Cover
Cover - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 28, 2024 | Jun. 30, 2023 | |
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
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 | 80401 | ||
City Area Code | (303) | ||
Local Phone Number | 431-3435 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 Public Float | $ 24,520 | ||
Entity Common Stock, Shares Outstanding | 55,430,976 | ||
Documents Incorporated by Reference [Text Block] | Portions of the registrant’s definitive proxy statement pursuant to Regulation 14A for the registrant’s 2024 Annual Meeting of Shareholders, to be filed within 120 days of the registrant’s fiscal year end, are incorporated by reference into Part III hereof | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Auditor Firm ID | 688 | ||
Auditor Name | Marcum LLP | ||
Auditor Location | Hartford, Connecticut | ||
Class Common Stock 0.0001 par Value per Share [Member] | |||
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 Common Stock at Exercise Price of11.50 per Share [Member] | |||
Title of 12(b) Security | Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | ||
Trading Symbol | SHFSW | ||
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 4,888,769 | $ 8,390,195 |
Contract assets | 21,170 | |
Prepaid expenses – current portion | 546,437 | 175,585 |
Accrued interest receivable | 13,780 | 7,320 |
Short-term loans receivable, net | 12,391 | 51,300 |
Other current assets | 82,657 | 150,817 |
Total Current Assets | 7,761,229 | 10,231,172 |
Long-term loans receivable, net | 381,463 | 1,359,772 |
Property, plant and equipment, net | 84,220 | 49,614 |
Operating lease right to use assets | 859,861 | 1,016,198 |
Goodwill | 6,058,000 | 19,266,276 |
Intangible assets, net | 3,721,745 | 10,621,087 |
Deferred tax asset | 43,829,019 | 51,593,302 |
Prepaid expenses – long term position | 562,500 | 712,500 |
Forward purchase receivable | 4,584,221 | 4,584,221 |
Security deposit | 18,651 | 17,795 |
Total Assets | 67,860,909 | 99,451,937 |
Current Liabilities: | ||
Accrued expenses | 1,008,987 | 1,473,411 |
Contract liabilities | 21,922 | 996 |
Lease liabilities – current | 132,546 | 20,124 |
Senior secured promissory note – current portion | 3,006,991 | |
Deferred consideration – current portion | 2,889,792 | 14,359,822 |
Due to seller - current portion | 25,973,017 | |
Other current liabilities | 41,639 | 11,291 |
Total Current Liabilities | 7,896,584 | 49,571,192 |
Warrant liability | 4,164,129 | 666,510 |
Deferred consideration – long term portion | 810,000 | 2,747,592 |
Forward purchase derivative liability | 7,309,580 | 7,309,580 |
Due to seller – long term portion | 30,976,783 | |
Senior secured promissory note—long term portion | 11,004,175 | |
Net deferred indemnified loan origination fees | 63,275 | 109,081 |
Lease liabilities – long term | 875,447 | 1,008,109 |
Deferred underwriter fee | 1,450,500 | |
Indemnity liability | 1,382,408 | 499,465 |
Total Liabilities | 33,505,598 | 94,338,812 |
Commitment and Contingencies (Note 15) | ||
Parent-Entity Net Investment and Stockholders’ Equity | ||
Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 1,101 and 14,616 shares issued and outstanding on December 31, 2023, and December 31, 2022, respectively | 1 | |
Class A common stock, $.0001 par value, 130,000,000 shares authorized, 54,563,372 and 23,732,889 issued and outstanding on December 31, 2023, and December 31, 2022, respectively | 5,458 | 2,374 |
Additional paid in capital | 105,919,674 | 44,806,031 |
Retained deficit | (71,569,821) | (39,695,281) |
Total Parent-Entity Net Investment and Stockholders’ Equity | 34,355,311 | 5,113,125 |
Total Liabilities and Parent-Entity Net Investment and Stockholders’ Equity | 67,860,909 | 99,451,937 |
Nonrelated Party [Member] | ||
Current Assets: | ||
Accounts receivable | 121,875 | 203,058 |
Current Liabilities: | ||
Accounts payable | 217,392 | 2,654,489 |
Related Party [Member] | ||
Current Assets: | ||
Accounts receivable | 2,095,320 | 1,231,727 |
Current Liabilities: | ||
Accounts payable | $ 577,315 | $ 5,078,042 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 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 | 1,101 | 14,616 |
Convertible preferred stock, shares outstanding | 1,101 | 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 | 54,563,372 | 23,732,889 |
Class A common stock, shares outstanding | 54,563,372 | 23,732,889 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 17,562,903 | $ 9,478,819 |
Operating Expenses | ||
Compensation and employee benefits | 10,334,212 | 6,695,319 |
General and administrative expenses | 6,568,662 | 2,390,539 |
Professional services | 1,858,137 | 1,985,343 |
Rent expense | 315,615 | 99,246 |
Provision for credit losses | 290,857 | 506,212 |
Impairment of goodwill | 13,208,276 | |
Impairment of long-lived intangible assets | 5,699,463 | |
Total operating expenses | 38,275,222 | 11,676,659 |
Operating loss | (20,712,319) | (2,197,840) |
Other (income) expenses | ||
Interest expense | 1,113,466 | 705,204 |
Change in fair value of warrant liability | 1,853,920 | (939,019) |
Change in the fair value of deferred consideration | (4,570,157) | 97,593 |
Change in fair value of forward purchase agreement | 33,322,248 | |
Change in fair value of forward purchase option derivative | 8,997,110 | |
Total other (income) expenses | (1,602,771) | 42,183,136 |
Net loss income before income tax | (19,109,548) | (44,380,976) |
Provision for income taxes | (1,829,701) | (9,252,893) |
Net loss | $ (17,279,847) | $ (35,128,083) |
Weighted average shares outstanding, basic | 42,574,563 | 18,988,558 |
Basic net loss per share | $ (0.41) | $ (1.85) |
Weighted average shares outstanding, diluted | 42,574,563 | 18,988,558 |
Diluted net loss per share | $ (0.41) | $ (1.85) |
Consolidated Statements of Pare
Consolidated Statements of Parent-Entity Net Investment and Stockholders' Equity - 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 |
Balance at Dec. 31, 2021 | $ 7,339,101 | $ 7,339,101 | ||||
Balance, shares at Dec. 31, 2021 | ||||||
Issuance of shares in connection with Business Combination and PIPE offering, net of issuance costs | $ 2 | $ 1,872 | 29,327,087 | (7,339,101) | 21,989,860 | |
Issuance of shares in connection with Business Combination and PIPE offering, net of issuance costs, shares | 20,450 | 18,715,912 | ||||
Acquisition of Abaca | $ 210 | 8,105,701 | 8,105,911 | |||
Acquisition of Abaca, shares | 2,099,977 | |||||
Conversion of PIPE Shares | $ (1) | $ 292 | 2,916,709 | (2,917,000) | ||
Conversion of PIPE Shares, shares | (5,834) | 2,917,000 | ||||
Stock option conversion | 2,806,336 | 2,806,336 | ||||
Net income (loss) | 1,650,198 | (36,778,281) | (35,128,083) | |||
Balance at Dec. 31, 2022 | $ 1 | $ 2,374 | 44,806,031 | (39,695,281) | 5,113,125 | |
Balance, shares at Dec. 31, 2022 | 14,616 | 23,732,889 | ||||
Conversion of PIPE Shares | $ (1) | $ 1,256 | 14,012,120 | (14,013,375) | ||
Conversion of PIPE Shares, shares | (13,515) | 12,562,200 | ||||
Net income (loss) | (17,279,847) | (17,279,847) | ||||
Cumulative effect from adoption of CECL | (581,318) | (581,318) | ||||
Issuance of shares to Abaca shareholders | $ 585 | 4,084,491 | 4,085,076 | |||
Issuance of shares to Abaca shareholders, shares | 5,835,822 | |||||
Restricted stock units | $ 123 | 1,251,920 | 1,252,043 | |||
Restricted stock unit, shares | 1,232,461 | |||||
Stock compensation cost | 2,459,324 | 2,459,324 | ||||
PCCU Restructuring | $ 1,120 | 38,405,288 | 38,406,408 | |||
PCCU Restructuring, shares | 11,200,000 | |||||
Reversal of deferred underwriting cost | 900,500 | 900,500 | ||||
Balance at Dec. 31, 2023 | $ 5,458 | $ 105,919,674 | $ (71,569,821) | $ 34,355,311 | ||
Balance, shares at Dec. 31, 2023 | 1,101 | 54,563,372 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (17,279,847) | $ (35,128,083) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,373,707 | 189,274 |
Stock compensation expense | 3,711,367 | 2,806,336 |
Net deferred indemnified loan origination fees | (45,806) | |
Interest expense | 663,208 | 705,204 |
Lease Expense | 136,097 | |
Provision for credit loss | 290,857 | 506,212 |
Impairment of goodwill | 13,208,276 | |
Impairment of long-lived intangible assets | 5,699,463 | |
Deferred tax credit | (1,829,700) | (9,252,893) |
Change in fair value of warrant and forward purchase option derivative liabilities | 1,853,920 | 41,380,339 |
Change in the fair value of deferred consideration | (4,570,157) | 97,593 |
Changes in operating assets and liabilities: | ||
Accounts receivable - Trade | 81,183 | 24,798 |
Accounts receivable – Related Party | (863,593) | (710,698) |
Contract assets | 21,170 | (2,853) |
Prepaid expenses | (220,852) | 55,997 |
Forward purchase receivables | 1,379,285 | |
Accrued interest receivable | (6,460) | (236) |
Deferred underwriting payable | (550,000) | (715,750) |
Other current assets | 68,160 | (150,817) |
Accounts payable | (2,515,443) | 355,202 |
Accounts Payable – related party | 386,660 | (231,875) |
Accrued expenses | (464,424) | 402,767 |
Contract Liabilities | 20,926 | (7,337) |
Security deposit | (856) | (5,085) |
Net cash (used in)/provided by operating activities | (832,144) | 1,697,380 |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (208,434) | (17,318) |
Change in loan receivable, net | 161,569 | |
Payment to Abaca Shareholder | (3,000,000) | |
Loan receivable repayment | 1,027,986 | |
Acquisition of Abaca | (3,041,680) | |
Net cash used in investing activities | (2,180,448) | (2,897,429) |
CASH FLOWS USED IN FINANCING ACTIVITIES: | ||
Proceeds from reverse capitalization, net of transaction costs | 4,094,339 | |
Repayment of loans | (488,834) | |
Net cash (used in)/provided by financing activities | (488,834) | 4,094,339 |
Net (decrease)/increase in cash and cash equivalents | (3,501,426) | 2,894,290 |
Cash and cash equivalents - beginning of period | 8,390,195 | 5,495,905 |
Cash and cash equivalents - end of period | 4,888,769 | 8,390,195 |
Supplemental disclosure of cash flow information | ||
Interest paid | 450,258 | |
Non-cash transactions: | ||
Shares issued for the settlement of abaca acquisition | 4,085,076 | 8,105,911 |
Operating lease right of use assets recognized | 1,029,227 | |
Operating lease liabilities recognized | 1,022,380 | |
Shares issued for the settlement of PCCU debt obligation | 38,406,408 | |
Cumulative effect from adoption of CECL | 581,318 | |
Reversal of deferred underwriting cost | 900,500 | |
Interest recognized on PCCU settlement | $ 639,521 |
Organization and Business Opera
Organization and Business Operations | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Organization and Business Operations | 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.” 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 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, Pre-Public Company, 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 Pre-Public Company 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 10 to the 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 upon exchange for an aggregate of $ 185,000,000 11,386,139 115,000,000 70,000,000 56,949,801 1,831,683 46.37 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, the Company, 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 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. On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations payable in connection with the business combination. On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including $ 56,949,800 five 14,500,000 4.25 11,200,000 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 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. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 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 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 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, valuation and useful lives of intangibles and the fair value of financial instruments. Actual results could differ from the estimates. ii. Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company, and its wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated in consolidation. In this reporting period, we have adopted the Current Expected Credit Loss (CECL) accounting standard for the first time, marking a significant change in our accounting policy for the recognition of credit losses. This adoption necessitates the estimation and immediate recognition of expected credit losses over the lifetimes of our financial assets upon their origination or acquisition, which is a departure from the previous incurred loss approach. The accounting method was adopted with on a modified retrospectively basis, and the effects of this adoption were recorded as of January 1, 2023. The Company has made certain immaterial reclassifications to the 2022 balance sheet and statements of operations to conform to the presentation of the 2023 balance sheet and statements of operations. These included reclassifications totaling $ 1,198,781 32,946 196,968 4,881,074 109,081 97,593 iii. Liquidity and Going Concern As of December 31, 2023, the Company had $ 4,888,769 135,355 20,712,319 832,144 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 consolidated financial statements have been issued. If the Company is not able to sustain its present level of operations, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned expansion programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. The accompanying 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, majority of the Company’s revenue is generated by deposits and loans hosted by PCCU pursuant to a master service agreement. The Company had only one loan on its balance sheet as of December 31, 2023, which comprises 100 10 vi. Accounts Receivable 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. Accounts receivable - related party represents amounts due from PCCU under related party contracts disclosed in Note 10. The Company maintains allowances for doubtful accounts for estimated losses as a result of a customers’ inability to make required payments. The Company estimates anticipated losses from doubtful accounts based on days past due as measured from the contractual due date and historical collection history. The Company also takes into consideration changes in economic conditions that may not be reflected in historical trends, for example customers in bankruptcy, liquidation or reorganization. Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible. Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings. At December 31, 2023 and December 31, 2022, there were no vii. Loans Receivable CRB Loans that significantly support the Company’s operations are recognized as assets on the balance sheet. These loans, intended to be held either for the foreseeable future or until their maturity or full repayment, are recorded at their outstanding principal balance. This amount is adjusted for any credit loss allowances and net of any deferred loan origination fees and costs, as applicable, to reflect the net investment in these loans. The Company recognizes interest income on CRB Loans over the loan term using the simple-interest method based on outstanding principal amounts. This approach ensures a systematic recognition of income, aligning with the time value of money principle. Interest income recognition is suspended when there is uncertainty regarding full loan repayment, such as in cases of loan impairment or when payments are overdue by ninety days or more. Loans under these conditions are placed on nonaccrual status. Any accrued interest not received by the time a loan is placed on nonaccrual is reversed from interest income. Subsequent interest payments on nonaccrual loans are recorded using either the cash basis or the cost recovery method until the loan meets the criteria for reclassification to accrual status. Loans are returned to accrual status when they become current (less than ninety days past due) and when there is reasonable assurance of future payment compliance, evidenced by the full satisfaction of both principal and interest payments due. Loans are assessed individually for potential charge-off, which typically occurs at the point of foreclosure. Charge-offs are executed to reflect the realizable value of loans that are deemed uncollectible. The determination of a loan’s past-due status is based on its contractual repayment terms. Loans are either placed on nonaccrual status or charged-off ahead of their contractual delinquency dates if the collection of principal and interest is deemed doubtful, ceasing the recognition of interest income on such loans. viii. Allowance for Credit Losses (ACL) On January 1, 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 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 internally developed model estimation approaches for smaller homogenous loans. The PD is quantified by analyzing historical data to determine the rate at which loans have defaulted within the portfolio, relative to the total outstanding loans as of the end of the reporting period. This rate is expressed as a percentage and serves as a key indicator of the likelihood of default across the loan pool. LGD assessments are conducted to estimate the potential loss amount in the event of a default, considering the recoverable value from the collateral liquidation against the remaining loan balance. This involves a detailed analysis of two primary components: the loss on principal, which arises from the gap between the collateral’s liquidation value and the unpaid principal balance of the loan; and the loss associated with various ancillary costs to recover, including, but not limited to, foregone interest, transaction costs, legal and administrative fees, and expenses related to the maintenance and renovation of the property. 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 (ALL) Prior to the adoption of CECL on January 1, 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 the Company 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 presented net of loans receivable asset for portfolio loans, or as a separate liability for indemnified loans, and recognized as interest income utilizing the interest method. xi. Indemnity Liability Under the Loan Servicing Agreement and Commercial Alliance Agreement with PCCU, the Company had 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 and the Commercial Alliance Agreement (refer to Note 10 to the 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. 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 3 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. The Company 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 finite 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. 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 tested for impairment at least annually, unless any events or circumstances indicate it is more likely than not that the fair value of the goodwill is less than its carrying value. The Company previously had elected to test goodwill for impairment as of November 15 th st 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. xv. 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 have been 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 xvi. 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. xvii. 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. Under the terms of the Loan Servicing Agreement and the Commercial Alliance Agreement, the Company is responsible for covering account hosting costs associated with the fees generated from deposits held at PCCU. These costs are classified as “General and Administrative Expenses” in the Consolidated Statements of Operations. 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. SHF recognizes revenue from interest on loans and investment income distributed by PCCU, which is determined by particular customer account balances. As per the Loan Servicing Agreement and the Commercial Alliance Agreement, SHF bears the expenses for hosting investments and servicing loans related to this interest and investment income. These expenses are allocated to “General and Administrative Expenses” in the Consolidated Statements of Operations. 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. xviii. 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 December 31, 2023, the Company reported contract assets and contract liabilities of $ 0 21,922 21,170 996 xix. Warrants Liability The Company has evaluated each of the warrant arrangements separately in accordance with ASC 480 and 815, to determine classification as either equity instruments or liabilities based on the specific terms and features of each warrant. Warrants are recognized as equity if they are indexed to our own stock and meet the equity classification criteria in ASC 815-40. These warrants are recorded within stockholders’ equity at their issuance date and are not subsequently remeasured at fair value. Conversely, warrants that do not meet the criteria for equity classification under ASC 815-40 are classified as liabilities. Such warrants are initially recorded at fair value on the issuance date and are subject to remeasurement at each balance sheet date thereafter. Any changes in fair value are recognized in the statement of operations. None of our warrant contracts met criteria to be considered indexed to their own stock, as a result, have each been accounted for as a liability financial instrument. The fair value of warrants classified as liabilities is determined using appropriate valuation models, such as the Black-Scholes model, which incorporates various inputs, including the current stock price, expected volatility, risk-free interest rate, and the expected term of the warrants. xix. Deferred consideration In line with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), the Company treats the deferred consideration from the Abaca acquisition as a derivative liability, since it does not fulfill the equity classification criteria. As a result, this obligation is recognized as a liability on the balance sheet at fair value and is adjusted to reflect its fair value at the end of each reporting period. The liability will be reassessed at fair value on every balance sheet date until the obligation’s term concludes. Fluctuations in its fair value are recorded in the consolidated statements of operations. xx. 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 The Company classifies the forward purchase derivative as an asset or liability carried at fair value and adjusts the forward purchase derivative 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 consolidated statement of operations. On December 31, 2022, a Monte-Carlo Simulation within a risk-neutral framework was used to estimate the forward purchase derivative’s fair value, assuming Geometric Brownian Motion for future stock prices. Values from each simulation path were determined per contractual terms and discounted by a matching risk-free rate. In 2023, no FPA holder sales occurred, and no significant risk factor changes affecting FPA derivative values were noted. Consequently, management retained the December 31, 2022 valuation for year-end 2023. xxi. Earnings Per Share Basic and diluted earnings per share are computed and disclosed in accordance with ASC Topic 260, Earnings Per Share. The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-clas |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Note 3. Business Combination On September 28, 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 21.9 35 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 17.5 ● 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 1,101 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 54,563,372 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 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 five 14,500,000 4.25 11,200,000 |
