Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 11, 2022 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-40524 | |
Entity Registrant Name | SHF Holdings, Inc. | |
Entity Central Index Key | 0001854963 | |
Entity Tax Identification Number | 86-2409612 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 5269 W. 62nd Avenue | |
Entity Address, City or Town | Arvada | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80003 | |
City Area Code | (303) | |
Local Phone Number | 431-3435 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,715,912 | |
Entity Information, Former Legal or Registered Name | Northern Lights Acquisition Corp | |
Class A Common Stock, $0.0001 par value per share | ||
Title of 12(b) Security | Class A Common Stock, $0.0001 par value per share | |
Trading Symbol | SHFS | |
Security Exchange Name | NASDAQ | |
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | ||
Title of 12(b) Security | Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | |
Trading Symbol | SHFSW | |
Security Exchange Name | NASDAQ |
Combined Balance Sheets
Combined Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 7,273,012 | $ 5,495,905 |
Accounts receivable – trade | 813,257 | 522,896 |
Contract assets | 7,676 | 18,317 |
Prepaid expenses | 941,478 | 6,021 |
Accrued interest receivable | 25,422 | 7,556 |
Due from PIPE investors | 4,090,000 | |
Short-term loans receivable | 71,168 | 52,833 |
Total Current Assets | 13,222,013 | 6,103,528 |
Long-term loans receivable, net | 1,350,246 | 1,410,727 |
Property and equipment, net | 16,510 | 6,351 |
Other investment | 500,000 | |
Deferred tax asset | 43,411,985 | |
Forward purchase derivative assets | 1,085,839 | |
Forward purchase receivable | 39,285,754 | |
Security deposit | 5,036 | |
Total Assets | 98,877,383 | 7,520,606 |
Current Liabilities: | ||
Accounts payable | 2,263,746 | 43,626 |
Accrued expenses | 5,569,026 | 129,546 |
Contract liabilities | 14,583 | 8,333 |
Due to seller - current portion | 33,616,468 | |
Total Current Liabilities | 41,463,823 | 181,505 |
Warrant liability | 737,057 | |
Due to seller – long-term portion | 23,333,333 | |
Deferred loan origination fees | 102,364 | |
Deferred offering costs | 2,166,250 | |
Indemnity liability | 377,005 | |
Total Liabilities | 68,179,832 | 181,505 |
Parent-Entity Net Investment and Stockholders’ Equity | ||
Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 20,450 shares issued and outstanding on September 30, 2022, and no shares issued and outstanding on December 31, 2021, respectively | 2 | |
Class A common stock, $.0001 par value, 125,000,000 shares authorized, 18,715,912 issued and outstanding on September 30, 2022, and no shares issued and outstanding on December 31, 2021, respectively | 1,872 | |
Additional paid in capital | 30,451,696 | |
Retained earnings | 243,981 | |
Parent-Entity Net Investment | 7,339,101 | |
Total Parent-Entity Net Investment and Stockholders’ Equity | 30,697,551 | 7,339,101 |
Total Liabilities and Parent-Entity Net Investment and Stockholders’ Equity | $ 98,877,383 | $ 7,520,606 |
Combined Balance Sheets (Parent
Combined Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized | 1,250,000 | 1,250,000 |
Convertible preferred stock, shares issued | 20,450 | 0 |
Convertible preferred stock, shares outstanding | 20,450 | 0 |
Class A common stock, par value | $ 0.0001 | $ 0.0001 |
Class A common stock, shares authorized | 125,000,000 | 125,000,000 |
Class A common stock, shares issued | 18,715,912 | 0 |
Class A common stock, shares outstanding | 18,715,912 | 0 |
Combined Statements of Net Inco
Combined Statements of Net Income and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Income Statement [Abstract] | |||||
Revenue | $ 2,379,314 | $ 1,716,861 | $ 5,903,213 | $ 5,297,457 | |
Operating Expenses | |||||
Compensation and employee benefits | 865,595 | 539,611 | 2,383,117 | 1,997,669 | |
Professional services | 195,464 | 29,288 | 534,494 | 91,558 | |
Rent expense | 30,759 | 24,710 | 82,087 | 48,576 | |
Provision for loan losses | 88,345 | 514 | 383,910 | 12,441 | |
General and administrative expenses | 373,695 | 176,675 | 856,205 | 578,676 | |
Total operating expenses | 1,553,858 | 770,798 | 4,239,813 | 2,728,920 | |
Operating income | 825,456 | 946,063 | 1,663,400 | 2,568,537 | |
Other (income) expenses | |||||
Interest expense | 36,002 | 36,002 | |||
Change in fair value of warrant liability | (868,472) | (868,472) | |||
Change in fair value of forward purchase option derivative liability | 601,691 | 601,691 | |||
Total other (income)/expenses | (230,779) | (230,779) | |||
Net income | $ 1,056,235 | $ 946,063 | $ 1,894,179 | $ 2,568,537 | |
Weighted average shares outstanding, basic | 18,715,912 | 18,715,912 | 18,715,912 | 18,715,912 | |
Basic net income per share | $ 0.06 | $ 0.05 | $ 0.10 | $ 0.14 | |
Weighted average shares outstanding, diluted | [1] | 20,760,912 | 18,715,912 | 20,760,912 | 18,715,912 |
Diluted net income per share | $ 0.06 | $ 0.05 | $ 0.09 | $ 0.14 | |
[1]PIPE investors initial shares represent preferred stock without voting rights. Preferred stock initially converts at $ 10 2,045,000 |
Combined Statements of Parent-E
Combined Statements of Parent-Entity Net Investment and Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] Class A Common Stock [Member] | Additional Paid-in Capital [Member] | Parent-Entity Net Investment [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 4,354,021 | $ 4,354,021 | ||||
Beginning balance, shares at Dec. 31, 2020 | ||||||
Net income | 905,303 | 905,303 | ||||
Contribution of loan receivable from Parent | 510,250 | 510,250 | ||||
Net change due to allocations and distributions to Parent | (938,210) | (938,210) | ||||
Ending balance, value at Mar. 31, 2021 | 4,831,364 | 4,831,364 | ||||
Ending balance, shares at Mar. 31, 2021 | ||||||
Beginning balance, value at Dec. 31, 2020 | 4,354,021 | 4,354,021 | ||||
Beginning balance, shares at Dec. 31, 2020 | ||||||
Net income | 2,568,537 | |||||
Ending balance, value at Sep. 30, 2021 | 6,509,133 | 6,509,133 | ||||
Ending balance, shares at Sep. 30, 2021 | ||||||
Beginning balance, value at Mar. 31, 2021 | 4,831,364 | 4,831,364 | ||||
Beginning balance, shares at Mar. 31, 2021 | ||||||
Net income | 717,171 | 717,171 | ||||
Contribution of loan receivable from Parent | 682,500 | 682,500 | ||||
Net change due to allocations and distributions to Parent | (699,787) | (699,787) | ||||
Ending balance, value at Jun. 30, 2021 | 5,531,248 | 5,531,248 | ||||
Ending balance, shares at Jun. 30, 2021 | ||||||
Net income | 946,063 | 946,063 | ||||
Contribution from Parent | 31,822 | 31,822 | ||||
Ending balance, value at Sep. 30, 2021 | 6,509,133 | 6,509,133 | ||||
Ending balance, shares at Sep. 30, 2021 | ||||||
Beginning balance, value at Dec. 31, 2021 | 7,339,101 | 7,339,101 | ||||
Beginning balance, shares at Dec. 31, 2021 | ||||||
Net income | 501,600 | 501,600 | ||||
Contribution of loan receivable from Parent | 59,999 | 59,999 | ||||
Ending balance, value at Mar. 31, 2022 | 7,900,700 | 7,900,700 | ||||
Ending balance, shares at Mar. 31, 2022 | ||||||
Beginning balance, value at Dec. 31, 2021 | 7,339,101 | 7,339,101 | ||||
Beginning balance, shares at Dec. 31, 2021 | ||||||
Net income | 1,894,179 | |||||
Ending balance, value at Sep. 30, 2022 | $ 2 | $ 1,872 | 30,451,696 | 243,981 | 30,697,551 | |
Ending balance, shares at Sep. 30, 2022 | 20,450 | 18,715,912 | ||||
Beginning balance, value at Mar. 31, 2022 | 7,900,700 | 7,900,700 | ||||
Beginning balance, shares at Mar. 31, 2022 | ||||||
Net income | 336,344 | 336,344 | ||||
Contribution of loan receivable from Parent | 74,999 | 74,999 | ||||
Ending balance, value at Jun. 30, 2022 | 8,312,043 | 8,312,043 | ||||
Ending balance, shares at Jun. 30, 2022 | ||||||
Net income | 812,254 | 243,981 | 1,056,235 | |||
Issuance of shares in connection with Business Combination and PIPE offering, net of issuance costs | $ 2 | $ 1,872 | 30,451,696 | (9,124,297) | 21,329,273 | |
Beginning balance, shares | 20,450 | 18,715,912 | ||||
Ending balance, value at Sep. 30, 2022 | $ 2 | $ 1,872 | $ 30,451,696 | $ 243,981 | $ 30,697,551 | |
Ending balance, shares at Sep. 30, 2022 | 20,450 | 18,715,912 |
Combined Statements of Cash Flo
Combined Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 1,894,179 | $ 2,568,537 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 3,576 | 1,264 |
Provision for loan loss | 383,910 | 12,441 |
Change in fair value of warrant and forward purchase option derivative liabilities | (266,781) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (290,361) | (415,425) |
Contract assets | 10,641 | |
Prepaid expenses | (20,457) | (19,646) |
Accrued interest receivable | (17,866) | (8,989) |
Accounts payable | 116,050 | (70,770) |
Accrued expenses | 153,662 | 98,535 |
Contract liabilities | 6,250 | 16,943 |
Net cash provided by operating activities | 1,972,803 | 2,182,890 |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (13,735) | (344) |
Issuance of new loans (net of payment received) | 35,241 | (415,657) |
Funding of other investment | (500,000) | |
Security deposit | (5,036) | |
Net cash used in investing activities | (483,530) | (416,001) |
CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
Proceeds from reverse capitalization, net of transaction costs | 287,834 | |
Net change in parent funding, allocations, and distributions to parent | (413,425) | |
Net cash provided by (used in) financing activities | 287,834 | (413,425) |
Net increase in cash and cash equivalents | 1,777,107 | 1,353,464 |
Cash and cash equivalents - beginning of period | 5,495,905 | 3,001,363 |
Cash and cash equivalents - end of period | $ 7,273,012 | $ 4,354,827 |
Organization and Business Opera
Organization and Business Operations | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Organization and Business Operations | Note 1. Organization and Business Operations Business Description On February 11, 2022, SHF, LLC and SHF Holding Co., LLC, the sole member of SHF, LLC, and Partner Colorado Credit Union (“PCCU”), the sole member of SHF Holding Co., LLC, entered into a definitive purchase agreement (herein referred to as the “Business Combination”) with Northern Lights Acquisition Corp. (“NLIT”), a special purpose acquisition company, and its sponsor, 5AK, LLC. In connection with the closing of the Business Combination, NLIT changed its name to “SHF Holdings, Inc.” (herein referred to as the “Company”). PCCU’s Board of Directors approved the contribution of certain assets and operating activities associated with operations from both the Branches and Safe Harbor Services (“SHS” or “Oldco”), a wholly-owned subsidiary of PCCU, to SHF Holding, Co., LLC. SHF Holding, Co., LLC then contributed the same assets and related operations to SHF, LLC with PCCU’s investment in SHF, LLC maintained at the SHF Holding Co., LLC level (the “reorganization”). The reorganization effectively occurred July 1, 2021. In conjunction with the reorganization, all of Branches’ employees and certain PCCU employees were terminated from PCCU and hired as SHF, LLC employees. Collectively, Oldco, the Branches and SHF, LLC represent the “Carved-Out Operations.”= After the reorganization, SHF, LLC contains the entirety of the Carved-Out Operations and Oldco was dissolved. In addition, effective July 1, 2021, the entity entered into an Account Servicing Agreement and Support Servicing Agreement which were subsequently amended and restated and are discussed in Note 7. Pursuant to the purchase agreement, upon the closing of the transaction, NLIT purchased all of the issued and outstanding membership interests of SHF in exchange for an aggregate of $ 185,000,000 11,386,139 115,000,000 70,000,000 1,831,683 3,143,388 30 70 50 70 56,949,800 70,000,000 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS On September 28, 2022, the parties consummated the Business Combination, resulting in NLIT, consistent with the aforementioned parameters, purchasing all of the issued and outstanding membership interests of the SHF, LLC in exchange for an aggregate of $ 185,000,000 11,386,139 115,000,000 70,000,000 56,949,801 In connection with the closing of the Business Combination, the status of PCCU has changed from Parent to majority shareholder of the Company pursuant to its ownership of 60.8% The Company generates both interest income and fee income through providing a variety of services to financial institutions desiring to service the cannabis industry including, among other things, Bank Secrecy Act and other regulatory compliance and reporting, onboarding, responding to account inquiries, responding to customer service inquiries relating to CRB depository accounts held at PCCU, and sourcing and managing loans. In addition to PCCU, the Company provides these similar services and outsourced support to other financial institutions providing banking to the cannabis industry. These services are provided to other financial institutions under the Safe Harbor Master Program Agreement. Pursuant to the purchase agreement, the Company entered into an amended services agreements under similar terms as the July 2021 agreements. In addition, in conjunction with the purchase agreement, SHF and PCCU entered into an Amended and Restated Loan Servicing Agreement. Refer to Note 7 for additional information. The purpose of the aforementioned $ 56,949,800 Pursuant to the third amendment to the unit purchase agreement, the Company will pay the deferred consideration in one payment of $ 21,949,801 35,000,000 6,416,667 38,500,002 3,143,388 On October 26, 2022, SHF Holdings, Inc., entered into a Forbearance Agreement (the “Forbearance Agreement”) with PCCU and Luminous Capital USA Inc. (“Luminous”). As per the terms of the agreement, PCCU has agreed to defer all payments owed by the Company pursuant to the Purchase Agreement for a period of six (6) months from the date hereof while the Parties engage in good faith efforts to renegotiate the payment terms applicable to the Deferred Obligation (the “Forbearance Period”). Basis of Presentation Financial statements have not historically been prepared for the Carved-Out Operations. For the nine months ended September 30, 2021, the combined financial statements consist of the balances of SHS and SHF as prepared on a stand-alone basis and the balances of the Branches on a “carve-out” basis. For the three and nine months ended September 30, 2022, the financial statements represent SHF on a stand-alone basis as the period is post reorganization. All intercompany transactions have been eliminated for all periods presented. These combined financial statements reflect the Company’s historical financial position, results of operations and cash flows as they have been historically managed in conformity with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). All depository asset accounts and liabilities are retained by PCCU as the Carved-Out Operations are not organized as a chartered financial institution. Accordingly, none of the cash of PCCU has been attributed to these combined financial statements. Asset and liabilities maintained by SHS and SHF have been included in these financial statements along with any specific assets and liabilities associated with the Branches. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Revenue and expenses for the Branches were included based on specific identification as they relate to customer deposits, professional services, compensation and employee benefits, rent expense, provision for loan losses and other general and administrative expenses. Corporate allocations such as information technology, customer support, marketing, executive compensation and other general and administrative expenses are attributed to the Branches proportionately based on the size of the specifically identifiable CRB’s deposit balances, deposit activity and accounts relative to the totals of the consolidated PCCU entity. This allocation method was consistent for all periods prior to July 2021. Beginning in July 2021, a services agreement was entered into between Newco and PCCU (see Note 7). In exchange for services provided to PCCU via the Carved-Out Operations, Newco receives 100% of CRB related revenue. PCCU receives (and Newco pays) a monthly per account fee, split loan servicing fees and split investment income associated with Carved-Out Operations depository accounts. The fees are meant to represent PCCU’s cost for hosting depository accounts and funding related loans and providing certain limited infrastructure support. Management has considered the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Branches during the periods presented. All revenue and expenses of SHS and SHF are specific to the entity. Corporate allocations were attributed for the nine months ended September 30, 2021. Liquidity and Going Concern As of September 30, 2022, the Company had $ 7,273,012 ($28,241,810) 5,495,905 5,922,023 56,949,800 33,616,468 4,090,000 The Company has not incurred significant cumulative consolidated operating losses and does not have negative cash flows. As of September 30, 2022, the Company has retained earnings of $ 243,981 1,894,179 1,972,803 Despite the going concern disclosure, we have determined not to take a valuation allowance on the Deferred Tax Asset (“DTA”). The Company does not have a history of operating loss or tax credit carry forwards expiring unused; no losses expected in early future years given that the Company is presently profitable; no unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels on a continuing basis in future years; no adverse carry back or carry forward periods; and no business cyclicality concerns. The Company also has enhanced lending capacity pursuant to increased deposits and greater credit pools, additional interest income, and more service fees accentuate the Company’s stance that a DTA valuation allowance is not required. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Material estimates that are particularly subject to change in the near term include the determination of the allowance for loan losses, and the fair value of financial instruments. Actual results could differ from the estimates. Cash and Cash Equivalent Cash and cash equivalents include cash on hand, amounts due from financial institutions, and investments with maturities of three months or less. Concentrations of Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained principally in accounts at PCCU which is insured by the National Credit Union Share Insurance Fund (“NCUSIF”) up to regulatory limits. From time to time, cash balances may exceed the NCUSIF insurance limit. The Company has not experienced any credit losses associated with its cash balances in the past. Currently the Company only services the cannabis industry. Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability to execute our business plan. Currently the Company substantially relies on PCCU to hold customer deposits and fund its originated loans. As of this time, substantially all of the Company’s revenue is generated by deposits and loans hosted by PCCU pursuant to various services agreements. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Accounts Receivable-PCCU and Allowance for Doubtful Accounts Accounts receivable are recorded based on account fee schedules. While fees are generated from individual CRB related accounts, amounts are initially collected by the financial institutional partners and remitted in the subsequent month. As of September 30, 2022, and December 31, 2021, 100% of the Accounts Receivable, respectively is due from PCCU. Effective January 2021 through June 2021, PCCU elected to transfer account servicing from SHS to the Branches. In accordance with this change, a policy was adopted wherein substantially all cash was collected by PCCU and retained by PCCU outside of the Branches and SHS. This policy was eliminated in conjunction with the July 2021 reorganization and execution of the Account Servicing Agreement and Support Servicing Agreement discussed at Note 7. The Company maintains allowances for doubtful accounts for estimated losses as a result of a customers’ inability to make required payments. The Company estimates anticipated losses from doubtful accounts based on days past due as measured from the contractual due date and historical collection history. The Company also takes into consideration changes in economic conditions that may not be reflected in historical trends, for example customers in bankruptcy, liquidation or reorganization. Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible. Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings. At September 30, 2022 and December 31, 2021, there were no Loans Receivable PCCU originates mortgage, commercial and consumer loans to members and other businesses. Commercial CRB loans originated by the Company and funded by PCCU are typically managed by the Company, inclusive of originated and funded loans that are on the PCCU balance sheet only. Certain CRB Loans were contributed to the Carved-out Operations. Such loans where the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at principal balance outstanding, net of an allowance for loan losses and net deferred loan origination fees and costs when applicable. Interest income on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired, or payments are past due ninety days or more. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts are satisfied to where the loan is less than ninety days past due and future payments are reasonably assured. Loans are evaluated for charge-off on a case-by-case basis and are typically charged off at the time of foreclosure. Past-due status is based on the contractual terms of the loans. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if the collection of principal and interest is considered doubtful. Allowance for Loan Losses The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. Management estimates the required allowance for loan losses balance using past loan loss experience, known and inherent risks in the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. The allowance for loan losses consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Due to the nature of uncertainties related to any estimation process, management’s estimate of loan losses inherent in the loan portfolio may change in the near term. However, the amount of the change that is reasonably possible cannot be estimated. A loan is considered impaired when, based on current information and events, full payment under the loan terms is not expected. Impairment is generally evaluated in total for smaller-balance loans of similar nature such as commercial lines of credit, but may be evaluated on an individual loan basis if deemed necessary. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. The loans SHF intends to originate will be secured by various types of assets of the borrowers, including real property and certain personal property, including value associated with other assets to the extent permitted by applicable laws and the regulations governing the borrowers. The documents governing the loans also include a variety of provisions intended to provide remedies against the value associated with licenses. Collection procedures are designed to ensure that neither SHF nor its financial institution clients who provide funding for a loan, nor a third-party agent engaged to assist with the liquidation or foreclosure process, will take possession of cannabis inventory, cannabis paraphernalia, or other cannabis-related assets, nor will they take title to real estate used in cannabis-related businesses. Upon default of a loan, a third-party agent will be engaged to work with the borrower to have the borrower sell collateral securing the loan to a third party or to institute a foreclosure proceeding to have such collateral sold to generate funds towards the payoff of the loan. Applicable regulations under state law that govern CRBs generally do not permit the taking of title to real estate involved in commercial sales of cannabis, whether through foreclosure or otherwise, without prior regulatory approval. The sale of a license or other realization of the value of licenses also requires the approval of state and local regulatory authorities. A defaulted loan may also be sold if such a sale would yield higher proceeds or that a sale could be accomplished more quickly than a foreclosure proceeding while yielding proceeds comparable to what would be expected from a foreclosure sale. Such sale of the loan would be conducted through a third-party administrative agent. However, SHF can provide no assurances that a sale of such loans would be possible or that the sales price of such loans would be sufficient to recover the outstanding principal balance, accrued interest, and fees. Net Deferred Loan Origination Fees and Cost When included with a new loan origination, the Company receives loan origination fees in conjunction with new loans funded and any indemnified liabilities which are not recorded on the balance sheet from our financial institution partners. Where applicable, the loan origination fee is netted with loan origination costs associated with originating a specific loan. These loan origination costs are typically incremental direct costs (non-reimbursed) paid to third parties. Net loan origination fees are initially deferred and recognized as interest income utilizing the interest method. Indemnity Liability Effective February 11, 2022, SHF entered into an Amended and Restated Loan Servicing Agreement with PCCU. Under the Loan Servicing Agreement, PCCU, in exchange for a fee at an annual rate of 0.25 ASC 450-20 Loss Contingencies SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS In addition to default-related loan losses, SHF continuously monitors all other circumstances pursuant to the agreement and identifies events that may necessitate a loss contingency under the Loan Servicing Agreement. A loss contingency is reported when it is both probable that a future event will confirm that a loss had been incurred on or before the related balance sheet date and the loss is reasonably estimable. Property and Equipment, net Property and equipment is recorded at historical cost, net of accumulated depreciation. Depreciation is provided over the assets’ useful lives on a straight-line basis - 4 5 Management periodically assesses the estimated useful life over which assets are depreciated or amortized. If the analysis warrants a change in the estimated useful life of property and equipment, management will reduce the estimated useful life and depreciate or amortize the carrying value prospectively over the shorter remaining useful life. The carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the period of disposal and the resulting gains and losses are included in the results of operations during the same period. Impairment of Long-Lived Assets The Company evaluates the recoverability of tangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. There were no Other Investments These investments are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. Fair Value Measurements The Company utilizes the fair value hierarchy to apply fair value measurements. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair values that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below: Level 1 — Quoted prices for identical assets or liabilities in active markets. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 —Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable. With the exceptions of loans receivable, warrants (public and private), and the derivative liability, the Company considers the carrying amounts of its financial instruments (cash, accounts receivable and accounts payable) in the balance sheet to approximate fair value because of the short-term or highly liquid nature of these financial instruments. The fair values of loans receivables, warrants, and derivative are fully disclosed in Note 10. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Revenue Recognition The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under previous accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s financial statements as of the date of adoption. As a result, a cumulative- effect adjustment was not required. Revenue is recorded at a point in time when the performance obligation is satisfied, and no contingencies exist. Revenue consists primarily of fees earned on deposit accounts held at PCCU but serviced by the Company such as bank account charges, onboarding income, account activity fee income and other miscellaneous fees. In addition, the Company recognizes revenue from the Master Program Agreement. The Master Program Agreement is a non-exclusive and non-transferable right to implement and utilize the Safe Harbor Program. The Safe Harbor Program has two performance obligations; an implementation fee recognized when the contract is effective, and a service fee recognized ratable over the contract term as the compliance program is executed. Lastly, the Company also records revenue for interest on loans and investment income allocated by PCCU based on specific customer balances. Amounts received in advance of the service being provided is recorded as a liability under deferred revenue on the combined balance sheets. Typical Safe Harbor Program contracts are three-year contracts with amounts due monthly, quarterly or annually based on contract terms. Customers consist of financial institutions providing services to CRBs. Revenues are concentrated in the United States. Contract Assets / Contract Liabilities A contract asset is the Company’s right to consideration in exchange for goods or services that the Company has transferred to a customer. Conversely, the Company recognizes a contract liability if the customer’s payment of consideration precedes the reporting entity’s performance. As of September 30, 2022, the Company reported contract assets and contract liabilities of $ 7,676 14,583 18,317 8,333 18,987 59,081 Advertising/Marketing Costs Advertising/marketing costs are expensed as incurred. For the three and nine months ended September 30, 2022, advertising/marketing costs were $ 81,130 231,970 21,327 48,730 Software Development Cost The Company applied agile development methodologies to their software development projects, which are characterized by a more dynamic development process with more frequent and iterative revisions to the product features and functions as the software is being developed. Due to the shorter development cycle and focus on rapid production associated with agile development, the costs incurred to get to, and have incurred after the achievement of technological feasibility, have been expensed as incurred. Software development costs amounted to $ 35,880 88,550 30,973 88,499 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Warrants Liability The Company accounts for the warrants assumed in the business combination in accordance with the guidance contained in ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), under which warrants that do not meet the criteria for equity classification and must be recorded as derivative liabilities. Accordingly, the Company classifies the warrants as liabilities carried at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the consolidated statement of operations Earnings Per Share Basic and diluted earnings per share