What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 771 added, 681 removed, 1136 unchanged (56% of the section changed)

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CONSOLIDATED BALANCE SHEETS

June 30, 2023

December 31, 2022

Current Assets:

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Parent-Entity Net Investment and Stockholders’ Equity

Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 10,896 shares issued and outstanding on March 31, 2023, and Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 14,616 shares issued and outstanding on December 31, 2022, respectively

Class A common stock, $ .0001 par value, 130,000,000 shares authorized 40,288,817 issued and outstanding on March 31, 2023, and Class A common stock, $ .0001 par value, 130,000,000 shares authorized, 23,732,889 issued and outstanding on December 31, 2022, respectively

Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 4,221 shares issued and outstanding on June 30, 2023, and Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 14,616 shares issued and outstanding on December 31, 2022, respectively

Class A common stock, $ .0001 par value, 130,000,000 shares authorized 46,265,317 issued and outstanding on June 30, 2023, and Class A common stock, $ .0001 par value, 130,000,000 shares authorized, 23,732,889 issued and outstanding on December 31, 2022, respectively

Additional paid in capital

Retained earnings

Retained deficit

( 70,577,990 )

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For the three months ended

For the six months ended

Operating Expenses

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General and administrative expenses

Impairment of goodwill

Impairment of finite-lived intangible assets

Professional services

Provision for credit losses

operating expenses

Total operating expenses

Operating (loss)/ income

( 17,912,767 )

( 19,534,436 )

Other (income) expenses

Interest expense

( 1,187,939 )

Change in fair value of warrant liability

Total other expenses

$ ( 343,947 )

$ ( 745,002 )

Net (loss) / income before income tax

( 18,256,714 )

( 20,279,438 )

Income tax benefit

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$ ( 17,604,567 )

$ ( 19,018,014 )

Weighted average shares outstanding, basic

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Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity

THE THREE MONTHS ENDED MARCH 31, 2023

A Common Stock

Parent-Entity

Shareholders’

December 31, 2022

THE THREE MONTHS ENDED JUNE 30, 2023

Preferred Stock

Class A Common Stock

Additional Paid-in

Total Shareholders’

Balance, March 31, 2023

$ ( 46,695,249 )

effect from adoption of CECL

of PIPE shares

Conversion of PIPE shares

( 6,278,174 )

option conversion

of shares to PCCU (net of tax)

of deferred underwriting cost

Restricted stock units

Stock option conversion

( 17,604,567 )

March 31, 2023

Balance, June 30, 2023

$ ( 70,577,990 )

THE THREE MONTHS ENDED JUNE 30, 2022

Preferred Stock

Class A Common Stock

Total Shareholders’

Balance, March 31, 2022

Contribution from parent

Balance, June 30, 2022

Holdings, Inc.

Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity

THE THREE MONTHS ENDED MARCH 31, 2022

THE SIX MONTHS ENDED JUNE 30, 2023

Preferred Stock

Class A Common Stock

Additional Paid-in

Parent-Entity Net

Total Shareholders’

Balance, December 31, 2022

$ ( 39,695,281 )

Reversal of deferred underwriting cost

Cumulative effect from adoption of CECL

Conversion of PIPE shares

( 11,283,374 )

Restricted stock units

Stock option conversion

Issuance of shares to PCCU (net of tax)

( 19,018,014 )

Balance, June 30, 2023

$ ( 70,577,990 )

THE SIX MONTHS ENDED JUNE 30, 2022

Preferred Stock

Class A Common Stock

Additional Paid-in

Total Shareholders’

Balance, December 31, 2021

Contribution from parent

Net profit (loss)

Balance, March 31, 2022

Balance, June 30, 2022

accompanying notes are an integral part of the condensed consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31,

For the six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Lease expense

Income tax benefit

Impairment of goodwill

Impairment of finite-lived intangible assets

Deferred tax benefit

( 1,261,424 )

Change in fair value of warrant

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Accounts payable

( 1,604,082 )

Accrued expenses

Deferred loan origination fees

Contract liabilities

Security deposit

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchase of property and equipment

Issuance of new loans (net of repayment)

Net cash provided by investing activities

Funding of other investment

Repayment of loans, net

Net cash provided by (used in) investing activities

CASH FLOWS USED IN FINANCING ACTIVITIES:

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Cash and cash equivalents – end of period

Non-Cash transactions:

Supplemental disclosure

Shares issued for the settlement of PCCU debt obligation

Cumulative effect from adoption of CECL

Interest payment on senior secured promissory note

Reversal of deferred underwriting cost

accompanying notes are an integral part of the condensed consolidated financial statements.

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The Business Combination was consummated pursuant to a Unit Purchase Agreement dated February 11, 2022 (the “Business Combination

Agreement”) among SHF, SHF Holding Co., LLC (the direct parent of SHF and a wholly owned subsidiary of PCCU), PCCU, NLIT, a

special purpose acquisition company, and its sponsor, 5AK, LLC.

Subsequent to the completion of the Business Combination, NLIT changed

its name to “SHF Holdings, Inc.” In this quarterly report on Form 10-Q (the “Quarterly Report”), we use the terms

“we,” “us,” “our” and the “Company” to refer to the business and operations of SHF Holdings,

following the closing of the Business Combination.

Agreement”) among SHF, SHF Holding Co., LLC (the direct parent of SHF and a wholly owned subsidiary of PCCU), PCCU, NLIT, a special

purpose acquisition company, and its sponsor, 5AK, LLC.

Subsequent to the completion of the Business Combination, NLIT changed its name

to “SHF Holdings, Inc.” In this quarterly report on Form 10-Q (the “Quarterly Report”), we use the terms “we,”

“us,” “our” and the “Company” to refer to the business and operations of SHF Holdings, Inc.

the closing of the Business Combination.

(Refer to Note 3 to the Condensed Consolidated Financial Statements.)

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all of the employees engaged in the operations and certain PCCU employees were terminated from PCCU and hired as SHF employees.

Collectively, Oldco, the relevant operations of the PCCU branches, and SHF, represent the “Carved-Out Operations.” After

the reorganization, the entirety of the Carved-Out Operations were owned by SHF and Oldco was dissolved.

In addition, effective July

1, 2021, SHF entered into an Account Servicing Agreement and Support Services Agreement with PCCU, which memorialized the operational

relationship between SHF and PCCU and which were subsequently amended and restated and are discussed in Note 9 to the Condensed Consolidated

Financial Statements.

Collectively,

Oldco, the relevant operations of the PCCU branches, and SHF, represent the “Carved-Out Operations.” After the reorganization,

the entirety of the Carved-Out Operations were owned by SHF and Oldco was dissolved.

In addition, effective July 1, 2021, SHF entered

into an Account Servicing Agreement and Support Services Agreement with PCCU, which memorialized the operational relationship between

SHF and PCCU and which were subsequently amended and restated and are discussed in Note 9 to the Condensed Consolidated Financial Statements.

September 28, 2022, the parties consummated the Business Combination, resulting in NLIT acquiring 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 Company’s Class A common

interests of SHF upon 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.

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(“Luminous”), an affiliate of the sponsor of NLIT.

Under the Forbearance Agreement, PCCU has agreed to defer

Under the Forbearance Agreement, PCCU agreed to defer

all payments owed by the Company pursuant to the Business Combination Agreement for a period of six months from the date of the Forbearance

Agreement while the parties engage in good faith efforts to renegotiate the payment terms of the deferred obligations.

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, the origination, onboarding, and servicing of cannabis-related deposit

business for and on behalf of those partner institutions;

Bank Secrecy Act and other regulatory compliance and reporting related to

these accounts;

On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations

payable in connection with the business combination.

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, the origination, onboarding, and servicing of cannabis-related deposit business

for and on behalf of those partner institutions;

Bank Secrecy Act and other regulatory compliance and reporting related to these accounts;

onboarding these accounts and responding to account and customer service inquiries;

and sourcing, underwriting, and

servicing, and administering loans issued to cannabis businesses and related entities.

In addition to PCCU, the Company provides these similar services and outsourced support to

other financial institutions providing banking to the cannabis industry.

and sourcing, underwriting, and servicing, and administering

loans issued to cannabis businesses and related entities.

In addition to PCCU, the Company provides these similar services and outsourced

support to other financial institutions providing banking to the cannabis industry.

These services are provided to other financial institutions

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to the Abaca Merger Agreement, as amended, the Company acquired Abaca together with its proprietary financial technology platform in

exchange for $ 30,000,000 ,

paid in a combination of cash and shares of the Company as follows:

(a) cash consideration in an amount equal to (i) $ 9,000,000

was payable at the closing of the Mergers (the “Merger Closing”), with an additional $ 3,000,000

payable at each of the one-year and two-year anniversaries of the Merger Closing), (collectively, the “Cash

Consideration”);

and (b) 2,100,000

shares of Class A Common Stock at the Closing Date and $ 12,600,000

(minus an outstanding note balance of $ 500,000 ,

plus accrued interest) in shares of Class A Common Stock at the one-year anniversary of the Merger Closing based on a 10-day VWAP

(collectively, the “Share Consideration”).

Each of the Company, the Merger Subs, and Abaca provided customary

representations, warranties and covenants in the Agreement.

exchange for $ 30,000,000 , paid in a combination of cash and shares of the Company as follows:

(a) cash consideration in an amount equal

to (i) $ 9,000,000 ($ 3,000,000 was payable at the closing of the Mergers (the “Merger Closing”), with an additional $ 3,000,000

payable at each of the one-year and two-year anniversaries of the Merger Closing), (collectively, the “Cash Consideration”);

and (b) 2,100,000 shares of Class A Common Stock at the Closing Date and $ 12,600,000 (minus an outstanding note balance of $ 500,000 ,

plus accrued interest) in shares of Class A Common Stock at the one-year anniversary of the Merger Closing based on a 10-day VWAP (collectively,

the “Share Consideration”).