Acquisition
Acquisition | 12 Months Ended |
Dec. 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 100 500,000 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 8,400,000 12,600,000 500,000 The Company measures the deferred cash consideration and deferred 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 Deferred 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 Years 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. |
Deferred consideration
Deferred consideration | 12 Months Ended |
Dec. 31, 2023 | |
Deferred Consideration | |
Deferred consideration | Note 5. Deferred consideration As per the note 4, Under 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 8,400,000 12,600,000 500,000 As a result, there was $ 11.3 5.6 On October 26, 2023, the Company and the Abaca stockholders entered into the second amendment to the Abaca merger agreement to redefine the deferred consideration payable and the deferred stock consideration payable on the one-year anniversary of the merger closing. The main points of the amendment are outlined below: a) The deferred stock consideration payable on the first anniversary of the merger amounts to $ 12,600,000 2.00 5,835,822 b) No changes were made to the cash payments of $ 3,000,000 c) Added a Third Anniversary Consideration Payment of $ 1,500,000 If the Company decides to pay with shares, their value will be determined by the 10-day NASDAQ average before the anniversary, with prices ranging between $2.00 and $4.36. Shares given purely for payment won’t be restricted by the Lock-Up Agreement. However, if the Lock-Up Agreement is in effect, the payment will be split into $750,000 cash and an equivalent $750,000 in shares. The lock-up duration for any shares will adhere to the legal minimum. In the event of a company stock consolidation or similar activity, the number of shares to be issued for the payment will be adjusted to reflect the decreased total of outstanding shares. d) The Company issued stock warrants equal to 5,000,000 2.00 e) The Company has also granted the Abaca Stockholders’ Representative the right to nominate 3 qualified candidates for the Company’s Board of Directors to the Company’s Nominating and Corporate Governance Committee (“NCG Committee”) of which the NCG Committee shall select and nominate 1 candidate to the Company’s Board of Directors in the Company’s 2024 annual proxy statement. As a result of the above, under the original agreement, the Company would have been obligated to issue 16.67 0.70 5.8 2.00 7.7 Furthermore, the second amendment introduced a third-anniversary consideration, which includes a payment of $ 1.5 5 2.00 430,000 1,643,699 Schedule of Change in Deferred Consideration Stock consideration Cash consideration Third Anniversary Consideration Payment January 1, 2022 $ - $ - $ - Add: Abaca acquisition 11,391,205 5,618,616 - Add: Fair value adjustment 65,433 32,160 - December 31, 2022 11,456,639 5,650,775 - Less: Working capital adjustment (108,691 ) - - Less: Issuance of shares and payment to shareholders (4,085,075 ) (3,000,000 ) - Less: Issuance of Abaca warrants (1,643,699 ) - - Less: Issuance of third anniversary payment consideration (430,000 ) - 430,000 Less: Gain recognized in the consolidated statements of operations (5,645,107 ) - - Add: Fair value adjustment 455,933 239,017 380,000 December 31, 2023 $ - $ 2,889,792 810,000 The second amendment has also led to a net gain of $ 5.6 Schedule of Change in Fair Value of Deferred Consideration Change in the fair value of stock consideration $ 7,718,806 Less: Fair value of third-anniversary consideration (430,000 ) Less: Fair value of Abaca warrants (1,643,699 ) Change in the fair value of deferred consideration on October 26, 2023, due to Second Amendment 5,645,107 Less: Adjustment to the fair value of deferred consideration for the year 2023 (1,074,950 ) Net impact recognized in the Consolidated Statements of Operations $ 4,570,157 |
Goodwill and Finite-lived Intan
Goodwill and Finite-lived Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Finite-lived Intangible Assets | Note 6. Goodwill and Finite-lived Intangible Assets Goodwill The Company’s goodwill was derived from the transaction discussed in note 4, where the purchase price exceeded the fair value of the net identifiable assets acquired. Goodwill is tested for impairment at least annually, or more frequently if a triggering event occurs. On July 20, 2023, the Company agreed to terminate the Master Services and Revenue Sharing Agreement between Abaca and Central Bank, effective October 1, 2023. Under the agreement, the Company provided expertise and intellectual property that allowed the Company and Central Bank to jointly serve the deposit banking needs of cannabis related businesses primarily located in Arkansas. The Company engaged a third-party valuation specialist to assist in the performance of an impairment analysis of the goodwill at June 30, 2023 in conjunction with the aforementioned triggering event, and also at December 31, 2023 for the annual impairment test. In conducting the quantitative goodwill impairment tests as of June 30, 2023, and December 31, 2023, the Company adopted a hybrid method, allocating one-third of the emphasis on the income approach and the remainder two-third on the market approach to assess the goodwill’s fair value . The discounted cash flow models reflect company’s assumptions regarding revenue growth rates, risk-adjusted discount rate, terminal period growth rate, economic and market trends and other expectations about the anticipated operating results of the goodwill. Under the market approach, the Company estimates the fair value based on market multiples of revenues derived from comparable publicly traded companies with operating characteristics similar to the Company. During the interim impairment assessment at June 30, 2023, it was found that the carrying value of goodwill exceeded its fair value, leading to the recognition of a $ 13.21 Fair value determination of the goodwill requires considerable judgment and is sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the quantitative goodwill impairment tests will prove to be an accurate prediction of future results. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of the goodwill may include such items as: (i) an increase in the weighted-average cost of capital due to further increases in interest rates, (ii) timing and success of estimated future income, it is possible that an additional impairment charge may be recorded in the future, which could be material. As of December 31, 2022, there were no negative indicators in the goodwill impairment that would impact the fair value of the goodwill. The change in the carrying amount of goodwill from January 1, 2022, to December 31, 2023, is as follows: Schedule of Carrying Amount of Goodwill January 1, 2022 $ - Acquisition of Abaca 19,266,276 December 31, 2022 19,266,276 Impairment of Goodwill (13,208,276 ) December 31, 2023 $ 6,058,000 As of December 31, 2023, our accumulated goodwill impairment was $ 13,208,276 Finite-lived intangible assets The Company reviews its finite-lived intangible assets is tested for impairment at least annually on December 31st unless any events or circumstances indicate it is more likely than not that the fair value of the finite-lived intangible assets is less than its carrying value. As of June 30, 2023, due to the triggering event mentioned in the analysis of Goodwill analysis above, the Company conducted an interim test. Furthermore, in alignment with our policy, an annual assessment was carried out on December 31, 2023. The finite-lived intangible assets consist of market-related intangibles, customer relationships, and developed technologies. The interim test, conducted as of June 30, 2023, utilized the Royalty Method for market-related intangibles, the Discounted Cash Flow Method for customer relationships, and the Cost to Re-create Method for developed technologies. This assessment led to the recognition of an impairment charge of $ 3,680,463 2,019,000 5,699,464 Schedule of Finite Lived Intangible Assets Remaining Useful life in Years December 31, 2022 (A) Acquired in Acquisition (B) Amortization (C) Impairment (D) December 31, (A+B-C-D) Market related intangible assets 6.87 2,066,918 $ - $ 136,034 1,865,668 $ 65,216 Customer relationships 8.87 1,974,795 - 103,225 1,814,795 56,775 Developed technology 5.87 6,579,374 - 960,620 2,019,001 3,599,753 Total intangible assets $ 10,621,087 $ - $ 1,199,877 5,699,464 $ 3,721,745 Following is a summary of the Company’s finite-lived intangible assets as of December 31, 2022: Remaining Useful life in Years January 1, 2022 (A) Acquired in Acquisition Amortization (C) Impairment (D) December 31, 2022 (A+B-C-D) Market related intangible assets 8.00 - $ 2,100,000 $ 33,082 - $ 2,066,918 Customer relationships 10.00 - 2,000,000 25,205 - 1,974,795 Developed technology 7.00 - 6,700,000 120,626 - 6,579,374 Total intangible assets $ - $ 10,800,000 $ 178,913 - $ 10,621,087 |
Loans Receivable
Loans Receivable | 12 Months Ended |
Dec. 31, 2023 | |
Receivables [Abstract] | |
Loans Receivable | Note 7. Loans Receivable Commercial real estate loans receivable, net consist of the following: Schedule of Commercial Real Estate Loans Receivable December 31, 2023 December 31, 2022 Commercial real estate loans receivable, gross $ 404,577 $ 1,432,560 Allowance for credit losses (10,723 ) (21,488 ) Commercial real estate loans receivable, net 393,854 1,411,072 Current portion (12,391 ) (51,300 ) Noncurrent portion $ 381,463 $ 1,359,772 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 Company’s estimated the allowance for credit losses on the reporting date in accordance with the credit loss policy described in Note 2. The allowance for credit losses consists of the following activity for the year ended December 31, 2023 and 2022: Schedule of Allowance For Loan Losses Year ended December 31, 2023 2022 Allowance for credit losses Beginning balance $ 21,488 $ 14,741 Cumulative effect from adoption of CECL 14,980 - Charge-offs - - Recoveries - - (Benefits) Provision (25,745 ) 6,747 Ending balance $ 10,723 $ 21,488 Loans receivable: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 404,577 1,432,560 $ 404,577 $ 1,432,560 Allowance for credit losses: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 10,723 21,488 $ 10,723 $ 21,488 At December 31, 2023 and December 31, 2022, no loans were past due, classified as non-accrual or considered impaired. Additionally, no loans were modified during the years ended December 31, 2023, or 2022. 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. The Company continuously evaluates the credit quality of each indemnified loan by assessing the risk factors and assigning a risk rating based on a variety of factors. The detailed breakdown of risk factors described in Note 8. The carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value within each risk rating is as follows: Schedule of Risk Rating Risk rating Year ended. December 31, 2023 Year ended December 31, 2022 4 $ 404,577 $ 1,432,560 Grand total $ 404,577 $ 1,432,560 |
Indemnification Liability
Indemnification Liability | 12 Months Ended |
Dec. 31, 2023 | |
Indemnification Liability | |
Indemnification Liability | Note 8. Indemnification Liability As discussed at Note 10 to the 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 0.35% of the outstanding loan principal funded and serviced by PCCU and 0.25% of the outstanding loan principle serviced by SHF. The below schedule details outstanding amounts funded by PCCU and categorized as either collateralized loans or unsecured loans and lines of credit. Schedule of Outstanding Amounts December 31, 2023 December 31, 2022 Secured term loans $ 55,215,013 $ 18,400,000 Unsecured loans and lines of credit 431,640 498,042 Total loans funded by Parent $ 55,646,653 $ 18,898,042 Secured loans contained an interest rate ranging from 7 12 Unsecured loans and lines of credit contain variable rates ranging from Prime +1.50 % to Prime +6.00 %. 525,000 996,958 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. The Company’s estimated indemnity liability on the reporting date was calculated in accordance with the allowance for credit loss policy described in Note 2. The indemnity liability activity are as follows: Schedule of Indemnity Liability Year ended. December 31, 2023 Year ended December 31, 2022 Beginning balance $ 499,465 $ - Cumulative effect from adoption of CECL 566,341 - Charge-offs - - Recoveries - - Provision 316,602 499,465 Ending balance $ 1,382,408 $ 499,465 All loans were current and considered performing at December 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 $ 3.1 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. The Company continuously evaluates the credit quality of each indemnified loan by assessing the risk factors and assigning a risk rating based on a variety of factors. Risk factors include property type, geographic and local market dynamics, physical condition, projected cash flow, loan structure and exit plan, loan-to-value ratio, fixed charge coverage ratio, project sponsorship, and other factors deemed necessary. Based on a 10-point scale, the Company’s loans are rated “0” through “10,” from less risk to greater risk, which ratings are defined as follows: Risk rating Category Description 0 Risk Free Free of repayment risk. The loan is fully guaranteed by the full faith and backing of the US Government or entirely secured by cash controlled by SHF. 1 Highest Quality High caliber loan with the lowest risk of default. Significant excess cash flow after debt service and moderate to low leverage. 2 Excellent High quality loan that carry’s a low risk of default. Strong cash flow and relatively few negative individual risk factors. 3 Good Loans with lower-than-average level of risk. Excess cash flow and other factors contributing to the overall low level of risk in the loan. 4 Average Risk factors may be mixed with some negative and some positive aspects, but the overall rating will indicate an average level of risk. 5 Fair Loans in this category have the maximum level of risk that can be accepted while still recommending a new loan for origination. The loan risk factors may contain multiple negative factors, but they are generally outweighed by the positive aspects of the loan. 6 Watch List There is a temporary and curable condition resulting in a lower risk rating. 7 Special Mention There is a potential weakness that may result in the deterioration of the prospect of repayment that are not temporary and may require additional collection or workout efforts. 8 Substandard Loans in this category are inadequately protected by the current net worth and paying capacity of the obligors or of the collateral pledged and have well-defined weaknesses that jeopardize the liquidation of the debt with distinct possibility of loss. SHF may be required to advance additional funds to manage the loan. Escalated collection activities such as foreclosure have been scheduled with anticipated losses up to 20% of the outstanding balance. 9 Doubtful Collection or liquidation in full highly questionable and improbable. Escalated collection activities such as foreclosure have commenced with anticipated losses from 20% to 50% of the outstanding balance. 10 Loss Uncollectable loans. A complete write-off is imminent although a partial recovery may be affected in the future. 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 carrying value, excluding the CECL Reserve, of the Company’s indemnified loans held at carrying value within each risk rating is as follows: Schedule of Indemnified Loans Risk Rating Risk rating Year ended. December 31, 2023 Year ended December 31, 2022 3 $ 10,100,000 $ 1,100,000 4 3,431,640 - 5 28,115,013 5,498,042 6 10,900,000 9,200,000 7 3,100,000 3,100,000 Grand total $ 55,646,653 $ 18,898,042 The provision for credit losses on the statement of operations consists of the following activity for the year ended December 31, 2023 and December 31, 2022: Schedule of Provision for Loan Losses Commercial real estate loans Indemnity liability Total Commercial real estate loans Indemnity liability Total December 31, 2023 December 31, 2022 Commercial real estate loans Indemnity liability Total Commercial real estate loans Indemnity liability Total Provision (benefit) $ (25,745 ) $ 316,602 $ 290,857 $ 6,747 $ 499,465 $ 506,212 |
Property and equipment, net
