SHF Holdings, Inc.
For the period ended Sep 30, 2025. Filed Nov 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 12, 2025
SHFS$0.03-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001641172-25-024215
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0001493152-25-021644
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 99 current paragraphs.
36 unchanged; 25 reworded; 37 added; 26 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Three and Nine Months September 30, 2025 As Compared To September 30, 2024
Current report
The decrease in the account fee income was primarily attributable to a decrease in the comparative average monthly ending deposit balance, a revised revenue-sharing arrangement between a large merchant and a participating third-party payment processor, and a promotion geared to retaining and expanding our average monthly deposit balance. Under the updated revenue-sharing arrangement, the merchant’s retainage increased, which in turn reduces both the total revenue available to the payment processor and the Company’s corresponding share of that revenue compared with the prior year.
Current report
Loan interest income is generated from loans issued predominantly under the Company’s Commercial Alliance Agreement (the “PCCU CAA”) with PCCU, as amended.
Current report
For the three months ended September 30, 2025, compared to September 30, 2024, the Company reduced operating expenses by $0.26 million, or 7.7%. For the nine months ended September 30, 2025, compared to the same period in 2024, operating expenses decreased by $1.0 million, or 9.1%.
Current report
The Company has been implementing cost-reduction measures since the prior year, including workforce realignments, vendor consolidation, and tighter discretionary spending controls. The benefits of these cost actions were partially offset by expenses incurred to implement certain of these initiatives. In addition, reported operating expenses include higher one-time non-cash stock-based compensation associated with new executive and consultant equity awards granted in 2025, which increased by approximately $1.0 million year over year. Management is using stock-based compensation awards to reduce the cash component of employee compensation and align incentives with the performance of the Company’s Class A Common Stock.
Current report
Excluding these non-recurring transition costs and non-cash compensation, total operating costs would have shown a more significant year-over-year decline. The Company believes these results demonstrate that its cost-containment initiatives are generating sustainable reductions in ongoing cash expenditures, the full effect of which is expected to become more evident in 2026.
Current report
Compensation and employee benefits
Current report
During the three months ended September 30, 2025, compensation and employee benefits decreased by $0.1 million or 7.8%, primarily due to a reduction in headcount. The reduction in headcount resulted in a cost savings of approximately $0.4 million offset in part by an increase of non-cash stock-based compensation of approximately $0.3 million.
Current report
For the nine month period ended September 30, 2025, these expenses declined by $1.7 million, or 27.1%, reflecting $1.0 million in decrease from headcount reductions and $0.9 million decrease in stock compensation expense partially offset by $0.1 million expense to a former employee.
Current report
General and administrative expenses
Current report
For the three months ended September 30, 2025, general and administrative expenses decreased by $0.07 million, or 7.9%, compared to the three months ended September 30, 2024. This decrease was primarily due to a $0.2 million reduction in intangible asset amortization as certain assets became fully amortized.
Current report
Beginning in 2025, investment hosting fees and loan servicing fees were combined into the account hosting fees following the Amended PCCU CAA. On a combined basis, total hosting-related fees increased by $0.04 million ($0.18 million increases in account hosting fees less $0.10 million of investment hosting fees and $0.04 million of loan servicing fees incurred in the prior period), reflecting the impact of the Amended PCCU CAA offset by the termination of the Company’s customer relationship with Five Star Bank.
Current report
For the nine months ended September 30, 2025, general and administrative expenses decreased by $0.6 million, or 20.9%, compared to the same period in 2024. This decrease was primarily due to a $0.5 million reductions in intangible asset amortization as certain assets became fully amortized.
Current report
Beginning in 2025, investment hosting fees and loan servicing fees were combined into account hosting fees following the Amended PCCU CAA. On a combined basis, total hosting-related fees increased by $0.03 million ($0.5 million increase in account hosting fees less $0.4 million of investment hosting fees and $0.1 million of loan servicing fees incurred in the prior period), reflecting the impact of the Amended PCCU CAA offset by the termination of the Company’s customer relationship with Five Star Bank.
Current report
Account hosting fees
Current report
Professional services
Current report
For the three months ended September 30, 2025, professional services expense decreased by $0.03 million or 4.6% compared to the same period in 2024, primarily reflecting lower negotiated rates with several service providers and reduced audit and accounting fees following completion of the Company’s auditor transition earlier in the year.
