What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-22 · 1255 added, 1098 removed, 71 unchanged (97% of the section changed)

Financial Statements

LIGHTS ACQUISITION CORP.

Holdings, Inc.

BALANCE SHEETS

September 30,

Current Assets:

Prepaid expense

Prepaid insurance

Cash and cash equivalents

Accounts receivable – trade

Contract assets

Prepaid expenses

Accrued interest receivable

Due from PIPE investors

Short-term loans receivable

Total Current Assets

Noncurrent assets

Prepaid insurance – noncurrent portion

Deferred offering costs

Investments held in Trust Account

$ 119,028,846

$ 117,846,030

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Long-term loans receivable, net

Property and equipment, net

Other investment

Deferred tax asset

Forward purchase derivative assets

Forward purchase receivable

Security deposit

LIABILITIES AND PARENT-ENTITY NET INVESTMENT AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable and accrued expenses

Income tax payable

Franchise tax payable

Accounts payable

Accrued expenses

Contract liabilities

Due to seller - current portion

Total Current Liabilities

Warrant liabilities

Advance from sponsor

Forward purchase option derivative liability

Deferred underwriter fee payable

Warrant liability

Due to seller – long-term portion

Deferred loan origination fees

Deferred offering costs

Indemnity liability

Total Liabilities

Commitments and Contingencies (Note 6)

Class A Common Stock subject to possible redemption;

7,695,128 shares as of June 30, 2022 and 11,500,000 as of December 2021 at redemption value

Stockholders’ Deficit

Preferred stock, $ 0.0001 par value;

1,250,000 shares authorized;

none issued and outstanding

Class A Common Stock, $ 0.0001

shares authorized;

issued and outstanding - excluding 7,695,128

shares subject to redemption as of June 30, 2022.

528,175 issued and outstanding – excluding 11,500,000

subject to redemption as of December 31, 2021

Class B common stock, $ 0.0001

shares authorized;

issued and outstanding as of June 30, 2022 and December 31, 2021

Parent-Entity Net Investment and Stockholders’ Equity

Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 20,450 shares issued and outstanding on

September 30, 2022, and no shares issued and outstanding on December 31, 2021, respectively

Class A common stock, $ .0001 par value, 125,000,000 shares authorized, 18,715,912 issued and outstanding on September

30, 2022, and no shares issued and outstanding on December 31, 2021, respectively

Additional paid in capital

Accumulated deficit

( 7,824,443 )

( 6,781,746 )

Total stockholders’ equity (deficit)

( 6,781,405 )

Total liabilities and stockholders’ deficit

$ 119,028,846

$ 117,846,030

accompanying notes are an integral part of these condensed unaudited financial statements

LIGHTS ACQUISITION CORP.

STATEMENTS OF OPERATIONS

February 26, 2021

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Forward purchase option expense

Formation and operating costs

Franchise tax expense

Loss from operation costs

( 1,874,043 )

( 2,593,830 )

Other income (expense):

Interest earned on marketable securities held in trust account

Unrealized loss from marketable securities held in trust account

Change in fair value of warrant derivative liabilities

( 1,462,306 )

Retained earnings

Parent-Entity Net Investment

Total Parent-Entity Net Investment and Stockholders’ Equity

Total Liabilities and Parent-Entity Net Investment and Stockholders’ Equity

accompanying notes are an integral part of the combined financial statements

Holdings, Inc.

STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME

For the three months

ended September

For the nine months

ended September 30,

Operating Expenses

Compensation and employee benefits

Professional services

Provision for loan losses

General and administrative expenses

Total operating expenses

Operating income

Other (income) expenses

Interest expense

Change in fair value of warrant liability

Change in fair value of forward purchase option derivative liability

Offering costs allocated to warrants

Total other income (expense)

( 1,733,622 )

Loss before taxes

( 1,813,719 )

( 1,743,727 )

( 1,029,171 )

( 1,744,522 )

Income tax expense

$ ( 1,827,245 )

$ ( 1,743,727 )

$ ( 1,042,697 )

$ ( 1,744,522 )

Basic and diluted weighted average shares outstanding Class A subject to redemption

Basic and diluted net loss per common stock subject to redemption.

Basic and diluted weighted average shares outstanding Class A, Class A non-redemption and Class B non-redemption

Basic and diluted net loss per common stock not subject to redemption

accompanying notes are an integral part of these condensed unaudited financial statements.

LIGHTS ACQUISITION CORP.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

- April 1, 2022

$ ( 5,997,198 )

$ ( 5,996,857 )

Reclassification

of temporary equity to permanent equity

Extension payment

( 1,827,245 )

- June 30, 2022

$ ( 7,824,443 )

- April 1, 2021

of IPO Units, net of offering costs

underwriter fee

( 4,025,000 )

( 5,031,474 )

measurement of Class A Common Stock Subject to Redemption under ASC 480-10-S99 (1)

( 11,500,000 )

( 109,271,946 )

( 8,026,904 )

( 117,300,000 )

( 1,743,727 )

- June 30, 2021

$ ( 9,771,425 )

$ ( 9,771,084 )

– January 1, 2022

$ ( 6,781,746 )

$ ( 6,781,405 )

Reclassification

of temporary equity to permanent equity

Extension payment

( 1,042,697 )

– June 30, 2022

$ ( 7,824,443 )

- February 26, 2021

balance, value

of Class B Common Stock to Sponsor

of IPO Units, net of offering costs

underwriter fee

( 4,025,000 )

( 5,031,474 )

measurement of Class A Common Stock Subject to Redemption under ASC 480-10-S99 (1)

( 11,500,000 )

( 109,271,946 )

( 8,026,904 )

Total other (income)/expenses

$ ( 230,779 )

Weighted average shares outstanding, basic

Basic net income per share

Weighted average shares outstanding, diluted

Diluted net income per share

accompanying notes are an integral part of the combined financial statements

Holdings, Inc.

Statements of Parent-Entity Net Investment and Stockholders’ Equity

THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2022

Class A Common

Preferred Stock

Stockholders’

Balance, December 31, 2021

Contribution of loan receivable from Parent

Balance, March 31, 2022

Contribution of loan receivable from Parent

Balance, June 30, 2022

Issuance of shares in connection with Business Combination and PIPE offering, net of issuance costs

$ ( 9,124,297 )

- June 30, 2021

Balance, September 30, 2022

Holdings, Inc.

Statements of Parent-Entity Net Investment and Stockholders’ Equity

THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021

Class A Common

Preferred Stock

Shareholders’

Balance, December 31, 2020

Contribution of loan receivable from Parent

Net change due to allocations and distributions to Parent

$ ( 938,210 )

balance, value

Balance, March 31, 2021

Contribution of loan receivable from Parent

Net change due to allocations and distributions to Parent

$ ( 699,787 )

accompanying notes are an integral part of these condensed unaudited financial statements

LIGHTS ACQUISITION CORP.

Balance, June 30, 2021

Contribution from Parent

Balance, September 30, 2021

Holdings, Inc.

STATEMENTS OF CASH FLOWS

June 30, 2022

the Period from

February 26, 2021

(Inception) through

June 30, 2021

flow from operating activities:

$ ( 1,042,697 )

$ ( 1,744,522 )

to reconcile net loss to net cash used in operating activities:

gain from securities held in Trust Account

earned on securities held in trust account

Initial fair value of forward purchase option reported as operating expense

in fair value of warrant and forward purchase option derivative liabilities

( 1,417,551 )

costs allocated to warrants

in operating assets and liabilities:

operating cost

payable and accrued expenses

cash used in operating activities

flow from investing activities:

of cash in Trust Account

( 1,150,000 )

( 117,300,000 )

transferred from Trust Account

cash used in financing activities

( 117,300,000 )

flow from financing activities:

from issuance of Class B common stock to Sponsor

from sale of Units, net of Underwriting discount paid

from sale of Private units

from sponsor advance

of offering costs

cash provided by financing activities

change in cash

at the beginning of the period

at the end of the period

disclosure of non-cash financing activities:

deferred offering costs

classification of warrant liabilities

costs charged to additional paid in capital included in accrued expenses

costs charged to additional paid in capital paid by promissory note-related party

accompanying notes are an integral part of these condensed unaudited financial statements

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 — Description of Organization and Business Operations

Lights Acquisition Corp.

(the “Company”) is a blank check company incorporated in Delaware on February 26, 2021 .

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.

of June 30, 2022, the Company had not yet commenced any operations.

All activity for the period February 26, 2021 (inception) through

June 30, 2022, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”),

and, since the closing of the initial public offering, the Company has entered into a unit purchase agreement and a securities purchase

agreement (as described below).

The Company has selected December 31 as

its fiscal year end.

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

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 the Sponsor, generating gross proceeds of $ 5,281,750 ,

which is described in Note 4.

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.

costs of the Initial Public Offering amounted to $ 6,263,677 , of which $ 1,725,000 was for underwriting fees paid at the time of the IPO,

$ 4,025,000 was for deferred underwriting commissions, and $ 513,677 was for other offering costs.

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, 2022, we have $ 172,441 of cash on our balance sheet and working capital deficit of $ 1,810,112 .

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.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 — Description of Organization and Business Operations (Continued)

February 11, 2022, the Company and 5AK, LLC (our “Sponsor”) entered into a definitive unit purchase agreement (the “Unit

Purchase Agreement”) with SHF, LLC d/b/a Safe Harbor Financial, a Colorado limited liability company (“SHF”), SHF Holding

Co., LLC, the sole member of SHF (the “Seller”), and Partner Colorado Credit Union, the sole member of the Seller (“PCCU”).

Pursuant to the Unit Purchase Agreement, upon the closing (the “Closing”) of the Business Combination, we will purchase all

of the issued and outstanding membership interests of SHF in exchange for an aggregate of $ 185,000,000 , consisting of (i) 11,386,139

shares of Class A Common Stock with an aggregate value equal to $ 115,000,000 and (b) $ 70,000,000 in cash.

Pursuant to the original terms

of the Unit Purchase Agreement, the Unit Purchase Agreement could be terminated under certain customary and limited circumstances at

any time prior to the closing of the Business Combination, including, among others, if the Closing had not occurred by June 30, 2022

(the “Outside Date”).

On June 30, 2022, the Company, the Sponsor, SHF, the Seller, and PCCU agreed to amend the Unit Purchase

Agreement to extend the Outside Date until July 29, 2022, with the ability for the deadline to be extended through September 28, 2022,

to provide the Company with additional time to complete the Business Combination (the “UPA Extension”) as it awaits regulatory

with entering into the Unit Purchase Agreement, we entered into a securities purchase agreement (a “Securities Purchase

Agreement”) with certain investors (collectively, the “PIPE Investors”), pursuant to which, among other things,

the PIPE Investors agreed to subscribe for and purchase, and we agreed to issue and sell to the PIPE Investors, an aggregate of 60,000

shares (the “PIPE Shares”) of our Series A Convertible Preferred Stock, par value $ 0.0001

per share (the “Series A Convertible Preferred Stock”), and warrants to purchase up to a number of shares of Class A

Common Stock equal to 50 %

of shares of the Class A Common Stock issuable upon conversion of the PIPE Shares (the “PIPE Warrants”) for gross

proceeds of $ 60.0

million (the “PIPE Financing”).

The Securities Purchase Agreement could be terminated under certain customary and

limited circumstances at any time prior to the closing of the PIPE Financing, including, among others, if the closing had not

occurred by June 30, 2022.

The Company is currently completing satisfaction of its remaining closing conditions, including

regulatory approvals, and is discussing with the PIPE Investors their continuing interest in the investment contemplated by the

Securities Purchase Agreement.

Company’s stockholders approved the Business Combination at the special meeting of stockholders held on June 28, 2022.

In connection

with the proposed Business Combination with SHF, the Company provided its public stockholders with the opportunity to redeem all or a

portion of their Class A Common Stock upon the completion of such Business Combination.

Stockholders holding 7,554,784 shares of Class

A Common Stock submitted redemption requests in connection with the anticipated closing of the Business Combination.

Following the extension

of the Outside Date, these stockholders who previously submitted redemption requests in connection with the closing of the Business Combination

may request that such redemption requests be reversed by contacting the Company’s transfer agent, Continental Stock Transfer &

Trust Company.

