Business Context and Reporting Period
This Form 8-K, filed on September 19, 2022, by Northern Lights Acquisition Corp. (the "Company"), details amendments to its pending business combination with SHF Holdings, Inc. (d/b/a Safe Harbor Financial, the "Target"). The filing addresses a delay in closing due to a review by the Nasdaq Listing Qualifications Staff and outlines revised terms for the transaction.
Key Financial Metrics and Transaction Terms
- Deferred Cash Consideration: $30 million of the $70 million purchase price due to the Seller at closing has been deferred to support post-closing liquidity.
- Payment Schedule: The deferred amount will be paid in six equal installments of $5,375,000, beginning the first business day after January 1, 2023, totaling $32,250,000 (including 5% annualized interest).
- Security for Deferred Payment: Luminous Capital USA Inc. (an affiliate of the Sponsor) has agreed to escrow 1,200,000 shares of Class A Common Stock until the deferred consideration is paid in full.
- Trust Account Value: As of September 19, 2022, the fair value of investment securities in the Trust Account was $118,458,452.
- Estimated Redemption Price: Approximately $10.30 per share.
- PIPE Financing: $60 million committed for Class A Convertible Preferred Stock and warrants; final investor pool is being confirmed.
Material Changes Versus Prior Period
- Extension of Outside Date: The deadline to close the Business Combination was extended from August 31, 2022, to September 28, 2022.
- Redemption Rights: Due to the delay between the June 28, 2022, Special Meeting and the anticipated closing, public stockholders are granted additional redemption rights. Requests must be made by 5:00 p.m. Eastern Time on September 23, 2022.
- Proxy Statement Supplements: The Company is voluntarily supplementing its June Proxy Statement with revised disclosures regarding Risk Factors, the Business of Safe Harbor Financial, and Management's Discussion and Analysis (MD&A).
- Management Changes: Paul Penney's role as Chief Investment Officer will terminate on September 30, 2022. Chris Fameree (CFO) entered an independent contractor agreement with the Target effective July 1, 2022, for a monthly fee of $23,750.
Guidance, Outlook, Risks, and Contingencies
- Anticipated Closing: The Company currently anticipates closing the Business Combination by September 28, 2022.
- Regulatory Risks: Closing is contingent upon the satisfaction of conditions, including the minimum cash amount following redemptions and receipt of governmental and regulatory approvals.
- Listing Risk: There is a risk regarding the ability to maintain the listing of the Company's securities on the Nasdaq Capital Market.
- Forward-Looking Statements: The filing includes standard disclaimers regarding uncertainties in the cannabis industry, regulatory changes, and the Target's ability to achieve profitability or raise additional capital.
Important Facts for Investor Verification
- Verify the final pool of PIPE Investors and any changes to the $60 million financing terms.
- Confirm the final redemption price per share, which depends on the Trust Account balance two business days prior to closing.
- Monitor the status of the Nasdaq Listing Qualifications Staff review to ensure the September 28, 2022, closing date is met.
- Review the Supplemental Disclosures (Exhibits 99.2, 99.4, 99.6) for updated risk factors and financial data regarding Safe Harbor Financial.
- Check for any further extensions of the Outside Date if the transaction does not close by September 28, 2022.