are computed and disclosed in accordance with FASB ASC Topic 260, Earnings Per Share. The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-class method, earnings are adjusted by accretion amounts to redeemable noncontrolling interests recorded at redemption value. The adjustments represent dividend distributions, in substance, to the noncontrolling interest holder as the holders have contractual rights to receive an amount upon redemption other than the fair value of the applicable shares. As a result, earnings are adjusted to reflect this in substance distribution that is different from other common shareholders. In addition, the Company allocates net earnings to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. Income Tax Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are adjusted through the provision for income taxes as changes in tax laws or rates are enacted. Effective September 28, 2022, the Company complies with the accounting and reporting requirements of ASC Topic 740, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. PCCU was exempt from most federal, state, and local taxes under the provisions of the Internal Revenue Code and state tax laws. However, PCCU was subject to unrelated business income tax. The Carved-Out Operations were wholly owned by PCCU and therefore, were exempt from most federal and state income taxes. The ASC Topic 740, “Income Taxes,” under US GAAP clarifies accounting for uncertainty in income taxes reported in the financial statements. The interpretation provides criteria for assessment of individual tax positions and a process for recognition and measurement of uncertain tax positions. Tax positions are evaluated on whether they meet the “more likely than not” standard for sustainability on examination by tax authorities. The Company’s Management has determined there are no material uncertain tax positions. ASC 740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods. If management is unable to estimate a portion of its ordinary income, but is otherwise able to reliably estimate the remainder, ASC 740-270-25-3 provides that the tax applicable to that item be reported in the interim period in which the item occurs. The tax (or benefit) related to ordinary income (or loss) shall be computed at an estimated annual effective tax rate and the tax (or benefit) related to all other items shall be individually computed and recognized when the items occur. Management is unable to estimate a portion of its ordinary income and as a result had computed the company’s tax provision in accordance with ASC 740-270-25-3. The Company’s effective tax rate was 0.00 0.00 0.00 0.00 21 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS ASC Topic 740 also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. Offering Costs Associated with the Initial Public Offering and PIPE Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as offering costs allocated to warrants in the statements of operations. Offering costs associated with the Public Shares were charged to stockholders’ equity upon the completion of the Initial Public Offering. Deferred offering costs as of September 30, 2022 consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the PIPE Offering. Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective and are not expected to have a material impact on the Company’s financial position or results of operations upon adoption. Financial Instruments—Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a model based on expected losses to estimate credit losses for most financial assets and certain other instruments. In November 2019, the FASB issued ASU No. 2019-10 Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The update allows the extension of the initial effective date for entities which have not yet adopted ASU No. 2016-02. The standard is effective for annual reporting periods beginning after December 15, 2022 for private companies and SEC filers classified as smaller reporting entities, with early adoption permitted. Entities apply the standard’s provisions by recording a cumulative effect adjustment to retained earnings. The Company has not yet adopted ASU 2016-13 and is currently assessing the impact of this new standard on its financial statements. Collaborative Arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808). This update clarifies the interaction between ASC 808, Collaborative Arrangements and ASC 606, Revenue from Contracts with Customers (“ASU 2018-18”). The update clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, the update precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue if the counterparty is not a customer for that transaction. ASU 2018-18 should be applied retrospectively to the date of initial application of ASC 606 and early adoption is permitted. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS The ASU’s amendments were effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods therein. The adoption of this standard did not have a material impact on the Company’s financial statements as the Company does not have any collaborative agreements. However, there is a potential for the Company to enter into collaborative agreements in the future, as it expands into additional markets. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Deferral of the Effective Dates for Certain Entities Business Combination The Business Combination detailed in Note 1 above was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, NLIT is treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination is treated as the equivalent of SHF issuing shares for the net assets of NLIT, accompanied by a recapitalization. The net assets of NLIT are recognized at fair value (which is expected to be consistent with carrying value), with no goodwill or other intangible assets recorded. Other related events in connection with the Business Combination are summarized below: ● The 2,875,000 ● Upon closing of the Business Combination, 11,386,139 The Seller was due to receive a cash payment of $ 3.1 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS ● Approximately $ 56.9 70.0 21.9 35.0 6.4 7.7 1,200,000 ● The Parent-Entity Net Investment appearing in the balance sheet of SHF amounting to $ 9,124,297 ● Immediately prior to the Closing, 20,450 20,450,000 2,045,000 10.00 ● For tax purposes, the transaction will be treated as a taxable asset acquisition, resulting in an estimated tax basis Goodwill balance of $ 43,411,985 ● Preferred Stock The Company is authorized to issue 1,250,000 0.0001 20,450 no ● Class A Common Stock The Company is authorized to issue up to 125,000,000 0.0001 18,715,912 0 3,804,872 ● Parent-Entity Net Investment Parent-Entity Net Investment balance in the combined balance sheets represents PCCU’s historical net investment in the Carved-Out Operations. For purposes of these combined financial statements, investing requirements have been summarized as “Parent-Entity Net Investment” and represents equity as no cash settlement with PCCU is required. No separate equity accounts are maintained for SHS, SHF or the Branches. |
Loans Receivable
Loans Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Loans Receivable | Note 3. Loans Receivable Commercial real estate loans receivable, net consist of the following: Schedule of Commercial Real Estate Loans Receivable September 30, 2022 December 31, 2021 (Unaudited) (Audited) Commercial real estate loans receivable, gross $ 1,443,060 1,478,301 Allowance for loan losses (21,646 ) (14,741 ) Commercial real estate loans receivable, net 1,421,414 1,463,560 Current portion (71,168 ) (52,833 ) Noncurrent portion $ 1,350,246 1,410,727 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS |
Other Investment
Other Investment | 9 Months Ended |
Sep. 30, 2022 | |
Investments, All Other Investments [Abstract] | |
Other Investment | Note 4. Other Investment At September 30, 2022, the Company had a $ 500,000 |
Allowance for Loan Losses
Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Allowance for Loan Losses | Note 5. Allowance for Loan Losses The allowance for loan losses is maintained at a level believed to be sufficient to provide for estimated loan losses based on evaluating known and inherent risks in the loan portfolio. The allowance is provided based upon management’s analysis of the pertinent factors underlying the quality of the loan portfolio. These factors include changes in the amount and composition of the loan portfolio, delinquency levels, actual loss experience, current economic conditions, and detailed analysis of individual loans for which the full collectability may not be assured. The detailed analysis includes methods to estimate the fair value of loan collateral and the existence of potential alternative sources of repayment. The allowance may consist of specific and general components. While the allowance may consist of general and specific components, the allowance is general in nature and is available for the loan portfolio in its entirety. The allowance for loan losses consists of the following activity for the three and nine months ended September 30, 2022 and 2021: Schedule of Allowance For Loan Losses Unsecured Commercial Total Nine Months ended September 30, 2022: Allowance for loan losses: Beginning balance $ - $ 14,741 $ 14,741 Charge-offs - - - Recoveries - - - Provision 10,500 6,905 6,905 Ending balance $ 10,500 $ 21,646 $ 21,646 Three Months ended September 30, 2022: Allowance for loan losses: Beginning balance $ 10,500 $ 21,801 $ 21,801 Charge-offs - - - Recoveries - - - Provision (benefit) - (155 ) (155 ) Ending balance $ 10,500 $ 21,646 $ 21,646 Loans receivable at September 30, 2022 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment 500,000 1,443,060 1,443,060 Total loans receivable $ 500,000 $ 1,443,060 $ 1,443,060 Allowance for loan losses at September 30, 2022 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment 10,500 21,646 21,646 Total allowance for loan losses $ 10,500 $ 21,646 $ 21,646 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Unsecured Commercial Total Nine Months ended September 30, 2021: Allowance for loan losses: Beginning balance $ - $ 13,342 $ 13,342 Charge-offs - - - Recoveries - - - Provision - 12,441 12,441 Ending balance $ - $ 25,783 $ 25,783 Three Months ended September 30, 2021: Allowance for loan losses: Beginning balance $ - $ 25,269 $ 25,269 Charge-offs - - - Recoveries - - - Provision - 514 514 Ending balance $ - $ 25,783 $ 25,783 Loans receivable at September 30, 2021 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment - 1,741,475 1,741,475 Total loans receivable $ - $ 1,741,475 $ 1,741,475 Allowance for loan losses at September 30, 2021 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment - 25,783 25,783 Total allowance for loan losses $ - $ 25,783 $ 25,783 At September 30, 2022 and September 30, 2021, no loans were past due, classified as non-accrual or considered impaired. Indemnity Liability As discussed at Note 7, and pursuant to PCCU Agreements, PCCU funds loans originated and serviced by SHF either directly or through a third-party vendor. SHF retains the associated interest and pays PCCU a fee at an annual rate of 0.25% Schedule of Outstanding Amounts September 30, 2022 December 31, 2021 (Unaudited) (Audited) Secured term loans $ 17,200,000 $ - Unsecured loans and lines of credit 528,042 - Total loans funded by Parent $ 17,728,042 $ - All amounts were performing at September 30, 2022. Secured loans contained an interest rate ranging from 8.25% 12.0% Unsecured loans and lines of credit contain variable rates ranging from Prime + 1.5% to Prime + 6%. 996,958 225,000 SHF’s indemnity liability reflects SHF management’s estimate of probable loan losses inherent under the agreement at the balance sheet date. Management uses a disciplined process and methodology to establish the liability, and the estimates are sensitive to risk ratings assigned to individual loans covered by the agreement as well as economic assumptions driving the estimation model. Individual loan risk ratings are evaluated at least a quarterly based on each situation by SHF management. Given the Company’s limited lending history, the estimate is based on risk adjusted national charge off rates as published by the US Federal Reserve. The indemnity liability activity on September 30, 2022 are as follows: Schedule of Indemnity Liability Three months ended September 30, 2022 Nine months ended September 30, 2022 (Unaudited) (Unaudited) Beginning balance 288,505 - Charge-offs - - Recoveries - - Provision 88,500 377,005 Ending balance 377,005 377,005 All loans were current and considered performing at September 30, 2022 SHF has agreed to indemnify PCCU from all claims related to SHF’s cannabis-related business. Other than potential loan losses, no other circumstances were identified meeting the requirements of a loss contingency. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS The provision for loan losses on the statement of operations consists of the following activity for the three and nine months ended September 30, 2022: Commercial real estate loans Indemnity liability Commercial real estate loans Indemnity liability Three months ended Nine months ended Commercial real estate loans Indemnity liability Total Commercial real estate loans Indemnity liability Total Provision (benefit) (155 ) 88,500 88,345 6,905 377,005 383,910 |
Property and equipment, net