It is currently anticipated that all shareholders, with the exception of those parties described in the below Forward Purchase Agreement

section, will have an additional opportunity to redeem shares prior to the closing of the proposed Business Combination.

the event the proposed Business Combination with SHF is not consummated, in connection with an alternative proposed initial business

combination, the Company will provide its 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 .

Company initially had until June 28, 2022 to consummate a Business Combination.

If the Company was unable to complete a Business Combination

within 12 months from the closing of the Initial Public Offering, such period could (i) be extended by the Company’s stockholders

in accordance with the Company’s amended and restated certificate of incorporation or (ii) at the election of the Company subject

to satisfaction of certain conditions, including the deposit of up to $ 2,300,000 into the Trust Account, be extended up to six additional

months to December 28, 2022.

On June 27, 2022, the Company, with proceeds advanced from an affiliate of the Sponsor, deposited $1,150,000

in the Trust Account extending operations for three months from June 28, 2022 to September 28, 2022.

If the Company is unable to complete

a Business Combination by September 28, 2022, such period could (i) be extended by the Company’s stockholders in accordance with

the Company’s amended and restated certificate of incorporation or (ii) at the election of the Company subject to satisfaction

of certain conditions, including the deposit of up to $1,150,000 into the Trust Account, be extended an additional three months to December

If the Company is unable to complete a Business Combination by December 28, 2022 and such period is not extended by the Company’s

stockholders in accordance with the Company’s amended and restated certificate of incorporation, 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.

On June 30, 2022, $168,617 in Trust Account interest income was released to the Company and utilized to pay franchise

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

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 — Description of Organization and Business Operations (Continued)

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.

of June 30, 2022, the Company had $ 172,441 in cash and a working capital deficit of $ 1,810,112 .

As described above, on June 28, 2021

the Company closed its IPO of 11,500,000 Units at $ 10.00 per Unit, generating gross proceeds of $ 115.0 million, and also consummated

the Private Placement of 528,175 Private Placement units to the Sponsor at a purchase price of $ 10.00 per Private Placement unit, generating

gross proceeds of $ 5,281,750 .

Company’s liquidity needs prior to the consummation of its IPO were satisfied through the proceeds of $ 25,000 from the sale of

the Founder Shares and proceed from the promissory note from sponsor of $ 92,737 , which was repaid upon closure of the IPO.

to the IPO, the Company’s liquidity will be satisfied through a portion of the net proceeds from IPO held outside of the Trust

Company intends to complete its initial Business Combination before September 28, 2022, however, there can be no assurance that the

Company will be able to consummate the Business Combination by then.

In the event that we are unable to consummate the Business

Combination before September 28, 2022, we anticipate identifying and accessing additional capital resources in order to extend the

Business Combination period to December 28, 2022.

However, there can be no assurance that the Company will have access to sufficient

capital to extend the deadline to consummate the Business Combination.

As a result, in connection with the Company’s

assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards

Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going

Concern,” it is uncertain that the Company will have sufficient liquidity to fund the working capital needs of the Company

beyond September 28, 2022.

Should a Business Combination not occur by September 28, 2022, Management has determined that given the

liquidity condition of the Company as well as the uncertainty regarding the Company’s ability to extend the deadline to consummate the Business

Combination, there is substantial doubt about

For the nine months ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expense

Provision for loan loss

Change in fair value of warrant and forward purchase option derivative liabilities

Changes in operating assets and liabilities:

Accounts receivable

Contract assets

Prepaid expenses

Accrued interest receivable

Accounts payable

Accrued expenses

Contract liabilities

Net cash provided by operating activities

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchase of property and equipment

Issuance of new loans (net of payment received)

Funding of other investment

Security deposit

Net cash used in investing activities

CASH FLOWS USED IN FINANCING ACTIVITIES:

Proceeds from reverse capitalization, net of transaction costs

Net change in parent funding, allocations, and distributions to parent

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents - beginning of period

Cash and cash equivalents - end of period

accompanying notes are an integral part of the combined financial statements

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Organization and Business Operations

On February 11, 2022, SHF, LLC and SHF Holding Co.,

LLC, the sole member of SHF, LLC, and Partner Colorado Credit Union (“PCCU”), the sole member of SHF Holding Co., LLC, entered

into a definitive purchase agreement (herein referred to as the “Business Combination”) with Northern Lights Acquisition Corp.

(“NLIT”), a special purpose acquisition company, and its sponsor, 5AK, LLC.

In connection with the closing of the Business Combination,

NLIT changed its name to “SHF Holdings, Inc.” (herein referred to as the “Company”).

Board of Directors approved the contribution of certain assets and operating activities associated with operations from both the

Branches and Safe Harbor Services (“SHS” or “Oldco”), a wholly-owned subsidiary of PCCU, to SHF Holding,

SHF Holding, Co., LLC then contributed the same assets and related operations to SHF, LLC with PCCU’s investment in

SHF, LLC maintained at the SHF Holding Co., LLC level (the “reorganization”).

The reorganization effectively

occurred July 1, 2021.

In conjunction with the reorganization, all of Branches’ employees and certain PCCU employees were terminated from PCCU and hired as SHF, LLC employees.

Collectively,

Oldco, the Branches and SHF, LLC represent the “Carved-Out Operations.”= After the reorganization,

SHF, LLC contains the entirety of the Carved-Out Operations and Oldco was dissolved.

In addition, effective July 1, 2021, the entity entered

into an Account Servicing Agreement and Support Servicing Agreement which were subsequently amended and restated and are discussed in

to the purchase agreement, upon the closing of the transaction, NLIT purchased all of the

issued and outstanding membership interests of SHF in exchange for an aggregate of $ 185,000,000 , consisting of (i) 11,386,139 shares

of the entity’s Class A common stock with an aggregate value equal to $ 115,000,000 and (ii) $ 70,000,000 in cash.

At transaction

close, 1,831,683 shares of the Class A Common Stock were deposited with an escrow agent to be held in escrow for a period of 12 months

following the closing date to satisfy potential indemnification claims of the parties.

In addition, $ 3,143,388 in cash and cash equivalents

representing the amount of cash on hand at July 31, 2021, less accrued but unpaid liabilities, were paid to PCCU at the final transaction

On September 19, 2022, the parties entered into the first amendment to the purchase agreement to extend the date by which the

closing had to occur from August 31, 2022 until September 28, 2022 and provide for the deferral of $ 30 million of the $ 70 million in

cash due at the closing.

On September 22, 2022, the parties entered into the second amendment to the purchase agreement to provide for

the deferral of a total of $ 50 million of the $ 70 million due at the closing.

On September 28, 2022, the parties entered into the third

amendment to the purchase agreement to provide for the deferral of a total of $ 56,949,800 of the $ 70,000,000 due at the closing.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

September 28, 2022, the parties consummated the Business Combination, resulting in NLIT, consistent with the aforementioned

parameters, purchasing all of the issued and outstanding membership interests of the SHF, LLC in exchange for an aggregate of $ 185,000,000 ,

consisting of (i) 11,386,139 shares of the Company’s Class A common stock with an aggregate value equal to $ 115,000,000 and (ii)

$ 70,000,000 in cash, $ 56,949,801 of which will be paid on a deferred basis.

In connection with the closing

of the Business Combination, the status of PCCU has changed from Parent to majority shareholder of the Company pursuant to its ownership

of 60.8 % of the Company.

The Company generates both

interest income and fee income through providing a variety of services to financial institutions desiring to service the cannabis industry

including, among other things, Bank Secrecy Act and other regulatory compliance and reporting, onboarding, responding to account inquiries,

responding to customer service inquiries relating to CRB depository accounts held at PCCU, and sourcing and managing loans.

to PCCU, the Company provides these similar services and outsourced support to other financial institutions providing banking to the cannabis

These services are provided to other financial institutions under the Safe Harbor Master Program Agreement.

Pursuant to the purchase agreement, the Company entered into an amended services agreements under similar terms as

the July 2021 agreements.

In addition, in conjunction with the purchase agreement, SHF and PCCU entered into an Amended and Restated Loan Servicing Agreement.

Refer to Note 7 for additional information.

purpose of the aforementioned $ 56,949,800 deferral is to provide SHF Holdings, Inc.

with additional cash to support its post-closing

to the third amendment to the unit purchase agreement, the Company will pay the deferred consideration in one payment of $ 21,949,801

on or before December 15, 2022, and the $ 35,000,000

balance in six equal installments of $ 6,416,667 ,

payable beginning on the first business day following April 1, 2023 and on the first business day of each of the following five

fiscal quarters, for a total of $ 38,500,002 ,

including interest of $3,500,002.

Furthermore, PCCU agreed to defer $ 3,143,388 ,

representing certain excess cash of SHF, LLC due to PCCU under the definitive unit purchase agreement, and the reimbursement

of certain reimbursable expenses under the definitive unit purchase agreement .

October 26, 2022, SHF Holdings, Inc., entered into a Forbearance Agreement (the “Forbearance Agreement”) with PCCU and

Luminous Capital USA Inc.

(“Luminous”).

As per the terms of the agreement, PCCU has agreed to defer all payments owed by

the Company pursuant to the Purchase Agreement for a period of six (6) months from the date hereof while the Parties engage in good

faith efforts to renegotiate the payment terms applicable to the Deferred Obligation (the “Forbearance

of Presentation

statements have not historically been prepared for the Carved-Out Operations.

For the nine months ended September 30, 2021,

the combined financial statements consist of the balances of SHS and SHF as prepared on a stand-alone basis and the balances of the Branches

on a “carve-out” basis.

For the three and nine months ended September 30, 2022, the financial statements represent SHF on

a stand-alone basis as the period is post reorganization.

All intercompany transactions have been eliminated for all periods presented.

These combined financial statements reflect the Company’s historical financial position, results of operations and cash flows as

they have been historically managed in conformity with Generally Accepted Accounting Principles in the United States (“U.S.

depository asset accounts and liabilities are retained by PCCU as the Carved-Out Operations are not organized as a chartered financial

Accordingly, none of the cash of PCCU has been attributed to these combined financial statements.

Asset and liabilities

maintained by SHS and SHF have been included in these financial statements along with any specific assets and liabilities associated

with the Branches.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

and expenses for the Branches were included based on specific identification as they relate to customer deposits, professional services,

compensation and employee benefits, rent expense, provision for loan losses and other general and administrative expenses.

allocations such as information technology, customer support, marketing, executive compensation and other general and administrative

expenses are attributed to the Branches proportionately based on the size of the specifically identifiable CRB’s deposit balances,

deposit activity and accounts relative to the totals of the consolidated PCCU entity.

This allocation method was consistent for all periods

prior to July 2021.

Beginning in July 2021, a services agreement was entered into between Newco and PCCU (see Note 7).

In exchange for

services provided to PCCU via the Carved-Out Operations, Newco receives 100% of CRB related revenue.

PCCU receives (and Newco pays) a

monthly per account fee, split loan servicing fees and split investment income associated with Carved-Out Operations depository accounts.

The fees are meant to represent PCCU’s cost for hosting depository accounts and funding related loans and providing certain limited

infrastructure support.

has considered the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided

to or the benefits received by the Branches during the periods presented.

revenue and expenses of SHS and SHF are specific to the entity.

allocations were attributed for the nine months ended September 30, 2021.

Liquidity and Going Concern

As of September 30, 2022, the Company had $ 7,273,012

in cash and net working capital of ($ 28,241,810 ) ,

as compared to $ 5,495,905

in cash and net working capital of $ 5,922,023

at December 31, 2021.

The driver of the working capital deficit is the current portion of the long-term payable owed to the Seller,

PCCU, from the aforementioned business combination.

To permit the business combination transaction to be completed, PCCU agreed to

an unsecured future payment obligation of $ 56,949,800 ,

the current portion of which is $ 33,616,468 .

This large payment is offset by $ 4,090,000

in proceeds the Company expects pursuant to the PIPE offering currently held in escrow to be released when its currently pending

registration statement on Form S-1 becomes effective, as well as proceeds from the Forward Purchase Agreement subsequent to the

effectiveness of the pending Form S-1.

