United States securities and exchange commission logo
May 12, 2022
Joshua Mann
Co-Chief Executive Officer and Director
Northern Lights Acquisition Corp.
10 East 53rd Street
Suite 3001
New York, New York 10022
Re: Northern Lights
Acquisition Corp.
Preliminary Proxy
Statement on Schedule 14A
Filed April 15,
2022
File No. 001-40524
Dear Mr. Mann:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Preliminary Proxy Statement filed April 15, 2022
General
1. Please revise to
include the Amended and Restated Account Services Agreement, the
Amended and Restated
Support Services Agreement, and the Loan Servicing Agreement
with Partner Colorado
Credit Union ( PCCU ) as Annexes in your next filing amendment.
Cover Page
2. Please revise your Dear
Stockholder letter to clearly indicate that following the Business
Combination you will be
a controlled company and identify the parties that will control
Safe Harbor Financial.
Joshua Mann
FirstName LastNameJoshua
Northern Lights Acquisition Mann
Corp.
Comapany
May NameNorthern Lights Acquisition Corp.
12, 2022
May 12,
Page 2 2022 Page 2
FirstName LastName
Frequently Used Terms
"PIPE Investors", page 9
3. Please revise to clearly disclose if the PIPE Investors are third
parties or associated with
any of the pre-combination entities, including the Sponsor or the
Company s directors,
officers or their affiliates.
Summary of the Proxy Statement
Amended and Restated Account Servicing Agreement, page 33
4. We note your disclosure on page 33 that the Amended and Restated
Account Servicing
Agreement will terminate within 60 days if Safe Harbor Financial (SHF)
no longer
qualifies as a credit union service organization (CUSO). Please
revise to clarify if SHF
is currently structured as a CUSO and will be structured as a CUSO
after the business
combination. If applicable, please revise to file as an Annex the
legal opinion obtained by
PCCU that indicates that SHF qualifies as a CUSO. Please refer to
National Credit Union
Administration (NCUA) regulations Part 712.
Loan Servicing Agreement, page 34
5. We note your disclosure on page 34 that SHF has agreed to indemnify
PCCU from all
claims related to SHF s cannabis-related business, including but not
limited to default-
related loan losses as defined in the Loan Servicing Agreement. Please
revise your filing
to discuss how management will monitor and evaluate the performance
and credit quality
of these loans to ensure that expected loan losses will be timely
recognized in your
financial statements.
6. Please revise to disclose the accounting policy related to your
agreement to indemnify
PCCU from all claims related to SHF s cannabis-related business,
including but not
limited to default-related loan losses as defined in the Loan
Servicing Agreement and
disclose the specific authoritative guidance you relied upon in
support of your accounting.
Organizational Structure, page 34
7. Please revise the graphic on page 35 to use a similar graphic that you
used on page 34 as
opposed to a pie chart. In addition, this new graphic should, if
accurate, refer to "SHF
Holding Co., LLC" as the owner of 34.6% of the post-combination
company as opposed
to "Existing SHF Shareholders." Also indicate who has ownership
interests in SHF
Holding Co. LLC following the Business Combination. This graphic
should also
indicate indicating that SHF will be a controlled company
post-combination noting which
of these ownership interests are controlled by PCCU or other
shareholders. If there are
differences between the amount of voting power and economic interests
that are held by
each entity, please note that as well.
Joshua Mann
FirstName LastNameJoshua
Northern Lights Acquisition Mann
Corp.
Comapany
May NameNorthern Lights Acquisition Corp.
12, 2022
May 12,
Page 3 2022 Page 3
FirstName LastName
Impact of the Business Combination on the Company s Public Float, page 35
8. Revise your disclosure to show the potential impact of redemptions on
the per share value
of the shares owned by non-redeeming shareholders by including a
sensitivity analysis
showing a range of redemption scenarios, including minimum, maximum
and interim
redemption levels.