Current report
For the nine months ended September 30, 2025, professional services expense increased by $1.2 million or 85.9% compared to September 30, 2024. The increase was driven primarily by transition-related legal and advisory costs incurred as the Company outsourced its internal legal and compliance functions to external counsel, as well as other non-recurring professional fees primarily related to shareholder litigation. Key components of the increase include:
Current report
These increases were partially offset by the elimination of prior-year external counsel retainers, lower recurring audit and accounting fees after the auditor transition, and rate reductions achieved through vendor consolidation. The Company expects that, following completion of the legal and auditor transitions, annualized professional service costs will decline compared with maintaining both internal and multiple external service providers.
Current report
Provision (benefit) for credit losses
Current report
For the three and nine months ended September 30, 2025, other income (expenses) primarily reflects the impact of financing-related transactions and fair-value adjustments associated with the Company’s capital restructuring completed in connection with the Series B Convertible Preferred Stock and Series B Warrant issuance.
Current report
Deferred Consideration (Abaca Acquisition)
Current report
During the three and nine months ended September 30, 2025, we recorded a loss of $0.04 million and a gain of $0.08 million, respectively, related to changes in the fair value of the contingent consideration liability associated with our 2022 acquisition of Abaca. The decrease in the liability was primarily due to the elimination of the interest component from the deferred consideration arrangement, which more than offset the impact of the increase in our stock price during the period. The third anniversary payment was made on October 3, 2025 through the issuance of 37,517 shares of our Class A Common Stock.
Current report
Interest Expense
Current report
Interest expense for the three months ended September 30, 2025, increased by $0.1 million compared to the same period in 2024. The increase was primarily due to $0.1 million of non-cash interest expense related to the original issue discount on convertible notes issued in September 2025. This increase was partially offset by a decrease in interest expense on the Senior Secured Promissory Note.
Current report
Interest expense for the nine months ended September 30, 2025, decreased by $0.004 million compared to the same period in 2024. While the interest rate on the Senior Secured Promissory Note remained unchanged, interest expense decreased due to a lower average principal balance following $2.2 million in principal repayments in 2024. This decrease of approximately $0.1 million was substantially offset by $0.1 million of non-cash interest expense related to the original issue discount on convertible notes issued in September 2025.
Current report
Gain on Extinguishment of Debt
Current report
The Company recognized a $3.2 million gain on extinguishment of debt predominately related to the settlement of its FPA obligations. The Company settled its FPA obligation of $7.3 million by issuance of 5,002 shares of Series B Convertible Preferred Stock and Series B Warrants to purchase 322,111 shares of Class A Common Stock, whose aggregate fair value of $4.0 million was lower than the carrying amount of the liability, producing the gain.
Current report
Expenses incurred to secure financing
Current report
During the three months ended September 30, 2025, the Company incurred $1.0 million of costs related to establishing its equity line of credit or ELOC, of which $0.8 million was non-cash. These costs were expensed during the three and nine months ended September 30, 205 in accordance with ASC 505-10-45-2.
Current report
Change in Fair Value of Warrant Liabilities
Current report
The Company’s Public, Private Placement, and PIPE warrants are recorded as liabilities and remeasured at fair value each period using the Black-Scholes-Merton model. The Company’s Abaca warrants are recorded as liabilities and remeasured at fair value using a Monte Carlo simulation model. As of September 30, 2025, all outstanding warrants were out of the money. Changes in the Company’s stock price and related volatility during the period were the primary drivers of the fair-value adjustments.
Current report
Average monthly deposit balances declined 13.1% year-over-year for the nine months to date, but declined 2.9% year over year for the third quarter as deposit outflows have begun to stabilize. Despite lower balances, active accounts increased 3.9% for the quarter and 3.0% for the nine months to date, demonstrating continued client retention and modest new-account growth. The decline in average fees per account of 34% year over year for both the three- and nine-months end September 30th was driven primarily by the loss of higher-performing accounts that generated greater transaction-based activity, such as ACH and wire services. Average account balances also declined as a result of broader economic pressures within the U.S. cannabis industry, including reduced wholesale pricing and constrained operator liquidity. Looking ahead, the Company believes that improvement in overall U.S. economic conditions, particularly increased discretionary spending, and potential regulatory easing, including federal rescheduling of cannabis, could contribute to higher account balances and transaction activity over time. The current depositor mix remains more diversified, reducing concentration risk and positioning the Company to benefit from any industry recovery.
Current report
As of June 30, 2025, the Company had a working-capital deficit of $7.4 million, cash and cash equivalents of $0.2 million and limited access to external funding sources. During the third quarter ended September 30, 2025, the Company completed its Series B Convertible Preferred Stock and Series B Warrant financing, raising gross proceeds of $6.3 million, excluding money received from management and a board member. The Company received $5.9 million shortly after the closing. As a result, on September 30, 2025, the Company held cash and cash equivalent $0.9 million, had no material debt outstanding, and no longer reported a working-capital deficit. The improvement in liquidity was primarily driven by the equity raise and repayment or conversion of substantially all debt obligations.