Furthermore, PCCU has agreed to a six-month deferral while the Company and PCCU negotiate a

solution regarding the Company’s payment obligation to PCCU.

The Company has not incurred significant cumulative consolidated operating losses and does not have negative cash

As of September 30, 2022, the Company has retained earnings of $ 243,981 ;

furthermore, for the nine months ended September 30, 2022,

the Company generated $ 1,894,179 in net income and $ 1,972,803 in operating cash flows.

The Company also has the potential ability to renegotiate

its aforementioned payable with PCCU, thus eliminating any working deficit.

These factors, however, do not remove substantial doubt regarding

the Company’s ability to continue as a going concern.

No adjustments have been made to the carrying amounts of assets or

liabilities should the Company be required to liquidate.

The Company may need to raise additional capital through loans or

additional investments from its Sponsor, stockholders, officers, directors or third parties.

The Company’s officers, directors

and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem

reasonable in their sole discretion, to meet the Company’s working capital needs.

Accordingly, the Company may not be able to

obtain additional financing.

If the Company is unable to raise additional capital, the Company may be required to take additional

measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the

pursuit of a potential transaction, and reducing overhead expenses.

The Company cannot provide any assurance that new financing will

be available to it on commercially acceptable terms, if at all.

These conditions raise substantial doubt about the Company’s

ability to continue as a going concern through September 28, 2022.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 — Description of Organization and Business Operations (Continued)

offering costs

offering costs consist of costs incurred in connection with preparation for the PIPE Financing to be executed in conjunction with the

Business Combination.

These costs, together with the underwriting discounts and commissions, will be allocated among the freestanding

financial instruments that are included in the PIPE Financing.

As of June 30, 2022, the Company had deferred offering costs of $ 201,405

and accrued offering costs of $ 176,405 which are included in accrued expenses on the accompanying condensed balance sheet.

no deferred offering costs or accrued offering costs at December 31, 2021.

purchase agreement

June 16, 2022, the Company, SHF, and Midtown East Management NL LLC, a Delaware limited liability company (“ Midtown East ”),

entered into an agreement (the “ Forward Purchase Agreement ”) for an OTC Equity Prepaid Forward Transaction (the “ Forward

Purchase Transaction ”).

Pursuant to the terms of the Forward Purchase Agreement (a) Midtown East intends, but is not obligated,

to purchase shares of the Company’s Class A Common Stock, par value $ 0.0001 per share (“ Class A Common Stock ”),

after the date of the Forward Purchase Agreement from holders of Class A Common Stock, other than the Company or affiliates of the Company,

who have requested that their shares of Class A Common Stock be redeemed or indicated an interest in having their shares of Class A Common

Stock redeemed pursuant to the redemption rights set forth in the Company’s Amended and Restated Certificate of Incorporation in

connection with the Business Combination (such holders, “ Redeeming Holders ”) and (b) Midtown East has agreed to waive

any redemption rights in connection with the Business Combination with respect to any shares of Class A Common Stock it purchases in

accordance with the Forward Purchase Agreement (the “ Subject Shares ”).

The number of Subject Shares shall be no more

than the lesser of (i) 5,000,000 and (ii) the maximum number of shares of Class A Common Stock such that Midtown East does not beneficially

own greater than 9.9 % of the Class A Common Stock on a post-combination pro forma basis.

Midtown East will purchase any Additional Shares

(as defined in the Forward Purchase Agreement) at the Redemption Price (as defined in Section 9.2 of the Amended and Restated Certificate

of Incorporation of the Company (the “ Certificate of Incorporation ”)), and has undertaken to purchase all Subject

Shares at a price no higher than the Redemption Price.

to entering into the Forward Purchase Agreement, the Company, the Target, and Midtown East entered into assignment and novation agreements

with Verdun Investments LLC (“ Verdun ”) and Vellar Opportunity Fund SPV LLC – Series 1 (“ Vellar ”),

pursuant to which Midtown East assigned its obligations as to 1,666,666 shares of the shares of Class A Stock to be purchased under the

Forward Purchase Agreement to each of Verdun and Vellar.

As of June 27, 2022, Midtown East had purchased an aggregate of 1,599,496 shares

of Class A Stock, Verdun had purchased an aggregate of 1,180,376 shares of Class A Stock, and Vellar had purchased an aggregate of 1,025,000

shares of Class A Stock (the “ Purchased Shares ”) in the Forward Purchase Transaction at an average purchase price

per share of $ 10.21 .

630,736 of the Purchased Shares were purchased from a holder of 5 % or more of the Class A Stock.

Pursuant to the

Forward Purchase Agreement, Midtown East, Verdun, and Vellar have waived all redemption rights under the Certificate of Incorporation

that would require redemption by the Company of the Purchased Shares.

June 30, 2022, Midtown East and its assignees had purchased 3,804,872 in shares pursuant to this agreement.

The related amount of $ 38,809,694

has been reclassified from temporary to permanent equity.

Also in connection with the Forward Purchase Agreement, the Company recognized

a liability for a freestanding derivative, referred to herein as the “forward purchase option derivative,” on its Condensed

Consolidated Balance Sheets.

Refer to Note 10 for further detail.

primary purpose of entering into the Forward Purchase Agreement is to help ensure the maximum redemption threshold condition in the Unit

Purchase Agreement will be met, increasing the likelihood that the transaction will close.

and Uncertainties

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.

Additionally,

as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related

economic sanctions, the Company’s ability to consummate a Business Combination, including the proposed Business Combination with

SHF, or the operations of a target business with which the Company ultimately consummates a Business Combination, including SHF, may

be materially and adversely affected.

Further, the Company’s ability to consummate a transaction may be dependent on the ability

to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased

market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all.

The impact of this action and

related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or

ability to consummate a Business Combination are not yet determinable.

The condensed financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

If the Company is not able to sustain its present level of operations, it

may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail

planned expansion programs.

Any of these actions could materially harm the Company’s business, results of operations and future

The accompanying unaudited combined financial statements have been prepared assuming the Company will continue as a going concern,

which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include

any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification

of liabilities that may result should the Company not continue as a going concern.

If the current terms of the aforementioned PCCU payable are enforced as

contemplated, management does not believe they have sufficient cash

for the next twelve months from the date of this report to continue as a going concern without maintaining its present level of business

The Company also believes that its pending business combination transaction, which will add additional depository accounts, incremental revenue, and

additional deposits, that was agreed to on October 31, 2022 (refer to

the “Subsequent Events” section within Note 14 below) will be consistent with allowing the Company to continue as a going

Despite the going concern disclosure, we have determined not to take a

valuation allowance on the Deferred Tax Asset (“DTA”).

The Company does not have a history of operating loss or tax credit

carry forwards expiring unused;

no losses expected in early future years given that the Company is presently profitable;

circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels on a continuing basis in future

no adverse carry back or carry forward periods;

and no business cyclicality concerns.

The Company also has enhanced lending capacity

pursuant to increased deposits and greater credit pools, additional interest income, and more service fees accentuate the Company’s

stance that a DTA valuation allowance is not required.

Summary of Significant Accounting Policies

of Presentation

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

Growth Company

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

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

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.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2 — Summary of Significant Accounting Policies (Continued)

preparation of the balance sheets 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.

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.

and Cash Equivalents

Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

equivalents are carried at cost, which approximates fair value.

The Company had $ 172,441 and $ 254,523 , respectively, in cash and no cash

equivalents as of June 30, 2022 and December 31, 2021.

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.

June 27, 2022, the Company, with proceeds advanced from an affiliate of the Sponsor, deposited $ 1,150,000 in the Trust Account extending

operations for three months from June 28, 2022.

On June 30, 2022, $ 168,617 in Trust Account interest income was released to the Company

and utilized to pay franchise taxes.

Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset

preparation of the financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect

the amounts reported in the financial statements and accompanying notes.

Material estimates that are particularly subject to change in

the near term include the determination of the allowance for loan losses, and the fair value of financial instruments.

Actual results

could differ from the estimates.

Cash and Cash Equivalent s

and cash equivalents include cash on hand, amounts due from financial institutions, and investments with maturities of three months or

Concentrations

Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash.

Cash balances are

maintained principally in accounts at PCCU which is insured by the National Credit Union Share Insurance Fund (“NCUSIF”)

up to regulatory limits.

From time to time, cash balances may exceed the NCUSIF insurance limit.

The Company has not experienced any

credit losses associated with its cash balances in the past.

the Company only services the cannabis industry.

Cannabis remains illegal under federal law, and therefore, strict enforcement of federal

laws regarding cannabis would likely result in our inability to execute our business plan.

the Company substantially relies on PCCU to hold customer deposits and fund its originated loans.

As of this time, substantially

all of the Company’s revenue is generated by deposits and loans hosted by PCCU pursuant to various services agreements.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Accounts Receivable-PCCU and Allowance for Doubtful Accounts

receivable are recorded based on account fee schedules.

While fees are generated from individual CRB related accounts, amounts are initially

collected by the financial institutional partners and remitted in the subsequent month.

As of September 30, 2022, and December 31, 2021,

100% of the Accounts Receivable, respectively is due from PCCU.

Effective January 2021 through June 2021, PCCU elected to

transfer account servicing from SHS to the Branches.

In accordance with this change, a policy was adopted wherein substantially all cash

was collected by PCCU and retained by PCCU outside of the Branches and SHS.

This policy was eliminated in conjunction with the July 2021

reorganization and execution of the Account Servicing Agreement and Support Servicing Agreement discussed at Note 7.

The Company maintains

allowances for doubtful accounts for estimated losses as a result of a customers’ inability to make required payments.

estimates anticipated losses from doubtful accounts based on days past due as measured from the contractual due date and historical collection

The Company also takes into consideration changes in economic conditions that may not be reflected in historical trends, for

example customers in bankruptcy, liquidation or reorganization.

Receivables are written-off against the allowance for doubtful accounts

when they are determined uncollectible.

Such determination includes analysis and consideration of the particular conditions of the account,

including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any

bankruptcy proceedings.

September 30, 2022 and December 31, 2021, there were no recorded allowances for doubtful accounts.

originates mortgage, commercial and consumer loans to members and other businesses.

Commercial CRB loans originated by the Company

and funded by PCCU are typically managed by the Company, inclusive of originated and funded loans that are on the PCCU balance sheet

Certain CRB Loans were contributed to the Carved-out Operations.

Such loans where the Company has the intent and ability to

hold for the foreseeable future or until maturity or payoff are reported at principal balance outstanding, net of an allowance for

loan losses and net deferred loan origination fees and costs when applicable.

Interest income on loans is recognized over the term

of the loan and is calculated using the simple-interest method on principal amounts outstanding.

income is not reported when full loan repayment is in doubt, typically when the loan is impaired, or payments are past due ninety days

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income.

Interest received

on such loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual.

Loans are returned

to accrual status when all the principal and interest amounts are satisfied to where the loan is less than ninety days past due and future

payments are reasonably assured.

are evaluated for charge-off on a case-by-case basis and are typically charged off at the time of foreclosure.

status is based on the contractual terms of the loans.

In all cases, loans are placed on nonaccrual status or charged-off at an earlier

date if the collection of principal and interest is considered doubtful.

Allowance for Loan Losses

allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and

decreased by charge-offs less recoveries.

Management estimates the required allowance for loan losses balance using past loan loss experience,

known and inherent risks in the nature and volume of the portfolio, information about specific borrower situations and estimated collateral

values, economic conditions, and other factors.

Allocations of the allowance for loan losses may be made for specific loans, but the

entire allowance is available for any loan that, in management’s judgment, should be charged-off.

allowance for loan losses consists of specific and general components.

The specific component relates to loans that are individually

classified as impaired or loans otherwise classified as substandard or doubtful.

The general component covers non-classified loans and

is based on historical loss experience adjusted for current factors.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

to the nature of uncertainties related to any estimation process, management’s estimate of loan losses inherent in the loan portfolio

may change in the near term.

However, the amount of the change that is reasonably possible cannot be estimated.

loan is considered impaired when, based on current information and events, full payment under the loan terms is not expected.

is generally evaluated in total for smaller-balance loans of similar nature such as commercial lines of credit, but may be evaluated

on an individual loan basis if deemed necessary.

