SHF Holdings, Inc. 10-Q

Item 1. Financial Statements NORTHERN LIGHTS ACQUISITION CORP. CONDENSED BALANCE SHEET June 30, 2021 (Unaudited) ASSETS Current Assets Cash $ 938,805 Prepaid insurance 350,000 Total current assets 1,288,805 Investments held in Trust Account 117,290,522 Total assets $ 118,579,327 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses 438,895 Promissory note - related party 92,737 Total current liabilities 531,632 Warrant liabilities 6,493,780 Deferred underwriter fee payable 4,025,000 Total liabilities 11,050,412 Commitments and Contingencies (Note 6) - Class A common stock subject to possible redemption; 10,513,519 shares at redemption value 102,528,914 Stockholders’ Equity Preferred stock, $ 0.0001 par value; 1,250,000 shares authorized; none issued and outstanding — Class A common stock, $ 0.0001 par value; 125,000,000 shares authorized; 1,514,656 issued and outstanding, excluding 10,513,519 shares subject to redemption 151 Class B common stock, $ 0.0001 par value; 12,500,000 shares authorized; 2,875,000 issued and outstanding 288 Common stock 288 Additional paid in capital 6,744,084 Accumulated deficit ( 1,744,522 ) Total stockholders’ equity 5,000,001 Total liabilities and stockholders’ equity $ 118,579,327 The accompanying notes are an integral part of these condensed unaudited financial statements 1 NORTHERN LIGHTS ACQUISITION CORP. CONDENSED STATEMENTS OF OPERATIONS For the Period from February 26, 2021 Three Months Ended (Inception) June 30, Through 2021 June 30, 2021 (Unaudited) (Unaudited) Formation and operating costs $ ( 10,105 ) $ ( 10,900 ) Loss from operations ( 10,105 ) ( 10,900 ) Other income and expense: Interest earned on marketable securities held in Trust Account 17 17 Unrealized loss from marketable securities held in Trust Account ( 9,495 ) ( 9,495 ) Change in fair value of warrant liability ( 1,462,306 ) ( 1,462,306 ) Offering costs allocated to warrants ( 261,838 ) ( 261,838 ) Net Loss $ ( 1,743,727 ) $ ( 1,744,522 ) Weighted average shares outstanding of Class A common stock subject to redemption 10,302,592 10,302,592 Basic and diluted net loss per common stock $ 0.00 $ 0.00 Weighted average shares outstanding of Class A and Class B non-redeemable common stock 2,931,887 2,916,414 Basic and diluted net loss per common stock $ ( 0.59 ) $ ( 0.59 ) The accompanying notes are an integral part of these condensed unaudited financial statements. 2 NORTHERN LIGHTS ACQUISITION CORP. CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) For the Period from February 26, 2021 (Inception) Through June 30, 2021 Class A Class B Additional Total Common Stock Common Stock Paid in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance - February 26, 2021 (inception) — $ — — $ — $ — $ — $ — Issuance of Class B Common stock to Sponsor — — 2,875,000 288 24,712 — 25,000 Sale of IPO Units, net of offering costs Sale of IPO Units, net of offering costs, shares Deferred underwriter fee Warrant liabilities Initial shares subject to redemption Initial shares subject to redemption, shares Subsequent shares subject to redemption Subsequent shares subject to redemption, shares Net loss — — — — — ( 795 ) ( 795 ) Balance – March 31, 2021 — $ — 2,875,000 $ 288 $ 24,712 $ ( 795 ) $ 24,205 Balance — $ — 2,875,000 $ 288 $ 24,712 $ ( 795 ) $ 24,205 Sale of IPO Units, net of offering costs 12,028,175 1,203 — — 118,303,708 — 118,304,911 Deferred underwriter fee — — — — ( 4,025,000 ) — ( 4,025,000 ) Warrant liabilities — — — — ( 5,031,474 ) — ( 5,031,474 ) Initial shares subject to possible redemption ( 10,197,129 ) ( 1,020 ) — — ( 104,009,696 ) — ( 104,010,715 ) Change in shares subject to possible redemption ( 316,390 ) ( 32 ) — — 1,481,834 1,481,801 Net loss — — — — — ( 1,743,727 ) ( 1,743,727 ) Balance – June 30, 2021 1,514,656 $ 151 2,875,000 $ 288 $ 6,744,084 $ ( 1,744,522 ) $ 5,000,001 Balance, shares 1,514,656 $ 151 2,875,000 $ 288 $ 6,744,084 $ ( 1,744,522 ) $ 5,000,001 The accompanying notes are an integral part of these condensed unaudited financial statements 3 NORTHERN LIGHTS ACQUISITION CORP. CONDENSED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM FEBRUARY 26, 2021 (INCEPTION) THROUGH JUNE 30, 2021 (Unaudited) Cash flow from operating activities : Net loss $ ( 1,744,522 ) Adjustments to reconcile net loss to net cash used in operating activities: Income earned on securities held in Trust Account ( 17 ) Offering costs allocated to warrants 261,838 Unrealized loss from securities held in Trust Account 9,495 Change in fair value of warrant liabilities 1,462,306 Changes in operating assets and liabilities: Prepaid insurance ( 350,000 ) Accounts payable and accrued expenses 360,795 Net cash used in operating activities ( 105 ) Cash flows from investing activities: Investment of cash in Trust Account ( 117,300,000 ) Net cash used in investing activities ( 117,300,000 ) Cash flow from financing activities: Proceeds from issuance of Class B common stock to Sponsor 25,000 Proceeds from sale of Units, net of underwriting discount paid 113,275,000 Proceeds from sale of private placement units 5,281,750 Payment of offering costs ( 342,840 ) Net cash provided by financing activities 118,238,910 Net change in cash 938,805 