Each of the Company, the Merger Subs, and Abaca provided customary representations, warranties

and covenants in the Agreement.

March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including

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Basis of Presentation and Summary of Significant Accounting Policies

preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United

States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the

condensed consolidated financial statements and accompanying notes.

Material estimates that are particularly subject to change in the

near term include the determination of the allowance for credit losses, indemnification liabilities, useful lives of intangibles and the

fair value of financial instruments.

Use of Estimates

preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the

United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported

in the condensed consolidated financial statements and accompanying notes.

Material estimates that are particularly subject to

change in the near term include the determination of the allowance for credit losses, indemnification liabilities, valuation and

useful lives of intangibles and the fair value of financial instruments.

Actual results could differ from the estimates.

of Presentation

Basis of Presentation

accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles

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accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly

the consolidated financial condition, results of operations, statements of shareholders’ equity, and cash

flows of the Company for the interim periods presented.

Except as otherwise disclosed, all such adjustments consist only of those of

a normal recurring nature.

Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results

that may be expected for the current year ending December 31, 2023.

The financial data presented herein should be read in conjunction

with the audited consolidated financial statements and accompanying notes as of and for the years ended December 31, 2022, and 2021 included

in the Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”).

the consolidated financial condition, results of operations, statements of shareholders’ equity, and cash flows of the Company

for the interim periods presented.

Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature.

Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected

for the current year ending December 31, 2023.

The financial data presented herein should be read in conjunction with the audited consolidated

financial statements and accompanying notes as of and for the years ended December 31, 2022, and 2021 included in the Annual Report on

Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”).

information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

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or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q.

and Going Concern

of March 31, 2023, the Company had $ 8,628,752 in

cash and net working capital deficit of $ 8,998,880 ,

as compared to $ 8,390,195 in

cash and net working capital deficit of $ 39,340,020 at December 31, 2022.

Included in the working capital deficit at March 31, 2023 and December 31, 2022 are $ 11,685,419 and

$ 11,622,831 ,

respectively, which represent the equity consideration payable towards the Abaca acquisition.

The Company has also incurred an

operating loss of $ 1,621,669 for the period ended March 31, 2023.

Liquidity and Going Concern

of June 30, 2023, the Company had $ 8,239,095 in cash and net working capital deficit of $ 9,423,796 , as compared to $ 8,390,195 in cash

and net working capital deficit of $ 39,340,020 at December 31, 2022.

Included in the working capital deficit at June 30, 2023 and December

31, 2022 are $ 11,880,296 and $ 11,622,831 , respectively, which represent the equity consideration payable towards the Abaca acquisition.

The Company has also incurred an operating loss of $ 17,912,767 and $ 19,534,436 for the three and six months ended June 30, 2023.

upon these factors, management of the Company has determined that there is a risk of substantial doubt about the Company’s ability

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have been issued.

At December 31, 2022, a

significant component of the working capital deficit was $ 25,973,017 representing the current portion of due to PCCU.

above, the Company restructured the due to PCCU issuing equity and a long-term payable.

As a result, this risk factor that the

Company may not be able to continue as a going concern which existed at December 31, 2022 was alleviated.

December 31, 2022, a significant component of the working capital deficit was $ 25,973,017 representing the current portion of due to

As outlined above, the Company restructured the due to PCCU issuing equity and a long-term payable.

As a result, this risk factor

that the Company may not be able to continue as a going concern which existed at December 31, 2022 was alleviated.

Despite the restructuring

of the due to PCCU, at March 31, 2023, the working capital deficit substantially includes an equity commitment towards the Abaca

acquisition, which is a non-cash liability amounting to $ 11,685,419 .

The Company also hired an experienced Chief Financial Officer in October 2022, who has immediately begun to institute certain

cost-cutting measures across the Company, including expense reduction measures and negotiating reduced amounts and extended terms

for certain payables.

These factors, however, do not fully remove substantial doubt regarding the Company’s ability to

continue as a going concern.

of the due to PCCU, at June 30, 2023, the working capital deficit substantially includes an equity commitment towards the Abaca acquisition,

which is a non-cash liability amounting to $ 11,880,296 .

These factors, however, do not fully remove substantial doubt regarding the

Company’s ability to continue as a going concern.

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 prospects.

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

accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which

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

and Cash Equivalents

Cash and Cash Equivalents

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

Concentrations

Concentrations of Risk

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

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As of this time, substantially all

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

Company had only one loan on its balance sheet as of March 31, 2023, which comprises 100 %

of the total loan balance.

The Company also indemnified six loans as of March 31, 2023;

three of these indemnified loans were in

excess of 10 %

of the total balance.

Receivable-PCCU and Allowance for Doubtful Accounts

of the Company’s revenue is generated by deposits and loans hosted by PCCU pursuant to a master service agreement.

Company had only one loan on its balance sheet as of June 30, 2023, which comprises 100 % of the total loan balance.

The Company also

indemnified 12 loans as of June 30, 2023;

three of these indemnified loans were in excess of 10 % of the total balance.

Accounts Receivable-PCCU and Allowance for Doubtful Accounts

receivable are recorded based on account fee schedules.

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

As of March 31, 2023, and December 31, 2022,

As of June 30, 2023, and December 31, 2022, 78 %

and 85 % of the Accounts Receivable, respectively, is due from PCCU.

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customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings.

March 31, 2023 and December 31, 2022, there were no recorded allowances for doubtful accounts on accounts receivables.

June 30, 2023 and December 31, 2022, there were no recorded allowances for doubtful accounts on accounts receivables.

Loans Receivable

underwrites 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

credit 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.

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 only.

Certain CRB Loans were contributed to the Company’s 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 credit

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

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

for Credit Losses (ACL)

2023, the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326), which

replaced the incurred loss methodology for estimated probable credit losses with an expected credit loss methodology that is referred

Allowance for Credit Losses (ACL)

January 1, 2023, the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326),

which replaced the incurred loss methodology for estimated probable credit losses with an expected credit loss methodology that is referred

to as the current expected credit loss (“CECL”) methodology.

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of this limit are first recognized as interest income, then as a reduction of collection costs, and then as other income.

for Loan Losses

to the adoption of CECL in 2023, the Company recognized an 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

to the adoption of CECL on January 1, 2023, the Company recognized an 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.

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is expected solely from the collateral.

loans SHF originates are 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.

loans SHF originates are 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

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

Deferred Loan Origination Fees and Cost

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

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utilizing the interest method.

the Loan Servicing Agreement, PCCU, in exchange for a fee at an annual rate of 0.25 %

Indemnity Liability

the prior 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, the Company has agreed to indemnify

Under the Loan Servicing Agreement, the Company had agreed to indemnify

PCCU from all claims related to Company’s cannabis-related business, including but not limited to default-related credit

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The indemnification component of the Loan Servicing Agreement (refer to Note 9 to

the condensed consolidated financial statements) is accounted for in accordance with accounting standards codification

the unaudited condensed consolidated financial statements) is accounted for in accordance with accounting standards codification

(“ ASC”) 460 Guarantees .

In determining the applicability of ASC 460, we considered that the agreement outlines a

In determining the applicability of ASC 460, the Company considered that the agreement outlines a

broad indemnification of all claims related to the cannabis-related business.

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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

addition to default-related credit losses, the Company 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.

addition to default-related credit losses, the Company 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

March 29, 2023, the Company and PCCU entered into the Commercial Alliance Agreement that sets forth the terms and conditions of the lending-related

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well as the Amended and Restated Support Services Agreement and the Amended and Restated Account Servicing Agreement.

and Equipment, net

Property and Equipment, net

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

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on a straight-line basis over the estimated useful life of the related asset, generally five years.

of use assets and lease liability

Right of Use Assets and Lease Liability

Company has entered into lease agreements for a certain facility and certain items of equipment, which provide the right to use the underlying

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Both operating and finance lease right of use assets are reviewed

for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount

for impairment, consistent with other finite lived assets, whenever events or changes in circumstances indicate that the carrying amount

may not be recoverable.

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over the shorter of the remaining lease term or the estimated useful life.

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 months ended March

31, 2023, and the year ended December 31, 2022.

and Other Intangible Assets

Goodwill and Other Intangible Assets

Company’s methodology for allocating the purchase price of an acquisition is based on established valuation techniques that reflect

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from the assets are less than their carrying amounts.

Stock-based Compensation

Company measures all equity-based payment arrangements to employees and directors in accordance with ASC 718, Compensation–Stock

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Changes in assumptions used to estimate fair value could result in materially different results.

shares of the Company were listed on the Nasdaq stock exchange for a limited period of the time and also the stock price has dropped

significantly from the date of listing, based on which the Company has considered the expected volatility at 100 %

for the purpose of stock compensation.

shares of the Company have been listed on the Nasdaq stock exchange for a limited period of the time and also the stock price has dropped

significantly from the date of listing, based on which the Company has considered the expected volatility at 100 % for the purpose of

stock compensation.

The risk-free interest rates are based on quoted U.S.

Treasury rates for securities with

maturities approximating the awards’ expected lives.

The expected term of the options granted is calculated based on the

simplified method by taking average of contractual term and vesting period the awards.

The expected dividend yield is zero as the

Company has never paid dividends and does not currently anticipate paying any in the foreseeable future.

Value Measurements

Treasury rates for securities with maturities approximating

the awards’ expected lives.

The expected term of the options granted is calculated based on the simplified method by taking average

of contractual term and vesting period the awards.

