Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 14, 2023 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
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 | 1526 Cole Blvd. | |
Entity Address, Address Line Two | Suite 250 | |
Entity Address, City or Town | Golden | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80410 | |
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 | 46,225,317 | |
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 $11.50 per share | |
Trading Symbol | SHFSW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 8,628,752 | $ 8,390,195 |
Accounts receivable – trade | 1,249,731 | 1,401,839 |
Contract assets | 34,189 | 21,170 |
Prepaid expenses – current portion | 135,649 | 175,585 |
Accrued interest receivable | 186,371 | 40,266 |
Short-term loans receivable, net | 11,728 | 51,300 |
Other current assets | 150,817 | |
Total Current Assets | 10,246,420 | 10,231,172 |
Long-term loans receivable, net | 277,010 | 1,250,691 |
Property, plant and equipment, net | 201,971 | 49,614 |
Operating lease right to use assets | 977,113 | 1,016,198 |
Goodwill | 19,266,276 | 19,266,276 |
Intangible assets, net | 10,266,176 | 10,621,087 |
Deferred tax asset | 42,608,596 | 51,593,302 |
Prepaid expenses – long term position | 675,000 | 712,500 |
Forward purchase receivable | 4,584,221 | 4,584,221 |
Security deposit | 17,795 | 17,795 |
Total Assets | 89,120,578 | 99,342,856 |
Current Liabilities: | ||
Accounts payable | 2,252,224 | 2,851,457 |
Accrued expenses | 1,197,298 | 6,354,485 |
Contract liabilities | 79,612 | 996 |
Lease liabilities – current | 66,726 | 20,124 |
Senior secured promissory note – current portion | 1,229,376 | |
Deferred consideration – current portion | 14,333,773 | 14,359,822 |
Other current liabilities | 86,291 | 11,291 |
Total Current Liabilities | 19,245,300 | 49,571,192 |
Warrant liability | 233,362 | 666,510 |
Deferred consideration – long term portion | 2,938,535 | 2,747,592 |
Forward purchase derivative liability | 7,309,580 | 7,309,580 |
Senior secured promissory note—long term portion | 13,270,624 | |
Lease liabilities – long term | 979,269 | 1,008,109 |
Deferred underwriter fee | 1,450,500 | |
Indemnity liability | 1,147,862 | 499,465 |
Total Liabilities | 45,124,532 | 94,229,731 |
Commitment and Contingencies (Note 15) | ||
Parent-Entity Net Investment and Stockholders’ Equity | ||
Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 10,896 shares issued and outstanding on March 31, 2023, and Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 14,616 shares issued and outstanding on December 31, 2022, respectively | 1 | 1 |
Class A common stock, $.0001 par value, 130,000,000 shares authorized 40,288,817 issued and outstanding on March 31, 2023, and Class A common stock, $.0001 par value, 130,000,000 shares authorized, 23,732,889 issued and outstanding on December 31, 2022, respectively | 4,029 | 2,374 |
Additional paid in capital | 90,687,265 | 44,806,031 |
Retained earnings | (46,695,249) | (39,695,281) |
Total Parent-Entity Net Investment and Stockholders’ Equity | 43,996,046 | 5,113,125 |
Total Liabilities and Parent-Entity Net Investment and Stockholders’ Equity | 89,120,578 | 99,342,856 |
Related Party [Member] | ||
Current Liabilities: | ||
Due to seller - current portion | 25,973,017 | |
Other current liabilities | 25,973,017 | |
Due to seller – long term portion | $ 30,976,783 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
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 | 10,896 | 14,616 |
Convertible preferred stock, shares outstanding | 10,896 | 14,616 |
Class A common stock, par value | $ 0.0001 | $ 0.0001 |
Class A common stock, shares authorized | 130,000,000 | 130,000,000 |
Class A common stock, shares issued | 40,288,817 | 23,732,889 |
Class A common stock, shares outstanding | 40,288,817 | 23,732,889 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 4,180,379 | $ 1,671,110 |
Operating Expenses | ||
Compensation and employee benefits | 3,659,520 | 722,525 |
General and administrative expenses | 1,538,874 | 222,953 |
Professional services | 449,246 | 130,816 |
Rent expense | 87,742 | 25,025 |
Provision for credit losses | 66,666 | 68,191 |
Total operating expenses | 5,802,048 | 1,169,510 |
Operating (loss)/ income | (1,621,669) | 501,600 |
Other (income) expenses | ||
Interest expense | 834,203 | |
Change in fair value of warrant liability | (433,148) | |
Total other expenses | 401,055 | |
Net (loss) / income before income tax | (2,022,724) | 501,600 |
Income tax benefit | (609,277) | |
Net (loss)/income | $ (1,413,447) | $ 501,600 |
Weighted average shares outstanding, basic | 25,670,730 | |
Basic net loss per share | $ (0.06) | |
Weighted average shares outstanding, diluted | 25,670,730 | |
Diluted loss per share | $ (0.06) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] Common Class A [Member] | Additional Paid-in Capital [Member] | Parent-Entity Net Investment [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 7,339,101 | $ 7,339,101 | ||||
Beginning balance, shares at Dec. 31, 2021 | ||||||
Cumulative effect from adoption of CECL | ||||||
Net profit (loss) | 501,600 | 501,600 | ||||
Contribution 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, 2022 | $ 1 | $ 2,374 | 44,806,031 | (39,695,281) | 5,113,125 | |
Beginning balance, shares at Dec. 31, 2022 | 14,616 | 23,732,889 | ||||
Cumulative effect from adoption of CECL | (581,321) | (581,321) | ||||
Conversion of PIPE shares | $ 473 | 5,004,727 | (5,005,200) | |||
Beginning balance, shares | (3,720) | 4,726,200 | ||||
Stock option conversion | $ 62 | 1,570,719 | 1,570,781 | |||
Beginning balance, shares | 629,728 | |||||
Issuance of shares to PCCU (net of tax) | $ 1,120 | 38,405,288 | 38,406,408 | |||
Beginning balance, shares | 11,200,000 | |||||
Reversal of deferred underwriting cost | 900,500 | 900,500 | ||||
Net profit (loss) | (1,413,447) | (1,413,447) | ||||
Ending balance, value at Mar. 31, 2023 | $ 1 | $ 4,029 | $ 90,687,265 | $ (46,695,249) | $ 43,996,046 | |
Ending balance, shares at Mar. 31, 2023 | 10,896 | 40,288,817 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) / income | $ (1,413,447) | $ 501,600 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 751,225 | 817 |
Stock compensation expense | 1,570,781 | |
Interest expense | 1,064,232 | |
Provision for credit losses | 66,666 | 68,191 |
Lease expense | 17,762 | |
Income tax benefit | (609,277) | |
Change in fair value of warrant | (433,148) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 152,108 | (43,276) |
Contract assets | (13,019) | (8,611) |
Prepaid expenses | 77,436 | (32,297) |
Accrued interest receivable | (146,106) | 67 |
Deferred underwriting payable | (550,000) | |
Other current assets | 150,817 | |
Accounts payable | (524,233) | 19,717 |
Accrued expenses | (466,849) | 10,446 |
Contract liabilities | 78,616 | (8,333) |
Security deposit | (1,867) | |
Net cash provided by (used in) operating activities | (226,436) | 506,454 |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (548,671) | (4,416) |
Issuance of new loans (net of repayment) | 1,013,664 | 12,820 |
Net cash provided by investing activities | 464,993 | 8,404 |
CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
Net change in parent funding, allocations, and distributions to parent | 59,999 | |
Net cash provided by financing activities | 59,999 | |
Net increase in cash and cash equivalents | 238,557 | 574,857 |
Cash and cash equivalents – beginning of period | 8,390,195 | 5,495,905 |
Cash and cash equivalents – end of period | 8,628,752 | 6,070,762 |
Non-Cash transactions: | ||
Shares issued for the settlement of PCCU debt obligation | 38,406,408 | |
Cumulative effect from adoption of CECL | $ 581,321 |
Organization and Business Opera
Organization and Business Operations | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Organization and Business Operations | Note 1. Organization and Business Operations Business Description The Company originated as business operations conducted through Partner Colorado Credit Union (“PCCU”), which were transferred to SHF LLC (“SHF”), then an indirect wholly owned subsidiary of PCCU. SHF Holdings, Inc. (the “Company”), formerly known as Northern Lights Acquisition Corp. (“NLIT”), acquired all of the outstanding membership interests of SHF in a transaction that closed on September 28, 2022 (the “Business Combination”). The Business Combination was consummated pursuant to a Unit Purchase Agreement dated February 11, 2022 (the “Business Combination Agreement”) among SHF, SHF Holding Co., LLC (the direct parent of SHF and a wholly owned subsidiary of PCCU), PCCU, NLIT, a special purpose acquisition company, and its sponsor, 5AK, LLC. Subsequent to the completion of the Business Combination, NLIT changed its name to “SHF Holdings, Inc.” In this quarterly report on Form 10-Q (the “Quarterly Report”), we use the terms “we,” “us,” “our” and the “Company” to refer to the business and operations of SHF Holdings, Inc. following the closing of the Business Combination. (Refer to Note 3 to the Condensed Consolidated Financial Statements.) SHF was formed by PCCU following the approval of the contribution of certain assets and operating activities associated with operations from both certain branches and Safe Harbor Services, 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, with PCCU’s investment in SHF maintained at the SHF Holding, Co., LLC level (the “reorganization”). The reorganization effectively occurred July 1, 2021. In conjunction with the reorganization, all of the employees engaged in the operations and certain PCCU employees were terminated from PCCU and hired as SHF employees. Collectively, Oldco, the relevant operations of the PCCU branches, and SHF, represent the “Carved-Out Operations.” After the reorganization, the entirety of the Carved-Out Operations were owned by SHF and Oldco was dissolved. In addition, effective July 1, 2021, SHF entered into an Account Servicing Agreement and Support Services Agreement with PCCU, which memorialized the operational relationship between SHF and PCCU and which were subsequently amended and restated and are discussed in Note 9 to the Condensed Consolidated Financial Statements. On September 28, 2022, the parties consummated the Business Combination, resulting in NLIT acquiring 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 56,949,801 1,831,683 3,143,388 55.92 The Business Combination Agreement was amended to provide for the deferral of a portion of the cash due to PCCU at the closing of the Business Combination. The purpose of this deferral was to provide the Company with additional cash to support its post-closing activities. Furthermore, PCCU also agreed to defer $ 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”), an affiliate of the sponsor of NLIT. Under the Forbearance Agreement, PCCU has agreed to defer all payments owed by the Company pursuant to the Business Combination Agreement for a period of six months from the date of the Forbearance Agreement while the parties engage in good faith efforts to renegotiate the payment terms of the deferred obligations. 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, the origination, onboarding, and servicing of cannabis-related deposit business for and on behalf of those partner institutions; Bank Secrecy Act and other regulatory compliance and reporting related to these accounts; onboarding these accounts and responding to account and customer service inquiries; and sourcing, underwriting, and servicing, and administering loans issued to cannabis businesses and related entities. 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. On October 31, 2022, the Company entered into an Agreement and Plan of Merger (the “Abaca Merger Agreement”) by and among the Company, SHF Merger Sub I, a Delaware corporation and a direct wholly-owned subsidiary of the Company (“Merger Sub I”), SHF Merger Sub II, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of the Company (“Merger Sub II” and, together with Merger Sub I, the “Merger Subs”), Rockview Digital Solutions, Inc., a Delaware corporation, d/b/a Abaca (“Abaca”) and Dan Roda, solely in such individual’s capacity as the representative of the security holders of Abaca (the “Abaca Stockholders’ Representative”). On November 11, 2022, the parties to the Abaca Merger Agreement entered into an amendment to the Abaca Merger Agreement to modify the number of shares of the Company’s Class A Common Stock to be issued as consideration thereunder. On November 15, 2022, the parties consummated the transactions contemplated by the Abaca Merger Agreement, as amended. Pursuant to the Abaca Merger Agreement, as amended, (a) Merger Sub I merged with and into Abaca, with Abaca surviving as a direct wholly-owned subsidiary of the Company (“Merger I”) and (b) immediately following the effective time of the Merger I, Abaca merged with and into Merger Sub II (“Merger II” and, collectively with Merger I, the “Mergers”), with Merger Sub II surviving Merger II as a direct wholly-owned subsidiary of the Company. Pursuant to the Abaca Merger Agreement, as amended, the Company acquired Abaca together with its proprietary financial technology platform in exchange for $ 30,000,000 9,000,000 3,000,000 3,000,000 2,100,000 12,600,000 500,000 On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including $ 56,949,800 14,500,000 4.25 11,200,000 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2. Basis of Presentation and Summary of Significant Accounting Policies i. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Material estimates that are particularly subject to change in the near term include the determination of the allowance for credit losses, indemnification liabilities, useful lives of intangibles and the fair value of financial instruments. Actual results could differ from the estimates. ii. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, statements of shareholders’ equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the current year ending December 31, 2023. The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the years ended December 31, 2022, and 2021 included in the Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q. iii. Liquidity and Going Concern As of March 31, 2023, the Company had $ 8,628,752 in cash and net working capital deficit of $ 8,998,880 , as compared to $ 8,390,195 in cash and net working capital deficit of $ 39,340,020 at December 31, 2022. Included in the working capital deficit at March 31, 2023 and December 31, 2022 are $ 11,685,419 and $ 11,622,831 , respectively, which represent the equity consideration payable towards the Abaca acquisition. The Company has also incurred an operating loss of $ 1,621,669 Based upon these factors, management of the Company has determined that there is a risk of substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date these condensed consolidated financial statements have been issued. At December 31, 2022, a significant component of the working capital deficit was $ 25,973,017 11,685,419 The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result should the Company not continue as a going concern as a result of this uncertainty. iv. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from financial institutions, and investments with maturities of three months or less. v. Concentrations of Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained substantially 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 its PCCU pursuant to various services agreements. The Company had only one loan on its balance sheet as of March 31, 2023, which comprises 100 10 vi. 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 March 31, 2023, and December 31, 2022, 81 85 At March 31, 2023 and December 31, 2022, there were no vii. Loans Receivable PCCU underwrites 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 credit 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. viii. Allowance for Credit Losses (ACL) In 2023, the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326), which replaced the incurred loss methodology for estimated probable credit losses with an expected credit loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The ACL is a valuation account that is deducted from the amortized cost basis of financial assets carried at their amortized cost, including loans held for investment, to present the net amount that is expected to be collected throughout the life of the financial asset. The estimated ACL is recorded through a provision for credit losses charged against operations. Management periodically evaluates the adequacy of the ACL to maintain it at a level it believes to be reasonable. The Company uses the same methods used to determine the ACL to assess any reserves needed for off-balance sheet credit risks such as unfunded loan commitments including Indemnified loans to PCCU. These reserves for off-balance sheet credit risks are presented in the liabilities section in the condensed consolidated balance sheets as an “Indemnity liability.” The ACL consists of two components: an asset-specific component for estimating credit losses for individual loans that do not share similar risk characteristics with other loans; and a pooled component for estimating credit losses for pools of loans that share similar risk characteristics. The ACL for the pooled component is derived from an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters such as probability of default (“PD”) and loss given default (“LGD”) which are derived from various vendor models and/or internally developed model estimation approaches for smaller homogenous loans. PD is projected in these models or estimation approaches using economic scenarios, whose outcomes are weighted based on the Company’s economic outlook and are developed to incorporate relevant information about past events, current conditions, and reasonable and supportable forecasts. The Company considers relevant current conditions and reasonable and supportable forecasts that relate to its lending practices and environment and the specific borrower and determines that the significant factor affecting the loan’s performance is the fact that these borrowers are involved in the cannabis business. Despite being legal at the state level in certain jurisdictions, cannabis remains federally illegal in the United States as of the date of this filing. As cannabis related lending is a new practice in the United States, there is very little historical or industry data on which to base a loss forecast. Therefore, significant judgement is required in creating a reasonable loss estimate, using similar non-MRB loans as a baseline and adjusting for the inherent risks in the cannabis industry. While the Company considers other qualitative factors, including national macroeconomic conditions, in its overall risk analysis, it has determined that they are not significant inputs to the overall loss estimate calculations. The ACL estimation process also applies an economic forecast scenario, or a composite of scenarios based on management’s judgment and expectations around the current and future macroeconomic outlook. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term of a loan excludes expected extensions, renewals, and modification under certain conditions. Recoveries on loans represent collections received on amounts that were previously charged off against the ACL. Recoveries are credited to the ACL when received, to the extent of the amount previously charged off against the ACL on the related loan. Any amounts collected in excess of this limit are first recognized as interest income, then as a reduction of collection costs, and then as other income. ix. Allowance for Loan Losses Prior to the adoption of CECL in 2023, the Company recognized an 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. 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 originates are 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. x. 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. xi. Indemnity Liability Under the Loan Servicing Agreement, PCCU, in exchange for a fee at an annual rate of 0.25 % of the outstanding principal balance, funds certain loans. Under the Loan Servicing Agreement, the Company has agreed to indemnify PCCU from all claims related to Company’s cannabis-related business, including but not limited to default-related credit losses as defined in the Loan Servicing Agreement. The indemnification component of the Loan Servicing Agreement (refer to Note 9 to the condensed consolidated financial statements) is accounted for in accordance with accounting standards codification (“ ASC”) 460 Guarantees In addition to default-related credit losses, the Company 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. On March 29, 2023, The Company and PCCU entered into the Commercial Alliance Agreement that sets forth the terms and conditions of the lending-related and account-related services governing the relationship between the Company and PCCU and supersedes the Loan Servicing Agreement, as well as the Amended and Restated Support Services Agreement and the Amended and Restated Account Servicing Agreement. xii. Property and Equipment, net Property and equipment are 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. We capitalize certain costs related to software developed for internal-use, primarily associated with the ongoing development and enhancement of our technology platform. Costs incurred in the preliminary development and post-development stages are expensed. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally five years. xiii. Right of use assets and lease liability The Company has entered into lease agreements for a certain facility and certain items of equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. At inception of the lease agreement, the Company assesses whether the agreement conveys the right to control the use of an identified asset for a period in exchange for consideration, in which case it is classified as a lease. Each lease is further analyzed to check whether it meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated balance sheet with a corresponding lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. The Company has elected not to recognize lease assets and lease liabilities for short-term leases (leases with a term of 12 months or less) and leases of low-value assets. Lease right-of-use assets, net and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available as of the lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Finance lease interest expense is recognized based on an effective interest method and depreciation of assets is recorded on a straight-line basis over the shorter of the lease term and useful life of the asset. Both operating and finance lease right of use assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After a right of use asset is impaired, any remaining balance of the asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life. xiv. 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 xv. Goodwill and Other Intangible Assets The Company’s methodology for allocating the purchase price of an acquisition is based on established valuation techniques that reflect the consideration of a number of factors, including a valuation performed by a third-party appraiser. Goodwill is measured as the excess of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities assumed. Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value. If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill. A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. Finite-lived intangible assets are amortized over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets should be tested for impairment at the time of a triggering event, if one were to occur. Finite-lived intangible assets may be impaired when the estimated undiscounted future cash flows generated from the assets are less than their carrying amounts. xvi. Stock-based Compensation The Company measures all equity-based payment arrangements to employees and directors in accordance with ASC 718, Compensation–Stock Compensation. The Company’s stock-based compensation cost is measured based on the fair value at the grant date of the stock-based award. It is recognized as expense on a straight-line basis over the requisite service period for the entire award. Forfeitures are recognized as they occur. The Company estimates the fair value of each stock-based award on its measurement date using either the current market price of the stock or Black-Scholes option valuation model, whichever is most appropriate. The Black-Scholes valuation model incorporates assumptions such as expected term of the instrument, volatility of the Company’s future share price, risk free rates, future dividend yields and estimated forfeitures at the initial grant date, by reference to the underlying terms of the instrument, and the Company’s experience with similar instruments. Changes in assumptions used to estimate fair value could result in materially different results. The shares of the Company were listed on the Nasdaq stock exchange for a limited period of the time and also the stock price has dropped significantly from the date of listing, based on which the Company has considered the expected volatility at 100 xvii. 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. xviii. Revenue Recognition SHF recognizes revenue in accordance with 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 SHF expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle 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. 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 SHF such as bank account charges, onboarding income, account activity fee income and other miscellaneous fees. In addition, SHF 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, SHF 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 consolidated 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 of America. xix. 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 March 31, 2023, the Company reported contract assets and contract liabilities of $ 34,189 79,612 21,170 996 xx. 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 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 condensed consolidated statement of operations. xxi. Forward purchase derivative The Company accounts for the forward purchase derivative assumed in the business combination in accordance with the guidance contained in ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company classifies the forward purchase derivatives as liabilities carried at their fair value and adjusts the forward purchase derivatives to fair value at each reporting period. This derivative asset or liability is subject to re-measurement at each balance sheet date until the conditions under the forward purchase agreement are exercised or expire, and any change in fair value is recognized in the condensed consolidated statement of operations. xxii. Earnings Per Share Basic and diluted earnings per share are computed and disclosed in accordance with ASC Topic 260, Earnings Per Shares. 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 (Refer to Note 17). 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. xxiii. 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. Prior to the merger, the Company was a pass-through entity for tax purposes. 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. 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 bene |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Note 3. Business Combination During the year 2022, 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 GAAP. Under this method of accounting, NLIT was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of SHF issuing shares for the net assets of NLIT, accompanied by a recapitalization. The net assets of NLIT were recognized at fair value (which was 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 ● Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the business combination was approximately $ 10.85 ● Approximately $ 56.9 70.0 21.9 35.0 6.4 4.71 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 is treated as a taxable asset acquisition, resulting in an estimated tax basis Goodwill balance of $ 44,102,572 ● Preferred Stock: The Company is authorized to issue 1,250,000 0.0001 14,616 10.00 (i) 80% of the volume weighted average price of the Class A Common Stock for the prior five trading days and (ii) $2.00 (the “Floor Price”), provided that, so long as a preferred stock holders continues to hold any preferred shares, such preferred stock holder will be entitled to receive the aggregate shares of Class A Common Stock that would be issuable based upon its initial purchase of preferred stock at the adjusted Conversion Price . 2.00 1.25 ● Class A Common Stock: The Company is authorized to issue up to 130,000,000 0.0001 23,732,889 3,667,377 ● The fair value of net assets on September 28, 2022 in the books of NLIT are as follows: Schedule of Fair Value Net Assets Cash & Cash Equivalents $ 2,879 Prepaid Expense 15,000 Cash held in Trust 118,738,861 Deferred offering cost 266,240 Accounts Payable (1,374,021 ) Accrued Expense (1,202,164 ) Advance from sponsor (1,150,000 ) Deferred underwriter payable (4,025,000 ) Forward purchase derivative (795,942 ) Warrant Liability (1,394,453 ) Class A Common Stock subject to possible redemption (79,259,819 ) Fair value of net assets acquired 29,821,581 ● The following table summarizes the total fair value of consideration: Schedule of Fair Value Consideration Company’s Class A common stock comprises of 11,386,139 115,000,000 Cash consideration 13,050,199 Deferred cash consideration 56,949,801 Total fair value of consideration 185,000,000 Parent-Entity Net Investment: Parent-Entity Net Investment balance in the consolidated balance sheets represents PCCU’s historical net investment in the Carved-Out Operations. For purposes of these condensed consolidated financial statements, investing requirements have been summarized as “Parent-Entity Net Investment” and represent equity as no cash settlement with PCCU is required. No separate equity accounts are maintained for SHS, SHF or the Branches. On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including $ 56,949,800 14,500,000 4.25 11,200,000 |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition | Note 4. Acquisition On November 15, 2022, the Company and its subsidiary entered into a series of merger and acquisition transactions resulting in the acquisition of 100.00 500,000 The acquisition increases the Company’s customer base to include more than 1,000 unique depository accounts across 40 states and U.S. territories; adds Abaca’s fintech platform to the Company’s existing technology; increases the Company’s financial institution client relationships and access to balance sheet capacity to five unique financial institutions strategically located across the United States; increases the Company’s lending capacity; and nearly doubles the Company’s team, adding to the existing talent pool of the cannabis industry’s foremost financial services and financial technology experts. Pursuant to the Abaca merger agreement, as amended, the Company acquired Abaca in exchange for $ 30,000,000 (a) cash consideration in an amount equal to (i) $ 9,000,000 3,000,000 3,000,000 (b) Common Stock equal to the lesser of (1) 2,100,000 12,600,000 500,000 The Company measures the deferred cash consideration and future stock consideration at fair value on the acquisition date based on a report received from an independent valuation firm. The following table summarizes the purchase price allocation: Schedule of Purchase Price Allocation Property, plant & equipment $ 27,117 Software 9,189 Cash & cash equivalents 245,524 Prepaid expense 23,061 Security deposit 675 Accounts receivables 232,265 Accounts Payable (206,508 ) Accrued Expense (235,894 ) Fair value of net assets acquired $ 95,429 Other intangibles 10,800,000 Goodwill 19,266,276 Deferred tax liabilities (1,758,769 ) Total purchase consideration $ 28,402,936 The following table summarizes the total fair value of consideration: Schedule of Fair Value Consideration Cash paid $ 2,763,800 Deferred cash payment 5,452,424 Share issued – common stock ( 2,099,977 8,105,911 Settlement of pre-existing notes along with accrued interest 523,404 Future consideration settled in common stock 11,557,397 Fair value of consideration $ 28,402,936 At the date of acquisition, management allocated the initial purchase price based on the estimated fair value of the identifiable assets and liabilities assumed on the acquisition date. The pre-existing relationships settled were the Company’s notes and related accrued interest with Abaca. Subsequently, the Company finalized the purchase price allocation and has adjusted the provisional values retrospectively to reflect changes to the assets and liabilities at the acquisition date. For the fair value of the identifiable intangible assets acquired, the Company used an income-based approach, which involves estimating the future net cash flows and applies an appropriate discount rate to those future cash flows. Intangible assets were recorded at estimated fair value, as determined by management based on available information which includes a valuation prepared by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach and multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, discounted at an appropriate rate of return which is based on the weighted average cost of capital for both the company and other market participants. The useful lives of intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The estimated fair value of intangible assets and related useful lives as included in the purchase price allocation include: Schedule of Intangible Assets and Related Useful Lives as Included in Purchase Price Allocation Amount Useful life in Market related intangible assets $ 2,100,000 8 Customer relationships 2,000,000 10 Developed technology 6,700,000 10 Fair value of consideration $ 10,800,000 Goodwill has been recognized as a result of the specialized assembled workforce at Abaca. Had the acquisition of Abaca occurred on January 1, 2022, there would not have been a significant impact on the consolidated operating sales revenues and net earnings for the three months ended March 31, 2022. Acquisition costs of $ 236,200 |
Goodwill and other intangibles
Goodwill and other intangibles | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangibles | Note 5. Goodwill and other intangibles Goodwill acquired in connection with the acquisition on November 16, 2022, is not amortized, but instead evaluated for impairment on an annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate that impairment may be more likely than not. During the year ended December 31, 2022, no The change in the carrying amount of goodwill from December 31, 2022, to March 31, 2023, is as follows: Schedule of Carrying Amount of Goodwill December 31, 2022 $ 19,266,276 Acquisition of Abaca - March 31, 2023 $ 19,266,276 The Company has elected November 15 as the date for annual impairment testing or as necessary for triggering events. The management believes that there has been no change in the circumstances which could cause any indicators to impairment hence no The Company’s finite lived intangible assets are amortized on a straight-line basis over their estimated useful lives. The following is a summary of the Company’s finite-lived intangible assets as of March 31, 2023: Schedule of Finite Lived Intangible Assets Finite-lived intangible assets, net Acquired in Amortization Finite-lived intangible assets, net Remaining December 31, Acquired in Amortization March 31, Market related intangible assets 8 2,066,918 - 65,625 2,001,293 Customer relationships 10 1,974,795 - 50,000 1,924,795 Developed technology 7 6,579,374 - 239,286 6,340,088 Total intangible assets 10,621,087 - 354,911 10,266,176 Following is a summary of the Company’s finite-lived intangible assets as of December 31, 2022. Acquired in acquisition Amortization Finite-lived intangible assets, net Remaining December 31, Acquired Amortization December 31, Market related intangible assets 8 - $ 2,100,000 $ 33,082 $ 2,066,918 Customer relationships 10 - 2,000,000 25,205 1,974,795 Developed technology 7 - 6,700,000 120,626 6,579,374 Total intangible assets $ 10,800,000 $ 178,913 $ 10,621,087 |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
Loans Receivable | Note 6. Loans Receivable Commercial real estate loans receivable, net consist of the following: Schedule of Commercial Real Estate Loans Receivable March 31, December 31, Commercial real estate loans receivable, gross $ 413,292 $ 1,432,560 Less: loan origination charges (103,476 ) (109,081 ) Commercial real estate loans receivable, net 309,816 1,323,479 Allowance for credit losses (21,078 ) (21,488 ) Commercial real estate loans receivable, net 288,738 1,301,991 Current portion (11,728 ) (51,300 ) Noncurrent portion $ 277,010 $ 1,250,691 Allowance for Credit Losses The allowance for credit losses is maintained at a level believed to be sufficient to provide for estimated credit 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 credit losses consist of the following activity for the three months ended March 31, 2023 and year ended March 31, 2022: Schedule of Allowance For Loan Losses March 31, March 31, Allowance for credit losses Beginning balance $ 21,488 $ 14,741 Cumulative effect from adoption of CECL 14,980 - Charge-offs - - Recoveries (15,390 ) - Provision - 9,805 Ending balance $ 21,078 $ 24,546 Loans receivable: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 413,292 1,465,482 $ 413,292 $ 1,465,482 Allowance for credit losses: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 21,078 24,546 $ 21,078 $ 24,546 At March 31, 2023 and December 31, 2022, no loans were past due, classified as non-accrual or considered impaired. Credit quality of loans: As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks credit quality indicators based on the loan payment status on monthly basis. All the loans outstanding on March 31, 2023, are evaluated based on their payment status, which is considered as the most meaningful indicator of credit quality. |
Indemnification liability
Indemnification liability | 3 Months Ended |
Mar. 31, 2023 | |
Indemnification Liability | |