Property and equipment, net | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Note 9. Property and equipment, net Property and equipment consist of the following: Schedule of Property and Equipment, Net December 31, 2023 December 31, 2022 Equipment $ 45,397 $ 45,397 Software 51,692 51,692 Improvement 71,635 71,635 Office furniture 215,504 7,070 Property and equipment, gross 384,228 175,794 Less: accumulated depreciation (300,008 ) (126,180 ) Property and equipment, net $ 84,220 $ 49,614 Depreciation expense was $ 173,828 10,361 |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 10. 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 assumed 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 agreed to pay SHF all revenue generated from CRB accounts. Amounts due to SHF were due monthly in arrears and upon receipt of invoice. This agreement was replaced and superseded in its entirety by Commercial Alliance Agreement entered on March 29, 2023, between PCCU and the Company. Support Services Agreement On 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 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 Commercial Alliance Agreement On March 29, 2023, the Company and PCCU entered into the Commercial Alliance Agreement. This Agreement sets forth the terms and conditions of the lending and account-related services, governing the relationship between the Company and PCCU. The Commercial Alliance Agreement replaces and supersedes, in their entirety, the following agreements entered into between the aforementioned parties: the Amended and Restated Loan Servicing Agreement (the “Loan Servicing Agreement”, dated September 21, 2022); the Second Amended and Restated Account Servicing Agreement (“the “Account Servicing Agreement,” dated May 23, 2022, effective February 11, 2022) and the Second Amended and Restated Support Services Agreement (the “Support Agreement,” dated May 23, 2022, effective February 11, 2022). The Commercial Alliance Agreement sets forth the application, underwriting, loan approval, and foreclosure process for loans from PCCU to borrowers that are cannabis-related businesses and the loan servicing and monitoring responsibilities provided by the Company and PCCU. In particular, the Commercial Alliance Agreement provides for procedures to be followed upon the default of a loan to ensure that neither the Company nor PCCU will take title to or possession of any cannabis-related assets, including real property, that may be collateral for a loan funded by PCCU pursuant to the Commercial Alliance Agreement. Under the Commercial Alliance agreement, the PCCU has the right to receive monthly fees for managing loans. For SHF-serviced loans, which are CRB loans provided by the PCCU but primarily handled by SHF, a yearly fee of 0.25 0.35 In addition, the Commercial Alliance Agreement provides for certain fees to be paid to the Company for certain identified account related services to include: 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 for a monthly fee equal to $30.96 per account in 2022, $25.32-$27.85 per account in 2023, and $26.08-$28.69 in 2024. In addition, as it pertains to CRB deposits held at PCCU, investment and interest income earned on these deposits (excluding interest income on loans funded by PCCU) will be shared 25% to PCCU and 75% to the Company. Finally, under the Commercial Alliance Agreement, PCCU will continue to allow its ratio of CRB-related deposits to total assets to equal at least 60% unless otherwise dictated by regulatory, regulator or policy requirements. The initial term of the Commercial Alliance Agreement is for a period of two years, with a one-year automatic renewal unless a party provides one hundred twenty days’ written notice prior to the end of the term. In fiscal 2022 and up to the third quarter of 2023, our investment earnings were solely from interest on deposits at the Federal Reserve Bank, capped at the earnings accrued by PCCU from its reserves. However, a strategic shift in the fourth quarter of 2023 led us to adopt Federal Reserve’s interest rates applied to the daily average balance of SHF customer deposits, with certain exclusions. This method, applied retroactively from the beginning of 2023, resulted in incremental revenue of $ 549,000 25 The below schedule demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits: Schedule of Demonstrated Deposit Capacity December 31, 2023 December 31, 2022 CRB related deposits $ 129,350,998 $ 161,138,975 Capacity at 60% 77,610,599 96,683,385 PCCU net worth 81,087,746 133,231,565 Capacity at 1.3125 106,670,306 174,866,429 Limiting capacity 77,610,599 174,866,429 PCCU loans funded 55,660,039 18,898,042 Amounts available under lines of credit 525,000 996,958 Incremental capacity $ 21,425,560 $ 154,971,429 The revenue from the PCCU Agreements recognized in the statements of operations consists of the following for the year ended December 31, 2023, and December 31, 2022: Schedule of Revenue from Operations Year ended December 31, 2023 Year ended December 31, 2022 Account servicing agreement $ 3,075,458 $ 8,823,608 Commercial alliance agreement 10,761,245 - Total $ 13,836,703 $ 8,823,608 Revenue $ 13,836,703 $ 8,823,608 The operating expense from the PCCU Agreements recognized in the statements of operations consists of the following for the year ended December 31, 2023, and December 31, 2022: Schedule of Operating Expense from Operations Year ended December 31, 2023 Year ended December 31, 2022 Support services agreement $ 378,730 $ 775,259 Loan servicing agreement 11,929 26,088 Commercial alliance agreement 1,665,644 - Total $ 2,056,303 $ 801,347 Operating expense $ 2,056,303 $ 801,347 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-year 14,500,000 4.25 ● A Securities Issuance Agreement, pursuant to which the Company issued 11,200,000 46.39 ● 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 0 1,150,000 The outstanding balances associated with the PCCU disclosed in the balance sheet are as follows: Schedule of Outstanding Balances from Balance Sheet December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Accounts receivable $ 2,095,320 $ 1,231,727 Accounts payable 577,315 5,078,042 Due to Seller (Refer to Note 11 to the financial statements below) - 56,949,800 Senior Secured Promissory Note (Refer to Note 12 to the financial statements below) 14,011,166 - Of the $ 8.9 8.4 4.6 8.3 Transactions with Abaca shareholder As disclosed in Notes 4 and 5 to the consolidated financial statements, the merger with Abaca that occurred in October 2022 involves certain payments either paid or payable to the former shareholders of Abaca, warrants and issuances of stock. The former shareholders of Abaca represent a related party to the Company based on current employment with the Company and their significant equity ownership interest in the Company. |
Due to Seller
Due to Seller | 12 Months Ended |
Dec. 31, 2023 | |
Due To Seller | |
Due to Seller | Note 11. Due to Seller Amounts due to seller were as follows: Schedule of Amounts Due to Seller December 31, 2023 December 31, 2022 Due to Seller-Current (Unsecured) $ - $ 25,973,017 Due to Seller-long term (Unsecured) - 30,976,783 Total loans funded by PCCU $ - $ 56,949,800 As contemplated by the Unit Purchase Agreement, related to reverse acquisition of NLIT, the consideration paid to 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, the Company 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 five-year 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 | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Senior Secured Promissory Note | Note 12. Senior Secured Promissory Note Schedule of Senior Secured Promissory Note December 31, 2023 December 31, 2022 Senior Secured Promissory Note (current) $ 3,006,991 $ - Senior Secured Promissory Note (long term) 11,004,175 - Total $ 14,011,166 $ - 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 installments of principal and interest of $ 295,487 The repayment schedule of the outstanding principal amount on December 31, 2023, is as follows: Schedule of Outstanding Amount on Debt Year of payment 2024 $ 3,006,991 2025 3,138,933 2026 3,274,966 2027 3,416,896 2028 1,173,380 Grand total $ 14,011,166 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Leases | Note 13. 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 years ten years 859,861 1,016,198 1,007,993 1,028,233 The Company analyses 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 years ended December 31, 2023 and 2022, included in Consolidated Statements of Operations, is detailed in the table below: Schedule of Lease Cost and Right of Use Assets Related to Lease and Future Minimum Lease Payments Year ended December 31, 2023 Year ended December 31, 2022 Operating lease cost $ - $ - Short-term lease cost 315,615 99,246 Total Lease Cost $ 315,615 $ 99,246 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 year (156,337 ) (13,028 ) Lease modifications - - Ending balance $ 859,861 $ 1,016,198 Further information related to leases is as follows: Weighted-average remaining lease term 3.42 4.42 Weighted-average discount rate 6.87 % 6.87 % Future minimum lease payments as of December 31, 2023 and December 31, 2022 are as follows: Schedule of Future Minimum Lease Payments Year 2023 $ - $ 91,303 2024 197,520 197,520 2025 217,925 217,925 2026 222,275 222,275 2027 226,705 226,705 2028 231,216 231,216 Thereafter 117,710 117,710 Total future minimum lease payments $ 1,213,351 $ 1,304,654 Less: Imputed interest 205,358 276,421 Operating lease liabilities $ 1,007,993 $ 1,028,233 Less: Current portion 132,546 20,124 Non-current portion of lease liabilities $ 875,447 $ 1,008,109 |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 14. Revenue Disaggregated revenue Revenue by type are as follows: Schedule of Disaggregated Revenue 2023 2022 Year ended December 31 2023 2022 Deposit, activity, onboarding income $ 8,614,945 $ 6,063,939 Investment income 5,844,836 2,120,640 Loan interest income 2,972,434 1,130,178 Safe Harbor Program income 130,688 164,062 Total Revenue $ 17,562,903 $ 9,478,819 Account fee income consists of deposit account fees, activity fees and onboarding income, which are recognized on periodic basis as per the fee schedule with financial partner institutions. 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. Loan interest income consist of interest earned on both direct and indemnified loans pursuant to a commercial alliance agreement with PCCU. Investment income consist of interest earned on the daily deposits balance with financial institution. In fiscal 2022 and up to the third quarter of 2023, our investment earnings were solely from interest on deposits at the Federal Reserve Bank, capped at the earnings accrued by PCCU from its reserves. However, a strategic shift in the fourth quarter of 2023 led us to adopt Federal Reserve’s interest rates applied to the daily average balance of SHF customer deposits, with certain exclusions. This method, applied retroactively from the beginning of 2023, resulted in incremental revenue of $ 549,000 25 5,150,397 5,803,114 2,883,192 529,209 1,445,517 81,577 5,554,922 2,110,572 989,642 255,853 519,406 26,088 |
Deferred underwriter fee
Deferred underwriter fee | 12 Months Ended |
Dec. 31, 2023 | |
Deferred Underwriter Fee | |
Deferred underwriter fee | Note 15. 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 | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 16. Commitments and Contingencies ● 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. ● In connection with the issuance of common stock to Abaca shareholders, the Company commits to registering the stock upon the exercise of Warrants if required by law or regulation to ensure the shares can be sold without restrictive legends, known as the Warrant Registration Requirement. Should this requirement arise, the Company is obliged to file a registration statement with the SEC within 45 calendar days of notification of the Warrant Registration Requirement. The failure to file within this timeframe constitutes an event of default. Moreover, the Company is dedicated to making the registration statement effective as promptly as possible and maintaining its effectiveness, along with a current prospectus, until the Warrants expire according to this Agreement’s terms. In the event a registration statement triggered by a Warrant Registration Requirement is not declared effective by the SEC within one year from its filing date, Warrant holders are entitled to exercise their Warrants on a cashless basis from the 366th day post-filing until the statement becomes effective. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 17. 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 For year Ended December 31 2023 2022 Net loss $ (17,279,847 ) $ (35,128,083 ) Weighted average shares outstanding – basic 42,574,563 18,988,558 Basic net loss per share $ (0.41 ) $ (1.85 ) Weighted average shares outstanding – diluted 42,574,563 18,988,558 Diluted net loss per share $ (0.41 ) $ (1.85 ) Weighted average shares calculation December 31, 2023 December 31, 2022 Company public shares 3,926,598 3,926,598 Company initial stockholders 3,403,175 3,403,175 PCCU stockholders 19,977,920 11,386,139 Shares issued for Abaca acquisition 3,155,222 264,654 Restricted stock units issued 999,638 - Conversion of Preferred stock 11,112,010 7,992 Grand total 42,574,563 18,988,558 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 Share-based Equity Awards Excluded From Computation of Dilutive Loss For year Ended December 31 2023 2022 Warrants 12,786,588 7,036,588 Share based payments 2,643,277 2,170,000 Shares to be issued to Abaca shareholders - 6,433,839 Conversion of preferred stock 880,800 13,443,000 Grand total 16,310,665 29,083,427 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. |
Forward Purchase Agreement
Forward Purchase Agreement | 12 Months Ended |
Dec. 31, 2023 | |
Forward Purchase Agreement | |
Forward Purchase Agreement | Note 18. 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. In 2022, the Company had already called a special meeting to lower the make-whole price under the preferred share purchase agreement to $ 1.25 ● In 2022, an agreement was reached among the Company, its common shareholders, and preferred investors, leading to a reduction in the make-whole price to $ 1.25 37.9 4.6 ● The reconciliation statement of the common stock held by the parties are as follows: Schedule of Forward Purchase Agreement As at Shares sold during As at S.no Name of the party Opening Shares Amount Shares Amount Shares Rest price Amount 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 On the date of Shares sold during As at Name of the Opening Amount Shares Amount Shares Rest Amount Vellar 1,025,000 $ 10,583,246 53,796 $ 524,472 971,204 1.25 $ 1,214,005 Midtown East 1,599,496 16,514,986 81,572 832,850 1,517,924 1.25 1,897,405 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 |
Warrant Liabilities
Warrant Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Warrant Liabilities | |
Warrant Liabilities | Note 19. Warrant Liabilities Public and Private Placement Warrants As of December 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. 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, 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 December 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 Abaca Warrants As of December 31, 2023, the Company has 5,000,000 no The Abaca 5,000,000 2.00 5 2.00 |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2023 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Note 20. 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 exchange traded price, 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. In 2023, the Company internally assessed the value of these derivatives with Level 3 inputs, which are derived from Black-Scholes model . This is a change from 2022, when the valuation was based on third-party reports, also utilizing Level 3 inputs for these derivatives. Management believes that this change was necessary to enhance the precision and control over the valuation process, allowing for a more tailored and responsive approach to the unique characteristics of the derivatives and the evolving market conditions. PIPE Warrants: PIPE Warrants are recorded at fair value on a recurring basis. In 2023, the Company internally assessed the value of these derivatives with Level 3 inputs, which are derived from Black-Scholes model. This is a change from 2022, when the valuation was based on third-party reports, also utilizing Level 3 inputs for these derivatives. Management believes that this change was necessary to enhance the precision and control over the valuation process, allowing for a more tailored and responsive approach to the unique characteristics of the derivatives and the evolving market conditions. Abaca Warrants: Abaca Warrants are recorded at fair value on a recurring basis. The Company internally assessed the value of these derivatives with Level 3 inputs. Level 3 inputs, based on unobservable data derived from Black-Scholes model. Third anniversary payment consideration: Third anniversary payment consideration 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 unobservable data derived from Black Scholes-Merton model. Forward purchase option derivatives: Forward purchase option derivatives are recorded at fair value on a recurring basis. In 2022, the Company values these derivatives based on third party reports for Level 3 inputs. In 2023, no significant risk factor changes affecting FPA derivative values were noted. Consequently, management retained the December 31, 2022, valuation for December 31, 2023. 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 December 31, 2023, and December 31,2022: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other December 31, 2023 December 31, 2022 Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other (Level 3) Description Liabilities: PIPE warrants $ 273,124 - 273,124 $ 286,300 - 286,300 Public warrants $ 481,850 481,850 - $ 361,100 361,100 - Private placement warrants $ 25,070 - 25,070 $ 19,110 - 19,110 Abaca warrant $ 3,384,085 - 3,384,085 $ - - - Forward purchase derivative liability $ 7,309,580 - 7,309,580 $ 7,309,580 - 7,309,580 Third anniversary payment consideration $ 810,000 - 810,000 $ - - - Liabilities $ 810,000 - 810,000 $ - - - Assets Measured at Fair Value on a Nonrecurring Basis Assets that are measured at fair value on a nonrecurring basis primarily comprises of property, plant and equipment, right-to-use assets, finite lived intangible assets and goodwill. The Company does not record these at fair value on a recurring basis, however, the carrying value of the assets may be reduced to fair value when the Company determines that impairment has occurred. At December 31, 2023, the Company’s developed technology asset were measured at fair value on a nonrecurring basis as result of annual impairment testing. In order to evaluate the fair value of the developed technology asset, the annual impairment test employed the Relief from Royalty Method for accurately reflecting market conditions and asset performance (Refer to note 5 - Goodwill and Finite-lived intangible assets). The following table presents the carrying amounts and fair values of financial instruments measured on a nonrecurring basis, 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 Measured on a Nonrecurring Basis Level 1 Level 2 Level 3 As on December 31, 2023 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Developed Technology 3,599,754 3,599,754 - - 3,599,754 The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the finite lived intangible assets as of their measurement dates: Schedule of Finite Lived Intangible Assets Measurement As on December 31, 2023 Developed technology Royalty rate 6.50 % Discount rate 14.25 % Estimated useful life 5.87 Tax rate 25 % Fair value measurements inputs 25 % There were no assets or liabilities recorded at fair value on a nonrecurring basis for the period ended December 31, 2022. 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 Level 1 Level 2 Level 3 As on December 31, 2023 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 4,888,769 $ 4,888,769 $ 4,888,769 $ - $ - Forward purchase receivables 4,584,221 4,584,221 4,584,221 - - Loans 330,579 363,561 - - 363,561 Liabilities Deferred consideration 2,889,792 2,889,792 2,889,792 - - Senior secured promissory note 14,011,166 12,750,204 - - 12,750,204 Public warrants 481,850 481,850 481,850 - - Private placement warrants 25,070 25,070 - - 25,070 PIPE warrants 273,124 273,124 - - 273,124 Abaca warrants 3,384,085 3,384,085 - - 3,384,085 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 Third anniversary payment consideration 810,000 810,000 - - 810,000 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 - - 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 the Company have utilized Level 3 inputs to determine fair value are presented in the following table: Schedule of Fair Value Assets Measured on Recurring Basis For the Year ended December 31, 2023 PIPE Warrants Abaca Warrant Private Placement Warrants Third anniversary payment consideration Forward Purchase Derivative Balance at the beginning of the period $ 286,300 - 19,110 - 7,309,580 Issued to Abaca shareholders - 1,635,407 - 430,000 - Acquired under business combination Fair value adjustment (13,176 ) 1,740,386 5,960 380,000 - Balance at the end of the period $ 273,124 3,384,085 25,070 810,000 7,309,580 For the Year ended December 31, 2022 PIPE Warrants Private Placement Warrants Forward Purchase Derivative Balance at the beginning of the period $ - $ - $ - Acquired under business combination 203,112 (1,687,530 ) Fair value adjustment 286,300 184,002 8,997,110 Balance at the end of the period $ 286,300 $ 19,110 $ 7,309,580 In 2023, the valuation of private placement warrants, PIPE warrants, and Abaca warrants was carried out using the Black-Scholes model, while the fair value of the Abaca third anniversary payment consideration was determined using the Black Scholes Merton Option pricing model. Contrastingly, in 2022, the fair value assessments for both the private placement warrants and PIPE warrants were conducted using the Black-Scholes model and the Black Scholes-Merton model, respectively. Management believes that the change in method for PIPE warrants was necessary to enhance the precision and control over the valuation process, allowing for a more tailored and responsive approach to the unique characteristics of the derivatives and the evolving market conditions. As of December 31, 2023, and December 31, 2022, these warrants were valued for Level 3 inputs, which are based on observable data to value these derivatives. In 2022, 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). In 2023, no significant risk factor changes affecting FPA derivative values were noted. Consequently, management retained the December 31, 2022, valuation for December 31, 2023.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. During the fiscal years 2022 and 2023, there were no changes in the classification of financial instruments within Level 2 and Level 3 of the fair value hierarchy. 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 PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants December 31, 2023 December 31, 2022 PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants Exercise price $ 5 $ 11.5 - $ 2 $ 5 $ 11.5 - - Share Price $ 1.42 $ 1.42 $ 1.42 $ 1.42 $ 1.78 $ 1.78 - - Expected term (years) 3.74 3.74 1.76 4.84 4.74 4.74 - - Volatility 62.95 % 62.95 % 62.95 % 62.95 % 46.00 % 46.00 % - - Risk-free rate 4.25 % 4.25 % 4.25 % 4.25 % 4.00 % 3.98 % - - Warrants and rights outstanding, measurement input 4.25 % 4.25 % 4.25 % 4.25 % 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 December 31, 2023 and December 31, 2022: Schedule of Level 3 Fair Value Measurements Inputs December 31, 2023 December 31, 2022 Reset Price $ 1.25 $ 1.25 Expected term (years) 1.74 2.74 Additional Maturity Consideration per share $ 2.00 $ 2.00 Volatility 46 % 46 % Risk-free rate 4.2 % 4.2 % Risk-adjusted discount rate 13.4 % 13.4 % Derivative liability, measurement input 13.4 % 13.4 % |