If a loan is impaired, a portion of the allowance is allocated so that the loan is reported,

net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment

is expected solely from the collateral.

loans SHF intends to originate will be secured by various types of assets of the borrowers, including real property and certain personal

property, including value associated with other assets to the extent permitted by applicable laws and the regulations governing the borrowers.

The documents governing the loans also include a variety of provisions intended to provide remedies against the value associated with

Collection procedures are designed to ensure that neither SHF nor its financial institution clients who provide funding for

a loan, nor a third-party agent engaged to assist with the liquidation or foreclosure process, will take possession of cannabis inventory,

cannabis paraphernalia, or other cannabis-related assets, nor will they take title to real estate used in cannabis-related businesses.

Upon default of a loan, a third-party agent will be engaged to work with the borrower to have the borrower sell collateral securing the

loan to a third party or to institute a foreclosure proceeding to have such collateral sold to generate funds towards the payoff of the

Applicable regulations under state law that govern CRBs generally do not permit the taking of title to real estate involved in

commercial sales of cannabis, whether through foreclosure or otherwise, without prior regulatory approval.

The sale of a license or other

realization of the value of licenses also requires the approval of state and local regulatory authorities.

A defaulted loan may also

be sold if such a sale would yield higher proceeds or that a sale could be accomplished more quickly than a foreclosure proceeding while

yielding proceeds comparable to what would be expected from a foreclosure sale.

Such sale of the loan would be conducted through a third-party

administrative agent.

However, SHF can provide no assurances that a sale of such loans would be possible or that the sales price of such

loans would be sufficient to recover the outstanding principal balance, accrued interest, and fees.

Net Deferred Loan Origination Fees and Cost

included with a new loan origination, the Company receives loan origination fees in conjunction with new loans funded and any indemnified liabilities which are not recorded on the balance sheet from our financial institution

Where applicable, the loan origination fee is netted with loan origination costs associated with originating a specific loan.

These loan origination costs are typically incremental direct costs (non-reimbursed) paid to third parties.

Net loan origination fees

are initially deferred and recognized as interest income utilizing the interest method.

February 11, 2022, SHF entered into an Amended and Restated Loan Servicing Agreement with PCCU.

Under the Loan Servicing Agreement, PCCU, in exchange for a

fee at an annual rate of 0.25 % of the outstanding principal balance, funds certain loans.

Under the Loan Servicing Agreement, SHF has

agreed to indemnify PCCU from all claims related to SHF’s cannabis-related business, including but not limited to default-related

loan losses as defined in the Loan Servicing Agreement.

The indemnification component of the Loan Servicing Agreement (refer to Note

7) is accounted for in accordance with ASC 450-20 Loss Contingencies .

In determining the applicability of ASC 450-20, we considered

that the agreement outlines a broad indemnification of all claims related to the cannabis-related business.

The most immediate and potentially

significant of these are potential default-related loan losses.

In the lending industry, it is inherently anticipated future loan losses

will result from currently issued debt.

SHF’s indemnity obligation is subordinate to PCCU’s and other financial institution

clients’ other means of collecting on the loans including foreclosure of the collateral, recourse against personal and/or corporate

guarantors and other default remedies available in the loan agreements.

Since borrowers are not party to the agreement between SHF and

PCCU, any indemnity payments do not relieve borrowers of their obligation to PCCU nor would such payments preclude PCCU’s right

to future recoveries from the debtor.

Therefore, as defined in ASC 450-20, the indemnification clause represents a general loss contingency

in that it is an existing condition, situation or set of circumstances involving uncertainty as to possible loss to the Company that

will ultimately be resolved when one or more future events occur or fail to occur.

SHF’s indemnity liability reflects SHF management’s

estimate of probable loan losses inherent under the agreement at the balance sheet date.

Management uses a disciplined process and methodology

to establish the liability, and the estimates are sensitive to risk ratings assigned to individual loans covered by the agreement as

well as economic assumptions driving the estimation model.

Individual loan risk ratings are evaluated quarterly by SHF management based

on each situation.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

addition to default-related loan losses, SHF continuously monitors all other circumstances pursuant to the agreement and identifies events

that may necessitate a loss contingency under the Loan Servicing Agreement.

A loss contingency is reported when it is both probable that

a future event will confirm that a loss had been incurred on or before the related balance sheet date and the loss is reasonably estimable.

and Equipment, net

and equipment is recorded at historical cost, net of accumulated depreciation.

Depreciation is provided over the assets’ useful

lives on a straight-line basis - 4 - 5 years for equipment and furniture and fixtures.

Repairs and maintenance costs are expensed as incurred.

periodically assesses the estimated useful life over which assets are depreciated or amortized.

If the analysis warrants a change in

the estimated useful life of property and equipment, management will reduce the estimated useful life and depreciate or amortize the

carrying value prospectively over the shorter remaining useful life.

carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the period of disposal and the

resulting gains and losses are included in the results of operations during the same period.

of Long-Lived Assets

Company evaluates the recoverability of tangible assets periodically by taking into account events or circumstances that may warrant

revised estimates of useful lives or that indicate the asset may be impaired.

There were no impairments for the three and nine months

ended September 30, 2022 and the year ended December 31, 2021.

Other Investments

These investments are accounted for at cost minus impairment, if any, plus

or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.

Value Measurements

Company utilizes the fair value hierarchy to apply fair value measurements.

The fair value hierarchy is based on inputs to valuation

techniques that are used to measure fair values that are either observable or unobservable.

Observable inputs reflect assumptions market

participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs

reflect a reporting entity’s pricing based upon its own market assumptions.

The basis for fair value measurements for each level

within the hierarchy is described below:

1 — Quoted prices for identical assets or liabilities in active markets.

2 — Quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities

in markets that are not active;

or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

3 —Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable.

the exceptions of loans receivable, warrants (public and private), and the derivative liability, the Company considers the carrying amounts

of its financial instruments (cash, accounts receivable and accounts payable) in the balance sheet to approximate fair value because

of the short-term or highly liquid nature of these financial instruments.

The fair values of loans receivables, warrants, and derivative

are fully disclosed in Note 10.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers

in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required

within the revenue recognition process than required under previous accounting principles generally accepted in the United States of

America (“U.S.

GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration

to include in the transaction price and allocating the transaction price to each separate performance obligation.

The Company adopted

ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment,

if any, as of the date of adoption.

The adoption of ASC 606 did not have a material impact on the Company’s financial statements

as of the date of adoption.

As a result, a cumulative- effect adjustment was not required.

is recorded at a point in time when the performance obligation is satisfied, and no contingencies exist.

Revenue consists primarily of

fees earned on deposit accounts held at PCCU but serviced by the Company such as bank account charges, onboarding income, account activity

fee income and other miscellaneous fees.

addition, the Company recognizes revenue from the Master Program Agreement.

The Master Program Agreement is a non-exclusive and non-transferable

right to implement and utilize the Safe Harbor Program.

The Safe Harbor Program has two performance obligations;

an implementation fee

recognized when the contract is effective, and a service fee recognized ratable over the contract term as the compliance program is executed.

the Company also records revenue for interest on loans and investment income allocated by PCCU based on specific customer balances.

received in advance of the service being provided is recorded as a liability under deferred revenue on the combined balance sheets.

Safe Harbor Program contracts are three-year contracts with amounts due monthly, quarterly or annually based on contract terms.

consist of financial institutions providing services to CRBs.

Revenues are concentrated in the United States.

Contract Assets / Contract Liabilities

A contract asset is the Company’s right to consideration

in exchange for goods or services that the Company has transferred to a customer.

Conversely, the Company recognizes a contract liability

if the customer’s payment of consideration precedes the reporting entity’s performance.

of September 30, 2022, the Company reported contract assets and contract liabilities of $ 7,676 and $ 14,583 , respectively, from contracts

with customers.

As of December 31, 2021, the Company reported a contract asset and liability of $ 18,317 and $ 8,333 , respectively.

the three and nine months ended September 30, 2022, the Company recognized revenue $ 18,987 and $ 59,081 , respectively related to the contract

liability outstanding at December 31, 2021.

Advertising/Marketing

Advertising/marketing

costs are expensed as incurred.

For the three and nine months ended September 30, 2022, advertising/marketing costs were $ 81,130 and

$ 231,970 , respectively.

For the three and nine months ended September 30, 2021, advertising/marketing costs were $ 21,327 and $ 48,730 , respectively.

Development Cost

Company applied agile development methodologies to their software development projects, which are characterized by a more dynamic development

process with more frequent and iterative revisions to the product features and functions as the software is being developed.

shorter development cycle and focus on rapid production associated with agile development, the costs incurred to get to, and have incurred

after the achievement of technological feasibility, have been expensed as incurred.

development costs amounted to $ 35,880 and $ 88,550 for the three and nine months ended September 30, 2022, respectively.

Software development

costs amounted to $ 30,973 and $ 88,499 for the three and nine months ended September 30, 2021, respectively.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Company accounts for the warrants assumed in the business combination in accordance with the guidance contained in ASC Topic 815, “Derivatives

and Hedging” (“ASC 815”), under which warrants that do not meet the criteria for equity classification and must be

recorded as derivative liabilities.

Accordingly, the Company classifies the warrants as liabilities carried at their fair value and adjusts

the warrants to fair value at each reporting period.

This liability is subject to re-measurement at each balance sheet date until the

warrants are exercised or expire, and any change in fair value is recognized in the consolidated statement of operations

and diluted earnings per share are computed and disclosed in accordance with FASB ASC Topic 260, Earnings Per Share.

The Company utilizes

the two-class method to compute earnings available to common shareholders.

Under the two-class method, earnings are adjusted by accretion

amounts to redeemable noncontrolling interests recorded at redemption value.

The adjustments represent dividend distributions, in substance,

to the noncontrolling interest holder as the holders have contractual rights to receive an amount upon redemption other than the fair

value of the applicable shares.

As a result, earnings are adjusted to reflect this in substance distribution that is different from other

common shareholders.

In addition, the Company allocates net earnings to each class of common stock and participating security as if all

of the net earnings for the period had been distributed.

The Company’s participating securities consist of share-based payment

awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings

with common shareholders.

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common

shares by the weighted-average number of common shares outstanding for the period.

Diluted earnings per common share is calculated by

dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted

for the potential dilutive effect of non-participating share-based awards.

Deferred tax assets and liabilities are recognized

for the estimated future tax consequences attributable to differences between the tax bases of assets and liabilities and their carrying

amounts for financial reporting purposes.

Deferred tax assets and liabilities are adjusted through the provision for income taxes as changes

in tax laws or rates are enacted.

Effective September 28, 2022, the

Company complies with the accounting and reporting requirements of ASC Topic 740, which requires an asset

and liability approach to financial accounting and reporting for income taxes.

3 unchanged sentences

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it.

740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in

interim periods.

If management is unable to estimate a portion of its ordinary income, but is otherwise able to reliably estimate the

remainder, ASC 740-270-25-3 provides that the tax applicable to that item be reported in the interim period in which the item occurs.

The tax (or benefit) related to ordinary income (or loss) shall be computed at an estimated annual effective tax rate and the tax (or

benefit) related to all other items shall be individually computed and recognized when the items occur.

Management is unable to estimate

a portion of its ordinary income and as a result had computed the company’s tax provision in accordance with ASC 740-270-25-3 The

Company’s effective tax rate was ( 0.75 %)

for the three months ended June 30, 2022 and 2021, respectively, and ( 1.31 %)

for the six months ended June 30, 2022 and the period February 26, 2021 to June 30, 2021 respectively.

The effective tax rate differs

from the statutory tax rate of 21 %

for the three months ended June 30, 2022 and 2021 and for the six months ended June 30, 2022 and the period February 26, 2021 to June

30, 2021, primarily due to changes in fair value in warrant liability, changes in fair value in the Forward Purchase Agreement derivative

liability, and the valuation allowance on the deferred tax assets.