Indemnification liability | Note 7. Indemnification liability As discussed at Note 9 to the condensed consolidated financial statements, and pursuant to PCCU Agreements, PCCU funds loans through a third-party vendor. SHF earns the associated interest and pays PCCU a loan hosting payment at an annual rate of 0.25 Schedule of Outstanding Amounts March 31, December 31, Secured term loans $ 16,300,000 $ 15,300,000 Unsecured loans and lines of credit 3,791,428 3,598,042 Total loans funded by Parent $ 20,091,428 $ 18,898,042 Secured loans contained an interest rate ranging from 5.90 12.00 Unsecured loans and lines of credit contain variable rates ranging from Prime + 1.50 % to Prime + 6.00 %. 875,000 996,958 SHF has agreed to indemnify PCCU for losses on certain PCCU loans. The indemnity liability reflects SHF management’s estimate of probable credit 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 are as follows: Schedule of Indemnity Liability Three Months March 31, 2023 Three Months March 31, 2022 Beginning balance $ 499,465 $ - Cumulative effect from adoption of CECL 566,341 - Charge-offs - - Recoveries - - Provision 82,026 58,386 Ending balance $ 1,147,832 $ 58,386 All loans were current and considered performing at March 31, 2023 except one loan which was identified pursuant to potential default on January 5, 2023. The Company’s management was informed that an indemnified loan, having an outstanding balance of $3.1MM, was past due pursuant to its December 2022 payment. The guarantor on the loan stated to management that the borrower is out of money due to business losses. The guarantor noted that the borrower is attempting to sell the building prior to the end of Q2 of 2023. The Company is discussing workout options with the borrower. In addition, further to the aforementioned attempt to sell, the loan has sufficient collateral. The above-mentioned loan is now greater than 120 days delinquent and considered impaired. The Company’s CECL methodology has reserved management’s best estimate of credit losses in relation to this loan and the overall loan portfolio on a collective basis. Credit quality of indemnified loans: As part of the on-going monitoring of the credit quality of the Company’s indemnified loan portfolio, management tracks credit quality indicators based on the loan payment status on monthly basis. All the indemnified loans outstanding on March 31,2023 are evaluated based on their payment status, which is considered as the most meaningful indicator of credit quality. SHF has agreed to indemnify PCCU from all claims related to SHF’s cannabis-related business. Other than potential credit losses, no other circumstances were identified meeting the requirements of a loss contingency. The provision for credit losses on the statement of operations consists of the following activity for the three months ended March 31, 2023 and year ended December 31, 2022: Schedule of Provision for Loan Losses Commercial Indemnity Total Commercial Indemnity Total March 31, 2023 March 31, 2022 Commercial Indemnity Total Commercial Indemnity Total Provision (benefit) $ (15,390 ) $ 82,056 $ 66,666 $ 9,805 $ 58,386 $ 68,191 |
Property and equipment, net
Property and equipment, net | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Note 8. Property and equipment, net Property and equipment consist of the following: Schedule of Property and Equipment, Net March 31, 2023 December 31, Equipment $ 45,397 $ 45,397 Software 51,692 51,692 Improvement 71,635 71,635 Office furniture 200,831 7,070 Property and equipment, gross 369,555 175,794 Less: accumulated depreciation (167,584 ) (126,180 ) Property and equipment, net $ 201,971 $ 49,614 |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 9. Related party transactions Account Servicing Agreement The Company had 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. Pursuant to this agreement, SHF reported revenue of $ 3,261,284 1,628,091 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 Pursuant to these agreements and as amended and restated, the Company reported expenses of $ 378,730 83,807 Significant terms of the Amended and Restated Accounting Servicing Agreement and Support Services Agreement are as follows: ● Pursuant to the Account Servicing Agreement, the Company’s fees for such services 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 the Company no longer qualifying as a “credit union service organization” (a “CUSO”) or within 60 days of the assumption by a third party of all CRB-related accounts. On May 23, 2022, the Company and PCCU entered into the Second Amended and Restated Account Servicing Agreement and Support Services Agreement, which agreement amended and restated the Amended and Restated Account Servicing and Support Services Agreements to remove the provision providing for the termination of the agreements within 60 days of the Company no longer qualifying as a “credit union service organization,” as the Company will cease to qualify as a CUSO following the closing of the Business Combination. ● Pursuant to the Support Services Agreement, as amended, PCCU will continue to provide to the Company 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 the Company and the Company will reimburse PCCU for any of its out-of-pocket expenses relating to the services provided to the Company. 30,000,000 Schedule of Demonstrated Deposit Capacity March 31, 2023 December 31, PCCU total assets $ 699,228,293 $ 695,072,554 Capacity at 65% 454,498,390 451,797,160 CRB related deposits 213,645,529 161,138,975 Incremental capacity $ 240,852,861 $ 290,658,185 PCCU policy also requires they maintain an internal ratio of net worth to total assets of at least 10 Loan Servicing Agreement Effective February 11, 2022, SHF entered into a 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 receives 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 60 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 March 31, 2023 and December 31, 2022. Schedule of Demonstrated Deposit Capacity March 31, December 31, CRB related deposits $ 213,645,529 $ 161,138,975 Capacity at 60% 128,187,317 96,683,385 PCCU net worth 92,411,928 133,231,565 Capacity at 1.3125 121,290,656 174,866,429 Limiting capacity 121,290,656 174,866,429 PCCU loans funded 20,091,428 18,898,042 Amounts available under lines of credit 846,958 996,958 Incremental capacity $ 100,352,270 $ 154,971,429 Pursuant to this agreement, the Company reported expenses of $ 11,929 1,373 Issuance of shares to PCCU On March 29, 2023, the Company and PCCU entered into the following definitive transaction documents to settle and restructure the deferred obligation: ● A five 14,500,000 4.25% ● A Securities Issuance Agreement, pursuant to which the Company issued 11,200,000 54.93% ● The Registration Rights Agreement requires the Company to register the Shares for resale pursuant to the Securities Act of 1933, as amended (the “Securities Act”); and the Lock-Up Agreement restricts PCCU from transferring the Shares until the earlier of (i) six (6) months after the date of the Securities Issuance Documents or (ii) the consummation of a transaction with an unaffiliated third party in which all of the Company’s stockholders have the right to exchange their shares of Class A Common Stock for cash, securities, or other property; and ● A Commercial Alliance Agreement that sets forth the terms and conditions of the lending-related and account-related services governing the relationship between the Company and PCCU which supersedes the Loan Servicing Agreement, as well as the Amended and Restated Support Services Agreement and the Amended and Restated Account Servicing Agreement. 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 Advance from Sponsor On June 27, 2022, Luminous Capital Inc., an affiliate of the Sponsor provided a non-interest-bearing advance (the “Advance”) amounting to $ 1,150,000 |
Due to Seller
Due to Seller | 3 Months Ended |
Mar. 31, 2023 | |
Due To Seller | |
Due to Seller | Note 10. Due to Seller Amounts due to seller were as follows: Schedule of Amounts Due to Seller March 31, December 31, Due to Seller-Current (Unsecured) $ - $ 25,973,017 Due to Seller-long term (Unsecured) - 30,976,783 Total loans funded by Parent $ - $ 56,949,800 As contemplated by the Unit Purchase Agreement, related to reverse acquisition of NLIT, the consideration paid to the seller parent (PCCU) in connection with the Business Combination consisted of an aggregate of $ 185,000,000 11,386,139 115,000,000 70,000,000 56,949,800 The Deferred Cash Consideration was to be paid in one payment of $ 21,949,800 35,000,000 6,416,667 38,500,002 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”). The loan included 5 4.71 On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including $ 56,949,800 14,500,000 4.25 11,200,000 Schedule of Breakdown of Liabilities Settled Due to Seller $ 56,949,800 Cash payment obligation under business combination 3,143,389 Business combination expense payable to seller 1,069,359 Interest accrued but not paid 1,337,843 Total deferred obligation 62,500,391 Less: Senior secured promissory note 14,500,000 Less: Change in deferred tax 9,593,983 Amount charged to Stockholders’ Equity towards issuance of common stock $ 38,406,408 |
Senior Secured Promissory Note
Senior Secured Promissory Note | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Senior Secured Promissory Note | Note 11. Senior Secured Promissory Note Schedule of Senior Secured Promissory Note March 31, December 31, Senior Secured Promissory Note (Current) $ 1,229,376 $ - Senior Secured Promissory Note (long term) 13,270,624 - Total $ 14,500,000 $ - On March 29, 2023, the Company and PCCU entered into definitive transaction documents to settle and restructure the deferred obligation related to business Combination (Refer to Note 3) under which the Company has issued the five- year Senior Secured Promissory Note (the “Note”) in the principal amount of $ 14,500,000 4.25 The Note amount will be paid in 54 equal installments of $ 295,487 The repayment schedule of the outstanding amount on March 31, 2023 is as follows: Schedule of Outstanding Amount on Debt Year of payment 2023 $ 488,834 2024 3,006,992 2025 3,138,932 2026 3,274,966 2027 3,416,896 2028 1,173,380 Grand total $ 14,500,000 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Note 12. Leases The Company has non-cancellable operating leases for facility space with varying terms. All of the active leases for facility space qualified for capitalization under FASB ASC 842, Leases. These leases have remaining lease terms between one 7 ten years 977,113 1,016,198 1,045,995 1,028,233 The Company analyzes contracts above certain thresholds to identify leases and lease components. Lease and non-lease components are not separated for facility space leases. The Company uses its contractual borrowing rate to determine lease discount rates when an implicit rate is not available. Total lease cost for the three months ended March 31, 2023 and for the year ended December 31, 2022, included in Condensed Consolidated Statements of Operations, is detailed in the table below: Schedule of Lease Cost Three months ended March 31, 2023 (Unaudited) Year ended December 31, 2022 (Audited) Three months ended March 31, 2023 Year ended December 31, 2022 Operating lease cost $ - $ - Short-term lease cost 87,742 99,246 Total Lease Cost $ 87,742 $ 99,246 Schedule of Right Of Use Assets ROU assets that are related to lease properties are presented as follows: Beginning balance $ 1,016,198 $ - Additions to right-of-use assets - 1,029,226 Amortization charge for the period (39,085 ) (13,028 ) Lease modifications - - Ending balance $ 977,113 $ 1,016,198 Further information related to leases is as follows: Weighted-average remaining lease term 4.29 4.42 Weighted-average discount rate 6.87 % 6.87 % Future minimum lease payments as of March 31, 2023, and December 31, 2022, are as follows: Schedule of Future Minimum Lease Payments Year 2023 $ 91,303 $ 91,303 2024 197,520 197,520 2025 217,925 217,925 2026 222,275 222,275 2027 226,705 226,705 Thereafter 348,926 348,926 Total future minimum lease payments $ 1,304,654 $ 1,304,654 Less: Imputed interest 258,659 276,421 Operating lease liabilities 1,045,995 1,028,233 Less: Current portion 66,726 20,124 Non-current portion of lease liabilities $ 979,269 $ 1,008,109 |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 13. Revenue Disaggregated revenue Revenue by type are as follows: Schedule of Disaggregated Revenue 2023 2022 Three months ended March 31 2023 2022 Deposit, activity, onboarding income $ 2,245,831 $ 1,466,869 Safe Harbor Program income 51,103 43,019 Investment income 1,417,152 93,986 Loan interest income 466,293 67,236 Total Revenue $ 4,180,379 $ 1,671,110 Account fee income consists of deposit account fees, activity fees and onboarding income, which are recognized on periodic basis as per the fee schedule pursuant to deposit servicing agreement with PCCU. Safe Harbor Program income consists of outsourced support to other financial institutions providing banking to the cannabis industry whose income is recognized on the basis of usage as per the agreements. Investment income consist of interest earned on deposits with the Federal Reserve Bank pursuant to an investment servicing agreement with PCCU. Loan interest income consist of interest earned on both direct and indemnified loans pursuant to a Commercial Alliance Agreement with PCCU. |
Deferred underwriter fee
Deferred underwriter fee | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred underwriter fee | Note 14. Deferred underwriter fee In connection with the business combination (refer to Note 3), the Company executed a note on September 28, 2022 with EF Hutton related to PIPE financing under which the Company was obligated to pay the principal sum of $ 2,166,250 715,750 362,625 The Company made the payment of its first installment of $ 715,750 1,450,500 550,000 900,500 |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 15. Commitments and contingencies ● The Company has issued an irrevocable Letter of Credit in favor of AFCO Credit Corporation (“AFCO”), for an aggregate amount of US $ 750,000 ○ The Company continues to be in default, after 10 days’ written notice, in the payment of any sums due to AFCO under a premium finance agreement dated on or about October 20, 2022, or ○ A case concerning the Company has been filed under title 11 of the United States Code and that, not more than 95 days before that case commenced, AFCO received loan payments amounting to not less than (total of payments received in the 95-day period prior to filing of the bankruptcy case), and AFCO is drawing an amount equal to the stated sum of the loan payments so received. ○ The Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course of its business. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert management resources. The Company cannot predict the timing or outcome of these claims and other proceedings. ● In connection with the Company’s initial public offering (“IPO”), the Company entered into a registration rights agreement dated June 23, 2021 with the Sponsor and the individuals serving as directors and executive officers of the Company at the time of the IPO. Pursuant to this registration rights agreement, the Company has agreed to register for resale upon the expiration of the applicable lock-up period the Company securities acquired by the Sponsor and such individuals in connection with the organization of the Company and the IPO. ● For a period beginning on June 28, 2021 and ending 12 months from the closing of the Business Combination, the Company has granted the underwriters a right of first refusal to act as lead-left book running manager and lead left manager for any and all future private or public equity, convertible and debt offerings during such period. In accordance with FINRA Rule 5110(f)(2)I(i), such right of first refusal shall not have a duration of more than three years from the effective date of our Registration Statement. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 16. 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 Three months ended March 31, 2023 Net loss $ (1,413,447 ) Weighted average shares outstanding – basic 25,670,730 Basic net loss per share $ (0.06 ) Weighted average shares outstanding – diluted 25,670,730 Diluted net loss per share $ (0.06 ) Weighted average shares calculation As on March 31, 2023 Company public shares 3,926,598 Company initial stockholders 3,403,175 PCCU stockholders 11,759,472 Shares issued for abaca acquisition 2,099,977 Restricted stock units issued 566,755 Conversion of preferred stock 3,914,753 Weighted average shares outstanding 25,670,730 Certain share-based equity awards were excluded from the computation of dilutive loss per share because inclusion of these awards would have had an anti-dilutive effect. The following table reflects the awards excluded. Schedule of Awards Excluded March 31, Warrants 7,036,588 Share based payments 2,775,655 Shares to be issued to Abaca acquisition 6,433,839 Conversion of preferred stock 10,896,000 Total 27,142,082 The holders of Series A Convertible Preferred Stock shall be entitled to receive, and the Company shall pay, dividends on shares of Series A Convertible Preferred Stock equal (on an as-if-converted-to-Class-A-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Class A Common Stock when, as and if such dividends are paid on shares of the Class A Common Stock. No other dividends shall be paid on shares of Series A Convertible Preferred Stock In the 2022, before the date of business combination, SHF was a single member limited liability company with no shareholders hence the disclosure related to earning per share is not applicable. |
Forward Purchase Agreement
Forward Purchase Agreement | 3 Months Ended |
Mar. 31, 2023 | |
Forward Purchase Agreement | |
Forward Purchase Agreement | Note 17. 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 ● 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 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 ● 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 ● The trading value of the common stock combined with preferred shareholders electing to convert their preferred shares to common stock triggered a lower reset price embedded in the forward purchase agreement, or FPA. As of December 31, 2022, the Company had already called a special meeting to lower the make-whole price under the preferred share purchase agreement to $ 1.25 1.25 1.25 1.25 4.6 37.9 42.3 ● The reconciliation statement of the common stock held by the parties are as follows: Schedule of Forward Purchase Agreement On the date of (September 28, 2022) Share sold during September 29, 2022 As at December 31, 2022 S.no Name of the Opening (a) Amount Shares (b) Amount Shares (c=a-b) Rest (iii) Amount (c x iii) 1 Vellar 1,025,000 $ 10,583,246 53,796 $ 524,472 971,204 1.25 $ 1,214,005 2 Midtown East 1,599,496 16,514,986 81,572 832,850 1,517,924 1.25 1,897,405 3 Verdun 1,180,376 12,187,522 2,127 21,962 1,178,249 1.25 1,472,811 Grand total 3,804,872 $ 39,285,754 137,495 $ 1,379,284 3,667,377 $ 4,584,221 As at December 31, 2022 Share sold during the three months As at Opening Shares Shares Shares Rest price Amount S.no Name of the party (a) Amount (b) Amount (c=a-b) (iii) (c x iii) 1 Vellar 971,204 $ 1,214,005 - - 971,204 1.25 $ 1,214,005 2 Midtown East 1,517,924 1,897,405 - - 1,517,924 1.25 1,897,405 3 Verdun 1,178,249 1,472,811 - - 1,178,249 1.25 1,472,811 Grand total 3,667,377 $ 4,584,221 - - 3,667,377 $ 4,584,221 |
Warrant Liability
Warrant Liability | 3 Months Ended |
Mar. 31, 2023 | |
Warrant Liability | |
