What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-14 · 676 added, 468 removed, 739 unchanged (61% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

and cash equivalents

receivable – trade

receivable – related party

expenses – current portion

interest receivable

loans receivable, net

current assets

September 30, 2024

December 31, 2023

Current Assets:

loans receivable, net

plant and equipment, net

lease right to use assets

expenses – long term position

purchase receivable

AND STOCKHOLDERS’ EQUITY

payable-related party

liabilities – current

secured promissory note – current portion

consideration – current portion

current liabilities

Cash and cash equivalents

Accounts receivable – trade

Accounts receivable – related party

Accounts receivable

Prepaid expenses – current portion

Accrued interest receivable

Forward purchase receivable

Short-term loans receivable, net

Other current assets

Total Current Assets

Long-term loans receivable, net

Property, plant and equipment, net

Operating lease right to use assets

Intangible assets, net

Deferred tax asset

Prepaid expenses – long term position

Forward purchase receivable

Security deposit

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

consideration – long term portion

purchase derivative liability

secured promissory note—long term portion

deferred indemnified loan origination fees

liabilities – long term

and Contingencies (Note 13)

Stockholders’

preferred stock, $ .0001 par value, 1,250,000 shares authorized, 111 and 1,101 shares issued and outstanding on June 30, 2024, and

December 31, 2023, respectively

A common stock, $ .0001 par value, 130,000,000 shares authorized, 55,431,001 and 54,563,372 issued and outstanding on June 30, 2024,

and December 31, 2023, respectively

paid in capital

Accounts payable

Accounts payable-related party

Accounts payable

Accrued expenses

Contract liabilities

Lease liabilities – current

Senior secured promissory note – current portion

Deferred consideration – current portion

Forward purchase derivative liability

Other current liabilities

Total Current Liabilities

Warrant liabilities

Deferred consideration – long term portion

Forward purchase derivative liability

Senior secured promissory note—long term portion

Net deferred indemnified loan origination fees

Lease liabilities – long term

Indemnity liability

Total Liabilities

Commitment and Contingencies (Note 13)

Stockholders’ Equity

Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 111 and 1,101 shares issued and outstanding on September 30, 2024, and December 31, 2023, respectively

Class A common stock, $ .0001 par value, 130,000,000 shares authorized, 55,673,327 and 54,563,372 issued and outstanding on September 30, 2024, and December 31, 2023, respectively

Additional paid in capital

Retained deficit

( 69,091,050 )

( 71,569,821 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS

the three months ended

the six months ended

and employee benefits

and administrative expenses

of finite-lived intangible assets

(benefit) for credit losses

For the three months ended

September 30,

For the nine months ended

September 30,

Operating Expenses

income/ (loss)

$ ( 17,912,767 )

Compensation and employee benefits

General and administrative expenses

Impairment of goodwill

Impairment of finite-lived intangible assets

Professional services

Provision (benefit) for credit losses

Total operating expenses

Operating income/ (loss)

$ ( 19,002,987 )

income /(expenses)

in the fair value of deferred consideration

in fair value of warrant liabilities

Other income /(expenses)

$ ( 343,947 )

Change in the fair value of deferred consideration

Interest expense

Change in fair value of warrant liabilities

Total other income/ (expenses)

$ ( 1,217,575 )

income/ (loss) before income tax

$ ( 1,962,577 )

Net income/ (loss) before income tax

( 20,965,564 )

tax benefit/ (expense), net

income/ (loss)

Income tax benefit/ (expense), net

Net income/ (loss)

$ ( 748,067 )

$ ( 19,766,081 )

average shares outstanding, basic

net income/ (loss) per share

average shares outstanding, diluted

income / (loss) per share

Weighted average shares outstanding, basic

Basic net income/ (loss) per share

Weighted average shares outstanding, diluted

Diluted income / (loss) per share

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

Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED JUNE 30, 2024

Shareholders’

March 31, 2024

$ 107,348,166

$ ( 70,386,394 )

of PIPE shares

stock units (net of tax)

compensation cost

June 30, 2024

$ 107,900,303

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED SEPTEMBER 30, 2024

Preferred Stock

Total Shareholders’

Balance, June 30, 2024

$ 107,900,303

THE THREE MONTHS ENDED JUNE 30, 2023

Shareholders’

March 31, 2023

$ ( 69,444,867 )

of PIPE shares

Issuance of equity for marketing services

Restricted stock units (net of tax)

Stock compensation cost

Balance, September 30, 2024

$ 108,437,941

option conversion

$ ( 69,091,050 )

THE THREE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Stock

Total Shareholders’

Balance, June 30, 2023

$ ( 70,577,990 )

June 30, 2023

Conversion of PIPE shares

Stock option conversion

Restricted stock units

Balance, September 30, 2023

$ ( 71,684,807 )

Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE SIX MONTHS ENDED JUNE 30, 2024

Shareholders’

December 31, 2023

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE NINE MONTHS ENDED SEPTEMBER 30, 2024

Preferred Stock

Total Shareholders’

Balance, December 31, 2023

$ 105,919,674

$ ( 71,569,821 )

of PIPE shares

stock units (net of tax)

compensation cost

June 30, 2024

Conversion of PIPE shares

Issuance of equity for marketing services

Restricted stock units (net of tax)

Stock compensation cost

Balance, September 30, 2024

( 69,091,050 )

THE SIX MONTHS ENDED JUNE 30, 2023

Shareholders’

December 31, 2022

THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Stock

Total Shareholders’

Balance, December 31, 2022

$ ( 39,695,281 )

effect from adoption of CECL

of PIPE shares

Cumulative effect from adoption of CECL

Conversion of PIPE shares

( 11,642,124 )

option conversion

of deferred underwriting cost

of shares to PCCU (net of tax)

Stock option conversion

Restricted stock units

Reversal of deferred underwriting cost

Issuance of shares to PCCU (net of tax)

( 19,766,081 )

income (loss)

Net income (loss)

( 19,766,081 )

June 30, 2023

Balance, September 30, 2023

( 71,684,807 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

the six months ended

FLOWS FROM OPERATING ACTIVITIES:

income/ (loss)

For the nine months ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income/ (loss)

$ ( 19,766,081 )

to reconcile net income/ (loss) to net cash provided by/ (used in) operating activities:

and amortization expense

compensation expense (net of RSU tax adjustment)

of net deferred indemnified loan origination fees

provision for credit losses

of finite-lived intangible assets

tax expense/(benefit), net

Adjustments to reconcile net income/ (loss) to net cash provided by/ (used in) operating activities:

Depreciation and amortization expense

Marketing expense settled via equity

Stock compensation expense (net of RSU tax adjustment)

Amortization of net deferred indemnified loan origination fees

Interest expense

(Benefit)/ provision for credit losses

Lease expense

Impairment of goodwill

Impairment of finite-lived intangible assets

Deferred tax expense/(benefit), net

( 1,199,483 )

in the fair value of deferred consideration

in fair value of warrant

Change in the fair value of deferred consideration

Change in fair value of warrant

( 2,756,045 )

in operating assets and liabilities:

receivable – trade

receivable – related party

interest receivable

underwriting payable

current assets

current liabilities

Changes in operating assets and liabilities:

Accounts receivable – trade

Accounts receivable – related party

Contract assets

Prepaid expenses

Accrued interest receivable

Deferred underwriting payable

Other current assets

Other current liabilities

Accounts payable

( 1,874,633 )

payable – related party

deferred indemnified loan origination fees

cash provided by (used in) operating activities

FLOWS PROVIDED BY INVESTING ACTIVITIES:

of property and equipment

repayment of loans

cash provided by investing activities

FLOWS USED IN FINANCING ACTIVITIES:

of senior secured promissory note

Accounts payable – related party

Accrued expenses

Contract liabilities

Net deferred indemnified loan origination fees

Security deposit

Net cash provided by (used in) operating activities

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:

Purchase of property and equipment

Net repayment of loans

Net cash provided by investing activities

CASH FLOWS USED IN FINANCING ACTIVITIES:

Repayment of senior secured promissory note

( 2,242,536 )

cash used in financing activities

Net cash used in financing activities

( 2,242,536 )

increase in cash and cash equivalents

and cash equivalents – beginning of period

and cash equivalents – end of period

disclosure of cash flow information

transactions:

issued for the settlement of PCCU debt obligation

effect from adoption of CECL

of deferred underwriting cost

Net increase in cash and cash equivalents

Cash and cash equivalents – beginning of period

Cash and cash equivalents – end of period

Supplemental disclosure of cash flow information

Interest paid

Non-Cash transactions:

Marketing expense settled via common stock

Shares issued for the settlement of PCCU debt obligation

Cumulative effect from adoption of CECL

Interest payment on senior secured promissory note

Reversal of deferred underwriting cost

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

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

Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected

for the current year ending December 31, 2024 or other interim periods.

The financial data presented herein should be read in conjunction

with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023, included in

the Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

Company has made certain immaterial reclassifications to the statements of operations for the three and six months ended June 30, 2023,

to conform to the presentation for the three and six months ended June 30, 2024.

These reclassifications, totaling $ 193,065 and $ 384,008

for the three and six months ended June 30, 2023 respectively, were moved from ‘Interest Expense’ to ‘Change in the

Fair Value of Deferred Consideration’.

Operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected

for the current year ending December 31, 2024 or other future interim periods.

The financial data presented herein should be read in

conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023,

included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC (the “2023

Company has made certain immaterial reclassifications to the statements of operations for the three and nine months ended September 30,

2023, to conform to the presentation for the three and nine months ended September 30, 2024.

These reclassifications, totaling $ 197,307

and $ 581,315 for the three and nine months ended September 30, 2023 respectively, were moved from ‘Interest Expense’ to ‘Change

in the Fair Value of Deferred Consideration’.

Corresponding adjustments have been made to the statement of cash flows and the applicable

notes to the unaudited condensed consolidated financial statements.

condensed consolidated financial statements include the accounts of SHF Holdings, Inc., its subsidiaries where the Company have controlling

condensed consolidated financial statements include the accounts of SHF Holdings, Inc.

and its subsidiaries where the Company have controlling

financial interests.

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Cannabis remains illegal under

federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability to execute our

business plan.

federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in the Company inability to execute

our business plan.

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

1 unchanged sentence

revenue is generated by deposits and loans hosted by PCCU pursuant to a commercial alliance agreement dated March 29, 2023 between PCCU

and the Company, as previously disclosed as an exhibit to the Form 10-K for the fiscal year ended December 31, 2023 (the “Commercial

Alliance Agreement”).

Company had only one loan on its balance sheet as of June 30, 2024, which comprises 100 % of the total loan balance.

The Company also

indemnified twenty-four loans as of June 30, 2024;

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

and the Company, as previously disclosed as an exhibit to the Form 10-K for the fiscal year ended December 31, 2023 (the “PCCU

Company had only one loan on its balance sheet as of September 30, 2024, which comprises 100 % of the total loan balance.

also indemnified twenty-four loans as of September 30, 2024;

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

Use of Estimates

preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates

preparation of the unaudited condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates

and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes.

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the estimates.

have determined that our Chief Executive Officer (“CEO”) serves as the Chief Operating Decision Maker (“CODM”),

who regularly reviews the financial performance of the business on a consolidated basis for the purposes of allocating resources and

evaluating financial performance.

The Company operates as one reportable segment and one operating segment, which focuses on providing

financial services, particularly tailored to the cannabis industry.

making this determination, we consider factors such as the nature of our operating activities, the organizational and reporting structure,

and the information reviewed by the CODM to evaluate and allocate resources effectively.

All of our assets are located within the United

Liquidity and Going Concern

of June 30, 2024, the Company had $ 6,111,982 in cash and net working capital of $ 301,738 , as compared to $ 4,888,769 in cash and net working

capital deficit of $ 135,355 as of December 31, 2023.

The retained deficit was $ 69,444,867 on June 30, 2024, and $ 71,569,821 on December

The Company has also generated operating income of $ 300,163 and $ 625,104 for the three and six months ended June 30, 2024 respectively.

the six months ended June 30, 2024, the Company reported positive operating income and net working capital.

However, considering the

historical data, where the Company experienced negative operating income and negative net working capital, management acknowledges the

need to closely evaluate the financial performance in upcoming quarters to mitigate any going concern risks.

As of June 30, 2024, due

to these historical trends, there is substantial doubt about the Company’s ability to continue as a going concern for at least

twelve months from the date these unaudited condensed consolidated financial statements were issued.

of September 30, 2024, the Company had $ 5,861,475 in cash and net working capital deficit of $ 2,520,441 , as compared to $ 4,888,769 in

cash and net working capital deficit of $ 135,355 as of December 31, 2023.

The retained deficit was $ 69,091,050 on September 30, 2024,

and $ 71,569,821 on December 31, 2023.

The Company has also generated operating income of $ 176,909 and $ 802,013 for the three and nine

months ended September 30, 2024 respectively.

the nine months ended September 30, 2024, the Company reported positive operating income.

However, considering the historical data, where

the Company experienced negative operating income and negative net working capital, management acknowledges the need to closely evaluate

the financial performance in upcoming quarters to mitigate any going concern risks.

As of September 30, 2024, due to these historical

trends, there is substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the

date these unaudited condensed consolidated financial statements were issued.

the Company is not able to sustain its present level of operations, it may be forced to make reductions in spending, extend payment terms

36 unchanged sentences

Expected Credit Losses Transition Impact

receivable, gross

Loans receivable, gross

Allowance for credit loss

Liabilities & Equity

Indemnity liability

Retained deficit

( 39,695,281 )

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to employees or non-employees in return for goods or services.

term “profits interest” is not explicitly defined in US GAAP.

Rather, an IRS Revenue Procedure (Rev Proc 93-27) defines a

“Profits Interest” as a “partnership interest other than a capital interest.” Unlike a capital interest, which

term “profits interest” is not explicitly defined in U.S.