Current report
The Company also entered into an Equity Line of Credit (“ELOC”) with an investor, providing the ability, once the related registration statement becomes effective and to an extent pending shareholder approval, to sell up to $150 million of newly issued common stock, with potential expansion to $500 million upon mutual agreement. These arrangements, together with lower ongoing debt service obligations, substantially strengthen the Company’s short-term liquidity position.
Current report
While deposit and fee revenue remain below prior-year levels, management expects continued cost reductions and improved cash generation as operational efficiencies take hold. Based on current forecasts, existing cash resources, combined with potential access to the ELOC, are expected to be sufficient to fund operations for at least 12 months beyond the issuance date of these unaudited condensed consolidated financial statements.
Current report
For the nine months ended September 30, 2025, the Company generated $0.5 million of net cash from financing activities. This amount primarily reflects proceeds of $0.55 million raised through the issuance of a convertible notes and $0.22 million in gross proceeds from Series B Convertible Preferred Stock and Series B Warrants to purchase Class A Common Stock. This is offset by the repayment of a senior secured promissory note totaling $0.3 million. For the nine months ended September 30, 2024, the Company used $2.2 million in financing activities resulting from the repayment of Senior Security Promissory Note PCCU.
Removed paragraphs (26)
Previous report
Three and Six Months June 30, 2025 As Compared To June 30, 2024
Previous report
The Company provides similar account services and outsourced support to other financial institutions that offer banking services to the cannabis industry. These services are provided under the Safe Harbor Master Program Agreement.
Previous report
During 2024, under the terms of the PCCU CAA, the Company paid a hosting fee equal to 25% of the investment income generated from PCCU-related funds. For the three months and six months ended June 30, 2024, PCCU’s contribution to investment income totaled $435,238 and $1,166,663, resulting in $117,620 and $277,721 investment hosting fees. These fees were recorded under general and administrative expenses in the unaudited condensed consolidated statements of operations.
Previous report
In contrast, under the Amended PCCU CAA effective December 31, 2024, the Company is no longer required to pay investment hosting fees to PCCU. For the three months ended and six months ended June 30, 2025, PCCU’s contribution to investment income was $260,387 and $552,823.
Previous report
Loan interest income includes interest earned from both direct loans and those issued under the PCCU CAA, which were indemnified by the Company through December 31, 2024. Upon the execution of the Amended PCCU CAA on December 31, 2024, the indemnification liability was eliminated, and the indemnified status of these loans was removed.
Previous report
For the three months ended June 30, 2025, as compared to June 30, 2024, the Company reduced operating expenses by $920,996, or 24.6%. For the six months ended June 30, 2025, as compared to June 30, 2024, the Company reduced operating expenses by $723,007 or 9.7%. The Company implemented a business plan that included a reduction of expenses to save cash, refer to management’s plan related to going concern, Note 2 to the accompanying financial statements.
Previous report
For the three months ended June 30, 2025, compared to the same period in 2024, the Company reduced compensation and employee benefits by $681,880, or 30.1%. This decrease was primarily driven by reduction in stock compensation expense of $700,000 which is offset by $100,000 for an amount accrued for an amount owed to a former employee. For the six months ended June 30, 2025, compared to the same period in 2024, compensation and employee benefits declined by $1,589,437, or 34.9%, including $833,000 in savings from headcount reductions and a $861,000 reduction in stock compensation expense, offset by $100,000 for an accrual for an amount owed to a former employee. Compensation and employee expenses should continue to decline in the third quarter ending September 30, 2025 with a full effect of the headcount reductions taken during the quarter ended June 30, 2025.
Previous report
For the three months ended June 30, 2025, as compared to June 30, 2024, there was a decrease in general and administrative expense of $543,961, or 54.3%. The decrease is primarily related to a decrease of $271,000 from franchise taxes, a decrease of $191,000 for amortization of intangible assets, and a decrease in marketing expenses of $41,000. For the six months ended June 30, 2025, as compared to June 30, 2024, there was a decrease in general and administrative expense of $537,355, or 27%. The decrease was primarily attributed to a franchise taxes of $271,000, and a decrease in marketing expenses of $92,000.
Previous report
For the three months ended June 30, 2025, as compared to June 30, 2024, there was an increase in professional services of $208,610, or 41.4%, The increase was attributed to legal fees associated with the Company’s litigation, For the six months ended June 30, 2025, as compared to June 30, 2024, there was an increase in professional services of $1,247,194, or 129.3%. The increase was attributed to legal fees associated with the Abaca legal case, non-cash stock compensation to directors, and a $200,000 legal settlement with a former employee, refer to Note 17 – Commitments and Contingencies for further details.
