Business Context and Reporting Period
This Form 8-K is filed by Northern Lights Acquisition Corp. (NLIT) on June 27, 2022. The filing reports on the adjournment of a special stockholder meeting regarding a proposed business combination with SHF, LLC d/b/a Safe Harbor Financial (the "Target"). The meeting was rescheduled for June 28, 2022. The filing also details an extension of the deadline to consummate the business combination and updates on a forward purchase transaction designed to mitigate redemptions.
Key Financial Metrics and Liquidity
- Trust Account Extension: The Company deposited $1,150,000 ($0.10 per public unit) into its trust account to extend the business combination deadline from June 28, 2022, to September 28, 2022.
- Funding Source: The extension deposit was funded by the Sponsor (5AK, LLC) in exchange for a non-interest bearing, unsecured promissory note.
- Redemption Activity: As of June 22, 2022, the Company received redemption requests for 11,416,205 shares of Class A Common Stock.
- Forward Purchase Transaction: To offset redemptions, third parties (Midtown East, Verdun, and Vellar) purchased an aggregate of 3,804,872 shares of Class A Stock at an average price of $10.21 per share. These purchasers waived their redemption rights.
- Debt: The filing does not provide a total debt figure, only noting the specific promissory note issued to the Sponsor for the extension deposit.
Material Changes and Events
- Meeting Adjournment: The special meeting held on June 27, 2022, was adjourned. Votes cast were 12,128,644 for, 150,147 against, and 5,054 abstentions on the proposal to adjourn.
- Deadline Extension: The deadline to complete the business combination was extended by three months to September 28, 2022, though management anticipates closing by June 30, 2022.
- Forward Purchase Assignments: Obligations under the Forward Purchase Agreement were partially assigned to Verdun Investments LLC and Vellar Opportunity Fund SPV LLC.
- Unit Separation: Upon closing, all Units will be separated into Class A Common Stock and Warrants, and Units will cease trading on Nasdaq.
Outlook, Risks, and Management Commentary
Management anticipates the business combination will close by June 30, 2022, subject to closing conditions. The primary purpose of the forward purchase transaction was to ensure the maximum redemption threshold condition is met, thereby increasing the likelihood of the transaction closing.
Risks and Contingencies:
- Transaction Completion: Risks include failure to satisfy conditions, such as minimum cash requirements post-redemption and regulatory approvals.
- Regulatory Environment: The Target operates in the cannabis industry, subject to significant changes in U.S. and state laws and regulations.
- Profitability: There is a risk that the Target may not achieve or sustain profitability and may need to raise additional capital.
- Market Volatility: The price of securities may be volatile due to the competitive nature of the industry and changes in the capital structure.
Investor Verification Checklist
- Verify the outcome of the rescheduled special meeting on June 28, 2022, regarding the approval of the business combination.
- Confirm the final number of shares redeemed versus the shares purchased in the forward transaction to ensure the minimum cash condition is met.
- Review the Definitive Proxy Statement (Schedule 14A) filed on June 10, 2022, for detailed financial projections and terms of the merger.
- Monitor regulatory approvals required for the Target's operations in the cannabis sector.
- Check for any updates on the separation of Units and the subsequent trading of Class A Stock and Warrants on Nasdaq.