Tax
Tax | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Tax | Note 21. Tax The major components of income tax expense for the years ended 31 December 2023 and 31 December 2022: Schedule of Major Components of Income Tax For year ended December 31, 2023 2022 Current income tax: Current tax on profits $ - $ (3,394 ) Deferred tax: Deferred taxation - current year $ (1,829,701 ) $ (9,249,499 ) Income tax benefit reported in the income statement $ (1,829,701 ) $ (9,252,893 ) A reconciliation follows between tax benefit and the product of accounting profit multiplied by the United States domestic tax rate for the years ended December 31, 2023 and December 31, 2022: Schedule of Effective Income Tax Rate Reconciliation For year ended December 31, 2023 2022 Accounting loss before tax from continuing operations (19,109,548 ) $ (44,380,976 ) Accounting loss before income tax (19,109,548 ) (44,380,976 ) At federal statutory income tax rate of 21% (4,013,005 ) (9,320,005 ) State income tax benefit, net of federal benefit (253,649 ) (1,304,510 ) Permanent differences, net 2,207,439 1,787,471 Other 229,514 (415,849 ) Total (1,829,701 ) $ (9,252,893 ) Deferred tax: Deferred taxes are comprised of the following: Schedule of Deferred Tax Assets and Liabilities December 31, 2023 December 31, 2022 Change Loan Loss Reserve 340,982 127,508 (213,473 ) Capital Loss Carryover 72,914 - (72,914 ) Stock Option Expense 1,322,890 686,879 (636,011 ) Deferred Revenue 5,366 251 (5,115 ) Fixed Assets 20,866 (11,444 ) (32,310 ) Transaction Costs 1,014,922 817,323 (197,599 ) Change in Forward Purchase Contract 8,155,953 8,155,953 - Goodwill 30,631,880 42,551,111 11,919,231 NOL Carryforward 3,210,838 1,862,393 (1,348,445 ) ROU Assets (210,460 ) (248,725 ) (38,265 ) ROU Liabilities 246,716 251,670 4,954 Intangible Assets (910,934 ) (2,599,617 ) (1,688,683 ) Valuation Allowance (72,914 ) - 72,914 Net deferred tax assets / (liabilities) 43,829,019 51,593,302 7,764,284 Reflected in the statement of financial position as follows: Deferred tax assets 44,950,413 - Deferred tax liabilities (1,121,394 ) - Deferred tax assets net 43,829,019 - Reconciliation of deferred tax liabilities net: Schedule of Deferred Tax Liabilities Net Year on year change December 31, 2022 Opening balance as on December 31, 2022 $ 51,593,302 $ - Tax Income/(expense) during the period recognized in profit or loss 1,829,701 9,249,499 Acquisitions (9,593,985 ) 42,343,803 Closing balance as on December 31, 2023 $ 43,829,019 $ 51,593,302 The Company offsets tax assets and liabilities only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. The Company considers their deferred tax assets to be realizable and has not established a valuation allowance. The Company has US federal tax loss carryovers totaling $ 13.1 12.8 0.2 |
401(k) Plan
401(k) Plan | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
401(k) Plan | Note 22. 401(k) Plan The Company offers to all employees a tax-qualified retirement contribution plan, with the Company’s 100 4 62,785 47,806 |
Share based compensation
Share based compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share based compensation | Note 23. Share based compensation 2022 Equity Incentive Plan Share-based compensation expense recognized for the years ended December 31, 2023, and 2022 totaled $ 3.71 2.81 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, stock bonus awards, or performance compensation awards in the year ended December 31, 2023, and December 31, 2022. In conjunction with the 2023 Plan, as of December 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 year ended December 31, 2023, using the Black-Scholes-Merton model are as follows: Schedule of Fair Value of Options Granted Black-Scholes-Merton Model Particulars December 31, 2023 December 31, 2022 Dividend yield - - Risk-free interest rate 3.62 4.23 % 3.62 4.23 % Expected volatility (weighted-average and range, if applicable) 100 % 100 % Expected term 6.00 6.5 6.00 6.5 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 have been 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, Management has considered the expected volatility at 100 A summary of the Company’s stock option activities and related information for the year ended December 31, 2023, is as follows: Schedule of Stock Option and Related Information Stock Option No. of Stock Option Weighted Average Exercise Price Weighted-Average Remaining Contractual Life (in Years) December 31, 2022 2,170,000 5.29 2.02 Granted 336,730 $ 1.03 1.28 Exercised - - - Expired - - - Cancelled / Forfeited (220,720 ) (2.67 ) - December 31, 2023 2,286,010 $ 5.43 1.65 On December 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 year ended December 31, 2023 or year ended December 31, 2022. Stock Option No. of Stock Option Weighted Average Exercise Price Weighted-Average Remaining Contractual Life (in Years) December 31, 2021 - - - Granted 2,170,000 $ 5.29 2.02 Exercised - - - Expired - - - Cancelled / Forfeited - - - December 31, 2022 2,170,000 $ 5.29 2.02 The following options were outstanding at their respective exercise price: Schedule of Options Outstanding Exercise price options outstanding December 31, 2023 December 31, 2022 $1.56 376,510 87,500 $2.58 350,000 350,000 $4.00 309,500 482,500 $6.67 1,250,000 1,250,000 Total 2,286,010 2,170,000 Restricted Stock Units (“RSUs”) A summary of the Company’s RSU activities and related information for the year ended December 31, 2023, is as follows: Schedule of Restricted Stock Units Restricted Stock Units No. of RSU Weighted- Average Grant Date Fair Value Per RSU Weighted-Average Remaining Contractual Life (in Years) December 31, 2022 - $ - $ - Granted 1,600,028 0.99 2.0 Exercised (1,266,228 ) (0.90 ) - Expired - - - Cancelled / Forfeited (10,300 ) 1.31 - December 31, 2023 323,500 $ 0.47 2.0 The following RSU were outstanding at their respective exercise price: Schedule of Exercise price of Restricted Stock Units Exercise price RSU outstanding December 31, 2023 December 31, 2022 $1.31 323,500 - Total 323,500 - The fair value as of the respective vesting dates of RSUs that vested during the year ended December 31, 2023, and December 31, 2022 was $ 1,140,648 0 |
Subsequent event
Subsequent event | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent event | Note 24. Subsequent event For the period subsequent to the reporting date up to the date of filing this report, there have been no significant events that would materially affect the financial position or results of operations as presented in this 10-K. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Use of Estimates | i. Use of Estimates The preparation of the 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 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, valuation and 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 consolidated financial statements and related notes have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company, and its wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated in consolidation. In this reporting period, we have adopted the Current Expected Credit Loss (CECL) accounting standard for the first time, marking a significant change in our accounting policy for the recognition of credit losses. This adoption necessitates the estimation and immediate recognition of expected credit losses over the lifetimes of our financial assets upon their origination or acquisition, which is a departure from the previous incurred loss approach. The accounting method was adopted with on a modified retrospectively basis, and the effects of this adoption were recorded as of January 1, 2023. The Company has made certain immaterial reclassifications to the 2022 balance sheet and statements of operations to conform to the presentation of the 2023 balance sheet and statements of operations. These included reclassifications totaling $ 1,198,781 32,946 196,968 4,881,074 109,081 97,593 |
Liquidity and Going Concern | iii. Liquidity and Going Concern As of December 31, 2023, the Company had $ 4,888,769 135,355 20,712,319 832,144 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 consolidated financial statements have been issued. If the Company is not able to sustain its present level of operations, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned expansion programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. The accompanying 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, majority of the Company’s revenue is generated by deposits and loans hosted by PCCU pursuant to a master service agreement. The Company had only one loan on its balance sheet as of December 31, 2023, which comprises 100 10 |
Accounts Receivable and Allowance for Doubtful Accounts | vi. Accounts Receivable 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. Accounts receivable - related party represents amounts due from PCCU under related party contracts disclosed in Note 10. The Company maintains allowances for doubtful accounts for estimated losses as a result of a customers’ inability to make required payments. The Company estimates anticipated losses from doubtful accounts based on days past due as measured from the contractual due date and historical collection history. The Company also takes into consideration changes in economic conditions that may not be reflected in historical trends, for example customers in bankruptcy, liquidation or reorganization. Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible. Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings. At December 31, 2023 and December 31, 2022, there were no |
Loans Receivable | vii. Loans Receivable CRB Loans that significantly support the Company’s operations are recognized as assets on the balance sheet. These loans, intended to be held either for the foreseeable future or until their maturity or full repayment, are recorded at their outstanding principal balance. This amount is adjusted for any credit loss allowances and net of any deferred loan origination fees and costs, as applicable, to reflect the net investment in these loans. The Company recognizes interest income on CRB Loans over the loan term using the simple-interest method based on outstanding principal amounts. This approach ensures a systematic recognition of income, aligning with the time value of money principle. Interest income recognition is suspended when there is uncertainty regarding full loan repayment, such as in cases of loan impairment or when payments are overdue by ninety days or more. Loans under these conditions are placed on nonaccrual status. Any accrued interest not received by the time a loan is placed on nonaccrual is reversed from interest income. Subsequent interest payments on nonaccrual loans are recorded using either the cash basis or the cost recovery method until the loan meets the criteria for reclassification to accrual status. Loans are returned to accrual status when they become current (less than ninety days past due) and when there is reasonable assurance of future payment compliance, evidenced by the full satisfaction of both principal and interest payments due. Loans are assessed individually for potential charge-off, which typically occurs at the point of foreclosure. Charge-offs are executed to reflect the realizable value of loans that are deemed uncollectible. The determination of a loan’s past-due status is based on its contractual repayment terms. Loans are either placed on nonaccrual status or charged-off ahead of their contractual delinquency dates if the collection of principal and interest is deemed doubtful, ceasing the recognition of interest income on such loans. |
Allowance for Credit Losses (ACL) | viii. Allowance for Credit Losses (ACL) On January 1, 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 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 internally developed model estimation approaches for smaller homogenous loans. The PD is quantified by analyzing historical data to determine the rate at which loans have defaulted within the portfolio, relative to the total outstanding loans as of the end of the reporting period. This rate is expressed as a percentage and serves as a key indicator of the likelihood of default across the loan pool. LGD assessments are conducted to estimate the potential loss amount in the event of a default, considering the recoverable value from the collateral liquidation against the remaining loan balance. This involves a detailed analysis of two primary components: the loss on principal, which arises from the gap between the collateral’s liquidation value and the unpaid principal balance of the loan; and the loss associated with various ancillary costs to recover, including, but not limited to, foregone interest, transaction costs, legal and administrative fees, and expenses related to the maintenance and renovation of the property. 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 (ALL) | ix. Allowance for Loan Losses (ALL) Prior to the adoption of CECL on January 1, 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 the Company 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 presented net of loans receivable asset for portfolio loans, or as a separate liability for indemnified loans, and recognized as interest income utilizing the interest method. |
Indemnity Liability | xi. Indemnity Liability Under the Loan Servicing Agreement and Commercial Alliance Agreement with PCCU, the Company had 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 and the Commercial Alliance Agreement (refer to Note 10 to the 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. |
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 3 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. The Company 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 finite 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. |
Goodwill and Other Intangible Assets | xiv. 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 tested for impairment at least annually, unless any events or circumstances indicate it is more likely than not that the fair value of the goodwill is less than its carrying value. The Company previously had elected to test goodwill for impairment as of November 15 th st 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 | xv. 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 have been 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 | xvi. 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 | xvii. 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. Under the terms of the Loan Servicing Agreement and the Commercial Alliance Agreement, the Company is responsible for covering account hosting costs associated with the fees generated from deposits held at PCCU. These costs are classified as “General and Administrative Expenses” in the Consolidated Statements of Operations. 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. SHF recognizes revenue from interest on loans and investment income distributed by PCCU, which is determined by particular customer account balances. As per the Loan Servicing Agreement and the Commercial Alliance Agreement, SHF bears the expenses for hosting investments and servicing loans related to this interest and investment income. These expenses are allocated to “General and Administrative Expenses” in the Consolidated Statements of Operations. 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 | xviii. 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 December 31, 2023, the Company reported contract assets and contract liabilities of $ 0 21,922 21,170 996 |
Warrants Liability | xix. Warrants Liability The Company has evaluated each of the warrant arrangements separately in accordance with ASC 480 and 815, to determine classification as either equity instruments or liabilities based on the specific terms and features of each warrant. Warrants are recognized as equity if they are indexed to our own stock and meet the equity classification criteria in ASC 815-40. These warrants are recorded within stockholders’ equity at their issuance date and are not subsequently remeasured at fair value. Conversely, warrants that do not meet the criteria for equity classification under ASC 815-40 are classified as liabilities. Such warrants are initially recorded at fair value on the issuance date and are subject to remeasurement at each balance sheet date thereafter. Any changes in fair value are recognized in the statement of operations. None of our warrant contracts met criteria to be considered indexed to their own stock, as a result, have each been accounted for as a liability financial instrument. The fair value of warrants classified as liabilities is determined using appropriate valuation models, such as the Black-Scholes model, which incorporates various inputs, including the current stock price, expected volatility, risk-free interest rate, and the expected term of the warrants. |
Deferred consideration | xix. Deferred consideration In line with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), the Company treats the deferred consideration from the Abaca acquisition as a derivative liability, since it does not fulfill the equity classification criteria. As a result, this obligation is recognized as a liability on the balance sheet at fair value and is adjusted to reflect its fair value at the end of each reporting period. The liability will be reassessed at fair value on every balance sheet date until the obligation’s term concludes. Fluctuations in its fair value are recorded in the consolidated statements of operations. |
Forward purchase derivative | xx. 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 The Company classifies the forward purchase derivative as an asset or liability carried at fair value and adjusts the forward purchase derivative 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 consolidated statement of operations. On December 31, 2022, a Monte-Carlo Simulation within a risk-neutral framework was used to estimate the forward purchase derivative’s fair value, assuming Geometric Brownian Motion for future stock prices. Values from each simulation path were determined per contractual terms and discounted by a matching risk-free rate. In 2023, no FPA holder sales occurred, and no significant risk factor changes affecting FPA derivative values were noted. Consequently, management retained the December 31, 2022 valuation for year-end 2023. |