Rather, an IRS Revenue Procedure (Rev Proc 93-27) defines

a “Profits Interest” as a “partnership interest other than a capital interest.” Unlike a capital interest, which

provides rights to existing net assets of an entity, a profits interest only provides rights to future profits and/or equity appreciation

1 unchanged sentence

This distinction, along with other terms, conditions and characteristics of profits interests often complicates accounting

decisions for profits interests, leading to diversity in practice whether to account for profits interests under ASC 718 or other US

decisions for profits interests, leading to diversity in practice whether to account for profits interests under ASC 718 or other U.S.

ASU introduces four (4) illustrative examples of fact patterns that demonstrate how an entity would apply the scope guidance in paragraph

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on its agenda to address suggestions received from stakeholders on the Accounting Standards Codification and other incremental improvements

This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance,

simplifications to wording or the structure of guidance and other minor improvements.

In the Board’s view, removing all references

to Concept Statements in the guidance will simplify the codification and draw a distinction between authoritative and non-authoritative

This effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to

guidance, simplifications to wording or the structure of guidance and other minor improvements.

In the Board’s view, removing all

references to Concept Statements in the guidance will simplify the codification and draw a distinction between authoritative and non-authoritative

amendments in the Update are effective for public business entities for fiscal years beginning after December 15, 2024.

3 unchanged sentences

Deferred Consideration

November 11, 2022, as provided in Exhibit 2.1 of the Current Report of Form 8-K on November 14, 2022, the Company entered into the first

Amendment to the Merger Agreement and Plan of Merger to that certain Agreement and Plan of Merger, dated as of October 29, 2022, by and

among the Parent, SHF Merger Sub I, a Delaware corporation and a direct wholly-owned subsidiary of Parent (“Merger Sub I”),

SHF Merger Sub II, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent (“Merger Sub II”

and, together with Merger Sub I, the “Merger Subs”), Rockview Digital Solutions, Inc., a Delaware corporation, d/b/a Abaca

and Dan Roda, solely in such individual’s capacity as the representative of the Company Security Holders (collectively with the

“Merger Agreement”).

The Merger Agreement provided for payment of $ 30 million through a mix of cash and stock.

structure included $ 9 million in cash, distributed in three equal installments, with the first installment occurring at the merger closing

and the other installments being paid on the first and second anniversaries of the merger closing.

Additionally, the Class A Common Stock

consideration was settled through 2,100,000 Class A Common Stock which represented a monetary equivalent calculated against the closing

trading price, alongside deferred stock consideration calculated with a 10-day VWAP formula.

Adjustments were made via amendments to

redefine the terms and conditions of the deferred stock and cash considerations.

The foregoing description of the Merger Agreement does

not purport to be complete and is qualified in its entirety by the Merger Agreement attached as Exhibit 2.1 to the Current Report on

the Second Amendment to Agreement and Plan of Merger, dated October 26, 2023, by and among SHF Holdings, Inc., a Delaware corporation,

Merger Sub I, a Delaware corporation, [Merger Sub II], a Delaware limited liability corporation, Rockview Digital Solutions, Inc., a

Delaware corporation, d/b/a Abaca and Dan Roda, solely in such individual’s capacity as the representative of the Abaca security

holders as referenced in Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on October 27, 2023 (the “Amended

Abaca Merger Agreement”)The revised terms, provides for deferred stock consideration of 5,835,822 shares of Class A Common Stock

issued at the first anniversary of the Abaca Merger Agreement based on a recalculated value of $ 2.00 per share.

No changes affected the

scheduled cash payments.

Furthermore, a third-anniversary consideration of $ 1.5 million was introduced, payable in cash or Class A Common

Stock at the Company’s discretion, alongside an issue of 5,000,000 stock warrants at an exercise price of $ 2.00 per share of Class

A Common Stock.

The adjustments and additional considerations have been valued and recorded according to ASC 815, reflecting changes

in the fair value of deferred consideration in the consolidated statements of operations for the year ended December 31, 2023.

change in the amount of deferred consideration from January 1, 2023, to June 30, 2024, is as follows:

November 11, 2022, as provided in Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 16, 2022,

on November 11, 2022, the Company entered into the first Amendment to the Merger Agreement and Plan of Merger to that certain Agreement

and Plan of Merger, dated as of October 29, 2022, by and among the Parent, SHF Merger Sub I, a Delaware corporation and a direct wholly-owned

subsidiary of Parent (“Merger Sub I”), SHF Merger Sub II, LLC, a Delaware limited liability company and a direct wholly-owned

subsidiary of Parent (“Merger Sub II” and, together with Merger Sub I, the “Merger Subs”), Rockview Digital Solutions,

Inc., a Delaware corporation, d/b/a Abaca and Dan Roda, solely in such individual’s capacity as the representative of the Company

Security Holders (the “Merger Agreement”).

The Merger Agreement provided for payment of $ 30 million through a mix of cash

The payment structure included $ 9 million in cash, distributed in three equal installments, with the first installment occurring

at the merger closing and the other installments being paid on the first and second anniversaries of the merger closing.

Additionally,

the Class A Common Stock consideration was settled through 2,100,000 Class A Common Stock which represented a monetary equivalent calculated

against the closing trading price, alongside deferred stock consideration calculated with a 10-day VWAP formula.

Adjustments were made

via amendments to redefine the terms and conditions of the deferred stock and cash considerations.

The foregoing description of the Merger

Agreement does not purport to be complete and is qualified in its entirety by the Merger Agreement attached as Exhibit 2.1 to the Company’s

Current Report on Form 8-K filed with the SEC on November 16, 2022.

Second Amendment to the Merger Agreement, dated October 26, 2023, by and among the Company, Merger Sub I, Merger Sub II, Rockview Digital

Solutions, Inc., a Delaware corporation, d/b/a Abaca and Dan Roda, solely in such individual’s capacity as the representative of

the Abaca security holders as referenced in Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed with the SEC on October

27, 2023 (the “Amended Abaca Merger Agreement”) amends the Merger Agreement to provide for deferred stock consideration of

5,835,822 shares of Class A Common Stock to be issued at the first anniversary of the Abaca Merger Agreement based on a recalculated

value of $ 2.00 per share.

No changes affected the scheduled cash payments under the Amended Abaca Merger Agreement/the Merger Agreement.

Furthermore, a third-anniversary consideration of $ 1.5 million was introduced, payable in cash or Class A Common Stock at the Company’s

discretion, alongside an issue of 5,000,000 stock warrants at an exercise price of $ 2.00 per share of Class A Common Stock.

The adjustments

and additional considerations have been valued and recorded according to ASC 815, reflecting changes in the fair value of deferred consideration

in the consolidated statements of operations.

change in the amount of deferred consideration from January 1, 2023, to September 30, 2024, is as follows:

of Change in Deferred Consideration

1 unchanged sentence

Consideration

Third Anniversary

Consideration Payment

January 1, 2023

Working capital adjustment

8 unchanged sentences

Fair value adjustment

December 31, 2023

Fair value adjustment

September 30, 2024

October 17, 2024, SHF Holdings, Inc.

filed a declaratory judgment complaint in the District Court for the City and County of Denver,

Colorado, under Case No.

