Item 4.01 Changes in Registrant's Certifying Accountant.
Friedman LLP
On October 29, 2021, Alfi, Inc. (the "Company") was notified by email by
Friedman LLP ("Friedman") that the firm resigned as the Company's independent
registered public accounting firm. As discussed below, the Company engaged
Friedman on October 18, 2021 and, accordingly, Friedman has not issued any
report on the Company's financial statements.
The Company is in the process of determining the disclosures that are required
by Item 4.01 of Form 8-K in connection with such resignation, including with
respect to: (i) "disagreements" (as such term is defined in Item 304(a)(1)(iv)
of Regulation S-K) between the Company and Friedman on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures; and (ii) "reportable events" (as such term is defined in Item
304(a)(1)(v) of Regulation S-K). Since Friedman's resignation, the Company has
not been able to discuss such matters with Friedman but intends on doing so. The
Company intends to file an amendment to this Current Report on Form 8-K (this
"Current Report") to provide the disclosures required by Item 4.01 of Form 8-K
in connection with Friedman's resignation.
On October 18, 2021, the Company engaged Friedman to serve as its independent
registered public accounting firm to audit the consolidated balance sheet of the
Company as of December 31, 2021, and the related consolidated statements of
operations, comprehensive income, stockholders' equity, cash flows and related
notes for the year then ended. The decision to engage Friedman as the Company's
independent registered public accounting firm was approved by the Audit
Committee (the "Audit Committee") of the Company's Board of Directors (the
"Board"). During the two most recent fiscal years ended December 31, 2020 and
2019, and during the subsequent interim period from January 1, 2021 through the
date of Friedman's engagement, to the knowledge of the Company's current
management and the current members of the Audit Committee, neither the Company
nor anyone on its behalf consulted Friedman regarding either: (i) the
application of accounting principles to a specified transaction (either
completed or proposed), or the type of audit opinion that might be rendered on
the Company's financial statements, and neither a written report nor oral advice
was provided to the Company that Friedman concluded was an important factor
considered by the Company in reaching a decision as to any accounting, auditing
or financial reporting issue; or (ii) any matter that was either the subject of
a "disagreement" (as such term is defined in Item 304(a)(1)(iv) of Regulation
S-K) or a "reportable event" (as such term is defined in Item 304 (a)(1)(v) of
Regulation S-K).
The Company will provide Friedman with a copy of the disclosure it is making
herein in response to Item 304(a) of Regulation S-K and request that Friedman
furnish the Company with a copy of its letter addressed to the Securities and
Exchange Commission (the "SEC"), pursuant to Item 304(a)(3) of Regulation S-K,
stating whether Friedman agrees with the statements made by the Company in
response to Item 304(a) of Regulation S-K and, if not, stating the respects in
which it does not agree. The Company will file an amendment to this Current
Report within two business days of receipt of the letter from Friedman.
Slack & Company CPAs, LLC
Prior to Friedman, Slack & Company CPAs, LLC ("Slack") served as the Company's
independent registered public accounting firm and audited the Company's
consolidated balance sheets as of December 31, 2020 and 2019, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the two years then ended, and the related notes. In August 2021, Slack
notified the Company that it was resigning as the Company's independent
registered public accounting firm after Slack completed the work necessary for
the Company to file its Quarterly Report on Form 10-Q for quarter ended June 30,
2021, due to the Slack firm closing its business.
Slack's report on the Company's consolidated financial statements as of December
31, 2020 and 2019, did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope or accounting
principles, except that such report contained an explanatory paragraph that
stated that the Company had a loss from operations and an accumulated deficit
and intends to fund operations through future financing, of which no assurance
can be given that the Company will be successful in raising such capital, and
which factors raised substantial doubt about the Company's ability to continue
as a going concern.