Cash at the beginning of the period — Cash at the end of the period $ 938,805 Supplemental disclosure of non-cash financing activities: Deferred underwriting fee payable $ 4,025,000 Initial classification of common stock subject to possible redemption $ 104,010,715 Change in value of common stock subject to possible redemption $ ( 1,481,801 ) Initial classification of warrant liabilities $ 5,031,474 Offering costs charged to additional paid-in capital included in accrued expenses $ 78,100 Offering costs charged to additional paid-in capital paid by promissory note–related party $ 92,737 The accompanying notes are an integral part of these condensed unaudited financial statements 4 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 1 — Description of Organization and Business Operations Northern Lights Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on February 26, 2021 . The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of June 30, 2021, the Company had not yet commenced any operations. All activity for the period February 26, 2021 (inception) through June 30, 2021 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and, since the closing of the initial public offering, a search for a Business Combination candidate. The Company has selected December 31 as its fiscal year end. The registration statement for the Company’s Initial Public Offering was declared effective on June 23, 2021. On June 28, 2021, the Company consummated the Initial Public Offering of 11,500,000 units (“Units” and, with respect to the shares of Class A common stock included in the Units offered, the “Public Shares”), generating gross proceeds of $ 115,000,000 , which is described in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 528,175 private placement units (the “Private Placement Units”) at a price of $ 10.00 per unit in a private placement to 5AK, LLC (the “Sponsor”), generating gross proceeds of $ 5,281,750 , which is described in Note 4. Following the closing of the Initial Public Offering on June 28, 2021, an amount of $ 117,300,000 ($ 10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Units was placed in a trust account (“Trust Account”) which may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account to the Company’s stockholders, as described below. Transaction costs of the Initial Public Offering amounted to $ 6,263,677 , of which $ 1,725,000 was for underwriting fees, $ 4,025,000 was for deferred underwriting commissions, and $ 513,677 was for other offering costs. Following the closing of the Initial Public Offering $ 938,853 of cash was held outside of the Trust Account available for working capital purposes. As of June 30, 2021, we have available to us $ 938,805 of cash on our balance sheet and a working capital of $ 757,173 . The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination. 5 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 1 — Description of Organization and Business Operations (Continued) The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination . The Company will have until June 28, 2022 (or up to December 28, 2022, as applicable) to consummate a Business Combination. If the Company is unable to complete a Business Combination within 12 months from the closing of the Initial Public Offering (or up to 18 months from the closing of the Initial Public Offering at the election of the Company subject to satisfaction of certain conditions, including the deposit of up to $ 2,300,000 since the underwriters’ over-allotment option is exercised in full ($ 0.10 per unit in either case), into the Trust Account, or as extended by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation) (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes (less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($ 10.00 ). There will be no redemption rights or liquidating distributions with respect to the Founder Shares (as defined below) or the shares of Class A common stock and the warrants that are included as components of the Private Placement Units. Such warrants will expire worthless if the Company fails to complete a Business Combination within the 12-month time period (or up to 18-month time period). The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.20 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account, if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”) . However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its stockholders that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. 6 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 1 — Description of Organization and Business Operations (Continued) Liquidity and Management’s Plans Prior to the completion of the Initial Public Offering, the Company lacked the liquidity it needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. The Company has since completed its Initial Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was released to the Company for general working capital purposes. Accordingly, management has since reevaluated the Company’s liquidity and financial condition and determined that sufficient capital exists to sustain operations through the earlier of the consummation of a Business Combination or one year from this filing and therefore substantial doubt has been alleviated. There is no assurance that the Company’s plans to consummate an initial Business Combination will be successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Risks and Uncertainties Management is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statement. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Note 2 — Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. 7 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 2 — Summary of Significant Accounting Policies (Continued) Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of the balance sheet in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. The Company had $ 938,805 in cash and no cash equivalents as of June 30, 2021. Trust Account Upon the closing of the Initial Public Offering and the Private Placement, $ 117,300,000 ($ 10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act 1940, as amended (the “Investment Company Act”), which will be invested only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below. Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The provision for income taxes was deemed to be immaterial for the period from February 26, 2021 (inception) through June 30, 2021. 8 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 2 — Summary of Significant Accounting Policies (Continued) Offering Costs Associated with the Initial Public Offering Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as offering costs allocated to warrants in the condensed statements of operations. Offering costs associated with the Public Shares were charged to stockholders’ equity upon the completion of the Initial Public Offering. Class A Common Stock Subject to Possible Redemption The Company accounts for its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, shares are classified as stockholders’ equity. The Company’s shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2021, as there are 1,514,656 shares of Class A Common Stock outstanding, 10,513,519 shares of Class A Common Stock are subject to possible redemption. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $ 250,000 . The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Net Loss Per Share Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock shares outstanding for the period. The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the Initial Public Offering and warrants issued as components of the Private Placement Units (the “Placement Warrants”) since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. The Company’s statements of operations includes a presentation of income (loss) per share for common stock shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income per share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, if any, by the weighted average number of Class A redeemable common stock shares outstanding. Net loss per share, basic and diluted, for Class A and Class B non-redeemable common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock shares, by the weighted average number of Class A and Class B non-redeemable common stock shares outstanding for the period. Non-redeemable Class A and Class B common stock shares includes the Founder Shares and non-redeemable common stock shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account. The following table reflects the calculation of basic and diluted net income per common share: Schedule of Calculation of Basic and Diluted Net Income Per Share For the Three Months For the Period from February 26, 2021 (inception) Ended June 30, 2021 Through June 30, 2021 Redeemable Class A common shares Numerator: earnings allocable to redeemable Class A common shares Interest income on investments held in Trust Account $ 17 $ 17 Unrealized loss from investments held in Trust Account ( 9,495 ) ( 9,495 ) Net loss $ ( 9,478 ) $ ( 9,478 ) Denominator: weighted average number of redeemable Class A common share 10,302,592 10,302,592 Basic and diluted net loss per redeemable Class A common share $ 0.00 $ 0.00 Non-redeemable Class A and Class B common shares Numerator: net income (loss) minus redeemable net earnings Net loss $ ( 1,743,727 ) $ ( 1,743,727 ) Redeemable net loss ( 9,478 ) ( 9,478 ) Non-redeemable net loss $ ( 1,753,205 ) $ ( 1,753,205 ) Denominator: weighted average number of non-redeemable Class B common shares and Class A private placement shares Non-redeemable Class A private placement and Class B common shares, basic and diluted 2,931,887 2,916,414 Basic and diluted net loss per non-redeemable Class A private placement and Class B common share $ ( 0.59 ) $ ( 0.59 ) 9 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 2 — Summary of Significant Accounting Policies (Continued) Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature. Fair Value Measurements Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Recently Issued Accounting Standards In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt—Debt with Conversion and Other Options(Subtopic 470- 0) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows. Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. Note 3 — Public Offering Pursuant to the Initial Public Offering, the Company sold 11,500,000 Units at a purchase price of $ 10.00 per Unit. Each Unit consists of one share of the Company’s Class A common stock, $ 0.0001 par value, and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $ 11.50 per whole share (see Note 7). 10 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 4 — Private Placement Simultaneously with the Initial Public Offering, the Sponsor purchased an aggregate of 528,175 Private Placement Units at a price of $ 10.00 per Private Placement Unit for an aggregate purchase price of $ 5,281,750 . The Private Placement Units are identical to the Units, except that (a) the Private Placement Units and their component securities will not be transferable, assignable or saleable until the consummation of the Company’s initial business combination except to permitted transferees and (b) the Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) may be exercised by the holders on a cashless basis and (ii) will be entitled to registration rights. Note 5 — Related Party Transactions Founder Shares On March 19, 2021, the Company issued an aggregate of 2,875,000 shares of Class B common stock (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $ 25,000 . On March 24, 2021, the Sponsor transferred 10,000 shares to the Company’s Chief Financial Officer and 10,000 shares to each of the Company’s three independent directors. The Founder Shares which the Sponsor and its permitted transferees will collectively own, on an as-converted basis, represent 20 % of the Company’s issued and outstanding shares after the Initial Public Offering. 11 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 5 — Related Party Transactions (Continued) The Sponsor has agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) six months after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or similar transaction that results in the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last reported sale price of the Company’s Class A common stock equals or exceeds $ 12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock-up. Promissory Note — Related Party On February 26, 2021, the Sponsor committed to loan the Company an aggregate of up to $ 300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing and was payable on the earlier of July 31, 2021 or the completion of the Initial Public Offering. At June 30, 2021, we had borrowed $ 92,737 under the Note, which was repaid to Sponsor in full on July 7, 2021 . Related Party Loans In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $ 1,500,000 of notes may be converted upon consummation of a Business Combination into units at a price of $ 10.00 per unit. The Units will be identical to the Private Placement Units. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. To date, the Company has no working capital loans outstanding. If the Company anticipates that it may not be able to consummate a Business Combination within 12 months, the Company may, by resolution of the Company’s board if requested by the Sponsor, extend the period of time to consummate a Business Combination up to two times, each by an additional three months (for a total of up to 18 months to complete a Business Combination), subject to the Sponsor depositing additional funds into the Trust Account as set out below. Pursuant to the terms of the Company’s amended and restated certificate of incorporation and the trust agreement entered into between the Company and Continental Stock Transfer & Trust Company, in order for the time available for the Company to consummate the initial Business Combination to be extended, the Sponsor or its affiliates or designees, upon five business days advance notice prior to the applicable deadline, must deposit into the Trust Account $ 1,150,000 since the underwriters’ over-allotment option is exercised in full ($ 0.10 per unit), on or prior to the date of the applicable deadline, for each of the available three month extensions, providing a total possible Business Combination period of 18 months at a total payment value of $ 2,300,000 since the underwriters’ over-allotment option is exercised in full ($ 0.10 per unit) (the “Extension Loans”). Any such payments would be made in the form of non-interest bearing loans. If the Company completes its initial Business Combination, the Company will, at the option of the Sponsor, repay the Extension Loans out of the proceeds of the Trust Account released to the Company or convert a portion or all of the total loan amount into units at a price of $ 10.00 per unit, which units will be identical to the Private Placement Units. If the Company does not complete a Business Combination, the Company will repay such loans only from funds held outside of the Trust Account. Furthermore, the letter agreement among the Company and the Company’s officers, directors, and the Sponsor contains a provision pursuant to which the Sponsor will agree to waive its right to be repaid for such loans to the extent there is insufficient funds held outside of the Trust Account in the event that the Company does not complete a Business Combination. The Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete the initial Business Combination. The public stockholders will not be afforded an opportunity to vote on the extension of time to consummate an initial Business Combination from 12 months to 18 months described above or redeem their shares in connection with such extensions. 