Previous report
Deferred consideration from the Abaca acquisition is classified as a derivative liability under ASC 815 and recorded at fair value, with periodic adjustments. Its value fluctuates based on factors such as the Company’s stock price, market volatility, risk-free interest rates, and amendments to the agreement. For the three months and six months ending June 30, 2025, the fair value of deferred consideration decreased by $252,495, of 119.4% and $276,030, or 69.7%. This decrease was predominantly due to a decline in the stock price which affected the fair value of the warrants and third anniversary payment.
Previous report
Interest expense for the three and six months ended June 30, 2025, and June 30, 2024, primarily relates to the Senior Secured Promissory Note. For the three months ended June 30, 2025, interest expense decreased by $53,489, or 31.7%, compared to the same period in 2024, primarily due to principal repayments on the note. For the six months ended June 30, 2025, interest expense decreased by $94,875, or 29.4%, compared to the prior-year period, also driven by principal repayments on the Senior Secured Promissory Note.
Previous report
The Company has warrant liabilities related to Public, Private Placement, PIPE, and Abaca Warrants, which may be settled in cash or stock at the option of the Company. The liabilities are subject to adjustments based on its fair value which is calculated by the Black Scholes Merton option pricing method and Monte Carlo Simulation method. Changes in the Company’s stock price primarily resulted in the decrease in fair market value.
Previous report
For the three months and six months ended June 30, 2025, there was an increase in the average number of accounts; however, the average monthly balance and fees declined due to a reduction in high value accounts compared to the three and six months ended June 30, 2024. The Company is focused on expanding its client base through various strategic partnerships, which is expected to drive growth in both account balances and fees in the upcoming quarters.
Previous report
Pursuant to ASC 205-40,Presentation of Financial Statements – Going Concern, we evaluated whether there are conditions or events that raise substantial doubt about our ability to continue as a going concern for at least one year from the date of issuance of these unaudited condensed consolidated financial statements. Based on current financial projections, we believe substantial doubt exists regarding our ability to continue as a going concern.
Previous report
Management projects that the Company will not have sufficient liquidity to continue operations, including making required interest payments under the Amended PCCU Note, see Note 9), beyond October 2025. The total outstanding balance under the Amended PCCU Note is $10,748,408. xPCCU holds a senior security interest in all of the Company’s assets other than the NASDAQ listing. In the event of a payment default, and if such default is not cured within the applicable grace period, PCCU may exercise its rights under the security agreement, which could include accelerating the debt and pursuing remedies that could materially and adversely affect the Company’s operations and financial position.
Previous report
The Company continues to experience reductions in depository activity, loan interest income, and fee revenue, as well as legal expenses related to ongoing shareholder and former employee litigation. These factors have further constrained liquidity and heightened the uncertainty surrounding our ability to sustain operations.
Previous report
The Company entered into a purchase loan agreement with PCCU on July 31, 2025, for the sale of a loan receivable of $385,642 as of June 30, 2025 to PCCU. On July 31, 2025, the Company received $384,527 from PCCU for the sale of the loan, see Note 18, Subsequent Events.
Previous report
Additionally, as of June 30, 2025, our stockholders’ deficit of approximately $17.9 million is $20.4 million below the $2.5 million minimum equity requirement for continued listing on The Nasdaq Capital Market under Rule 5550(b)(1). We received a deficiency notice from Nasdaq and submitted a compliance plan on May 22, 2025. Nasdaq confirmed receipt of the plan but has provided no additional commentary as of the date of issuance of the financial statements. There is no assurance that the Company will regain compliance within the allowed period.
Previous report
Notwithstanding these financial conditions, the Company does not anticipate any material impact to services provided to its cannabis-related business (CRB) clients, whose deposits are maintained with the Company’s contracted financial institutions. However, these developments could ultimately result in changes to the Company’s ownership structure.
Previous report
Management’s Plan Related to Going Concern
Previous report
In response to the liquidity challenges and the existence of substantial doubt about the Company’s ability to continue as a going concern, management has implemented and is pursuing a series of initiatives intended to improve the Company’s financial condition and operating flexibility.
Previous report
The Company has undertaken several operational and financial restructuring measures, including:
Previous report
In addition, the Company is actively engaged in discussions with potential investors, lenders, acquirers, investment banks, and strategic partners to secure additional capital through debt and equity financing or other strategic alternatives. Management is also exploring the potential use of its Nasdaq listing as part of a broader strategy that may include digital assets or treasury-related partnerships. These discussions remain preliminary, and no assurance can be given that any such transaction will materialize.