Earnings Per Share | xxi. Earnings Per Share Basic and diluted earnings per share are computed and disclosed in accordance with ASC Topic 260, Earnings Per Share. The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-class method, earnings are adjusted by accretion amounts to redeemable noncontrolling interests recorded at redemption value. The adjustments represent dividend distributions, in substance, to the noncontrolling interest holder as the holders have contractual rights to receive an amount upon redemption other than the fair value of the applicable shares. As a result, earnings are adjusted to reflect this in substance distribution that is different from other common shareholders. In addition, the Company allocates net earnings to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders (Refer to Note 16). 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 | xxii. 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, in which PCCU was exempt from most federal, state, and local taxes under the provisions of the Internal Revenue Code and state tax laws, except for being subject to unrelated business income tax. Effective September 28, 2022, the Company became subject to income taxes as a Corporation and 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. 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. 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 | xxiii. 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 | xxiv. 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 Simplifying the impairment test for Intangibles-Goodwill and Other In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other (“ASC 350”). As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04, as amended, is effective for annual reporting periods beginning after December 15, 2019, for SEC filers, excluding entities eligible to be smaller reporting companies (for whom the effective periods begin after December 15, 2022), including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 on January 1, 2023, with no material impact; however, the standard was applied to the impairment analyses noted in Note 5 of the financial statements below. 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. Schedule of Current Expected Credit Losses Transition Impact Assets December 31, 2022 Transition January 1, 2023 Loans receivable, gross $ 1,432,560 $ - $ 1,432,560 Less: Allowance for credit loss (21,488 ) (14,980 ) (36,468 ) $ 14,11,072 $ (14,980 ) $ 1,396,092 Liabilities & Equity December 31, 2022 Transition January 1, 2023 Indemnity liability $ 499,465 $ 566,338 $ 1,065,803 Retained deficit (39,695,281 ) (581,318 ) (40,276,599 ) $ (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 consolidated balance sheets. 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 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 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 consolidated financial statements. In March 2023, the FASB issued ASU 2023-02, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures using the Proportional Amortization Method. The FASB issued final guidance allowing entities to apply the proportional amortization method to equity investments in all tax credit programs that meet the conditions in ASC 323-740, rather than just investments in qualified affordable projects that generate low income housing tax credits, as was required under the legacy guidance. The guidance is effective for public business entities for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The Company is evaluating the impact of this update on its consolidated financial statements. Business Combinations-Joint Venture Formations In August 2023, the FASB issued 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60); Recognition and Initial Measurement. This ASU contains guidance requiring certain joint ventures to apply a new basis of accounting upon formation by recognizing and initially measuring most of their assets and liabilities at fair value. This guidance is effective for all joint venture formations with a formation date on or after January 1, 2025. Early adoption is permitted. Joint Ventures formed before the effective date have the option to apply it retrospectively, while those formed after the effective date are required to apply it prospectively. The Company is evaluating the impact of this update on its consolidated financial statements. Disclosure Improvements, “Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, “Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB codification. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. The amendments in this Update should be applied prospectively. For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company is evaluating the impact of this update on its consolidated financial statements. Segment Reporting In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). This ASU requires public entities to provide disclosures of significant segment expenses and other segment items. It also requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment will have to provide all the disclosures required by ASC 280, including the significant segment expense disclosures. This guidance is applied retrospectively to all periods presented, unless it is impractical. This ASU applies to all public entities and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact of this update on its consolidated financial statements. Income Taxes In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). This ASU requires public business entities to disclose in their rate reconciliation table additional categories of information about income taxes paid, including certain disclosures that would be disaggregated by jurisdiction and other categories. This ASU is effective for public entities for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. For all other entities, this ASU is effective for fiscal years after December 15, 2024 and for interim periods beginning after December 15, 2026. Early adoption would be permitted. The Company is evaluating the impact of this update on its consolidated financial statements. |
Change in annual goodwill impairment testing date | xxv: Change in annual goodwill impairment testing date During the current financial year, the Company has elected to change the annual impairment testing date for its goodwill from November 15th to December 31st. The change was considered by the Company to be preferable considering guidance in the December 8, 2014 “Remarks before the 2014 AICPA Conference on Current SEC and PCAOB Developments” by Carlton E. Tartar, Associate Chief Accountant, Office of the Chief Accountant as follows: a. This change aligns the impairment testing process more closely with the Company’s financial year-end and facilitates a more efficient integration of the impairment analysis with the annual financial reporting cycle. b. This adjustment in timing is deemed to provide a more relevant and timely assessment of the recoverable amounts of our assets, reflecting the operational and financial performance for the entire financial year. c. We do not believe a different result in impairment assessment would have occurred had the measurement been conducted at November 15, 2023 vs. December 31, 2023. d. November 15 th th st th st e. We conducted an impairment test at June 30, 2023 as outlined in Note 5, which allowed for less than twelve months between conducting impairment tests with this policy change. The change is applied prospectively from the current year and does not materially affect the comparability of our financial statements. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 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 January 1, 2023 Loans receivable, gross $ 1,432,560 $ - $ 1,432,560 Less: Allowance for credit loss (21,488 ) (14,980 ) (36,468 ) $ 14,11,072 $ (14,980 ) $ 1,396,092 Liabilities & Equity December 31, 2022 Transition January 1, 2023 Indemnity liability $ 499,465 $ 566,338 $ 1,065,803 Retained deficit (39,695,281 ) (581,318 ) (40,276,599 ) $ (39,195,816 ) $ (14,980 ) $ (39,210,796 ) |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 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) | 12 Months Ended |
Dec. 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 Years 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 |
Abaca [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 Deferred consideration settled in common stock 11,557,397 Fair value of consideration $ 28,402,936 |
Deferred consideration (Tables)
Deferred consideration (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Deferred Consideration | |
Schedule of Change in Deferred Consideration | Schedule of Change in Deferred Consideration Stock consideration Cash consideration Third Anniversary Consideration Payment January 1, 2022 $ - $ - $ - Add: Abaca acquisition 11,391,205 5,618,616 - Add: Fair value adjustment 65,433 32,160 - December 31, 2022 11,456,639 5,650,775 - Less: Working capital adjustment (108,691 ) - - Less: Issuance of shares and payment to shareholders (4,085,075 ) (3,000,000 ) - Less: Issuance of Abaca warrants (1,643,699 ) - - Less: Issuance of third anniversary payment consideration (430,000 ) - 430,000 Less: Gain recognized in the consolidated statements of operations (5,645,107 ) - - Add: Fair value adjustment 455,933 239,017 380,000 December 31, 2023 $ - $ 2,889,792 810,000 |
Schedule of Change in Fair Value of Deferred Consideration | Schedule of Change in Fair Value of Deferred Consideration Change in the fair value of stock consideration $ 7,718,806 Less: Fair value of third-anniversary consideration (430,000 ) Less: Fair value of Abaca warrants (1,643,699 ) Change in the fair value of deferred consideration on October 26, 2023, due to Second Amendment 5,645,107 Less: Adjustment to the fair value of deferred consideration for the year 2023 (1,074,950 ) Net impact recognized in the Consolidated Statements of Operations $ 4,570,157 |
Goodwill and Finite-lived Int_2
Goodwill and Finite-lived Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amount of Goodwill | The change in the carrying amount of goodwill from January 1, 2022, to December 31, 2023, is as follows: Schedule of Carrying Amount of Goodwill January 1, 2022 $ - Acquisition of Abaca 19,266,276 December 31, 2022 19,266,276 Impairment of Goodwill (13,208,276 ) December 31, 2023 $ 6,058,000 |
Schedule of Finite Lived Intangible Assets | Schedule of Finite Lived Intangible Assets Remaining Useful life in Years December 31, 2022 (A) Acquired in Acquisition (B) Amortization (C) Impairment (D) December 31, (A+B-C-D) Market related intangible assets 6.87 2,066,918 $ - $ 136,034 1,865,668 $ 65,216 Customer relationships 8.87 1,974,795 - 103,225 1,814,795 56,775 Developed technology 5.87 6,579,374 - 960,620 2,019,001 3,599,753 Total intangible assets $ 10,621,087 $ - $ 1,199,877 5,699,464 $ 3,721,745 Following is a summary of the Company’s finite-lived intangible assets as of December 31, 2022: Remaining Useful life in Years January 1, 2022 (A) Acquired in Acquisition Amortization (C) Impairment (D) December 31, 2022 (A+B-C-D) Market related intangible assets 8.00 - $ 2,100,000 $ 33,082 - $ 2,066,918 Customer relationships 10.00 - 2,000,000 25,205 - 1,974,795 Developed technology 7.00 - 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) | 12 Months Ended |
Dec. 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 December 31, 2023 December 31, 2022 Commercial real estate loans receivable, gross $ 404,577 $ 1,432,560 Allowance for credit losses (10,723 ) (21,488 ) Commercial real estate loans receivable, net 393,854 1,411,072 Current portion (12,391 ) (51,300 ) Noncurrent portion $ 381,463 $ 1,359,772 |
Schedule of Allowance For Loan Losses | The allowance for credit losses consists of the following activity for the year ended December 31, 2023 and 2022: Schedule of Allowance For Loan Losses Year ended December 31, 2023 2022 Allowance for credit losses Beginning balance $ 21,488 $ 14,741 Cumulative effect from adoption of CECL 14,980 - Charge-offs - - Recoveries - - (Benefits) Provision (25,745 ) 6,747 Ending balance $ 10,723 $ 21,488 Loans receivable: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 404,577 1,432,560 $ 404,577 $ 1,432,560 Allowance for credit losses: Individually evaluated for impairment $ - $ - Collectively evaluated for impairment 10,723 21,488 $ 10,723 $ 21,488 |
Schedule of Risk Rating | The carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value within each risk rating is as follows: Schedule of Risk Rating Risk rating Year ended. December 31, 2023 Year ended December 31, 2022 4 $ 404,577 $ 1,432,560 Grand total $ 404,577 $ 1,432,560 |
Indemnification Liability (Tabl
Indemnification Liability (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Indemnification Liability | |
Schedule of Outstanding Amounts | Schedule of Outstanding Amounts December 31, 2023 December 31, 2022 Secured term loans $ 55,215,013 $ 18,400,000 Unsecured loans and lines of credit 431,640 498,042 Total loans funded by Parent $ 55,646,653 $ 18,898,042 |
Schedule of Indemnity Liability | The indemnity liability activity are as follows: Schedule of Indemnity Liability Year ended. December 31, 2023 Year ended December 31, 2022 Beginning balance $ 499,465 $ - Cumulative effect from adoption of CECL 566,341 - Charge-offs - - Recoveries - - Provision 316,602 499,465 Ending balance $ 1,382,408 $ 499,465 |
Schedule of Indemnified Loans Risk Rating | The carrying value, excluding the CECL Reserve, of the Company’s indemnified loans held at carrying value within each risk rating is as follows: Schedule of Indemnified Loans Risk Rating Risk rating Year ended. December 31, 2023 Year ended December 31, 2022 3 $ 10,100,000 $ 1,100,000 4 3,431,640 - 5 28,115,013 5,498,042 6 10,900,000 9,200,000 7 3,100,000 3,100,000 Grand total $ 55,646,653 $ 18,898,042 |
Schedule of Provision for Loan Losses | The provision for credit losses on the statement of operations consists of the following activity for the year ended December 31, 2023 and December 31, 2022: Schedule of Provision for Loan Losses Commercial real estate loans Indemnity liability Total Commercial real estate loans Indemnity liability Total December 31, 2023 December 31, 2022 Commercial real estate loans Indemnity liability Total Commercial real estate loans Indemnity liability Total Provision (benefit) $ (25,745 ) $ 316,602 $ 290,857 $ 6,747 $ 499,465 $ 506,212 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 12 Months Ended |
Dec. 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 December 31, 2023 December 31, 2022 Equipment $ 45,397 $ 45,397 Software 51,692 51,692 Improvement 71,635 71,635 Office furniture 215,504 7,070 Property and equipment, gross 384,228 175,794 Less: accumulated depreciation (300,008 ) (126,180 ) Property and equipment, net $ 84,220 $ 49,614 |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Revenue from Operations | The revenue from the PCCU Agreements recognized in the statements of operations consists of the following for the year ended December 31, 2023, and December 31, 2022: Schedule of Revenue from Operations Year ended December 31, 2023 Year ended December 31, 2022 Account servicing agreement $ 3,075,458 $ 8,823,608 Commercial alliance agreement 10,761,245 - Total $ 13,836,703 $ 8,823,608 Revenue $ 13,836,703 $ 8,823,608 |
Schedule of Operating Expense from Operations | The operating expense from the PCCU Agreements recognized in the statements of operations consists of the following for the year ended December 31, 2023, and December 31, 2022: Schedule of Operating Expense from Operations Year ended December 31, 2023 Year ended December 31, 2022 Support services agreement $ 378,730 $ 775,259 Loan servicing agreement 11,929 26,088 Commercial alliance agreement 1,665,644 - Total $ 2,056,303 $ 801,347 Operating expense $ 2,056,303 $ 801,347 |
Schedule of Outstanding Balances from Balance Sheet | The outstanding balances associated with the PCCU disclosed in the balance sheet are as follows: Schedule of Outstanding Balances from Balance Sheet December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Accounts receivable $ 2,095,320 $ 1,231,727 Accounts payable 577,315 5,078,042 Due to Seller (Refer to Note 11 to the financial statements below) - 56,949,800 Senior Secured Promissory Note (Refer to Note 12 to the financial statements below) 14,011,166 - |
Loan Servicing Agreement [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Schedule of Demonstrated Deposit Capacity | The below schedule demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits: Schedule of Demonstrated Deposit Capacity December 31, 2023 December 31, 2022 CRB related deposits $ 129,350,998 $ 161,138,975 Capacity at 60% 77,610,599 96,683,385 PCCU net worth 81,087,746 133,231,565 Capacity at 1.3125 106,670,306 174,866,429 Limiting capacity 77,610,599 174,866,429 PCCU loans funded 55,660,039 18,898,042 Amounts available under lines of credit 525,000 996,958 Incremental capacity $ 21,425,560 $ 154,971,429 |
Due to Seller (Tables)
Due to Seller (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Due To Seller | |
Schedule of Amounts Due to Seller | Amounts due to seller were as follows: Schedule of Amounts Due to Seller December 31, 2023 December 31, 2022 Due to Seller-Current (Unsecured) $ - $ 25,973,017 Due to Seller-long term (Unsecured) - 30,976,783 Total loans funded by PCCU $ - $ 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) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Secured Promissory Note | Schedule of Senior Secured Promissory Note December 31, 2023 December 31, 2022 Senior Secured Promissory Note (current) $ 3,006,991 $ - Senior Secured Promissory Note (long term) 11,004,175 - Total $ 14,011,166 $ - |
Schedule of Outstanding Amount on Debt | The repayment schedule of the outstanding principal amount on December 31, 2023, is as follows: Schedule of Outstanding Amount on Debt Year of payment 2024 $ 3,006,991 2025 3,138,933 2026 3,274,966 2027 3,416,896 2028 1,173,380 Grand total $ 14,011,166 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Schedule of Lease Cost and Right of Use Assets Related to Lease and Future Minimum Lease Payments | Schedule of Lease Cost and Right of Use Assets Related to Lease and Future Minimum Lease Payments Year ended December 31, 2023 Year ended December 31, 2022 Operating lease cost $ - $ - Short-term lease cost 315,615 99,246 Total Lease Cost $ 315,615 $ 99,246 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 year (156,337 ) (13,028 ) Lease modifications - - Ending balance $ 859,861 $ 1,016,198 Further information related to leases is as follows: Weighted-average remaining lease term 3.42 4.42 Weighted-average discount rate 6.87 % 6.87 % |
Schedule of Future Minimum Lease Payments | Future minimum lease payments as of December 31, 2023 and December 31, 2022 are as follows: Schedule of Future Minimum Lease Payments Year 2023 $ - $ 91,303 2024 197,520 197,520 2025 217,925 217,925 2026 222,275 222,275 2027 226,705 226,705 2028 231,216 231,216 Thereafter 117,710 117,710 Total future minimum lease payments $ 1,213,351 $ 1,304,654 Less: Imputed interest 205,358 276,421 Operating lease liabilities $ 1,007,993 $ 1,028,233 Less: Current portion 132,546 20,124 Non-current portion of lease liabilities $ 875,447 $ 1,008,109 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | Revenue by type are as follows: Schedule of Disaggregated Revenue 2023 2022 Year ended December 31 2023 2022 Deposit, activity, onboarding income $ 8,614,945 $ 6,063,939 Investment income 5,844,836 2,120,640 Loan interest income 2,972,434 1,130,178 Safe Harbor Program income 130,688 164,062 Total Revenue $ 17,562,903 $ 9,478,819 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earning Per Shares, Basic and Diluted | Schedule of Earning Per Shares, Basic and Diluted For year Ended December 31 2023 2022 Net loss $ (17,279,847 ) $ (35,128,083 ) Weighted average shares outstanding – basic 42,574,563 18,988,558 Basic net loss per share $ (0.41 ) $ (1.85 ) Weighted average shares outstanding – diluted 42,574,563 18,988,558 Diluted net loss per share $ (0.41 ) $ (1.85 ) Weighted average shares calculation December 31, 2023 December 31, 2022 Company public shares 3,926,598 3,926,598 Company initial stockholders 3,403,175 3,403,175 PCCU stockholders 19,977,920 11,386,139 Shares issued for Abaca acquisition 3,155,222 264,654 Restricted stock units issued 999,638 - Conversion of Preferred stock 11,112,010 7,992 Grand total 42,574,563 18,988,558 |
Schedule of Share-based Equity Awards Excluded From Computation of Dilutive Loss | Schedule of Share-based Equity Awards Excluded From Computation of Dilutive Loss For year Ended December 31 2023 2022 Warrants 12,786,588 7,036,588 Share based payments 2,643,277 2,170,000 Shares to be issued to Abaca shareholders - 6,433,839 Conversion of preferred stock 880,800 13,443,000 Grand total 16,310,665 29,083,427 |
Forward Purchase Agreement (Tab
Forward Purchase Agreement (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Forward Purchase Agreement | |
Schedule of Forward Purchase Agreement | Schedule of Forward Purchase Agreement As at Shares sold during As at S.no Name of the party Opening Shares Amount Shares Amount Shares Rest price Amount 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 On the date of Shares sold during As at Name of the Opening Amount Shares Amount Shares Rest Amount Vellar 1,025,000 $ 10,583,246 53,796 $ 524,472 971,204 1.25 $ 1,214,005 Midtown East 1,599,496 16,514,986 81,572 832,850 1,517,924 1.25 1,897,405 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 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [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 December 31, 2023, and December 31,2022: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other December 31, 2023 December 31, 2022 Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other (Level 3) Description Liabilities: PIPE warrants $ 273,124 - 273,124 $ 286,300 - 286,300 Public warrants $ 481,850 481,850 - $ 361,100 361,100 - Private placement warrants $ 25,070 - 25,070 $ 19,110 - 19,110 Abaca warrant $ 3,384,085 - 3,384,085 $ - - - Forward purchase derivative liability $ 7,309,580 - 7,309,580 $ 7,309,580 - 7,309,580 Third anniversary payment consideration $ 810,000 - 810,000 $ - - - Liabilities $ 810,000 - 810,000 $ - - - |
Schedule of Carrying Amounts and Fair Values of Financial Instruments Measured on a Nonrecurring Basis | The following table presents the carrying amounts and fair values of financial instruments measured on a nonrecurring basis, 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 Measured on a Nonrecurring Basis Level 1 Level 2 Level 3 As on December 31, 2023 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Developed Technology 3,599,754 3,599,754 - - 3,599,754 |
Schedule of Finite Lived Intangible Assets Measurement | The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the finite lived intangible assets as of their measurement dates: Schedule of Finite Lived Intangible Assets Measurement As on December 31, 2023 Developed technology Royalty rate 6.50 % Discount rate 14.25 % Estimated useful life 5.87 Tax rate 25 % Fair value measurements inputs 25 % |