12 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 5 — Related Party Transactions (Continued) Administrative Support Agreement Commencing on the date of the Initial Public Offering and until completion of the Company’s Business Combination or liquidation, the Company may reimburse Luminous Capital Inc., an affiliate of the Sponsor, up to an amount of $ 10,000 per month for office space, secretarial and administrative support. Through June 30, 2021, $ 10,000 support fees were incurred. Note 6 — Commitments and Contingencies Registration Rights Pursuant to a registration rights agreement entered into on June 23, 2021, the holders of the Founder Shares, Private Placement Units (including the securities contained therein), the units (including the securities contained therein) that may be issued upon conversion of the Working Capital Loans, and any shares of Class A common stock issuable upon the exercise of the Placement Warrants and any shares of Class A common stock, warrants (and underlying Class A common stock) that may be issued upon conversion of the units issued as part of the working capital loans and Class A common stock issuable upon conversion of the founder shares are entitled to registration rights. The holders of a majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriters Agreement The Company granted the underwriter a 45-day option to purchase up to 1,500,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriter’s over-allotment option was exercised in full on June 28, 2021. The underwriter was paid a cash underwriting discount of 1.50 % of the gross proceeds of the Initial Public Offering, or $ 1,725,000 . In addition, the underwriter is entitled to a deferred fee of three and a half percent ( 3.50 %) of the gross proceeds of the Initial Public Offering, or $ 4,025,000 . The deferred fee was placed in the Trust Account and will be paid in cash upon the closing of a Business Combination, subject to the terms of the underwriting agreement. Right of First Refusal For a period beginning on June 28, 2021 and ending 12 months from the closing of a business combination, we have granted the underwriters a right of first refusal to act as lead-left book running manager and lead left manager for any and all future private or public equity, convertible and debt offerings during such period. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of our Registration Statement. 13 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 7 – Warrant Liability At June 30, 2021 the Company has 5,750,000 Public Warrants and the 264,088 Private Placement Warrants, respectively, outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (i) the date of the completion of a Business Combination and (ii) 12 months from the closing of the Initial Public Offering, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of its initial Business Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement or a new registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the Company’s initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, it may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event it does not so elect, it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. Redemption of warrants when the price per Class A common stock equals or exceeds $18.00. Once the warrants become exercisable, the Company may redeem the Public Warrants: ● in whole and not in part; ● at a price of $ 0.01 per Public Warrant; ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; and ● if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities) for any 20 trading days within a 30-trading day period commencing no earlier than the date the warrants become exercisable and ending on the third business day before the date on which the Company sends the notice of redemption to the warrant holders. If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. 14 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 7 – Warrant Liability (Continued) If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Window and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price and the $10.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to the greater of the Market Value and the Newly Issued Price. The Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Placement Warrants and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company accounted for the aggregate 6,014,088 warrants issued in connection with the Initial Public Offering (the 5,750,000 Public Warrants and the 264,088 Placement Warrants) in accordance with the guidance contained in FASB ASC Topic 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability due to the existence of provisions whereby adjustments to the exercise price of the warrants is based on a variable that is not an input to the fair value of a ‘‘fixed-for-fixed’’ option and the existence of the potential for net cash settlement for the warrant holders (but not all common stockholders) in the event of a tender offer. The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company