Topic 740 also 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, 2022 and December 31, 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.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2 — Summary of Significant Accounting Policies (Continued)

PCCU was exempt from most federal, state, and local taxes under the provisions

of the Internal Revenue Code and state tax laws.

However, PCCU was subject to unrelated business income tax.

The Carved-Out Operations

were wholly owned by PCCU and therefore, were exempt from most federal and state income taxes.

The ASC Topic 740, “Income Taxes,”

under US GAAP clarifies accounting for uncertainty in income taxes reported in the financial statements.

The interpretation provides criteria

for assessment of individual tax positions and a process for recognition and measurement of uncertain tax positions.

Tax positions are

evaluated on whether they meet the “more likely than not” standard for sustainability on examination by tax authorities.

Company’s Management has determined there are no material uncertain tax positions.

740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income

in interim periods.

If management is unable to estimate a portion of its ordinary income, but is otherwise able to reliably estimate

the remainder, ASC 740-270-25-3 provides that the tax applicable to that item be reported in the interim period in which the item

The tax (or benefit) related to ordinary income (or loss) shall be computed at an estimated annual effective tax rate and

the tax (or benefit) related to all other items shall be individually computed and recognized when the items occur.

Management is

unable to estimate a portion of its ordinary income and as a result had computed the company’s tax provision in accordance

with ASC 740-270-25-3.

The Company’s effective tax rate was 0.00 %

for the three months ended September 30, 2022, and 2021, respectively, and 0.00 %

for the nine months ended September 30, 2022 and September 30, 2021, respectively.

The effective tax rate differs from the statutory

tax rate of 21 %

for the three months and nine months ended September 30, 2022 and 2021 primarily due to the aforementioned tax exemption available to PCCU.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Topic 740 also 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 September 30, 2022 and December 31, 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.

Costs Associated with the Initial Public Offering and PIPE Offering

3 unchanged sentences

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 allocated to warrants in the statements of operations.

Offering costs associated with the Public Shares were

charged to stockholders’ equity upon the completion of the Initial Public Offering.

offering costs as of June 30, 2022 consisted of legal, accounting, underwriting fees and other costs incurred that were directly related

to the PIPE Offering.

A Common Stock Subject to Possible Redemption

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’

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.

June 30, 2022 and December 31, 2021, there were 4,333,047

and 528,175 shares,

respectively, of Class A Common Stock issued and outstanding that were issued as component securities of the Private Placement Units

At December 31, 2021, 11,500,000 shares

of Class A Common Stock were subject to possible redemption.

At June 30, 2022, 7,695,128

shares of Class A Common Stock were subject to possible redemption with 3,804,872 shares held by purchasers subject to the forward

purchase agreement who have waived their redemption rights.

it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption

value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable,

if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur

and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period.

The Company has elected

to recognize the changes immediately.

The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings,

or in absence of retained earnings, additional paid-in capital).

of December 31, 2021, the Class A Common Stock reflected on the balance sheets is reconciled in the following table:

Schedule of Common Stock Reflected on the Balance Sheets

Gross Proceeds

$ 115,000,000

Proceeds allocated to public warrants

( 5,031,474 )

Proceeds allocated to shares not subject to redemption

Issuance costs related to Class A Common Stock

offering costs as of September 30, 2022 consisted of legal, accounting, underwriting fees and other costs incurred that were directly

related to the PIPE Offering.

Issued Accounting Standards

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting

bodies and adopted by the Company as of the specified effective date.

Unless otherwise discussed, the impact of recently issued standards

that are not yet effective and are not expected to have a material impact on the Company’s financial position or results of operations

upon adoption.

Instruments—Credit Losses

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on

Financial Instruments, which introduces a model based on expected losses to estimate credit losses for most financial assets and certain

other instruments.

In November 2019, the FASB issued ASU No.

2019-10 Financial Instruments — Credit Losses (Topic 326), Derivatives

and Hedging (Topic 815), and Leases (Topic 842).

The update allows the extension of the initial effective date for entities which have

not yet adopted ASU No.

The standard is effective for annual reporting periods beginning after December 15, 2022 for private

companies and SEC filers classified as smaller reporting entities, with early adoption permitted.

Entities apply the standard’s

provisions by recording a cumulative effect adjustment to retained earnings.

The Company has not yet adopted ASU 2016-13 and is currently

assessing the impact of this new standard on its financial statements.

Collaborative

November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808).

This update clarifies the interaction between ASC

808, Collaborative Arrangements and ASC 606, Revenue from Contracts with Customers (“ASU 2018-18”).

The update clarifies

that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty

is a customer.

In addition, the update precludes an entity from presenting consideration from a transaction in a collaborative arrangement

as revenue if the counterparty is not a customer for that transaction.

ASU 2018-18 should be applied retrospectively to the date of initial

application of ASC 606 and early adoption is permitted.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

ASU’s amendments were effective for public business entities for fiscal years beginning after December 15, 2019, including interim

periods therein.

The adoption of this standard did not have a material impact on the Company’s financial statements as the Company

does not have any collaborative agreements.

However, there is a potential for the Company to enter into collaborative agreements in the

future, as it expands into additional markets.

February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,

Leases (Topic 842) .

FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease

assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

Certain qualitative and

quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases.

In June 2020, FASB

issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842):

Deferral of the Effective Dates for

Certain Entities , which deferred the effective date of ASU 2016-02 to annual reporting periods beginning after December 15, 2021,

and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted.

Management is currently evaluating

this standard but anticipates the adoption of the new lease standard to be immaterial.

Effective July 1, 2022, the Company amended its

existing lease to a month-to-month lease and therefore no asset or liability amounts are reported pursuant to ASC 842.

Business Combination detailed in Note 1 above was accounted for as a reverse recapitalization, with no goodwill or other intangible

assets recorded, in accordance with accounting principles generally accepted in the United States of America.

Under this method of

accounting, NLIT is treated as the acquired company for financial reporting purposes.

Accordingly, for accounting purposes, the

Business Combination is treated as the equivalent of SHF issuing shares for the net assets of NLIT, accompanied by a

recapitalization.

The net assets of NLIT are recognized at fair value (which is expected to be consistent with carrying value), with

no goodwill or other intangible assets recorded.

related events in connection with the Business Combination are summarized below:

2,875,000 of Founder Class B Stock converted at the closing to an equal number of shares

of Class A stock.

closing of the Business Combination, 11,386,139 shares of Class A Stock were issued to the

Seller as set forth in and pursuant to the terms of the Purchase Agreement.

Seller was due to receive a cash payment of $ 3.1 million at the consummation of the Business Combination, which represented the amount

of SHF’s cash on hand at July 31, 2021, less accrued but unpaid liabilities.

In addition, pursuant to the terms of the purchase

agreement, the Company is responsible for reimbursing the Seller for its transaction expenses.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

● Approximately

$ 56.9 million of the $ 70.0 million of cash proceeds due to PCCU was deferred and is due to

Approximately $ 21.9 million of the amount is payable to PCCU beginning December

The residual $ 35.0 million is due in six quarterly instalments of $ 6.4 million

Interest accrues at an effective annual rate of approximately 7.7 %.

1,200,000 founder shares were escrowed until the amount is paid in full.

● The Parent-Entity Net Investment appearing in the balance sheet of SHF amounting to $ 9,124,297 on the date of the

business combination was transferred to additional paid in capital.

● Immediately

prior to the Closing, 20,450 shares of Series A Convertible Preferred were purchased by the

PIPE Investors pursuant to the PIPE Securities Purchase Agreements for an aggregate value

of $ 20,450,000 .

The shares of Series A Convertible Preferred are convertible into 2,045,000

shares of Class A Stock assuming a purchase price of $ 10.00 per share of Class A Stock.

(20) percent of the aggregate value was deposited into a third party escrow account for purposes

of paying the PIPE Investors any required Registration Delay Payments.

Upon the filing of

a registration statement 10 calendar days subsequent to closing, 17.5% of the escrow amount

will be released with the remaining amount released once all securities are included in an

effective registration statement.

For tax purposes, the transaction

will be treated as a taxable asset acquisition, resulting in an estimated tax basis Goodwill balance of $ 43,411,985 , creating a deferred

tax asset reported as Additional Paid-in Capital in the equity section of the balance sheet as of the date of the business combination.

There is not any goodwill for book reporting purposes as no goodwill or other intangible assets are to recorded in accordance with

accounting principles generally accepted in the United States of America.

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.

As of September 30, 2022, there were

20,450 preferred shares issued or outstanding and no preferred shares outstanding on December 31, 2021.

A Common Stock

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.

the Company’s Class A Common Stock are entitled to one vote for each share.

As of September 30, 2022 and December 31, 2021,

there were 18,715,912 and 0 shares, respectively, of Class A Common Stock issued or outstanding.

As of September 30, 2022, 3,804,872

Class A Common Stock are held by the purchasers under that certain forward purchase agreement dated June 16, 2022 by and among the

Company and such purchasers.

Parent-Entity

Net Investment

Parent-Entity

Net Investment balance in the combined balance sheets represents PCCU’s historical net investment in the Carved-Out Operations.

For purposes of these combined financial statements, investing requirements have been summarized as “Parent-Entity Net Investment”

and represents equity as no cash settlement with PCCU is required.

No separate equity accounts are maintained for SHS, SHF or the

Loans Receivable

real estate loans receivable, net consist of the following:

of Commercial Real Estate Loans Receivable

Commercial real estate loans receivable, gross

Allowance for loan losses

Commercial real estate loans receivable, net

Current portion

Noncurrent portion

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Other Investment

At September 30, 2022, the Company had a $ 500,000

unsecured loan receivable amount that contained a conversion feature.

The Company had the right to convert the outstanding balance

of the loan, including all accrued but unpaid interest, into equity of the borrower.

In the event that no agreement for acquisition

is reached, the Company, in its sole and subjective discretion, may elect to proceed under the existing repayment schedule or

convert the loan to equity.

Given this conversion feature, the amount receivable from the borrower is thus classified as an

“Other Investment” as of September 30, 2022.

Allowance for Loan Losses

allowance for loan losses is maintained at a level believed to be sufficient to provide for estimated loan losses based on evaluating

known and inherent risks in the loan portfolio.

The allowance is provided based upon management’s analysis of the pertinent factors

underlying the quality of the loan portfolio.

These factors include changes in the amount and composition of the loan portfolio, delinquency

levels, actual loss experience, current economic conditions, and detailed analysis of individual loans for which the full collectability

may not be assured.

The detailed analysis includes methods to estimate the fair value of loan collateral and the existence of potential

alternative sources of repayment.

allowance may consist of specific and general components.

While the allowance may consist of general and specific components, the allowance

is general in nature and is available for the loan portfolio in its entirety.

allowance for loan losses consists of the following activity for the three and nine months ended September 30, 2022 and 2021:

Schedule of Allowance For Loan Losses

Nine Months ended September 30, 2022:

Allowance for loan losses:

Beginning balance

Ending balance

Three Months ended September 30, 2022:

Allowance for loan losses:

Beginning balance

Provision (benefit)

Ending balance

Loans receivable at September 30, 2022

Individually evaluated for impairment

Collectively evaluated for impairment

Total loans receivable

Allowance for loan losses at September 30, 2022

Individually evaluated for impairment

Collectively evaluated for impairment

Total allowance for loan losses

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Nine Months ended September 30, 2021:

Allowance for loan losses:

Beginning balance

Ending balance

Three Months ended September 30, 2021:

Allowance for loan losses:

Beginning balance

Ending balance

Loans receivable at September 30, 2021

Individually evaluated for impairment

Collectively evaluated for impairment

Total loans receivable

Allowance for loan losses at September 30, 2021

Individually evaluated for impairment

Collectively evaluated for impairment

Total allowance for loan losses

September 30, 2022 and September 30, 2021, no loans were past due, classified as non-accrual or considered impaired.

Indemnity Liability

As discussed at Note 7, and pursuant to PCCU Agreements,

PCCU funds loans originated and serviced by SHF either directly or through a third-party vendor.

SHF retains the associated interest and

pays PCCU a fee at an annual rate of 0.25 % of the outstanding loan principal.

The below schedule details outstanding amounts funded by

PCCU and categorized as either collateralized loans or unsecured loans and lines of credit.