Warrant Liability | Note 18. Warrant Liability Public and Private Placement Warrants As of March 31, 2023, and December 31, 2022, the Company has 5,750,000 264,088 The Public and Private Placement Warrants may only be exercised for a whole number of shares. The Public and Private Placement Warrants became exercisable on September 28, 2022, the date of the Business Combination and will expire on September 28,2027, or earlier upon redemption or liquidation. 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 ● 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 private placement warrants are identical to the public warrants, except that the private placement warrants and the Class A Common Stock issuable upon the exercise of the private placement warrants were not transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the private 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 private placement warrants are held by someone other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. PIPE Warrants As of March 31, 2023 and December 31, 2022, the Company has 1,022,500 The PIPE Warrants have an exercise price of $ 11.50 (i)125% of the conversion price if at any time there is an adjustment to the Conversion Price and the exercise price after such adjustment is greater than 125% of the Conversion Price as adjusted and (ii) $5.00. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Note 19. 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. Assets and Liabilities Reported at Fair Value on a Recurring Basis Public Warrants: Public warrants are recorded at fair value on a recurring basis. The Company obtains dealer quotes, of Level 1 inputs, based on observable data to value these warrants. Private Placement Warrants Private Placement Warrants are recorded at fair value on a recurring basis. The Company value these derivatives based on third party reports for Level 3 inputs. Level 3 inputs, based on observable data to value these derivatives. PIPE Warrants PIPE Warrants are recorded at fair value on a recurring basis. The Company value these derivatives based on third party reports for Level 3 inputs. Level 3 inputs, based on observable data to value these derivatives. Forward purchase option derivatives: Forward purchase option derivatives are recorded at fair value on a recurring basis. The Company values these derivatives based on third party reports for Level 3 inputs. Level 3 inputs, based on observable data to value these derivatives. 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 March 31, 2023 and December 31,2022: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis March 31, 2023: Total Fair Quoted Prices Significant (Level 3) Description Liabilities: Public warrants $ 150,650 150,650 - Private placement warrants 7,953 - 7,953 PIPE Warrants 74,762 - 74,762 Forward purchase option derivative 7,309,580 - 7,309,580 Liabilities,fair value 7,309,580 - 7,309,580 December 31, 2022: Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Description Liabilities: Public warrants $ 361,100 361,100 - Private placement warrants 19,110 - 19,110 PIPE Warrants 286,300 - 286,300 Forward purchase option derivative 7,309,580 - 7,309,580 Liabilities, fair value 7,309,580 - 7,309,580 Assets Measured at Fair Value on a Nonrecurring Basis There were no 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 Level 1 Level 2 Level 3 As on March 31, 2023 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 8,628,752 $ 8,628,752 $ 8,628,752 - - Forward purchase receivables 4,584,221 4,584,221 4,584,221 - - Loans 413,292 365,781 - - 365,781 Liabilities Deferred consideration 17,272,308 17,272,308 17,272,308 - - Senior Secured Promissory note 14,500,000 14,500,000 14,500,000 - - Indemnity liability 1,147,832 1,147,832 1,147,832 - - Public warrants 150,650 150,650 150,650 - - Private placement warrants 7,953 7,953 - - 7,953 PIPE Warrants 74,762 74,762 - - 74,762 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 Level 1 Level 2 Level 3 As on December 31, 2022 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 8,390,195 $ 8,390,195 $ 8,390,195 - - Forward purchase receivables 4,584,221 4,584,221 4,584,221 - Loans 1,301,991 1,241,761 - - 1,241,761 Liabilities Deferred consideration 14,359,822 14,359,822 14,359,822 - - Due to seller - current portion 25,973,017 25,973,017 25,973,017 - - Due to seller - long term position 30,976,783 30,976,783 30,976,783 - - Deferred underwriter fee payable 1,450,500 1,450,500 1,450,500 - - Indemnity liability 499,465 499,465 499,465 - - Public warrants 361,100 361,100 361,100 - - Private placement warrants 19,110 19,110 - - 19,110 PIPE Warrants 286,300 286,300 - - 286,300 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 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: Schedule of Fair Value Assets Measured on Recurring Basis PIPE Private Forward For the three months ended March 31, 2023 PIPE Private Forward Balance at the beginning of the period $ 286,300 19,110 7,309,580 Fair value adjustment (211,538 ) (11,157 ) - Balance at the end of the period $ 74,762 7,953 7,309,580 The private placement warrants and PIPE warrants are measured at fair value using a Black-Scholes model and Black-Scholes-Merton model, respectively. As of March 31, 2023, these warrants were valued based on third party reports for Level 3 inputs. Level 3 inputs, based on observable data to value these derivatives. The fair value of the forward purchase 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 December 31, 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 private placement warrants and public warrants as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs As on March 31, 2023 PIPE Warrants Private placement Exercise price $ 5.00 $ 11.50 Share Price $ 0.51 $ 0.51 Expected term (years) 4.49 4.49 Volatility 73.2 % 73.2 % Risk-free rate 3.62 % 3.62 % As on December 31,2022 PIPE Warrants Private placement warrants Exercise price $ 5.00 $ 11.50 Share Price $ 1.78 $ 1.78 Expected term (years) 4.74 4.74 Volatility 46.00 % 46.00 % Risk-free rate 4.00 % 3.98 % The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the forward purchase derivatives as of their measurement dates on March 31,2023 and December 31,2022: Schedule of Level 3 Fair Value Measurements Inputs March 31, 2023 Reset Price $ 5.00 Expected term (years) 2.74 Additional maturity consideration per share $ 2.00 Volatility 46 % Risk-free rate 4.2 % Risk-adjusted discount rate 13.4 % December 31, 2022 Reset Price $ 5.00 Expected term (years) 2.74 Additional maturity consideration per share $ 2.00 Volatility 46 % Risk-free rate 4.2 % Risk-adjusted discount rate 13.4 % |
Tax
Tax | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Tax | Note 20. Tax For the three months ended March 31, 2023, the Company recorded income tax benefit of $ 609,277 30.12 21.0 51,593,302 42,608,596 The Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain. As of both March 31, 2023, and December 31, 2022, the Company has no unrecognized income tax benefits. |
401(k) Plan
401(k) Plan | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
401(k) Plan | Note 21. 401(k) Plan The Company offers to all employees a tax-qualified retirement contribution plan, with the Company’s 100 4 20,663 3,942 |
Share based compensation
Share based compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share based compensation | Note 22. Share based compensation 2022 Equity Incentive Plan Share-based compensation expense recognized for the three months ended March 31, 2023 and March 31, 2022 totaled $ 1.6 0 The 2022 Plan was approved by the Company’s stockholders on June 28, 2022. The 2022 Plan permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. The Company has not issued stock appreciation rights, restricted stock, stock bonus awards, or performance compensation awards in the three months ended March 31, 2023 and March 31, 2022. In conjunction with the 2023 Plan, as of March 31, 2023, the Company had granted stock options and restricted stock units which are described in more detail below. Stock options Stock options are awarded to encourage ownership of the Company’s common stock by employees and to provide increased incentive for employees to render services and to exert maximum effort for the success of the Company. The Company’s incentive stock options generally permit net-share settlement upon exercise. The option exercise price, vesting schedule and exercise period are determined for each grant by the administrator (person appointed by board to administer the stock plans) of the applicable plan. The Company’s stock options generally have a 10 The assumptions used to determine the fair value of options granted in the three months ended March 31, 2023, using the Black-Scholes-Merton model are as follows: Schedule of Fair Value of Options Granted Black-Scholes-Merton Model Dividend yield 0 % Risk-free interest rate 3.62 % to 4.23 % Expected volatility (weighted-average and range, if applicable) 100 % Expected term 6 to 6.5 years The expected term of the options granted is calculated based on the simplified method by taking average of contractual term and vesting period the awards. The shares of the Company were listed on the stock exchange for a limited period of the time and the share price has also dropped significantly from the date of listing, based on these factors the Management has considered the expected volatility at 100 A summary of the Company’s stock option activities and related information for the three months ended March 31, 2023 is as follows: Schedule of Stock Option and Related Information Stock Option No. of Stock Option Weighted- Aggregate December 31, 2022 2,170,000 3.53 7,665,707 Granted 336,730 $ 1.03 345,835 Exercised - - - Expired - - - Cancelled / Forfeited (64,875 ) 3.13 (202,851 ) March 31, 2023 2,441,855 $ 3.20 7,808,691 On March 31, 2023, there were no unrecognized compensation costs related to non-vested stock options to be recognized. Share based compensation did not impact on Company’s cash flow in three months ended March 31, 2023 or year ended December 31, 2022. Restricted Stock Units (“RSUs”) A summary of the Company’s RSU activities and related information for the three months ended March 31, 2023 is as follows: Schedule of Restricted Stock Units Restricted Stock Units No. of RSU Weighted- Aggregate December 31, 2022 - - - Granted 963,528 $ 1.31 1,262,222 Exercised - - - Expired - - - Cancelled / Forfeited - - - March 31, 2023 963,528 $ 1.31 1,262,222 The fair value as of the respective vesting dates of RSUs that vested during the three months ended March 31, 2023 and 2022 was $ 857,530 0 |
Subsequent events
Subsequent events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 23. Subsequent events There were not any material subsequent events that occurred after the balance sheet date of March 31, 2023 through the date of this report. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Use of Estimates | i. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Material estimates that are particularly subject to change in the near term include the determination of the allowance for credit losses, indemnification liabilities, useful lives of intangibles and the fair value of financial instruments. Actual results could differ from the estimates. |
Basis of Presentation | ii. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, statements of shareholders’ equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the current year ending December 31, 2023. The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the years ended December 31, 2022, and 2021 included in the Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q. |
Liquidity and Going Concern | iii. Liquidity and Going Concern As of March 31, 2023, the Company had $ 8,628,752 in cash and net working capital deficit of $ 8,998,880 , as compared to $ 8,390,195 in cash and net working capital deficit of $ 39,340,020 at December 31, 2022. Included in the working capital deficit at March 31, 2023 and December 31, 2022 are $ 11,685,419 and $ 11,622,831 , respectively, which represent the equity consideration payable towards the Abaca acquisition. The Company has also incurred an operating loss of $ 1,621,669 Based upon these factors, management of the Company has determined that there is a risk of substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date these condensed consolidated financial statements have been issued. At December 31, 2022, a significant component of the working capital deficit was $ 25,973,017 11,685,419 The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result should the Company not continue as a going concern as a result of this uncertainty. |
Cash and Cash Equivalents | iv. Cash and Cash Equivalents 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 | v. Concentrations of Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained substantially 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 its PCCU pursuant to various services agreements. The Company had only one loan on its balance sheet as of March 31, 2023, which comprises 100 10 |
Accounts Receivable-PCCU and Allowance for Doubtful Accounts | vi. 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 March 31, 2023, and December 31, 2022, 81 85 At March 31, 2023 and December 31, 2022, there were no |
Loans Receivable | vii. Loans Receivable PCCU underwrites 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 credit 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 Credit Losses (ACL) | viii. Allowance for Credit Losses (ACL) In 2023, the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326), which replaced the incurred loss methodology for estimated probable credit losses with an expected credit loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The ACL is a valuation account that is deducted from the amortized cost basis of financial assets carried at their amortized cost, including loans held for investment, to present the net amount that is expected to be collected throughout the life of the financial asset. The estimated ACL is recorded through a provision for credit losses charged against operations. Management periodically evaluates the adequacy of the ACL to maintain it at a level it believes to be reasonable. The Company uses the same methods used to determine the ACL to assess any reserves needed for off-balance sheet credit risks such as unfunded loan commitments including Indemnified loans to PCCU. These reserves for off-balance sheet credit risks are presented in the liabilities section in the condensed consolidated balance sheets as an “Indemnity liability.” The ACL consists of two components: an asset-specific component for estimating credit losses for individual loans that do not share similar risk characteristics with other loans; and a pooled component for estimating credit losses for pools of loans that share similar risk characteristics. The ACL for the pooled component is derived from an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters such as probability of default (“PD”) and loss given default (“LGD”) which are derived from various vendor models and/or internally developed model estimation approaches for smaller homogenous loans. PD is projected in these models or estimation approaches using economic scenarios, whose outcomes are weighted based on the Company’s economic outlook and are developed to incorporate relevant information about past events, current conditions, and reasonable and supportable forecasts. The Company considers relevant current conditions and reasonable and supportable forecasts that relate to its lending practices and environment and the specific borrower and determines that the significant factor affecting the loan’s performance is the fact that these borrowers are involved in the cannabis business. Despite being legal at the state level in certain jurisdictions, cannabis remains federally illegal in the United States as of the date of this filing. As cannabis related lending is a new practice in the United States, there is very little historical or industry data on which to base a loss forecast. Therefore, significant judgement is required in creating a reasonable loss estimate, using similar non-MRB loans as a baseline and adjusting for the inherent risks in the cannabis industry. While the Company considers other qualitative factors, including national macroeconomic conditions, in its overall risk analysis, it has determined that they are not significant inputs to the overall loss estimate calculations. The ACL estimation process also applies an economic forecast scenario, or a composite of scenarios based on management’s judgment and expectations around the current and future macroeconomic outlook. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term of a loan excludes expected extensions, renewals, and modification under certain conditions. Recoveries on loans represent collections received on amounts that were previously charged off against the ACL. Recoveries are credited to the ACL when received, to the extent of the amount previously charged off against the ACL on the related loan. Any amounts collected in excess of this limit are first recognized as interest income, then as a reduction of collection costs, and then as other income. |
Allowance for Loan Losses | ix. Allowance for Loan Losses Prior to the adoption of CECL in 2023, the Company recognized an 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. 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 originates are 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 | x. 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 | xi. Indemnity Liability Under the Loan Servicing Agreement, PCCU, in exchange for a fee at an annual rate of 0.25 % of the outstanding principal balance, funds certain loans. Under the Loan Servicing Agreement, the Company has agreed to indemnify PCCU from all claims related to Company’s cannabis-related business, including but not limited to default-related credit losses as defined in the Loan Servicing Agreement. The indemnification component of the Loan Servicing Agreement (refer to Note 9 to the condensed consolidated financial statements) is accounted for in accordance with accounting standards codification (“ ASC”) 460 Guarantees In addition to default-related credit losses, the Company 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. On March 29, 2023, The Company and PCCU entered into the Commercial Alliance Agreement that sets forth the terms and conditions of the lending-related and account-related services governing the relationship between the Company and PCCU and supersedes the Loan Servicing Agreement, as well as the Amended and Restated Support Services Agreement and the Amended and Restated Account Servicing Agreement. |
Property and Equipment, net | xii. Property and Equipment, net Property and equipment are 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. We capitalize certain costs related to software developed for internal-use, primarily associated with the ongoing development and enhancement of our technology platform. Costs incurred in the preliminary development and post-development stages are expensed. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally five years. |