Property and equipment, net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Note 6. Property and equipment, net Property and equipment consist of the following: Schedule of Property and Equipment, Net September 30, 2022 December 31, (Unaudited) (Audited) Equipment $ 41,815 $ 28,080 Office furniture 7,070 7,070 Property and equipment, gross 48,885 35,150 Less: accumulated depreciation (32,375 ) (28,799 ) Property and equipment, net $ 16,510 $ 6,351 Depreciation expense was $ 3,576 1,264 |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 7. Related party transactions Account Servicing Agreement Effective July 1, 2021, SHF, LLC (“SHF”) entered into an Account Servicing Agreement with PCCU. SHF provides services as per the agreement to CRB accounts at PCCU. In addition to providing the services, SHF assumes the costs associated with the CRB accounts. These costs include employees to manage account onboarding, monitoring and compliance, rent and office expense, insurance and other operating expenses necessary to service these accounts. Under the agreement, PCCU agrees to pay SHF all revenue generated from CRB accounts. Amounts due to SHF are due monthly in arrears and upon receipt of invoice. The agreement is for an initial term of 3 years from the effective date. It shall renew thereafter for 1-year terms until either SHF or PCCU provide sixty days prior written notice. The agreement was amended and restated in conjunction with the contemplated Business Combination with substantially similar terms. Pursuant to this agreement, as amended and restated, the Company reported revenue of $ 2,340,716 5,777,446 1,633,667 4,938,413 Support Services Agreement Effective July 1, 2021, SHF entered into a Support Services Agreement with PCCU. In connection with PCCU hosting the depository accounts and the related loans and providing certain infrastructure support, PCCU receives (and SHF pays) a monthly fee per depository account. In addition, 25 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Pursuant to these agreements and as amended and restated, the Company reported expense of $ 204,535 420,085 93,285 261,496 Significant terms of the Amended and Restated Accounting Servicing Agreement and Support Services Agreement are as follows: ● Pursuant to the Account Servicing Agreement, SHF’s fees for such services will equal all cannabis-related income, including all lending-related income (such as loan origination fees, interest income on CRB-related loans, participation fees and servicing fees), investment income, interest income, account activity fees, processing fees, flat fees, and other revenue generated from cannabis and multi-state hemp accounts that are hosted on PCCU’s core system. The Account Servicing Agreement and Support Services Agreement are for an initial term of three years and will renew for additional one-year terms unless a party provides 120 days’ notice of non-renewal, provided that PCCU may not provide notice of non-renewal until 30 months following the signing date. The Account Servicing Agreement will also terminate within 60 days of SHF no longer qualifying as a “credit union service organization” (a “CUSO ● Pursuant to the Support Services Agreement, as amended, PCCU will continue to provide to SHF certain operational and administrative services relating to, among other things, human resources, employee benefits, IT and systems, accounting and marketing and capacity for CRB depository accounts for a monthly fee equal to $ 30.96 25.32 In addition, investment income from CRB-related cash and investments (excluding loans) will be shared 25% to PCCU and 75% to SHF and SHF will reimburse PCCU for any of its out-of-pocket expenses relating to the services provided to SHF 30,000,000 Schedule of Demonstrates Deposit Capacity September 30, 2022 December 31, 2021 (Unaudited) (Audited) PCCU total assets $ 636,482,187 $ 575,170,939 Capacity at 65% 413,713,422 373,861,110 CRB related deposits 165,697,653 146,267,976 Incremental capacity $ 248,015,769 $ 227,593,134 PCCU policy also requires they maintain an internal ratio of net worth to total assets of at least 10 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Loan Servicing Agreement Effective February 11, 2022, SHF entered into an Amended and Restated Loan Servicing Agreement with PCCU. The agreement sets forth the application, underwriting and approval process for loans from PCCU to CRB customers and the loan servicing and monitoring responsibilities provided by both PCCU and SHF. PCCU will receive a monthly servicing fee at the annual rate of 0.25 SHF’s loan program currently depends on PCCU as SHF’s largest funding source for new loans to CRBs. Under PCCU’s loan policy for loans to CRBs, PCCU’s Board of Directors has approved aggregate lending limits at the lessor of 1.3125 times PCCU’s net worth or 65 National Credit Union Association regulations to the greater of $100,000 or 15% of PCCU’s net worth The below schedule demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits at September 30, 2022. No amounts were funded prior to January 1, 2022. Schedule of Demonstrates Deposit Capacity September 30, 2022 December 31, 2021 (Unaudited) (Audited) CRB related deposits $ 165,697,653 $ 146,267,976 Capacity at 65% 107,703,474 95,074,184 PCCU net worth 97,656,494 61,925,336 Capacity at 1.3125 128,174,148 81,227,003 Limiting capacity $ 128,174,148 $ 81,227,003 PCCU loans funded 17,728,042 - Amounts available under lines of credit 996,958 225,000 Incremental capacity $ 109,449,148 $ 81,002,003 Pursuant to this agreement, the Company reported expenses of $ 9,160 14,264 0 Collectively the Account Servicing Agreement, Support Servicing Agreement and Loan Servicing Agreement are referred to as the “Parent Agreements.” Operating leases Effective July 1, 2021, SHF entered into a one-year gross lease with PCCU to lease space in its existing office at a monthly rent of $ 5,400 Effective July 1, 2022, the Company amended its existing lease to a month-to-month lease and therefore no asset or liability amounts are reported pursuant to ASC 842. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 8. Revenue Disaggregated revenue Revenue by type are as follows: Schedule of Disaggregated Revenue For the three-month period ended September 30, 2022 2021 (Unaudited) (Unaudited) Deposit, activity, onboarding income $ 1,369,559 $ 1,494,204 Safe Harbor Program income 38,598 83,194 Investment income 558,860 111,052 Loan interest income 412,297 28,411 Total Revenue $ 2,379,314 $ 1,716,861 For the nine-month period ended September 30, 2022 2021 (Unaudited) (Unaudited) Deposit, activity, onboarding income $ 4,179,323 $ 4,588,471 Safe Harbor Program income 125,767 359,044 Investment income 935,993 271,113 Loan interest income 662,130 78,829 Total Revenue $ 5,903,213 $ 5,297,457 |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 9. Commitments and contingencies From time to time, the Company is subject to claims in legal proceedings arising in the normal course of business. The Company does not believe that it is currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business or operating results. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Note 10. Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy ranks the inputs used in measuring fair value as follows: ○ Level 1 – Observable, unadjusted quoted prices in active markets ○ Level 2 – Inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability ○ Level 3 – Unobservable inputs with little or no market activity that require the Company to use reasonable inputs and assumptions The Company uses fair value measurements to record adjustments to certain financial assets and liabilities on a recurring basis. The Company may be required to record certain assets at fair value on a nonrecurring basis in specific circumstances, such as evidence of impairment. Methodologies used to determine fair value might be highly subjective and judgmental in nature; therefore, valuations may not be precise. If the Company determines that a valuation technique change is necessary, the change is assumed to have occurred at the end of the respective reporting period. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Assets and Liabilities Reported at Fair Value on a Recurring Basis Public and Private Placement Warrants: Public and private placement warrants are recorded at fair value on a recurring basis. The Company obtains dealer quotes, Level 1 and Level 3 inputs, based on observable data to value these warrants. Forward purchase option derivative: Forward purchase option derivative are recorded at fair value on a recurring basis. The Company obtains dealer quotes, Level 3 inputs, based on observable data to value these warrants. The following tables summarize financial assets and liabilities recorded at fair value on a recurring basis, by the level of valuation inputs in the fair value hierarchy on September 30, 2022: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis Total Fair Quoted in Active (Level 1) Significant Other Unobservable Description Liabilities: Public warrants $ 704,375 $ 704,375 - Private placement warrants $ 32,682 - $ 32,682 Assets: Forward purchase option derivative $ 1,085,839 - $ 1,085,839 Assets Measured at Fair Value on a Nonrecurring Basis There were no assets or liabilities recorded at fair value on a nonrecurring basis for the periods ended September 30, 2022, and December 31, 2021. Fair Value of Financial Instruments The Company uses various methodologies and assumptions to estimate the fair value of certain financial instruments. With the exceptions of loans receivable, warrants and forward purchase option derivatives, the Company considers the carrying amounts of its financial instruments (cash, accounts receivable and accounts payable) in the balance sheet to approximate fair value because of the short-term or highly liquid nature of these financial instruments. The following tables present the carrying amounts and fair values of financial instruments, by the level of valuation inputs in the fair value hierarchy, as of the dates indicated: Schedule of Carrying Amounts and Fair Values of Financial Instruments by the Level of Valuation Inputs in the Fair Value Hierarchy As on September 30, 2022 Fair value measurement using Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash and cash equivalents 7,273,012 7,273,012 7,273,012 - - Accounts receivable – trade 813,257 813,257 813,257 - - Contract assets 7,676 7,676 7,676 - - Prepaid expenses 941,478 941,478 941,478 - - Accrued interest receivable 25,422 25,422 25,422 - - Forward purchase derivative assets 1,085,839 1,085,839 1,085,839 - 1,085,839 Loans 1,421,414 1,280,815 - - 1,280,815 Liabilities Accounts payable 2,263,746 2,263,746 2,263,746 - - Accrued expenses 5,569,026 5,569,026 5,569,026 - - Contract liabilities 14,583 14,583 14,583 - - Public Warrants 704,375 704,375 704,375 - - Private Placement Warrants 32,682 32,682 - - 32,682 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS As on December 31, 2021 Fair value measurement using Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash and cash equivalents 5,495,905 5,495,905 5,495,905 - - Accounts receivable – trade 522,896 522,896 522,896 - - Contract assets 18,317 18,317 18,317 - - Prepaid expenses 6,021 6,021 6,021 - - Accrued interest receivable 7,556 7,556 7,556 - - Loans 1,463,560 1,417,637 - - 1,417,637 Liabilities Accounts payable 43,626 43,626 43,626 - - Accrued expenses 129,546 129,546 129,546 - - Contract liabilities 8,333 8,333 8,333 - - The change in the assets measured at fair value on a recurring basis for which we have utilized Level 3 inputs to determine fair value are presented in the following table: As on September 30, 2022 Warrants Forward purchase Balance at the beginning of the period - - Acquired under business combination 1,605,529 1,687,530 Fair value adjustment (868,472 ) (601,691 ) Balance at the end of the period 737,057 1,085,839 Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The Warrants are measured at fair value on a recurring basis. The Warrants were initially valued using a Modified Monte Carlo Simulation. As of September 30, 2022, the warrants were valued using the instrument’s publicly listed trading price as of the balance sheet date, which is a Level 1 measurement due to the use of an observable market quote in an active market. The fair value of the forward purchase option derivative was estimated using a Monte-Carlo Simulation in a risk-neutral framework (a special case of the Income Approach). Specifically, the future stock price is simulated assuming a Geometric Brownian Motion (“GBM”). For each simulated path, the forward purchase value is calculated based on the contractual terms and then discounted at the term-matched risk-free rate. Finally, the value of the forward is calculated as the average present value over all simulated paths. The Company measured the fair value of the forward purchase option derivative upon execution of the Forward Purchase Agreement and as of September 30, 2022, with the respective fair value adjustments recorded within its Statements of Operations. The Company will continue to monitor the fair value of the forward option derivative each reporting period with subsequent revisions to be recorded in the Statements of Operations. The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the warrants as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs September 30, Exercise price 11.50 Share Price 6.99 Expected term (years) 4.99 Probability of Acquisition 100.0 % Volatility 11.3 % Risk-free rate 4.06 % Dividend yield (per share) 0.00 % The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the forward purchase agreement as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs September 30, Share Price 6.99 Expected term (years) 3 Probability of Acquisition 100 % Volatility 11.3 % Risk-free rate 4.25 % BB Bond rate 7.72 % C bond rate 15.63 % Fair value measurement input 15.63 % SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 11. Earnings Per Share Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to common stockholders’ by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders’ by the weighted average number of common shares and potentially dilutive securities outstanding for the period. For the Company’s diluted earnings per share calculation, the Company uses the “if-converted” method for preferred stock and convertible debt and the “treasury stock” method for Warrants and Options. As the Business Combination and related transactions are being reflected as if they had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the shares issued in connection with the Business Combination have been outstanding for the entire period presented. Schedule Of Earning Per Shares, Basic And Diluted 2022 2021 For the Nine Months Ended September 30, 2022 2021 Net income 1,894,179 2,568,537 Weighted average shares outstanding – basic 18,715,912 18,715,912 Basic net earnings per share 0.10 0.14 Weighted average shares outstanding – diluted ** ** 20,760,912 18,715,912 Diluted net earnings per share 0.09 0.14 2022 2021 For the Three Months Ended 2022 2021 Net income 1,056,235 946,063 Weighted average shares outstanding – basic 18,715,912 18,715,912 Basic net earnings per share 0.06 0.05 Weighted average shares outstanding – diluted** ** 20,760,912 18,715,912 Diluted net earnings per share 0.06 0.05 2022 2021 Weighted average share calculations, basic As of, September 30, September 30, Company public shares 3,926,598 2,568,537 Company initial stockholders’ 3,403,175 18,715,912 SHF stockholders’ 11,386,139 11,386,139 Weighted average shares outstanding – basic 18,715,912 18,715,912 2022 2021 Weighted average shares calculations, diluted As of, September 30, September 30, Company public shares 3,926,598 2,568,537 Company initial stockholders’ 3,403,175 18,715,912 PIPE Investors ** 2,045,000 - SHF stockholders’ 11,386,139 11,386,139 Weighted average shares outstanding – diluted 20,760,912 18,715,912 ** PIPE investors initial shares represent preferred stock without voting rights. Preferred stock initially converts at $ 10 2,045,000 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS |
Forward Purchase Agreement
Forward Purchase Agreement | 9 Months Ended |
Sep. 30, 2022 | |
Forward Purchase Agreement | |
Forward Purchase Agreement | Note 12. Forward Purchase Agreement On June 16, 2022, NLIT entered into a Forward Purchase Agreement with Midtown East Management NL, LLC (“Midtown East”). Subsequent to entering into the Forward Purchase Agreement, the Company, NLIT, and Midtown East entered into assignment and novation agreements with Verdun Investments LLC (“Verdun”) and Vellar Opportunity Fund SPV LLC – Series 1 (“Vellar”), pursuant to which Midtown East assigned its obligations as to 1,666,666 shares of the shares of Class A Stock to be purchased under the Forward Purchase Agreement to each of Verdun and Vellar. As contemplated by the Forward Purchase Agreement: ● Prior to the Closing, Midtown East, Verdun and Vellar purchased approximately 3.8 ● One business day following the Closing, NLIT paid approximately $ 39.3 0.3 ● At any time prior to the Maturity Date (defined as the earlier of i) the third anniversary of the Closing of the Business Combination, ii) the shares are delisted from The Nasdaq Stock Market or (iii) during any 30 consecutive Scheduled Trading Day-period following the closing of the Business Combination, the Volume Weighted Average Share Price (VWAP) Price for 20 Scheduled Trading Days during such period shall be less than $ 3.00 ● At the Maturity Date, Midtown East, Verdun and Vellar shall be entitled to (1) the product of the shares then held by them multiplied by the Forward Price, and (2) an amount, in cash or shares at the sole discretion of NLIT, equal to (a) in the case of cash, the product of(i)(x) 3.8 |
Warrant Liability
Warrant Liability | 9 Months Ended |
Sep. 30, 2022 | |
Warrant Liability | |