classified each warrant as a liability at its fair value and the warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value determined by the Monte Carlo simulation. This liability is subject to remeasurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification 15 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 8 – Stockholders’ Equity Preferred Stock — The Company is authorized to issue 1,250,000 preferred shares with a par value of $ 0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At June 30, 2021, there were no preferred shares issued or outstanding. Class A Common Stock — The Company is authorized to issue up to 125,000,000 shares of Class A common stock with a par value of $ 0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. At June 30, 2021, there were 1,514,656 shares of Class A common stock issued or outstanding, excluding 10,513,519 shares of Class A common stock subject to possible redemption. Class B Common Stock — The Company is authorized to issue up to 12,500,000 shares of Class B common stock with a par value of $ 0.0001 per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. On March 24, 2021, the Sponsor transferred 10,000 shares to the Company’s Chief Financial Officer and 10,000 shares to each of the Company’s three independent directors. At June 30, 2021, there were 2,875,000 shares of Class B common stock issued and outstanding. Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like. In the case that additional shares of Class A common stock, or equity linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity linked securities issued, or to be issued, to any seller in a Business Combination, and any private placement-equivalent units and its underlying securities issued to the Sponsor or its affiliates upon conversion of loans made to the Company) . The Company may issue additional common stock or preferred stock to complete its Business Combination or under an employee incentive plan after completion of its Business Combination. Note 9 – Fair Value Measurements The following table presents information about the Company’s assets and derivative warrant liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value: Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis Quoted Prices in Active Markets Significant Other Observable Inputs Significant Other Unobservable Inputs Description (Level 1) (Level 2) (Level 3) Asset: Marketable securities held in Trust Account $ 117,290,522 $ — $ — Warrant Liabilities: Public Warrants $ — $ — $ 6,493,780 Private Placement Warrants $ — $ — $ 384,067 Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no changes in the measurements during the three months ended June 30, 2021. At June 30, 2021, assets held in the Trust Account were comprised of $ 509 in cash and $ 117,290,013 in a mutual fund invested in U.S. Treasury Securities. 16 NORTHERN LIGHTS ACQUISITION CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 9 – Fair Value Measurements (Continued) The Company recognized $ 5,031,474 for the derivative warrant liabilities upon their issuance on June 28, 2021. The Sponsor paid an aggregate of $ 5,852,750 for Private Placement Warrants with an initial aggregate fair value of $ 224,474 . The excess purchase price over the initial fair value on the private placement closing date is recognized as a capital contribution from the Sponsor. The Company utilizes a binomial Monte-Carlo simulation to estimate the fair value of the warrants at each reporting period for warrants that are not actively traded, which at June 30, 2021 included both the Public and Private Placement Warrants. The estimated fair value of the derivative warrant liabilities is determined using Level 3 inputs. Inherent in a binomial Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates: Schedule of Level 3 Fair Value Measurement Inputs June 28, 2021 June 30, 2021 Exercise price $ 11.50 $ 11.50 Share price $ 10.00 $ 9.60 Expected term (years) 5.86 5.82 Probability of Acquisition 90.0 % 90.0 % Volatility 14.7 % 23.1 % Risk-free rate 1.04 % 1.01 % Dividend yield (per share) 0.00 % 0.00 % The change in the fair value of the derivative warrant liabilities for the period from February 26, 2021 (inception) through June 30, 2021 is summarized as follows: Schedule of Derivative Warrant Liabilities Private Placement Public Warrant Warrant Liability Fair value as of June 28, 2021 (Initial Public Offering) $ 224,474 $ 4,807,000 $ 5,031,474 Change in valuation inputs or other assumptions (1) 159,593 1,302,713 1,462,306 Fair value as of June 30, 2021 $ 384,067 $ 6,109,713 $ 6,493,780 (1) Changes in valuation inputs or other assumptions are recognized in change in fair value of warrant liability in the statement of operations (1) Changes in valuation inputs or other assumptions are recognized in change in fair value of warrant liability in the statement of operations. Note 10 – Subsequent Events Management has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statement was issued. Based upon this review, other than the events included in the above notes, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement. - On July 7, 2021, $ 92,737 borrowed from promissory note has been repaid in full. 17