Right of use assets and lease liability | xiii. Right of use assets and lease liability The Company has entered into lease agreements for a certain facility and certain items of equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. At inception of the lease agreement, the Company assesses whether the agreement conveys the right to control the use of an identified asset for a period in exchange for consideration, in which case it is classified as a lease. Each lease is further analyzed to check whether it meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated balance sheet with a corresponding lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. The Company has elected not to recognize lease assets and lease liabilities for short-term leases (leases with a term of 12 months or less) and leases of low-value assets. Lease right-of-use assets, net and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available as of the lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Finance lease interest expense is recognized based on an effective interest method and depreciation of assets is recorded on a straight-line basis over the shorter of the lease term and useful life of the asset. Both operating and finance lease right of use assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After a right of use asset is impaired, any remaining balance of the asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life. |
Impairment of Long-Lived Assets | xiv. 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 |
Goodwill and Other Intangible Assets | xv. Goodwill and Other Intangible Assets The Company’s methodology for allocating the purchase price of an acquisition is based on established valuation techniques that reflect the consideration of a number of factors, including a valuation performed by a third-party appraiser. Goodwill is measured as the excess of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities assumed. Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value. If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill. A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. Finite-lived intangible assets are amortized over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets should be tested for impairment at the time of a triggering event, if one were to occur. Finite-lived intangible assets may be impaired when the estimated undiscounted future cash flows generated from the assets are less than their carrying amounts. |
Stock-based Compensation | xvi. Stock-based Compensation The Company measures all equity-based payment arrangements to employees and directors in accordance with ASC 718, Compensation–Stock Compensation. The Company’s stock-based compensation cost is measured based on the fair value at the grant date of the stock-based award. It is recognized as expense on a straight-line basis over the requisite service period for the entire award. Forfeitures are recognized as they occur. The Company estimates the fair value of each stock-based award on its measurement date using either the current market price of the stock or Black-Scholes option valuation model, whichever is most appropriate. The Black-Scholes valuation model incorporates assumptions such as expected term of the instrument, volatility of the Company’s future share price, risk free rates, future dividend yields and estimated forfeitures at the initial grant date, by reference to the underlying terms of the instrument, and the Company’s experience with similar instruments. Changes in assumptions used to estimate fair value could result in materially different results. The shares of the Company were listed on the Nasdaq stock exchange for a limited period of the time and also the stock price has dropped significantly from the date of listing, based on which the Company has considered the expected volatility at 100 |
Fair Value Measurements | xvii. 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. |
Revenue Recognition | xviii. Revenue Recognition SHF recognizes revenue in accordance with 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 SHF expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle 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. 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 SHF such as bank account charges, onboarding income, account activity fee income and other miscellaneous fees. In addition, SHF 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, SHF 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 consolidated 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 of America. |
Contract Assets / Contract Liabilities | xix. 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 March 31, 2023, the Company reported contract assets and contract liabilities of $ 34,189 79,612 21,170 996 |
Warrants Liability | xx. 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 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 condensed consolidated statement of operations. |
Forward purchase derivative | xxi. Forward purchase derivative The Company accounts for the forward purchase derivative assumed in the business combination in accordance with the guidance contained in ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company classifies the forward purchase derivatives as liabilities carried at their fair value and adjusts the forward purchase derivatives to fair value at each reporting period. This derivative asset or liability is subject to re-measurement at each balance sheet date until the conditions under the forward purchase agreement are exercised or expire, and any change in fair value is recognized in the condensed consolidated statement of operations. |
Earnings Per Share | xxii. Earnings Per Share Basic and diluted earnings per share are computed and disclosed in accordance with ASC Topic 260, Earnings Per Shares. 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 (Refer to Note 17). 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 | xxiii. 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. Prior to the merger, the Company was a pass-through entity for tax purposes. 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. 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 30.13 % and 0 % for the three months ended March 31, 2023 and March 31, 2022, respectively. The effective tax rate differs from the statutory tax rate of 21 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 no |
Offering Costs | xxiv. Offering Costs Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the PIPE offering. Offering costs are allocated to the separable financial instruments issued 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 Parent-Entity Net Investment and Stockholders’ Equity upon the completion of the Initial Public Offering. |
Recently Issued Accounting Standards | xxv. 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 are not expected to have a material impact on the Company’s financial position or results of operations upon adoption. Adopted Standards Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity In August 2020, the FASB issued ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. ASU 2020-06 was effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020. The Company early adopted the new standard during fiscal year 2021. Current Expected 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 deficit. The Company has adopted ASU 2016-13 as of January 1, 2023, utilizing the modified retrospective method. CECL Transition Impact: The table below provides details on the transition impacts of adopting CECL. Other balance sheet lines not presented were not affected by CECL. CECL Transition Impact: Schedule of Current Expected Credit Losses Transition Impact Assets December 31, 2022 Transition Adjustment January 1, Loans receivable, gross $ 1,323,479 $ - $ 1,323,479 Less: Allowance for credit loss (21,488 ) (14,980 ) (36,468 ) $ 1,301,991 $ (14,980 ) $ 1,287,011 Liabilities & Equity December 31, 2022 Transition Adjustment January 1, Indemnity liability $ 499,465 $ 566,341 $ 1,065,806 Retained deficit (39,695,281 ) (581,321 ) (40,276,602 ) $ (39,195,816 ) $ (14,980 ) $ (39,210,796 ) Lease Accounting FASB ASU 2016-02, Leases, (“ASC 842”) and related amendments, require lessees to recognize a right-of-use asset and a lease liability for substantially all leases and to disclose key information about leasing arrangements and aligns certain underlying principles of the lessor model with the revenue standard. The Company adopted this guidance during fiscal year 2022 using the optional transition method, which allows entities to apply the guidance at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings, if any, in the period of adoption with no restatement of comparative periods. At January 1, 2022 adoption date, there were no leases outstanding that met criteria for recognition. The Company has since recognized any leases in accordance with ASC 842 by recording right-of-use assets and operating lease liabilities on the balance sheet. Troubled Debt Restructurings and Vintage Disclosures This Accounting Standard Update (ASU 2022-02) eliminates the recognition and measurement guidance on troubled debt restructurings for creditors that have adopted ASC 326 and requires them to make enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The new guidance also requires public business entities to present current period gross write-offs (on a current year-to-date basis for interim-period disclosures) by year of origination in their vintage disclosures. For entities that have adopted ASU 2016-13, this ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company did not adopt ASU 2022-02 as of December 31, 2022; however, it has adopted this standard as of January 1, 2023 and the ASU has not had a material impact on the Company’s condensed consolidated financial statements. Standards Pending to be Adopted Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions This Accounting Standard Update (ASU 2022-03) clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value. Recognizing a contractual restriction on the sale of an equity security as a separate unit of account is not permitted. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not expect this ASU to have a material impact on its condensed consolidated financial statements. Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 This Accounting Standard Update (ASU 2022-06) defers the Sunset Date of ASC Topic 848, Reference Rate Reform (Topic 848), which provides temporary optional relief in accounting for the impact of Reference Rate Reform. This ASU is effective upon issuance (December 21, 2022) and generally can be applied through December 31, 2024. The Company does not expect this ASU to have a material impact on its condensed consolidated financial statements. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Current Expected Credit Losses Transition Impact | Schedule of Current Expected Credit Losses Transition Impact Assets December 31, 2022 Transition Adjustment January 1, Loans receivable, gross $ 1,323,479 $ - $ 1,323,479 Less: Allowance for credit loss (21,488 ) (14,980 ) (36,468 ) $ 1,301,991 $ (14,980 ) $ 1,287,011 Liabilities & Equity December 31, 2022 Transition Adjustment January 1, Indemnity liability $ 499,465 $ 566,341 $ 1,065,806 Retained deficit (39,695,281 ) (581,321 ) (40,276,602 ) $ (39,195,816 ) $ (14,980 ) $ (39,210,796 ) |
Business Combination (Tables)
Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Fair Value Net Assets | Schedule of Fair Value Net Assets Cash & Cash Equivalents $ 2,879 Prepaid Expense 15,000 Cash held in Trust 118,738,861 Deferred offering cost 266,240 Accounts Payable (1,374,021 ) Accrued Expense (1,202,164 ) Advance from sponsor (1,150,000 ) Deferred underwriter payable (4,025,000 ) Forward purchase derivative (795,942 ) Warrant Liability (1,394,453 ) Class A Common Stock subject to possible redemption (79,259,819 ) Fair value of net assets acquired 29,821,581 |
Schedule of Fair Value Consideration | Schedule of Fair Value Consideration Company’s Class A common stock comprises of 11,386,139 115,000,000 Cash consideration 13,050,199 Deferred cash consideration 56,949,801 Total fair value of consideration 185,000,000 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Acquisition [Line Items] | |
Schedule of Purchase Price Allocation | The following table summarizes the purchase price allocation: Schedule of Purchase Price Allocation Property, plant & equipment $ 27,117 Software 9,189 Cash & cash equivalents 245,524 Prepaid expense 23,061 Security deposit 675 Accounts receivables 232,265 Accounts Payable (206,508 ) Accrued Expense (235,894 ) Fair value of net assets acquired $ 95,429 Other intangibles 10,800,000 Goodwill 19,266,276 Deferred tax liabilities (1,758,769 ) Total purchase consideration $ 28,402,936 |
Schedule of Fair Value Consideration | Schedule of Fair Value Consideration Company’s Class A common stock comprises of 11,386,139 115,000,000 Cash consideration 13,050,199 Deferred cash consideration 56,949,801 Total fair value of consideration 185,000,000 |
Schedule of Intangible Assets and Related Useful Lives as Included in Purchase Price Allocation | Schedule of Intangible Assets and Related Useful Lives as Included in Purchase Price Allocation Amount Useful life in Market related intangible assets $ 2,100,000 8 Customer relationships 2,000,000 10 Developed technology 6,700,000 10 Fair value of consideration $ 10,800,000 |
Abacha [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value Consideration | The following table summarizes the total fair value of consideration: Schedule of Fair Value Consideration Cash paid $ 2,763,800 Deferred cash payment 5,452,424 Share issued – common stock ( 2,099,977 8,105,911 Settlement of pre-existing notes along with accrued interest 523,404 Future consideration settled in common stock 11,557,397 Fair value of consideration $ 28,402,936 |
Goodwill and other intangibles
Goodwill and other intangibles (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amount of Goodwill | The change in the carrying amount of goodwill from December 31, 2022, to March 31, 2023, is as follows: Schedule of Carrying Amount of Goodwill December 31, 2022 $ 19,266,276 Acquisition of Abaca - March 31, 2023 $ 19,266,276 |
Schedule of Finite Lived Intangible Assets | The following is a summary of the Company’s finite-lived intangible assets as of March 31, 2023: Schedule of Finite Lived Intangible Assets Finite-lived intangible assets, net Acquired in Amortization Finite-lived intangible assets, net Remaining December 31, Acquired in Amortization March 31, Market related intangible assets 8 2,066,918 - 65,625 2,001,293 Customer relationships 10 1,974,795 - 50,000 1,924,795 Developed technology 7 6,579,374 - 239,286 6,340,088 Total intangible assets 10,621,087 - 354,911 10,266,176 Following is a summary of the Company’s finite-lived intangible assets as of December 31, 2022. Acquired in acquisition Amortization Finite-lived intangible assets, net Remaining December 31, Acquired Amortization December 31, Market related intangible assets 8 - $ 2,100,000 $ 33,082 $ 2,066,918 Customer relationships 10 - 2,000,000 25,205 1,974,795 Developed technology 7 - 6,700,000 120,626 6,579,374 Total intangible assets $ 10,800,000 $ 178,913 $ 10,621,087 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, December 31, Commercial real estate loans receivable, gross $ 413,292 $ 1,432,560 Less: loan origination charges (103,476 ) (109,081 ) Commercial real estate loans receivable, net 309,816 1,323,479 Allowance for credit losses (21,078 ) (21,488 ) Commercial real estate loans receivable, net 288,738 1,301,991 Current portion (11,728 ) (51,300 ) Noncurrent portion $ 277,010 $ 1,250,691 |
Schedule of Allowance For Loan Losses | The allowance for credit losses consist of the following activity for the three months ended March 31, 2023 and year ended March 31, 2022: Schedule of Allowance For Loan Losses March 31, March 31, Allowance for credit losses Beginning balance $ 21,488 $ 14,741 Cumulative effect from adoption of CECL 14,980 - Charge-offs - - Recoveries (15,390 ) - Provision - 9,805 Ending balance $ 21,078 $ 24,546 Loans receivable: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 413,292 1,465,482 $ 413,292 $ 1,465,482 Allowance for credit losses: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 21,078 24,546 $ 21,078 $ 24,546 |
Indemnification liability (Tabl
Indemnification liability (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Indemnification Liability | |
Schedule of Outstanding Amounts | Schedule of Outstanding Amounts March 31, December 31, Secured term loans $ 16,300,000 $ 15,300,000 Unsecured loans and lines of credit 3,791,428 3,598,042 Total loans funded by Parent $ 20,091,428 $ 18,898,042 |
Schedule of Indemnity Liability | The indemnity liability activity are as follows: Schedule of Indemnity Liability Three Months March 31, 2023 Three Months March 31, 2022 Beginning balance $ 499,465 $ - Cumulative effect from adoption of CECL 566,341 - Charge-offs - - Recoveries - - Provision 82,026 58,386 Ending balance $ 1,147,832 $ 58,386 |
Schedule of Provision for Loan Losses | The provision for credit losses on the statement of operations consists of the following activity for the three months ended March 31, 2023 and year ended December 31, 2022: Schedule of Provision for Loan Losses Commercial Indemnity Total Commercial Indemnity Total March 31, 2023 March 31, 2022 Commercial Indemnity Total Commercial Indemnity Total Provision (benefit) $ (15,390 ) $ 82,056 $ 66,666 $ 9,805 $ 58,386 $ 68,191 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment consist of the following: Schedule of Property and Equipment, Net March 31, 2023 December 31, Equipment $ 45,397 $ 45,397 Software 51,692 51,692 Improvement 71,635 71,635 Office furniture 200,831 7,070 Property and equipment, gross 369,555 175,794 Less: accumulated depreciation (167,584 ) (126,180 ) Property and equipment, net $ 201,971 $ 49,614 |
Related party transactions (Tab
Related party transactions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Demonstrated Deposit Capacity | Schedule of Demonstrated Deposit Capacity March 31, 2023 December 31, PCCU total assets $ 699,228,293 $ 695,072,554 Capacity at 65% 454,498,390 451,797,160 CRB related deposits 213,645,529 161,138,975 Incremental capacity $ 240,852,861 $ 290,658,185 |
Loan Servicing Agreement [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Demonstrated Deposit Capacity | Schedule of Demonstrated Deposit Capacity March 31, December 31, CRB related deposits $ 213,645,529 $ 161,138,975 Capacity at 60% 128,187,317 96,683,385 PCCU net worth 92,411,928 133,231,565 Capacity at 1.3125 121,290,656 174,866,429 Limiting capacity 121,290,656 174,866,429 PCCU loans funded 20,091,428 18,898,042 Amounts available under lines of credit 846,958 996,958 Incremental capacity $ 100,352,270 $ 154,971,429 |
Due to Seller (Tables)
Due to Seller (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Due To Seller | |
Schedule of Amounts Due to Seller | Amounts due to seller were as follows: Schedule of Amounts Due to Seller March 31, December 31, Due to Seller-Current (Unsecured) $ - $ 25,973,017 Due to Seller-long term (Unsecured) - 30,976,783 Total loans funded by Parent $ - $ 56,949,800 |
Schedule of Breakdown of Liabilities Settled | Schedule of Breakdown of Liabilities Settled Due to Seller $ 56,949,800 Cash payment obligation under business combination 3,143,389 Business combination expense payable to seller 1,069,359 Interest accrued but not paid 1,337,843 Total deferred obligation 62,500,391 Less: Senior secured promissory note 14,500,000 Less: Change in deferred tax 9,593,983 Amount charged to Stockholders’ Equity towards issuance of common stock $ 38,406,408 |
Senior Secured Promissory Note