Schedule of Carrying Amounts and Fair Values of 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 Level 1 Level 2 Level 3 As on December 31, 2023 Carrying amount Fair value Fair value measurement using Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 4,888,769 $ 4,888,769 $ 4,888,769 $ - $ - Forward purchase receivables 4,584,221 4,584,221 4,584,221 - - Loans 330,579 363,561 - - 363,561 Liabilities Deferred consideration 2,889,792 2,889,792 2,889,792 - - Senior secured promissory note 14,011,166 12,750,204 - - 12,750,204 Public warrants 481,850 481,850 481,850 - - Private placement warrants 25,070 25,070 - - 25,070 PIPE warrants 273,124 273,124 - - 273,124 Abaca warrants 3,384,085 3,384,085 - - 3,384,085 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 Third anniversary payment consideration 810,000 810,000 - - 810,000 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 - - 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 the Company have utilized Level 3 inputs to determine fair value are presented in the following table: Schedule of Fair Value Assets Measured on Recurring Basis For the Year ended December 31, 2023 PIPE Warrants Abaca Warrant Private Placement Warrants Third anniversary payment consideration Forward Purchase Derivative Balance at the beginning of the period $ 286,300 - 19,110 - 7,309,580 Issued to Abaca shareholders - 1,635,407 - 430,000 - Acquired under business combination Fair value adjustment (13,176 ) 1,740,386 5,960 380,000 - Balance at the end of the period $ 273,124 3,384,085 25,070 810,000 7,309,580 For the Year ended December 31, 2022 PIPE Warrants Private Placement Warrants Forward Purchase Derivative Balance at the beginning of the period $ - $ - $ - Acquired under business combination 203,112 (1,687,530 ) Fair value adjustment 286,300 184,002 8,997,110 Balance at the end of the period $ 286,300 $ 19,110 $ 7,309,580 |
Purchase Agreement Option [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [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 December 31, 2023 and December 31, 2022: Schedule of Level 3 Fair Value Measurements Inputs December 31, 2023 December 31, 2022 Reset Price $ 1.25 $ 1.25 Expected term (years) 1.74 2.74 Additional Maturity Consideration per share $ 2.00 $ 2.00 Volatility 46 % 46 % Risk-free rate 4.2 % 4.2 % Risk-adjusted discount rate 13.4 % 13.4 % Derivative liability, measurement input 13.4 % 13.4 % |
Warrant [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [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 private placement warrants and public warrants as of their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants December 31, 2023 December 31, 2022 PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants PIPE Warrants Private Warrants Third anniversary payment consideration Abaca Warrants Exercise price $ 5 $ 11.5 - $ 2 $ 5 $ 11.5 - - Share Price $ 1.42 $ 1.42 $ 1.42 $ 1.42 $ 1.78 $ 1.78 - - Expected term (years) 3.74 3.74 1.76 4.84 4.74 4.74 - - Volatility 62.95 % 62.95 % 62.95 % 62.95 % 46.00 % 46.00 % - - Risk-free rate 4.25 % 4.25 % 4.25 % 4.25 % 4.00 % 3.98 % - - Warrants and rights outstanding, measurement input 4.25 % 4.25 % 4.25 % 4.25 % 4.00 % 3.98 % - - |
Tax (Tables)
Tax (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Major Components of Income Tax | The major components of income tax expense for the years ended 31 December 2023 and 31 December 2022: Schedule of Major Components of Income Tax For year ended December 31, 2023 2022 Current income tax: Current tax on profits $ - $ (3,394 ) Deferred tax: Deferred taxation - current year $ (1,829,701 ) $ (9,249,499 ) Income tax benefit reported in the income statement $ (1,829,701 ) $ (9,252,893 ) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation follows between tax benefit and the product of accounting profit multiplied by the United States domestic tax rate for the years ended December 31, 2023 and December 31, 2022: Schedule of Effective Income Tax Rate Reconciliation For year ended December 31, 2023 2022 Accounting loss before tax from continuing operations (19,109,548 ) $ (44,380,976 ) Accounting loss before income tax (19,109,548 ) (44,380,976 ) At federal statutory income tax rate of 21% (4,013,005 ) (9,320,005 ) State income tax benefit, net of federal benefit (253,649 ) (1,304,510 ) Permanent differences, net 2,207,439 1,787,471 Other 229,514 (415,849 ) Total (1,829,701 ) $ (9,252,893 ) |
Schedule of Deferred Tax Assets and Liabilities | Deferred taxes are comprised of the following: Schedule of Deferred Tax Assets and Liabilities December 31, 2023 December 31, 2022 Change Loan Loss Reserve 340,982 127,508 (213,473 ) Capital Loss Carryover 72,914 - (72,914 ) Stock Option Expense 1,322,890 686,879 (636,011 ) Deferred Revenue 5,366 251 (5,115 ) Fixed Assets 20,866 (11,444 ) (32,310 ) Transaction Costs 1,014,922 817,323 (197,599 ) Change in Forward Purchase Contract 8,155,953 8,155,953 - Goodwill 30,631,880 42,551,111 11,919,231 NOL Carryforward 3,210,838 1,862,393 (1,348,445 ) ROU Assets (210,460 ) (248,725 ) (38,265 ) ROU Liabilities 246,716 251,670 4,954 Intangible Assets (910,934 ) (2,599,617 ) (1,688,683 ) Valuation Allowance (72,914 ) - 72,914 Net deferred tax assets / (liabilities) 43,829,019 51,593,302 7,764,284 Reflected in the statement of financial position as follows: Deferred tax assets 44,950,413 - Deferred tax liabilities (1,121,394 ) - Deferred tax assets net 43,829,019 - |
Schedule of Deferred Tax Liabilities Net | Reconciliation of deferred tax liabilities net: Schedule of Deferred Tax Liabilities Net Year on year change December 31, 2022 Opening balance as on December 31, 2022 $ 51,593,302 $ - Tax Income/(expense) during the period recognized in profit or loss 1,829,701 9,249,499 Acquisitions (9,593,985 ) 42,343,803 Closing balance as on December 31, 2023 $ 43,829,019 $ 51,593,302 |
Share based compensation (Table
Share based compensation (Tables) | 12 Months Ended |
Dec. 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 year ended December 31, 2023, using the Black-Scholes-Merton model are as follows: Schedule of Fair Value of Options Granted Black-Scholes-Merton Model Particulars December 31, 2023 December 31, 2022 Dividend yield - - Risk-free interest rate 3.62 4.23 % 3.62 4.23 % Expected volatility (weighted-average and range, if applicable) 100 % 100 % Expected term 6.00 6.5 6.00 6.5 |
Schedule of Stock Option and Related Information | A summary of the Company’s stock option activities and related information for the year ended December 31, 2023, is as follows: Schedule of Stock Option and Related Information Stock Option No. of Stock Option Weighted Average Exercise Price Weighted-Average Remaining Contractual Life (in Years) December 31, 2022 2,170,000 5.29 2.02 Granted 336,730 $ 1.03 1.28 Exercised - - - Expired - - - Cancelled / Forfeited (220,720 ) (2.67 ) - December 31, 2023 2,286,010 $ 5.43 1.65 On December 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 year ended December 31, 2023 or year ended December 31, 2022. Stock Option No. of Stock Option Weighted Average Exercise Price Weighted-Average Remaining Contractual Life (in Years) December 31, 2021 - - - Granted 2,170,000 $ 5.29 2.02 Exercised - - - Expired - - - Cancelled / Forfeited - - - December 31, 2022 2,170,000 $ 5.29 2.02 |
Schedule of Options Outstanding | The following options were outstanding at their respective exercise price: Schedule of Options Outstanding Exercise price options outstanding December 31, 2023 December 31, 2022 $1.56 376,510 87,500 $2.58 350,000 350,000 $4.00 309,500 482,500 $6.67 1,250,000 1,250,000 Total 2,286,010 2,170,000 |
Schedule of Restricted Stock Units | A summary of the Company’s RSU activities and related information for the year ended December 31, 2023, is as follows: Schedule of Restricted Stock Units Restricted Stock Units No. of RSU Weighted- Average Grant Date Fair Value Per RSU Weighted-Average Remaining Contractual Life (in Years) December 31, 2022 - $ - $ - Granted 1,600,028 0.99 2.0 Exercised (1,266,228 ) (0.90 ) - Expired - - - Cancelled / Forfeited (10,300 ) 1.31 - December 31, 2023 323,500 $ 0.47 2.0 |
Schedule of Exercise price of Restricted Stock Units | The following RSU were outstanding at their respective exercise price: Schedule of Exercise price of Restricted Stock Units Exercise price RSU outstanding December 31, 2023 December 31, 2022 $1.31 323,500 - Total 323,500 - |
Organization and Business Ope_2
Organization and Business Operations (Details Narrative) - USD ($) | 12 Months Ended | ||||||||
Oct. 26, 2023 | Mar. 29, 2023 | Nov. 15, 2022 | Sep. 28, 2022 | Feb. 11, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jul. 31, 2023 | Oct. 31, 2022 | |
Purchase consideration | $ 10,850,000 | ||||||||
Payments to acquire businesses | $ 3,041,680 | ||||||||
Cash and cash equivalents | $ 4,888,769 | 8,390,195 | |||||||
Debt instrument, face amount | $ 14,500,000 | ||||||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.71% | |||||||
Stock issued during period, value, acquisitions | $ 8,105,911 | ||||||||
Abaca Merger Closing [Member] | |||||||||
Payments to acquire businesses | $ 30,000,000 | ||||||||
Senior Secured Promissory Note [Member] | |||||||||
Secured debt | $ 56,949,800 | ||||||||
Debt instrument term | 5 years | ||||||||
Debt instrument, face amount | $ 14,500,000 | ||||||||
Debt instrument, interest rate, effective percentage | 4.25% | ||||||||
Partner Colorado Credit Union [Member] | |||||||||
Equity method investment, ownership percentage | 46.37% | ||||||||
Common Class A [Member] | Merger Agreement [Member] | |||||||||
Stock issued during period, value, acquisitions | 12,600,000 | ||||||||
Common Class A [Member] | Senior Secured Promissory Note [Member] | Securities Issuance Agreement [Member] | |||||||||
Number of shares issued | 11,200,000 | ||||||||
Common Class A [Member] | Partner Colorado Credit Union [Member] | Securities Issuance Agreement [Member] | |||||||||
Equity method investment, ownership percentage | 46.39% | ||||||||
Number of shares issued | 11,200,000 | ||||||||
Safe Harbour Financial LLC [Member] | |||||||||
Purchase consideration | $ 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 | ||||||||
Abaca [Member] | |||||||||
Purchase consideration | 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 | ||||||||
Abaca [Member] | Merger Agreement [Member] | |||||||||
Purchase consideration | $ 12,600,000 | ||||||||
Number of shares issued in acquisition transaction | 5,835,822 | ||||||||
Payments to acquire businesses | $ 1,500,000 | 9,000,000 | |||||||
Outstanding note balance plus accrued interest | 500,000 | $ 500,000 | |||||||
Abaca [Member] | Merger Closing [Member] | |||||||||
Payments to acquire businesses | $ 3,000,000 | 3,000,000 | |||||||
Abaca [Member] | Two Year Anniversaries [Member] | |||||||||
Payments to acquire businesses | $ 3,000,000 | ||||||||
Abaca [Member] | Common Class A [Member] | Merger Agreement [Member] | |||||||||
Stock issued during period, shares, acquisitions | 2,100,000 | ||||||||
Stock issued during period, value, acquisitions | $ 12,600,000 |
Schedule of Current Expected Cr
Schedule of Current Expected Credit Losses Transition Impact (Details) - USD ($) | Jan. 01, 2023 | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Indemnity liability | $ 1,382,408 | $ 499,465 | |
Retained earning | (71,569,821) | (39,695,281) | |
Liabilities & Equity | $ (67,860,909) | (99,451,937) | |
Cumulative Effect, Period of Adoption, Adjustment [Member] | |||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Loans receivable, gross | |||
Allowance for loan losses | (14,980) | ||
Loans receivable, net | (14,980) | ||
Indemnity liability | 566,338 | ||
Retained earning | (581,318) | ||
Liabilities & Equity | (14,980) | ||
Credit Expected Credit Losses Transition [Member] | |||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |||
Loans receivable, gross | 1,432,560 | 1,432,560 | |
Less: Allowance for credit loss | (36,468) | (21,488) | |
Loans receivable, net | 1,396,092 | 1,411,072 | |
Indemnity liability | 1,065,803 | 499,465 | |
Retained earning | (40,276,599) | (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 ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Net deferred indemnified loan origination fees | $ 63,275 | $ 109,081 |
Fair value of deferred consideration | (4,570,157) | 97,593 |
Cash | 4,888,769 | 8,390,195 |
Working capital deficit | 135,355 | |
Operating income loss | 20,712,319 | 2,197,840 |
Net cash provided by operating activities | $ 832,144 | (1,697,380) |
Percentage of total loans receivables | 100% | |
Percentage of loans receivables | 10% | |
Allowance for doubtful accounts | $ 0 | 0 |
Expected volatility rate | 100% | |
Contract assets | $ 0 | 21,170 |
Contract liabilities | 21,922 | 996 |
Unrecognized tax benefits | 0 | 0 |
Amounts accrued for interest and penalties | $ 0 | 0 |
Equipment and Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment useful life | 3 years | |
Equipment and Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment useful life | 5 years | |
Related Party [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Accounts receivable | $ 2,095,320 | 1,231,727 |
Accounts payable | $ 577,315 | 5,078,042 |
Revision of Prior Period, Reclassification, Adjustment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Accounts receivable trade | 1,198,781 | |
Accounts payable | 196,968 | |
Net deferred indemnified loan origination fees | 109,081 | |
Revision of Prior Period, Reclassification, Adjustment [Member] | Related Party [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Accounts receivable | 32,946 | |
Accounts payable | $ 4,881,074 |
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 ($) | 12 Months Ended | ||||
Nov. 15, 2022 | Sep. 28, 2022 | Feb. 11, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||||
Total fair value of consideration | $ 10,850,000 | ||||
Cash paid | $ 3,041,680 | ||||
Share issued – common stock (2,099,977 shares) | $ 8,105,911 | ||||
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 | ||||
Abaca [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 | ||||
Deferred 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] | Abaca [Member] | ||
Business Acquisition [Line Items] | ||
Common stock, shares | 2,099,977 |
Business Combination (Details N
Business Combination (Details Narrative) - USD ($) | 12 Months Ended | ||||||
Mar. 29, 2023 | Sep. 28, 2022 | Feb. 11, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jan. 25, 2023 | Jul. 31, 2021 | |
Business Acquisition [Line Items] | |||||||
Business combination | $ 10,850,000 | ||||||
Cash consideration | $ 3,041,680 | ||||||
Transferred to additional paid in capital | 2,806,336 | ||||||
Acquisition of Abaca | $ 8,105,911 | ||||||
Goodwill | $ 44,102,572 | ||||||
Preferred stock, shares authorized | 1,250,000 | 1,250,000 | |||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | |||||
Convertible preferred stock, shares issued | 1,101 | 14,616 | |||||
Convertible preferred stock, shares outstanding | 1,101 | 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 | 54,563,372 | 23,732,889 | |||||
Common stock, shares outstanding | 54,563,372 | 23,732,889 | |||||
Debt instrument, face amount | $ 14,500,000 | ||||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.71% | |||||
Senior Secured Promissory Note [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Secured debt | $ 56,949,800 | ||||||
Debt instrument term | 5 years | ||||||
Debt instrument, face amount | $ 14,500,000 | ||||||
Debt instrument, interest rate, effective percentage | 4.25% | ||||||
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, par value | $ 0.0001 | ||||||
Business combination common stock held by the purchaser | 3,667,377 | 3,667,377 | |||||
Common Class A [Member] | Senior Secured Promissory Note [Member] | Securities Issuance Agreement [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Number of shares issued | 11,200,000 | ||||||
Common Class A [Member] | Maximum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Common stock, shares authorized | 130,000,000 | ||||||
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 | ||||||
Effective 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] | |||||||
Acquisition of Abaca, shares | 20,450 | ||||||
Acquisition of Abaca | $ 20,450,000 | ||||||
Share price per share | $ 10 | ||||||
Escrow amount released percentage | 17.50% |
Schedule of Purchase Price Allo
Schedule of Purchase Price Allocation (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | Nov. 15, 2022 | Sep. 28, 2022 | Dec. 31, 2021 |
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 | $ 6,058,000 | $ 19,266,276 | |||
Abaca [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) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
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 |
Customer Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of consideration | $ 2,000,000 |
Developed technology | 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 ($) | 12 Months Ended | ||||
Oct. 26, 2023 | Nov. 15, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Oct. 31, 2022 | |
Business Acquisition [Line Items] | |||||
Payments to acquire businesses | $ 3,041,680 | ||||
Stock issued during period, shares, acquisitions | 21,989,860 | ||||
Stock issued during period, value, acquisitions | $ 8,105,911 | ||||
Abaca Merger Closing [Member] | |||||
Business Acquisition [Line Items] | |||||
Payments to acquire businesses | $ 30,000,000 | ||||
Merger Agreement [Member] | Common Class A [Member] | |||||
Business Acquisition [Line Items] | |||||
Stock issued during period, value, acquisitions | $ 12,600,000 | ||||
Abaca [Member] | |||||
Business Acquisition [Line Items] | |||||
Acquisition transactions percentage | 100% | ||||
Outstanding note balance plus accrued interest | $ 500,000 | ||||
Payments to acquire businesses | 2,763,800 | ||||
Stock issued during period, value, acquisitions | 8,105,911 | ||||
Abaca [Member] | Merger Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Outstanding note balance plus accrued interest | 500,000 | $ 500,000 | |||
Payments to acquire businesses | $ 1,500,000 | $ 9,000,000 | |||
Abaca [Member] | Merger Agreement [Member] | Common Class A [Member] | |||||
Business Acquisition [Line Items] | |||||
Stock issued during period, shares, acquisitions | 2,100,000 | ||||
Stock issued during period, shares, acquisitions | $ 8,400,000 | ||||
Stock issued during period, value, acquisitions | 12,600,000 | ||||
Abaca [Member] | Merger Closing [Member] | |||||
Business Acquisition [Line Items] | |||||
Payments to acquire businesses | $ 3,000,000 | 3,000,000 | |||
Abaca [Member] | Two Year Anniversaries [Member] | |||||
Business Acquisition [Line Items] | |||||
Payments to acquire businesses | $ 3,000,000 |
Schedule of Change in Deferred
Schedule of Change in Deferred Consideration (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Deferred Consideration | ||
Deferred stock consideration, Balance | $ 11,456,639 | |
Deferred cash consideration, Balance | 5,650,775 | |
Deferred consideration payment, Balance | ||
Add: Abaca acquisition stock consideration | 11,391,205 | |
Add: Abaca acquisition cash consideration | 5,618,616 | |
Stock consideration, Fair value adjustment | 455,933 | 65,433 |
Cash consideration, Fair value adjustment | 239,017 | 32,160 |
Stock consideration, Working capital adjustment | (108,691) | |
Cash consideration, Working capital adjustment | ||
Stock consideration, Issuance of shares and payment to shareholders | (4,085,075) | |
Cash consideration, Issuance of shares and payment to shareholders | (3,000,000) | |
Stock consideration, Issuance of payment consideration | (1,643,699) | |
Stock consideration, Issuance of payment consideration | (430,000) | |
Consideration payment, Issuance of payment consideration | 430,000 | |
Stock consideration, Gain recognized in the consolidated statements of operations | (5,645,107) | |
Consideration payment, Fair value adjustment | 380,000 | |
Deferred stock consideration, Balance | 11,456,639 | |
Deferred cash consideration, Balance | 2,889,792 | 5,650,775 |
Deferred consideration payment, Balance | $ 810,000 |
Schedule of Change in Fair Valu
Schedule of Change in Fair Value of Deferred Consideration (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Deferred Consideration | ||
Change in the fair value of stock consideration | $ 7,718,806 | |
Less: Fair value of third-anniversary consideration | (430,000) | |
Less: Fair value of Abaca warrants | (1,643,699) | |
Change in the fair value of deferred consideration on October 26, 2023, due to Second Amendment | 5,645,107 | |
Less: Adjustment to the fair value of deferred consideration for the year 2023 | (1,074,950) | |
Net impact recognized in the Consolidated Statements of Operations | $ 4,570,157 | $ (97,593) |
Deferred consideration (Details
Deferred consideration (Details Narrative) - USD ($) | 12 Months Ended | ||||
Oct. 26, 2023 | Nov. 15, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Oct. 31, 2022 | |
Payments to acquire businesses | $ 3,041,680 | ||||
Stock issued during period, shares, acquisitions | 21,989,860 | ||||
Stock issued during period, value, acquisitions | 8,105,911 | ||||
Deferred stock consideration | $ 11,300,000 | ||||
Deferred cash consideration | 5,600,000 | ||||