2024CV33187, titled *SHF Holdings, Inc.

Daniel Roda, Gregory W.

Ellis, and James R.

This complaint

addresses issues related to the Second Amendment to the Merger Agreement, dated October 26, 2023 (Refer Note 20, Subsequent Events).

Goodwill and Finite-lived Intangible Assets

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as the fair value did not surpass the carrying value.

As of June 30, 2024, and December 31, 2023, the carrying value of the company’s

As of September 30, 2024, and December 31, 2023, the carrying value of the company’s

goodwill was $ 6,058,000 .

of June 30, 2024, the Company has not conducted an interim impairment assessment of its assets, due to the absence of any triggering

of September 30, 2024, the Company has not conducted an interim impairment assessment of its assets, due to the absence of any triggering

Therefore, no additional impairment charges have been recognized in this reporting period.

of June 30, 2024, and December 31, 2023, the Company’s accumulated goodwill impairment was $ 13,208,276 .

of September 30, 2024, and December 31, 2023, the Company’s accumulated goodwill impairment was $ 13,208,276 .

intangible assets

9 unchanged sentences

The annual review further identified an impairment charge of $ 2,019,000 related to developed technologies.

of June 30, 2024, the Company has not conducted an interim impairment assessment of its assets, due to the absence of any triggering

of September 30, 2024, the Company has not conducted an interim impairment assessment of its assets, due to the absence of any triggering

Therefore, no additional impairment changes have been recognized in this reporting period.

is a summary of the Company’s finite-lived intangible assets as of June 30, 2024 and December 31, 2023:

is a summary of the Company’s finite-lived intangible assets as of September 30, 2024 and December 31, 2023:

Schedule of Finite Lived Intangible Assets

related intangible assets

relationships

intangible assets

December 31, 2023

related intangible assets

relationships

intangible assets

the six months ended June 30, 2024, amortization expense and impairment of finite-lived intangible assets were $ 313,708 and $ 0 , respectively,

compared to $ 709,882 and $ 3,680,463 , respectively, for the six months ended June 30, 2023.

September 30,

Market related intangible assets

Customer relationships

Developed technology

Total intangible assets

Market related intangible assets

Customer relationships

Developed technology

Total intangible assets

the nine months ended September 30, 2024, amortization expense and impairment of finite-lived intangible assets were $ 472,286 and $ 0 ,

respectively, compared to $ 954,850 and $ 3,680,463 , respectively, for the nine months ended September 30, 2023.

Loans Receivable

1 unchanged sentence

of Commercial Real Estate Loans Receivable

real estate loans receivable, gross

for credit losses

real estate loans receivable, net

September 30,

Commercial real estate loans receivable, gross

Allowance for credit losses

Commercial real estate loans receivable, net

Current portion

Noncurrent portion

for Credit Losses

3 unchanged sentences

accordance with the credit loss policy described in Note 2 to the 2023 Form 10-K.

allowance for credit losses consists of the following activity for the three and six months ended June 30, 2024 and June 30, 2023:

allowance for credit losses consists of the following activity for the three and nine months ended September 30, 2024 and September 30,

Schedule of Allowance For Loan Losses

months ended June 30,

for credit losses

months ended June 30,

for credit losses

effect from adoption of CECL

evaluated for an allowance for credit loss

for credit losses:

evaluated for an allowance for credit loss

June 30, 2024 and December 31, 2023, no loans were past due or classified as non-accrual.

Three months ended September 30,

Allowance for credit losses

Beginning balance

Cumulative effect from adoption of CECL

(Benefit)/ Provision

Ending balance

Nine months ended September 30,

Allowance for credit losses

Beginning balance

Cumulative effect from adoption of CECL

(Benefit)/ Provision

Ending balance

September 30,

Loans receivable:

Individually evaluated for an allowance for credit loss

Collectively evaluated for an allowance for credit loss

Allowance for credit losses:

Individually evaluated for an allowance for credit loss

Collectively evaluated for an allowance for credit loss

September 30, 2024 and December 31, 2023, no loans were past due or classified as non-accrual.

quality of loans:

7 unchanged sentences

of Risk Rating

September 30,

Indemnification Liability

discussed at Note 8 to the unaudited condensed consolidated financial statements, and pursuant to the Commercial Alliance Agreement with

PCCU, PCCU funds loans through a third-party vendor.

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

rate of 0.35% of the outstanding loan principal funded and serviced by PCCU and 0.25% of the outstanding loan principle serviced by SHF.

The below schedule details outstanding amounts funded by PCCU and categorized as either collateralized loans or unsecured loans and lines

discussed at Note 8 to the unaudited condensed consolidated financial statements, and pursuant to the PCCU CAA, PCCU funds loans through

a third-party vendor.

SHF earns the associated interest and pays PCCU a loan hosting payment at an annual rate of 0.35% of the outstanding

loan principal funded and serviced by PCCU and 0.25% of the outstanding loan principle serviced by SHF.

The schedule below details outstanding

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

of Outstanding Amounts

loans and lines of credit

loans funded by PCCU

September 30,

Secured term loans

Unsecured loans and lines of credit

Total loans funded by PCCU

loans contained an interest rate ranging from 8.00 % to 13.00 % .

1 unchanged sentence

10.00% to 12.50%.

Unsecured lines of credit had incremental availability of $ 231,052 and $ 996,958 on June 30, 2024 and December 31, 2023,

Unsecured lines of credit had incremental availability of $ 213,792 and $ 996,958 on September 30, 2024 and December

31, 2023, respectively.

7 unchanged sentences

of Indemnity Liability

effect from adoption of CECL

of June 30, 2024, the company’s entire loan portfolio was current and performing.

However, as of December 31, 2023, one loan had

been classified as nonaccrual.

On December 29, 2023, the company successfully negotiated an amendment agreement to the nonaccrual loan

agreement, resulting in the payment of all overdue amounts and restoring the loan to current status.

Nine months ended

September 30,

Beginning balance

Cumulative effect from adoption of CECL

(Benefit)/ Provision

Ending balance

of September 30, 2024, the company’s entire loan portfolio was current and performing.

However, as of December 31, 2023, one loan

had been classified as nonaccrual.

On December 29, 2023, the company successfully negotiated an amendment agreement to the nonaccrual

loan agreement, resulting in the payment of all overdue amounts and restoring the loan to current status.