No loans were funded by PCCU prior to January

of Outstanding Amounts

September 30,

Secured term loans

Unsecured loans and lines of credit

Total loans funded by Parent

All amounts were performing at September 30, 2022.

Secured loans contained an interest rate ranging from 8.25 % to 12.0 % .

Unsecured loans and lines of credit contain variable rates ranging

from Prime + 1.5% to Prime + 6%.

Unsecured lines of credit had incremental availability of $ 996,958 and $ 225,000 at September 30, 2022

and December 31, 2021.

SHF’s indemnity liability reflects SHF management’s

estimate of probable loan losses inherent under the agreement at the balance sheet date.

Management uses a disciplined process and methodology

to establish the liability, and the estimates are sensitive to risk ratings assigned to individual loans covered by the agreement as well

as economic assumptions driving the estimation model.

Individual loan risk ratings are evaluated at least a quarterly based on each situation

by SHF management.

Given the Company’s limited lending history, the estimate is based on risk adjusted national charge off rates

as published by the US Federal Reserve.

The indemnity liability activity on September 30,

2022 are as follows:

of Indemnity Liability

Three months ended September 30, 2022

Nine months ended September 30, 2022

Beginning balance

Ending balance

All loans were current and considered performing at

September 30, 2022

SHF has agreed to indemnify PCCU from all claims related

to SHF’s cannabis-related business.

Other than potential loan losses, no other circumstances were identified meeting the requirements

of a loss contingency.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

The provision for loan losses on the statement

of operations consists of the following activity for the three and nine months ended September 30, 2022:

Commercial real estate loans

Indemnity liability

Commercial real estate loans

Indemnity liability

Three months ended

Nine months ended

Commercial real estate loans

Indemnity liability

Commercial real estate loans

Indemnity liability

Provision (benefit)

Property and equipment, net

and equipment consist of the following:

of Property and Equipment, Net

Office furniture

Property and equipment, gross

accumulated depreciation

Property and equipment, net

expense was $ 3,576 and $ 1,264 for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Related party transactions

Servicing Agreement

July 1, 2021, SHF, LLC (“SHF”) entered into an Account Servicing Agreement with PCCU.

SHF provides services as per the agreement

to CRB accounts at PCCU.

In addition to providing the services, SHF assumes the costs associated with the CRB accounts.

These costs include

employees to manage account onboarding, monitoring and compliance, rent and office expense, insurance and other operating expenses necessary

to service these accounts.

Under the agreement, PCCU agrees to pay SHF all revenue generated from CRB accounts.

Amounts due to SHF are

due monthly in arrears and upon receipt of invoice.

The agreement is for an initial term of 3 years from the effective date.

renew thereafter for 1-year terms until either SHF or PCCU provide sixty days prior written notice.

The agreement was amended and restated

in conjunction with the contemplated Business Combination with substantially similar terms.

to this agreement, as amended and restated, the Company reported revenue of $ 2,340,716 and $ 5,777,446 for the three month and nine month

periods ended September 30, 2022 and $ 1,633,667 and $ 4,938,413 for the three and nine month periods ended September 30, 2021.

Services Agreement

July 1, 2021, SHF entered into a Support Services Agreement with PCCU.

In connection with PCCU hosting the depository accounts and the

related loans and providing certain infrastructure support, PCCU receives (and SHF pays) a monthly fee per depository account.

25 % of any investment income associated with CRB deposits is paid to PCCU.

The respective duties and obligations as per the agreement

commenced on the effective date and continue unless terminated by either SHF or PCCU upon giving sixty days prior written notice.

agreement was amended and restated in conjunction with the contemplated Business Combination with substantially similar terms.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

to these agreements and as amended and restated, the Company reported expense of $ 204,535 and $ 420,085 for the three-month and nine-month

periods ended September 30, 2022, and $ 93,285 and $ 261,496 for the three-month and nine-month periods ended September 30, 2021.

terms of the Amended and Restated Accounting Servicing Agreement and Support Services Agreement are as follows:

to the Account Servicing Agreement, SHF’s fees for such services will equal all cannabis-related income, including all lending-related

income (such as loan origination fees, interest income on CRB-related loans, participation fees and servicing fees), investment income,

interest income, account activity fees, processing fees, flat fees, and other revenue generated from cannabis and multi-state hemp

accounts that are hosted on PCCU’s core system.

The Account Servicing Agreement and Support Services Agreement are for an initial

term of three years and will renew for additional one-year terms unless a party provides 120 days’ notice of non-renewal, provided

that PCCU may not provide notice of non-renewal until 30 months following the signing date.

The Account Servicing Agreement will

also terminate within 60 days of SHF no longer qualifying as a “credit union service organization” (a “CUSO ”)

or within 60 days of the assumption by a third party of all CRB-related accounts.

On May 23, 2022, SHF and PCCU entered into the

Second Amended and Restated Account Servicing Agreement and Support Services Agreement, which agreement amended and restated the

Amended and Restated Account Servicing and Support Services Agreements to remove the provision providing for the termination of the

agreements within 60 days of SHF no longer qualifying as a “credit union service organization,” as SHF ceased to

qualify as a CUSO following the closing of the Business Combination.

to the Support Services Agreement, as amended, PCCU will continue to provide to SHF certain operational and administrative services

relating to, among other things, human resources, employee benefits, IT and systems, accounting and marketing and capacity for CRB

depository accounts for a monthly fee equal to $ 30.96 per account in 2022 and $ 25.32 per account in 2023 and 2024.

In addition, investment

income from CRB-related cash and investments (excluding loans) will be shared 25% to PCCU and 75% to SHF and SHF will reimburse PCCU

for any of its out-of-pocket expenses relating to the services provided to SHF .

The Amended and Restated Support Services Agreement

also sets forth certain agreements of PCCU to limit bonus distributions to its members to $ 30,000,000 during any 12-month period

following the effective date of the agreement.

Finally, under the Support Services Agreement PCCU will continue to allow its ratio

of CRB-related deposits to total assets to equal at least 65% unless otherwise dictated by regulatory, regulator or policy requirements.

The below schedule demonstrates PCCU’s deposit capacity at September 30, 2022 and December 31, 2021.

of Demonstrates Deposit Capacity

September 30,

PCCU total assets

$ 636,482,187

Extension payment classified as temporary equity

Accretion of carrying value to redemption value

Class A Common Stock subject to possible redemption

$ 575,170,939

of June 30, 2022, the Class A Common Stock reflected on the balance sheets are reconciled in the following table:

A Common Stock subject to possible redemption at December 31, 2021

Gross Proceeds

allocated to shares not redeemed - Class A Common Stock par value (1)

Proceeds allocated to shares not subject to redemption

allocated to shares not redeemed – additional paid in capital (1)

Extension payment classified as temporary equity

Proceeds allocated to public warrants

A Common Stock subject to possible redemption

(1) Represents

3,804,872 in shares subject to the forward purchase agreement.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2 — Summary of Significant Accounting Policies (Continued)

Concentration

of Credit Risk

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.

Income (Loss) Per Share

Net loss per share is computed by dividing net loss by the weighted average number of common stock shares outstanding for

The calculation of diluted 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.

Company applies the two-class method in calculating earnings per share.

The contractual formula utilized to calculate the redemption

amount approximates fair value.

The Class feature to redeem at fair value means that there is effectively only one class of stock.

Changes in fair value are not considered a dividend of the purposes of the numerator in the earnings per share calculation.

per common share is computed by dividing the pro rata net loss between the redeemable shares and the non-redeemable shares by the

weighted average number of common shares outstanding for each of the periods.

The calculation of diluted loss per common stock

does not consider the effect of the warrants issued in connection with the IPO 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 warrants are exercisable for 6,014,088

shares of common stock in the aggregate.

following table reflects the calculation of basic and diluted net loss per common share:

Schedule of Calculation of Basic and Diluted Net Income Per Share

June 30, 2022

June 30, 2021

Redeemable Class A Common Stock subject to possible redemption

net loss allocable to redeemable Class A Common Stock subject to possible redemption

Capacity at 65%

CRB related deposits

Incremental capacity

$ 248,015,769

weighted average number of redeemable Class A Common Stock

Basic and diluted net loss per redeemable Class A Common Stock

Non-redeemable Class A and Class B common stock

net loss allocable to non-redeemable Class A and Class B common stock

$ 227,593,134

policy also requires they maintain an internal ratio of net worth to total assets of at least 10 %.

CRB related deposit capacity maybe

limited if PCCU ratio declines below this threshold.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Servicing Agreement

February 11, 2022, SHF entered into an Amended and Restated Loan Servicing Agreement with PCCU.

The agreement sets forth the application, underwriting and

approval process for loans from PCCU to CRB customers and the loan servicing and monitoring responsibilities provided by both PCCU and

PCCU will receive a monthly servicing fee at the annual rate of 0.25 % of the then-outstanding principal balance of each loan funded

For the loans that are subject to this agreement, SHF originates the loans and performs all compliance analysis, credit analysis

of the potential borrower, due diligence and underwriting and all administration, including hiring and incurring the costs of all related

personnel or third-party vendors necessary to perform these services.

Under the Loan Servicing Agreement, SHF has agreed to indemnify

PCCU from all claims related to default-related loan losses as defined in the Loan Servicing Agreement.

The agreement is for an initial

term of three years and will renew for additional one-year terms unless a party provides 120 days’ notice of non-renewal or there

is a termination for cause, provided that PCCU may not provide notice of non-renewal until 30 months following the signing date.

agreement was amended and restated in conjunction with the contemplated Business Combination with substantially similar terms.

loan program currently depends on PCCU as SHF’s largest funding source for new loans to CRBs.

Under PCCU’s loan policy for

loans to CRBs, PCCU’s Board of Directors has approved aggregate lending limits at the lessor of 1.3125 times PCCU’s net worth

or 65 % of total CRB deposits.

Concentration limits for the deployment of loans are further categorized as i) real estate secured, ii)

construction, iii) unsecured and iv) mixed collateral with each category limited to a percentage of PCCU’s net worth.

loans to any one borrower or group of associated borrowers are limited by applicable National Credit Union Association regulations to

the greater of $100,000 or 15% of PCCU’s net worth .

below schedule demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits at September 30, 2022.

were funded prior to January 1, 2022.

of Demonstrates Deposit Capacity

CRB related deposits

$ 165,697,653

weighted average number of non-redeemable Class A and Class B common stock

Basic and diluted net income per non-redeemable Class A and Class B common stock

For the Period from February 26, 2021 (inception)

June 30, 2022

June 30, 2021

Redeemable Class A Common Stock subject to possible redemption

net loss allocable to redeemable Class A Common Stock subject to possible redemption

$ 146,267,976

weighted average number of redeemable Class A Common Stock

Basic and diluted net loss per redeemable Class A Common Stock

Non-redeemable Class A and Class B common stock

net loss allocable to non-redeemable Class A and Class B common stock

Capacity at 65%

PCCU net worth

Capacity at 1.3125

Limiting capacity

$ 128,174,148

PCCU loans funded

Amounts available under lines of credit

Incremental capacity

$ 109,449,148

weighted average number of non-redeemable Class A and Class B common stock

Basic and diluted net loss per non-redeemable Class A and Class B common stock

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2 — Summary of Significant Accounting Policies (Continued)

Value of Financial Instruments

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.

Value Measurements

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.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs

used in measuring fair value.

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:

1, defined as observable inputs such as quoted prices for identical instruments in active markets;

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;

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.

some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

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.

Financial Instruments

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.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

— Summary of Significant Accounting Policies (Continued)

Issued Accounting Standards

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):

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.

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.

ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified

retrospective basis, with early adoption permitted beginning on January 1, 2021.

The Company is currently assessing the impact, if any,

that ASU 2020-06 would have on its financial position, results of operations or cash flows.

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.

3 — Public Offering

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).

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 .

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.

5 — Related Party Transactions

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.

January 18, 2022, the Sponsor agreed to allocate an additional 90,000 shares to the Company’s Chief Financial Officer which

may be purchased by Mr.