Purchase consideration | 10,850,000 | ||||
Payment of warrants | $ 430,000 | ||||
Fair value adjustment of warrants | $ 1,643,699 | 1,853,920 | $ (939,019) | ||
Net gain on deferred consideration | $ 5,600,000 | ||||
Common Stock [Member] | |||||
Warrant outstanding | 5,000,000 | ||||
Common Class A [Member] | |||||
Exercise price | $ 11.50 | ||||
Common Class A [Member] | Common Stock [Member] | |||||
Stock issued during period, shares, acquisitions | 2,099,977 | ||||
Stock issued during period, shares, acquisitions | $ 1,872 | ||||
Stock issued during period, value, acquisitions | $ 210 | ||||
Abaca [Member] | |||||
Payments to acquire businesses | 2,763,800 | ||||
Stock issued during period, value, acquisitions | 8,105,911 | ||||
Outstanding note balance plus accrued interest | 500,000 | ||||
Purchase consideration | $ 28,402,936 | ||||
Fair value of common shares | $ 2 | ||||
Business acquisition description | If the Company decides to pay with shares, their value will be determined by the 10-day NASDAQ average before the anniversary, with prices ranging between $2.00 and $4.36. Shares given purely for payment won’t be restricted by the Lock-Up Agreement. However, if the Lock-Up Agreement is in effect, the payment will be split into $750,000 cash and an equivalent $750,000 in shares. The lock-up duration for any shares will adhere to the legal minimum. In the event of a company stock consolidation or similar activity, the number of shares to be issued for the payment will be adjusted to reflect the decreased total of outstanding shares. | ||||
Abaca [Member] | Common Stock [Member] | |||||
Stock issued during period, shares, acquisitions | 2,099,977 | ||||
Third Anniversary Consideration [Member] | |||||
Purchase consideration | $ 1,500,000 | ||||
Third Anniversary Consideration [Member] | Common Stock [Member] | |||||
Exercise price | $ 2 | ||||
Abaca Merger Closing [Member] | |||||
Payments to acquire businesses | $ 30,000,000 | ||||
Merger Agreement [Member] | |||||
Fair value adjustment | $ 7,700,000 | ||||
Merger Agreement [Member] | Common Class A [Member] | |||||
Stock issued during period, value, acquisitions | 12,600,000 | ||||
Merger Agreement [Member] | Abaca [Member] | |||||
Payments to acquire businesses | 1,500,000 | 9,000,000 | |||
Outstanding note balance plus accrued interest | $ 500,000 | $ 500,000 | |||
Purchase consideration | $ 12,600,000 | ||||
Fair value of common shares | $ 2 | ||||
Number of shares issued for acquisition | 5,835,822 | ||||
Number of warrant issued | 5,000,000 | ||||
Exercise price | $ 2 | ||||
Merger Agreement [Member] | Abaca [Member] | Common Class A [Member] | |||||
Stock issued during period, shares, acquisitions | 2,100,000 | ||||
Stock issued during period, shares, acquisitions | $ 8,400,000 | ||||
Stock issued during period, value, acquisitions | 12,600,000 | ||||
Merger Closing [Member] | Abaca [Member] | |||||
Payments to acquire businesses | $ 3,000,000 | 3,000,000 | |||
Two Year Anniversaries [Member] | Abaca [Member] | |||||
Payments to acquire businesses | $ 3,000,000 | ||||
Original Agreement [Member] | |||||
Shares issued | 16,670,000 | ||||
Original Agreement [Member] | Abaca [Member] | |||||
Fair value of common shares | $ 0.70 | ||||
Shares issued | 5,800,000 |
Schedule of Carrying Amount of
Schedule of Carrying Amount of Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
December 31, 2022 | $ 19,266,276 | |
Acquisition of Abaca | 19,266,276 | |
Goodwill impairment | (13,208,276) | |
December 31, 2023 | $ 6,058,000 | $ 19,266,276 |
Schedule of Finite Lived Intang
Schedule of Finite Lived Intangible Assets (Details) - USD ($) | Dec. 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 | 1,199,877 | 178,913 | |
Intangible Assets, Net (Excluding Goodwill) | 5,699,464 | ||
Finite-lived intangible assets, net | 3,721,745 | 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 | 136,034 | 33,082 | |
Intangible Assets, Net (Excluding Goodwill) | 1,865,668 | ||
Finite-lived intangible assets, net | $ 65,216 | $ 2,066,918 | |
Developed technology | 6 years 10 months 13 days | 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 | 103,225 | 25,205 | |
Intangible Assets, Net (Excluding Goodwill) | 1,814,795 | ||
Finite-lived intangible assets, net | $ 56,775 | $ 1,974,795 | |
Developed technology | 8 years 10 months 13 days | 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 | 960,620 | 120,626 | |
Intangible Assets, Net (Excluding Goodwill) | 2,019,001 | ||
Finite-lived intangible assets, net | $ 3,599,753 | $ 6,579,374 | |
Developed technology | 5 years 10 months 13 days | 7 years |
Goodwill and Finite-lived Int_3
Goodwill and Finite-lived Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
mined to have a carrying value that exceeded its fair value | $ 13,208,276 | |
Goodwill impairment | 13,208,276 | |
Impairment charge for intangibles | 5,699,463 | |
Additional impairment charges | 2,019,000 | |
Impairment charge | 5,699,464 | |
Market Related Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Impairment charge for intangibles | $ 3,680,463 |
Schedule of Commercial Real Est
Schedule of Commercial Real Estate Loans Receivable (Details) - Commercial Real Estate Loans Receivable [Member] - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | ||
Commercial real estate loans receivable, gross | $ 404,577 | $ 1,432,560 |
Allowance for credit losses | (10,723) | (21,488) |
Commercial real estate loans receivable, net | 393,854 | 1,411,072 |
Current portion | (12,391) | (51,300) |
Noncurrent portion | $ 381,463 | $ 1,359,772 |
Schedule of Allowance For Loan
Schedule of Allowance For Loan Losses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 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 | ||
Provision | (25,745) | 6,747 |
Allowance for credit losses,ending balance | 10,723 | 21,488 |
Individually evaluated for impairment | ||
Collectively evaluated for impairment | 404,577 | 1,432,560 |
Loans receivable | 404,577 | 1,432,560 |
Individually evaluated for impairment | ||
Collectively evaluated for impairment | 10,723 | 21,488 |
Allowance for loan losses | $ 10,723 | $ 21,488 |
Schedule of Risk Rating (Detail
Schedule of Risk Rating (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | $ 404,577 | $ 1,432,560 |
Risk Rate Four [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | $ 404,577 | $ 1,432,560 |
Schedule of Outstanding Amounts
Schedule of Outstanding Amounts (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Indemnification Liability | ||
Secured term loans | $ 55,215,013 | $ 18,400,000 |
Unsecured loans and lines of credit | 431,640 | 498,042 |
Total loans funded by Parent | $ 55,646,653 | $ 18,898,042 |
Schedule of Indemnity Liability
Schedule of Indemnity Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Indemnification Liability | ||
Beginning balance | $ 499,465 | |
Cumulative effect from adoption of CECL | 566,341 | |
Charge-offs | ||
Recoveries | ||
Provision | 316,602 | 499,465 |
Ending balance | $ 1,382,408 | $ 499,465 |
Schedule of Indemnified Loans R
Schedule of Indemnified Loans Risk Rating (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | $ 55,646,653 | $ 18,898,042 |
Risk Rate Three [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | 10,100,000 | 1,100,000 |
Risk Rate Four [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | 3,431,640 | |
Risk Rate Five [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | 28,115,013 | 5,498,042 |
Risk Rate Six [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | 10,900,000 | 9,200,000 |
Risk Rate Seven [Member] | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Grand total | $ 3,100,000 | $ 3,100,000 |
Schedule of Provision for Loan
Schedule of Provision for Loan Losses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Financing Receivable, Past Due [Line Items] | ||
Provision (benefit) | $ 290,857 | $ 506,212 |
Commercial Real Estate Portfolio Segment [Member] | ||
Financing Receivable, Past Due [Line Items] | ||
Provision (benefit) | (25,745) | 6,747 |
Indemnity Liability Segment [Member] | ||
Financing Receivable, Past Due [Line Items] | ||
Provision (benefit) | $ 316,602 | $ 499,465 |
Indemnification Liability (Deta
Indemnification Liability (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Indemnified loan outstanding | $ 3,100,000 | |
Secured Debt [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 7% | |
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 | $ 525,000 | $ 996,958 |
Schedule of Property and Equipm
Schedule of Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 384,228 | $ 175,794 |
Less: accumulated depreciation | (300,008) | (126,180) |
Property and equipment, net | 84,220 | 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 | $ 215,504 | $ 7,070 |
Property and equipment, net (De
Property and equipment, net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 173,828 | $ 10,361 |
Schedule of Demonstrated Deposi
Schedule of Demonstrated Deposit Capacity (Details) - Loan Servicing Agreement [Member] - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Incremental capacity | $ 21,425,560 | $ 154,971,429 |
CRB Related Deposits [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 129,350,998 | 161,138,975 |
Capacity at 60% [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 77,610,599 | 96,683,385 |
Partner Colorado Credit Union [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 81,087,746 | 133,231,565 |
Capacity at 1.3125 [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 106,670,306 | 174,866,429 |
Limiting Capacity [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 77,610,599 | 174,866,429 |
PCCU Loans Funded [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | 55,660,039 | 18,898,042 |
Line of Credit [Member] | ||
Related Party Transaction [Line Items] | ||
Incremental capacity | $ 525,000 | $ 996,958 |
Schedule of Revenue from Operat
Schedule of Revenue from Operations (Details) - Related Party [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Revenue | $ 13,836,703 | $ 8,823,608 |
Account Servicing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue | 3,075,458 | 8,823,608 |
Commercial Alliance Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue | $ 10,761,245 |
Schedule of Operating Expense f
Schedule of Operating Expense from Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Operating expense | $ 38,275,222 | $ 11,676,659 |
Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Operating expense | 2,056,303 | 801,347 |
Support Services Agreement [Member] | Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Operating expense | 378,730 | 775,259 |
Loan Servicing Agreement [Member] | Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Operating expense | 11,929 | 26,088 |
Commercial Alliance Agreement [Member] | Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Operating expense | $ 1,665,644 |
Schedule of Outstanding Balance
Schedule of Outstanding Balances from Balance Sheet (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Due to Seller (Refer to Note 11 to the financial statements below) | $ 56,949,800 | |
Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Accounts receivable | 2,095,320 | 1,231,727 |
Accounts payable | 577,315 | 5,078,042 |
Due to Seller (Refer to Note 11 to the financial statements below) | 56,949,800 | |
Senior Secured Promissory Note (Refer to Note 12 to the financial statements below) | $ 14,011,166 |
Related party transactions (Det
Related party transactions (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Mar. 29, 2023 | Feb. 11, 2022 | Jul. 01, 2021 | Dec. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Sep. 28, 2022 | Jun. 27, 2022 | |
Related Party Transaction [Line Items] | ||||||||
Yearly fee percentage | 5% | |||||||
Debt instrument, face amount | $ 14,500,000 | |||||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.71% | 4.71% | |||||
Cash and cash equivalents | $ 8,900,000 | $ 8,900,000 | $ 8,400,000 | |||||
Deposits | 4,600,000 | 4,600,000 | 8,300,000 | |||||
Partner Colorado Credit Union [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Ownwership percentage | 46.37% | |||||||
Senior Secured Promissory Note [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt instrument term | 5 years | |||||||
Debt instrument, face amount | $ 14,500,000 | |||||||
Debt instrument, interest rate, effective percentage | 4.25% | |||||||
Partner Colorado Credit Union [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Rent expenses | $ 5,400 | |||||||
Related Party [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue | 13,836,703 | 8,823,608 | ||||||
Advance amount | 0 | $ 0 | $ 1,150,000 | $ 1,150,000 | ||||
Support Services Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Alliance agreement, description | In addition, the Commercial Alliance Agreement provides for certain fees to be paid to the Company for certain identified account related services to include: 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 for a monthly fee equal to $30.96 per account in 2022, $25.32-$27.85 per account in 2023, and $26.08-$28.69 in 2024. In addition, as it pertains to CRB deposits held at PCCU, investment and interest income earned on these deposits (excluding interest income on loans funded by PCCU) will be shared 25% to PCCU and 75% to the Company. Finally, under the Commercial Alliance Agreement, PCCU will continue to allow its ratio of CRB-related deposits to total assets to equal at least 60% unless otherwise dictated by regulatory, regulator or policy requirements. The initial term of the Commercial Alliance Agreement is for a period of two years, with a one-year automatic renewal unless a party provides one hundred twenty days’ written notice prior to the end of the term. | |||||||
Support Services Agreement [Member] | Cannabis Related Businesses [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Investment income deposits percentage | 25% | |||||||
Loan Servicing Agreement [Member] | Partner Colorado Credit Union [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Servicing fee | 0.25% | 0.25% | ||||||
Yearly fee percentage | 0.35% | |||||||
Commercial Alliance Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue | $ 549,000 | |||||||
Investment hosting fees rate | 25% | |||||||
Securities Issuance Agreement [Member] | Partner Colorado Credit Union [Member] | Common Class A [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of shares issued | 11,200,000 | |||||||
Ownwership percentage | 46.39% | |||||||
Securities Issuance Agreement [Member] | Senior Secured Promissory Note [Member] | Common Class A [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of shares issued | 11,200,000 |
Schedule of Amounts Due to Sell
Schedule of Amounts Due to Seller (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Due To Seller | ||
Due to Seller-Current (Unsecured) | $ 25,973,017 | |
Due to Seller-long term (Unsecured) | 30,976,783 | |
Total loans funded by PCCU | $ 56,949,800 |
Schedule of Breakdown of Liabil
Schedule of Breakdown of Liabilities Settled (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Payments to acquire businesses | $ 3,041,680 | |
Partner Colorado Credit Union [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
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 ($) | 12 Months Ended | ||||
Mar. 29, 2023 | Sep. 28, 2022 | Feb. 11, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Purchase consideration | $ 10,850,000 | ||||
Cash consideration | $ 3,041,680 | ||||
Debt instrument, interest rate annualized | 5% | ||||
Debt instrument, interest rate, effective percentage | 4.25% | 4.71% | |||
Debt instrument, face amount | $ 14,500,000 | ||||
Senior Secured Promissory Note [Member] | |||||
Debt instrument, interest rate, effective percentage | 4.25% | ||||
Secured debt | $ 56,949,800 | ||||
Debt instrument, term | 5 years | ||||
Debt instrument, face amount | $ 14,500,000 | ||||
December 15, 2022 [Member] | |||||
Deferred consideration payable | $ 21,949,800 | ||||
Common Class A [Member] | Senior Secured Promissory Note [Member] | Securities Issuance Agreement [Member] | |||||
Number of shares issued | 11,200,000 | ||||
Safe Harbour Financial LLC [Member] | |||||
Purchase consideration | 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 ($) | Dec. 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 | $ 14,011,166 | ||
Senior Secured Promissory Note (Current) [Member] | Security Agreement [Member] | |||
Short-Term Debt [Line Items] | |||
Total | 3,006,991 | ||
Senior Secured Promissory Note (Long Term) [Member] | Security Agreement [Member] | |||
Short-Term Debt [Line Items] | |||
Total | $ 11,004,175 |
Schedule of Outstanding Amount
Schedule of Outstanding Amount on Debt (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | ||
Total loans funded by Parent | $ 55,646,653 | $ 18,898,042 |
Senior Secured Promissory Note [Member] | ||
Short-Term Debt [Line Items] | ||
2024 | 3,006,991 | |
2025 | 3,138,933 | |
2026 | 3,274,966 | |
2027 | 3,416,896 | |
2028 | 1,173,380 | |
Total loans funded by Parent | $ 14,011,166 |
Senior Secured Promissory Not_2
Senior Secured Promissory Note (Details Narrative) - USD ($) | Dec. 31, 2023 | Nov. 05, 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 and Righ
Schedule of Lease Cost and Right of Use Assets Related to Lease and Future Minimum Lease Payments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating lease cost | ||
Short-term lease cost | 315,615 | 99,246 |
Total Lease Cost | 315,615 | 99,246 |
Beginning balance | 1,016,198 | |
Additions to right-of-use assets | 1,029,226 | |
Amortization charge for the year | (156,337) | (13,028) |
Lease modifications | ||
Ending balance | $ 859,861 | $ 1,016,198 |
Weighted-average remaining lease term | 3 years 5 months 1 day | 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 ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Leases | ||
2023 | $ 91,303 | |
2024 | 197,520 | 197,520 |
2025 | 217,925 | 217,925 |
2026 | 222,275 | 222,275 |
2027 | 226,705 | 226,705 |
2028 | 231,216 | 231,216 |
Thereafter | 117,710 | 117,710 |
Total future minimum lease payments | 1,213,351 | 1,304,654 |
Less: Imputed interest | 205,358 | 276,421 |
Operating lease liabilities | 1,007,993 | 1,028,233 |
Less: Current portion | 132,546 | 20,124 |
Non-current portion of lease liabilities | $ 875,447 | $ 1,008,109 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Option to extend lease term | ten years | ||
Operating lease right to use assets | $ 859,861 | $ 1,016,198 | |
Operating lease liablities | $ 1,007,993 | $ 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 ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Total Revenue | $ 17,562,903 | $ 9,478,819 |
Deposit Activity Onboarding Income [Member] | ||
Total Revenue | 8,614,945 | 6,063,939 |
Investment Income [Member] | ||
Total Revenue | 5,844,836 | 2,120,640 |
Interest Income [Member] | ||
Total Revenue | 2,972,434 | 1,130,178 |
Safe Harbor Program Income [Member] | ||
Total Revenue | $ 130,688 | $ 164,062 |
Revenue (Details Narrative)
Revenue (Details Narrative) - Partner Colorado Credit Union [Member] - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Incremental revenue | $ 549,000 | ||
Investment hosting fees remit percent | 25% | ||
Proceeds from deposits | $ 5,150,397 | $ 5,554,922 | |
Investment income | 5,803,114 | 2,110,572 | |
Loan interest income | 2,883,192 | 989,642 | |
Account hosting expenses | 529,209 | 255,853 | |
Investment hosting fee | 1,445,517 | 519,406 | |
Loan servicing fees | $ 81,577 | $ 26,088 |
Deferred underwriter fee (Detai
Deferred underwriter fee (Details Narrative) - USD ($) | 12 Months Ended | |||||
Mar. 13, 2023 | Jan. 31, 2023 | Oct. 14, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Sep. 28, 2022 | |
Debt instrument periodic payment | $ 715,750 | |||||
Deferred underwriter fee | $ 1,450,500 | |||||
Repayments of debt | $ 550,000 | |||||
Deferred underwriting cost | $ 900,500 | |||||
Benchmark Investments LLC [Member] | ||||||
Notes payable | $ 2,166,250 | |||||
Debt instrument periodic payment | $ 362,625 | $ 715,750 |
Schedule of Earning Per Shares,
Schedule of Earning Per Shares, Basic and Diluted (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (17,279,847) | $ (35,128,083) |
Weighted average shares outstanding – basic | 42,574,563 | 18,988,558 |
Basic net loss per share | $ (0.41) | $ (1.85) |
Weighted average shares outstanding – diluted | 42,574,563 | 18,988,558 |
Diluted net loss per share | $ (0.41) | $ (1.85) |
Company public shares | 3,926,598 | 3,926,598 |
Company initial stockholders | 3,403,175 | 3,403,175 |
PCCU stockholders | 19,977,920 | 11,386,139 |
Shares issued for Abaca acquisition | 3,155,222 | 264,654 |
Restricted stock units issued | 999,638 | |
Conversion of Preferred stock | 11,112,010 | 7,992 |
Grand total | 42,574,563 | 18,988,558 |
Schedule of Share-based Equity
Schedule of Share-based Equity Awards Excluded From Computation of Dilutive Loss (Details) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Grand total | 16,310,665 | 29,083,427 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Grand total | 12,786,588 | 7,036,588 |
Share-Based Payment Arrangement [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Grand total | 2,643,277 | 2,170,000 |