During the second quarter of

40 unchanged sentences

of Indemnified Loans Risk Rating

provision (benefit) for credit losses on the statement of operations consists of the following activity for the three months ended June

30, 2024 and June 30, 2023:

September 30,

provision (benefit) for credit losses on the statement of operations consists of the following activity for the three months ended September

30, 2024 and September 30, 2023:

of Provision for Loan Losses

provision (benefit) for credit losses on the statement of operations consists of the following activity for the six months ended June

30, 2024 and June 30, 2023:

September 30, 2024

September 30, 2023

Provision (benefit)

$ ( 196,196 )

$ ( 200,932 )

provision (benefit) for credit losses on the statement of operations consists of the following activity for the nine months ended September

30, 2024 and September 30, 2023:

September 30, 2024

September 30, 2023

Provision (benefit)

Property and Equipment, Net

1 unchanged sentence

of Property and Equipment

and equipment, gross

September 30,

Office furniture

Property and equipment, gross

accumulated depreciation

and equipment, net

Property and equipment, net

Related Party Transactions

Alliance Agreement

March 29, 2023, the Company and PCCU entered into the Commercial Alliance Agreement.

This Agreement sets forth the terms and conditions

governing the relationship between the Company and PCCU.

The Commercial Alliance Agreement sets forth the application, underwriting,

loan approval, and foreclosure process for loans from PCCU to borrowers that are cannabis-related businesses and the loan servicing and

monitoring responsibilities provided by the Company and PCCU.

In particular, the Commercial Alliance Agreement provides for procedures

to be followed upon the default of a loan to ensure that neither the Company nor PCCU will take title to or possession of any cannabis-related

assets, including real property, that may be collateral for a loan funded by PCCU pursuant to the Commercial Alliance Agreement.

the Commercial Alliance agreement, PCCU has the right to receive monthly fees for managing loans.

For CRB loans, which are funded by

PCCU but primarily managed by the Company, a yearly fee of 0.25 % of the remaining loan balance is applied.

On the other hand, loans both

funded and serviced by the PCCU are charged a yearly fee of 0.35 % on their outstanding balance.

These fees are calculated using the average

daily balance of each loan for the preceding month.

In addition, the Company’s is obligated by the Commercial Alliance Agreement

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

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

services to include:

all cannabis-related income, including all lending-related income (such as loan origination fees, interest income

on CRB-related loans, participation fees and servicing fees), investment income, interest income, account activity fees, processing fees,

flat fees, and other revenue generated from cannabis and multi-state hemp accounts that are hosted on PCCU’s core system for a

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

In addition, as it pertains

to CRB deposits held at PCCU, investment and interest income earned on these deposits (excluding interest income on loans funded by PCCU)

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

Finally, under the Commercial Alliance Agreement, PCCU will continue to allow its

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

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

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

below schedule demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits:

March 29, 2023, the Company and PCCU entered into the Commercial Alliance Agreement (referred to as “PCCU CAA”).

This Agreement

sets forth the terms and conditions governing the relationship between the Company and PCCU.

The PCCU CAA sets forth the application,

underwriting, loan approval, and foreclosure process for loans from PCCU to borrowers that are cannabis-related businesses and the loan

servicing and monitoring responsibilities provided by the Company and PCCU.

In particular, the PCCU CAA provides for procedures to be

followed upon the default of a loan to ensure that neither the Company nor PCCU will take title to or possession of any cannabis-related

assets, including real property, that may be collateral for a loan funded by PCCU pursuant to the PCCU CAA.

Under the PCCU CAA, PCCU

has the right to receive monthly fees for managing loans.

For CRB loans, which are funded by PCCU but primarily managed by the Company,

a yearly fee of 0.25 % of the remaining loan balance is applied.

On the other hand, loans both funded and serviced by the PCCU are charged

a yearly fee of 0.35 % on their outstanding balance.

These fees are calculated using the average daily balance of each loan for the preceding

In addition, the Company’s is obligated by the PCCU CAA to indemnify PCCU from certain default-related loan losses (as defined

in the PCCU CAA).

addition, the PCCU CAA provides for certain fees to be paid to the Company for certain identified account related services to include:

all cannabis-related income, including all lending-related income (such as loan origination fees, interest income on CRB-related loans,

participation fees and servicing fees), investment income, interest income, account activity fees, processing fees, flat fees, and other

revenue generated from cannabis and multi-state hemp accounts that are hosted on PCCU’s core system for a monthly fee equal to

$30.96 per account in 2022, $25.32-$27.85 per account in 2023, and $26.08-$28.69 in 2024.

In addition, as it pertains to CRB deposits

held at PCCU, investment and interest income earned on these deposits (excluding interest income on loans funded by PCCU) will be shared

25% to PCCU and 75% to the Company.

Finally, under the PCCU CAA, PCCU will continue to allow its ratio of CRB-related deposits to total

assets to equal at least 60% unless otherwise dictated by regulatory, regulator or policy requirements.

The initial term of the PCCU

CAA is for a period of two years, with a one-year automatic renewal unless a party provides one hundred twenty days’ written notice

prior to the end of the term .

schedule below demonstrates the ratio of CRB related loans funded by PCCU to the relative lending limits:

of Demonstrated Deposit Capacity

related deposits

September 30,

CRB related deposits

$ 129,350,998

available under lines of credit

Capacity at 60%

PCCU net worth

Capacity at 1.3125

Limiting capacity

PCCU loans funded

Amounts available under lines of credit

Incremental capacity *

$ ( 1,430,765 )

* If the loans funded

by PCCU exceed the limiting capacity, the Commercial Alliance Agreement specifies that PCCU will be unable to fund additional loans until

the loans funded by PCCU exceed the limiting capacity, the PCCU CAA specifies that PCCU will be unable to fund additional loans until

the incremental capacity is positive.

revenue from the Commercial Alliance Agreement recognized in the statements of operations consists of the following for the periods ended

June 30, 2024, and June 30, 2023:

revenue from the PCCU CAA recognized in the statements of operations consists of the following for the periods ended September 30, 2024,

and September 30, 2023:

of Revenue from Operations

Three months ended

Six months ended

Nine months ended

September 30,

Account servicing agreement

Commercial Alliance Agreement

operating expenses from the Commercial Alliance Agreement recognized in the statements of operations consists of the following for the

periods ended June 30, 2024, and June 30, 2023:

operating expenses from the PCCU CAA recognized in the statements of operations consists of the following for the periods ended September

30, 2024, and September 30, 2023:

of Operating Expense from Operations

services agreement

servicing agreement

Alliance Agreement

Three months ended

Nine months ended

September 30,

Support services agreement

Loan servicing agreement

Commercial Alliance Agreement

outstanding balances associated with PCCU disclosed in the balance sheet are as follows:

of Outstanding Balances from Balance Sheet

Secured Promissory Note (Refer to Note 9 to the unaudited condensed consolidated financial statements)

the $ 6.1 million and $ 4.89 million of cash and cash equivalents on June 30, 2024 and December 31, 2023, respectively, $ 5.1 million and

$ 4.6 million of the cash and cash equivalents, respectively, were held in deposit accounts at PCCU as a related party.

September 30,

Accounts receivable

Accounts payable

Senior Secured Promissory Note (Refer to Note 9 to the unaudited condensed consolidated financial statements)

the $ 5.86 million and $ 4.89 million of cash and cash equivalents on September 30, 2024 and December 31, 2023, respectively, $ 5.56 million

and $ 4.6 million of the cash and cash equivalents, respectively, were held in deposit accounts at PCCU as a related party.