Senior Secured Promissory Note (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Secured Promissory Note | Schedule of Senior Secured Promissory Note March 31, December 31, Senior Secured Promissory Note (Current) $ 1,229,376 $ - Senior Secured Promissory Note (long term) 13,270,624 - Total $ 14,500,000 $ - |
Schedule of Outstanding Amount on Debt | The repayment schedule of the outstanding amount on March 31, 2023 is as follows: Schedule of Outstanding Amount on Debt Year of payment 2023 $ 488,834 2024 3,006,992 2025 3,138,932 2026 3,274,966 2027 3,416,896 2028 1,173,380 Grand total $ 14,500,000 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of Lease Cost | Schedule of Lease Cost Three months ended March 31, 2023 (Unaudited) Year ended December 31, 2022 (Audited) Three months ended March 31, 2023 Year ended December 31, 2022 Operating lease cost $ - $ - Short-term lease cost 87,742 99,246 Total Lease Cost $ 87,742 $ 99,246 |
Schedule of Right Of Use Assets | Schedule of Right Of Use Assets ROU assets that are related to lease properties are presented as follows: Beginning balance $ 1,016,198 $ - Additions to right-of-use assets - 1,029,226 Amortization charge for the period (39,085 ) (13,028 ) Lease modifications - - Ending balance $ 977,113 $ 1,016,198 Further information related to leases is as follows: Weighted-average remaining lease term 4.29 4.42 Weighted-average discount rate 6.87 % 6.87 % |
Schedule of Future Minimum Lease Payments | Future minimum lease payments as of March 31, 2023, and December 31, 2022, are as follows: Schedule of Future Minimum Lease Payments Year 2023 $ 91,303 $ 91,303 2024 197,520 197,520 2025 217,925 217,925 2026 222,275 222,275 2027 226,705 226,705 Thereafter 348,926 348,926 Total future minimum lease payments $ 1,304,654 $ 1,304,654 Less: Imputed interest 258,659 276,421 Operating lease liabilities 1,045,995 1,028,233 Less: Current portion 66,726 20,124 Non-current portion of lease liabilities $ 979,269 $ 1,008,109 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | Revenue by type are as follows: Schedule of Disaggregated Revenue 2023 2022 Three months ended March 31 2023 2022 Deposit, activity, onboarding income $ 2,245,831 $ 1,466,869 Safe Harbor Program income 51,103 43,019 Investment income 1,417,152 93,986 Loan interest income 466,293 67,236 Total Revenue $ 4,180,379 $ 1,671,110 |
Deferred underwriter fee (Table
Deferred underwriter fee (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets [Table Text Block] | In connection with the business combination (refer to Note 3), the Company executed a note on September 28, 2022 with EF Hutton related to PIPE financing under which the Company was obligated to pay the principal sum of $ 2,166,250 715,750 362,625 The Company made the payment of its first installment of $ 715,750 1,450,500 550,000 900,500 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earning Per Shares, Basic and Diluted | Schedule of Earning Per Shares, Basic and Diluted Three months ended March 31, 2023 Net loss $ (1,413,447 ) Weighted average shares outstanding – basic 25,670,730 Basic net loss per share $ (0.06 ) Weighted average shares outstanding – diluted 25,670,730 Diluted net loss per share $ (0.06 ) Weighted average shares calculation As on March 31, 2023 Company public shares 3,926,598 Company initial stockholders 3,403,175 PCCU stockholders 11,759,472 Shares issued for abaca acquisition 2,099,977 Restricted stock units issued 566,755 Conversion of preferred stock 3,914,753 Weighted average shares outstanding 25,670,730 |
Schedule of Awards Excluded | Schedule of Awards Excluded March 31, Warrants 7,036,588 Share based payments 2,775,655 Shares to be issued to Abaca acquisition 6,433,839 Conversion of preferred stock 10,896,000 Total 27,142,082 |
Forward Purchase Agreement (Tab
Forward Purchase Agreement (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Forward Purchase Agreement | |
Schedule of Forward Purchase Agreement | Schedule of Forward Purchase Agreement On the date of (September 28, 2022) Share sold during September 29, 2022 As at December 31, 2022 S.no Name of the Opening (a) Amount Shares (b) Amount Shares (c=a-b) Rest (iii) Amount (c x iii) 1 Vellar 1,025,000 $ 10,583,246 53,796 $ 524,472 971,204 1.25 $ 1,214,005 2 Midtown East 1,599,496 16,514,986 81,572 832,850 1,517,924 1.25 1,897,405 3 Verdun 1,180,376 12,187,522 2,127 21,962 1,178,249 1.25 1,472,811 Grand total 3,804,872 $ 39,285,754 137,495 $ 1,379,284 3,667,377 $ 4,584,221 As at December 31, 2022 Share sold during the three months As at Opening Shares Shares Shares Rest price Amount S.no Name of the party (a) Amount (b) Amount (c=a-b) (iii) (c x iii) 1 Vellar 971,204 $ 1,214,005 - - 971,204 1.25 $ 1,214,005 2 Midtown East 1,517,924 1,897,405 - - 1,517,924 1.25 1,897,405 3 Verdun 1,178,249 1,472,811 - - 1,178,249 1.25 1,472,811 Grand total 3,667,377 $ 4,584,221 - - 3,667,377 $ 4,584,221 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis | 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 March 31, 2023 and December 31,2022: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis March 31, 2023: Total Fair Quoted Prices Significant (Level 3) Description Liabilities: Public warrants $ 150,650 150,650 - Private placement warrants 7,953 - 7,953 PIPE Warrants 74,762 - 74,762 Forward purchase option derivative 7,309,580 - 7,309,580 Liabilities,fair value 7,309,580 - 7,309,580 December 31, 2022: Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Description Liabilities: Public warrants $ 361,100 361,100 - Private placement warrants 19,110 - 19,110 PIPE Warrants 286,300 - 286,300 Forward purchase option derivative 7,309,580 - 7,309,580 Liabilities, fair value 7,309,580 - 7,309,580 |
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 Level 1 Level 2 Level 3 As on March 31, 2023 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 8,628,752 $ 8,628,752 $ 8,628,752 - - Forward purchase receivables 4,584,221 4,584,221 4,584,221 - - Loans 413,292 365,781 - - 365,781 Liabilities Deferred consideration 17,272,308 17,272,308 17,272,308 - - Senior Secured Promissory note 14,500,000 14,500,000 14,500,000 - - Indemnity liability 1,147,832 1,147,832 1,147,832 - - Public warrants 150,650 150,650 150,650 - - Private placement warrants 7,953 7,953 - - 7,953 PIPE Warrants 74,762 74,762 - - 74,762 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 Level 1 Level 2 Level 3 As on December 31, 2022 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 8,390,195 $ 8,390,195 $ 8,390,195 - - Forward purchase receivables 4,584,221 4,584,221 4,584,221 - Loans 1,301,991 1,241,761 - - 1,241,761 Liabilities Deferred consideration 14,359,822 14,359,822 14,359,822 - - Due to seller - current portion 25,973,017 25,973,017 25,973,017 - - Due to seller - long term position 30,976,783 30,976,783 30,976,783 - - Deferred underwriter fee payable 1,450,500 1,450,500 1,450,500 - - Indemnity liability 499,465 499,465 499,465 - - Public warrants 361,100 361,100 361,100 - - Private placement warrants 19,110 19,110 - - 19,110 PIPE Warrants 286,300 286,300 - - 286,300 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 |
Schedule of Fair Value Assets Measured on Recurring Basis | 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: Schedule of Fair Value Assets Measured on Recurring Basis PIPE Private Forward For the three months ended March 31, 2023 PIPE Private Forward Balance at the beginning of the period $ 286,300 19,110 7,309,580 Fair value adjustment (211,538 ) (11,157 ) - Balance at the end of the period $ 74,762 7,953 7,309,580 |
Schedule of Level 3 Fair Value Measurements Inputs | The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the private placement warrants and public warrants as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs As on March 31, 2023 PIPE Warrants Private placement Exercise price $ 5.00 $ 11.50 Share Price $ 0.51 $ 0.51 Expected term (years) 4.49 4.49 Volatility 73.2 % 73.2 % Risk-free rate 3.62 % 3.62 % As on December 31,2022 PIPE Warrants Private placement warrants Exercise price $ 5.00 $ 11.50 Share Price $ 1.78 $ 1.78 Expected term (years) 4.74 4.74 Volatility 46.00 % 46.00 % Risk-free rate 4.00 % 3.98 % |
Purchase Agreement Option [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Level 3 Fair Value Measurements Inputs | The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the forward purchase derivatives as of their measurement dates on March 31,2023 and December 31,2022: Schedule of Level 3 Fair Value Measurements Inputs March 31, 2023 Reset Price $ 5.00 Expected term (years) 2.74 Additional maturity consideration per share $ 2.00 Volatility 46 % Risk-free rate 4.2 % Risk-adjusted discount rate 13.4 % December 31, 2022 Reset Price $ 5.00 Expected term (years) 2.74 Additional maturity consideration per share $ 2.00 Volatility 46 % Risk-free rate 4.2 % Risk-adjusted discount rate 13.4 % |
Share based compensation (Table
Share based compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Fair Value of Options Granted Black-Scholes-Merton Model | The assumptions used to determine the fair value of options granted in the three months ended March 31, 2023, using the Black-Scholes-Merton model are as follows: Schedule of Fair Value of Options Granted Black-Scholes-Merton Model Dividend yield 0 % Risk-free interest rate 3.62 % to 4.23 % Expected volatility (weighted-average and range, if applicable) 100 % Expected term 6 to 6.5 years |
Schedule of Stock Option and Related Information | A summary of the Company’s stock option activities and related information for the three months ended March 31, 2023 is as follows: Schedule of Stock Option and Related Information Stock Option No. of Stock Option Weighted- Aggregate December 31, 2022 2,170,000 3.53 7,665,707 Granted 336,730 $ 1.03 345,835 Exercised - - - Expired - - - Cancelled / Forfeited (64,875 ) 3.13 (202,851 ) March 31, 2023 2,441,855 $ 3.20 7,808,691 |
Schedule of Restricted Stock Units | A summary of the Company’s RSU activities and related information for the three months ended March 31, 2023 is as follows: Schedule of Restricted Stock Units Restricted Stock Units No. of RSU Weighted- Aggregate December 31, 2022 - - - Granted 963,528 $ 1.31 1,262,222 Exercised - - - Expired - - - Cancelled / Forfeited - - - March 31, 2023 963,528 $ 1.31 1,262,222 |
Organization and Business Ope_2
Organization and Business Operations (Details Narrative) - USD ($) | 3 Months Ended | ||||||||
Mar. 29, 2023 | Mar. 29, 2023 | Nov. 15, 2022 | Oct. 31, 2022 | Sep. 28, 2022 | Feb. 11, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Jul. 31, 2021 | |
Business combination, consideration transferred | $ 10,850,000 | ||||||||
Payments to acquire businesses | 3,143,389 | ||||||||
Cash and cash equivalents | $ 8,628,752 | $ 8,390,195 | |||||||
Secured debt | $ 56,949,800 | $ 56,949,800 | |||||||
Debt instrument, face amount | $ 14,500,000 | $ 14,500,000 | |||||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.25% | 4.71% | ||||||
Stock issued during period, shares, new issues | 11,200,000 | 11,200,000 | |||||||
Partner Colorado Credit Union [Member] | |||||||||
Equity method investment, ownership percentage | 55.92% | ||||||||
Common Class A [Member] | Partner Colorado Credit Union [Member] | |||||||||
Equity method investment, ownership percentage | 54.93% | 54.93% | |||||||
Safe Harbour Financial LLC [Member] | |||||||||
Business combination, consideration transferred | $ 185,000,000 | ||||||||
Number of shares issued in acquisition transaction value | 115,000,000 | ||||||||
Payments to acquire businesses | 70,000,000 | $ 70,000,000 | |||||||
Deferred costs | $ 56,949,801 | ||||||||
Cash and cash equivalents | $ 3,143,388 | ||||||||
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 | ||||||||
Shares to be held in escrow | 1,831,683 | ||||||||
Abacha [Member] | |||||||||
Business combination, consideration transferred | $ 28,402,936 | ||||||||
Payments to acquire businesses | 2,763,800 | ||||||||
Stock issued during period, value, acquisitions | 8,105,911 | ||||||||
Outstanding note balance plus accrued interest | 500,000 | ||||||||
Abacha [Member] | Merger Agreement [Member] | |||||||||
Business combination, consideration transferred | 30,000,000 | $ 30,000,000 | |||||||
Payments to acquire businesses | 9,000,000 | 9,000,000 | |||||||
Outstanding note balance plus accrued interest | 500,000 | 500,000 | |||||||
Abacha [Member] | Merger Closing [Member] | |||||||||
Payments to acquire businesses | 3,000,000 | 3,000,000 | |||||||
Abacha [Member] | Two Year Anniversaries [Member] | |||||||||
Payments to acquire businesses | $ 3,000,000 | $ 3,000,000 | |||||||
Abacha [Member] | Common Class A [Member] | Merger Agreement [Member] | |||||||||
Stock issued during period, shares, acquisitions | 2,100,000 | 2,100,000 | |||||||
Stock issued during period, value, acquisitions | $ 12,600,000 | $ 12,600,000 |
Schedule of Current Expected Cr
Schedule of Current Expected Credit Losses Transition Impact (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Jan. 01, 2023 | Dec. 31, 2022 | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Indemnity liability | $ 1,147,862 | $ 499,465 | |
Retained earning | (46,695,249) | (39,695,281) | |
Liabilities & Equity | (89,120,578) | (99,342,856) | |
Cumulative Effect, Period of Adoption, Adjustment [Member] | |||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Loans receivable, gross | |||
custom:AllowanceForLoanLosses | (14,980) | ||
Loans receivable, net | (14,980) | ||
Indemnity liability | 566,341 | ||
Retained earning | (581,321) | ||
Liabilities & Equity | $ (14,980) | ||
Credit Expected Credit Losses Transition [Member] | |||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Loans receivable, gross | $ 1,323,479 | 1,323,479 | |
Less: Allowance for credit loss | (36,468) | (21,488) | |
Loans receivable, net | 1,287,011 | 1,301,991 | |
Indemnity liability | 1,065,806 | 499,465 | |
Retained earning | (40,276,602) | (39,695,281) | |
Liabilities & Equity | $ (39,210,796) | $ (39,195,816) |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||
Cash and Cash Equivalents, at Carrying Value | $ 8,628,752 | $ 8,390,195 | |
Working capital | 8,998,880 | $ 39,340,020 | |
Operating income loss | 1,621,669 | $ (501,600) | |
Non-cash liability | $ 11,685,419 | ||
Percentage of total loans receivables | 100% | ||
Percentage of loans receivables | 10% | ||
Accounts receivable percentage | 81% | 85% | |
Allowance for doubtful accounts | $ 0 | $ 0 | |
Debt Instrument, Interest Rate, Stated Percentage | 0.25% | ||
Impairment of long-lived asset | $ 0 | 0 | |
Expected volatility rate | 100% | ||
Contract assets | $ 34,189 | 21,170 | |
Contract liabilities | $ 79,612 | 996 | |
Effective income tax rate continuing operations | 30.13% | 0% | |
Effective tax rate differs from the statutory tax rate | 21% | ||
Unrecognized tax benefits | $ 0 | 0 | |
Accrued for interest and penalties, amount | $ 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 | ||
Partner Colorado Credit Union [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Working capital | 25,973,017 | ||
Abaca Acquisition [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 11,685,419 | $ 11,622,831 |
Schedule of Fair Value Net Asse
Schedule of Fair Value Net Assets (Details) | Sep. 28, 2022 USD ($) |
Business Combination and Asset Acquisition [Abstract] | |
Cash & Cash Equivalents | $ 2,879 |
Prepaid Expense | 15,000 |
Cash held in Trust | 118,738,861 |
Deferred offering cost | 266,240 |
Accounts Payable | (1,374,021) |
Accrued Expense | (1,202,164) |
Advance from sponsor | (1,150,000) |
Deferred underwriter payable | (4,025,000) |
Forward purchase derivative | (795,942) |
Warrant Liability | (1,394,453) |
Class A Common Stock subject to possible redemption | (79,259,819) |
Fair value of net assets acquired | $ 29,821,581 |
Schedule of Fair Value Consider
Schedule of Fair Value Consideration (Details) - USD ($) | 3 Months Ended | |||
Nov. 15, 2022 | Sep. 28, 2022 | Feb. 11, 2022 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | ||||
Deferred cash consideration | $ 1,069,359 | |||
Total fair value of consideration | 10,850,000 | |||
Cash paid | 3,143,389 | |||
Fair value of consideration | $ 10,850,000 | |||
Safe Harbour Financial LLC [Member] | ||||
Business Acquisition [Line Items] | ||||
Company’s Class A common stock comprises of 11,386,139 shares | $ 115,000,000 | |||
Cash consideration | 13,050,199 | |||
Deferred cash consideration | 56,949,801 | |||
Total fair value of consideration | 185,000,000 | |||
Cash paid | 70,000,000 | $ 70,000,000 | ||
Fair value of consideration | $ 185,000,000 | |||
Abacha [Member] | ||||
Business Acquisition [Line Items] | ||||
Total fair value of consideration | $ 28,402,936 | |||
Cash paid | 2,763,800 | |||
Deferred cash payment | 5,452,424 | |||
Share issued – common stock (2,099,977 shares) | 8,105,911 | |||
Settlement of pre-existing notes along with accrued interest | 523,404 | |||
Future consideration settled in common stock | 11,557,397 | |||
Fair value of consideration | $ 28,402,936 |
Schedule of Fair Value Consid_2
Schedule of Fair Value Consideration (Details) (Parenthetical) - shares | Nov. 15, 2022 | Sep. 28, 2022 |
Business Acquisition [Line Items] | ||
Common stock comprises, shares | 11,386,139 | |
Common Stock [Member] | Abacha [Member] | ||
Business Acquisition [Line Items] | ||
Common stock, shares | 2,099,977 |
Business Combination (Details N
Business Combination (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Mar. 29, 2023 | Mar. 29, 2023 | Sep. 28, 2022 | Feb. 11, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Jan. 25, 2023 | Jul. 31, 2021 | |
Business Acquisition [Line Items] | ||||||||
Business combination | $ 10,850,000 | |||||||
Cash consideration | $ 3,143,389 | |||||||
Interest rate | 0.25% | |||||||
Goodwill | $ 44,102,572 | |||||||
Preferred stock, shares authorized | 1,250,000 | 1,250,000 | ||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | ||||||
Preferred stock, shares issued | 10,896 | 14,616 | ||||||
Preferred stock, shares outstanding | 10,896 | 14,616 | ||||||
Conversion price | $ 10 | |||||||
Conversion of stock description | (i) 80% of the volume weighted average price of the Class A Common Stock for the prior five trading days and (ii) $2.00 (the “Floor Price”), provided that, so long as a preferred stock holders continues to hold any preferred shares, such preferred stock holder will be entitled to receive the aggregate shares of Class A Common Stock that would be issuable based upon its initial purchase of preferred stock at the adjusted Conversion Price . | |||||||
Common stock, shares authorized | 130,000,000 | 130,000,000 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||||
Common stock, shares issued | 40,288,817 | 23,732,889 | ||||||
Common stock, shares outstanding | 40,288,817 | 23,732,889 | ||||||
Secured debt | $ 56,949,800 | $ 56,949,800 | ||||||
Debt instrument, face amount | $ 14,500,000 | $ 14,500,000 | ||||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.25% | 4.71% | |||||
Number of shares issued | 11,200,000 | 11,200,000 | ||||||
Maximum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Share price | $ 2 | |||||||
Minimum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Share price | $ 1.25 | |||||||
Board of Directors [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Preferred stock, shares authorized | 1,250,000 | |||||||
Preferred stock, par value | $ 0.0001 | |||||||