Previous report
While these plans are factored and heighted to alleviate the conditions giving rise to the going concern uncertainty, there can be no assurance that they will be successfully executed, or that any financing will be secured on acceptable terms, or at all. If the Company is unable to implement these plans or obtain sufficient funding, it may be required to curtail operations or pursue other strategic alternatives. The Company is closely monitoring its cash flows, reducing discretionary expenditures, and prioritizing liquidity preservation while continuing to assess all available strategic options.
Previous report
Management remains committed to executing its business plan while addressing the Company’s liquidity needs in a timely and prudent manner.
Previous report
For the six months ended June 30, 2025, and June 2024, the Company used from financing activities was $268,536 and $1,487,507 was primarily from the repayment of the senior secured promissory notes, respectively.
Reworded paragraphs (25)
Previous wording
Founded in 2015 by Partner Colorado Credit Union (“PCCU”) (please see “Business Reorganization” below for a description of SHF’s organization), SHF’s mission is to provide access to reliable and compliant financial services for the legal cannabis, hemp, and related industries by enabling our Financial Institution customers to provide compliance driven banking, lending and other financial services to our Cannabis Related Business “CRB” clients.
Current wording
Founded in 2015 by Partner Colorado Credit Union (“PCCU”) (please see “Business Reorganization” below for a description of SHF’s organization), SHF was among the first financial institutions to provide banking services to Cannabis Related Businesses “CRB.” SHF’s mission is to provide access to reliable and compliant financial services for the legal cannabis, hemp, and related industries by enabling our Financial Institution (“FI”) customers to provide compliance driven banking, lending and other financial services to our CRB clients.
Previous wording
Through our proprietary platform operating in 42 states and territories, SHF ensures our Financial Institution customers can compliantly provide the following banking related services to CRBs:
Current wording
Through our proprietary platform operating in 41 states and territories, SHF ensures our Financial Institution customers can compliantly provide the following banking related services to CRBs:
Previous wording
Due to limited availability of payment and other banking solutions for the cannabis industry, most CRBs transact with high volumes of cash. Our fintech platform benefits CRBs and financial institutions by providing CRBs with access to financial institutions and financial institutions access to increased deposits with the comfort of knowing that those deposits have been compliantly monitored and validated. By facilitating the daily deposits of cash receipts between CRBs and financial institutions, the risks associated with high cash on hand are mitigated, creating a safer atmosphere for the CRB’s employees and the financial institutions at which the deposit accounts are held. Because the Company is not a financial institution, it does not hold customer deposits. All deposit accounts are held by the Company’s financial institution customers and all transmissions of funds to and from deposit accounts are handled directly by the financial institutions. In an industry with limited capital and financing options, we offer access to loan options at what we believe to be competitive rates, often with less punitive terms than the current industry average. Our financial institution customers offer loan options including senior secured debt and operating lines of debt. Collateral types include real estate, equipment, and other business assets. We also provide access to lending options for ancillary service providers serving the cannabis industry as these businesses also can have difficulty finding reliable financial services.
Current wording
The Company is not a financial institution, and as such it does not hold customer deposits. All deposit accounts are held by the Company’s financial institution customers and all transmissions of funds to and from deposit accounts are handled directly by the financial institutions. In an industry with limited capital and financing options, we offer access to loan options at what we believe to be competitive rates, often with more attractive terms than the current industry average. Our financial institution customers and strategic partners offer CRB’s loan options including senior secured and operating lines of debt. Collateral types include real estate, equipment, and other business assets.
Previous wording
To ensure access to consistent and dependable banking access to our CRB clients, we provide our compliance, validation and monitoring services to financial institutions in a compliance driven environment ensuring strict adherence to the Bank Secrecy Act/FinCEN guidance and related anti money laundering provisions. Since inception, the Company has assisted in the processing of approximately $25.6 billion in cannabis related depository funds. Through its relationship with its financial institution clients, the Company has successfully navigated over 16 state and federal banking exams.
Current wording
To ensure CRB’s have access to consistent and dependable banking, we provide our compliance, validation and monitoring services to financial institutions ensuring strict adherence to the Bank Secrecy Act/FinCEN guidance and related anti money laundering provisions. Since inception, the Company has assisted in the processing of approximately $26 billion in cannabis related depository funds. Through its relationship with its financial institution clients, the Company has successfully navigated over 16 state and federal banking exams.