Senior Secured Promissory Note

of Senior Secured Promissory Note

Secured Promissory Note (current)

Secured Promissory Note (long term)

September 30,

Senior Secured Promissory Note (current)

Senior Secured Promissory Note (long term)

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

1 unchanged sentence

in the principal amount of $ 14,500,000 bearing interest at the rate of 4.25 % and a Security Agreement, as referenced in Exhibit 3 of

the Company’s Quarterly Report on Form 10-Q, filed May 15, 2023, pursuant to which the Company will grant, as collateral for the

PCCU Note, a first priority security interest in substantially all of the assets of the Company.

the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 15, 2023, pursuant to which the Company will grant, as collateral

for the PCCU Note, a first priority security interest in substantially all of the assets of the Company.

PCCU Note amount will be paid in 54 installments of principal and interest of $ 295,487 each starting from November 5, 2023 and for the

period between March 29, 2023, to October 5, 2023, the Company has paid the interest portion.

repayment schedule of the outstanding principal amount of the PCCU Note as of June 30, 2024, is as follows:

repayment schedule of the outstanding principal amount of the PCCU Note as of September 30, 2024, is as follows:

of Outstanding Amount on Debt

Year of payment

Company has non-cancellable operating leases for facility space with varying terms.

6 unchanged sentences

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

As of June 30, 2024, and December 31, 2023, net assets

As of September 30, 2024, and December 31, 2023, net assets

recorded under operating leases were $ 742,609 and $ 859,861 respectively, and net lease liabilities were $ 913,208 and $ 1,007,993 , respectively.

4 unchanged sentences

not available.

Total lease cost for the three and six months ended June 30, 2024 and June 30, 2023, included in Unaudited Condensed Consolidated

Statements of Operations, is detailed in the table below:

Total lease cost for the three and nine months ended September 30, 2024 and September 30, 2023, included in Unaudited

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

of Lease Cost

Three months ended

Nine months ended

September 30,

Operating lease cost

Short-term lease cost

Total Lease Cost

Schedule of Right of Use Assets

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

to right-of-use assets

charge for the period

modifications

information related to leases is as follows:

Weighted-average

remaining lease term

Weighted-average

discount rate

minimum lease payments as of June 30, 2024, and December 31, 2023, are as follows:

September 30,

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

Beginning balance

Additions to right-of-use assets

Amortization charge for the period

Lease modifications

Ending balance

Further information related to leases is as follows:

Weighted-average remaining lease term

Weighted-average discount rate

minimum lease payments as of September 30, 2024, and December 31, 2023, are as follows:

of Future Minimum Lease Payments

future minimum lease payments

September 30,

Total future minimum lease payments

Imputed interest

lease liabilities

Operating lease liabilities

Current portion

portion of lease liabilities

Non-current portion of lease liabilities

Disaggregated

1 unchanged sentence

of Disaggregated Revenue

activity, onboarding income

Harbor Program income (expense)

interest income

activity, onboarding income

Harbor Program income

interest income

Three months ended

September 30,

Deposit, activity, onboarding income

Safe Harbor Program income

Investment income

Loan interest income

Total Revenue

Nine months ended

September 30,

Deposit, activity, onboarding income

Safe Harbor Program income

Investment income

Loan interest income

Total Revenue

fee income to the Company are derived from the businesses holding accounts with our financial institution partners and consists of deposit

4 unchanged sentences

Loan interest income consist of interest

earned on both direct and indemnified loans pursuant to the Commercial Alliance Agreement.

Investment income consists of interest earned

on the daily deposits balances of the cannabis businesses held with the Company’s financial institution partners.

the Company’s Commercial Alliance Agreement, the Company is obligated to remit 25 % of the investment hosting fees to PCCU based

on income which is classified as “General and Administrative Expenses” in the Consolidated Statements of Operations.

the three and six months ended June 30, 2024, PCCU’s contributions to the Company’s revenues included $ 1,206,922 and $ 2,424,598 ,

respectively from deposits, activities, and client onboarding, $ 435,238 and $ 1,166,663 , respectively, from investment income, and $ 1,836,092

and $ 3,472,848 , respectively, from loan interest income.

The associated expenses for these revenues were $ 121,108 and $ 225,367 , respectively,

for account hosting, $ 117,620 and $ 277,721 , respectively, for investment hosting fees, and $ 36,156 and $ 72,057 , respectively, for loan

servicing fees, all in accordance with the Commercial Alliance Agreement, classified as “General and Administrative Expenses”

in the Consolidated Statements of Operations.

During the three and six month ended June 30, 2023, PCCU’s contributions to the Company’s

revenues included $ 1,385,845 and $ 2,763,684 , respectively, from deposits, activities, and client onboarding, $ 1,420,542 and $ 2,837,694 ,

respectively, from investment income, and $ 604,831 and $ 1,071,124 , respectively, from loan interest income.

The related expenses for

these revenue streams were $ 60,833 and $ 116,258 , respectively, for account hosting, $ 381,427 and $ 704,732 , respectively, for investment

hosting fees, and $ 16,741 and $ 28,670 , respectively, for loan servicing fees, all in compliance with the Loan Servicing Agreement, classified

earned on both direct and indemnified loans pursuant to the PCCU CAA.

Investment income consists of interest earned on the daily deposits

balances of the cannabis businesses held with the Company’s financial institution partners.

the Company’s PCCU CAA, the Company is obligated to remit 25 % of the investment hosting fees to PCCU based on income which is classified

as “General and Administrative Expenses” in the Consolidated Statements of Operations.

During the three and nine months ended

September 30, 2024, PCCU’s contributions to the Company’s revenues included $ 1,354,036 and $ 3,778,633 , respectively from

deposits, activities, and client onboarding, $ 434,949 and $ 1,601,611 , respectively, from investment income, and $ 1,341,501 and $ 4,814,349 ,

respectively, from loan interest income.

The associated expenses for these revenues were $ 131,002 and $ 356,369 , respectively, for account

hosting, $ 96,870 , and $ 374,591 , respectively, for investment hosting fees, and $ 34,889 and $ 106,946 , respectively, for loan servicing

fees, all in accordance with the PCCU CAA, classified as “General and Administrative Expenses” in the Consolidated Statements

of Operations.

During the three and nine month ended September 30, 2023, PCCU’s contributions to the Company’s revenues included

$ 1,287,669 and $ 4,051,353 , respectively, from deposits, activities, and client onboarding, $ 1,186,246 and $ 4,023,940 , respectively, from

investment income, and $ 906,213 and $ 1,977,337 , respectively, from loan interest income.

The related expenses for these revenue streams

were $ 54,729 and $ 170,987 , respectively, for account hosting, $ 273,939 and $ 978,671 , respectively, for investment hosting fees, and $ 25,120

and $ 53,790 , respectively, for loan servicing fees, all in compliance with the Loan Servicing Agreement, classified as “General

and Administrative Expenses” in the Consolidated Statements of Operations.

Commitments and contingencies

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

of its business.

