Business context and reporting period
Registrant identity: The supplied filing is for Northern Lights Acquisition Corp. (Nasdaq: NLIT, NLITU, NLITW), not SHF Holdings, Inc. It is a blank-check company formed to pursue a business combination and had not begun operating activities as of September 30, 2021. This is its unaudited Form 10-Q for the quarter ended September 30, 2021; the company’s fiscal year ends December 31.
Financial results and position
- Revenue: None reported; the company said it does not expect operating revenue until after a business combination.
- Net income: $3.56 million for the three months ended September 30, 2021; $1.82 million from inception through September 30, 2021. The quarter’s income principally reflected a $3.78 million gain from the change in fair value of warrant liabilities, rather than operating performance. Quarterly formation and operating costs were $244,329.
- Cash flow: Net cash used in operating activities was $472,833 from inception through September 30. Cash at period end was $330,240.
- Liquidity and assets: Working capital was $512,844. Total assets were $117.97 million, including $117.31 million held in the Trust Account, principally in a U.S. Treasury money-market fund. Trust funds were generally unavailable for operating expenses.
- Liabilities and debt: Total liabilities were $6.88 million, including $2.71 million of warrant liabilities and $4.03 million of deferred underwriting fees. The company reported no long-term debt or outstanding working-capital loans.
- Margins: Not meaningful because the company had no revenue.
Changes, outlook and risks
- Restatement and controls: The company restated previously issued financial statements to classify all 11.5 million public Class A shares as temporary equity. It characterized the prior misstatement as material and disclosed a material weakness in accounting for complex financial instruments. Management concluded disclosure controls were ineffective as of September 30, 2021 and said remediation efforts were underway.
- Period comparisons: The company was newly formed in February 2021, so the filing provides no prior-year comparable quarter. It reports Q3 results and inception-to-date results.
- Business-combination deadline: The company had until June 28, 2022 to complete a transaction, with possible extensions to December 28, 2022 subject to conditions and sponsor funding. Failure to complete a transaction could require liquidation; public warrants could then expire worthless.
- Liquidity risks: Management believed available working capital and borrowing capacity would meet needs through a business combination or one year from filing, but cautioned that higher-than-estimated search and transaction costs could leave insufficient funds. Additional financing may be needed to complete a transaction or address redemptions, potentially diluting shareholders or adding debt.
- Other disclosures: Management said COVID-19 could adversely affect the company or its target search, but the impact was not determinable. No legal proceedings were reported. An independent director resigned effective November 10, 2021 for personal reasons; the company was seeking a replacement.
Important facts for investors to verify
- Confirm the issuer: this filing identifies Northern Lights Acquisition Corp., not SHF Holdings, Inc.
- Review the restatement’s effects and the disclosed material weakness, including subsequent remediation updates.
- Assess cash available outside the Trust Account, transaction spending, and any reliance on sponsor or other financing.
- Track business-combination progress, deadline-extension conditions, redemption terms, and potential dilution or debt.
- Distinguish reported net income from operating performance: the company had no revenue, and warrant fair-value changes drove much of reported income.