XML 114 R16.htm IDEA: XBRL DOCUMENT

Due to Seller

3 Months Ended

Mar. 31, 2023

Note 10. Due to Seller

Amounts due to seller were as follows:

Schedule of Amounts Due to Seller

	March 31, 2023		December 31, 2022
Due to Seller-Current (Unsecured)	$	-	$	25,973,017
Due to Seller-long term (Unsecured)		-		30,976,783
Total loans funded by Parent	$	-	$	56,949,800

As contemplated by the Unit Purchase Agreement, related to reverse acquisition of NLIT, the consideration paid to the seller parent (PCCU) in connection with the Business Combination consisted of an aggregate of $185,000,000, consisting of (i) 11,386,139 shares of the Company’s Class A Common Stock with an aggregate value equal to$115,000,000 and (ii) $70,000,000 in cash, $56,949,800 of which was to be paid on a deferred basis (the “Deferred Cash Consideration”).

The Deferred Cash Consideration was to be paid in one payment of $21,949,800 on or before December 15, 2022, and the $35,000,000 balance in six equal instalments of $6,416,667, payable beginning on the first business day following April 1,2023 and on the first business day of each of the following five fiscal quarters, for a total of $38,500,002.

On October 26, 2022, SHF Holdings, Inc., entered into a Forbearance Agreement (the “Forbearance Agreement”) with PCCU and Luminous Capital USA Inc. (“Luminous”). As per the terms of the agreement, PCCU has agreed to defer all payments owed by the Company pursuant to the Purchase Agreement for a period of six (6) months from the date hereof while the Parties engage in good faith efforts to renegotiate the payment terms applicable to the Deferred Obligation (the “Forbearance Period”).

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

On March 29, 2023, the Company and PCCU entered into a definitive transaction to settle and restructure the deferred obligations, including $56,949,800 into a five-year Senior Secured Promissory Note (the “Note”) in the principal amount of $14,500,000 bearing interest at the rate of 4.25%; a Security Agreement pursuant to which the Company will grant, as collateral for the Note, a first priority security interest in substantially all of the assets of the Company; and a Securities Issuance Agreement, pursuant to which the Company issued 11,200,000 shares of the Company’s Class A Common Stock to PCCU. The breakdown of the liabilities settled under this transaction are as follows:


Due to Seller	$	56,949,800
Cash payment obligation under business combination		3,143,389
Business combination expense payable to seller		1,069,359
Interest accrued but not paid		1,337,843
Total deferred obligation		62,500,391
Less: Senior secured promissory note		14,500,000
Less: Change in deferred tax		9,593,983
Amount charged to Stockholders’ Equity towards issuance of common stock	$	38,406,408