Previous wording
In strategically selected geographic areas, the Company has licensed its proprietary software and Safe Harbor Program (the “Program”) to other financial institutions to provide compliance-related services to CRBs. As part of the Program, we provide the following to financial institutions interested in licensing the Program to assist in compliant cannabis banking:
Current wording
The Company has licensed its proprietary software or Safe Harbor Program (the “Program”) to other financial institutions to provide compliance-related services to CRBs. As part of the Program, we provide the following to financial institutions interested in licensing the Program to assist in compliant cannabis banking:
Previous wording
The Company generates interest and fee income through providing a variety of services to our financial institution customers to facilitate their banking services to CRBs including, among other things, Bank Secrecy Act and other regulatory compliance and reporting, marketing new CRBs clients and onboarding, responding to account inquiries, responding to customer service inquiries relating to CRB deposit accounts held at financial institution clients, and sourcing and originating loans. In addition, the Company provides these similar services and outsourced support to other financial institutions providing banking to the cannabis industry.
Current wording
The Company generates interest and fee income by providing a variety of services to our financial institution customers to facilitate their banking services to CRBs including, among other things, maintaining compliance with the Bank Secrecy Act (“BSA”) and other regulatory compliance and reporting requirements, marketing and onboarding support, responding to customer service inquiries, and sourcing and originating loans. In addition, the Company provides outsourced support to financial institutions providing banking to the cannabis industry.
Previous wording
Compensation and benefits consist of employee wages and associated benefits while professional services consist of legal, general consulting and accounting fees.
Current wording
Compensation and benefits consist of employee wages, stock-based compensation and associated benefits, while professional services consist of legal, board fees including stock-based compensation, general consulting and accounting fees.
Previous wording
The Company reports provisions for credit losses on internally funded and indemnified loans. Prior to December 31, 2024, the Company indemnified PCCU against losses on sourced loans. The indemnification obligation ceased on December 31, 2024, when the Amended PCCU CAA took effect.
Current wording
The Company previously reported provisions for credit losses on indemnified loans. Prior to December 31, 2024, the Company indemnified PCCU against losses on sourced loans. The indemnification obligation ceased on December 31, 2024, when the Amended PCCU CAA took effect.
Previous wording
The following is the revenue for the three and six months ended June 30, 2025 and June 30, 2024.
Current wording
The following is the revenue for the three and nine months ended September 30, 2025 and September 30, 2024.
Previous wording
Account fee income consists of deposit account fees, activity fees and onboarding income. The Company receives a flat fee and lower rates for ancillary accounts, which are accounts provided to businesses servicing the cannabis industry in general but do not manufacture, possess, distribute or transport cannabis. The decrease in the account fee income was primarily attributable to the previously disclosed reduction in the average monthly ending deposit balance.
Current wording
Account fee income consists of (a) fees earned from banking services such as deposit account fees, activity fees and onboarding income and (b) merchant income earned through referral arrangements with third-party payment processors, under which the Company receives a percentage of the net revenue generated by referred merchants. The Company receives a flat fee and lower rates for ancillary accounts, which are accounts provided to businesses servicing the cannabis industry in general but do not manufacture, possess, distribute or transport cannabis.
Previous wording
The following is the account fee income by financial institutions for the three and six months ended June 30, 2025 and June 30, 2024.
Current wording
The following is the account fee income by financial institutions for the three and nine months ended September 30, 2025 and September 30, 2024.
Previous wording
Some of the Company’s financial institutions pay us interest on daily account balances as per the rates outlined in the agreements. The decrease in investment income was primarily attributable to a reduction in average daily deposit balances.
Current wording
Certain financial institutions pay us interest on daily account balances as per the rates outlined in the customer agreement. The decrease in investment income was primarily attributable to a reduction in average daily deposit balances, the launch of interest-bearing money market accounts in the first quarter of 2025, and federal rate cuts enacted in the fourth quarter of 2024 and in September 2025.
Previous wording
The majority of the Company’s loan portfolio consists of CRB loans originated by PCCU and primarily serviced by SHF. Under the original PCCU CAA in 2024, the Company received 100% of the loan interest income associated with these loans and was obligated to pay PCCU a servicing fee equal to 0.25% of the outstanding loan balance.
Current wording
The majority of the Company’s loan portfolio consists of CRB loans originated by PCCU and primarily serviced by SHF. Under the original PCCU CAA in 2024, the Company received 100% of the loan interest income associated with these loans and was obligated to pay PCCU a servicing fee equal to 0.25-0.35% of the outstanding loan balance.