During the two most recent fiscal years ended December 31, 2020 and 2019 and the
subsequent interim period from January 1, 2021 through the date of Slack's
resignation: (i) there were no "disagreements" (as such term is defined in Item
304(a)(1)(iv) of Regulation S-K) with Slack on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Slack,
would have caused Slack to make reference to the subject matter of the
disagreements in connection with its report on the consolidated financial
statements for such years; and (ii) there have been no "reportable events" (as
such term is defined in Item 304(a)(1)(v) of Regulation S-K).
The Company provided Slack with a copy of the disclosure it is making herein in
response to Item 304(a) of Regulation S-K and requested that Slack furnish the
Company with a copy of its letter addressed to the SEC, pursuant to Item
304(a)(3) of Regulation S-K, stating whether Slack agrees with the statements
made by the Company in response to Item 304(a) of Regulation S-K and, if not,
stating the respects in which it does not agree. As the Slack firm has closed,
the Company does not expect to receive such letter from Slack.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(a) Resignation of a Director
On October 27, 2021, the Board received by email a letter from Richard Mowser, a
director of the Company (the "Resignation Letter"), pursuant to which Mr. Mowser
resigned as a member of the Board effective immediately. Prior to such
resignation, Mr. Mowser served as the Chair of the Board's Audit Committee and
as a member of the Board's Compensation Committee and Nominating and Corporate
Governance Committee (the "Nominating Committee").
In the Resignation Letter, Mr. Mowser made statements regarding his
disagreements with the Company relating to its operations, policies and
practices, indicating that he tendered his resignation based on the actions
taken by the Board at its meeting held on October 22, 2021. As previously
disclosed on the Company's Current Report on Form 8-K filed with the SEC on
October 28, 2021 (the "Prior Form 8-K"), the Board placed each of Paul Pereira,
the Company's President and Chief Executive Officer, Dennis McIntosh, the
Company's Chief Financial Officer and Treasurer, and Charles Pereira, the
Company's Chief Technology Officer, on paid administrative leave and authorized
an independent internal investigation regarding certain corporate transactions
and other matters.
Mr. Mowser states in the Resignation Letter, among other things, that "The
decision to replace the CEO/Founder, the CFO and the CTO in my opinion was
personal and calculated and driven by certain directors/shareholders to take
control of the company without any regard for due process." In the Resignation
Letter, Mr. Mowser disagrees with the actions taken by the Board at its October
22, 2021 meeting, the reasons and motivations therefor, and the process by which
such actions were taken and with the selection process for, and qualifications
of, the individuals to replace such officers.
The majority of directors on the Board disagree with the assertions and
conclusions made by Mr. Mowser in the Resignation Letter and take particular
exception to his characterizations of reasons and motivations of the directors
who voted in favor of such actions.
A copy of the Resignation Letter is attached as Exhibit 17.1 to this Current
Report, and is incorporated herein by this reference. All descriptions of the
contents of the Resignation Letter in this Current Report are qualified in their
entirety by references to the full text of the Registration Letter.
The Company will provide Mr. Mowser a copy of the disclosures it is making in
this Item 5.02 no later than the day the Company files the disclosures with the
SEC. The Company will provide Mr. Mowser with the opportunity to furnish the
Company, as promptly as possible, with a letter addressed to the Company stating
whether Mr. Mowser agrees with the statements made by the Company in this Item
5.02 and, if not, stating the respects in which he does not agree. The Company
will file any letter provided by Mr. Mowser in relation thereto by amendment to
this Current Report within two business days after receipt by the Company.
(d) Election of Directors
On November 1, 2021, the Board, upon recommendation of the Nominating Committee,
appointed each of Patrick Dolan and Allen Capsuto to serve as a director of the
Company. Mr. Capsuto was also appointed by the Board, upon recommendation of the
Nominating Committee, to serve as the Chairman of the Audit Committee.