Warrant Liability | Note 13. Warrant Liability As of September 30, 2022, the Company has 5,750,000 264,088 Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The Warrants will become exercisable on the later of (i) the date of the completion of a Business Combination and (ii) 12 months from the closing of the Initial Public Offering, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Class A Common Stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A Common Stock is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Redemption of warrants become exercisable when the price per Class A Common Stock equals or exceeds $18.00. Once the warrants become exercisable, the Company may redeem the Warrants: ● in whole and not in part; ● at a price of $ 0.01 ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; and ● if, and only if, the reported last sale price of the Class A Common Stock equals or exceeds $ 18.00 If and when the warrants become redeemable by the Company, the Company may exercise its redemption rights; this is also the case if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Window and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless. The Placement Warrants are identical to the Warrants underlying the Units sold in the Initial Public Offering, except that the Placement Warrants and the Class A Common Stock issuable upon the exercise of the Placement Warrants are not transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Placement Warrants are exercisable on a cashless basis and non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
Subsequent events | Note 14. Subsequent events Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are issued. The Company noted the following subsequent events that occurred after the balance sheet date of September 30, 2022: ● On October 26, 2022, SHF Holdings, Inc., entered into a Forbearance Agreement (the “Forbearance Agreement”) with PCCU and Luminous Capital USA Inc. (“Luminous”). As per the terms of the agreement, PCCU has agreed to defer all payments owed pursuant to the Purchase Agreement for a period of six (6) months from the date hereof while the Parties engage in good faith efforts to renegotiate the payment terms applicable to the Deferred Obligation (the “Forbearance Period”). ● On October 29, 2022, SHF Holdings, Inc., entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the PCCU, SHF Merger Sub I and a direct wholly-owned subsidiary of Parent (“Merger Sub I”), SHF Merger Sub II, LLC, and a direct wholly-owned subsidiary of Parent (“Merger Sub II” and, together with Merger Sub I, the “Merger Subs”), Rockview Digital Solutions, Inc., d/b/a Abaca (the “Company”) and Dan Roda, solely in such individual’s capacity as the representative of the Company Security Holders (the “Company Stockholders’ Representative”). The Merger Agreement provides that the Parent will acquire the Company in exchange for (a) cash consideration in an amount equal to (i) $ 9,000,000 3,000,000 3,000,000 21,000,000 0.0001 8,400,000 12,600,000 ● On November 2, 2022, EF Hutton, a division of Benchmark Investments, LLC (“EF Hutton”) issued a notice of default to the Company towards a promissory note (the “Note”) entered with the company on September 28, 2022, amounting to $ 2,166,250 2,166,250 715,750 362,625 1,450,500 24% 362,625 ● As noted in Note 12 above, on June 16, 2022, NLIT entered into a Forward Purchase Agreement with Midtown East. Subsequent to entering into the Forward Purchase Agreement, the Company, NLIT, and Midtown East entered into assignment and novation agreements with Verdun and Vellar pursuant to which Midtown East assigned its obligations as to 1,666,666 3.00 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Material estimates that are particularly subject to change in the near term include the determination of the allowance for loan losses, and the fair value of financial instruments. Actual results could differ from the estimates. |
Cash and Cash Equivalent | Cash and Cash Equivalent Cash and cash equivalents include cash on hand, amounts due from financial institutions, and investments with maturities of three months or less. |
Concentrations of Risk | Concentrations of Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained principally in accounts at PCCU which is insured by the National Credit Union Share Insurance Fund (“NCUSIF”) up to regulatory limits. From time to time, cash balances may exceed the NCUSIF insurance limit. The Company has not experienced any credit losses associated with its cash balances in the past. Currently the Company only services the cannabis industry. Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability to execute our business plan. Currently the Company substantially relies on PCCU to hold customer deposits and fund its originated loans. As of this time, substantially all of the Company’s revenue is generated by deposits and loans hosted by PCCU pursuant to various services agreements. |
Accounts Receivable-PCCU and Allowance for Doubtful Accounts | Accounts Receivable-PCCU and Allowance for Doubtful Accounts Accounts receivable are recorded based on account fee schedules. While fees are generated from individual CRB related accounts, amounts are initially collected by the financial institutional partners and remitted in the subsequent month. As of September 30, 2022, and December 31, 2021, 100% of the Accounts Receivable, respectively is due from PCCU. Effective January 2021 through June 2021, PCCU elected to transfer account servicing from SHS to the Branches. In accordance with this change, a policy was adopted wherein substantially all cash was collected by PCCU and retained by PCCU outside of the Branches and SHS. This policy was eliminated in conjunction with the July 2021 reorganization and execution of the Account Servicing Agreement and Support Servicing Agreement discussed at Note 7. The Company maintains allowances for doubtful accounts for estimated losses as a result of a customers’ inability to make required payments. The Company estimates anticipated losses from doubtful accounts based on days past due as measured from the contractual due date and historical collection history. The Company also takes into consideration changes in economic conditions that may not be reflected in historical trends, for example customers in bankruptcy, liquidation or reorganization. Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible. Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings. At September 30, 2022 and December 31, 2021, there were no |
Loans Receivable | Loans Receivable PCCU originates mortgage, commercial and consumer loans to members and other businesses. Commercial CRB loans originated by the Company and funded by PCCU are typically managed by the Company, inclusive of originated and funded loans that are on the PCCU balance sheet only. Certain CRB Loans were contributed to the Carved-out Operations. Such loans where the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at principal balance outstanding, net of an allowance for loan losses and net deferred loan origination fees and costs when applicable. Interest income on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired, or payments are past due ninety days or more. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts are satisfied to where the loan is less than ninety days past due and future payments are reasonably assured. Loans are evaluated for charge-off on a case-by-case basis and are typically charged off at the time of foreclosure. Past-due status is based on the contractual terms of the loans. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if the collection of principal and interest is considered doubtful. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. Management estimates the required allowance for loan losses balance using past loan loss experience, known and inherent risks in the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. The allowance for loan losses consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Due to the nature of uncertainties related to any estimation process, management’s estimate of loan losses inherent in the loan portfolio may change in the near term. However, the amount of the change that is reasonably possible cannot be estimated. A loan is considered impaired when, based on current information and events, full payment under the loan terms is not expected. Impairment is generally evaluated in total for smaller-balance loans of similar nature such as commercial lines of credit, but may be evaluated on an individual loan basis if deemed necessary. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. The loans SHF intends to originate will be secured by various types of assets of the borrowers, including real property and certain personal property, including value associated with other assets to the extent permitted by applicable laws and the regulations governing the borrowers. The documents governing the loans also include a variety of provisions intended to provide remedies against the value associated with licenses. Collection procedures are designed to ensure that neither SHF nor its financial institution clients who provide funding for a loan, nor a third-party agent engaged to assist with the liquidation or foreclosure process, will take possession of cannabis inventory, cannabis paraphernalia, or other cannabis-related assets, nor will they take title to real estate used in cannabis-related businesses. Upon default of a loan, a third-party agent will be engaged to work with the borrower to have the borrower sell collateral securing the loan to a third party or to institute a foreclosure proceeding to have such collateral sold to generate funds towards the payoff of the loan. Applicable regulations under state law that govern CRBs generally do not permit the taking of title to real estate involved in commercial sales of cannabis, whether through foreclosure or otherwise, without prior regulatory approval. The sale of a license or other realization of the value of licenses also requires the approval of state and local regulatory authorities. A defaulted loan may also be sold if such a sale would yield higher proceeds or that a sale could be accomplished more quickly than a foreclosure proceeding while yielding proceeds comparable to what would be expected from a foreclosure sale. Such sale of the loan would be conducted through a third-party administrative agent. However, SHF can provide no assurances that a sale of such loans would be possible or that the sales price of such loans would be sufficient to recover the outstanding principal balance, accrued interest, and fees. |
Net Deferred Loan Origination Fees and Cost | Net Deferred Loan Origination Fees and Cost When included with a new loan origination, the Company receives loan origination fees in conjunction with new loans funded and any indemnified liabilities which are not recorded on the balance sheet from our financial institution partners. Where applicable, the loan origination fee is netted with loan origination costs associated with originating a specific loan. These loan origination costs are typically incremental direct costs (non-reimbursed) paid to third parties. Net loan origination fees are initially deferred and recognized as interest income utilizing the interest method. |
Indemnity Liability | Indemnity Liability Effective February 11, 2022, SHF entered into an Amended and Restated Loan Servicing Agreement with PCCU. Under the Loan Servicing Agreement, PCCU, in exchange for a fee at an annual rate of 0.25 ASC 450-20 Loss Contingencies SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS In addition to default-related loan losses, SHF continuously monitors all other circumstances pursuant to the agreement and identifies events that may necessitate a loss contingency under the Loan Servicing Agreement. A loss contingency is reported when it is both probable that a future event will confirm that a loss had been incurred on or before the related balance sheet date and the loss is reasonably estimable. |
Property and Equipment, net | Property and Equipment, net Property and equipment is recorded at historical cost, net of accumulated depreciation. Depreciation is provided over the assets’ useful lives on a straight-line basis - 4 5 Management periodically assesses the estimated useful life over which assets are depreciated or amortized. If the analysis warrants a change in the estimated useful life of property and equipment, management will reduce the estimated useful life and depreciate or amortize the carrying value prospectively over the shorter remaining useful life. The carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the period of disposal and the resulting gains and losses are included in the results of operations during the same period. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates the recoverability of tangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. There were no Other Investments These investments are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. |
Fair Value Measurements | Fair Value Measurements The Company utilizes the fair value hierarchy to apply fair value measurements. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair values that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below: Level 1 — Quoted prices for identical assets or liabilities in active markets. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 —Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable. With the exceptions of loans receivable, warrants (public and private), and the derivative liability, the Company considers the carrying amounts of its financial instruments (cash, accounts receivable and accounts payable) in the balance sheet to approximate fair value because of the short-term or highly liquid nature of these financial instruments. The fair values of loans receivables, warrants, and derivative are fully disclosed in Note 10. |
Revenue Recognition | Revenue Recognition The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under previous accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s financial statements as of the date of adoption. As a result, a cumulative- effect adjustment was not required. Revenue is recorded at a point in time when the performance obligation is satisfied, and no contingencies exist. Revenue consists primarily of fees earned on deposit accounts held at PCCU but serviced by the Company such as bank account charges, onboarding income, account activity fee income and other miscellaneous fees. In addition, the Company recognizes revenue from the Master Program Agreement. The Master Program Agreement is a non-exclusive and non-transferable right to implement and utilize the Safe Harbor Program. The Safe Harbor Program has two performance obligations; an implementation fee recognized when the contract is effective, and a service fee recognized ratable over the contract term as the compliance program is executed. Lastly, the Company also records revenue for interest on loans and investment income allocated by PCCU based on specific customer balances. Amounts received in advance of the service being provided is recorded as a liability under deferred revenue on the combined balance sheets. Typical Safe Harbor Program contracts are three-year contracts with amounts due monthly, quarterly or annually based on contract terms. Customers consist of financial institutions providing services to CRBs. Revenues are concentrated in the United States. |