Fameree at the same price as the Founder shares were acquired or $ 0.009 per share contingent upon closing of

NLIT’s business combination.

option to purchase the Founders Shares provided to the Company’s CFO is in the scope of FASB ASC Topic 718, “Compensation-Stock

Compensation” (“ASC 718”).

Under ASC 718, stock-based compensation associated with equity-classified awards is measured

at fair value upon the grant date.

The fair value of the 90,000 options to purchase shares granted to the Company’s CFO was $ 800,725

or $ 8.90 per option.

The Founders Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination).

Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of occurrence under

the applicable accounting literature in this circumstance.

As of June 30, 2022, the Company determined that a Business Combination is

not considered probable, and, therefore, no stock-based compensation expense has been recognized.

Stock-based compensation would be recognized

at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the

number of Founders Shares times the grant date fair value per option (unless subsequently modified) less the amount ultimately received

for the purchase of the Founders Shares.

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.

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.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

5— Related Party Transactions (Continued)

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.

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.

June 27, 2022, the Company, with proceeds advanced from an affiliate of the Sponsor through a non-interest bearing advance (the “Advance”), deposited $ 1,150,000

in the Trust Account extending operations for three months from June 28, 2022 to September 28, 2022.

the Company anticipates that it may not be able to consummate a Business Combination by September 28, 2022, 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 one additional time by an additional three months (for a total of up to 18 months to complete a Business Combination from the

consummation of the Company’s IPO), subject to the Sponsor depositing additional funds into the Trust Account as set out

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 (the “Extension Loans”).

above, the first such extension was made on June 27, 2022.

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.

The Sponsor and its affiliate have waived this

conversion right and the Advance will be repaid at the closing of the initial Business Combination utilizing cash.

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.

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.

the three months ending June 30, 2022, Luminous Capital Inc., an affiliate of the Sponsor, paid $ 222,211 in expenses on behalf of the

This amount was included in accounts payable/accrued expenses at June 30, 2022.

On June 30, 2022, $ 168,617 in Trust Account

interest income was released to the Company and utilized to pay franchise taxes.

Administrative

Support Agreement

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.

For the three and six months ending June 30, 2022, $ 30,000

in support fees was incurred, respectively.

in support fees was incurred for both the period from February 26, 2021 (inception) through June 30, 2021 and the three months

ending June 30, 2021.

and $ 0 in support fees were due to Luminous Capital Inc.

at June 30, 2022 and December 31, 2021, respectively.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

to this agreement, the Company reported expenses of $ 9,160 and $ 14,264 for the three-month and nine-month periods ended September 30,

2022 and $ 0 for the three-month and nine-month periods ended September 30, 2021.

the Account Servicing Agreement, Support Servicing Agreement and Loan Servicing Agreement are referred to as the “Parent Agreements.”

July 1, 2021, SHF entered into a one-year gross lease with PCCU to lease space in its existing office at a monthly rent of $ 5,400 .

July 1, 2022, the Company amended its existing lease to a month-to-month lease and therefore no asset or liability amounts are reported

pursuant to ASC 842.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Disaggregated

by type are as follows:

of Disaggregated Revenue

For the three-month period ended September 30,

Deposit, activity, onboarding income

Safe Harbor Program income

Investment income

Loan interest income

Total Revenue

For the nine-month period ended September 30,

Deposit, activity, onboarding income

Safe Harbor Program income

Investment income

Loan interest income

Total Revenue

Commitments and contingencies

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.

of a majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such

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.

will bear the expenses incurred in connection with the filing of any such registration statements.

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.

underwriter was paid a cash underwriting discount of 1.50 % of the gross proceeds of the Initial Public Offering, or $ 1,725,000 .

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.

of First Refusal

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.

Purchase Agreement

Company and Safe Harbor have agreed to pay (jointly and severally) to Midtown East a break-up fee equal to the sum of (i) all quarterly

structuring fees and attorney fees and other reasonable expenses related thereto incurred by Midtown East or its affiliates in connection

with the Forward Purchase Transaction, plus (ii) $ 1,000,000 , upon the occurrence of an “Additional Termination Event” following

the consummation of the Forward Purchase Transaction except where the Additional Termination Event occurred as a result of regulatory

items or a material breach of Seller’s obligations under the Forward Purchase Agreement.

An “Additional Termination Event”

is defined under the Forward Purchase Agreement to occur if (a) the Business Combination fails to close on or before the Outside Date

(as defined in the Unit Purchase Agreement, and as such Outside Date may be amended or extended from time to time) or (b) the Unit Purchase

Agreement is terminated prior to the closing of the Business Combination.

7 – Warrant Liability

of June 30, 2022 and December 31, 2021, the Company has 5,750,000 Public Warrants and the 264,088 Private Placement Warrants, respectively,

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.

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.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

7 – Warrant Liability (Continued)

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.

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:

whole and not in part;

a price of $ 0.01 per Public Warrant;

not less than 30 days’ prior written notice of redemption to each warrant holder;

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.

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.

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

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

7 – Warrant Liability (Continued)

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.

Placement Warrants are identical to the Public Warrants underlying the Units 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 are not transferable, assignable or salable

until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Additionally, the Placement Warrants

are exercisable on a cashless basis and 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.

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.

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.

8 – Stockholders’ Equity

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.

As of June 30, 2022 and December

31, 2021, there were no preferred shares issued or outstanding.

A Common Stock — The Company is authorized to issue up to 125,000,000

shares of Class A Common Stock with a par value

Holders of the Company’s Class

A Common Stock are entitled to one vote for each share.

As of June 30, 2022 and December 31, 2021, there were 4,333,047 and 528,175

shares, respectively, of Class A Common Stock

issued or outstanding, excluding shares subject to possible redemption.

As of June 30, 2022, 3,804,872

of the original 11,500,000

shares of Class A Common Stock subject to possible

redemption had elected not to redeem pursuant to the forward purchase agreement.

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

8 – Stockholders’ Equity (Continued)

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.

As of June 30, 2022 and December 31, 2021, there were 2,875,000 shares of Class B common stock issued and outstanding.

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.

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.

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).

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.

9 – Fair Value Measurements

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, 2022 and indicates the fair value hierarchy of the valuation techniques that the Company utilized

to determine such fair value:

time to time, the Company is subject to claims in legal proceedings arising in the normal course of business.

The Company does not believe

that it is currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business

or operating results.

Financial Instruments

value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants.

The fair value hierarchy ranks the inputs used in measuring fair value as follows:

Observable, unadjusted quoted prices in active markets

Level 2 – Inputs

other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability

Level 3 – Unobservable

inputs with little or no market activity that require the Company to use reasonable inputs and assumptions

Company uses fair value measurements to record adjustments to certain financial assets and liabilities on a recurring basis.

may be required to record certain assets at fair value on a nonrecurring basis in specific circumstances, such as evidence of impairment.

Methodologies used to determine fair value might be highly subjective and judgmental in nature;

therefore, valuations may not be precise.

If the Company determines that a valuation technique change is necessary, the change is assumed to have occurred at the end of the respective

reporting period.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

and Liabilities Reported at Fair Value on a Recurring Basis

Public and Private Placement Warrants:

Public and private placement warrants are recorded

at fair value on a recurring basis.

The Company obtains dealer quotes, Level 1 and Level 3 inputs, based on observable data to value these

Forward purchase option derivative:

Forward purchase option derivative are recorded at

fair value on a recurring basis.

The Company obtains dealer quotes, Level 3 inputs, based on observable data to value these warrants.

The following tables summarize financial assets and liabilities recorded

at fair value on a recurring basis, by the level of valuation inputs in the fair value hierarchy on September 30, 2022:

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

Quoted Prices

Public warrants

1 unchanged sentence

Forward purchase option derivative

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 December 31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized

to determine such fair value:

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

9 – Fair Value Measurements (Continued)

Quoted Prices

Marketable securities held in Trust Account

$ 117,321,508

Measured at Fair Value on a Nonrecurring Basis

were no assets or liabilities recorded at fair value on a nonrecurring basis for the periods ended September 30, 2022, and December 31,

Value of Financial Instruments

Company uses various methodologies and assumptions to estimate the fair value of certain financial instruments.

With the exceptions of

loans receivable, warrants and forward purchase option derivatives, the Company considers the carrying amounts of its financial instruments

(cash, accounts receivable and accounts payable) in the balance sheet to approximate fair value because of the short-term or highly liquid

nature of these financial instruments.

following tables present the carrying amounts and fair values of financial instruments, by the level of valuation inputs in the fair

value hierarchy, as of the dates indicated:

of Carrying Amounts and Fair Values of Financial Instruments by the Level of Valuation Inputs in the Fair Value Hierarchy

As on September 30, 2022

Fair value measurement using

Carrying amount

Cash and cash equivalents

Accounts receivable – trade

Contract assets

Prepaid expenses

Accrued interest receivable

Forward purchase derivative assets

Accounts payable

Accrued expenses

Contract liabilities

Public Warrants

Private Placement Warrants

Warrant liabilities

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

As on December 31, 2021

Fair value measurement using

Carrying amount

Cash and cash equivalents

Accounts receivable – trade

Contract assets

Prepaid expenses

Accrued interest receivable

Accounts payable

Accrued expenses

Contract liabilities

change in the assets measured at fair value on a recurring basis for which we have utilized Level 3 inputs to determine fair value are

presented in the following table:

As on September 30, 2022

Forward purchase

derivative assets

Balance at the beginning of the period

Acquired under business combination

Fair value adjustment

Balance at the end of the period

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.

In 2021, the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement, after they split from the units

and started trading.

Warrants are measured at fair value on a recurring basis.

The Public Warrants were initially valued using a Modified Monte Carlo Simulation.

As of June 30, 2022 and December 31, 2021, the Public warrants were valued using the instrument’s publicly listed trading price

as of the balance sheet date, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active

of June 30, 2022 and December 31, 2021, assets held in the Trust Account were entirely held in a mutual fund invested in U.S.

Company recognized $ 781,070 in expense and liabilities for the forward purchase option derivative upon the agreement execution of June

16, 2022 with a change in fair value of $ 14,872 recognized from execution to June 30, 2022.

The Warrants are measured at fair value on a recurring basis.

The Warrants were initially valued using a Modified Monte Carlo

As of September 30, 2022, the warrants were valued using the instrument’s publicly listed trading price as of

the balance sheet date, which is a Level 1 measurement due to the use of an observable market quote in an active market.

fair value of the forward purchase option derivative was estimated using a Monte-Carlo Simulation in a risk-neutral framework (a special

5 unchanged sentences

The Company measured

the fair value of the forward purchase option derivative upon execution of the Forward Purchase Agreement and as of June 30, 2022, with

the respective fair value adjustments recorded within its Consolidated Statements of Operations.

the fair value of the forward purchase option derivative upon execution of the Forward Purchase Agreement and as of September 30, 2022,

with the respective fair value adjustments recorded within its Statements of Operations.

The Company will continue to monitor

the fair value of the forward option derivative each reporting period with subsequent revisions to be recorded in the Consolidated Statements

the fair value of the forward option derivative each reporting period with subsequent revisions to be recorded in the Statements

of Operations.

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.

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.

The estimated fair value of the derivative warrant liabilities is determined using Level 3 inputs.

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.

following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the warrants as of

1 unchanged sentence

Schedule of Level 3 Fair Value Measurement Inputs

December 31, 2021

June 30, 2022

(Private Warrant)

September 30,

Exercise price

4 unchanged sentences

following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the forward purchase

agreement option at the measurement dates:

agreement as of their measurement dates:

of Level 3 Fair Value Measurement Inputs

June 16, 2022

June 30, 2022

September 30,

Expected term (years)

1 unchanged sentence

Risk-free rate

BB bonds rate

Warrants measurement inputs

LIGHTS ACQUISITION CORP.

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

9 – Fair Value Measurements (Continued)

change in the fair value of the derivative warrant liabilities for the period from December 31, 2021 (inception) through June 30, 2022

is summarized as follows:

Schedule of Derivative Warrant Liabilities

Fair value as of December 31, 2021

Change in valuation inputs or other assumptions (1)(2) (1)(2)

( 1,379,425 )

( 1,432,423 )

Fair value as of June 30, 2022

in valuation inputs or other assumptions are recognized in change in fair value of warrant liability in the statement of operations.

are due to the use of quoted prices in an active market (Level 1) and the use of unobservable inputs based on assessment of the assumptions

(Level 3) for Public Warrants (after becoming actively traded) and Private Placement Warrants, respectively.