December 15, 2022 [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Deferred consideration payable | $ 21,949,800 | |||||||
Common Class A [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Share price | $ 18 | |||||||
Common stock, shares authorized | 130,000,000 | |||||||
Common stock, par value | $ 0.0001 | |||||||
Common stock, shares outstanding | 3,667,377 | |||||||
Safe Harbour Financial LLC [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash | $ 3,100,000 | |||||||
Business combination | 185,000,000 | |||||||
Cash proceeds frm acquistion | 56,949,800 | $ 56,900,000 | ||||||
Cash consideration | 70,000,000 | $ 70,000,000 | ||||||
Deferred consideration payable | 38,500,002 | |||||||
Interest rate | 4.71% | |||||||
Deferred consideration payable | 1,200,000 | |||||||
Transferred to additional paid in capital | $ 9,124,297 | |||||||
Safe Harbour Financial LLC [Member] | December 15, 2022 [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Deferred consideration payable | 21,900,000 | |||||||
Safe Harbour Financial LLC [Member] | Six Equal Installments [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Deferred consideration payable | $ 6,416,667 | 35,000,000 | ||||||
Safe Harbour Financial LLC [Member] | There After [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Deferred consideration payable | $ 6,400,000 | |||||||
Safe Harbour Financial LLC [Member] | Common Class B [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shares converted | 2,875,000 | |||||||
Safe Harbour Financial LLC [Member] | Common Class A [Member] | ||||||||
Business Acquisition [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] | ||||||||
Business Acquisition [Line Items] | ||||||||
Shares issued during acquisitions, shares | 20,450 | |||||||
Shares issued during acquisitions | $ 20,450,000 | |||||||
Share price per share | $ 10 |
Schedule of Purchase Price Allo
Schedule of Purchase Price Allocation (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Nov. 15, 2022 | Sep. 28, 2022 |
Business Acquisition [Line Items] | ||||
Cash & cash equivalents | $ 2,879 | |||
Prepaid expense | 15,000 | |||
Accounts Payable | (1,374,021) | |||
Fair value of net assets acquired | $ 29,821,581 | |||
Goodwill | $ 19,266,276 | $ 19,266,276 | ||
Abacha [Member] | ||||
Business Acquisition [Line Items] | ||||
Property, plant & equipment | $ 27,117 | |||
Software | 9,189 | |||
Cash & cash equivalents | 245,524 | |||
Prepaid expense | 23,061 | |||
Security deposit | 675 | |||
Accounts receivables | 232,265 | |||
Accounts Payable | (206,508) | |||
Accrued Expense | (235,894) | |||
Fair value of net assets acquired | 95,429 | |||
Other intangibles | 10,800,000 | |||
Goodwill | 19,266,276 | |||
Deferred tax liabilities | (1,758,769) | |||
Total purchase consideration | $ 28,402,936 |
Schedule of Intangible Assets a
Schedule of Intangible Assets and Related Useful Lives as Included in Purchase Price Allocation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Fair value of consideration | $ 10,800,000 | |
Marketing-Related Intangible Assets [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Fair value of consideration | $ 2,100,000 | |
Developed technology | 8 years | 8 years |
Customer Relationships [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Fair value of consideration | $ 2,000,000 | |
Developed technology | 10 years | 10 years |
Developed Technology Rights [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Fair value of consideration | $ 6,700,000 | |
Developed technology | 10 years |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | 3 Months Ended | ||
Nov. 15, 2022 | Oct. 31, 2022 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | |||
Business combination, consideration transferred | $ 10,850,000 | ||
Payments to acquire businesses | 3,143,389 | ||
Acquisition costs | $ 236,200 | ||
Abacha [Member] | |||
Business Acquisition [Line Items] | |||
Acquisition transactions percentage | 100% | ||
Outstanding note balance plus accrued interest | $ 500,000 | ||
Business combination, consideration transferred | $ 28,402,936 | ||
Business combination, cash consideration description | cash consideration in an amount equal to (i) $9,000,000 ($3,000,000 was payable at the closing of the Mergers (the “Merger Closing”), with an additional $3,000,000 payable at each of the one-year and two-year anniversaries of the Merger Closing), (collectively, the “Deferred Cash Consideration”); and | ||
Payments to acquire businesses | $ 2,763,800 | ||
Business acquisition, description | Common Stock equal to the lesser of (1) 2,100,000 shares or (2) a number of shares equal to (i) $8,400,000, divided by (ii) the Closing Parent Trading Price and $12,600,000 (minus an outstanding note balance of $500,000, plus accrued interest) in shares of Class A Common Stock at the one-year anniversary of the Merger Closing based on a 10-day VWAP (collectively, the “Future stock consideration”). | ||
Stock issued during period, value, acquisitions | $ 8,105,911 | ||
Abacha [Member] | Merger Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Outstanding note balance plus accrued interest | 500,000 | $ 500,000 | |
Business combination, consideration transferred | 30,000,000 | 30,000,000 | |
Payments to acquire businesses | $ 9,000,000 | $ 9,000,000 | |
Abacha [Member] | Merger Agreement [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Stock issued during period, shares, acquisitions | 2,100,000 | 2,100,000 | |
Stock issued during period, value, acquisitions | $ 12,600,000 | $ 12,600,000 | |
Abacha [Member] | Merger Closing [Member] | |||
Business Acquisition [Line Items] | |||
Payments to acquire businesses | 3,000,000 | 3,000,000 | |
Abacha [Member] | Two Year Anniversaries [Member] | |||
Business Acquisition [Line Items] | |||
Payments to acquire businesses | $ 3,000,000 | $ 3,000,000 |
Schedule of Carrying Amount of
Schedule of Carrying Amount of Goodwill (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
December 31, 2022 | $ 19,266,276 |
Acquisition of Abaca | |
March 31, 2023 | $ 19,266,276 |
Schedule of Finite Lived Intang
Schedule of Finite Lived Intangible Assets (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | $ 10,800,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 354,911 | 178,913 | |
Finite-lived intangible assets, net | 10,266,176 | 10,621,087 | |
Marketing-Related Intangible Assets [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | 2,100,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 65,625 | 33,082 | |
Finite-lived intangible assets, net | $ 2,001,293 | $ 2,066,918 | |
Developed technology | 8 years | 8 years | |
Customer Relationships [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | $ 2,000,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 50,000 | 25,205 | |
Finite-lived intangible assets, net | $ 1,924,795 | $ 1,974,795 | |
Developed technology | 10 years | 10 years | |
Developed Technology Rights [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Gross | $ 6,700,000 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 239,286 | 120,626 | |
Finite-lived intangible assets, net | $ 6,340,088 | $ 6,579,374 | |
Developed technology | 10 years | ||
Developed Technology [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Developed technology | 7 years | 7 years |
Goodwill and other intangible_2
Goodwill and other intangibles (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, impairment loss | $ 0 | $ 0 |
Schedule of Commercial Real Est
Schedule of Commercial Real Estate Loans Receivable (Details) - Commercial Real Estate Loans Receivable [Member] - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | ||
Commercial real estate loans receivable, gross | $ 413,292 | $ 1,432,560 |
Less: loan origination charges | (103,476) | (109,081) |
Commercial real estate loans receivable, net | 309,816 | 1,323,479 |
Allowance for credit losses | (21,078) | (21,488) |
Commercial real estate loans receivable, net | 288,738 | 1,301,991 |
Current portion | (11,728) | (51,300) |
Noncurrent portion | $ 277,010 | $ 1,250,691 |
Schedule of Allowance For Loan
Schedule of Allowance For Loan Losses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Receivables [Abstract] | ||
Allowance for credit losses, beginning balance | $ 21,488 | $ 14,741 |
Cumulative effect from adoption of CECL | 14,980 | |
Charge-offs | ||
Recoveries | (15,390) | |
Provision | 9,805 | |
Allowance for credit losses,ending balance | 21,078 | 24,546 |
Individually evaluated for impairment | ||
Collectively evaluated for impairment | 413,292 | 1,465,482 |
Loans receivable | 413,292 | 1,465,482 |
Individually evaluated for impairment | ||
Collectively evaluated for impairment | 21,078 | 24,546 |
Allowance for loan losses | $ 21,078 | $ 24,546 |
Schedule of Outstanding Amounts
Schedule of Outstanding Amounts (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Indemnification Liability | ||
Secured term loans | $ 16,300,000 | $ 15,300,000 |
Unsecured loans and lines of credit | 3,791,428 | 3,598,042 |
Total loans funded by Parent | $ 20,091,428 | $ 18,898,042 |
Schedule of Indemnity Liability
Schedule of Indemnity Liability (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Indemnification Liability | ||
Beginning balance | $ 499,465 | |
Cumulative effect from adoption of CECL | 566,341 | |
Charge-offs | ||
Recoveries | ||
Provision | 82,026 | 58,386 |
Ending balance | $ 1,147,832 | $ 58,386 |
Schedule of Provision for Loan
Schedule of Provision for Loan Losses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Financing Receivable, Past Due [Line Items] | ||
Provision (benefit) | $ 66,666 | $ 68,191 |
Commercial Real Estate Portfolio Segment [Member] | ||
Financing Receivable, Past Due [Line Items] | ||
Provision (benefit) | (15,390) | 9,805 |
Indemnity Liability Segment [Member] | ||
Financing Receivable, Past Due [Line Items] | ||
Provision (benefit) | $ 82,056 | $ 58,386 |
Indemnification liability (Deta
Indemnification liability (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Interest rate | 0.25% | |
Lines of credit | $ 20,091,428 | $ 18,898,042 |
Secured Debt [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.90% | |
Secured Debt [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 12% | |
Unsecured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Variable rate description | Unsecured loans and lines of credit contain variable rates ranging from Prime + 1.50 % to Prime + 6.00 %. | |
Lines of credit | $ 875,000 | $ 996,958 |
Schedule of Property and Equipm
Schedule of Property and Equipment, Net (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 369,555 | $ 175,794 |
Less: accumulated depreciation | (167,584) | (126,180) |
Property and equipment, net | 201,971 | 49,614 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 45,397 | 45,397 |
Software Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 51,692 | 51,692 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 71,635 | 71,635 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 200,831 | $ 7,070 |
Schedule of Demonstrated Deposi
Schedule of Demonstrated Deposit Capacity (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Incremental capacity | $ 240,852,861 | $ 290,658,185 |
Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 100,352,270 | 154,971,429 |
Partner Colorado Credit Union [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 699,228,293 | 695,072,554 |
Partner Colorado Credit Union [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 92,411,928 | 133,231,565 |
Capacity At 65% Percentage [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 454,498,390 | 451,797,160 |
Capacity At 65% Percentage [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 128,187,317 | 96,683,385 |
CRB Related Deposits [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 213,645,529 | 161,138,975 |
CRB Related Deposits [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 213,645,529 | 161,138,975 |
Capacity [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 121,290,656 | 174,866,429 |
Limiting Capacity [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 121,290,656 | 174,866,429 |
PCCU Loans Funded [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 20,091,428 | 18,898,042 |
Line of Credit [Member] | Loan Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | $ 846,958 | $ 996,958 |
Related party transactions (Det
Related party transactions (Details Narrative) - USD ($) | 3 Months Ended | ||||||||
Mar. 29, 2023 | Mar. 29, 2023 | Feb. 11, 2022 | Jul. 01, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Sep. 28, 2022 | Jun. 27, 2022 | |
Related Party Transaction [Line Items] | |||||||||
Debt instrument face amount | $ 14,500,000 | $ 14,500,000 | |||||||
Debt instrument interest rate stated percentage | 0.25% | ||||||||
Stock issued during period, shares, new issues | 11,200,000 | 11,200,000 | |||||||
Partner Colorado Credit Union [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownwership percentage | 55.92% | ||||||||
Common Class A [Member] | Partner Colorado Credit Union [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownwership percentage | 54.93% | 54.93% | |||||||
Partner Colorado Credit Union [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Rent expenses | $ 5,400 | ||||||||
Related Party [Member] | Affiliate Of Sponsor [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Advance amount | $ 1,150,000 | ||||||||
Account Servicing Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Agreement description | 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. | ||||||||
Account Servicing Agreement [Member] | Related Party [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue from related party | $ 3,261,284 | $ 1,628,091 | |||||||
Support Services Agreement [Member] | Partner Colorado Credit Union [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Monthly fee | $ 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 the Company and the Company will reimburse PCCU for any of its out-of-pocket expenses relating to the services provided to the Company. | ||||||||
Bonus distributions | $ 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% | ||||||||
Support Services Agreement [Member] | Related Party [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Expense | $ 378,730 | 83,807 | |||||||
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 | 60% | ||||||||
Servicing fee | 0.25% | ||||||||
Loan Servicing Agreement [Member] | Related Party [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Expense | 11,929 | $ 1,373 | |||||||
Security Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Debt instrument term | 5 years | ||||||||
Debt instrument face amount | $ 14,500,000 | $ 14,500,000 | $ 14,500,000 | ||||||
Debt instrument interest rate stated percentage | 4.25% | 4.25% | |||||||
Securities Issuance Agreement [Member] | Common Class A [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Stock issued during period, shares, new issues | 11,200,000 |
Schedule of Amounts Due to Sell
Schedule of Amounts Due to Seller (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Due to Seller-Current (Unsecured) | $ 86,291 | $ 11,291 |
Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Due to Seller-Current (Unsecured) | 25,973,017 | |
Due to Seller-long term (Unsecured) | 30,976,783 | |
Total loans funded by Parent | $ 56,949,800 |
Schedule of Breakdown of Liabil
Schedule of Breakdown of Liabilities Settled (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Due To Seller | |
Due to Seller | $ 56,949,800 |
Payments to acquire businesses | 3,143,389 |
Business combination expense payable to seller | 1,069,359 |
Interest accrued but not paid | 1,337,843 |
Total deferred obligation | 62,500,391 |
Less: Senior secured promissory note | 14,500,000 |
Less: Change in deferred tax | 9,593,983 |
Amount charged to Stockholders’ Equity towards issuance of common stock | $ 38,406,408 |
Due to Seller (Details Narrativ
Due to Seller (Details Narrative) - USD ($) | 3 Months Ended | ||||
Mar. 29, 2023 | Mar. 29, 2023 | Sep. 28, 2022 | Feb. 11, 2022 | Mar. 31, 2023 | |
Business combination, consideration transferred | $ 10,850,000 | ||||
Cash consideration | $ 3,143,389 | ||||
Debt instrument, interest rate annualized | 5% | ||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.25% | 4.71% | ||
Secured debt | $ 56,949,800 | $ 56,949,800 | |||
Debt instrument, face amount | $ 14,500,000 | $ 14,500,000 | |||
Stock issued during period, shares, new issues | 11,200,000 | 11,200,000 | |||
December 15, 2022 [Member] | |||||
Deferred consideration payable | $ 21,949,800 | ||||
Safe Harbour Financial LLC [Member] | |||||
Business combination, consideration transferred | 185,000,000 | ||||
Number of shares issued in acquisition transaction value | 115,000,000 | ||||
Cash consideration | 70,000,000 | $ 70,000,000 | |||
Cash acquired from acquisition | 56,949,800 | 56,900,000 | |||
Deferred consideration payable | 38,500,002 | ||||
Safe Harbour Financial LLC [Member] | December 15, 2022 [Member] | |||||
Deferred consideration payable | 21,900,000 | ||||
Safe Harbour Financial LLC [Member] | After First Payment [Member] | |||||
Deferred consideration payable | 35,000,000 | ||||
Safe Harbour Financial LLC [Member] | Six Equal Installments [Member] | |||||
Deferred consideration payable | $ 6,416,667 | $ 35,000,000 | |||
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 |
Schedule of Senior Secured Prom
Schedule of Senior Secured Promissory Note (Details) - USD ($) | Mar. 31, 2023 | Mar. 29, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | |||
Total | $ 14,500,000 | ||
Security Agreement [Member] | |||
Short-Term Debt [Line Items] | |||
Total | $ 14,500,000 | $ 14,500,000 | |
Senior Secured Promissory Note Current [Member] | Security Agreement [Member] | |||
Short-Term Debt [Line Items] | |||
Total | 1,229,376 | ||
Senior Secured Promissory Note Non-current [Member] | Security Agreement [Member] | |||
Short-Term Debt [Line Items] | |||
Total | $ 13,270,624 |
Schedule of Outstanding Amount
Schedule of Outstanding Amount on Debt (Details) | Mar. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 488,834 |
2024 | 3,006,992 |
2025 | 3,138,932 |
2026 | 3,274,966 |
2027 | 3,416,896 |
2028 | 1,173,380 |
Grand total | $ 14,500,000 |
Senior Secured Promissory Not_2
Senior Secured Promissory Note (Details Narrative) - USD ($) | Nov. 05, 2023 | Mar. 31, 2023 | Mar. 29, 2023 |
Debt instrument, face amount | $ 14,500,000 | ||
Debt instrument, interest rate, effective percentage | 4.71% | 4.25% | |
Fifty Four Equal Installments [Member] | |||
Deferred consideration payable | $ 295,487 |
Schedule of Lease Cost (Details
Schedule of Lease Cost (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease cost | ||
Short-term lease cost | 87,742 | 99,246 |
Total Lease Cost | $ 87,742 | $ 99,246 |
Schedule of Right Of Use Assets
Schedule of Right Of Use Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Beginning balance | $ 1,016,198 | |
Additions to right-of-use assets | 1,029,226 | |
Amortization charge for the period | (39,085) | (13,028) |
Lease modifications | ||
Ending balance | $ 977,113 | $ 1,016,198 |
Weighted-average remaining lease term | 4 years 3 months 14 days | 4 years 5 months 1 day |
Weighted-average discount rate | 6.87% | 6.87% |
Schedule of Future Minimum Leas
Schedule of Future Minimum Lease Payments (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2023 | $ 91,303 | $ 91,303 |
2024 | 197,520 | 197,520 |
2025 | 217,925 | 217,925 |
2026 | 222,275 | 222,275 |