Abaca Acquisition [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Grand total | 6,433,839 | |
Conversion Preferred [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Grand total | 880,800 | 13,443,000 |
Schedule of Forward Purchase Ag
Schedule of Forward Purchase Agreement (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2023 | 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 | 12 Months Ended | |||
Jun. 16, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | |
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] | ||||
Decrease in receivables | $ 37.9 | |||
Receivables | $ 4.6 | |||
Cash [Member] | ||||
Asset held with trust | $ 39.3 | |||
Midtown East Management NL LLC [Member] | Common Class A [Member] | ||||
Shares, issued | 1,666,666 | |||
Number of new stock issued | 3,800,000 |
Warrant Liabilities (Details Na
Warrant Liabilities (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 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 | |
Warrants execise price | $ 0.01 | |
Private Placement Warrants [Member] | ||
Warrants outstanding | 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 | |
Abaca Warrants [Member] | ||
Warrants outstanding | 5,000,000 | 0 |
Warrants execise price | $ 2 | |
Abaca Warrants [Member] | Common Class A [Member] | ||
Warrants execise price | $ 2 | |
Number of warrant issued | 5,000,000 | |
Warrants term | 5 years |
Schedule of Fair Value Assets a
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
PIPE Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | $ 273,124 | $ 286,300 |
PIPE Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | ||
PIPE Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 273,124 | 286,300 |
Public Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 481,850 | 361,100 |
Public Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 481,850 | 361,100 |
Public Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | ||
Private Placement Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 25,070 | 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] | ||
Liabilities | ||
Private Placement Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 25,070 | 19,110 |
Abaca Warrant [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 3,384,085 | |
Abaca Warrant [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | ||
Abaca Warrant [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 3,384,085 | |
Forward Purchase Derivative Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 7,309,580 | 7,309,580 |
Forward Purchase Derivative Liability [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | ||
Forward Purchase Derivative Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 7,309,580 | 7,309,580 |
Third Anniversary Payment Consideration [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 810,000 | |
Third Anniversary Payment Consideration [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | ||
Third Anniversary Payment Consideration [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | $ 810,000 |
Schedule of Carrying Amounts an
Schedule of Carrying Amounts and Fair Values of Financial Instruments Measured on a Nonrecurring Basis (Details) - Fair Value, Nonrecurring [Member] | Dec. 31, 2023 USD ($) |
Fair Value, Inputs, Level 1 [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
Developed Technology | |
Fair Value, Inputs, Level 2 [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
Developed Technology | |
Fair Value, Inputs, Level 3 [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
Developed Technology | 3,599,754 |
Reported Value Measurement [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
Developed Technology | 3,599,754 |
Estimate of Fair Value Measurement [Member] | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | |
Developed Technology | $ 3,599,754 |
Schedule of Finite Lived Inta_2
Schedule of Finite Lived Intangible Assets Measurement (Details) - Fair Value, Inputs, Level 3 [Member] - Fair Value, Nonrecurring [Member] - Developed Technology [Member] | Dec. 31, 2023 |
Measurement Input Royalty Rate [Member] | |
Platform Operator, Crypto-Asset [Line Items] | |
Fair value measurements inputs | 6.50 |
Measurement Input, Discount Rate [Member] | |
Platform Operator, Crypto-Asset [Line Items] | |
Fair value measurements inputs | 14.25 |
Measurement Input, Expected Term [Member] | |
Platform Operator, Crypto-Asset [Line Items] | |
Estimated useful life | 5 years 10 months 13 days |
Measurement Input Tax Rate [Member] | |
Platform Operator, Crypto-Asset [Line Items] | |
Fair value measurements inputs | 25 |
Schedule of Carrying Amounts _2
Schedule of Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Liabilities | ||
Deferred consideration | $ 2,889,792 | $ 14,359,822 |
Forward purchase derivative | 7,309,580 | 7,309,580 |
Due to seller - current portion | 25,973,017 | |
Deferred underwriter fee payable | 1,450,500 | |
Fair Value, Inputs, Level 1 [Member] | ||
Assets | ||
Cash and cash equivalents | 4,888,769 | 8,390,195 |
Forward purchase receivables | 4,584,221 | 4,584,221 |
Loans | ||
Liabilities | ||
Deferred consideration | 2,889,792 | 14,359,822 |
Senior secured promissory note | ||
Public warrants | 481,850 | 361,100 |
Private placement warrants | ||
PIPE warrants | ||
Abaca warrants | ||
Forward purchase derivative | ||
Third anniversary payment consideration | ||
Due to seller - long term position | 30,976,783 | |
Deferred underwriter fee payable | 1,450,500 | |
Fair Value, Inputs, Level 1 [Member] | Related Party [Member] | ||
Liabilities | ||
Due to seller - current portion | 25,973,017 | |
Fair Value, Inputs, Level 2 [Member] | ||
Assets | ||
Cash and cash equivalents | ||
Forward purchase receivables | ||
Loans | ||
Liabilities | ||
Deferred consideration | ||
Senior secured promissory note | ||
Public warrants | ||
Private placement warrants | ||
PIPE warrants | ||
Abaca warrants | ||
Forward purchase derivative | ||
Third anniversary payment consideration | ||
Due to seller - long term position | ||
Deferred underwriter fee payable | ||
Fair Value, Inputs, Level 2 [Member] | Related Party [Member] | ||
Liabilities | ||
Due to seller - current portion | ||
Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Cash and cash equivalents | ||
Forward purchase receivables | ||
Loans | 363,561 | 1,241,761 |
Liabilities | ||
Deferred consideration | ||
Senior secured promissory note | 12,750,204 | |
Public warrants | ||
Private placement warrants | 25,070 | 19,110 |
PIPE warrants | 273,124 | 286,300 |
Abaca warrants | 3,384,085 | |
Forward purchase derivative | 7,309,580 | 7,309,580 |
Third anniversary payment consideration | 810,000 | |
Due to seller - long term position | ||
Deferred underwriter fee payable | ||
Fair Value, Inputs, Level 3 [Member] | Related Party [Member] | ||
Liabilities | ||
Due to seller - current portion | ||
Reported Value Measurement [Member] | ||
Assets | ||
Cash and cash equivalents | 4,888,769 | 8,390,195 |
Forward purchase receivables | 4,584,221 | 4,584,221 |
Loans | 330,579 | 1,301,991 |
Liabilities | ||
Deferred consideration | 2,889,792 | 14,359,822 |
Senior secured promissory note | 14,011,166 | |
Public warrants | 481,850 | 361,100 |
Private placement warrants | 25,070 | 19,110 |
PIPE warrants | 273,124 | 286,300 |
Abaca warrants | 3,384,085 | |
Forward purchase derivative | 7,309,580 | 7,309,580 |
Third anniversary payment consideration | 810,000 | |
Due to seller - long term position | 30,976,783 | |
Deferred underwriter fee payable | 1,450,500 | |
Reported Value Measurement [Member] | Related Party [Member] | ||
Liabilities | ||
Due to seller - current portion | 25,973,017 | |
Estimate of Fair Value Measurement [Member] | ||
Assets | ||
Cash and cash equivalents | 4,888,769 | 8,390,195 |
Forward purchase receivables | 4,584,221 | 4,584,221 |
Loans | 363,561 | 1,241,761 |
Liabilities | ||
Deferred consideration | 2,889,792 | 14,359,822 |
Senior secured promissory note | 12,750,204 | |
Public warrants | 481,850 | 361,100 |
Private placement warrants | 25,070 | 19,110 |
PIPE warrants | 273,124 | 286,300 |
Abaca warrants | 3,384,085 | |
Forward purchase derivative | 7,309,580 | 7,309,580 |
Third anniversary payment consideration | $ 810,000 | |
Due to seller - long term position | 30,976,783 | |
Deferred underwriter fee payable | 1,450,500 | |
Estimate of Fair Value Measurement [Member] | Related Party [Member] | ||
Liabilities | ||
Due to seller - current portion | $ 25,973,017 |
Schedule of Fair Value Assets M
Schedule of Fair Value Assets Measured on Recurring Basis (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
PIPE Warrants [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Balance at the beginning of the period | $ 286,300 | |
Issued to Abaca shareholders | ||
Fair value adjustment | (13,176) | 286,300 |
Balance at the end of the period | 273,124 | 286,300 |
Abaca Warrant [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Balance at the beginning of the period | ||
Issued to Abaca shareholders | 1,635,407 | |
Fair value adjustment | 1,740,386 | |
Balance at the end of the period | 3,384,085 | |
Private Placement Warrants [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Balance at the beginning of the period | 19,110 | |
Issued to Abaca shareholders | ||
Acquired under business combination | 203,112 | |
Fair value adjustment | 5,960 | 184,002 |
Balance at the end of the period | 25,070 | 19,110 |
Third Anniversary Payment Consideration [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Balance at the beginning of the period | ||
Issued to Abaca shareholders | 430,000 | |
Fair value adjustment | 380,000 | |
Balance at the end of the period | 810,000 | |
Forward Purchase Derivative [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Balance at the beginning of the period | 7,309,580 | |
Issued to Abaca shareholders | ||
Acquired under business combination | (1,687,530) | |
Fair value adjustment | 8,997,110 | |
Balance at the end of the period | $ 7,309,580 | $ 7,309,580 |
Schedule of Level 3 Fair Value
Schedule of Level 3 Fair Value Measurement Inputs (Details) | Dec. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares |
PIPE Warrants [Member] | Measurement Input, Exercise Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 5 | 5 |
PIPE Warrants [Member] | Measurement Input, Share Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 1.42 | 1.78 |
PIPE Warrants [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 3 years 8 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] | ||
Warrants and rights outstanding, measurement input | 62.95 | 46 |
PIPE Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 4.25 | 4 |
Private Warrants [Member] | Measurement Input, Exercise Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 11.5 | 11.5 |
Private Warrants [Member] | Measurement Input, Share Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 1.42 | 1.78 |
Private Warrants [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 3 years 8 months 26 days | 4 years 8 months 26 days |
Private Warrants [Member] | Measurement Input, Price Volatility [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 62.95 | 46 |
Private Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 4.25 | 3.98 |
Third Anniversary Payment Consideration [Member] | Measurement Input, Exercise Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | ||
Third Anniversary Payment Consideration [Member] | Measurement Input, Share Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 1.42 | |
Third Anniversary Payment Consideration [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 1 year 9 months 3 days | |
Third Anniversary Payment Consideration [Member] | Measurement Input, Price Volatility [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 62.95 | |
Third Anniversary Payment Consideration [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 4.25 | |
Abaca Warrant [Member] | Measurement Input, Exercise Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 2 | |
Abaca Warrant [Member] | Measurement Input, Share Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 1.42 | |
Abaca Warrant [Member] | Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 4 years 10 months 2 days | |
Abaca Warrant [Member] | Measurement Input, Price Volatility [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 62.95 | |
Abaca Warrant [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Warrants and rights outstanding, measurement input | 4.25 |
Schedule of Level 3 Fair Valu_2
Schedule of Level 3 Fair Value Measurements Inputs (Details) - Forward Purchase Derivative [Member] | 12 Months Ended | |
Dec. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares | |
Measurement Input Reset Price [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Derivative liability, measurement input | 1.25 | 1.25 |
Measurement Input, Expected Term [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Expected term (years) | 1 year 8 months 26 days | 2 years 8 months 26 days |
Measurement Input Additional Maturity Per Share [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Derivative liability, measurement input | 2 | 2 |
Measurement Input, Price Volatility [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Derivative liability, measurement input | 46 | 46 |
Measurement Input, Risk Free Interest Rate [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Derivative liability, measurement input | 4.2 | 4.2 |
Measurement Input, Discount Rate [Member] | Purchase Agreement Option [Member] | ||
Impairment Effects on Earnings Per Share [Line Items] | ||
Derivative liability, measurement input | 13.4 | 13.4 |
Schedule of Major Components of
Schedule of Major Components of Income Tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Current tax on profits | $ (3,394) | |
Deferred taxation - current year | (1,829,701) | (9,249,499) |
Income tax benefit reported in the income statement | $ (1,829,701) | $ (9,252,893) |
Schedule of Effective Income Ta
Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Accounting loss before tax from continuing operations | $ (19,109,548) | $ (44,380,976) |
Accounting loss before income tax | (19,109,548) | (44,380,976) |
At federal statutory income tax rate of 21% | (4,013,005) | (9,320,005) |
State income tax benefit, net of federal benefit | (253,649) | (1,304,510) |
Permanent differences, net | 2,207,439 | 1,787,471 |
Other | 229,514 | (415,849) |
Total | $ (1,829,701) | $ (9,252,893) |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Change in Accounting Estimate [Line Items] | ||
Loan Loss Reserve | $ 340,982 | $ 127,508 |
Capital Loss Carryover | 72,914 | |
Stock Option Expense | 1,322,890 | 686,879 |
Deferred Revenue | 5,366 | 251 |
Fixed Assets | 20,866 | (11,444) |
Transaction Costs | 1,014,922 | 817,323 |
Change in Forward Purchase Contract | 8,155,953 | 8,155,953 |
Goodwill | 30,631,880 | 42,551,111 |
NOL Carryforward | 3,210,838 | 1,862,393 |
ROU Assets | (210,460) | (248,725) |
ROU Liabilities | 246,716 | 251,670 |
Intangible Assets | (910,934) | (2,599,617) |
Valuation Allowance | (72,914) | |
Net deferred tax assets / (liabilities) | 43,829,019 | 51,593,302 |
Deferred tax assets | 44,950,413 | |
Deferred tax liabilities | (1,121,394) | |
Deferred tax assets net | 43,829,019 | |
Change in Deferred Tax [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Loan Loss Reserve | (213,473) | |
Capital Loss Carryover | (72,914) | |
Stock Option Expense | (636,011) | |
Deferred Revenue | (5,115) | |
Fixed Assets | (32,310) | |
Transaction Costs | (197,599) | |
Change in Forward Purchase Contract | ||
Goodwill | 11,919,231 | |
NOL Carryforward | (1,348,445) | |
ROU Assets | (38,265) | |
ROU Liabilities | 4,954 | |
Intangible Assets | (1,688,683) | |
Valuation Allowance | 72,914 | |
Net deferred tax assets / (liabilities) | $ 7,764,284 |
Schedule of Deferred Tax Liabil
Schedule of Deferred Tax Liabilities Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Opening balance as on December 31, 2022 | $ 51,593,302 | |
Tax Income/(expense) during the period recognized in profit or loss | 1,829,701 | 9,249,499 |
Acquisitions | (9,593,985) | 42,343,803 |
Closing balance as on December 31, 2023 | $ 43,829,019 | $ 51,593,302 |
Tax (Details Narrative)
Tax (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Federal tax loss carryovers | $ 13,100,000 | |
Operation loss carry forwards | 3,210,838 | $ 1,862,393 |
State of Colorado [Member] | ||
Operation loss carry forwards | 12,800,000 | |
State Of Arkansas [Member] | ||
Operation loss carry forwards | $ 200,000 |
401(k) Plan (Details Narrative)
401(k) Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Retirement Benefits [Abstract] | ||
Defined contribution plan employee percent | 100% | |
Defined contribution plan employee matching contribution | 4% | |
Defined contribution plan amount | $ 62,785 | $ 47,806 |
Schedule of Fair Value of Optio
Schedule of Fair Value of Options Granted Black-Scholes-Merton Model (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Dividend yield | ||
Risk-free interest rate, minimum | 3.62% | 3.62% |
Risk-free interest rate, maximum | 4.23% | 4.23% |
Expected volatility | 100% | 100% |
Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected term | 6 years | 6 years |
Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected term | 6 years 6 months | 6 years 6 months |
Schedule of Stock Option and Re
Schedule of Stock Option and Related Information (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
No. of Stock Option, Beginning Balance | 2,170,000 | |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ 5.29 | |
Weighted-Average Remaining Contractual Life, Beginning | 2 years 7 days | |
No. of Stock Option, Granted | 336,730 | 2,170,000 |
Weighted Average Exercise Price, Granted | $ 1.03 | $ 5.29 |
Weighted-Average Remaining Contractual Life, Granted (in Years) | 1 year 3 months 10 days | 2 years 7 days |
No. of Stock Option, Exercised | ||
Weighted Average Exercise Price, Exercised | ||
No. of Stock Option, Expired | ||
Weighted Average Exercise Price, Expired | ||
No. of Stock Option, Cancelled/Forfeited | (220,720) | |
Weighted Average Exercise Price, Cancelled/Forfeited | $ (2.67) | |
No. of Stock Option, Ending Balance | 2,286,010 | 2,170,000 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ 5.43 | $ 5.29 |
Weighted-Average Remaining Contractual Life, Ending | 1 year 7 months 24 days | 2 years 7 days |
Schedule of Options Outstanding
Schedule of Options Outstanding (Details) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price options | 2,286,010 | 2,170,000 |
Exercise Price One [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 1.56 | |
Exercise price options | 376,510 | 87,500 |
Exercise Price Two [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 2.58 | |
Exercise price options | 350,000 | 350,000 |
Exercise Price Three [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 4 | |
Exercise price options | 309,500 | 482,500 |
Exercise Price Four [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 6.67 | |
Exercise price options | 1,250,000 | 1,250,000 |
Schedule of Restricted Stock Un
Schedule of Restricted Stock Units (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
No. of RSU, Beginning Balance | ||
Weighted-Average Remaining Contractual Life, Beginning | 2 years 7 days | |
Weighted-Average Remaining Contractual Life, Granted | 1 year 3 months 10 days | 2 years 7 days |
No. of RSU, Ending Balance | 323,500 | |
Weighted-Average Remaining Contractual Life, Ending | 1 year 7 months 24 days | 2 years 7 days |
Restricted Stock Units (RSUs) [Member] | ||
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 | ||
Weighted-Average Remaining Contractual Life, Beginning | ||
No. of RSU, Granted | 1,600,028 | |
Weighted Average Grant Date Fair Value Per RSU, Granted | $ 0.99 | |
Weighted-Average Remaining Contractual Life, Granted | 2 years | |
No. of RSU, Exercised | (1,266,228) | |
Weighted Average Grant Date Fair Value Per RSU, Exercised | $ (0.90) | |
Weighted Average Grant Date Fair Value Per RSU, Expired | ||
No. of RSU, Expired | (10,300) | |
Weighted Average Grant Date Fair Value Per RSU, Cancelled/Forfeited | $ 1.31 | |
No. of RSU, Ending Balance | 323,500 | |
Weighted Average Grant Date Fair Value Per RSU, Ending Balance | $ 0.47 | |
Weighted-Average Remaining Contractual Life, Ending | 2 years |
Schedule of Exercise price of R
Schedule of Exercise price of Restricted Stock Units (Details) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price options | 323,500 | |
Restricted Stock Units (RSUs) [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price options | 323,500 | |
Exercise Price One [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 1.31 | |
Exercise price options | 323,500 |
Share based compensation (Detai
Share based compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Share based compensation | $ 3,710,000 | $ 2,810,000 |
Contractual term | 2 years 7 days | |
Expected volatility | 100% | |
Share-Based Payment Arrangement, Option [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Contractual term | 10 years | |
Restricted Stock Units (RSUs) [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Contractual term | ||
RSUs vested in period, fair value | $ 1,140,648 | $ 0 |