Fair value measurement input

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Earnings Per Share

net income (loss) per common share is calculated by dividing the net income (loss) attributable to common stockholders’ by the

weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities.

net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders’ by the weighted

average number of common shares and potentially dilutive securities outstanding for the period.

For the Company’s diluted earnings

per share calculation, the Company uses the “if-converted” method for preferred stock and convertible debt and the “treasury

stock” method for Warrants and Options.

the Business Combination and related transactions are being reflected as if they had occurred at the beginning of the period presented,

the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the shares issued in connection

with the Business Combination have been outstanding for the entire period presented.

Of Earning Per Shares, Basic And Diluted

the Nine Months Ended

September 30,

Weighted average shares outstanding – basic

Basic net earnings per share

Weighted average shares outstanding – diluted ** **

Diluted net earnings per share

the Three Months Ended

September 30,

Weighted average shares outstanding – basic

Basic net earnings per share

Weighted average shares outstanding – diluted** **

Diluted net earnings per share

Weighted average share calculations, basic

September 30,

Company public shares

Company initial stockholders’

SHF stockholders’

Weighted average shares outstanding – basic

Weighted average shares calculations, diluted

September 30,

Company public shares

Company initial stockholders’

PIPE Investors **

SHF stockholders’

Weighted average shares outstanding – diluted

investors initial shares represent preferred stock without voting rights.

Preferred stock initially converts at $ 10

per share which would result in an additional 2,045,000

shares of Class A Stock.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Forward Purchase Agreement

discussed in Note 1 on June 16, 2022, NLIT entered into a Forward Purchase Agreement with Midtown and its assignees for a Forward Purchase

Pursuant to the terms of the Forward Purchase Agreement, Midtown and its assignees, as of June 30, 2022, had purchased approximately

3,804,872 shares of NLIT’s Class A common stock in exchange for an amount to be paid of $ 38,847,743 (the Prepayment Amount).

close of the Business Combination, the amount will be paid out of the trust account and will be held in a deposit account for the benefit

of Midtown and its assignees until the Valuation Date.

There are a few scenarios in which the Forward Purchase Agreement can be settled

either before or on the Valuation Date:

any time prior to the Valuation Date, Midtown may elect an optional early termination to

sell some or all of the Forward Purchase shares in the open market.

If Midtown sells any

shares prior to the Valuation Date, a pro-rata portion of the Prepayment Amount will be released

from the deposit account and paid to the Company.

Midtown shall retain any proceeds from

the sale of such shares in excess of such pro-rata portion paid to the Company.

Combination Target will be entitled to the product of the number of shares sold times the

redemption price or the Reset Price.

The Reset Price is adjusted on the first scheduled trading

day of each month following the Business Combination and is the lower of:

i) the then current

reset price, ii) $ 10.00 and iii) the VWAP price of the last 10 scheduled trading days of

the prior month but not lower than $ 5.00 .

the Valuation Date, if any shares subject to the Forward Purchase Agreement remain unsold,

Midtown is entitled to the product of the unsold shares multiplied by the Forward Price (which

is equal to the redemption price as outlined in our Amended and Restated Certificate of Incorporation

dated June 21, 2021) and an incremental $ 2.00 per share for any unsold shares.

The incremental

$ 2.00 per share maybe settled in cash or shares at the discretion of the Company.

the volume weighted average share price (“VWAP”) of the shares falls below $3.00

per share for 20 out of any 30 consecutive trading days (a “VWAP Trigger Event”),

then Midtown may elect to accelerate the Valuation Date to the date of such VWAP Trigger

If Midtown elects to accelerate the Valuation Date, the settlement amount returned

to the Company would follow the methodology in the above section which will equate to the

product of unsold shares multiplied by the Forward Price ad an incremental $2.00 per unsold

share to be settled in cash or shares.

break-up fee equal to (i) all (a) structuring fees and (b) attorney fees and other reasonable expenses related thereto incurred by Midtown

or its assignees in connection with the forward purchase agreement, plus (ii) $ 1,000,000 , shall be payable to Midtown upon any failure

to close the Business Combination following the consummation of the Forward Purchase Transaction except where the Business Combination

did not occur as a result of regulatory items or a material breach of Midtown’s obligation under the agreement.

Midtown waived

any and all right, title and interest, or any claim of any kind they have or may have in the future, in or to any monies held in the

trust account

accordance with ASC 815, Derivatives and Hedging , the Company has determined that the forward option within the Forward Purchase

Agreement is (i) a freestanding financial instrument and (ii) a derivative.

This derivative, referred to throughout as the “forward

purchase option derivative” is recorded as a liability on the Company’s Consolidated Balance Sheets.

The Company has performed

fair value measurements for this derivative as of closing and as of June 30, 2022, which is described in Note 9.

The Company remeasures

the fair value of the forward purchase option derivative each reporting period.

June 16, 2022, NLIT entered into a Forward Purchase Agreement with Midtown East Management NL, LLC (“Midtown East”).

to entering into the Forward Purchase Agreement, the Company, NLIT, and Midtown East entered into assignment and novation agreements

with Verdun Investments LLC (“Verdun”) and Vellar Opportunity Fund SPV LLC – Series 1 (“Vellar”), pursuant

to which Midtown East assigned its obligations as to 1,666,666

shares of the shares of Class A Stock to be purchased

under the Forward Purchase Agreement to each of Verdun and Vellar.

As contemplated by the Forward Purchase Agreement:

to the Closing, Midtown East, Verdun and Vellar purchased approximately 3.8 million shares

of NLIT Class A common stock directly from investors at market price in the public market.

Midtown East and other counter parties waived their redemption rights with respect to the

acquired shares;

business day following the Closing, NLIT paid approximately $ 39.3 million from the cash held

in its trust account to Midtown East;

Verdun and Vellar for the shares purchased and approximately

$ 0.3 million in related expense amounts.

any time prior to the Maturity Date (defined as the earlier of i) the third anniversary of

the Closing of the Business Combination, ii) the shares are delisted from The Nasdaq Stock

Market or (iii) during any 30 consecutive Scheduled Trading Day-period following the closing

of the Business Combination, the Volume Weighted Average Share Price (VWAP) Price for 20 Scheduled Trading Days during such period

shall be less than $ 3.00 per share), Midtown East, Verdun and Vellar may elect an optional

early termination to sell some or all of the shares (the “Terminated Shares”)

of Class A Stock in the open market.

If Midtown East, Verdun and Vellar sell any shares prior

to the Maturity Date, the pro-rata portion of the Reset Price will be released from the escrow

account and paid to SHF.

Midtown East, Verdun and Vellar shall retain any proceeds in excess

of the Reset Price that is paid to SHF.

the Maturity Date, Midtown East, Verdun and Vellar shall be entitled to (1) the product of

the shares then held by them multiplied by the Forward Price, and (2) an amount, in cash

or shares at the sole discretion of NLIT, equal to (a) in the case of cash, the product of(i)(x)

3.8 million shares less (y) the number of Terminated Shares and (ii) $2.00 (the “Maturity

Cash Consideration”) and (b) in the case of shares, (i) the Maturity Cash Consideration

divided by (ii) the VWAP Price for the 30 Scheduled Trading Days prior to the Maturity Date .

Warrant Liability

of September 30, 2022, the Company has 5,750,000 Warrants and 264,088 Private Placement Warrants;

there are no warrants as of December

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.

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.

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.

of warrants become exercisable when the price per Class A Common Stock equals or exceeds $18.00.

Once the warrants become exercisable,

the Company may redeem the Warrants:

in whole and not in part;

at a price of $ 0.01 per Warrant;

upon not less than 30 days’ prior written notice

of redemption to each warrant holder;

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.

and when the warrants become redeemable by the Company, the Company may exercise its redemption rights;

this is also the case if the

Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the 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.

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

Placement Warrants are identical to the Warrants underlying the Units 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 are not transferable, assignable or saleable

until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Additionally, the Placement Warrants

are exercisable on a cashless basis and 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 Warrants.

Holdings, Inc.

NOTES TO FINANCIAL STATEMENTS

Subsequent events

has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statement

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.

Subsequent events are events or transactions that occur after the balance

sheet date but before the financial statements are issued.

The Company noted the following subsequent events that occurred after the balance

sheet date of September 30, 2022:

On October 26, 2022, SHF

Holdings, Inc., entered into a Forbearance Agreement (the “Forbearance Agreement”) with PCCU and Luminous Capital USA

(“Luminous”).

As per the terms of the agreement, PCCU has agreed to defer all payments owed pursuant to the Purchase

Agreement for a period of six (6) months from the date hereof while the Parties engage in good faith efforts to renegotiate the payment

terms applicable to the Deferred Obligation (the “Forbearance Period”).

On October 29, 2022, SHF

Holdings, Inc., entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the PCCU, SHF Merger

Sub I and a direct wholly-owned subsidiary of Parent (“Merger Sub I”), SHF Merger Sub II, LLC, and a direct wholly-owned

subsidiary of Parent (“Merger Sub II” and, together with Merger Sub I, the “Merger Subs”), Rockview Digital

Solutions, Inc., d/b/a Abaca (the “Company”) and Dan Roda, solely in such individual’s capacity as the representative

of the Company Security Holders (the “Company Stockholders’ Representative”).

The Merger Agreement provides that

the Parent will acquire the Company in exchange for (a) cash consideration in an amount equal to (i) $ 9,000,000 ($ 3,000,000 is payable

at closing, with an additional $ 3,000,000 payable at each of the one-year and two-year anniversaries of the closing);

and (b) $ 21,000,000

of validly issued, fully paid and non-assessable shares of the Parent’s common stock, $ 0.0001 par value per share, payable

in two installments of $ 8,400,000 on the closing date of merger and $ 12,600,000 on the first anniversary of the closing year.

transaction is expected to close in the fourth quarter of 2022.

November 2, 2022, EF Hutton, a division of Benchmark Investments, LLC (“EF Hutton”) issued a notice of default to the

Company towards a promissory note (the “Note”) entered with the company on September 28, 2022, amounting to $ 2,166,250 .

The Note provides that the Company was obligated to pay EF Hutton the principal sum of $ 2,166,250

on the following schedule:

(i) $ 715,750

on October 14, 2022 and (ii) $ 362,625 on

each of October 31, 2022, November 30, 2022, December 31, 2022, and January 31, 2023.

The legal notice indicates that the principal

balance of the $ 1,450,500

is immediately due and payable with default interest of 24 %

per annum, and that EF Hutton intended to pursue legal action if full payment was not received by November 7, 2022.

claimed that SHF defaulted on the Note by failing to pay the $ 362,625

instalment payment due on October 31, 2022.

The Company is currently investigating available remedies and intends to defend itself

against any claims.

As noted in Note 12 above,

on June 16, 2022, NLIT entered into a Forward Purchase Agreement with Midtown East.

Subsequent to entering into the Forward Purchase

Agreement, the Company, NLIT, and Midtown East entered into assignment and novation agreements with Verdun and Vellar pursuant to

which Midtown East assigned its obligations as to 1,666,666 shares of the shares of Class A Stock to be purchased under the Forward

Purchase Agreement to each of Verdun and Vellar.

As contemplated by the Forward Purchase Agreement, should the Volume Weighted Average

share Price (VWAP) Price for 20 Scheduled Trading Days be less than $ 3.00 prior to the maturity date, Midtown East, Verdun and Vellar

may elect an optional early termination to sell some or all of the shares (the “Terminated Shares”) of Class A Stock

in the open market.

If Midtown East, Verdun and Vellar sell any shares prior to the Maturity Date, the pro-rata portion of the Reset

Price will be released from the escrow account and paid to SHF.

Midtown East, Verdun and Vellar shall retain any proceeds in excess

of the Reset Price that is paid to SHF.

The Company will continue to monitor the aforementioned VWAP during the fourth

quarter of 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements