What changed in this filing

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Item 1A. Risk Factors

2024-04-01 compared with 2023-04-14 · 5 added, 1105 removed, 0 unchanged (100% of the section changed)

are subject to risks and uncertainties that could potentially negatively impact our business, financial conditions, results of operations

and cash flows.

This section contains a description of the risk and uncertainties identified by management that could, individually or

in combination, harm our business, results of operations, liquidity and financial condition, as well as our financial instruments and

our securities.

In evaluating us and our business and making or continuing an investment in our securities, you should carefully consider

the risks described below as well as other information contained in this Form 10-K and any risk factors and uncertainties discussed in

our other public filings with the SEC under the caption “Risk Factors”.

We may face other risks that are not contained in

this Form 10-K, including additional risk that are not presently known, or that we presently deem immaterial.

This Form 10-K and the

risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in

such forward-looking statements.

Please refer to the section in this Form 10-K titled “Cautionary Note Regarding Forward-Looking

Statements” for additional information regarding forward-looking statements.

RELATED TO THE COMPANY’S BUSINESS

Substantially

all of the Company’s CRB customers’ deposits are currently held at PCCU, which means that our growth will be restricted until

we can enter into agreements with additional financial institutions.

Substantially

all of the deposits of the Company’s CRB customers are currently held at PCCU, which constitutes

approximately 60% of PCCU’s total assets.

Under the Second Amended and Restated Support Services Agreement, PCCU has agreed to

maintain its ratio of CRB-related deposits to total assets to 60% or greater unless a lower ratio is required by applicable regulatory

or policy requirements.

There can be no assurances that PCCU will be able to maintain this ratio of CRB-related deposits to total assets,

or that its total assets will grow so as to permit its CRB deposits to grow.

Therefore, unless we are able to expand the number of financial

institutions at which deposits onboarded and monitored by the Company are held, our growth will be limited to the extent that PCCU’s

assets may grow, if at all.

Although under the Company’s Second Amended and Restated Account Servicing Agreement with PCCU, the

Company is not restricted from onboarding and monitoring deposits at other financial institutions, there can be no assurances that we

will be able to expand the number of financial institutions with which we will onboard and monitor deposits or, if we are able to enter

into agreements with additional financial institutions, whether the terms of those agreements will be on comparable terms.

if PCCU were to terminate either or both of the Second Amended and Restated Support Services Agreement or the Second Amended and Restated

Account Servicing Agreement, our operations would be materially impaired if we were not able to obtain from third parties the services

the Company receives from PCCU under the Second Amended and Restated Support Services Agreement or if we were not able to enter into

arrangements with other financial institutions to host the deposits of the Company’s customers.

Company has only recently begun its loan program, which may make it more difficult for the Company to compete with other lenders, brokers

and servicers.

Company, through its predecessor entity, began offering loan services through PCCU to CRBs in 2020.

As a result, the Company’s

loan program may be subject to factors inherent in a start-up business, such as competing with existing entities who have been

offering loans and other lending-related services for longer than the Company has, ensuring that the Company’s systems are

compliant with applicable laws and regulations, and ensuring that the Company’s systems and personnel are able to handle the

anticipated pipeline of loan applications.

The time to fully ramp-up the Company’s lending and loan servicing operations may

be more difficult for the Company to compete against lenders and brokers that have been lending to CRBs for a longer period of

Company’s loan program is currently substantially dependent on PCCU, currently the largest funding source for the Company’s

loans, which may limit the types, terms and amounts of loans that we may offer.

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

with the exception of one $500,000 loan funded directly by the Company during April 2022, all of the Company’s loans have been funded

Under PCCU’s loan policy for loans to CRBs, PCCU’s board has approved aggregate lending limits at the lesser of

1.3125 times PCCU’s net worth or 65% of total CRB deposits.

Concentration limits for the deployment of loans are further categorized

as (i) real estate secured, (ii) construction, (iii) unsecured and (iv) mixed collateral with each category limited to a percentage of

PCCU’s net worth.

As of December 31, 2022, PCCU’s net worth was $133.23 million and CRB-related deposits were $161.14 million.

As of December 31, 2021, PCCU’s net worth was $61.9 million and CRB-related deposits were $146.3 million.

In addition, loans to

any one borrower or group of associated borrowers are limited by applicable NCUA regulations to the greater of $100,000 or 15% of PCCU’s

As a result, our ability to expand our loan program will be limited by PCCU’s growth unless we are able to expand our

capacity to make loans directly or find other financial institutions and lenders willing to make loans to CRBs.

In addition, even if

we are able to identify additional lenders, we may not be able to negotiate comparable terms.

Company may face competition from traditional financial institutions and other lenders and service providers for its lending and other

services, which may adversely affect the Company’s ability to achieve our business goals and its results of operations.

Company operates in an increasingly competitive market for its lending, compliance, customer intake and management services.

Our competitors

for our compliance and customer-focused services include both traditional financial institutions and fintech companies.

Lending competitors

include both private investment funds and public REITs focused on the cannabis industry, as well as traditional financial institutions

that have begun offering loans to CRBs.

Many of our competitors are substantially larger and have considerably greater financial, technical

and marketing resources than we do.

In particular, because traditional financial institutions may have a cost of funds more comparable

to ours, we may face greater competition in providing loans to CRBs.

There can be no assurances that we will be able to successfully

compete against these competitors, which may adversely affect the Company’s ability to achieve its business goals and its results

of operations.

soundness of our financial institution clients could adversely affect us.

our clients are other financial institutions, our ability to grow our operations and client base could be adversely affected by the actions

and commercial soundness of other financial institutions for whom we provide services or who might seek our services.

Financial institutions

are interrelated as a result of trading, clearing, counterparty or other relationships.

As a result, defaults by, or even rumors or questions

about, one or more financial institutions, or the banking and financial services industry generally, have led to market-wide liquidity

problems and could lead to losses, defaults or regulatory actions against the financial institutions with which we do business or with

whom we may seek to provide services.

There can be no assurances that the occurrence of any such losses, defaults or regulatory actions

would not materially and adversely affect our results of operations.

Company intends to focus its lending to CRBs on commercial loans, which could increase the risk in the Company’s loan portfolio,

resulting in higher provisions for loan losses and adversely affecting the Company’s results of operations.

Company intends to focus its lending efforts on commercial loans to CRBs, including commercial real estate loans, commercial business

secured by other assets such as equipment or accounts receivable, and unsecured loans.

Historically, these loans have had higher risks

than other types of loans, such as loans secured by residential real estate.

For example, repayment of commercial real estate loans and

commercial business loans are dependent on income being generated by the rental property or business in amounts sufficient to cover operating

expenses and debt service.

If the borrowers of these types of loans default, the collateral may not be liquidated as easily and may involve

expensive workout techniques.

Commercial lending may also involve large balances of loans to single borrowers or related groups of borrowers.

If these loans become nonperforming, The Company may have to increase its reserves for loan losses, which would negatively affect its

results of operations.

addition, loans secured by commercial real estate may deteriorate in value during the time the credit is extended.

Real estate values

and the real estate markets are generally affected by a variety of factors including, but not limited to, changes in economic conditions,

fluctuations in interest rates, the availability of credit, changes in tax laws and other statutes, regulations, and policies, and acts

Weakening of the real estate market could result in an increase loan defaults and a reduction in the value of the collateral

securing those loans, which in turn could adversely affect our profitability and asset quality.

If the collateral securing a loan is

liquidated to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected.

to CRBs secured by properties and assets that are, and will be, subject to extensive regulations, such that if such collateral was foreclosed

upon those regulations may result in significant costs and materially and adversely affect the Company’s business, financial condition,

liquidity and results of operations.

loans presently funded by our financial institution clients, and the loans that are expected to be made in the future, may be secured

by properties and assets that are, and will be, subject to various state and local laws and regulatory requirements, and we, our client

financial institutions, or a third party would be subject to such requirements if such collateral was foreclosed upon.

State and local

property regulations may restrict the use of collateral or the ability to foreclose on the collateral.

Among other things, these restrictions

may relate to cultivation of cannabis, the use of water and the discharge of waste water, fire and safety, seismic conditions, asbestos-cleanup

or hazardous material abatement requirements.

Neither the Company, its financial institution clients, nor third parties engaged to assist

with the liquidation or foreclosure process will take possession of cannabis inventory, cannabis paraphernalia or other cannabis-related

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

Applicable regulations under state law that govern

CRBs generally do not permit the taking of title to real estate involved in commercial sales of cannabis, whether through foreclosure

or otherwise, without prior regulatory approval.

The sale of a license or other realization of the value of licenses also requires the

approval of state and local regulatory authorities.

While the loan agreements and related security agreements provide for foreclosure

remedies, receivership remedies and/or other remedies that would permit the sale or other realization of real property collateral, the

regulatory requirements and statutory prohibitions related to real property used in cannabis-related operations may cause significant

delays or difficulties in realizing upon the expected value of such real property collateral.

We make no assurance that existing regulatory

policies will not materially and adversely affect the value of such collateral, or that additional regulations will not be adopted that

would increase such potential material adverse effect.

The negative affect on such collateral could have a material adverse effect on

the Company’s business, financial condition, liquidity and results of operations.

Company is obligated to indemnify PCCU for all losses resulting from defaults of the CRB loans made by PCCU to the Company’s customers.

to the Company’s Loan Servicing Agreement with PCCU, the Company has agreed to indemnify PCCU for all losses resulting from the

defaults of loans made by PCCU to CRB customers.

This means that the Company will be solely responsible for all costs of negotiating

forbearances or refinancing the defaulted loans, loss mitigation, and collection efforts, whether conducted directly or by an affiliate

or third party, including realizing the proceeds from any collateral as a result of a sale of collateral by the borrower or through a

third party engaged to assist the borrower n the liquidation process.

The Company’s indemnity is subordinate to PCCU’s other

means of collecting on the loans including repossession of collateral, recourse against personal and/or corporate guarantors and other

default remedies available in the loan agreements.

Since borrowers are not parties to the agreement between the Company and PCCU, any

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

recoveries from the borrowers.

As a result, we will be required to establish loan loss reserves relating to these loans, even though

we are not the funding lender.

Because these loans will not be an asset on our balance sheet, the loan loss reserves are anticipated

to be reflected as a liability in our financial statements, versus a contra-asset.

the Company’s allowance for loan losses is not sufficient to cover actual loan losses for loans held in the Company’s portfolio

or for which it was otherwise responsible, the Company’s results of operations and financial condition will be negatively affected.

the event loan customers do not repay their loans according to their terms and the proceeds of liquidating the collateral securing these

loans is insufficient to satisfy any remaining loan balance, the Company may experience significant indemnity losses associated with

Such credit risk is inherent in the lending business, and failure to adequately assess such credit risk could have a material

adverse effect on our financial condition and results of operations.

The Company will be required to establish loan loss reserves for

all loans for which it is the lender, for all the Company originated loans made by PCCU to CRB customers, and in other instances where

it may be contractually liable to indemnify a lender for loan losses.

The determination of the appropriate level of the allowance for

loan losses involves a high degree of subjectivity and judgment and will require the Company to make significant estimates of current

credit risks and future trends, all of which may undergo material changes.

Although we have agreed with PCCU in the Loan Servicing Agreement

that we will maintain or have access to sufficient liquidity to satisfy our indemnity obligations to PCCU under the Loan Servicing Agreement,

we cannot be certain that our loan loss reserves will be adequate over time to cover losses in PCCU-funded loans or loans funded by other

funding sources in the Company’s portfolio because of unanticipated adverse changes in the economy, market conditions or events

adversely affecting specific customers, industries or markets, or borrowers repaying their loans.

If the Company’s loan loss reserves

are not adequate, our business, financial condition, including our liquidity and capital, and results of operations could be materially

adversely affected.

In addition, charge-offs of defaulted loans in future periods that exceed the related reserves may require us to

add to our loan loss reserves, which would result in a decrease in net income and capital, and could have a material adverse effect on

our financial condition and results of operations.

assets of CRB borrowers may not be used as collateral or transferred due to applicable state laws and regulations governing the cannabis

industry, and such restrictions could negatively impact our profitability.

state that has legalized cannabis in some form has adopted its own set of laws and regulations that differ from one another.

In particular,

laws and regulations differ among states and even localities regarding the collateralization or transferability of cannabis-related assets,

such as cannabis licenses, cannabis inventory, and ownership interests in licensed cannabis companies.

Some state laws and regulations

where borrowers operate may prohibit the collateralization or transferability of certain cannabis-related assets.

Other states may allow

the collateralization or transferability of cannabis-related assets, but with restrictions, such as meeting certain eligibility requirements,

utilization of state receiverships, and/or upon approval by the applicable regulatory authority.

Prohibitions or restrictions on the

ability to take possession of certain cannabis-related assets securing the loans of our borrowers could have a material adverse effect

on the Company’s business, financial condition, liquidity and results of operations.

In addition, because the sales of such assets

may be forced upon the borrower when time may be of the essence and available to a limited number of potential purchasers, the sales

prices may be less than the prices obtained with more time in a larger market.

of security interests on loans to CRBs that are in default could result in losses.

general, a foreclose procedure is required to liquidate collateral provided on loans in default.

Alternatively, a borrower may be required

under the terms of the loan documents to dispose of certain business assets to satisfy the loan commitments.

Foreclosure processes and

other liquidations of collateral are often lengthy and expensive.

Results of foreclosure and liquidation processes may be uncertain,

as claims may be asserted by the relevant borrower or by other creditors or investors in such borrower that interfere with the foreclosure

or liquidation process, such as claims that challenge the validity or enforceability of the loan or the priority or perfection of the

security interests.

Borrowers may resist foreclosure actions or may refuse to comply with loan requirements by asserting numerous claims,

counterclaims and defenses against our client financial institutions or us, including, without limitation, lender liability claims and

defenses, even when the assertions may have no merit, in an effort to prolong the foreclosure action or delay the liquidation of collateral

and seek to force us or the financial institution into a modification or buy-out of the loan for less than the amount owed.

Additionally,

the transfer of certain collateral to us or our financial institution clients may be limited or prohibited by applicable laws, regulations

and/or public company listing standards.

See “ Loans to CRBs secured by properties and assets that are, and will be, subject

to extensive regulations, such that if such collateral was foreclosed upon those regulations may result in significant costs and materially

and adversely affect the Company’s business, financial condition, liquidity and results of operations.

” For transferable

collateral, foreclosure, or other remedies available may be subject to certain laws and regulations, including the need for regulatory

disclosure and/or approval of such transfer.

If federal law were to change to permit cannabis companies to seek federal bankruptcy protection,

the applicable borrower could file for bankruptcy, which would have the effect of staying the foreclosure actions or liquidation processes

and delaying the foreclosure or liquidation processes and potentially result in reductions or discharges of debt owed.

Foreclosure or

forced liquidation may create a negative public perception of the collateral property, resulting in a diminution of its value.

the liquidation proceeds upon sale of the underlying real estate may not be sufficient to repay the loan in full.

Any costs or delays

involved in the foreclosure or a liquidation of the underlying property will reduce the net proceeds realized and, thus, increase the

potential for loss.

In the event a borrower defaults on any of its loan obligations and such debt obligations are equitized, neither

the Company nor its financial institution clients will hold such equity interests, which may result in additional losses on loans to

rate volatility could significantly reduce our profitability, business, financial condition, results of operations and liquidity.

earnings will depend in part on the relationship between the yield on our earning assets, primarily loans and investment securities,

and the cost of funds, primarily borrowings.

This net interest margin is susceptible to significant fluctuation and is affected by economic

and competitive factors that influence the yields and rates for, and the volume and mix of, our interest-earning assets and interest-bearing

Interest rate risk is exposure to movement in interest rates that could have an adverse impact on our net interest income.

Interest rate risk arises from the imbalance in the repricing, maturity and/or cash flow characteristics of assets and liabilities.

neither the Company nor the Company currently have any borrowings from third parties, to the extent that either incur indebtedness that

will be subject to interest rate risk to the degree that our interest-bearing liabilities reprice or mature more slowly or more rapidly

or on a different basis than our interest earning assets.

In addition, increases in interest rates could reduce the pipeline of borrowers

desiring to obtain loans from us or through our loan program if these borrowers seek alternate sources of capital.

As a result, fluctuations

in interest rates could have a material adverse impact on our business, financial condition, results of operations or liquidity.

Company may become subject to regulation in additional states as it expands its operations.

Company was previously considered a credit union service organization (“CUSO”) and as a result of its status as a Colorado

limited liability company and its relationship with PCCU, a Colorado-chartered credit union, the Company is subject to various Colorado

and federal laws, rules and regulations.

Although the Company is no longer considered a CUSO following the closing of the Business Combination,

the Company may become subject to the laws of additional states as it expands its operations by opening offices, maintaining employees

or otherwise establishing a substantial footprint in additional states.

Company is dependent on PCCU for certain administrative services.

to the Second Amended and Restated Support Services Agreement, PCCU has been providing the Company with certain administrative services,

including services relating to information technology and systems, accounting and financial services, human resources and marketing.

The Company may also request that certain PCCU employees be available to the Company on a shared basis to perform duties for the Company.

For these services, the Company paid PCCU a monthly fee equal to $30.96 per CRB account in addition to reimbursement of direct

Under the Second Amended and Restated Support Services Agreement, PCCU is also entitled to retain 25% of all investment income

derived from CRB cash and investments.

We are building out our team so that these operational functions will be handled internally.

we believe the fees due to PCCU under the Second Amended and Restated Support Services Agreement to be reasonable, these fees may result

in higher expenses than we would otherwise incur.

In addition, we may not be able to bring these functions in-house and, even if we are

able to do so, we may continue to rely on third parties for all or part of these functions.

Reliance on a third party, including PCCU,

may result in significant expenses and operational issues over which we will not have direct control.

or threatened public health crises, epidemics, or outbreaks, such as the outbreak of COVID-19, may have a material adverse effect on

the Company’s business, financial condition, and results of operations.

Company’s business operations and supply chains may be negatively impacted by regional or global public health crises, epidemics,

or outbreaks.

For example, in December 2019, a novel strain of coronavirus, now known as COVID-19.

The COVID-19 outbreak led governments

across the globe to impose a series of measures intended to contain its spread, including border closures, travel bans, quarantine measures,

social distancing, and restrictions on business operations and large gatherings.

While many of these measures have since been lifted,

should the United States experience a new outbreak of COVID-19 or another contagious disease, governments may impose new measures or

restrictions that may adversely impact the Company’s business, financial condition, and results of operations.

In addition, a significant

public health crisis, epidemic or outbreak of contagious disease in the human population may adversely affect the economies and financial

markets of many countries, including those in which the Company operates, resulting in an economic downturn that could affect the supply

or demand for the Company’s products and services.

information systems interruption or breach in security of the Company’s systems could adversely affect us.

Company relies on information technology and other computer resources to perform important operational and marketing activities as well

as to maintain its business and employee records and financial data.

The Company’s computer systems are currently hosted by PCCU

and are subject to damage or interruption from power outages, computer attacks by hackers, viruses, catastrophes, hardware and software

failures and breach of data security protocols by its personnel or third-party service providers.

Although the Company has implemented

administrative and technical controls and taken other actions to minimize the risk of cyber incidents and otherwise protect its information

technology, computer intrusion efforts are becoming increasingly sophisticated and even the controls that the Company has installed might

Further, many of these computer resources are provided to the Company or are maintained on the Company’s behalf by

third-party service providers pursuant to agreements that specify certain security and service level standards, but which are ultimately

outside of the Company’s control.

If the Company were to experience a significant period of disruption in information technology

systems that involve interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental

costs, which could adversely affect its business.

Additionally, security breaches of information technology systems could result in the

misappropriation or unauthorized disclosure of proprietary, personal and confidential information, including information related to employees,

counter-parties, and customers, which could result in significant financial or reputational damage and liability under data privacy laws

and regulations.

Company may not be successful in integrating acquisitions, expanding into new markets or implementing its growth strategies.

Company may suffer uninsured losses or suffer material losses in excess of insurance limits.

addition to difficulties with respect to claim assessment and liability and reserve estimation, some types of claims may not be covered

by insurance or may exceed applicable coverage limits.

The Company may also be responsible for applicable self-insured retentions with

respect to its insurance policies.

Furthermore, any product liability or warranty claims made against the Company, whether or not they

are viable, may lead to negative publicity, which could impact the Company’s reputation and future sales.

of the uncertainties inherent in litigation, we cannot provide assurance that the Company’s insurance coverage, indemnity arrangements

and reserves will be adequate to cover liability for any damages, the cost of litigation, or any other related expenses surrounding the

current claims to which the Company is subject or any future claims that may arise.

Such damages and expenses, to the extent that they

are not covered by insurance, could materially and adversely affect our consolidated financial statements and results.

adverse outcome in litigation to which the Company is or becomes a party could materially and adversely affect us.

Company is not aware of any pending litigation.

However, in the future, it may become subject to litigation, including claims relating

to its operations, breach of contract, securities offerings, relation to the cannabis industry, or otherwise in the ordinary course of

business or otherwise.

Some of these claims may result in significant defense costs and potentially significant judgments against the

Company, some of which are not, or cannot be, insured against.

We cannot be certain of the ultimate outcomes of any claims that may arise

in the future.

Resolution of these types of matters against the Company may result in significant fines, judgments or settlements, which,

if uninsured, or if the fines, judgments and settlements exceed insured levels, could adversely impact the Company’s earnings and

cash flows, thereby materially and adversely affecting us.

Litigation or the resolution of litigation may affect the availability or

cost of the Company’s insurance coverage, which could materially and adversely impact us.

Company identified material weaknesses in its internal control over financial reporting for the year ended December 31, 2022.

Such material

weaknesses could adversely affect the Company’s ability to report its results of operations and financial condition accurately

and in a timely manner.

noted above, the Company’s management is responsible for establishing and maintaining adequate internal control over financial

reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”)..

The Company’s management is likewise responsible for the evaluation of

the effectiveness of its internal controls and to disclose any changes and material weaknesses identified through such evaluation of

those internal controls.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,

such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented

or detected on a timely basis.

connection with the audit of the Company’s financial statements for the year ended December 31, 2022, the Company has identified

four (4) material weaknesses within its internal controls over financial reporting related to its Deferred Tax Asset, Going Concern ,

Revenue Recognition, and Complex Financial Instruments.

Refer to Item 9A of this document for additional details.

The Company has implemented

a plan to remediate these material weaknesses, through measures that include the following:

Deferred Tax Asset:

To alleviate this

material weakness, the Company has implemented a quarterly control to calculate and review

the deferred tax asset, evaluate the necessity for any valuation allowance, and reconcile

it to the general ledger.

To alleviate this material weakness, the Company has implemented a quarterly process with enhanced management review

controls to perform and review a going concern analysis and the adequacy of disclosures within the consolidated financial statements,

as applicable based on the results.

Revenue Recognition:

To alleviate this material

weakness, the Company will implement a monthly process with enhanced management review controls to perform and review revenue recognition.

Complex Financial Instruments:

this material weakness, the Company will implement a quarterly process with enhanced management review controls to perform and review

complex financial instruments.

the implementation of our remediation plans for each material weakness, we believe, in subsequent periods, these material weaknesses can

be remediated.

Completion of remediation does not provide assurance that our remediation or other controls will continue to operate

A failure to maintain effective internal controls over financial reporting could result in errors in its financial statements

that could require the Company to restate past financial statements, cause the Company to fail to meet its reporting obligations and

cause investors to lose confidence in the Company’s reported financial information, all of which could materially and adversely

affect the Company.

Risks Related to the Cannabis Industry

Company provides services to financial institutions that provide banking services to businesses in or ancillary to the state licensed

cannabis industry, which could expose us to additional liabilities and regulatory compliance cost and adversely impact our business,

operations, financial condition, brand and reputation.

Company provides deposit and lending services to financial institutions that desire to provide services to CRBs in states where cannabis

is legal for medical or full adult use.

Medical use cannabis, as well as recreational use businesses, are legal in numerous states and

the District of Columbia.

Cannabis remains a Schedule I drug under the Controlled Substances Act of 1970 (the “CSA”), however,

and the federal government has the authority to enforce the CSA regardless of whether cannabis is legal under state law.

Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) published guidance for financial

institutions servicing state legal cannabis businesses (the “FinCEN Guidance”).

The Company has implemented a comprehensive

control framework that includes written policies and procedures related to the on-boarding of such businesses and the monitoring and

maintenance of such business accounts at PCCU or other financial institutions that comport with the FinCEN Guidance.

Additionally, the

Company’s policies call for due diligence review of the cannabis business before the business is on-boarded, including, as applicable,

confirmation that the business is properly licensed and maintains the license in good standing in the applicable state.

The Company’s

services to PCCU or other financial institutions include the ongoing monitoring and of the business to determine if the business continues

to meet the requirements of the depositary institution.

we believe the Company’s policies and procedures will allow us to operate in compliance with the FinCEN Guidance, there can be

no assurance that compliance with the FinCEN Guidance will protect us from federal or other regulatory sanctions.

Federal prosecutors

have significant discretion and there can be no assurance that the federal prosecutors will not choose to strictly enforce the federal

laws governing cannabis.

Any change in the federal government’s enforcement position could potentially subject us to criminal prosecution

and other regulatory sanctions.

While we also believe the Company’s BSA/AML policies and programs for the services offered by PCCU

or other financial institutions to CRBs, the medical and recreational cannabis business is considered high-risk, thus increasing the

risk of a regulatory action against the Company’s BSA/AML program that could expose us to liabilities and regulatory compliance

costs that would have an adverse impact on our business, results of operations, financial condition, brand and reputation.

to the extent any law enforcement actions require us to respond to subpoenas, or undergo search warrants, for client records, PCCU or

other financial institutions providing services to CRBs could elect to cease using our services.

Until the U.S.

federal government changes

the laws with respect to cannabis, which may not occur, U.S.

federal authorities could more strictly enforce current federal prohibitions

and restrictions.

An increase in federal enforcement against companies licensed under state cannabis laws could negatively impact the

state licensed cannabis industries and, in turn, our business, operating results, financial condition, brand and reputation.

Company, its financial institution clients and their CRB customers are subject to a variety of laws regarding financial transactions

related to cannabis, which could subject their CRB customers to legal claims or otherwise adversely affect our business.

Company, its financial institution clients and their CRB customers are subject to a variety of laws and regulations in the United States

regarding financial transactions, including the Bank Secrecy Act, as amended by Title III of the USA Patriot Act.

The penalties for violation

of these laws and regulations include imprisonment, substantial fines and forfeiture.

In complying with these laws and regulations, the

Company complies with the FinCEN Guidance.

This compliance includes, among other things, extensive due diligence reviews of potential

and existing CRB customers of the financial institutions.

These reviews may be time-consuming and costly, potentially creating additional

barriers to providing financial services and imposing additional compliance requirements on us and our CRB customers.

In addition, the

Company is, on behalf of its financial institution clients, required to make various filings with FinCEN and the IRS to report certain

suspicious transactions or cash transactions of over $10,000.

If the filings are not made accurately or promptly, substantial penalties

may be imposed that could have a material adverse effect on our business, results of operations and financial condition.

we cannot assure that the Company’s strategies and techniques for designing our services and solutions for our clients and CRB

customers will operate effectively and efficiently and not be adversely impacted by cannabis regulations.

Further, a change in financial

services regulations or a change in the position of the financial services industry that permits more financial institutions to directly

serve businesses that grow and sell cannabis products may increase competition for us, facilitate new entrants into the industry offering

services similar to those that we offer, or otherwise adversely affect our results of operations.

may have difficulty using bankruptcy courts due to our involvement in the regulated cannabis industry.

currently have no need or plans to seek bankruptcy protection.

courts have held that debtors whose income is derived from cannabis

or cannabis assets in violation of the CSA cannot seek federal bankruptcy protections.

Although we are not in the business of growing

or processing cannabis or selling or even possessing cannabis or cannabis products, a U.S.

court could determine that our revenue is

derived from cannabis or cannabis assets and prevent us from obtaining bankruptcy protections if necessary.

conduct of third parties may jeopardize our business and regulatory compliance.

the post-consummation company will not be a cannabis licensee or directly involved in the cannabis industry, and as such, will not subject

to commercial cannabis regulations that apply to cannabis operators, we cannot guarantee that our systems, protocols, and practices associated

with our onboarding and monitoring services will prevent all unauthorized or illegal activities by the CRBs receiving banking services

through our financial institution clients.

Our success depends in part on our financial institution clients’ ability to operate

consistently with the regulatory and licensing requirements of each state, local, and regional jurisdiction in which they operate.

cannot ensure that the conduct of our financial institution clients and the CRBs that have deposits with them, who are third parties,

will not expose them to legal sanctions and costs, which could in turn, adversely affect our business, results of operations, financial

condition, brand and reputation.

may be subject to constraints on marketing our services, which could adversely impact our results of operations and our growth opportunities.

of the states in which the Company may operate have strict regulations regarding marketing and sales activities ancillary to cannabis

products, which could affect our ability to market our services and the development of our business.

If we are unable to effectively

market our services and compete for market share, or if the costs of compliance with government legislation and regulation cannot be

absorbed through increased fees for our services, this could hamper demand for our services, which could result in a loss of revenue.

providers to cannabis businesses may be subject to unfavorable U.S.

tax treatment.

Section 280E of the Internal Revenue Code, no deduction or credit is allowed for any amount paid or incurred during the taxable year

in carrying on business, other than costs of goods sold, if the business (or the activities which comprise the trade or business) consists

of trafficking in controlled substances (within the meaning of Schedules I and II of the CSA).

The IRS has applied this provision to

cannabis operations, prohibiting them from deducting expenses associated with cannabis businesses and asserting assessments and penalties

for additional taxes owed.

While we do believe that Section 280E does not apply to our business, or ancillary service providers that

work with state-licensed CRBs, if the IRS interprets the section to apply, it would significantly and materially affect our profitability

and financial condition.

MORE Act would remove marijuana from the CSA, which would effectively carve out state-legal cannabis businesses from Section 280E of

The MORE Act would impose two new taxes on cannabis businesses:

an excise tax measured by the value of certain cannabis products

and an occupational tax assessed on the enterprises engaging in cannabis production and sales.

Although these novel tax provisions are

included in the current version of the MORE Act, which has been passed by the U.S.

House of Representatives but has not yet been passed

Senate, it is challenging to predict whether, when, and in what form the MORE Act could be enacted into law and how any such

legislation would affect the activities of the Company.

businesses may be subject to civil asset forfeiture .

owned by participants in the cannabis industry used in the course of conducting such business, or that represents proceeds of such business

or is traceable to proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture because

of the illegality of the cannabis industry under federal law.

Even if the owner of the property is never charged with a crime, the property

in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject

to forfeiture.

Forfeiture of assets of our CRB customers, including if such assets are collateral for loans made or serviced by us, could

adversely affect our revenues if it impedes the borrowers’ profitability or operations and our CRB customers’ ability to

continue to use our services.

we provide services to companies that provide services to CRBs, we may have a difficult time obtaining the various insurances that are

desired to operate our business, which may expose us to additional risk and financial liability.

that is otherwise readily available, such as general liability and directors’ and officers’ insurance, may be more difficult

for us to find and could be more expensive or contains significant exclusions because our financial institution clients provide services

There are no guarantees that we will be able to find such insurance coverage in the future or that the cost will be affordable

If appropriate coverage is not available, we may be prevented from entering into certain business sectors, our growth may be inhibited,

and we may be exposed to additional risk and financial liabilities.

If we experience an uninsured loss, it may result in loss of anticipated

cash flow and could materially adversely affect our results of operations, financial condition, and business.

may be difficulty enforcing certain of our commercial agreements and contracts.

may not enforce a contract deemed to involve a violation of law or public policy.

Parties to contracts involving the state legal cannabis

industry have at times argued that the agreements were void as illegal federally or against public policy.

Some courts have accepted

this argument in certain cases.

While courts have enforced contracts related to activities by state-legal cannabis companies, and the

trend is generally to enforce contracts with state-legal cannabis companies and their vendors, there remains some doubt that we will

be able to enforce our commercial agreements with our financial institution clients or the CRBs to which they provide banking services

in court for this reason.

Therefore, we cannot be assured that we will have a remedy for breach of contract in all instances, which could

have a material adverse effect on our business.

of our directors, officers, employees and investors who are not U.S.

citizens may face constraints on cross-border travel into the United

citizens employed at or investing in companies doing business in the state-legal cannabis industry could face detention, denial of entry

or lifetime bans from the United States for their business associations with cannabis businesses.

Entry to the United States happens

at the sole discretion of the officers on duty of the U.S.

Customs and Border Protection, and these officers have wide latitude to ask

questions to determine the admissibility of a foreign national.

Business or financial involvement in the legal cannabis industry could

be grounds for U.S.

border guards to deny entry.

Related to the Company’s Organization and Structure

Concentration

of ownership among our existing executive officers, directors and their respective affiliates may prevent new investors from influencing

significant corporate decisions.

the Closing of the Business Combination, our affiliates, executive officers, directors and their respective affiliates as a group beneficially

own approximately 14.21% of our outstanding Class A Common Stock, as discussed elsewhere in this document.

As a result, these stockholders

are able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors,

amendment of our Second Amended and Restated Certificate of Incorporation and approval of significant corporate transactions.

could have the effect of delaying or preventing a change of control of us or changes in management and will make the approval of certain

transactions difficult or impossible without the support of these stockholders.

Company depends on key management personnel and other experienced employees.

Company’s success depends to a significant degree upon the contributions of certain key management personnel including, but not

limited to, those individuals listed in the “ The Company Management ” section included elsewhere in this document.

If any of the Company’s key management personnel were to cease employment with the Company, the Company’s operating results

could suffer.

The Company’s ability to retain its key management personnel or to attract suitable replacements should any member(s)

of its management team leave is dependent on the culture its leadership team fosters and on the competitive nature of the employment

The loss of services from key management personnel or a limitation in their availability could materially and adversely impact

the Company’s business, prospects, liquidity, financial condition and results of operations.

Further, such a loss could be negatively

perceived in the capital markets.

The Company has not obtained key management life insurance that would provide it with proceeds in the

event of death or disability of any of its key management personnel.

employees in the financial services and cannabis-related services industries are fundamental to the Company’s ability to generate,

obtain and manage opportunities.

In particular, relevant licenses and qualifications, local knowledge and relationships are critical

to the Company’s ability to provide its services.

Failure to attract and retain such personnel or to ensure that their experience

and knowledge is not lost when they leave the business through retirement, redundancy or otherwise may adversely affect the standards

of the Company’s service and may have an adverse impact on the Company’s business, prospects, liquidity, financial condition

and results of operations.

by the Company’s directors, officers or employees to comply with applicable policies, regulations and rules could materially and

adversely affect us.

Company has adopted an employee handbook which includes policies and guidelines for its directors, officers and employees.

The Company’s

adoption of these policies and guidelines is not a representation or warranty that all persons subject to such standards are or will

be in complete compliance.

The failure of a director, officer or employee of the Company to comply with the applicable policies and guidelines

may result in liability or other legal consequences, adverse publicity and termination of the relationship, which could materially adversely

affect the Company.

in accounting rules, assumptions or judgments could materially and adversely affect the Company.

rules and interpretations for certain aspects of the Company’s financial reporting are highly complex and involve significant

assumptions and judgment.

These complexities could lead to a delay in the preparation and dissemination of the Company’s

consolidated financial statements.

Furthermore, changes in accounting rules and interpretations or in the Company’s accounting

assumptions or judgments, such as asset impairments and contingencies are likely to significantly impact the Company’s

consolidated financial statements.

In some cases, the Company could be required to apply a new or revised standard retroactively,

resulting in restating consolidated financial statements from prior period(s).

Any of these circumstances could have a material

adverse effect on the Company’s business, prospects, liquidity, financial condition and results of operations.

For additional

information, see the consolidated financial statements of the Company and related footnotes included elsewhere in this

accounting for the forward purchase derivative resulting from the forward purchase agreement we entered into in connection with the Business

Combination requires us to revalue the derivative at each balance sheet date, which could result in material changes to our balance sheet

and statement of operations.

The Company accounts for the forward purchase derivative assumed in the Business Combination in accordance with the guidance contained

in ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

The Company classifies the forward purchase derivatives

as liabilities carried at their fair value and adjusts the forward purchase derivatives to fair value at each reporting period.

This liability

is subject to re-measurement at each balance sheet date until the conditions under the forward purchase agreement are exercised or expire,

and any change in fair value is recognized in the consolidated statement of operations.

As a result, changes in the fair value of this

derivative could result in material impacts to our balance sheet and statement of operations.

the Company fails to implement and maintain an effective system of internal controls, it may not be able to accurately determine its

financial results or prevent fraud.

As a result, investors could lose confidence in the Company’s financial results, which could

materially and adversely affect the Company.

internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud.

The Company may

in the future discover areas of its internal controls that need improvement.

We cannot be certain that the Company will be

successful in maintaining adequate internal control over its financial reporting and financial processes.

Furthermore, as the

Company grows its business, its internal controls will become more complex, and the Company will require significantly more

resources to ensure its internal controls remain effective.

Additionally, the existence of any material weakness or significant

deficiency would require management to devote significant time and incur significant expense to remediate any such material weakness

or significant deficiency and management may not be able to remediate any such material weakness or significant deficiency in a

timely manner.

The existence of any material weakness in the Company’s internal control over financial reporting could also

result in errors in its consolidated financial statements that could require the Company to restate past consolidated financial

statements, cause the Company to fail to meet its reporting obligations and cause investors to lose confidence in the

Company’s reported financial information, all of which could materially and adversely affect the Company.

Related to an Investment in Our Securities

failure to continue to meet Nasdaq’s continued listing standards could have an adverse impact on our stock price.

shares are currently listed for trading on the Nasdaq.

On March 16, 2023, we received a letter from Nasdaq notifying the Company that

for the last 30 consecutive business days, the Company did not maintain a minimum closing bid price of $1 per share for its common stock,

as required by Nasdaq listing rule 5550(a)(2).

The Company has 180 calendar days, or until September 12, 2023, to regain compliance.

The notice states that to regain compliance, the closing bid price of the Company’s common stock must be at least $1 for a minimum

of 10 consecutive business days.

If the Company does not regain compliance by September 12, 2023, the Company may be eligible for additional

time up to an additional 180 days.

In connection with any extension periods, if it appears that the Company will not be able to regain

compliance with Nasdaq listing rule 5550(a)(2), or if the Company is not otherwise eligible, the Nasdaq staff will provide notice to

the Company that its securities will be subject to delisting.

At that time, the Company may appeal any such delisting determination to

a Hearings Panel.

The Company intends to actively monitor the bid price and may evaluate other available options to resolve the deficiency

and regain compliance with the Nasdaq listing rule.

While the Company is exercising diligent efforts to maintain the listing of its common

stock and warrants on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with other Nasdaq

listing standards.

this time, the Company’s common stock and warrants continue to trade on Nasdaq under the symbols “SHFS” and “SHFSW,”

respectively.

Remaining listed for trading on Nasdaq requires us to remain compliant with Nasdaq’s current continued listing requirements,

which, in addition to the minimum bid price requirement described above, include maintaining minimum levels of shareholders’ equity,

assets and revenues (depending on the compliance standard being used to demonstrate compliance), and other quantitative standards such

as minimum market value of publicly held shares and number of market makers.

Although we currently meet the Nasdaq continued listing

requirements, there can be no assurances that we will continue to do so in the future.

of our Class A Common Stock, or the perception of such sales, by us or the holders of such shares in the public market or otherwise could

cause the market price for our Class A Common Stock to decline.

sale of shares of our Class A Common Stock in the public market or otherwise, or the perception that such sales could occur, could increase

the volatility of the market price of our Class A Common Stock or result in a significant decline in the public trading price of our

Class A Common Stock.

These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity

securities in the future at a time and at a price that it deems appropriate.

Resales of our Class A Common Stock may cause the market

price of our securities to drop significantly, even if our business is doing well.

may not receive any proceeds from the exercise of Warrants, and if we do we may be unable to invest the portion of the net proceeds from

this offering on acceptable terms.

will receive up to an aggregate of approximately $80.92 million from the exercise of the Warrants, assuming the exercise in full of all of the

Warrants for cash.

However, will only receive proceeds to the extent holders of Warrants elect to exercise.

We can provide no assurances

as to the amount of proceeds we will receive from the exercise of Warrants or whether we will receive any proceeds.

We will have broad

discretion in the use of any proceeds received from the exercise of Warrants.

Delays in investing the net proceeds from the exercise

of the Warrants may impair our performance.

We cannot assure you that we will be able to identify uses of proceeds that meet our investment

objectives or that any investment that we make will produce a positive return.

We may be unable to invest the net proceeds from the exercise

of the Warrants on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and

operating results.

is no guarantee that the Warrants will be in the money, and they may expire worthless.

exercise price for the Warrants is $11.50 per share of Class A Common Stock, which exceeds the market price of the shares of Class A Common

Stock, which was $0.47 per share based on the closing price of the Class A Common Stock on April 5, 2023.

There is no guarantee that

the Warrants will be in the money at any given time prior to their expiration.

If the trading price of Class A Common Stock remains below

the exercise price of the Warrants, the Warrants may expire worthless.

If all of the Warrants were exercised in full for cash, we would

receive an aggregate of approximately $80.92 million.

We do not currently expect the holders of the Warrants to exercise their Warrants and therefore,

we do not expect to receive cash proceeds from any such exercise, for so long as the Warrants remain out of the money.

We can provide

no assurances that the trading price of our Class A Common Stock will remain at levels where it would be attractive to exercise our outstanding

Warrants until the time that such warrants become exercisable.

market for our securities has been volatile and may continue to be volatile, which would adversely affect the liquidity and price of

our securities.

price of our securities may fluctuate significantly due to the market’s reaction to sales of our shares Class A Common Stock issued

to the holders of our convertible preferred stock upon the conversion thereof, and to general market and economic conditions.

trading market for our securities may never develop or, if developed, it may not be sustained.

In addition, the price of our securities

can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports.

Additionally,

if our securities become delisted from Nasdaq because we are unable to regain compliance with Nasdaq’s minimum bid price requirement

or for any reason, and are quoted on the OTC Bulletin Board or OTC Pink, an inter-dealer automated quotation system for equity securities

that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed

on Nasdaq or another national securities exchange.

You may be unable to sell your securities unless a market can be established or sustained.

the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price

of our securities may decline.

the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Company’s

securities may decline.

addition, fluctuations in the price of our securities could contribute to the loss of all or part of your investment.

Prior to the Business

Combination, there was not a public market for our stock and trading in the shares of our Class A Common Stock, public units and public

warrants was not active.

Accordingly, the valuation ascribed to us and our Class A Common Stock, public units and public warrants in

connection with the Business Combination may not be indicative of the price of the post-combination company that will prevail in the

trading market.

If an active market for our securities develops and continues, the trading price of our securities could be volatile

and subject to wide fluctuations in response to various factors, some of which are beyond our control.

Any of the factors listed below

could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below

the price you paid for them.

In such circumstances, the trading price of our securities may not recover and may experience a further

affecting the trading price of our securities may include:

or anticipated fluctuations in our financial results or the financial results of companies

perceived to be similar to us;

in the market’s expectations about our operating results;

public’s reaction to our press releases, our other public announcements and our filings

with the SEC;

● speculation

in the press or investment community;

of competitors;

operating results failing to meet the expectation of securities analysts or investors in

a particular period;

● the impact of changes in valuation of financial derivatives;

in financial estimates and recommendations by securities analysts concerning the post-combination

company or the market in general;

and stock price performance of other companies that investors deem comparable to the post-combination

ability to market new and enhanced products on a timely basis;

in laws and regulations affecting our business;

● commencement

of, or involvement in, litigation involving the post-combination company;

in the post-combination company’s capital structure, such as future issuances of securities

or the incurrence of additional debt;

volume of shares of the Class A Common Stock and public warrants of the post-combination

company available for public sale;

material change in our Board or management;

of substantial amounts of Class A Common Stock by our directors, officers or significant

stockholders or the perception that such sales could occur;

realization of any of the risk factors presented in this document;

or departures of key personnel;

to comply with the requirements of Nasdaq;

to comply with the Sarbanes-Oxley Act of 2002 or other laws or regulations;

potential or perceived control, accounting or reporting problems;

in accounting principles, policies and guidelines;

economic and political conditions such as recessions, interest rates, fuel prices, international

currency fluctuations and acts of war or terrorism.

market and industry factors may materially harm the market price of our securities irrespective of our operating performance.

market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the

operating performance of the particular companies affected.

The trading prices and valuations of these stocks, and of our securities,

may not be predictable.

A loss of investor confidence in the market for the stocks of other companies which investors perceive to be

similar to the post-combination company could depress our stock price regardless of our business, prospects, financial conditions or

results of operations.

A decline in the market price of our securities also could adversely affect our ability to issue additional securities

and our ability to obtain additional financing in the future.

the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock

This type of litigation could result in substantial costs and divert our management’s attention and resources, and could

also require us to make substantial payments to satisfy judgments or to settle litigation.

Company is a “controlled company” within the meaning of the applicable rules of Nasdaq and, as a result, may qualify for

exemptions from certain corporate governance requirements.

If the Company relies on these exemptions, its stockholders will not have

the same protections afforded to stockholders of companies that are subject to such requirements.

the Closing of the Business Combination, PCCU controls a majority of the voting power of the Company’s Class A Common Stock, and,

accordingly, the Company is considered a “controlled company” within the meaning of applicable rules of Nasdaq, which provide

that a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company

is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements:

a majority of the board consists of independent directors;

an annual performance evaluation of the nominating and corporate governance and compensation committees;

the controlled company has a nominating and corporate governance committee that is composed entirely of independent directors with

a written charter addressing the committee’s purpose and responsibilities;

the controlled company has a compensation committee that is composed entirely of independent directors with a written charter addressing

the committee’s purpose and responsibility.

the Company does not intend to rely on these exemptions, the Company may use these exemptions now or in the future.

As a result, the

Company’s stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq

corporate governance requirements.

may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative

effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

we have conducted due diligence on the Company, we cannot assure you that this diligence will surface all material issues that may be

present in the Company’s business, that it would be possible to uncover all material issues through a customary amount of due diligence,

or that factors outside of the Company’s business and outside of our and the Company’s control will not later arise.

result of these factors, we may be forced to later write down or write off assets, restructure operations, or incur impairment or other

charges that could result in losses.

Even if our due diligence successfully identifies certain risks, unexpected risks may arise and

previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

Even though these charges may be

non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to

negative market perceptions about the post-combination company or its securities.

Accordingly, any of our stockholders who chose to remain

stockholders following the Business Combination could suffer a reduction in the value of their shares.

Such stockholders are unlikely

to have a remedy for such reduction in value.

significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near

This could cause the market price of our Class A Common Stock or public warrants to drop significantly, even if the Company’s

business is doing well.

of a substantial number of shares of our Class A Common Stock or public warrants in the public market could occur at any time.

sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price

of our Class A Common Stock or public warrants.

Following the Business Combination, NLIT sponsor and the initial officers and directors

(“Northern Lights Restricted Stockholders”) hold approximately 18.2% of our Class A Common Stock.

Pursuant to the IPO Registration

Rights Agreement, the Northern Lights Restricted Stockholders are entitled to registration of the shares of Class A Common Stock into

which the shares of Class B Common Stock automatically converted at the time of the consummation of the Business Combination.

holders of our Private Placement Warrants and their permitted transferees can demand that we register the Private Placement Warrants

and the shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants and holders of warrants that may be issued

upon conversion of the Working Capital Loan may demand that we register such warrants or the Class A Common Stock issuable upon exercise

of such warrants.

The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company

These holders also have certain “piggy-back” registration rights with respect to registration statements

filed subsequent to the consummation of the initial business combination.

Northern Lights Restricted Stockholders entered into a letter agreement pursuant to which, they agreed that, with certain limited exceptions,

the shares of Class B Common Stock (which were converted into shares of Class A Common Stock at the Closing of the Business Combination)

may not be transferred until 150 days after the closing of the Business Combination.

We also entered into the Lock-Up Agreement at the

Closing of the Business Combination, with each of the seller and PCCU, substantially in the form attached as Annex C .

given that the lock-up period on the shares of Class A Common Stock into which the shares of Class B Common Stock converted is potentially

shorter than most other blank check companies, these shares may become registered and available for sale sooner than comparable shares

in such other companies.

terms of our PIPE financing completed in conjunction with the business Combination has had, and could continue to have an adverse impact

of the trading prices of the Class A Common Stock.

with entering into the Unit Purchase Agreement, the Company entered into the Original Securities Purchase Agreement with the PIPE Investors,

pursuant to which, among other things, the Original PIPE Investors agreed to subscribe for and purchase, and the Company agreed to issue

and sell to the Original PIPE Investors, the PIPE Shares and the PIPE Warrants.

On September 27, 2022, the Company and the PIPE Investors

entered into the Amended and Restated Securities Purchase Agreement, which amended the Original Securities Purchase Agreement to, among

other matters, reduce the amount of PIPE Shares to be issued from $60 million of Class A Convertible Preferred Stock to $20.45 million

of Class A Convertible Preferred Stock.

The terms of the PIPE Shares provide for an initial conversion price of $10.00 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, 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 PIPE Shares 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) $1.25, which is the adjusted minimum conversion price following receipt of stockholder

approval in January 2023 (the “Floor Price”);

provided that, so long as a PIPE Investor continues to hold any PIPE Shares,

such PIPE Investor will be entitled to receive the aggregate shares of Class A Common Stock that would be issuable based upon its initial

purchase of PIPE Shares at the adjusted Conversion Price.

However, so long as the PIPE Investor continues to hold any PIPE Shares, such

PIPE Investor will be entitled to receive the aggregate shares of Class A Common Stock that would be issuable based upon its initial

purchase of PIPE Shares at the adjusted conversion price.

The conversion price is also subject to other customary adjustments for stock

dividends, stock splits and similar corporate actions.

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

the warrants are not covered by an effective registration statement after the six-month anniversary of the closing date, in which case

cashless exercise is permitted), subject to adjustment to a price equal to the greater of (i) 125% of the Conversion Price if at any

time there is an adjustment to the Conversion Price and the exercise price after such adjustment is greater than 125% of the Conversion

Price as adjusted and (ii) $5.00.

The PIPE Warrants are also subject to adjustment for other customary adjustments for stock dividends,

stock splits and similar corporate actions.

The PIPE Warrants are exercisable for a period of five years following the Closing, or September

After exercise of a PIPE Warrant, the Company may be required to pay certain penalties if it fails to deliver the Class A Common

Stock within a specified period of time.

adjustments to the conversion price and the exercise price of the PIPE Warrants have had, and could have in the future, an adverse effect

on the market trading price of our Class A Common Stock.

grant of registration rights to PCCU in connection with the Business Combination pursuant to the Unit Purchase Agreement,

and to the PIPE Investors in connection with the Amended and Restated Securities Purchase Agreement, may adversely affect the market

price of our Class A Common Stock.

connection with the closing of the Business Combination pursuant to the Unit Purchase Agreement, we entered into a registration rights

agreement with PCCU and the seller in which we will agree to file a registration statement to register the resale of the Class A Common

Stock to be issued to the seller.

In addition, we entered into a registration rights agreement with the PIPE Investors, pursuant to which,

among other things, we are obligated to file a registration statement to register the resale of the shares of Class A Common Stock issuable

upon conversion of the PIPE Shares and the shares of Class A Common Stock issuable upon exercise of the PIPE Warrants.

The existence

of these shares available for resale pursuant to one or more registration statements could also have an adverse impact on the market

prices of our Class A Common Stock.

Company may issue additional shares of common or preferred stock under the Equity Incentive Plan or otherwise, any one of which would

dilute the interest of the Company’s stockholders and likely present other risks.

Company’s Second Amended and Restated Certificate of Incorporation authorizes the issuance of up to 130,000,000 shares of Class

A Common Stock and 1,250,000 shares of preferred stock, par value $0.0001 per share.

There are currently 111,249,088 authorized but unissued

shares of Class A Common Stock available for issuance, which amount does not take into account shares reserved for issuance upon exercise

of outstanding warrants.

There are currently 20,450 shares of preferred stock issued and outstanding.

The Company may issue additional

shares of common or preferred stock to under the Equity Incentive Plan or as needed for working capital or other purposes.

issuance of additional shares of common or preferred stock:

significantly dilute the equity interest of existing investors;

subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded the Company’s

common stock;

cause a change in control if a substantial number of common stock is issued, which may affect, among other things, the Company’s

ability to use its net operating loss carry forwards, if any, and could result in the resignation or removal of the Company’s

present officers and directors;

adversely affect prevailing market prices for the Company’s Class A Common Stock, Warrants, or both.

operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality

and other factors, some of which are beyond our control, resulting in a decline in our stock price.

operating results may fluctuate significantly because of several factors, including:

labor availability and

costs for hourly and management personnel;

profitability of our services,

especially in new markets and due to seasonal fluctuations;

changes in interest rates;

impairment of long-lived

macroeconomic conditions,

both nationally and locally;

negative publicity relating

to products we serve;

changes in consumer preferences

and competitive conditions;

expansion to new markets;

fluctuations in commodity

securities or industry analysts do not publish or cease publishing research or reports about the post-combination company, its business,

or its market, or if they change their recommendations regarding the Class A Common Stock of the post-combination company adversely,

then the price and trading volume of the Class A Common Stock of the post-combination company could decline.

trading market for our Class A Common Stock or public warrants will be influenced by the research and reports that industry or securities

analysts may publish about us, our business, our market, or our competitors.

Securities and industry analysts do not currently, and may

never, publish research on us.

If no securities or industry analysts commence coverage of the post-combination company, the stock price

and trading volume of our Class A Common Stock and public warrants would likely be negatively impacted.

If any of the analysts who may

cover the post-combination company change their recommendation regarding our stock adversely, or provide more favorable relative recommendations

about our competitors, the price of our Class A Common Stock and public warrants would likely decline.

If any analyst who may cover the

Company were to cease coverage of us or fail to regularly publish reports on it, we could lose visibility in the financial markets, which

could cause the stock price or trading volume of our Class A Common Stock and public warrants of the post-combination company to decline.

may be unable to obtain additional financing to fund our operations and growth.

may require additional financing to fund our operations or growth in future periods.

The failure to secure

additional financing could have a material adverse effect on the continued development or growth of the post-combination company.

of our officers, directors or stockholders is required to provide any financing to us.

in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments

and results of operations.

are subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq.

In particular, we are required

to comply with certain SEC, Nasdaq and other legal or regulatory requirements of businesses providing financial services.

with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly.

These laws, regulations,

and rules include, without limitation, the following:

As a commercial lender

making loans to CRBs, we will be subject to various state laws relating to usury that govern or limit interest rates and other fees

charged on loans, permitted contractual loan terms, collection practices and creditor remedies.

As an employer, we will

be subject to state and federal laws relating to employment practices, health and safety of employees, employee benefits and other

employment-related matters.

As a company whose common

stock is listed for trading on Nasdaq, we are subject to Nasdaq’s continued listing requirements, which include requirements

relating corporate governance matters, the size of the public float of our shares, and the minimum bid price of our shares.

also required to notify Nasdaq of various corporate actions.

We are an SEC reporting

company and therefore we are required to comply with the various rules and regulations of the SEC that relate to, among other things,

the timing and content of annual, quarterly and current reports, the process to register additional shares for sale to the public

or for resale by existing investors, and disclosures in connection with meetings of our stockholders.

Changes in these rules and

regulations can have a significant impact on us, such as the rules proposed by the SEC on March 30, 2022 regarding the disclosure

requirements in connection with business combination transactions involving SPACs.

our business expands to additional states, we will be required to review and comply with those states’ laws that apply to our services

and business activities.

We will also be required to determine whether we will become subject to additional areas of regulation if we

expand the types of activities in which we engage.

For example, because we do not hold customer deposits or offer loans for consumer

or personal purposes, we are not currently required have a financial institution charter or lending license in the states in which we

currently provide services or loans.

If we do not identify activities that would require a regulatory application, license or other approval,

or if the interpretation and application of the laws to which we are currently subject change, those additional laws, rules, and regulations

or changes therein could have a material adverse effect on our business, investments and results of operations.

A failure to comply with

any applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results

of operations.

have not registered the shares of Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities

laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor

from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.

have not registered the shares of Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state

securities laws at this time.

While under the terms of the warrant agreement we have agreed to use our best efforts to file a

registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the Class A

Common Stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the

warrant agreement, we cannot assure you that we will be able to do so.

For example, if any facts or events arise which represent a

fundamental change in the information set forth in such registration statement or prospectus, the consolidated financial statements

contained or incorporated by reference therein are not current or correct or the SEC issues a stop order, such registration will

likely not be available.

If the shares issuable upon exercise of the warrants are not registered under the Securities Act, holders

have the right to exercise their warrants on a cashless basis for unregistered shares of Class A Common Stock in accordance with

Section 3(a)(9) of the Securities Act or another exemption.

However, no such warrant will be exercisable and we will not be

obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is

registered or qualified under the securities laws of the state of the exercising holder or an exemption from state registration is

Notwithstanding the above, if our Class A Common Stock is at the time of any exercise of a warrant not listed on a

national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the

Securities Act, we may, at our option, require holders of warrants who exercise their warrants to do so on a “cashless

basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file

or maintain in effect a registration statement, but we will be required to use our best efforts to register the shares under

applicable blue sky laws to the extent an exemption is not available.

We will not be required to settle any warrant in cash or issue

securities or other compensation in exchange for the warrants if we are unable to register or qualify the shares underlying the

warrants under applicable state securities laws and there is no exemption available.

If the issuance of the shares upon exercise of

the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be

entitled to exercise such warrant and such warrant may have no value and expire worthless.

In such event, holders who acquired their

warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A Common Stock

included in the units.

If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable

to register or qualify the underlying shares of Class A Common Stock for sale under all applicable state securities laws.

are exercisable for Class A Common Stock, and the exercise of such Warrants would increase the number of shares eligible for resale in

the public market and result in dilution to our stockholders.

part of our business combination, there are warrants outstanding to purchase

5,750,000 shares of Class A Common Stock and Private Placement Warrants issued to NLIT’s sponsor to purchase 264,088 shares of Class

A Common Stock at $11.50 per share, and we also issued the PIPE Warrants to the PIPE Investors to purchase 1,022,500 shares of Class A

Common Stock at $11.50 per share.

The shares of Class A Common Stock issued upon exercise of our warrants will result in dilution to the

then existing holders of Class A Common Stock and increase the number of shares eligible for resale in the public market.

Sales of substantial

numbers of such shares in the public market could adversely affect the market price of our Class A Common Stock or public warrants.

Private Placement Warrants are identical to the warrants sold as part

of the units issued in NLIT’s IPO except that, so long as they are held by NLIT’s sponsor or its permitted transferees, (i)

they will not be redeemable by us, (ii) they (including the Class A Common Stock issuable upon exercise of these warrants) may not, subject

to certain limited exceptions, be transferred, assigned or sold by NLIT’s sponsor until 30 days after the completion of an initial

business combination, (iii) they may be exercised by the holders on a cashless basis and (iv) are subject to registration rights.

Anti-takeover

provisions contained in our Second Amended and Restated Certificate of Incorporation and bylaws, as well as provisions of Delaware law,

could impair a takeover attempt, which could limit the price investors might be willing to pay in the future for our common stock.

Second Amended and Restated Certificate of Incorporation contains provisions that may discourage unsolicited takeover proposals that

stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could

delay or prevent a change of control.

Together, these provisions may make more difficult the removal of management and may discourage

transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

These provisions include:

prohibition on stockholder action by written consent, which forces stockholder action to

be taken at an annual or special meeting of our stockholders;

denial of the right of stockholders to call a special meeting;

vote of 66 2/3% required to approve certain amendments to the Second Amended and Restated

Certificate of Incorporation and the bylaws;

designation of Delaware as the exclusive forum for certain disputes.

Second Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole

and exclusive forum for certain stockholder litigation matters, which could limit our stockholder’s ability to obtain a favorable

judicial forum for disputes with us or our directors, officers, employees or stockholders.

Second Amended and Restated Certificate of Incorporation provides, to the fullest extent permitted by law, that internal corporate claims

may be brought only in the Court of Chancery in the State of Delaware (or, if the Court of Chancery does not have, or declines to accept,

jurisdiction, another state court or a federal court located within the State of Delaware).

In addition, our Second Amended and Restated

Certificate of Incorporation provides that the federal district courts of the United States will be the exclusive forum for resolving

any complaint asserting a cause of action arising under the Securities Act.

This forum selection provision does not apply to claims brought

to enforce a duty or liability created by the Exchange Act.

Any person or entity purchasing or otherwise acquiring or holding any interest

in our stock shall be deemed to have notice of and consented to the forum provision in our Second Amended and Restated Certificate of

Incorporation.

choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes

with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.

Alternatively, if a court were to find the choice of forum provision contained in our Second Amended and Restated Certificate of Incorporation

to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,

which could harm our business, operating results and financial condition.

For example, under the Securities Act, federal courts have

concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive

compliance with the federal securities laws and the rules and regulations thereunder.

Accordingly, there is uncertainty as to whether

a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.

JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements

applicable to other public companies that are not emerging growth companies.

qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart

Our Business Startups Act of 2012, which we refer to as the “JOBS Act.” As such, we take advantage of certain exemptions

from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue

to be an emerging growth company, including (i) the exemption from the auditor attestation requirements with respect to internal control

over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 ( “SOX” ), (ii) the exemptions from say-on-pay,

say-on-frequency and say-on-golden parachute voting requirements and (iii) reduced disclosure obligations regarding executive compensation

in our periodic reports and proxy statements.

As a result, our stockholders may not have access to certain information they deem important.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) following July 28, 2026, the

fifth anniversary of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed

to be a large accelerated filer, which means the market value of our Class A Common Stock, public warrants and public units that is held

by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we

have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We cannot predict if investors will find

our common stock less attractive if we choose to rely on these exemptions.

If some investors find our common stock less attractive as

a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of

our common stock may be more volatile.

The Company had total revenues during calendar year 2021 of approximately $7.0 million.

post-combination company continues to expand its business through acquisitions and/or continues to grow revenues organically post-Business

Combination, we may cease to be an emerging growth company prior to December 31, 2026.

addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from

complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an

emerging growth company.

An emerging growth company can therefore delay the adoption of certain accounting standards until those

standards would otherwise apply to private companies.

The JOBS Act provides that a company can elect to opt out of the extended

transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is

We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or

revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new

or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of our consolidated

financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has

opted out of using the extended transition period difficult or impossible because of the potential differences in accounting

standards used.

some investors find our Class A Common Stock or public warrants less attractive as a result, there may be a less active trading market

for our Class A Common Stock or public warrants and more stock price volatility.

internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able

to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of SOX, which require management

to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness

of internal control over financial reporting.

To comply with the requirements of being a public company, and we may need to undertake

various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit

The standards required for a public company under Section 404 of SOX are significantly more stringent than those required of the

Company as a privately-held company.

Further, as an emerging growth company, our independent registered public accounting firm is not

required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 until the

date we are no longer an emerging growth company.

At such time, our independent registered public accounting firm may issue a report

that is adverse in the event that it is not satisfied with the level at which the controls of the post-combination company are documented,

designed or operating.

and maintaining these controls can divert our management’s attention from other matters that are important to the operation of

our business.

If we identify material weaknesses in the internal control over financial reporting of the Company or are unable to comply

with the requirements of Section 404 or assert that our internal control over financial reporting is effective, or if our independent

registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting

when we no longer qualify as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial

reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the SEC

or other regulatory authorities, which could require additional financial and management resources.

UNRESOLVED STAFF COMMENTS

Risk Factors.

For a complete discussion of the Company’s risks and uncertainties, please refer to the risk factors included

under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2022, filed with the SEC on April 14, 2023, as well as the limitation factors included in the forward-looking

statement in this Form 10-K for the year ended December 31, 2023.

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-K

Item 1A. Risk Factors