Business context and reporting period
The supplied filing is Northern Lights Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2021—not a filing identified as SHF Holdings, Inc. Northern Lights was a newly formed blank-check company (SPAC), incorporated February 26, 2021, with no operating business or revenue. It completed its IPO and private placement on June 28, 2021 and was searching for a business-combination target.
Financial results and position
- Revenue: None; management did not expect operating revenue before a business combination.
- Net loss: $1.744 million from inception through June 30, including $1.462 million of warrant-liability fair-value loss, $262,000 of offering costs allocated to warrants, and $10,900 of formation and operating costs. The quarter’s net loss was $1.744 million. Loss per non-redeemable share was $0.59; reported loss per redeemable share rounded to $0.00.
- Cash and liquidity: Cash outside the trust was $938,805; working capital was $757,173. Trust investments totaled $117.291 million. Operating cash use was $105 from inception through June 30; investing cash use was $117.300 million and financing cash inflow was $118.239 million.
- Liabilities and equity: Total liabilities were $11.050 million, including $6.494 million of warrant liabilities and $4.025 million of deferred underwriting fees. No long-term debt was reported. Stockholders’ equity was $5.000 million; $102.529 million of Class A shares was classified as subject to possible redemption.
- Margins and cash flow: Not meaningful for this pre-operating SPAC; no operating revenue was reported.
Material changes and financing
The company raised $115.0 million in its public offering and $5.282 million through sponsor private-placement units. It placed $117.3 million in trust. IPO transaction costs totaled $6.264 million, including $1.725 million paid underwriting fees and $4.025 million deferred fees payable only if a business combination closes. The warrant-liability remeasurement drove most of the reported loss.
A $92,737 sponsor promissory note outstanding at June 30 was repaid on July 7, 2021. The filing reports no working-capital loans outstanding at quarter-end and no off-balance-sheet arrangements.
Outlook, risks and contingencies
- The company had until June 28, 2022 to complete a business combination, with possible extensions to December 28, 2022 subject to required sponsor deposits. It warned there was no assurance a transaction would be completed.
- If no transaction is completed within the permitted period, public shares are to be redeemed from the trust, subject to the filing’s terms; founder shares and private-placement securities have no such redemption rights, and warrants may expire worthless.
- Management said IPO proceeds left sufficient capital to sustain operations through the earlier of a business combination or one year from the filing, alleviating substantial doubt about continued operations. The filing still identifies completion of a transaction as uncertain.
- Management said COVID-19 could adversely affect the company or its target search, but the impact was not determinable. The filing reported no material change to previously disclosed risk factors and no legal proceedings.
- Potential dilution, additional debt, target-search costs, warrant valuation estimates, and sponsor indemnification capacity are relevant risks. The company noted it had not verified the sponsor’s ability to meet its trust-account indemnity obligations.
Important facts for investors to verify
- Confirm the intended issuer: this document names Northern Lights Acquisition Corp., not SHF Holdings, Inc.; it contains no SHF operating results.
- Review the SPAC’s transaction status and applicable combination deadline, extension terms, and redemption mechanics.
- Check trust assets, cash available outside the trust, and the terms and fair-value assumptions for warrants and deferred underwriting fees.
- Assess potential dilution from founder-share conversion, new financing, and warrants, as well as the sponsor’s capacity to satisfy any indemnity obligations.