Contract Assets / Contract Liabilities | Contract Assets / Contract Liabilities A contract asset is the Company’s right to consideration in exchange for goods or services that the Company has transferred to a customer. Conversely, the Company recognizes a contract liability if the customer’s payment of consideration precedes the reporting entity’s performance. As of September 30, 2022, the Company reported contract assets and contract liabilities of $ 7,676 14,583 18,317 8,333 18,987 59,081 |
Advertising/Marketing Costs | Advertising/Marketing Costs Advertising/marketing costs are expensed as incurred. For the three and nine months ended September 30, 2022, advertising/marketing costs were $ 81,130 231,970 21,327 48,730 |
Software Development Cost | Software Development Cost The Company applied agile development methodologies to their software development projects, which are characterized by a more dynamic development process with more frequent and iterative revisions to the product features and functions as the software is being developed. Due to the shorter development cycle and focus on rapid production associated with agile development, the costs incurred to get to, and have incurred after the achievement of technological feasibility, have been expensed as incurred. Software development costs amounted to $ 35,880 88,550 30,973 88,499 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS |
Warrants Liability | Warrants Liability The Company accounts for the warrants assumed in the business combination in accordance with the guidance contained in ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), under which warrants that do not meet the criteria for equity classification and must be recorded as derivative liabilities. Accordingly, the Company classifies the warrants as liabilities carried at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized in the consolidated statement of operations |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are computed and disclosed in accordance with FASB ASC Topic 260, Earnings Per Share. The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-class method, earnings are adjusted by accretion amounts to redeemable noncontrolling interests recorded at redemption value. The adjustments represent dividend distributions, in substance, to the noncontrolling interest holder as the holders have contractual rights to receive an amount upon redemption other than the fair value of the applicable shares. As a result, earnings are adjusted to reflect this in substance distribution that is different from other common shareholders. In addition, the Company allocates net earnings to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. |
Income Tax | Income Tax Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are adjusted through the provision for income taxes as changes in tax laws or rates are enacted. Effective September 28, 2022, the Company complies with the accounting and reporting requirements of ASC Topic 740, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. PCCU was exempt from most federal, state, and local taxes under the provisions of the Internal Revenue Code and state tax laws. However, PCCU was subject to unrelated business income tax. The Carved-Out Operations were wholly owned by PCCU and therefore, were exempt from most federal and state income taxes. The ASC Topic 740, “Income Taxes,” under US GAAP clarifies accounting for uncertainty in income taxes reported in the financial statements. The interpretation provides criteria for assessment of individual tax positions and a process for recognition and measurement of uncertain tax positions. Tax positions are evaluated on whether they meet the “more likely than not” standard for sustainability on examination by tax authorities. The Company’s Management has determined there are no material uncertain tax positions. ASC 740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods. If management is unable to estimate a portion of its ordinary income, but is otherwise able to reliably estimate the remainder, ASC 740-270-25-3 provides that the tax applicable to that item be reported in the interim period in which the item occurs. The tax (or benefit) related to ordinary income (or loss) shall be computed at an estimated annual effective tax rate and the tax (or benefit) related to all other items shall be individually computed and recognized when the items occur. Management is unable to estimate a portion of its ordinary income and as a result had computed the company’s tax provision in accordance with ASC 740-270-25-3. The Company’s effective tax rate was 0.00 0.00 0.00 0.00 21 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS ASC Topic 740 also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. |
Offering Costs Associated with the Initial Public Offering and PIPE Offering | Offering Costs Associated with the Initial Public Offering and PIPE Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as offering costs allocated to warrants in the statements of operations. Offering costs associated with the Public Shares were charged to stockholders’ equity upon the completion of the Initial Public Offering. Deferred offering costs as of September 30, 2022 consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the PIPE Offering. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective and are not expected to have a material impact on the Company’s financial position or results of operations upon adoption. Financial Instruments—Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a model based on expected losses to estimate credit losses for most financial assets and certain other instruments. In November 2019, the FASB issued ASU No. 2019-10 Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The update allows the extension of the initial effective date for entities which have not yet adopted ASU No. 2016-02. The standard is effective for annual reporting periods beginning after December 15, 2022 for private companies and SEC filers classified as smaller reporting entities, with early adoption permitted. Entities apply the standard’s provisions by recording a cumulative effect adjustment to retained earnings. The Company has not yet adopted ASU 2016-13 and is currently assessing the impact of this new standard on its financial statements. Collaborative Arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808). This update clarifies the interaction between ASC 808, Collaborative Arrangements and ASC 606, Revenue from Contracts with Customers (“ASU 2018-18”). The update clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, the update precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue if the counterparty is not a customer for that transaction. ASU 2018-18 should be applied retrospectively to the date of initial application of ASC 606 and early adoption is permitted. SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS The ASU’s amendments were effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods therein. The adoption of this standard did not have a material impact on the Company’s financial statements as the Company does not have any collaborative agreements. However, there is a potential for the Company to enter into collaborative agreements in the future, as it expands into additional markets. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Deferral of the Effective Dates for Certain Entities |
Business Combination | Business Combination The Business Combination detailed in Note 1 above was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, NLIT is treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination is treated as the equivalent of SHF issuing shares for the net assets of NLIT, accompanied by a recapitalization. The net assets of NLIT are recognized at fair value (which is expected to be consistent with carrying value), with no goodwill or other intangible assets recorded. Other related events in connection with the Business Combination are summarized below: ● The 2,875,000 ● Upon closing of the Business Combination, 11,386,139 The Seller was due to receive a cash payment of $ 3.1 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS ● Approximately $ 56.9 70.0 21.9 35.0 6.4 7.7 1,200,000 ● The Parent-Entity Net Investment appearing in the balance sheet of SHF amounting to $ 9,124,297 ● Immediately prior to the Closing, 20,450 20,450,000 2,045,000 10.00 ● For tax purposes, the transaction will be treated as a taxable asset acquisition, resulting in an estimated tax basis Goodwill balance of $ 43,411,985 ● Preferred Stock The Company is authorized to issue 1,250,000 0.0001 20,450 no ● Class A Common Stock The Company is authorized to issue up to 125,000,000 0.0001 18,715,912 0 3,804,872 ● Parent-Entity Net Investment Parent-Entity Net Investment balance in the combined balance sheets represents PCCU’s historical net investment in the Carved-Out Operations. For purposes of these combined financial statements, investing requirements have been summarized as “Parent-Entity Net Investment” and represents equity as no cash settlement with PCCU is required. No separate equity accounts are maintained for SHS, SHF or the Branches. |
Loans Receivable (Tables)
Loans Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Commercial Real Estate Loans Receivable | Commercial real estate loans receivable, net consist of the following: Schedule of Commercial Real Estate Loans Receivable September 30, 2022 December 31, 2021 (Unaudited) (Audited) Commercial real estate loans receivable, gross $ 1,443,060 1,478,301 Allowance for loan losses (21,646 ) (14,741 ) Commercial real estate loans receivable, net 1,421,414 1,463,560 Current portion (71,168 ) (52,833 ) Noncurrent portion $ 1,350,246 1,410,727 |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Allowance For Loan Losses | The allowance for loan losses consists of the following activity for the three and nine months ended September 30, 2022 and 2021: Schedule of Allowance For Loan Losses Unsecured Commercial Total Nine Months ended September 30, 2022: Allowance for loan losses: Beginning balance $ - $ 14,741 $ 14,741 Charge-offs - - - Recoveries - - - Provision 10,500 6,905 6,905 Ending balance $ 10,500 $ 21,646 $ 21,646 Three Months ended September 30, 2022: Allowance for loan losses: Beginning balance $ 10,500 $ 21,801 $ 21,801 Charge-offs - - - Recoveries - - - Provision (benefit) - (155 ) (155 ) Ending balance $ 10,500 $ 21,646 $ 21,646 Loans receivable at September 30, 2022 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment 500,000 1,443,060 1,443,060 Total loans receivable $ 500,000 $ 1,443,060 $ 1,443,060 Allowance for loan losses at September 30, 2022 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment 10,500 21,646 21,646 Total allowance for loan losses $ 10,500 $ 21,646 $ 21,646 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS Unsecured Commercial Total Nine Months ended September 30, 2021: Allowance for loan losses: Beginning balance $ - $ 13,342 $ 13,342 Charge-offs - - - Recoveries - - - Provision - 12,441 12,441 Ending balance $ - $ 25,783 $ 25,783 Three Months ended September 30, 2021: Allowance for loan losses: Beginning balance $ - $ 25,269 $ 25,269 Charge-offs - - - Recoveries - - - Provision - 514 514 Ending balance $ - $ 25,783 $ 25,783 Loans receivable at September 30, 2021 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment - 1,741,475 1,741,475 Total loans receivable $ - $ 1,741,475 $ 1,741,475 Allowance for loan losses at September 30, 2021 Individually evaluated for impairment $ - $ - $ - Collectively evaluated for impairment - 25,783 25,783 Total allowance for loan losses $ - $ 25,783 $ 25,783 The provision for loan losses on the statement of operations consists of the following activity for the three and nine months ended September 30, 2022: Commercial real estate loans Indemnity liability Commercial real estate loans Indemnity liability Three months ended Nine months ended Commercial real estate loans Indemnity liability Total Commercial real estate loans Indemnity liability Total Provision (benefit) (155 ) 88,500 88,345 6,905 377,005 383,910 |
Schedule of Outstanding Amounts | Schedule of Outstanding Amounts September 30, 2022 December 31, 2021 (Unaudited) (Audited) Secured term loans $ 17,200,000 $ - Unsecured loans and lines of credit 528,042 - Total loans funded by Parent $ 17,728,042 $ - |
Schedule of Indemnity Liability | The indemnity liability activity on September 30, 2022 are as follows: Schedule of Indemnity Liability Three months ended September 30, 2022 Nine months ended September 30, 2022 (Unaudited) (Unaudited) Beginning balance 288,505 - Charge-offs - - Recoveries - - Provision 88,500 377,005 Ending balance 377,005 377,005 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment consist of the following: Schedule of Property and Equipment, Net September 30, 2022 December 31, (Unaudited) (Audited) Equipment $ 41,815 $ 28,080 Office furniture 7,070 7,070 Property and equipment, gross 48,885 35,150 Less: accumulated depreciation (32,375 ) (28,799 ) Property and equipment, net $ 16,510 $ 6,351 |
Related party transactions (Tab
Related party transactions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Demonstrates Deposit Capacity | Schedule of Demonstrates Deposit Capacity September 30, 2022 December 31, 2021 (Unaudited) (Audited) PCCU total assets $ 636,482,187 $ 575,170,939 Capacity at 65% 413,713,422 373,861,110 CRB related deposits 165,697,653 146,267,976 Incremental capacity $ 248,015,769 $ 227,593,134 |
Loan Servicing Agreement [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Demonstrates Deposit Capacity | Schedule of Demonstrates Deposit Capacity September 30, 2022 December 31, 2021 (Unaudited) (Audited) CRB related deposits $ 165,697,653 $ 146,267,976 Capacity at 65% 107,703,474 95,074,184 PCCU net worth 97,656,494 61,925,336 Capacity at 1.3125 128,174,148 81,227,003 Limiting capacity $ 128,174,148 $ 81,227,003 PCCU loans funded 17,728,042 - Amounts available under lines of credit 996,958 225,000 Incremental capacity $ 109,449,148 $ 81,002,003 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | Revenue by type are as follows: Schedule of Disaggregated Revenue For the three-month period ended September 30, 2022 2021 (Unaudited) (Unaudited) Deposit, activity, onboarding income $ 1,369,559 $ 1,494,204 Safe Harbor Program income 38,598 83,194 Investment income 558,860 111,052 Loan interest income 412,297 28,411 Total Revenue $ 2,379,314 $ 1,716,861 For the nine-month period ended September 30, 2022 2021 (Unaudited) (Unaudited) Deposit, activity, onboarding income $ 4,179,323 $ 4,588,471 Safe Harbor Program income 125,767 359,044 Investment income 935,993 271,113 Loan interest income 662,130 78,829 Total Revenue $ 5,903,213 $ 5,297,457 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis | Assets and Liabilities Reported at Fair Value on a Recurring Basis Public and Private Placement Warrants: Public and private placement warrants are recorded at fair value on a recurring basis. The Company obtains dealer quotes, Level 1 and Level 3 inputs, based on observable data to value these warrants. Forward purchase option derivative: Forward purchase option derivative are recorded at fair value on a recurring basis. The Company obtains dealer quotes, Level 3 inputs, based on observable data to value these warrants. The following tables summarize financial assets and liabilities recorded at fair value on a recurring basis, by the level of valuation inputs in the fair value hierarchy on September 30, 2022: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis Total Fair Quoted in Active (Level 1) Significant Other Unobservable Description Liabilities: Public warrants $ 704,375 $ 704,375 - Private placement warrants $ 32,682 - $ 32,682 Assets: Forward purchase option derivative $ 1,085,839 - $ 1,085,839 |