2027 | 226,705 | 226,705 |
Thereafter | 348,926 | 348,926 |
Total future minimum lease payments | 1,304,654 | 1,304,654 |
Less: Imputed interest | 258,659 | 276,421 |
Operating lease liabilities | 1,045,995 | 1,028,233 |
Less: Current portion | 66,726 | 20,124 |
Non-current portion of lease liabilities | $ 979,269 | $ 1,008,109 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Option to extend lease term | ten years | ||
Operating lease right to use assets | $ 977,113 | $ 1,016,198 | |
Operating lease liablities | $ 1,045,995 | $ 1,028,233 | |
Minimum [Member] | |||
Lease term | 1 year | ||
Maximum [Member] | |||
Lease term | 7 years |
Schedule of Disaggregated Reven
Schedule of Disaggregated Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Total Revenue | $ 4,180,379 | $ 1,671,110 |
Deposit, Activity, Onboarding Income [Member] | ||
Total Revenue | 2,245,831 | 1,466,869 |
Safe Harbor Program Income [Member] | ||
Total Revenue | 51,103 | 43,019 |
Investment Income [Member] | ||
Total Revenue | 1,417,152 | 93,986 |
Interest Income [Member] | ||
Total Revenue | $ 466,293 | $ 67,236 |
Deferred underwriter fee (Detai
Deferred underwriter fee (Details Narrative) - USD ($) | 3 Months Ended | |||||||
Mar. 13, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | Nov. 30, 2022 | Oct. 31, 2022 | Oct. 14, 2022 | Mar. 31, 2023 | Nov. 02, 2022 | |
Debt instrument periodic payment | $ 715,750 | |||||||
Deferred underwriter fee | $ 1,450,500 | |||||||
Reversal of deferred underwriting cost | $ 900,500 | |||||||
Settlement Agreement [Member] | ||||||||
Payments of Loan Costs | $ 550,000 | |||||||
Benchmark Investments LLC [Member] | ||||||||
Notes payable | $ 2,166,250 | |||||||
Debt instrument periodic payment | $ 362,625 | $ 362,625 | $ 362,625 | $ 362,625 | $ 715,750 |
Commitments and contingencies (
Commitments and contingencies (Details Narrative) - USD ($) | Mar. 31, 2023 | Mar. 29, 2023 |
Short-Term Debt [Line Items] | ||
Debt instrument, face amount | $ 14,500,000 | |
Letter of Credit [Member] | ||
Short-Term Debt [Line Items] | ||
Debt instrument, face amount | $ 750,000 |
Schedule of Earning Per Shares,
Schedule of Earning Per Shares, Basic and Diluted (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (1,413,447) | $ 501,600 |
Weighted average shares outstanding | 25,670,730 | |
Basic net loss per share | $ (0.06) | |
Weighted average shares outstanding – diluted | 25,670,730 | |
Diluted net loss per share | $ (0.06) | |
Company public shares | 3,926,598 | |
Company initial stockholders | 3,403,175 | |
PCCU stockholders | 11,759,472 | |
Shares issued for abaca acquisition | 2,099,977 | |
Restricted stock units issued | 566,755 | |
Conversion of preferred stock | 3,914,753 |
Schedule of Awards Excluded (De
Schedule of Awards Excluded (Details) | 3 Months Ended |
Mar. 31, 2023 shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Total | 27,142,082 |
Warrant [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Total | 7,036,588 |
Share-Based Payment Arrangement [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Total | 2,775,655 |
Abaca Acquisition [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Total | 6,433,839 |
Conversion of Preferred Stock [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Total | 10,896,000 |
Schedule of Forward Purchase Ag
Schedule of Forward Purchase Agreement (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Sep. 28, 2022 | |
Number of shares on the date of acquisition | 3,667,377 | 3,804,872 | |
Number of shares on the date of acquisition value | $ 4,584,221 | $ 39,285,754 | |
Sale of stock, consideration received on transaction | $ 1,379,284 | ||
Common stock held by subsidiary shares | 3,667,377 | 3,667,377 | |
Common stock held by subsidiary | $ 4,584,221 | $ 4,584,221 | |
Sale of stock, number of shares issued in transaction shares | 137,495 | ||
Vellar [Member] | |||
Number of shares on the date of acquisition | 971,204 | 1,025,000 | |
Number of shares on the date of acquisition value | $ 1,214,005 | $ 10,583,246 | |
Sale of stock, number of shares issued in transaction | 53,796 | ||
Sale of stock, consideration received on transaction | $ 524,472 | ||
Common stock held by subsidiary shares | 971,204 | 971,204 | |
Share price | $ 1.25 | $ 1.25 | |
Common stock held by subsidiary | $ 1,214,005 | $ 1,214,005 | |
Midtown East [Member] | |||
Number of shares on the date of acquisition | 1,517,924 | 1,599,496 | |
Number of shares on the date of acquisition value | $ 1,897,405 | $ 16,514,986 | |
Sale of stock, number of shares issued in transaction | 81,572 | ||
Sale of stock, consideration received on transaction | $ 832,850 | ||
Common stock held by subsidiary shares | 1,517,924 | 1,517,924 | |
Share price | $ 1.25 | $ 1.25 | |
Common stock held by subsidiary | $ 1,897,405 | $ 1,897,405 | |
Verdun [Member] | |||
Number of shares on the date of acquisition | 1,178,249 | 1,180,376 | |
Number of shares on the date of acquisition value | $ 1,472,811 | $ 12,187,522 | |
Sale of stock, number of shares issued in transaction | 2,127 | ||
Sale of stock, consideration received on transaction | $ 21,962 | ||
Common stock held by subsidiary shares | 1,178,249 | 1,178,249 | |
Share price | $ 1.25 | $ 1.25 | |
Common stock held by subsidiary | $ 1,472,811 | $ 1,472,811 |
Forward Purchase Agreement (Det
Forward Purchase Agreement (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||||
Mar. 29, 2023 | Mar. 29, 2023 | Jun. 16, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | |
Stock issued during period, shares, new issues | 11,200,000 | 11,200,000 | ||||
Related expense amounts | $ 0.3 | |||||
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. | |||||
Shares per share | $ 3 | $ 1.25 | ||||
Forward Purchase Agreement [Member] | ||||||
Shares per share | $ 1.25 | |||||
Decrease in receivables | $ 4.6 | |||||
Receivables | $ 37.9 | |||||
Other expenses | $ 42.3 | |||||
Cash [Member] | ||||||
Asset held with trust | $ 39.3 | |||||
Midtown East Management NL LLC [Member] | Common Class A [Member] | ||||||
Shares, issued | 1,666,666 | |||||
Stock issued during period, shares, new issues | 3,800,000 |
Warrant Liability (Details Narr
Warrant Liability (Details Narrative) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Common Class A [Member] | ||
Shares issued, Price per share | $ 18 | |
Warrants execise price | $ 11.50 | |
Public Warrants [Member] | ||
Warrants outstanding | 5,750,000 | 5,750,000 |
Warrants execise price | $ 0.01 | |
Private Placement Warrants [Member] | ||
Warrants outstanding | 264,088 | 264,088 |
Public and Private Warrants [Member] | ||
Warrants description | The Public and Private Placement Warrants became exercisable on September 28, 2022, the date of the Business Combination and will expire on September 28,2027, or earlier upon redemption or liquidation. | |
PIPE Warrants [Member] | ||
Warrants outstanding | 1,022,500 | 1,022,500 |
Warrants description | (i)125% of the conversion price if at any time there is an adjustment to the Conversion Price and the exercise price after such adjustment is greater than 125% of the Conversion Price as adjusted and (ii) $5.00. |
Schedule of Fair Value Assets a
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value | $ 7,309,580 | |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value | ||
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value | 7,309,580 | |
Public Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | $ 150,650 | 361,100 |
Public Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | 150,650 | 361,100 |
Public Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | ||
Private Placement Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | 7,953 | 19,110 |
Private Placement Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | ||
Private Placement Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | 7,953 | 19,110 |
PIPE Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | 74,762 | 286,300 |
PIPE Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | ||
PIPE Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | 74,762 | 286,300 |
Forward Purchase Option Derivative [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | 7,309,580 | 7,309,580 |
Forward Purchase Option Derivative [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | ||
Forward Purchase Option Derivative [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Forward purchase option derivative | $ 7,309,580 | $ 7,309,580 |
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 ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Liabilities | ||
Deferred consideration | $ 14,333,773 | $ 14,359,822 |
Indemnity liability | 1,147,862 | 499,465 |
Deferred underwriter fee payable | 1,450,500 | |
Fair Value, Inputs, Level 1 [Member] | ||
Assets | ||
Cash and cash equivalents | 8,628,752 | 8,390,195 |
Forward purchase receivables | 4,584,221 | 4,584,221 |
Loans | ||
Liabilities | ||
Deferred consideration | 17,272,308 | 14,359,822 |
Senior Secured Promissory note | 14,500,000 | |
Indemnity liability | 1,147,832 | 499,465 |
Public warrants | 150,650 | 361,100 |
Private placement warrants | ||
PIPE Warrants | ||
Forward purchase derivative | ||
Due to seller - current portion | 25,973,017 | |
Due to seller - long term position | 30,976,783 | |
Deferred underwriter fee payable | 1,450,500 | |
Fair Value, Inputs, Level 2 [Member] | ||
Assets | ||
Cash and cash equivalents | ||
Forward purchase receivables | ||
Loans | ||
Liabilities | ||
Deferred consideration | ||
Senior Secured Promissory note | ||
Indemnity liability | ||
Public warrants | ||
Private placement warrants | ||
PIPE Warrants | ||
Forward purchase derivative | ||
Due to seller - current portion | ||
Due to seller - long term position | ||
Deferred underwriter fee payable | ||
Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Cash and cash equivalents | ||
Forward purchase receivables | ||
Loans | 365,781 | 1,241,761 |
Liabilities | ||
Deferred consideration | ||
Senior Secured Promissory note | ||
Indemnity liability | ||
Public warrants | ||
Private placement warrants | 7,953 | 19,110 |
PIPE Warrants | 74,762 | 286,300 |
Forward purchase derivative | 7,309,580 | 7,309,580 |
Due to seller - current portion | ||
Due to seller - long term position | ||
Deferred underwriter fee payable | ||
Carrying Amount [Member] | ||
Assets | ||
Cash and cash equivalents | 8,628,752 | 8,390,195 |
Forward purchase receivables | 4,584,221 | 4,584,221 |
Loans | 413,292 | 1,301,991 |
Liabilities | ||
Deferred consideration | 17,272,308 | 14,359,822 |
Senior Secured Promissory note | 14,500,000 | |
Indemnity liability | 1,147,832 | 499,465 |
Public warrants | 150,650 | 361,100 |
Private placement warrants | 7,953 | 19,110 |
PIPE Warrants | 74,762 | 286,300 |
Forward purchase derivative | 7,309,580 | 7,309,580 |
Due to seller - current portion | 25,973,017 | |
Due to seller - long term position | 30,976,783 | |
Deferred underwriter fee payable | 1,450,500 | |
Fair Value [Member] | ||
Assets | ||
Cash and cash equivalents | 8,628,752 | 8,390,195 |
Forward purchase receivables | 4,584,221 | 4,584,221 |
Loans | 365,781 | 1,241,761 |
Liabilities | ||
Deferred consideration | 17,272,308 | 14,359,822 |
Senior Secured Promissory note | 14,500,000 | |
Indemnity liability | 1,147,832 | 499,465 |
Public warrants | 150,650 | 361,100 |
Private placement warrants | 7,953 | 19,110 |
PIPE Warrants | 74,762 | 286,300 |
Forward purchase derivative | $ 7,309,580 | 7,309,580 |
Due to seller - current portion | 25,973,017 | |
Due to seller - long term position | 30,976,783 | |
Deferred underwriter fee payable | $ 1,450,500 |
Schedule of Fair Value Assets M
Schedule of Fair Value Assets Measured on Recurring Basis (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
PIPE Warrants [Member] | |
Impairment Effects on Earnings Per Share [Line Items] | |
Balance at the beginning of the period | $ 286,300 |
Fair value adjustment | (211,538) |
Balance at the end of the period | 74,762 |
Private Placement Warrants [Member] | |
Impairment Effects on Earnings Per Share [Line Items] | |
Balance at the beginning of the period | 19,110 |
Fair value adjustment | (11,157) |
Balance at the end of the period | 7,953 |
Forward Purchase Derivative [Member] | |
Impairment Effects on Earnings Per Share [Line Items] | |
Balance at the beginning of the period | 7,309,580 |
Fair value adjustment | |
Balance at the end of the period | $ 7,309,580 |
Schedule of Level 3 Fair Value
Schedule of Level 3 Fair Value Measurement Inputs (Details) | Mar. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares |
PIPE Warrants [Member] | Measurement Input, Exercise Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 5 | 5 |
PIPE Warrants [Member] | Measurement Input, Share Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 0.51 | 1.78 |
PIPE Warrants [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 4 years 5 months 26 days | 4 years 8 months 26 days |
PIPE Warrants [Member] | Measurement Input, Price Volatility [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 73.2 | 46 |
PIPE Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 3.62 | 4 |
Private Placement Warrants [Member] | Measurement Input, Exercise Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 11.50 | 11.50 |
Private Placement Warrants [Member] | Measurement Input, Share Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 0.51 | 1.78 |
Private Placement Warrants [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 4 years 5 months 26 days | 4 years 8 months 26 days |
Private Placement Warrants [Member] | Measurement Input, Price Volatility [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 73.2 | 46 |
Private Placement Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-free rate | 3.62 | 3.98 |
Schedule of Level 3 Fair Valu_2
Schedule of Level 3 Fair Value Measurements Inputs (Details) | Mar. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares |
Measurement Input Reset Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 5 | |
Measurement Input Additional Maturity Per Share [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Additional maturity consideration per share | $ 2 | |
Measurement Input, Price Volatility [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 46 | |
Measurement Input, Risk Free Interest Rate [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 4.2 | |
Measurement Input, Discount Rate [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 13.4 | |
Forward Purchase Derivative [Member] | Measurement Input Reset Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 5 | |
Forward Purchase Derivative [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 2 years 8 months 26 days | 2 years 8 months 26 days |
Forward Purchase Derivative [Member] | Measurement Input Additional Maturity Per Share [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Additional maturity consideration per share | $ 2 | |
Forward Purchase Derivative [Member] | Measurement Input, Price Volatility [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 46 | |
Forward Purchase Derivative [Member] | Measurement Input, Risk Free Interest Rate [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 4.2 | |
Forward Purchase Derivative [Member] | Measurement Input, Discount Rate [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Risk-adjusted discount rate | 13.4 |
Financial Instruments (Details
Financial Instruments (Details Narrative) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Nonrecurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets and liabilities nonrecurring basis | $ 0 | $ 0 |
Tax (Details Narrative)
Tax (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefit | $ 609,277 | ||
Effective income tax rate reconciliation other adjustments | 30.12% | ||
Effective income tax rate, federal | 21% | ||
Deferred tax assets liabilities net | $ 51,593,302 | $ 42,608,596 |
401(k) Plan (Details Narrative)
401(k) Plan (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Retirement Benefits [Abstract] | ||
Defined contribution plan employee percent | 100% | |
Defined contribution plan employee matching contribution | 4% | |
Defined contribution plan amount | $ 20,663 | $ 3,942 |
Schedule of Fair Value of Optio
Schedule of Fair Value of Options Granted Black-Scholes-Merton Model (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0% |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate | 100% |
Minimum [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum | 3.62% |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 years |
Maximum [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 4.23% |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 years 6 months |
Schedule of Stock Option and Re
Schedule of Stock Option and Related Information (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Share-Based Payment Arrangement [Abstract] | |
No. of Stock Option, Beginning Balance | shares | 2,170,000 |
Weighted Average Grant Date Fair Value Per Stock Option, Beginning Balance | $ / shares | $ 3.53 |
Aggregate Fair Value, Beginning Balance | $ | $ 7,665,707 |
No. of Stock Option, Granted | shares | 336,730 |
Weighted Average Grant Date Fair Value Per Stock Option, Granted | $ / shares | $ 1.03 |
Aggregate Fair Value, Granted | $ | $ 345,835 |
No. of Stock Option, Exercised | shares | |
Weighted Average Grant Date Fair Value Per Stock Option, Exercised | $ / shares | |
Aggregate Fair Value, Exercised | $ | |
No. of Stock Option, Expired | shares | |
Weighted Average Grant Date Fair Value Per Stock Option, Expired | $ / shares | |
Aggregate Fair Value, Expired | $ | |
No. of Stock Option, Cancelled/Forfeited | shares | (64,875) |
Weighted Average Grant Date Fair Value Per Stock Option, Cancelled/Forfeited | $ / shares | $ 3.13 |
Aggregate Fair Value, Cancelled/Forfeited | $ | $ (202,851) |
No. of Stock Option, Ending Balance | shares | 2,441,855 |
Weighted Average Grant Date Fair Value Per Stock Option, Ending Balance | $ / shares | $ 3.20 |
Aggregate Fair Value, Ending Balance | $ | $ 7,808,691 |
Schedule of Restricted Stock Un
Schedule of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member] | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
No. of RSU, Beginning Balance | |
Weighted Average Grant Date Fair Value Per RSU, Beginning Balance | $ / shares | |
Aggregate Fair Value, Beginning Balance | |
No. of RSU, Granted | 963,528 |
Weighted Average Grant Date Fair Value Per RSU, Granted | $ / shares | $ 1.31 |
Aggregate Fair Value, Granted | 1,262,222 |
No. of RSU, Exercised | |
Weighted Average Grant Date Fair Value Per RSU, Exercised | $ / shares | |
Aggregate Fair Value, Exercised | |
No. of RSU, Expired | |
Weighted Average Grant Date Fair Value Per RSU, Expired | $ / shares | |
Aggregate Fair Value, Expired | |
No. of RSU, Cancelled/Forfeited | |
Weighted Average Grant Date Fair Value Per RSU, Cancelled/Forfeited | $ / shares | |
Aggregate Fair Value, Cancelled/Forfeited | |
No. of RSU, Ending Balance | 963,528 |
Weighted Average Grant Date Fair Value Per RSU, Ending Balance | $ / shares | $ 1.31 |
Aggregate Fair Value, Ending Balance | 1,262,222 |
Share based compensation (Detai
Share based compensation (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Share based compensation | $ 1,600,000 | $ 0 |
Contractual term | 10 years | |
Expected volatility | 100% | |
Restricted Stock Units (RSUs) [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, vested in period, fair value | $ 857,530 | $ 0 |