| 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. |
