anyone, it still a bit suspect. Based on vulnerabilities of other data collecting technologies, the tech is still potentially susceptible to tampering or hacking and shares similarities to technologies in dystopian science-fiction that are used to clandestinely observe and track individuals.
Barring potential misgivings, individuals in OOH, advertisers, and investors saw the profitable prospects of Alfi’s tech and gave the business a shot. On May 3, 2021, after nearly three years of private ownership, Alfi went public and was listed on the NASDAQ stock exchange at a valuation of nearly $15.5 million and a stock price of $4.15 per share. In the coming months, although the company’s stock price fell roughly 32% to a low of $2.83 on May 24, the stock would soon rebound to an astronomical high.
In June, Alfi made two lucrative announcements. First, the company revealed that it struck a deal with manufacturer All-Niter to produce and deliver 10,000 interactive digital tablets that featured Alfi’s proprietary software, to Uber and Lyft drivers. Second, Alfi announced that it would buy back $2 million worth of stock. In tandem, these announcements caused shares to soar 500% to an all-time high price of $17.10 on June 21. At this point, anyone with a stake in Alfi would have been sure that they made the right investment.
However, the good times would not last. From that point, Alfi’s trajectory was on a downward spiral due to the company being shell-shocked by a tumultuous series of calamities and scandals caused by greed and lies.
The Ship is Listing
In October of 2021, Alfi’s Board announced that it was conducting an independent internal investigation related to “certain corporate transactions and other matters.” Shortly thereafter, its CEO (Dr. Pereira), CTO, and CFO were all placed on paid administrative leave and replaced by interim leadership. The next month, Alfi revealed that it was the subject of an investigation by the SEC and that “its affiliates and agents may possess documents and [relevant] data.” Almost 5 months later, on Feb. 23, 2022, the results of the investigation were released, outlining the senior management’s various breaches of corporate regulations.
Foremost, the investigation revealed that Alfi’s former senior management used company and investor funds to buy a $1.1 million condo in Miami and sponsor a sports tournament for $640,000 without the Board’s knowledge or approval. Moreover, the investigation points out that the ownership of the condo was transferred to a newly formed LLC and was intended for personal use. In both transactions, the senior management signed official government documents which incorrectly certified that Alfi’s Board and Stockholders approved the purchases.
The investigation also stated that in a June 22, 2021 interview with the financial news website Benzinga, Dr. Pereira announced the aforementioned $2 million buyback plan – again without the Board’s knowledge or approval. Additionally, he made the false claim that Alfi had over 22,000 rideshare drivers “signed up” for its services when only 1,253 had contracts with the company.
Other findings in the investigation include inaccurate social media posts regarding the company’s prospects, interference and delay of the investigation, and deficient internal control over financial reporting. The entire investigation report can be read: here. The investigation and subsequent plunge in the company’s stock price spawned an onslaught of class action and civil lawsuits from large law firms accusing Alfi of making misleading statements, deficient disclosures, unapproved corporate transactions, and increasing the risk of internal and regulatory investigations.
All of these occurrences worked to drain the company’s finances, disrupt operations, and disparage investor confidence, ultimately leading to Alfi’s untimely demise.
Shipwrecked
On Oct. 14, Alfi ceased all operations, was delisted from the NASDAQ, and officially filed for chapter 7 bankruptcy in the District Court of Delaware. As is the case in chapter 7 bankruptcy procedure, the authority and powers of Alfi’s board have been eliminated and a court-appointed trustee has been appointed to control the business’ $25 million worth of assets and $8.63 million worth of liabilities. Currently, Alfi’s assets are being liquidated and its claims paid in line with bankruptcy codes.
Alfi’s hapless rise and fall outlines an exemplary case of phenomenal business prospects being marred by needless greed and corruption from a company’s top brass. Hopefully, future business leaders will learn from Alfi’s mistakes and not sail close to the wind.
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