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

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

The Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course of its business.

The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert management resources.

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

connection with the issuance of Class A Common Stock to Abaca shareholders, the Company commits to registering the stock upon the

exercise of Abaca Warrants if required by law or regulation to ensure the shares can be sold without restrictive legends, known as

the Warrant Registration Requirement.

Should this requirement arise, the Company is obliged to file a registration statement with

the SEC within 45 calendar days of notification of the Warrant Registration Requirement.

The failure to file within this timeframe

constitutes an event of default.

Moreover, the Company is dedicated to making the registration statement effective as promptly as

possible and maintaining its effectiveness, along with a current prospectus, until the Warrants expire according to this Agreement’s

In the event a registration statement triggered by a Warrant Registration Requirement is not declared effective by the SEC

within one year from its filing date, Warrant holders are entitled to exercise their Warrants on a cashless basis from the 366th

day post-filing until the statement becomes effective.

connection with the issuance of Class A Common Stock to Abaca shareholders, the Company commits to registering the stock upon the exercise

of Abaca Warrants if required by law or regulation to ensure the shares can be sold without restrictive legends, known as the “Warrant

Registration Requirement”.

Should this requirement arise, the Company is obliged to file a registration statement with the SEC

within 45 calendar days of notification of the Warrant Registration Requirement.

The failure to file within this timeframe constitutes

an event of default.

Moreover, the Company is dedicated to making the registration statement effective as promptly as possible and maintaining

its effectiveness, along with a current prospectus, until the Warrants expire according to this Agreement’s terms.

a registration statement triggered by a Warrant Registration Requirement is not declared effective by the SEC within one year from its

filing date, Warrant holders are entitled to exercise their Warrants on a cashless basis from the 366th day post-filing until the statement

becomes effective.

Earnings Per Share

8 unchanged sentences

Schedule of Earning Per Shares, Basic and Diluted

the three month period ended June 30,

Income/ (loss)

For the three month period ended September 30,

Net Income/ (loss)

$ ( 748,067 )

average shares outstanding – basic

net income/ (loss) per share

average shares outstanding – diluted

net income/ (loss) per share

the six month period ended June 30,

Income/ (loss)

Weighted average shares outstanding – basic

Basic net income/ (loss) per share

Weighted average shares outstanding – diluted

Diluted net income/ (loss) per share

For the nine month period ended September 30,

Net Income/ (loss)

$ ( 19,766,081 )

average shares outstanding – basic

net income/ (loss) per share

average shares outstanding – diluted

net income/ (loss) per share

Weighted average shares outstanding – basic

Basic net income/ (loss) per share

Weighted average shares outstanding – diluted

Diluted net income/ (loss) per share

Schedule of Weighted Average Shares Outstanding - Basic And Diluted

average shares calculation – basic

public shares

initial stockholders

issued for abaca acquisition

stock units issued

of preferred stock

Weighted average shares calculation – basic

Three months ended

September 30,

Nine months ended

September 30,

Company public shares

Company initial stockholders

PCCU stockholders

Issuance of Equity for Marketing Services

Shares issued for abaca acquisition

Restricted stock units issued

Conversion of preferred stock

average shares outstanding - basic

average shares calculation - diluted

used in computation of basic earnings per share

to be issued to Abaca shareholders

of preferred stock

Weighted average shares calculation - diluted

Three months ended

September 30,

Nine months ended

September 30,

Shares used in computation of basic earnings per share

Share based payments

Shares to be issued to Abaca shareholders

Conversion of preferred stock

share-based equity awards and warrants were excluded from the computation of dilutive earnings/ (loss) per share because inclusion of

2 unchanged sentences

of Share-based equity awards and Warrants Excluded from Computation of Earnings

based payments

to be issued to Abaca shareholders

of preferred stock

Three months ended

September 30,

Nine months ended

September 30,

Share based payments

Shares to be issued to Abaca shareholders

Conversion of preferred stock

holders of Series A Convertible preferred stock shall be entitled to receive, and the Company shall pay, dividends on shares of Series

5 unchanged sentences

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

East”), which subsequently assigned obligations to purchase 1,666,666 shares of Class A Stock each to Verdun Investments LLC (“Verdun”)

and Vellar Opportunity Fund SPV LLC – Series 1 (“Vellar”) through assignment and novation agreements.

The collective

acquisition involved 3.8 million Class A shares, with Midtown East, Verdun, and Vellar waiving their redemption rights.

The Company incurred

costs totaling $ 39.6 million, comprising $ 39.3 million for the shares and an additional $ 0.3 million in related expenses post-closing.

At the maturity of the FPA, the parties will receive the value of their shares multiplied by the Forward Price, as referenced in Exhibit

10.1 of the Company’s Report on Form 8-K filed on June 17, 2022.

They will also receive an additional amount in cash or shares,

at the Company’s discretion.

An early termination clause allows for the shares to be sold on the open market, with any proceeds

exceeding the Reset Price, as referenced in Exhibit 10.1 of the Company’s Report on Form 8-K filed on June 17, 2022, retained by

Following a price reset in 2022 to $ 1.25 per share, the FPA receivable was reduced from $ 37.9 million to $ 4.6 million.

of June 30, 2024, there have been no transactions by the FPA holders, and the value of the FPA receivable has remained unchanged.

reconciliation statement of the Class A Common Stock held by the parties are as follows:

East”), which subsequently assigned obligations to purchase 1,666,666 shares of Class A Common Stock each to Verdun Investments

LLC (“Verdun”) and Vellar Opportunity Fund SPV LLC – Series 1 (“Vellar”) through assignment and novation

The collective acquisition involved 3.8 million shares of Class A Common Stock, with Midtown East, Verdun, and Vellar waiving

their redemption rights.

The Company incurred costs totaling $ 39.6 million, comprising $ 39.3 million for the shares and an additional

$ 0.3 million in related expenses post-closing.

At the maturity of the FPA, the parties will receive the value of their shares multiplied

by the Forward Price, as referenced in Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 17,

They will also receive an additional amount in cash or shares, at the Company’s discretion.

An early termination clause allows

for the shares to be sold on the open market, with any proceeds exceeding the Reset Price, as referenced in Exhibit 10.1 of the Company’s

Current Report on Form 8-K filed with the SEC on June 17, 2022, retained by the sellers.

Following a price reset in 2022 to $ 1.25 per

share, the FPA receivable was reduced from $ 37.9 million to $ 4.6 million.

As of September 30, 2024, there have been no transactions by

the FPA holders, and the value of the FPA receivable has remained unchanged.

The reconciliation statement of the Class A Common Stock

held by the parties are as follows:

Schedule of Forward Purchase Agreement

December 31, 2023

the six months ended

June 30, 2024

Shares sold during

the nine months ended

September 30, 2024

Name of the party

Warrant Liabilities

and Private Placement Warrants

of June 30, 2024 and December 31, 2023, the Company had 5,750,000 Public Warrants and 264,088 Private Placement Warrants.

of September 30, 2024 and December 31, 2023, the Company had 5,750,000 Public Warrants and 264,088 Private Placement Warrants.