Mr. Dolan, age 59, is the former President and COO of the Interactive
Advertising Bureau ("IAB"), an advertising business organization that develops
industry standards, conducts research and provides legal support for the online
advertising industry. Mr. Dolan was with IAB for 13 years, from 2007 through
January 2021. During this time, he founded its Data Council and Data Center of
Excellence, co-founded its Video and Mobile Centers of Excellence and was a
founding executive board member of the IAB Tech Lab. He helped expand the
Digital Content NewFronts and establish the IAB Podcast Upfront's and IAB's
Digital Sales Certification Program. Currently, Mr. Dolan is providing advising
and consulting services. Mr. Dolan received his BA in economics from the
University of Virginia and his MBA from Virginia Commonwealth University.
Mr. Capsuto, age 69, has served as a Managing Director of Everest Group
International, LLC, which provides stakeholder services in the areas of
Professional Advisory, Mergers and Acquisitions, since 2015. He is also the
founder and principal of Capsuto Consulting LLC, which provides consulting
services for high net worth individuals. From 2002 to 2007, Mr. Capsuto served
as Executive Vice President and CFO of Magnatrax Corporation, a provider of
custom-engineered metal building systems for the North American nonresidential
construction market. He has served on the Board of Directors of QualServ
Corporation (Chairman), Champion Homes (Audit Chair), CCLM Holdings (Chairman),
Euramax (Compensation Committee), Magnatrx China JV-steel company, EquipMD
(Chairman) and as the sole Trustee of the Magnatrax Shareholders Liquidity
Trust. Mr. Capsuto received his BS in Computer Science and Math from the
University of Illinois - Chicago and his MBA from Roosevelt University.
The Company has not yet made any determinations regarding the compensation
Messrs. Dolan and Capsuto may receive for their service as directors. There are
no arrangements or understandings between either Mr. Dolan or Mr. Capsuto and
any other person pursuant to which either of them was elected as a director of
the Company. There are no family relationships between either Mr. Dolan or Mr.
Capsuto and any director or executive officer of the Company, and neither Mr.
Dolan nor Mr. Capsuto has any direct or indirect material interest in any
transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Item 8.01 Other Information.
As previously reported on the Prior Form 8-K, on October 22, 2021, the Board
placed each of Messrs. P. Pereira, McIntosh and C. Pereira on paid
administrative leave and authorized an independent internal investigation
regarding certain corporate transactions and other matters. The Company wishes
to disclose additional information regarding the foregoing matters.
The corporate transactions that precipitated the Board's actions to place the
executives on paid administrative leave and to authorize the independent
internal investigation included: (i) the Company's purchase of a condominium for
a purchase price of approximately $1.1 million and the related erroneously
certified corporate resolution regarding the unanimous approval by the Board and
the Company's stockholders of such purchase, and (ii) the Company's commitment
to sponsor a sports tournament in the amount of $640,000, a portion of which was
payable through the issuance by the Company of unregistered shares of the
Company's common stock, and as to which the Company would be obligated to pay
additional cash amounts if the net proceeds received by the recipient upon the
sale of such shares are less than an amount specified in the contract and for
which the Company would be given a credit toward sponsorship or attendance at
events in the future if the net proceeds received by the recipient upon the sale
of such shares exceed an amount specified in the contract. (The Company's entry
into the contract for the purchase of the condominium was disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)
These transactions were undertaken by the Company's management without
sufficient and appropriate consultation with or approval by the Board. The
independent internal investigation is expected to investigate the details of the
above-noted transactions and any other matters that come to the Board's
attention regarding actions taken by the executives in their management of the
Company. One of the goals of the independent internal investigation is to help
the Company in developing improved corporate governance policies and procedures
to ensure that the Board is provided the opportunity to consider and provide
appropriate input to the Company's management on significant corporate
transactions. If, during the course of the independent internal investigation,
the Board uncovers any wrongdoing, it will take appropriate action with respect
to the person or persons responsible therefor.
Item 9.01 Financial Statements and Exhibits
Exhibit 17.1 Resignation Letter from Richard Mowser.
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline
XBRL document)
© Edgar Online, source Glimpses