The expected dividend yield is zero as the Company has never paid dividends and does

not currently anticipate paying any in the foreseeable future.

Fair Value Measurements

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

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

Revenue Recognition

recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

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Revenues are concentrated in the United States of America.

Assets / Contract Liabilities

Contract Assets / Contract Liabilities

contract asset is the Company’s right to consideration in exchange for goods or services that the Company has transferred to a

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entity’s performance.

of March 31, 2023, the Company reported contract assets and contract liabilities of $ 34,189 and $ 79,612 , respectively, from contracts

with customers.

of June 30, 2023, the Company reported contract assets and contract liabilities of $ 1,980 and $ 60,382 , respectively, from contracts with

As of December 31, 2022, the Company reported a contract asset and liability of $ 21,170 and $ 996 , respectively.

Warrants Liability

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 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 condensed consolidated statement of operations.

purchase derivative

and Hedging” (“ASC 815”), under which warrants that do not meet the criteria for equity classification 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 condensed consolidated statement of operations.

Forward purchase derivative

Company accounts for the forward purchase derivative assumed in the business combination in accordance with the guidance contained in

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

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

Earnings Per Share

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

The Company utilizes

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federal and state income taxes.

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.

The Company’s Management has determined there

are no material uncertain tax positions.

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.

The 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

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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 30.13 %

for the three months ended March 31, 2023 and March 31, 2022, respectively.

The effective tax rate differs from the statutory tax rate

of 21 % for the three months ended March 31, 2023 and March 31, 2022 primarily due to the aforementioned tax exemption available to PCCU.

Topic 740 also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement

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There were no unrecognized tax benefits and no amounts accrued for interest and penalties

as of March 31, 2023 and December 31, 2022.

as of June 30, 2023 and December 31, 2022.

The Company is currently not aware of any issues under review that could result in significant

payments, accruals or material deviation from its position.

Offering Costs

costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the PIPE offering.

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Equity upon the completion of the Initial Public Offering.

Issued Accounting Standards

Recently Issued Accounting Standards

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

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upon adoption.

for Convertible Instruments and Contracts in an Entity’s Own Equity

August 2020, the FASB issued ASU No.

2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”

(“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and

equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, ASU 2020-06 removes from

GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after

adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

Similarly, the embedded

conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Instead, entities will

account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation

as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.

2020-06 was effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after

December 15, 2020.

The Company early adopted the new standard during fiscal year 2021.

Simplifying the impairment test for Intangibles-Goodwill

In January 2017, the FASB issued

ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment (“ASU 2017-04”).

ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill

with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting Standards Codification (“ASC”)

350, Intangibles - Goodwill and Other (“ASC 350”).

As a result, an entity should perform its annual, or interim, goodwill

impairment test by comparing the fair value of a reporting unit with its carrying amount.

An impairment charge should be recognized for

the amount by which the carrying amount exceeds the reporting unit’s fair value.

However, the impairment loss recognized should

not exceed the total amount of goodwill allocated to that reporting unit.

ASU 2017-04, as amended, is effective for annual reporting periods

beginning after December 15, 2019, for SEC filers, excluding entities eligible to be smaller reporting companies (for whom the effective

periods begin after December 15, 2022), including any interim impairment tests within those annual periods, with early application permitted

for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company adopted ASU 2017-04 on January

1, 2023, with no material impact;

however, the standard was applied to the impairment analyses noted in Note 5 of the financial statements

Expected Credit Losses

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provisions by recording a cumulative effect adjustment to retained deficit.

The Company has adopted ASU 2016-13 as of January 1, 2023, utilizing the modified retrospective method.

The Company has adopted ASU 2016-13 as of January 1, 2023,

utilizing the modified retrospective method.

Transition Impact:

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a material impact on the Company’s condensed consolidated financial statements.

Standards Pending to be

Pending to be Adopted

Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

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Business Combination

the year 2022, the Business Combination detailed in Note 1 above was accounted for as a reverse recapitalization, with no goodwill or

On September 28, 2022, the 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 GAAP.

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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.

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

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

costs consisted of legal, accounting, underwriting fees and other costs incurred that were

directly related to the business combination was approximately $ 10.85 million.

costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the business combination

was approximately $ 10.85 million.

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 was due to PCCU beginning December

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

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

Approximately $ 21.9 million

of the amount was due to PCCU beginning December 15, 2022.

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

million thereafter.

Interest accrues at an effective annual rate of approximately 4.71 %.

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

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

on the date of 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 .

A sum of 1,200,000 founder shares were escrowed

until the amount is paid in full.

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

transferred to additional paid in capital.

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 were converted into 2,045,000

shares of Class A Stock at 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

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

was released with the remaining amount once all securities are included in an effective registration

tax purposes, the transaction is treated as a taxable asset acquisition, resulting in an

estimated tax basis Goodwill balance of $ 44,102,572 , 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 be recorded in accordance with GAAP.

Twenty (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.

the filing of registration statement 10 calendar days subsequent to closing, 17.5% of the escrow amount was released with the remaining

amount once all securities are included in an effective registration statement.

tax purposes, the transaction is treated as a taxable asset acquisition, resulting in an estimated tax basis Goodwill balance of

$ 44,102,572 , 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 be recorded in accordance with GAAP.

The Company is authorized to issue 1,250,000

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per share of Class A Common Stock, which conversion price is subject to downward adjustment on each of the dates that are 10 days,

55 days, 100days, 145 days and 190 days after the effectiveness of a registration statement registering the shares of Class A Common

Stock issuable upon conversion of the preferred stock to the lower of the Conversion Price and the greater of (i)

55 days, 100 days, 145 days and 190 days after the effectiveness of a registration statement registering the shares of Class A

Common Stock issuable upon conversion of the preferred stock to the lower of the Conversion Price and the greater of (i)

80% of the volume weighted average price of the Class A Common Stock for the prior five trading days and (ii) $2.00 (the

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A Common Stock:

The Company is authorized to issue up to 130,000,000 shares of Class A Common

Stock with a par value of $ 0.0001 per share.

Holders of the Company’s Class A Common

Stock are entitled to one vote for each share.

As of December 31, 2022, there were 23,732,889

shares, respectively, of Class A Common Stock issued or outstanding.

As of December 31,2022,

3,667,377 Class A Common Stock are held by the purchasers under forward purchase agreement

dated June 16, 2022, by and among the Company and such purchasers.

fair value of net assets on September 28, 2022 in the books of NLIT are as follows:

The Company is authorized to issue up to 130,000,000 shares of Class A Common Stock with a par value of $ 0.0001 per

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

As of December 31, 2022, there

were 23,732,889 shares, respectively, of Class A Common Stock issued or outstanding.

As of December 31,2022, 3,667,377 Class A Common

Stock are held by the purchasers under forward purchase agreement dated June 16, 2022, by and among the Company and such purchasers.

The fair value of net assets

on September 28, 2022 in the books of NLIT are as follows:

of Fair Value Net Assets

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Fair value of net assets acquired

following table summarizes the total fair value of consideration:

The following table summarizes

the total fair value of consideration:

of Fair Value Consideration

Company’s Class A common stock comprises of 11,386,139 shares

$ 115,000,000

Cash consideration

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Total fair value of consideration

$ 185,000,000

Parent-Entity

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are maintained for SHS, SHF or the Branches.

On March 29, 2023, the Company and PCCU entered into

a definitive transaction to settle and restructure the deferred obligations, including $ 56,949,800 into a five-year Senior Secured Promissory

Note (the “Note”) in the principal amount of $ 14,500,000 bearing interest at the rate of 4.25 %;

a Security Agreement pursuant

to which the Company will grant, as collateral for the Note, a first priority security interest in substantially all of the assets of

and a Securities Issuance Agreement, pursuant to which the Company will issue 11,200,000 shares of the Company’s Class

A Common Stock to PCCU.

(Refer to Note 9 to the financial statements below.)

March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including

$ 56,949,800 into a five-year Senior Secured Promissory Note (the “Note”) in the principal amount of $ 14,500,000 bearing interest

at the rate of 4.25 %;

a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security

interest in substantially all of the assets of the Company;

and a Securities Issuance Agreement, pursuant to which the Company will issue

11,200,000 shares of the Company’s Class A Common Stock to PCCU (Refer to Note 9 to the financial statements below.)

November 15, 2022, the Company and its subsidiary entered into a series of merger and acquisition transactions resulting in the acquisition

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d/b/a/ ABACA (collectively “Abaca”).

This acquisition was completed

in exchange for a combination of cash and the Company’s shares.

This acquisition was completed in

exchange for a combination of cash and the Company’s shares.

As part of the acquisition, the Company’s Notes of $ 500,000

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shares of the Company as follows:

consideration in an amount equal to (i) $ 9,000,000 ($ 3,000,000 was payable at the closing

of the Mergers (the “Merger Closing”), with an additional $ 3,000,000 payable

at each of the one-year and two-year anniversaries of the Merger Closing), (collectively,

the “Deferred Cash Consideration”);

Stock equal to the lesser of (1) 2,100,000 shares or (2) a number of shares equal to (i)

$8,400,000, divided by (ii) the Closing Parent Trading Price and $ 12,600,000 (minus an outstanding

note balance of $ 500,000 , plus accrued interest) in shares of Class A Common Stock at the

one-year anniversary of the Merger Closing based on a 10-day VWAP (collectively, the “Future

stock consideration”).

Company measures the deferred cash consideration and future stock consideration at fair value on the acquisition date based on a

report received from an independent valuation firm.

consideration in an amount equal to (i) $ 9,000,000 ($ 3,000,000 was payable at the closing of the Mergers (the “Merger Closing”),

with an additional $ 3,000,000 payable at each of the one-year and two-year anniversaries of the Merger Closing), (collectively, the

“Deferred Cash Consideration”);

Stock equal to the lesser of (1) 2,100,000 shares or (2) a number of shares equal to (i) $8,400,000, divided by (ii) the Closing

Parent Trading Price and $ 12,600,000 (minus an outstanding note balance of $ 500,000 , plus accrued interest) in shares of Class A

Common Stock at the one-year anniversary of the Merger Closing based on a 10-day VWAP (collectively, the “Future stock consideration”).

Company measures the deferred cash consideration and future stock consideration at fair value on the acquisition date based on a report

received from an independent valuation firm.

following table summarizes the purchase price allocation:

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to those future cash flows.

assets were recorded at estimated fair value, as determined by management based on available information which includes a valuation

prepared by an independent third party.

The fair values assigned to identifiable intangible assets were determined through the use

of the income approach and multi-period excess earnings methods.

The major assumptions used in arriving at the estimated

identifiable intangible asset values included management’s estimates of future cash flows, discounted at an appropriate rate

of return which is based on the weighted average cost of capital for both the company and other market participants.

lives of intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected

to contribute directly or indirectly to future cash flows.

The estimated fair value of intangible assets and related useful lives as

included in the purchase price allocation include:

assets were recorded at estimated fair value, as determined by management based on available information which includes a valuation prepared

by an independent third party.

The fair values assigned to identifiable intangible assets were determined through the use of the income

approach and multi-period excess earnings methods.

The major assumptions used in arriving at the estimated identifiable intangible asset

values included management’s estimates of future cash flows, discounted at an appropriate rate of return which is based on the

weighted average cost of capital for both the company and other market participants.

The useful lives of intangible assets were determined

based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future

The estimated fair value of intangible assets and related useful lives as included in the purchase price allocation include:

Schedule of Intangible Assets and Related Useful Lives as Included

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the acquisition of Abaca occurred on January 1, 2022, there would not have been a significant impact on the consolidated operating sales

revenues and net earnings for the three months ended March 31, 2022.

revenues and net earnings for the three months ended June 30, 2022.

Acquisition costs of $ 236,200 were incurred and recognized in acquisition

related costs in the year of acquisition.

Goodwill and other intangibles

acquired in connection with the acquisition on November 16, 2022, is not amortized, but instead evaluated for impairment on an

annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate that impairment may be more

likely than not.

During the year ended December 31, 2022, no

impairment charges were taken against the company’s goodwill.

The carrying amount of goodwill arose from the acquisition

described in Note 4, “Acquisition.”

change in the carrying amount of goodwill from December 31, 2022, to March 31, 2023, is as follows:

Goodwill and Finite-lived Intangible Assets

The Company’s goodwill was derived from the

transaction discussed in note 4, where the purchase price exceeded the fair value of the net identifiable assets acquired.

tested for impairment at least annually on November 15 th unless any events or circumstances indicate it is more likely than

not that the fair value of the goodwill is less than its carrying value.

On July 20, 2023, the Company agreed to terminate

the Master Services and Revenue Sharing Agreement with Central Bank.

Under the agreement, the Company provided expertise and intellectual

property that allowed the Company and Central Bank to jointly serve the deposit banking needs of cannabis related businesses primarily

located in Arkansas.

The agreement was originally executed by Rockview

Digital Solutions, LLC, which was acquired by the Company in October 2022.

The parties have agreed that termination will be effective

as of October 1, 2023, allowing for an orderly transition that will have minimal impact on customer operations.

The agreement, originally

executed in 2018, was renewable on an annual basis and did not include any material early termination penalties.

The Company assessed several events and circumstances

that could affect the significant inputs used to determine the fair value of the goodwill, including the significance of the amount of

excess fair value over carrying value, consistency of operating margins and cash flows, budgeted-to-actual performance from prior year,

overall change in economic climate, changes in the industry and competitive environment, and earnings quality and sustainability.

Company considered the decline in the operating margins and cash flow being goodwill impairment indicators and determined it appropriate

to perform a quantitative assessment of the goodwill as of June 30, 2023.

The Company engaged a third-party valuation specialist

to assist in the performance of the impairment analysis of the goodwill.

For the interim quantitative goodwill impairment analysis performed

as of June 30, 2023, the Company utilized an equally weighted combination of both an income and market approach to determine the fair

value of the goodwill.

The income approach utilizes a discounted cash flow method which is based on the present value of projected cash

The discounted cash flow models reflect company’s assumptions regarding revenue growth rates, risk-adjusted discount rate,

terminal period growth rate, economic and market trends and other expectations about the anticipated operating results of the Company.

Under the market approach, the Company estimates the fair value based on market multiples of revenues derived from comparable publicly

traded companies with operating characteristics similar to the Company.

As a result of the interim goodwill impairment analysis, the goodwill

was determined to have a carrying value that exceeded its fair value and therefore, a $ 13.21 million noncash goodwill impairment charge

was recognized in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended June

Fair value determination of the goodwill requires

considerable judgment and is sensitive to changes in underlying assumptions and factors.

As a result, there can be no assurance that the

estimates and assumptions made for purposes of the quantitative goodwill impairment tests will prove to be an accurate prediction of future

Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and

ultimately impact the estimated fair value of the goodwill may include such items as:

(i) an increase in the weighted-average cost of

capital due to further increases in interest rates, (ii) timing and success of estimated future income, it is possible that an additional

impairment charge may be recorded in the future, which could be material.

As of December 31, 2022, there were no negative indicators

in the goodwill impairment that would impact the fair value of the goodwill.

change in the carrying amount of goodwill from December 31, 2022, to June 30, 2023, is as follows:

Schedule of Carrying Amount of Goodwill

December 31, 2022

Acquisition of Abaca

March 31, 2023

Company has elected November 15 as the date for annual impairment testing or as necessary for triggering events.

The management believes

that there has been no change in the circumstances which could cause any indicators to impairment hence no impairment was recognized

during the three months ended March 31, 2023.

Company’s finite lived intangible assets are amortized on a straight-line basis over their estimated useful lives.

following is a summary of the Company’s finite-lived intangible assets as of March 31, 2023:

Goodwill impairment

( 13,208,276 )

June 30, 2023

of June 30, 2023, the Company’s accumulated goodwill impairment was $ 13,208,276 .

intangible assets

Company reviews its finite-lived intangible assets when there is a triggering event.

The Company performs impairment test by comparing

the fair value of finite lived intangible assets to the carrying value.

In the event the carrying value exceeds the fair value of the

assets, the assets are written down to their fair value.

of June 30, 2023, on account of the triggering event discussed in the goodwill analysis above, the Company performed a quantitative assessment

of finite-lived intangible assets comprised of market related intangible, customer relationships and developed technologies.

order to evaluate the fair value of the finite-lived intangible assets, a royalty method was applied for market related intangibles,

a discounted cash flow method applied for customer relationships and a cost to re-create method for developed technologies.

the Company determined that the fair value of market related intangibles and customer relationships were less than the carrying value

on the reporting date.

The Company recognized an impairment charge of $ 3.68 million in the unaudited condensed consolidated statements

of operations for the three and six months ended June 30, 2023.

There was no impairment recognized for developed technologies as the

fair value was in excess of the carrying value on the June 30, 2023, reporting date.

is the summary of the Company’s finite-lived intangible assets as of June 30, 2023:

Schedule of Finite Lived Intangible Assets

Finite-lived intangible assets, net

Market related intangible assets

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is a summary of the Company’s finite-lived intangible assets as of December 31, 2022:

Acquired in acquisition

Finite-lived intangible assets, net

Remaining Useful life in Years

December 31, 2021 (A)

Acquired in Acquisition (B)

December 31, 2022 (A+B-C-D)

Market related intangible assets

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Schedule of Commercial Real Estate Loans Receivable

December 31, 2022

Commercial real estate loans receivable, gross

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for Credit Losses

allowance for credit losses is maintained at a level believed to be sufficient to provide for estimated credit 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 credit losses consist of the following activity for the three months ended March 31, 2023 and year ended March 31,

The allowance for credit losses

is maintained at a level believed to be sufficient to provide for estimated credit losses based on evaluating known and inherent risks

in the loan portfolio.

The Company’s estimated the allowance for credit losses on the reporting date in accordance with the credit

loss policy described in Note 2.

allowance for credit losses consists of the following activity for the three and six months ended June 30, 2023 and June 30, 2022:

Schedule of Allowance For Loan Losses

Six months ended June 30,

June 30, 2023

June 30, 2022

Allowance for credit losses

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Cumulative effect from adoption of CECL

Provision/(Benefits)

Ending balance

Three months ended June 30,

June 30, 2023

June 30, 2022

Allowance for credit losses

Beginning balance

Cumulative effect from adoption of CECL

Ending balance

Loans receivable:

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Collectively evaluated for impairment

March 31, 2023 and December 31, 2022, no loans were past due, classified as non-accrual or considered impaired.

June 30, 2023 and December 31, 2022, no loans were past due, classified as non-accrual or considered impaired.

quality of loans:

part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks credit quality indicators

based on the loan payment status on monthly basis.

All the loans outstanding on March 31, 2023, are evaluated based on their payment status,

which is considered as the most meaningful indicator of credit quality.

part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks credit quality

indicators based on the loan payment status on monthly basis.

All the loans outstanding on June 30, 2023 and December 31, 2022, are evaluated based on

their payment status, which is considered as the most meaningful indicator of credit quality.

Indemnification liability

discussed at Note 9 to the condensed consolidated financial statements, and pursuant to PCCU Agreements, PCCU funds loans through a third-party

SHF earns the associated interest and pays PCCU a loan hosting payment 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

SHF earns the associated interest and pays PCCU a loan hosting payment at an annual rate of 0.25 % of the outstanding loan principal serviced by PCCU and 0.35 % of the outstanding loan principle serviced by SHF.

The below schedule details outstanding amounts funded by PCCU and categorized

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

Schedule of Outstanding Amounts

June 30, 2023

December 31, 2022

Secured term loans

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Total loans funded by Parent

Secured loans contained an interest rate ranging from 5.90 % to 12.00 %.

Unsecured loans and lines of credit contain

variable rates ranging from Prime + 1.50 % to Prime + 6.00 %.

Unsecured lines of credit had incremental availability of $ 875,000 and

$ 996,958 at March 31, 2023 and December 31, 2022.

loans contained an interest rate ranging from 6.55 % to 11.75 %.

Unsecured loans and lines of credit contain variable rates ranging from

Prime + 1.50 % to Prime + 6.00 % .

Unsecured lines of credit had incremental availability of $ 725,000 and $ 996,958 at June 30, 2023 and

December 31, 2022.

has agreed to indemnify PCCU for losses on certain PCCU loans.

The indemnity liability reflects SHF management’s estimate of

probable credit 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 reflects SHF management’s estimate of probable

credit losses inherent under the agreement at the balance sheet date.

The Company’s estimated indemnity liability on the reporting date was calculated in accordance with the allowance

for credit loss policy described in Note 2.

indemnity liability activity are as follows:

Schedule of Indemnity Liability

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

Beginning balance

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Ending balance

All loans were current and considered performing at

March 31, 2023 except one loan which was identified pursuant to potential default on January 5, 2023.

The Company’s management was

informed that an indemnified loan, having an outstanding balance of $3.1MM, was past due pursuant to its December 2022 payment.

The guarantor

on the loan stated to management that the borrower is out of money due to business losses.

The guarantor noted that the borrower is attempting

to sell the building prior to the end of Q2 of 2023.

loans were current and considered performing at June 30, 2023 except one loan which was identified pursuant to potential default on January

The Company’s management was informed that an indemnified loan, having an outstanding balance of $ 3.1 million, was past

due pursuant to its December 2022 payment.

The guarantor on the loan stated to management that the borrower is out of money due to business

The Company is discussing workout options with the borrower.

In addition, further

to the aforementioned attempt to sell, the loan has sufficient collateral.

The above-mentioned loan is now greater than 120 days

delinquent and considered impaired.

The Company’s CECL methodology has reserved management’s best estimate of credit losses

in relation to this loan and the overall loan portfolio on a collective basis.

delinquent and is included in the Company’s CECL methodology to calculate management’s best estimate of credit losses in relation

to this loan and the overall loan portfolio on a collective basis.

quality of indemnified loans:

part of the on-going monitoring of the credit quality of the Company’s indemnified loan portfolio, management tracks credit quality

indicators based on the loan payment status on monthly basis.

All the indemnified loans outstanding on March 31,2023 are evaluated based

on their payment status, which is considered as the most meaningful indicator of credit quality.

part of the on-going monitoring of the credit quality of the Company’s indemnified loan portfolio, management tracks credit

quality indicators based on the loan payment status on monthly basis.

All the indemnified loans outstanding on June 30, 2023 and

December 31, 2022 are evaluated based on their payment status, which is considered as the most meaningful indicator of credit

has agreed to indemnify PCCU from all claims related to SHF’s cannabis-related business.

Other than potential credit losses,

no other circumstances were identified meeting the requirements of a loss contingency.

provision for credit losses on the statement of operations consists of the following activity for the three months ended March 31,

2023 and year ended December 31, 2022:

Other than potential credit losses, no

other circumstances were identified meeting the requirements of a loss contingency.

provision for credit losses on the statement of operations consists of the following activity for the three months ended June 30, 2023

and June 30, 2022:

Schedule of Provision for Loan Losses

June 30, 2023

June 30, 2022

Provision (benefit)

provision for credit losses on the statement of operations consists of the following activity for the six months ended June 30, 2023

and June 30, 2022:

June 30, 2023

June 30, 2022

Provision (benefit)

Property and equipment, net

and equipment consist of the following:

Schedule of Property and Equipment, Net

Schedule of Property and Equipment

December 31, 2022

Office furniture

6 unchanged sentences

SHF provides services as per the agreement to CRB accounts at PCCU.

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

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

These costs include employees to manage

1 unchanged sentence

these accounts.

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

Amounts due to SHF are due

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

Amounts due to SHF were due

monthly in arrears and upon receipt of invoice.

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

It shall 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 Business

Combination with substantially similar terms.

to this agreement, SHF reported revenue of $ 3,261,284 and $ 1,628,091 for the three months ended March 31, 2023 and March 31, 2022, respectively.

This agreement was replaced and superseded in its entirety by Commercial Alliance

Agreement entered on March 29, 2023, between PCCU and the Company.

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.

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.

In addition, 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.

to these agreements and as amended and restated, the Company reported expenses of $ 378,730 and $ 83,807 for the three months ended March

31, 2023 and March 31, 2022, respectively.

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

Pursuant to the Account Servicing Agreement, the Company’s fees for such services 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

The Account Servicing Agreement will also terminate within 60 days of the Company 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

On May 23, 2022, the Company 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 the Company no longer qualifying as a

“credit union service organization,” as the Company will cease to qualify as a CUSO following the closing of the

Business Combination.

Pursuant to the Support Services Agreement, as amended, PCCU will continue to provide to the Company 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 the Company and the Company will reimburse PCCU for any of its out-of-pocket expenses relating to the services provided to

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 up to 65% unless

otherwise dictated by regulatory, regulator or policy requirements.

The below schedule demonstrates unaudited PCCU’s deposit

capacity at March 31, 2023 and December 31, 2022.

of Demonstrated Deposit Capacity

PCCU total assets

$ 699,228,293

$ 695,072,554

Capacity at 65%

CRB related deposits

Incremental capacity

$ 240,852,861

$ 290,658,185

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.

This agreement was replaced and superseded in its entirety

by Commercial Alliance Agreement entered on March 29, 2023, between PCCU and the Company.

Servicing Agreement

10 unchanged sentences

default-related credit 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.

The agreement was

amended and restated in conjunction with the 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 60 % 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 March 31, 2023 and December

This agreement was replaced and superseded in its

entirety by Commercial Alliance Agreement entered on March 29, 2023, between PCCU and the Company.

Alliance Agreement

On March 29, 2023, the Company

and PCCU entered into the Commercial Alliance Agreement that sets forth the terms and conditions of the lending-related and account-related

services governing the relationship between the Company and PCCU.

The Commercial Alliance Agreement replaces and supersedes in their entirety

the following agreements entered:

the Amended and Restated Loan Servicing Agreement dated September 21, 2022 between the Company and PCCU

(the “Loan Servicing Agreement”);

the Second Amended and Restated Account Servicing Agreement dated May 23, 2022, effective

February 11, 2022 (“the “Account Servicing Agreement”);

and the Second Amended and Restated Support Services Agreement

dated May 23, 2022, effective February 11, 2022 (the “Support Agreement”).

Commercial Alliance Agreement sets forth the application, underwriting, loan approval, and foreclosure process for loans from PCCU to

borrowers that are cannabis-related businesses and the loan servicing and monitoring responsibilities provided by the Company and PCCU.

In particular, the Commercial Alliance Agreement provides for procedures to be followed upon the default of a loan to ensure that neither

the Company nor PCCU will take title to or possession of any cannabis-related assets, including real property, that may be collateral

for a loan funded by PCCU pursuant to the Commercial Alliance Agreement.

Under the Commercial Alliance Agreement, PCCU receives

a servicing fee at the annual rate of 0.25 % of the then-outstanding principal balance of each loan funded by PCCU and serviced by the

Company, and a servicing fee at the annual rate of 0.35 % of the then outstanding principal balance of each loan presented by the Company

and both funded and serviced by PCCU.

In addition, the Company is obligated by the Commercial Alliance Agreement to indemnify

PCCU from certain default-related loan losses (as fully defined in the Commercial Alliance Agreement).

addition, the Commercial Alliance Agreement provides for certain fees to be paid to the Company’s for certain identified account

related services to include:

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

for a monthly fee equal to $30.96 per account in 2022, $25.32-$27.85 per account in 2023, and $26.08-$28.69 in 2024.

In addition, as

it pertains to CRB deposits held at PCCU, investment and interest income earned on these deposits (excluding interest income on loans

funded by PCCU) will be shared 25% to PCCU and 75% to the Company.

Finally, under the Commercial Alliance Agreement, PCCU will continue

to allow its ratio of CRB-related deposits to total assets to equal at least 60% unless otherwise dictated by regulatory, regulator or

policy requirements.

The initial term of the Commercial Alliance Agreement is for a period of two years, with a one-year automatic renewal

unless a party provides one hundred twenty days’ written notice prior to the end of the term.

below schedule demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits at June 30, 2023 and December

of Demonstrated Deposit Capacity

June 30, 2023

December 31, 2022

CRB related deposits

9 unchanged sentences

$ 154,971,429

to this agreement, the Company reported expenses of $ 11,929 and $ 1,373 for the three months ended March 31, 2023 and March 31, 2022.

revenue from operation on the statement of operations consists of the following agreements mentioned above for the three months ended

June 30, 2023, and June 30, 2022:

of Revenue from Operations

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Account servicing agreement

Commercial alliance agreement

operating expense on the statement of operations consists of the following agreements mentioned above for the three months ended June

30, 2023, and June 30, 2022:

of Operating Expense from Operations

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Support services agreement

Loan servicing agreement

Commercial alliance agreement

of shares to PCCU

March 29, 2023, the Company and PCCU entered into the following definitive transaction documents to settle and restructure the deferred

five -year Senior Secured Promissory Note (the “Note”) in the principal amount

of $ 14,500,000 bearing interest at the rate of 4.25 % and a Security Agreement pursuant to

which the Company will grant, as collateral for the Note, a first priority security interest

in substantially all of the assets of the Company.

Securities Issuance Agreement, pursuant to which the Company issued 11,200,000 shares

of the Company’s Class A Common Stock to PCCU.

Following the issuance of the Shares,

PCCU will own 54.93 % of the outstanding Class A Common Stock.

In connection with the Securities

Issuance Agreement, the parties also entered into a Registration Rights Agreement and a Lock-Up

Registration Rights Agreement requires the Company to register the Shares for resale pursuant

to the Securities Act of 1933, as amended (the “Securities Act”);

and the Lock-Up

Agreement restricts PCCU from transferring the Shares until the earlier of (i) six (6) months

after the date of the Securities Issuance Documents or (ii) the consummation of a transaction

with an unaffiliated third party in which all of the Company’s stockholders have the

right to exchange their shares of Class A Common Stock for cash, securities, or other property;

five -year Senior Secured Promissory Note (the “Note”) in the principal amount of $ 14,500,000 bearing interest at the

rate of 4.25 % and a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security

interest in substantially all of the assets of the Company.

Securities Issuance Agreement, pursuant to which the Company issued 11,200,000 shares of the Company’s Class A Common Stock

Following the issuance of the Shares, PCCU will own 54.93 % of the outstanding Class A Common Stock.

In connection with the

Securities Issuance Agreement, the parties also entered into a Registration Rights Agreement and a Lock-Up Agreement.

Registration Rights Agreement requires the Company to register the Shares for resale pursuant to the Securities Act of 1933, as amended

(the “Securities Act”);

and the Lock-Up Agreement restricts PCCU from transferring the Shares until the earlier of (i)

six (6) months after the date of the Securities Issuance Documents or (ii) the consummation of a transaction with an unaffiliated

third party in which all of the Company’s stockholders have the right to exchange their shares of Class A Common Stock for

cash, securities, or other property;

Commercial Alliance Agreement that sets forth the terms and conditions of the lending-related and account-related services governing

4 unchanged sentences

pursuant to ASC 842.

June 27, 2022, Luminous Capital Inc., an affiliate of the Sponsor provided a non-interest-bearing advance (the

“Advance”) amounting to $ 1,150,000

to fund the operation of NLIT.

The amount remains outstanding at March 31, 2023 and December 31, 2022 and is presented within “accounts payable” in

the condensed consolidated balance sheets.

June 27, 2022, Luminous Capital Inc., an affiliate of the Sponsor provided a non-interest-bearing advance (the “Advance”)

amounting to $ 1,150,000 to fund the operation of NLIT.

The amount outstanding on June 30, 2023, and December 31, 2022, is $ 700,000 and $ 1,150,000 , respectively and is

presented within “accounts payable” in the condensed consolidated balance sheets.

Due to Seller

Amounts due to seller were as follows:

due to seller were as follows:

of Amounts Due to Seller

June 30, 2023

December 31, 2022

Due to Seller-Current (Unsecured)

8 unchanged sentences

day of each of the following five fiscal quarters, for a total of $ 38,500,002 .

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

October 26, 2022, SHF Holdings, Inc.

entered into a Forbearance Agreement (the “Forbearance Agreement”) with PCCU and Luminous

Capital USA Inc.

4 unchanged sentences

loan included 5 % interest annualized using the simple interest method and an approximate 4.71 % effective interest rate.

March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations,

including $ 56,949,800 into a

five-year Senior Secured Promissory Note (the “Note”) in the principal amount of $ 14,500,000

bearing interest at the rate of 4.25 %;

a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security interest in

substantially all of the assets of the Company;

March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including

$ 56,949,800 into a five-year Senior Secured Promissory Note (the “Note”) in the principal amount of $ 14,500,000 bearing interest

at the rate of 4.25 %;

a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security

interest in substantially all of the assets of the Company;

and a Securities Issuance Agreement, pursuant to which the Company issued

11,200,000 shares of the Company’s Class A Common Stock to PCCU.

The breakdown of the liabilities settled under this transaction are as follows:

The breakdown of the liabilities settled under this transaction

are as follows:

Breakdown of Liabilities Settled

9 unchanged sentences

of Senior Secured Promissory Note

June 30, 2023

December 31, 2022

Senior Secured Promissory Note (current)

Senior Secured Promissory Note (long term)

March 29, 2023, the Company and PCCU entered into definitive transaction documents to settle and restructure the deferred

obligation related to business Combination (Refer to Note 3) under which the Company has issued the five- year

Senior Secured Promissory Note (the “Note”) in the principal amount of $ 14,500,000 bearing interest at the rate of 4.25 % and

a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security interest in substantially

all of the assets of the Company.

The Note amount will be paid in 54 equal installments

of $ 295,487 each starting from November 5, 2023 and for the period between March 29, 2023, to October 05, 2023, the Company is expected

to pay only interest portion.

repayment schedule of the outstanding amount on March 31, 2023 is as follows:

March 29, 2023, the Company and PCCU entered into definitive transaction documents to settle and restructure the deferred obligation

related to business Combination (Refer to Note 3) under which the Company has issued the five-year Senior Secured Promissory Note (the

“Note”) in the principal amount of $ 14,500,000 bearing interest at the rate of 4.25 % and a Security Agreement pursuant to

which the Company will grant, as collateral for the Note, a first priority security interest in substantially all of the assets of the

Note amount will be paid in 54 equal installments of $ 295,487 each starting from November 5, 2023, and for the period between March 29,

2023, to October 05, 2023, the Company is expected to pay only interest portion.

repayment schedule of the outstanding amount on June 30, 2023, is as follows:

of Outstanding Amount on Debt

8 unchanged sentences

elected not to capitalize leases with terms equal to, or less than, one year.

As of March 31, 2023, and December 31, 2022, net assets

As of June 30, 2023, and December 31, 2022, net assets

recorded under operating leases were $ 938,029 and $ 1,016,198 on, respectively, and net lease liabilities were $ 1,058,006 and $ 1,028,233 ,

5 unchanged sentences

not available.

Total lease cost for the three months ended March 31, 2023 and for the year ended December 31, 2022, included in Condensed

Consolidated Statements of Operations, is detailed in the table below:

Total lease cost for the three and six months ended June 30, 2023 and for the three and six months ended June 30, 2022

included in Condensed Consolidated Statements of Operations, is detailed in the table below:

of Lease Cost

Three months ended

March 31, 2023

December 31, 2022

Three months ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Operating lease cost

2 unchanged sentences

Schedule of Right Of Use Assets

June 30, 2023

December 31, 2022

ROU assets that are related to lease properties are presented as follows:

7 unchanged sentences

Weighted-average discount rate

Future minimum lease

payments as of March 31, 2023, and December 31, 2022, are as follows:

minimum lease payments as of June 30, 2023, and December 31, 2022, are as follows:

Schedule of Future Minimum Lease Payments

7 unchanged sentences

of Disaggregated Revenue

Six months ended

Deposit, activity, onboarding income

Safe Harbor Program income

Investment income

Loan interest income

Total Revenue

Three months ended

5 unchanged sentences

fee income consists of deposit account fees, activity fees and onboarding income, which are recognized on periodic basis as per the fee

schedule pursuant to deposit servicing agreement with PCCU.

schedule pursuant to commercial alliance agreement with PCCU.

Safe Harbor Program income consists of outsourced support to other financial

institutions providing banking to the cannabis industry whose income is recognized on the basis of usage as per the agreements.

income consist of interest earned on deposits with the Federal Reserve Bank pursuant to an investment servicing agreement with PCCU.

income consist of interest earned on deposits with the Federal Reserve Bank pursuant to the commercial alliance agreement with PCCU.

Loan interest income consist of interest earned on both direct and indemnified loans pursuant to a commercial alliance agreement with

Deferred underwriter fee

connection with the business combination (refer to Note 3), the Company executed a note on September 28, 2022 with EF Hutton related to

PIPE financing under which the Company was obligated to pay 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 Company made the payment of its first

installment of $ 715,750 and defaulted on the remaining outstanding amounts.

The outstanding balance of the note on December 31, 2022

was $ 1,450,500 .

On March 13, 2023, the Company and EF Hutton entered into a settlement agreement pursuant to which the Company paid

EF Hutton in full settlement of the amount due and the difference of $ 900,500 has

been accounted for in the “Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders’

connection with the business combination (refer to Note 3), the Company executed a note on September 28, 2022 with EF Hutton related

to PIPE financing under which the Company was obligated to pay 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.

Company made the payment of its first installment of $ 715,750 and defaulted on the remaining outstanding amounts.

The outstanding balance

of the note on December 31, 2022 was $ 1,450,500 .

On March 13, 2023, the Company and EF Hutton entered into a settlement agreement pursuant

to which the Company paid $ 550,000 to EF Hutton in full settlement of the amount due and the difference of $ 900,500 has been accounted

for in the “Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity.”

Commitments and contingencies

Company has issued an irrevocable Letter of Credit in favor of AFCO Credit Corporation (“AFCO”),

for an aggregate amount of US $ 750,000 , which can be drawn in the case of following events:

Company continues to be in default, after 10 days’ written notice, in the payment of

any sums due to AFCO under a premium finance agreement dated on or about October 20, 2022,

case concerning the Company has been filed under title 11 of the United States Code and that,

not more than 95 days before that case commenced, AFCO received loan payments amounting to

not less than (total of payments received in the 95-day period prior to filing of the bankruptcy

case), and AFCO is drawing an amount equal to the stated sum of the loan payments so received.

Company is involved in, or has been involved in, arbitrations or various other legal proceedings

that arise from the normal course of its business.

The ultimate outcome of any litigation

is uncertain, and either unfavorable or favorable outcomes could have a material impact on

the Company’s results of operations, balance sheets and cash flows due to defense costs,

and divert management resources.

The Company cannot predict the timing or outcome of these

claims and other proceedings.

connection with the Company’s initial public offering (“IPO”), the Company

entered into a registration rights agreement dated June 23, 2021 with the Sponsor and the

individuals serving as directors and executive officers of the Company at the time of the

Pursuant to this registration rights agreement, the Company has agreed to register for

resale upon the expiration of the applicable lock-up period the Company securities acquired

by the Sponsor and such individuals in connection with the organization of the Company and

a period beginning on June 28, 2021 and ending 12 months from the closing of the Business

Combination, the Company has 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)I(i), such right of first refusal shall not have a duration of more than three

years from the effective date of our Registration Statement.

Company has issued an irrevocable Letter of Credit in favor of AFCO Credit Corporation (“AFCO”), for an aggregate amount

of US $ 750,000 , which can be drawn in the case of following events:

Company continues to be in default, after 10 days’ written notice, in the payment of any sums due to AFCO under a premium finance

agreement dated on or about October 20, 2022, or

case concerning the Company has been filed under title 11 of the United States Code and that, not more than 95 days before that case

commenced, AFCO received loan payments amounting to not less than (total of payments received in the 95-day period prior to filing

of the bankruptcy case), and AFCO is drawing an amount equal to the stated sum of the loan payments so received.

Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course

of its business.

The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material

impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert management resources.

The Company cannot predict the timing or outcome of these claims and other proceedings.

connection with the Company’s initial public offering (“IPO”), the Company entered into a registration rights agreement

dated June 23, 2021 with the Sponsor and the individuals serving as directors and executive officers of the Company at the time of

Pursuant to this registration rights agreement, the Company has agreed to register for resale upon the expiration of the

applicable lock-up period the Company securities acquired by the Sponsor and such individuals in connection with the organization

of the Company and the IPO.

a period beginning on June 28, 2021 and ending 12 months from the closing of the Business Combination, the Company has 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)I(i), such right of

first refusal shall not have a duration of more than three years from the effective date of our Registration Statement.

Earnings Per Share

11 unchanged sentences

of Earning Per Shares, Basic and Diluted

June 30, 2023

$ ( 17,604,567 )

$ ( 19,018,014 )

Weighted average shares outstanding – basic

2 unchanged sentences

Diluted net loss per share

Weighted average shares calculation

Company public shares

Company initial stockholders

PCCU stockholders

Shares issued for abaca acquisition

Restricted stock units issued

Conversion of preferred stock

Weighted average shares outstanding

share-based equity awards were excluded from the computation of dilutive loss per share because inclusion of these awards would have

2 unchanged sentences

of Awards Excluded

June 30, 2023

Share based payments

15 unchanged sentences

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.

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.

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.

trading value of the common stock combined with preferred shareholders electing to convert

their preferred shares to common stock triggered a lower reset price embedded in the forward

purchase agreement, or FPA.

As of December 31, 2022, the Company had already called a special

meeting to lower the make-whole price under the preferred share purchase agreement to $ 1.25 /share.

The Company, majority common shareholders and the preferred investors had entered into a

voting agreement whereby the vote to approve the $ 1.25 /share make-whole price was secured.

Knowing the Company would ultimately be issuing shares to the preferred stockholders with

a make whole issuance at $ 1.25 /share compelled the company has recognized a reset price under

the terms of the FPA of $ 1.25 /share.

These events significantly reduced the FPA receivable

to approximately $ 4.6 million, from approximately $ 37.9 million reported at the end of the

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.

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.

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.

trading value of the common stock combined with preferred shareholders electing to convert their preferred shares to common stock

triggered a lower reset price embedded in the forward purchase agreement, or FPA.

As of December 31, 2022, the Company had already

called a special meeting to lower the make-whole price under the preferred share purchase agreement to $ 1.25 /share.

majority common shareholders and the preferred investors had entered into a voting agreement whereby the vote to approve the $ 1.25 /share

make-whole price was secured.

Knowing the Company would ultimately be issuing shares to the preferred stockholders with a make whole

issuance at $ 1.25 /share compelled the company has recognized a reset price under the terms of the FPA of $ 1.25 /share.

significantly reduced the FPA receivable to approximately $ 4.6 million, from approximately $ 37.9 million reported at the end of the

September 2022 quarter.

The loss in value resulted not only in a compression of the balance

sheet, but also $ 42.3 million charge to other expense on the statement of operations in the

fourth quarter of 2022.

The loss in value resulted not only in a compression of the balance sheet, but also $ 42.3 million charge

to other expense on the statement of operations in the fourth quarter of 2022.

reconciliation statement of the common stock held by the parties are as follows:

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(September 28, 2022)

Share sold during

Shares sold during

September 29, 2022

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December 31, 2022

Share sold during the three months

March 31, 2023

Shares sold during the six months.

Ended June 30, 2023

June 30, 2023

Opening Shares

2 unchanged sentences

and Private Placement Warrants

of March 31, 2023, and December 31, 2022, the Company has 5,750,000 Public warrants and 264,088 Private Placement Warrants.

of June 30, 2023, and December 31, 2022, the Company has 5,750,000 Public warrants and 264,088 Private Placement Warrants.

Public and Private Placement Warrants may only be exercised for a whole number of shares.

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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 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;

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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

private placement warrants are identical to the public warrants, except that the private placement warrants and the Class A Common Stock

issuable upon the exercise of the private placement warrants were not transferable, assignable or saleable until 30 days after the completion

of a Business Combination, subject to certain limited exceptions.

issuable upon the exercise of the private placement warrants were not transferable, assignable or saleable, subject to certain limited exceptions.

Additionally, the private placement warrants are exercisable on a cashless

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redeemable by the Company and exercisable by such holders on the same basis as the public warrants.

of March 31, 2023 and December 31, 2022, the Company has 1,022,500 PIPE Warrants.

of June 30, 2023 and December 31, 2022, the Company has 1,022,500 PIPE Warrants.

PIPE Warrants have an exercise price of $ 11.50 per share of Class A Common Stock to be paid in cash (except if the shares underlying

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1 – Observable, unadjusted quoted prices in active markets

2 – Inputs other than quoted prices included in Level 1 that are directly or indirectly

observable for the asset or liability

3 – Unobservable inputs with little or no market activity that require the Company

to use reasonable inputs and assumptions

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

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.

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and Liabilities Reported at Fair Value on a Recurring Basis

warrants are recorded at fair value on a recurring basis.

The Company obtains dealer quotes, of Level 1 inputs, based on observable data

to value these warrants.

Placement Warrants

Placement Warrants are recorded at fair value on a recurring basis.

The Company value these derivatives based on third party reports

for Level 3 inputs.

Level 3 inputs, based on observable data to value these derivatives.

Warrants are recorded at fair value on a recurring basis.

The Company value these derivatives based on third party reports for Level

Level 3 inputs, based on observable data to value these derivatives.

Public warrants are recorded

at fair value on a recurring basis.

The Company obtains exchange traded price, of Level 1 inputs, based on observable data to value these

Private Placement Warrants:

Private Placement Warrants are

recorded at fair value on a recurring basis.

The Company values these Level 3 derivatives using observable data (Black-Scholes model).

PIPE Warrants:

PIPE Warrants are recorded at

fair value on a recurring basis.

The Company values these Level 3 derivatives using observable data (Black-Scholes model).

purchase option derivatives:

purchase option derivatives are recorded at fair value on a recurring basis.

The Company values these derivatives based on third party

reports for Level 3 inputs.

Level 3 inputs, based on observable data to value these derivatives.

Forward purchase option derivatives

are recorded at fair value on a recurring basis.

The Company values these Level 3 derivatives using observable data (Black-Scholes model).

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 March 31, 2023 and December 31,2022:

in the fair value hierarchy on June 30, 2023 and December 31,2022:

of Fair Value Assets and Liabilities Measured on Recurring Basis

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Liabilities,fair value

December 31, 2022:

Total Fair Value

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Measured at Fair Value on a Nonrecurring Basis

were no assets or liabilities recorded at fair value on a nonrecurring basis for the three months periods ended March 31, 2023 and for

the year ended as on December 31, 2022, respectively.

Assets that are measured at fair value on a nonrecurring

basis primarily comprises of property, plant and equipment, right-to-use assets, finite lived intangible assets and goodwill.

does not record these at fair value on a recurring basis, however, the carrying value of the assets may be reduced to fair value when

the Company determines that impairment has occurred.

At June 30, 2023, The Company’s goodwill and

finite lived intangible assets were measured at fair value on a nonrecurring basis as result of impairment triggered due to termination

of the Master Services and Revenue Sharing Agreement with Central Bank.

The fair value of goodwill was measured using third-party valuation

models with an equally weighted combination of both an income and market approach.

The income approach consists of a discounted cash flow

model which is based on the present value of projected cash flows.

The discounted cash flow model reflects the Company’s assumptions

regarding revenue growth rates, risk-adjusted discount rate, terminal period growth rate, economic and market trends and other expectations

about the anticipated operating results of the Company.

Under the market approach, the Company estimates the fair value based on market

multiples of revenues derived from comparable publicly traded companies with operating characteristics similar to the Company.

to evaluate the fair value of the finite-lived intangible assets, a royalty method was applied for market related intangibles, a discounted

cash flow method applied for customer relationships and a cost to re-create method for developed technologies.

(Refer to note 5 - Goodwill

and Finite-lived intangible assets).

The following table presents the carrying amounts

and fair values of financial instruments measured on a nonrecurring basis, by the level of valuation inputs in the fair value hierarchy,

as of the dates indicated:

As on June 30, 2023

Fair value measurement using

Market related intangible assets

Customer relationships

The following table provides quantitative information

regarding Level 3 fair value measurements inputs as it relates to the finite lived intangible assets as of their measurement dates:

As on June 30, 2023

Market related

intangible assets

relationships

Discount rate

Estimated useful life

were no assets or liabilities recorded at fair value on a nonrecurring basis for the six months ended June 30, 2022.

Value of Financial Instruments

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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

on March 31, 2023

of Carrying Amounts and Fair Values of Financial Instruments

As on June 30, 2023

Fair value measurement using

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Forward purchase derivative

on December 31, 2022

As on December 31, 2022

Fair value measurement using

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Forward purchase derivative

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

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

presented in the following table:

of Fair Value Assets Measured on Recurring Basis

For the three months ended

March 31, 2023

For the six months ended

June 30, 2023

Balance at the beginning of the period

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Balance at the end of the period

private placement warrants and PIPE warrants are measured at fair value using a Black-Scholes model and Black-Scholes-Merton model, respectively.

As of March 31, 2023, these warrants were valued based on third party reports for Level 3 inputs.

Level 3 inputs, based on observable

data to value these derivatives.

private placement warrants and PIPE warrants are measured at fair value using a Black-Scholes model.

As of June 30, 2023, these warrants

were valued for Level 3 inputs, which are based on observable data to value these derivatives.

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

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of Level 3 Fair Value Measurement Inputs

on March 31, 2023

As on June 30, 2023

PIPE Warrants

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PIPE Warrants

Private placement warrants

Private Placement

Exercise price

2 unchanged sentences

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

derivatives as of their measurement dates on March 31,2023 and December 31,2022:

derivatives as of their measurement dates on June 30,2023 and December 31,2022:

Level 3 Fair Value Measurements Inputs

June 30, 2023

Expected term (years)

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Risk-adjusted discount rate

For the three months ended March

31, 2023, the Company recorded income tax benefit of $ 609,277 for continuing operations.

The effective tax rate of 30.12 % for the three

months ended March 31, 2023, varied from the statutory United States federal income tax rate of 21.0 % primarily because of state

income taxes, net of the federal benefit, and adjustments to the fair market value of warrant liabilities.

The Company has net deferred tax assets of $ 51,593,302 and $ 42,608,596 as of December 31, 2022, and March 31, 2023,

respectively.

The Company considers their deferred tax assets to be realizable and has not established a valuation allowance, as it is

considered more likely than not that the Company will utilize deferred tax assets in future periods through future taxable income.

The Company recognizes income tax benefits

from uncertain tax positions where the realization of the ultimate benefit is uncertain.

As of both March 31, 2023, and December 31,

2022, the Company has no unrecognized income tax benefits.

Company offers to all employees a tax-qualified retirement contribution plan, with the Company’s 100 %

matching contribution up to 4 %

of a participant’s eligible compensation, The total benefits package supports the employees’ well-being to achieve a

healthy and financial lifestyle goal.

The Company’s consolidated matching contributions for the three months ended on March

31, 2023, and March 31, 2022, amounting to $ 20,663

and $ 3,942 ,

respectively.

the six months ended June 30, 2023, the Company recorded income tax benefit of $ 1,261,424 for continuing operations.

The effective tax

rate of 6.22 % for the six months ended June 30, 2023 varied from the statutory United States federal income tax rate of 21.0 % primarily

due to the effect of state income taxes, net of the federal benefit, goodwill impairment for book purposes and adjustments to the fair

market value of warrant liabilities.

The Company has net deferred tax assets of $ 51,593,302 and $ 43,260,743 as of December 31, 2022 and

June 30, 2023, respectively.

The Company considers their deferred tax assets to be realizable and has not established a valuation allowance,

as it is considered more likely than not that the Company will utilize deferred tax assets in future periods through future taxable income.

Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain.

both December 31, 2022 and June 30, 2023, the Company has no unrecognized income tax benefits.

Company offers to all employees a tax-qualified retirement contribution plan, with the Company’s 100 % matching contribution up

to 4 % of a participant’s eligible compensation.

The Company’s consolidated matching contributions for the three and six months

ended June 30, 2023, amounting to $ 13,426 and $ 34,089 , and June 30, 2022, amounting to $ 13,640 and $ 25,430 , respectively.

Share based compensation

Equity Incentive Plan

compensation expense recognized for the three months ended March 31, 2023 and March 31, 2022 totaled $ 1.6 million and $ 0 respectively.

compensation expense recognized for the three months ended June 30, 2023, and June 30, 2022, are $ 958,261 and $ 0 respectively and six

months ended June 30, 2023 and June 30, 2022 totaled $ 2,529,042 and $ 0 respectively.

2022 Plan was approved by the Company’s stockholders on June 28, 2022.

The 2022 Plan permits the grant of incentive stock

options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and

performance compensation awards.

The Company has not issued stock appreciation rights, restricted stock, stock bonus awards, or

performance compensation awards in the three months ended March 31, 2023 and March 31, 2022.

In conjunction with the 2023 Plan, as

of March 31, 2023, the Company had granted stock options and restricted stock units which are described in more detail

The 2022 Plan permits the grant of incentive stock options,

non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance

compensation awards.

The Company has not issued stock appreciation rights, restricted stock, stock bonus awards, or performance compensation

awards in the six months ended June 30, 2023, and June 30, 2022.

In conjunction with the 2023 Plan, as of June 30, 2023, the Company

had granted stock options and restricted stock units which are described in more detail below.

options are awarded to encourage ownership of the Company’s common stock by employees and to provide increased incentive for employees

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generally have a 10 -year contractual term.

assumptions used to determine the fair value of options granted in the three months ended March 31, 2023, using the Black-Scholes-Merton

assumptions used to determine the fair value of options granted in the six months ended June 30, 2023, using the Black-Scholes-Merton

model are as follows:

of Fair Value of Options Granted Black-Scholes-Merton Model

interest rate

volatility (weighted-average and range, if applicable)

Dividend yield

Risk-free interest rate

3.62 % to 4.23 %

Expected volatility (weighted-average and range, if applicable)

Expected term

6.00 to 6.25 years

expected term of the options granted is calculated based on the simplified method by taking average of contractual term and vesting period

The shares of the Company were listed on the stock exchange for a limited period of the time and the share price has also

dropped significantly from the date of listing, based on these factors the Management has considered the expected volatility at 100 %

for the current period.

The risk-free interest rate used is the current yield on US Treasury notes with a term equal to the expected

term of the options at the grant date.

The expected dividend yield is based on annualized dividends on the underlying share during the

expected term of the option.

A summary of the Company’s stock option activities

and related information for the three months ended March 31, 2023 is as follows:

The shares of the Company have been listed on the stock exchange for a limited period of the time and the share price has also

dropped significantly from the date of listing, based on these factors, Management has considered the expected volatility at 100 % for

the current period.

The risk-free interest rate used is the current yield on US Treasury notes, with a term equal to the expected term

of the options at the grant date.

The expected dividend yield is based on annualized dividends on the underlying share during the expected

term of the option.

summary of the Company’s stock option activities and related information for the six months ended June 30, 2023, is as follows:

Schedule of Stock Option and Related Information

of Stock Option

Average Grant

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Cancelled / Forfeited

March 31, 2023

March 31, 2023, there were no unrecognized compensation costs related to non-vested stock options to be recognized.

June 30, 2023

June 30, 2023, there were no unrecognized compensation costs related to non-vested stock options to be recognized.

Share based compensation

did not impact on Company’s cash flow in three months ended March 31, 2023 or year ended December 31, 2022.

did not impact on Company’s cash flow in six months ended June 30, 2023 or year ended December 31, 2022.

Stock Units (“RSUs”)

summary of the Company’s RSU activities and related information for the three months ended March 31, 2023 is as follows:

summary of the Company’s RSU activities and related information for the six months ended June 30, 2023, is as follows:

of Restricted Stock Units

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Cancelled / Forfeited

March 31, 2023

fair value as of the respective vesting dates of RSUs that vested during the three months ended March 31, 2023 and 2022 was $ 857,530

As of March 31, 2023, there is $ 404,692 of unrecognized share-based compensation expense related to RSU awards.

June 30, 2023

fair value as of the respective vesting dates of RSUs that vested during the six months ended June 30, 2023 and December 31, 2022 was

$ 1,209,838 and $ 0 .

As of June 30, 2023, there is $ 368,088 of unrecognized share-based compensation expense related to RSU awards.

Subsequent events

There were not any material subsequent events that

occurred after the balance sheet date of March 31, 2023 through the date of this report.

There were no material subsequent events that occurred

after the balance sheet date of June 30, 2023, through the date of this report, except for the following:

July 20, 2023, Central Bank and the Company agreed that the Master Services and Revenue Sharing Agreement will terminate, effective

October 1, 2023.

Under the agreement, Company provides expertise and intellectual property that allows the Company and Central Bank

to jointly serve the deposit banking needs of cannabis related businesses primarily located in Arkansas.

The agreement was

originally executed by Rockview Digital Solutions, LLC, which was acquired by the Company in October 2022.

The parties have agreed

that termination will be effective as of October 1, 2023, allowing for an orderly transition that will have minimal impact on

customer operations.

The agreement, originally executed in 2018, was renewable on an annual basis and did not include any material

early termination penalties.

This is the event that triggered the impairment analyses at Note 5.

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