Previous wording
Effective December 31, 2024, the Amended PCCU CAA eliminated the Company’s role as guarantor, thereby removing the 100% indemnity liability. Additionally, under the amended agreement, the method for calculating loan interest income was revised, and loan service fees were eliminated. The new loan yield allocation formula factors in the Constant Maturity U.S. Treasury Rate and a proprietary risk rating to determine the interest income split for each loan.
Current wording
Effective December 31, 2024, the method for calculating loan interest income was revised. The new loan yield allocation formula factors in the Constant Maturity U.S. Treasury Rate and a proprietary risk rating to determine the interest income split for each loan.
Previous wording
The reduction in loan interest income for the period is mainly attributed to the implementation of the new formula and the removal of the indemnification structure. According to the Amended CAA, the Company’s interest income on all loans with PCCU is now calculated using a loan yield allocation formula. This formula takes into account the Constant Maturity US Treasury Rate from the Federal Reserve’s website, along with a proprietary risk rating formula to determine the fee split between the Company and PCCU. Prior to the amendment, the Company retained the full interest income from the loans and was responsible for paying loan servicing fees of 0.25% of the loan balance. The amendment eliminates both the loan servicing fees and indemnification liability, while introducing the new interest income split between the Company and PCCU. The interest income split, given the current portfolio of loans, and using the loan yield allocation formula is approximately 39% in favor of the Company, the remainder is retained by PCCU. The interest income split will vary depending on changes to the loan portfolio.
Current wording
The reduction in loan interest income for the period is mainly attributed to the implementation of the new formula. Under the Amended PCCU CAA, the Company’s interest income on all loans is now calculated using a loan yield allocation formula that considers the Constant Maturity US Treasury Rate from the Federal Reserve’s website, along with a proprietary risk rating formula to determine the fee split between the Company and PCCU. The amendment introduced a new interest income split between the Company and PCCU. The interest income split under the new loan yield allocation formula is approximately 39% to the Company, with the remainder retained by PCCU. The interest income split will vary depending on changes to the loan portfolio.
Previous wording
For the three months and six months ended June 30, 2025, the Company recognized $506,233 and $1,046,455 in loan interest income attributable to PCCU activities. In comparison, for the three months and six months ended June 30, 2024, the Company recognized $1,836,092 and $3,472,848 in loan interest income from the same activities. Related expenses for the 2024 period included $36,156 and $72,057 in loan servicing fees, in accordance with the PCCU CAA, which were reported under general and administrative expenses in the unaudited condensed consolidated statements of operations.
Current wording
For the three months and nine months ended September 30, 2025, the Company recognized $0.5 million and $1.6 million in loan interest income attributable to PCCU activities. In comparison, for the three months and nine months ended September 30, 2024, the Company recognized $1.3 million and $4.8 million in loan interest income from the same activities.
Previous wording
Account hosting fees increased in the three ended and six months ended June 30, 2025 compared to 2024, primarily due to the amendment. In 2024, PCCU charged a monthly per-account fee ranging from $25.32 to $27.85 for accounts hosted on their platform. In contrast, under the Amended CAA in 2025, the Company pays PCCU a fixed asset hosting fee calculated as 0.01 multiplied by the average daily balance of account relationships generated by the Company, divided by the number of days in the year, and then multiplied by the number of days in the applicable month. This new asset hosting fee replaced the prior Investment Hosting Fee and Loan Hosting Fee, as described below. We anticipate that the new asset hosting fee will be more expensive than the disaggregated fees in the PCCU CAA.
Current wording
The account hosting fees increased for both periods primarily due to the Amended PCCU CAA, which became effective on December 31, 2024. Under the prior CAA, PCCU charged a monthly per-account fee ranging from $26.08 to $28.69 for accounts hosted on its platform. Under the Amended PCCU CAA, the Company now pays PCCU a fixed asset hosting fee calculated as 0.01 multiplied by the average daily balance of account relationships generated by the Company, divided by the number of days in the year, and multiplied by the number of days in the applicable month. This new structure incorporated the investment hosting fee and loan hosting fee that existed under the prior agreement and has resulted in higher total account hosting costs compared to the prior fee schedule.
Previous wording
The following is the hosting fee by financial institutions for the three and six months ended June 30, 2025 and June 30, 2024.
Current wording
Beginning in 2025, investment hosting fees and loan servicing fees are reported within account hosting fees following the Amended PCCU CAA. The following is the account hosting fee by financial institutions for the three and nine months ended September 30, 2025 and September 30, 2024:
Previous wording
For the three months ended June 30, 2025, there was no credit loss (benefit) expense as compared to a credit loss (benefit) of $(97,248). For the six months ended June 30, 2025, there was no credit loss (benefit) expense as compared to a credit loss (benefit) of $(166,035). Effective with the Amended PCCU CAA, the Company is not indemnifying loans issued by PCCU.
Current wording
For both the three- and nine-month periods ended September 30, 2025, there was no credit loss (benefit) expense, compared to an expense of $0.0 million and a benefit of $0.2 million, respectively, in the comparable 2024 periods. Effective with the Amended PCCU Commercial Alliance Agreement, the Company is no longer indemnifying loans issued by PCCU, thereby eliminating the prior credit-loss exposure.
Previous wording
Income tax (benefit) expense for the three months ended June 30, 2025 was $(58,470) as compared to income tax of $487,627 for the three months ended June 30, 2024. Income tax (benefit)expense for the six months ended June 30, 2025 was $(58,470) as compared to an income tax expense of $48,742 for the six months ended June 30, 2024. The change in income tax (benefit) resulted in a reversal of estimated accrual.
Current wording
Income tax (benefit) expense for the three months ended September 30, 2025 was $0 as compared to income tax of $0.007 million for the three months ended September 30, 2024. Income tax (benefit)expense for the nine months ended September 30, 2025 was $0.06 million as compared to an income tax credit of $0.05 million for the nine months ended September 30, 2024. The change in income tax (benefit) resulted from a reversal of estimated accrual.
Previous wording
Liquidity refers to our ability to meet expected cash obligations, including operating costs, interest payments, and general business expenditures. As of June 30, 2025, we had cash and cash equivalents of $247,318 and a net working capital deficit of $7,381,312. We also had an accumulated deficit of $122,513,459 and used cash of $1,815,338 in operating activities during the six months ended June 30, 2025.
Current wording
Liquidity refers to the Company’s ability to meet expected cash obligations, including operating costs and general business expenditures.
Previous wording
For the six months ended June 30, 2025, the Company used $1,815,338 of cash in operating activities to fund its net loss of $1,757,914. Operating cash flow benefited from $783,762 in non-cash stock-based compensation and $532,761 generated through effective working capital management. For the six months ended June 30, 2024, the Company cash provided by operations was $2,704,637 primarily from a net income of $2,991,203, increases in changes in operating assets and liabilities $1,390,207, offset by non-cash expenses of $1,340,207.
Current wording
For the nine months ended September 30, 2025, the Company used $2.4 million of cash in operating activities to fund its net loss of $1.6 million. Operating cash flows benefited from positive working capital changes of $0.7 million and offset by $1.5 million for non-cash income. For the nine months ended September 30, 2024, the Company generated $3.2 million of cash from operating activities, primarily driven by net income of $3.3 million and favorable changes in operating assets and liabilities of $1 million, partially offset by non-cash income of $1.1 million.
Previous wording
For the six months ended June 30, 2025, and June 30, 2024, the Company generated cash from investing activities was $6,545 and $6,083 from the proceeds of loan, respectively.
Current wording
For the nine months ended September 30, 2025, and September 30, 2024, the Company generated cash from investing activities was $0.4 million and $0.008 million from the proceeds of loan, respectively.
Previous wording
In connection with our management assessment of internal control over financial reporting as of and for the six months ended June 30, 2025, the Company has identified material weaknesses within our internal controls over financial reporting. Refer to Item 4A of this document for additional details.
Current wording
In connection with our management assessment of internal control over financial reporting as of and for the nine months ended September 30, 2025, the Company has identified material weaknesses within our internal controls over financial reporting. Refer to Item 4A of this document for additional details.
Previous wording
PCCU is considered a related party as it holds a significant ownership interest in the Company, is our most significant financial institution customer, serves as the Company’s sole lending financial institution, is the counterparty to the PCCU Note, and is where we maintain the majority of the Company’s deposits. Refer to Note 8 Related Party Transactions, to the accompanying unaudited consolidated financial statements that describe the related party transactions.
Current wording
PCCU is considered a related party as it holds a significant ownership interest in the Company, is our most significant financial institution customer, and is where we maintain the majority of the Company’s deposits. Refer to Note 9 Related Party Transactions, to the accompanying unaudited condensed consolidated financial statements that describe the related party transactions.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Due to limited availability of payment and other banking solutions for the cannabis industry, most CRBs transact with high volumes of cash. Our fintech platform benefits CRBs and financial institutions by providing CRBs with access to financial institutions and financial institutions access to increased deposits with the comfort of knowing that those deposits have been compliantly monitored and validated. By facilitating the daily movement of cash between CRBs and financial institutions, the risks associated with high cash on hand are mitigated, creating a safer atmosphere for the CRB’s employees and the financial institutions at which the deposit accounts are held.