Schedule of Carrying Amounts and Fair Values of Financial Instruments by the Level of Valuation Inputs in the Fair Value Hierarchy | The following tables present the carrying amounts and fair values of financial instruments, by the level of valuation inputs in the fair value hierarchy, as of the dates indicated: Schedule of Carrying Amounts and Fair Values of Financial Instruments by the Level of Valuation Inputs in the Fair Value Hierarchy As on September 30, 2022 Fair value measurement using Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash and cash equivalents 7,273,012 7,273,012 7,273,012 - - Accounts receivable – trade 813,257 813,257 813,257 - - Contract assets 7,676 7,676 7,676 - - Prepaid expenses 941,478 941,478 941,478 - - Accrued interest receivable 25,422 25,422 25,422 - - Forward purchase derivative assets 1,085,839 1,085,839 1,085,839 - 1,085,839 Loans 1,421,414 1,280,815 - - 1,280,815 Liabilities Accounts payable 2,263,746 2,263,746 2,263,746 - - Accrued expenses 5,569,026 5,569,026 5,569,026 - - Contract liabilities 14,583 14,583 14,583 - - Public Warrants 704,375 704,375 704,375 - - Private Placement Warrants 32,682 32,682 - - 32,682 SHF Holdings, Inc. COMBINED NOTES TO FINANCIAL STATEMENTS As on December 31, 2021 Fair value measurement using Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash and cash equivalents 5,495,905 5,495,905 5,495,905 - - Accounts receivable – trade 522,896 522,896 522,896 - - Contract assets 18,317 18,317 18,317 - - Prepaid expenses 6,021 6,021 6,021 - - Accrued interest receivable 7,556 7,556 7,556 - - Loans 1,463,560 1,417,637 - - 1,417,637 Liabilities Accounts payable 43,626 43,626 43,626 - - Accrued expenses 129,546 129,546 129,546 - - Contract liabilities 8,333 8,333 8,333 - - The change in the assets measured at fair value on a recurring basis for which we have utilized Level 3 inputs to determine fair value are presented in the following table: As on September 30, 2022 Warrants Forward purchase Balance at the beginning of the period - - Acquired under business combination 1,605,529 1,687,530 Fair value adjustment (868,472 ) (601,691 ) Balance at the end of the period 737,057 1,085,839 |
Schedule of Level 3 Fair Value Measurement Inputs | The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the warrants as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs September 30, Exercise price 11.50 Share Price 6.99 Expected term (years) 4.99 Probability of Acquisition 100.0 % Volatility 11.3 % Risk-free rate 4.06 % Dividend yield (per share) 0.00 % |
Purchase Agreement Option [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Level 3 Fair Value Measurement Inputs | The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the forward purchase agreement as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs September 30, Share Price 6.99 Expected term (years) 3 Probability of Acquisition 100 % Volatility 11.3 % Risk-free rate 4.25 % BB Bond rate 7.72 % C bond rate 15.63 % Fair value measurement input 15.63 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule Of Earning Per Shares, Basic And Diluted | Schedule Of Earning Per Shares, Basic And Diluted 2022 2021 For the Nine Months Ended September 30, 2022 2021 Net income 1,894,179 2,568,537 Weighted average shares outstanding – basic 18,715,912 18,715,912 Basic net earnings per share 0.10 0.14 Weighted average shares outstanding – diluted ** ** 20,760,912 18,715,912 Diluted net earnings per share 0.09 0.14 2022 2021 For the Three Months Ended 2022 2021 Net income 1,056,235 946,063 Weighted average shares outstanding – basic 18,715,912 18,715,912 Basic net earnings per share 0.06 0.05 Weighted average shares outstanding – diluted** ** 20,760,912 18,715,912 Diluted net earnings per share 0.06 0.05 2022 2021 Weighted average share calculations, basic As of, September 30, September 30, Company public shares 3,926,598 2,568,537 Company initial stockholders’ 3,403,175 18,715,912 SHF stockholders’ 11,386,139 11,386,139 Weighted average shares outstanding – basic 18,715,912 18,715,912 2022 2021 Weighted average shares calculations, diluted As of, September 30, September 30, Company public shares 3,926,598 2,568,537 Company initial stockholders’ 3,403,175 18,715,912 PIPE Investors ** 2,045,000 - SHF stockholders’ 11,386,139 11,386,139 Weighted average shares outstanding – diluted 20,760,912 18,715,912 ** PIPE investors initial shares represent preferred stock without voting rights. Preferred stock initially converts at $ 10 2,045,000 |
Organization and Business Ope_2
Organization and Business Operations (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||||||||
Sep. 28, 2022 | Sep. 22, 2022 | Sep. 19, 2022 | Feb. 11, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jul. 31, 2021 | |
Cash | $ 7,273,012 | $ 7,273,012 | $ 5,495,905 | |||||||||||
Working capital | (28,241,810) | (28,241,810) | 5,922,023 | |||||||||||
Unsecured future payment obligation, current | 33,616,468 | 33,616,468 | ||||||||||||
Retained earnings | 243,981 | 243,981 | ||||||||||||
Net income | 1,056,235 | $ 336,344 | $ 501,600 | $ 946,063 | $ 717,171 | $ 905,303 | 1,894,179 | $ 2,568,537 | ||||||
Net cash provided by operating activities | 1,972,803 | $ 2,182,890 | ||||||||||||
Colorado Credit Union [Member] | SHF Holding Co., LLC [Member] | ||||||||||||||
Unsecured future payment obligation | 56,949,800 | 56,949,800 | ||||||||||||
Unsecured future payment obligation, current | $ 33,616,468 | 33,616,468 | ||||||||||||
Proceeds from PIPE offering | $ 4,090,000 | |||||||||||||
Partner Colorado Credit Union [Member] | ||||||||||||||
Purchase consideration | 60.80% | |||||||||||||
Safe Harbour Financial LLC [Member] | ||||||||||||||
Purchase consideration | $ 185,000,000 | $ 185,000,000 | ||||||||||||
Cash consideration | 70,000,000 | 70,000,000 | ||||||||||||
Cash | $ 3,143,388 | |||||||||||||
Deferral amount | 56,949,801 | 56,900,000 | ||||||||||||
Deferred consideration payable | $ 38,500,002 | |||||||||||||
Deferred consideration payable terms | Pursuant to the third amendment to the unit purchase agreement, the Company will pay the deferred consideration in one payment of $21,949,801 on or before December 15, 2022, and the $35,000,000 balance in six equal installments of $6,416,667, payable beginning on the first business day following April 1, 2023 and on the first business day of each of the following five fiscal quarters, for a total of $38,500,002, including interest of $3,500,002. Furthermore, PCCU agreed to defer $3,143,388, representing certain excess cash of SHF, LLC due to PCCU under the definitive unit purchase agreement, and the reimbursement of certain reimbursable expenses under the definitive unit purchase agreement | |||||||||||||
Safe Harbour Financial LLC [Member] | Colorado Credit Union [Member] | ||||||||||||||
Deferral amount | $ 3,143,388 | |||||||||||||
Safe Harbour Financial LLC [Member] | December 15, 2022 [Member] | ||||||||||||||
Deferred consideration payable | 21,949,801 | 21,900,000 | ||||||||||||
Safe Harbour Financial LLC [Member] | After First Payment [Member] | ||||||||||||||
Deferred consideration payable | 35,000,000 | 35,000,000 | ||||||||||||
Safe Harbour Financial LLC [Member] | Six Equal Installments [Member] | ||||||||||||||
Deferred consideration payable | 6,416,667 | $ 6,400,000 | ||||||||||||
Safe Harbour Financial LLC [Member] | First Amendment [Member] | ||||||||||||||
Cash consideration | $ 70,000,000 | |||||||||||||
Deferral amount | $ 30,000,000 | |||||||||||||
Safe Harbour Financial LLC [Member] | Second Amendment [Member] | ||||||||||||||
Cash consideration | $ 70,000,000 | |||||||||||||
Deferral amount | $ 50,000,000 | |||||||||||||
Safe Harbour Financial LLC [Member] | Third Amendment [Member] | ||||||||||||||
Cash consideration | 70,000,000 | |||||||||||||
Deferral amount | $ 56,949,800 | |||||||||||||
Safe Harbour Financial LLC [Member] | Common Class A [Member] | ||||||||||||||
Number of shares issued in acquisition transaction | 11,386,139 | 11,386,139 | ||||||||||||
Number of shares issued in acquisition transaction value | $ 115,000,000 | $ 115,000,000 | ||||||||||||
Shares to be held in escrow | 1,831,683 | |||||||||||||
S H F Holdings [Member] | ||||||||||||||
Deferred consideration payable | $ 56,949,800 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 28, 2022 | Feb. 11, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jul. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||||||||
Allowance for doubtful accounts | $ 0 | $ 0 | $ 0 | |||||
Interest rate | 0.25% | |||||||
Impairment of long-lived asset | 0 | 0 | ||||||
Contract assets | 7,676 | 7,676 | 18,317 | |||||
Contract liabilities | 14,583 | 14,583 | 8,333 | |||||
Revenue recognized | 18,987 | 59,081 | ||||||
Advertising/Marketing costs | 81,130 | $ 21,327 | 231,970 | $ 48,730 | ||||
Software development costs | $ 35,880 | $ 30,973 | $ 88,550 | $ 88,499 | ||||
Effective tax rate | 0% | |||||||
Statutory tax rate | 21% | 21% | 21% | 21% | ||||
Deferred tax asset | $ 43,411,985 | $ 43,411,985 | ||||||
Preferred stock, shares authorized | 1,250,000 | 1,250,000 | 1,250,000 | |||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Preferred stock, shares issued | 20,450 | 20,450 | 0 | |||||
Preferred stock, shares outstanding | 20,450 | 20,450 | 0 | |||||
Common stock, shares authorized | 125,000,000 | 125,000,000 | 125,000,000 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Common stock, shares issued | 18,715,912 | 18,715,912 | 0 | |||||
Common stock, shares outstanding | 18,715,912 | 18,715,912 | 0 | |||||
Board of Directors [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Preferred stock, shares authorized | 1,250,000 | 1,250,000 | ||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | ||||||
Common Class A [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Number of shares issuable upon conversion | 2,045,000 | |||||||
Common stock, shares authorized | 125,000,000 | 125,000,000 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||||
Common stock, shares outstanding | 3,804,872 | 3,804,872 | ||||||
Safe Harbour Financial LLC [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Interest rate | 7.70% | |||||||
Cash | $ 3,100,000 | |||||||
Deferral amount | $ 56,949,801 | $ 56,900,000 | ||||||
Cash consideration | 70,000,000 | $ 70,000,000 | ||||||
Deferred consideration payable | 38,500,002 | |||||||
Deferred consideration payable | 1,200,000 | |||||||
Transferred to additional paid in capital | $ 9,124,297 | |||||||
Safe Harbour Financial LLC [Member] | December 15, 2022 [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Deferred consideration payable | 21,949,801 | 21,900,000 | ||||||
Safe Harbour Financial LLC [Member] | After First Payment [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Deferred consideration payable | 35,000,000 | 35,000,000 | ||||||
Safe Harbour Financial LLC [Member] | Six Equal Installments [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Deferred consideration payable | $ 6,416,667 | $ 6,400,000 | ||||||
Safe Harbour Financial LLC [Member] | Common Class B [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Number of shares converted | 2,875,000 | |||||||
Safe Harbour Financial LLC [Member] | Common Class A [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Number of shares issued in acquisition transaction | 11,386,139 | 11,386,139 | ||||||
Number of shares issuable upon conversion | 2,045,000 | |||||||
Safe Harbour Financial LLC [Member] | Series A Convertible Preferred Stock [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Shares issued during acquisitions, shares | 20,450 | |||||||
Shares issued during acquisitions | $ 20,450,000 | |||||||
Share price per share | $ 10 | |||||||
Forward Purchase Agreement [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Effective tax rate | 0% | 0% | 0% | |||||
Equipment and Furniture and Fixtures [Member] | Minimum [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property and equipment useful life | 4 years | |||||||
Equipment and Furniture and Fixtures [Member] | Maximum [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property and equipment useful life | 5 years |
Schedule of Commercial Real Est
Schedule of Commercial Real Estate Loans Receivable (Details) - Commercial Real Estate Loans Receivable [Member] - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Short-Term Debt [Line Items] | ||
Commercial real estate loans receivable, gross | $ 1,443,060 | $ 1,478,301 |
Allowance for loan losses | (21,646) | (14,741) |
Commercial real estate loans receivable, net | 1,421,414 | 1,463,560 |
Current portion | (71,168) | (52,833) |
Noncurrent portion | $ 1,350,246 | $ 1,410,727 |
Other Investment (Details Narra
Other Investment (Details Narrative) | Sep. 30, 2022 USD ($) |
Investments, All Other Investments [Abstract] | |
Investment | $ 500,000 |
Schedule of Allowance For Loan
Schedule of Allowance For Loan Losses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Financing Receivable, Past Due [Line Items] | ||||
Beginning balance | $ 21,801 | $ 25,269 | $ 14,741 | $ 13,342 |
Charge-offs | ||||
Recoveries | ||||
Provision (benefit) | (155) | 514 | 6,905 | 12,441 |
Ending balance | 21,646 | 25,783 | 21,646 | 25,783 |
Individually evaluated for impairment | ||||
Collectively evaluated for impairment | 1,443,060 | 1,741,475 | 1,443,060 | 1,741,475 |
Total loans receivable | 1,443,060 | 1,741,475 | 1,443,060 | 1,741,475 |
Individually evaluated for impairment | ||||
Collectively evaluated for impairment | 21,646 | 25,783 | 21,646 | 25,783 |
Total allowance for loan losses | 21,646 | 25,783 | 21,646 | 25,783 |
Provision For Loan Losses [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Provision (benefit) | 88,345 | 383,910 | ||
Unsecured Debt [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Beginning balance | 10,500 | |||
Charge-offs | ||||
Recoveries | ||||
Provision (benefit) | 10,500 | |||
Ending balance | 10,500 | 10,500 | ||
Individually evaluated for impairment | ||||
Collectively evaluated for impairment | 500,000 | 500,000 | ||
Total loans receivable | 500,000 | 500,000 | ||
Individually evaluated for impairment | ||||
Collectively evaluated for impairment | 10,500 | 10,500 | ||
Total allowance for loan losses | 10,500 | 10,500 | ||
Commercial Real Estate Portfolio Segment [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Beginning balance | 21,801 | 25,269 | 14,741 | 13,342 |
Charge-offs | ||||
Recoveries | ||||
Provision (benefit) | (155) | 514 | 6,905 | 12,441 |
Ending balance | 21,646 | 25,783 | 21,646 | 25,783 |
Individually evaluated for impairment | ||||
Collectively evaluated for impairment | 1,443,060 | 1,741,475 | 1,443,060 | 1,741,475 |
Total loans receivable | 1,443,060 | 1,741,475 | 1,443,060 | 1,741,475 |
Individually evaluated for impairment | ||||
Collectively evaluated for impairment | 21,646 | 25,783 | 21,646 | 25,783 |
Total allowance for loan losses | 21,646 | $ 25,783 | 21,646 | $ 25,783 |
Commercial Real Estate Portfolio Segment [Member] | Provision For Loan Losses [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Provision (benefit) | (155) | 6,905 | ||
Indemnity Liability Segment [Member] | Provision For Loan Losses [Member] | ||||
Financing Receivable, Past Due [Line Items] | ||||
Provision (benefit) | $ 88,500 | $ 377,005 |
Schedule of Outstanding Amounts
Schedule of Outstanding Amounts (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Secured term loans | $ 17,200,000 | |
Unsecured loans and lines of credit | 528,042 | |
Total loans funded by Parent | $ 17,728,042 |
Schedule of Indemnity Liability
Schedule of Indemnity Liability (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Receivables [Abstract] | ||
Beginning balance | $ 288,505 | |
Charge-offs | ||
Recoveries | ||
Provision | 88,500 | 377,005 |
Ending balance | $ 377,005 | $ 377,005 |
Allowance for Loan Losses (Deta
Allowance for Loan Losses (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Feb. 11, 2022 | Dec. 31, 2021 | |
Interest rate | 0.25% | ||
Secured Debt [Member] | Minimum [Member] | |||
Interest rate | 8.25% | ||
Secured Debt [Member] | Maximum [Member] | |||
Interest rate | 12% | ||
Unsecured Debt [Member] | |||
Variable rate description | Unsecured loans and lines of credit contain variable rates ranging from Prime + 1.5% to Prime + 6%. | ||
Lines of credit | $ 996,958 | $ 225,000 | |
Partner Colorado Credit Union [Member] | |||
Interest rate | 0.25% |
Schedule of Property and Equipm
Schedule of Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 48,885 | $ 35,150 |
Less: accumulated depreciation | (32,375) | (28,799) |
Property and equipment, net | 16,510 | 6,351 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 41,815 | 28,080 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,070 | $ 7,070 |
Property and equipment, net (De
Property and equipment, net (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 3,576 | $ 1,264 |
Schedule of Demonstrates Deposi
Schedule of Demonstrates Deposit Capacity (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Related Party Transaction [Line Items] | ||
Incremental capacity | $ 248,015,769 | $ 227,593,134 |
Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 109,449,148 | 81,002,003 |
Partner Colorado Credit Union [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 636,482,187 | 575,170,939 |
Partner Colorado Credit Union [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 97,656,494 | 61,925,336 |
Capacity at 65% [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 413,713,422 | 373,861,110 |
Capacity at 65% [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 107,703,474 | 95,074,184 |
CRB Related Deposits [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 165,697,653 | 146,267,976 |
CRB Related Deposits [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 165,697,653 | 146,267,976 |
Capacity [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 128,174,148 | 81,227,003 |
Limiting Capacity [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 128,174,148 | 81,227,003 |
PCCU Loans Funded [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 17,728,042 | |
Line of Credit [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | $ 996,958 | $ 225,000 |
Related party transactions (Det
Related party transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Feb. 11, 2022 | Jul. 01, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jul. 07, 2021 | |
Partner Colorado Credit Union [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Rent expenses | $ 5,400 | ||||||
Account Servicing Agreement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related party | $ 2,340,716 | $ 1,633,667 | $ 5,777,446 | $ 4,938,413 | |||
Support Services Agreement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Expense | 204,535 | 93,285 | $ 420,085 | 261,496 | |||
Support Services Agreement [Member] | Partner Colorado Credit Union [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Monthly fee 2022 | $ 30.96 | ||||||
Monthly fee 2023 | 25.32 | ||||||
Monthly fee 2024 | $ 25.32 | ||||||
Related party transaction description | In addition, investment income from CRB-related cash and investments (excluding loans) will be shared 25% to PCCU and 75% to SHF and SHF will reimburse PCCU for any of its out-of-pocket expenses relating to the services provided to SHF | ||||||
Bonus distributions | 30,000,000 | $ 30,000,000 | |||||
Assets net worth percentage | 10% | ||||||
Support Services Agreement [Member] | Cannabis Related Businesses [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Investment income deposits percentage | 25% | ||||||
Loan Servicing Agreement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Expense | $ 9,160 | $ 0 | $ 14,264 | $ 0 | |||
Loan Servicing Agreement [Member] | Partner Colorado Credit Union [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related party transaction description | National Credit Union Association regulations to the greater of $100,000 or 15% of PCCU’s net worth | ||||||
Assets net worth percentage | 65% | ||||||
Servicing fee | 0.25% |
Schedule of Disaggregated Reven
Schedule of Disaggregated Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Total Revenue | $ 2,379,314 | $ 1,716,861 | $ 5,903,213 | $ 5,297,457 |
Deposit Activity Onboarding Income [Member] | ||||
Total Revenue | 1,369,559 | 1,494,204 | 4,179,323 | 4,588,471 |
Safe Harbor Program Income [Member] | ||||
Total Revenue | 38,598 | 83,194 | 125,767 | 359,044 |
Investment Income [Member] | ||||
Total Revenue | 558,860 | 111,052 | 935,993 | 271,113 |
Interest Income [Member] | ||||
Total Revenue | $ 412,297 | $ 28,411 | $ 662,130 | $ 78,829 |
Schedule of Fair Value Assets a
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring [Member] | Sep. 30, 2022 USD ($) |
Fair Value, Inputs, Level 1 [Member] | Public Warrants [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Private placement warrants | $ 704,375 |
Fair Value, Inputs, Level 1 [Member] | Private Placement Warrants [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Private placement warrants | |
Fair Value, Inputs, Level 1 [Member] | Forward Purchase Option Derivative [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Forward purchase option derivative | |
Fair Value, Inputs, Level 3 [Member] | Public Warrants [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Private placement warrants | |
Fair Value, Inputs, Level 3 [Member] | Private Placement Warrants [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Private placement warrants | 32,682 |
Fair Value, Inputs, Level 3 [Member] | Forward Purchase Option Derivative [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Forward purchase option derivative | $ 1,085,839 |
Schedule of Carrying Amounts an
Schedule of Carrying Amounts and Fair Values of Financial Instruments by the Level of Valuation Inputs in the Fair Value Hierarchy (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Warrants Liability [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Balance at the beginning of the period | ||
Acquired under business combination | 1,605,529 | |
Fair value adjustment | (868,472) | |
Balance at the end of the period | 737,057 | |
Forward Purchase Derivative Assets Memebr [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Balance at the beginning of the period | ||
Acquired under business combination | 1,687,530 | |
Fair value adjustment | (601,691) | |
Balance at the end of the period | 1,085,839 | |
Fair Value, Inputs, Level 1 [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Cash and cash equivalents | 7,273,012 | $ 5,495,905 |
Accounts receivable – trade | 813,257 | 522,896 |
Contract assets | 7,676 | 18,317 |
Prepaid expenses | 941,478 | 6,021 |
Accrued interest receivable | 25,422 | 7,556 |
Forward purchase derivative assets | 1,085,839 | |
Loans | ||
Accounts payable | 2,263,746 | 43,626 |
Accrued expenses | 5,569,026 | 129,546 |
Contract liabilities | 14,583 | 8,333 |
Public Warrants | 704,375 | |
Private Placement Warrants | ||
Fair Value, Inputs, Level 2 [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Cash and cash equivalents | ||
Accounts receivable – trade | ||
Contract assets | ||
Prepaid expenses | ||
Accrued interest receivable | ||
Forward purchase derivative assets | ||
Loans | ||
Accounts payable | ||
Accrued expenses | ||
Contract liabilities | ||
Public Warrants | ||
Private Placement Warrants | ||
Fair Value, Inputs, Level 3 [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Cash and cash equivalents | ||
Accounts receivable – trade | ||
Contract assets | ||
Prepaid expenses | ||
Accrued interest receivable | ||
Forward purchase derivative assets | 1,085,839 | |
Loans | 1,280,815 | 1,417,637 |
Accounts payable | ||
Accrued expenses | ||
Contract liabilities | ||
Public Warrants | ||
Private Placement Warrants | 32,682 | |
Carrying Amount [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Cash and cash equivalents | 7,273,012 | 5,495,905 |
Accounts receivable – trade | 813,257 | 522,896 |
Contract assets | 7,676 | 18,317 |
Prepaid expenses | 941,478 | 6,021 |
Accrued interest receivable | 25,422 | 7,556 |
Forward purchase derivative assets | 1,085,839 | |
Loans | 1,421,414 | 1,463,560 |
Accounts payable | 2,263,746 | 43,626 |
Accrued expenses | 5,569,026 | 129,546 |
Contract liabilities | 14,583 | 8,333 |
Public Warrants | 704,375 | |
Private Placement Warrants | 32,682 | |
Fair Value [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Cash and cash equivalents | 7,273,012 | 5,495,905 |
Accounts receivable – trade | 813,257 | 522,896 |
Contract assets | 7,676 | 18,317 |
Prepaid expenses | 941,478 | 6,021 |
Accrued interest receivable | 25,422 | 7,556 |
Forward purchase derivative assets | 1,085,839 | |
Loans | 1,280,815 | 1,417,637 |
Accounts payable | 2,263,746 | 43,626 |
Accrued expenses | 5,569,026 | 129,546 |
Contract liabilities | 14,583 | $ 8,333 |
Public Warrants | 704,375 | |
Private Placement Warrants | $ 32,682 |
Schedule of Level 3 Fair Value
Schedule of Level 3 Fair Value Measurement Inputs (Details) | Sep. 30, 2022 $ / shares |
Measurement Input, Expected Term [Member] | Purchase Agreement Option [Member] | |
Expected term (years) | 3 years |
Private Warrants [Member] | Measurement Input, Exercise Price [Member] | |
Fair value measurement input | 11.50 |
Private Warrants [Member] | Measurement Input, Share Price [Member] | |
Fair value measurement input | 6.99 |
Private Warrants [Member] | Measurement Input, Share Price [Member] | Purchase Agreement Option [Member] | |
Fair value measurement input | 6.99 |
Private Warrants [Member] | Measurement Input, Expected Term [Member] | |
Expected term (years) | 4 years 11 months 26 days |
Private Warrants [Member] | Measurement Input Probability Acquisition [Member] | |
Fair value measurement input | 1 |
Private Warrants [Member] | Measurement Input Probability Acquisition [Member] | Purchase Agreement Option [Member] | |
Fair value measurement input | 1 |
Private Warrants [Member] | Measurement Input, Price Volatility [Member] | |
Fair value measurement input | 0.113 |
Private Warrants [Member] | Measurement Input, Price Volatility [Member] | Purchase Agreement Option [Member] | |
Fair value measurement input | 0.113 |
Private Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | |
Fair value measurement input | 0.0406 |
Private Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | Purchase Agreement Option [Member] | |
Fair value measurement input | 0.0425 |
Private Warrants [Member] | Measurement Input, Expected Dividend Rate [Member] | |
Fair value measurement input | 0 |
Private Warrants [Member] | Measurement Input B B Bonds Rate [Member] | Purchase Agreement Option [Member] | |
Fair value measurement input | 0.0772 |
Private Warrants [Member] | Measurement Input C Bonds Rate [Member] | Purchase Agreement Option [Member] | |
Fair value measurement input | 0.1563 |
Schedule Of Earning Per Shares,
Schedule Of Earning Per Shares, Basic And Diluted (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Earnings Per Share [Abstract] | |||||||||
Net income | $ 1,056,235 | $ 336,344 | $ 501,600 | $ 946,063 | $ 717,171 | $ 905,303 | $ 1,894,179 | $ 2,568,537 | |
Weighted average shares outstanding – basic | 18,715,912 | 18,715,912 | 18,715,912 | 18,715,912 | |||||
Basic net earnings per share | $ 0.06 | $ 0.05 | $ 0.10 | $ 0.14 | |||||
Weighted average shares outstanding – diluted | [1] | 20,760,912 | 18,715,912 | 20,760,912 | 18,715,912 | ||||
Diluted net earnings per share | $ 0.06 | $ 0.05 | $ 0.09 | $ 0.14 | |||||
Company public shares | 3,926,598 | 2,568,537 | |||||||
Company initial stockholders’ | 3,403,175 | 18,715,912 | |||||||
SHF stockholders’ | 11,386,139 | 11,386,139 | |||||||
Company public shares | 3,926,598 | 2,568,537 | |||||||
Company initial stockholders’ | 3,403,175 | 18,715,912 | |||||||
PIPE Investors | [1] | 2,045,000 | |||||||
SHF stockholders’ | 11,386,139 | 11,386,139 | |||||||
[1]PIPE investors initial shares represent preferred stock without voting rights. Preferred stock initially converts at $ 10 2,045,000 |
Schedule Of Earning Per Share_2
Schedule Of Earning Per Shares, Basic And Diluted (Details) (Parenthetical) - Common Class A [Member] | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |
Share price per share | $ / shares | $ 10 |
Number of shares issuable upon conversion | shares | 2,045,000 |
Forward Purchase Agreement (Det
Forward Purchase Agreement (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Jun. 16, 2022 | Sep. 30, 2022 | |
Related expense amounts | $ 0.3 | |
Shares per share | $ 3 | |
Maturity date, description | At the Maturity Date, Midtown East, Verdun and Vellar shall be entitled to (1) the product of the shares then held by them multiplied by the Forward Price, and (2) an amount, in cash or shares at the sole discretion of NLIT, equal to (a) in the case of cash, the product of(i)(x) 3.8 million shares less (y) the number of Terminated Shares and (ii) $2.00 (the “Maturity Cash Consideration”) and (b) in the case of shares, (i) the Maturity Cash Consideration divided by (ii) the VWAP Price for the 30 Scheduled Trading Days prior to the Maturity Date | |
Cash [Member] | ||
Asset held with trust | $ 39.3 | |
Midtown East Management NL LLC [Member] | Common Class A [Member] | ||
Shares, Issued | 1,666,666 | |
Number of new stock issued | 3,800,000 |
Warrant Liability (Details Narr
Warrant Liability (Details Narrative) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Common Class A [Member] | ||
Shares issued, Price per share | $ 18 | |
Public Warrants [Member] | ||
Class of warrant or right outstanding | 5,750,000 | |
Warrants description | The Warrants will become exercisable on the later of (i) the date of the completion of a Business Combination and (ii) 12 months from the closing of the Initial Public Offering, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. | |
Warrants price per share | $ 0.01 | |
Private Placement Warrants [Member] | ||
Class of warrant or right outstanding | 264,088 |
Subsequent events (Details Narr
Subsequent events (Details Narrative) - USD ($) | Dec. 31, 2022 | Nov. 30, 2022 | Nov. 02, 2022 | Oct. 31, 2022 | Oct. 29, 2022 | Oct. 14, 2022 | Jun. 16, 2022 | Nov. 07, 2022 | Sep. 30, 2022 | Feb. 11, 2022 | Dec. 31, 2021 |
Common stock value | $ 1,872 | ||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||||||
Interest rate | 0.25% | ||||||||||
Due from related party | $ 4,090,000 | ||||||||||
Common Class A [Member] | |||||||||||
Common stock, par value | $ 0.0001 | ||||||||||
Midtown East Management NL LLC [Member] | Common Class A [Member] | |||||||||||
Shares, Issued | 1,666,666 | ||||||||||
Weighted average share price | $ 3 | ||||||||||
Subsequent Event [Member] | SHF Holding Co., LLC [Member] | Merger Agreement [Member] | |||||||||||
Cash consideration | $ 9,000,000 | ||||||||||
Cash consideration payable | 3,000,000 | ||||||||||
Additional cash consideration payable | 3,000,000 | ||||||||||
Common stock value | $ 21,000,000 | ||||||||||
Common stock, par value | $ 0.0001 | ||||||||||
Payable in two installment | $ 8,400,000 | ||||||||||
Payable in closing year | $ 12,600,000 | ||||||||||
Subsequent Event [Member] | Benchmark Investments LLC [Member] | |||||||||||
Notes payable | $ 2,166,250 | ||||||||||
Principle amount | 2,166,250 | ||||||||||
Debt periodic payment | $ 362,625 | $ 362,625 | $ 362,625 | $ 715,750 | |||||||
Repayment of debt | $ 1,450,500 | ||||||||||
Interest rate | 24% | ||||||||||
Due from related party | $ 362,625 |