Accounting Treatment, page 38
9. Please tell us and revise your filing to discuss how you determined
SHF s former owners
will retain control of the combined company after the transaction and
that SHF is the
accounting acquirer. In your response, please tell us how you
considered the guidance in
ASC 805-10-55-12 and 55-13 when identifying the accounting acquirer
and also include
consideration of the no redemption and maximum redemption
scenarios as disclosed
on page 36.
Regulatory Matters, page 43
10. We note your disclosure that there are no material regulatory
approvals or actions required
other than those involving Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
Please tell us how you concluded that there was no regulatory interest
in this business
combination from money servicing business regulators, Colorado or
federal credit unions
regulators, bank holding company regulators, or other similar
regulatory bodies.
Unaudited Pro Forma Condensed Combined Financial Information
Note 2. Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as
of
December 31, 2021, page 57
11. We note adjustment 7 to the pro forma balance sheet on page 58
includes a deferred tax
asset (DTA) of $41.4 million related to Amortization-Goodwill.
Please tell us the
authoritative accounting guidance you relied upon in support of the
recognition of this
DTA as we note no goodwill recognized as part of the reverse
recapitalization.
Risk Factors, page 62
12. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Joshua Mann
FirstName LastNameJoshua
Northern Lights Acquisition Mann
Corp.
Comapany
May NameNorthern Lights Acquisition Corp.
12, 2022
May 12,
Page 4 2022 Page 4
FirstName LastName
Risks Related to SHF's Business and the Post-Combination Company, page 62
13. We note your disclosure that all of SHF's customer deposits are
currently held at PCCU.
Please provide additional disclosure regarding the potential risks to
SHF's business if
PCCU terminates or seeks to modify the terms of your Support Services
Agreement or
Account Servicing Agreement. Please also clarify the risk factor below
to indicate
approximately what percentage of your lending comes from PCCU.
14. Please clarify whether the maximum amount of loans that PCCU may make
is capped by
reference to the amount of both PCCU's net worth and the total CRB
deposits, or whether
the maximum amount of loans is either 1.3125x PCCU's net worth for
secured
loans/1.142x for unsecured loans or 65% of total deposits.
15. Please include a separately captioned risk factor to disclose all
possible sources and extent
of dilution that shareholders who elect not to redeem their shares may
experience in
connection with the business combination. Provide disclosure of the
impact of each
significant source of dilution, including the amount of equity held by
founders,
convertible securities, including warrants retained by redeeming
shareholders, at each of
the redemption levels detailed in your sensitivity analysis, including
any needed
assumptions.
SHF provides services to businesses in the state licensed cannabis industry...,
page 64
16. Please revise this risk factor to clearly indicate that the federal
government may not
change the laws with respect to cannabis in such a way that your
regulatory risks may
decrease.
Service providers to cannabis businesses may be subject to unfavorable U.S. tax
treatment, page
67
17. Please define the MORE Act here or in your Frequently Used Terms
section. In addition,
please revise this risk factor to provide greater clarity on the
current status of the MORE
Act.
Our Sponsor, certain members of our Board and our officers may have interests
in the Business
Combination that are different..., page 70
18. We note your disclosure in this risk factor. Please revise it as
necessary in order to ensure
that you quantify the aggregate dollar amount and describe the nature
of what the sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Also ensure that it includes the current value of securities held,
loans extended, fees due,
and out-of-pocket expenses for which the sponsor and its affiliates
are awaiting
reimbursement. Provide similar disclosure for the company s officers
and directors, if
material.
Joshua Mann
FirstName LastNameJoshua
Northern Lights Acquisition Mann
Corp.
Comapany
May NameNorthern Lights Acquisition Corp.
12, 2022
May 12,
Page 5 2022 Page 5
FirstName LastName
19. We note your disclosure that your Sponsor will lose their entire
investment if your initial
business combination is not consummated. Please expand this disclosure
to discuss that
your Sponsor will benefit from completing the business combination and
may be
incentivized to complete an acquisition of a less favorable target
company or on terms less
favorable to shareholders rather than liquidate.
Risks Related to the Business Combination, page 70
20. We note your disclosure at the beginning of page 89 of the
identification of a material
weakness related to the classification of your Class A common stock,
which resulted in
your conclusion that your internal control over financial reporting
was not effective as of
September 20, 2021. Please revise your filing to disclose management
s evaluation of the
effectiveness of both your internal control over financial reporting
and disclosure controls
and procedures as of December 31, 2021 as it doesn t appear the
evaluations for this
period were included in your Form 10-K for December 31, 2021, which is
incorporated by
reference into this filing, as disclosed on page 209.
Changes in laws, regulations or rules, or a failure to comply with any laws,
regulations or rules...,
page 84
21. We note your disclosure here that you "are required to comply with
certain SEC, Nasdaq
and other legal or regulatory requirements of businesses providing
financial services."
Please expand this risk factor to identify the applicable legal or
regulatory requirements of
businesses providing financial services. In addition, please expand
your Regulatory
Matters sections to discuss those laws and regulations in greater
detail.
Background of the Business Combination, page 112
22. We note your disclosure in this section that on July 30, 2021 you
executed a non-binding
letter of intent that valued the business at $415 million and on
September 29, 2021 your
new terms valued the business at $185 million. Please revise this
section in order to
provide more detail as to the factors and reasonings that led to the
notable decrease in
valuation over a relatively short period of time. Please identify any
resources or parties
that you consulted with in order to come to this new valuation.
Business of Safe Harbor Financial, page 155
23. Please provide context and support for the statements on page 156 that
Safe Harbor
provides the "highest level of monitoring and validation" and has
processed over $12
billion of funds into the financial system. In your response please
give greater clarity as to
the customer journey to opening an account through Safe Harbor,
including AML/KYC
procedures.
24. Please clarify whether both annual deposits and net cash flow have
grown at a CAGR of
69% from 2015 to 2021, or only annual deposits.
Joshua Mann
FirstName LastNameJoshua
Northern Lights Acquisition Mann
Corp.
Comapany
May NameNorthern Lights Acquisition Corp.
12, 2022
May 12,
Page 6 2022 Page 6
FirstName LastName
25. We note the information captioned "Regulatory Pressures" on page 161.
Please revise to
include a detailed description of the regulatory pressures your
business faces, including
identifying such regulatory bodies, and the means by which Safe Harbor
meets its
regulatory obligations. Please provide support for your statement that
"Regulators remain
uncomfortable with the unknown" or specify that this opinion is based
on your own
beliefs.
26. Please clarify what is meant by the statement on page 163 that we
have developed
proprietary software from input gathered from all experienced banking
positions." Please
provide further detail on your proprietary software and how it impacts
the company s
operations.
Further Penetrate Existing Legal Markets, page 166
27. We note the disclosure that you believe without past constraints, as a
result of being
owned by PCCU, you will be able to increase your client s onboarding
capacity and
capture meaningful stakes in all currently legal cannabis markets.
Please revise your
filing, where appropriate, to explain in further detail the past
constraints you are no longer
subject to in addition to the constraints, if any, as a result of PCCU
s continued ownership
stake after the business combination.
Lending, page 167
28. We note your disclosure that, "[you] believe that our innate advantage
is our materially
lower cost of capital relative to our peers." Please explain why you
believe that you have a
materially lower cost of capital relative to your lending peers.
Conflicts of Interest, page 203
29. We note your disclosure here and in your Q&A on page 23 of a variety
of potential
conflicts of interest that exist or may emerge between the sponsor and
the company s
officers and directors on one side, and the company and its public
shareholders on the
other. Please clarify how the board considered those conflicts in
negotiating and
recommending the business combination.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Joshua Mann
Northern Lights Acquisition Corp.
May 12, 2022
Page 7
You may contact William Schroeder at 202-551-3294 or John Spitz at
202-551-3484 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Christopher Wall at 202-551-4162 or Eric Envall at 202-551-3234 with
any other
questions.
FirstName LastNameJoshua Mann Sincerely,
Comapany NameNorthern Lights Acquisition Corp.
Division of
Corporation Finance
May 12, 2022 Page 7 Office of Finance
FirstName LastName