Public and Private Placement Warrants may only be exercised for a whole number of Class A Common Stock.

4 unchanged sentences

of the state of the exercising holder, or an exemption from registration is available.

of warrants become exercisable when the price per Class A Common Stock equals or exceeds $ 18.00 .

of warrants become exercisable when the price per share of Class A Common Stock equals or exceeds $ 18.00 .

Once the warrants become exercisable,

25 unchanged sentences

on the same basis as the public warrants.

of June 30, 2024 and December 31, 2023, the Company had 1,022,500 PIPE Warrants, as referenced in Exhibit 4.1 of the Company’s

Current Report on Form 8-K, filed on October 4, 2022.

of September 30, 2024 and December 31, 2023, the Company had 1,022,500 PIPE Warrants, as referenced in Exhibit 4.1 of the Company’s

Current Report on Form 8-K, filed with the SEC on October 4, 2022.

PIPE Warrants have an adjusted exercise price of $ 5.00 per share of Class A Common Stock to be paid in cash (except if the shares underlying

6 unchanged sentences

Stock within a specified period of time.

of June 30, 2024, and December 31, 2023, the Company issued 5,000,000 Abaca warrants, as referenced in Exhibit 2.2 of the Company’s

Current Report on Form 8-K, filed on October 27, 2023.

of September 30, 2024, and December 31, 2023, the Company issued 5,000,000 Abaca warrants, as referenced in Exhibit 2.2 of the Company’s

Current Report on Form 8-K, filed with the SEC on October 27, 2023.

5,000,000 Abaca warrants have an exercise price of $ 2.00 per share of Class A Common Stock to be paid in cash.

52 unchanged sentences

following tables summarize financial assets and liabilities recorded at fair value on a recurring basis, by the level of valuation inputs

in the fair value hierarchy on June 30, 2024 and December 31, 2023:

in the fair value hierarchy on September 30, 2024 and December 31, 2023:

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

June 30, 2024

September 30, 2024

December 31, 2023

28 unchanged sentences

Fair value measurements inputs

were no assets or liabilities recorded at fair value on a nonrecurring basis for the period ended June 30, 2024.

were no assets or liabilities recorded at fair value on a nonrecurring basis for the period ended September 30, 2024.

Value of Financial Instruments

7 unchanged sentences

Schedule of Carrying Amounts and Fair Values of Financial Instruments

As on June 30, 2024

As on September 30, 2024

Fair value measurement using

21 unchanged sentences

Third anniversary payment consideration

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

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

value are presented in the following table:

1 unchanged sentence

Consideration

For the period ended June 30, 2024

For the period ended September 30, 2024

Consideration

5 unchanged sentences

Balance at the June 30, 2024

Fair value adjustment

Balance at the September 30, 2024

Consideration

For the period ended June 30, 2023

For the period ended September 30, 2023

Consideration

4 unchanged sentences

Balance at the June 30, 2023

of June 30, 2024 and on December 31, 2023, the valuation of private placement warrants, PIPE warrants, and Abaca warrants was carried

Fair value adjustment

Balance at the September 30, 2023

of September 30, 2024 and on December 31, 2023, the valuation of Private Placement Warrants, PIPE warrants, and Abaca warrants was carried

out using the Black-Scholes model, while the fair value of the Abaca third anniversary payment consideration was determined using the

Black Scholes Merton Option pricing model.

As of June 30, 2024 and December 31, 2023, these warrants were valued using Level 3 inputs.

As of September 30, 2024 and December 31, 2023, these warrants were valued using Level 3 inputs.

of December 31, 2023, the Company assessed the fair value of its Forward Purchase Agreement (FPA) derivative utilizing a Monte Carlo

Simulation within a risk-neutral setting, which is a particular instance of the Income Approach, based on calculations from December

Throughout the periods ended June 30, of 2023 and 2024, there were no notable alterations in risk factors that would impact

Throughout the periods ended September 30, of 2023 and 2024, there were no notable alterations in risk factors that would impact

the valuation of the FPA derivative.

Consequently, management retained the December 31, 2022, valuation for December 31, 2023 and June

Consequently, management retained the December 31, 2022, valuation for December 31, 2023 and September

The Company will continue to monitor the fair value of the forward option derivative each reporting period with subsequent

revisions to be recorded in the Statements of Operations.

the period ended June 30, of 2023 and 2024, there were no changes in the classification of financial instruments within Level 2 and Level

3 of the fair value hierarchy.

the period ended September 30, 2023 and 2024, there were no changes in the classification of financial instruments within Level 2 and

Level 3 of the fair value hierarchy.

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

3 unchanged sentences

Consideration

June 30, 2024

September 30, 2024

December 31, 2023

4 unchanged sentences

Risk-free rate

Warrants and rights outstanding, measurement input

Warrants and rights outstanding,

measurement input

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

derivatives as of their measurement dates on June 30, 2024 and December 31, 2023:

derivatives as of their measurement dates on September 30, 2024 and December 31, 2023:

Schedule of Level 3 Fair Value Measurements Inputs

September 30, 2024

December 31, 2023

4 unchanged sentences

Derivative liability, measurement input

the six months ended June 30, 2024, the Company recorded income tax expense of $ 48,742 for continuing operations.

The effective tax rate

of 1.6 % for the six months ended June 30, 2024, varied from the statutory United States federal income tax rate of 21.0 % primarily because

of state income taxes, net of the federal benefit, and adjustments to the fair market value of warrant liabilities The Company has net

deferred tax assets of $ 43,793,536 and $ 43,829,019 as of June 30, 2024, and December 31, 2023, respectively.

The Company considers their

deferred tax assets to be realizable and has not established a valuation allowance, as it is considered more likely than not that the

Company will utilize deferred tax assets in future periods through future taxable income.

the nine months ended September 30, 2024, the Company recorded income tax expense of $ 55,579 for continuing operations.

The effective

tax rate of 24.97 % for the nine months ended September 30, 2024, varied from the statutory United States federal income tax rate of 21.00 %

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

The Company has net deferred tax assets of $ 43,802,927 and $ 43,829,019 as of September 30, 2024, and December 31, 2023, respectively.

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

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

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

both June 30, 2024, and December 31, 2023, the Company has no unrecognized income tax benefits.

both September 30, 2024, and December 31, 2023, the Company has no unrecognized income tax benefits.

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

to 4 % of a participant’s eligible compensation.

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

ended June 30, 2024, amounted to $ 28,714 and $ 63,947 , respectively, and for the three and six months ended June 30, 2023 amounted to

$ 13,426 and $ 34,089 , respectively.

The Company’s consolidated matching contributions for the three and nine

months ended September 30, 2024, amounted to $ 28,853 and $ 92,800 , respectively, and for the three and nine months ended September 30,

2023 amounted to $ 14,866 and $ 48,955 , respectively.

Stockholders’ Equity

Company is authorized to issue 1,250,000 preferred shares with a par value of $ 0.0001 per share with such designation rights and preferences

as may be determined from time to time by the Company’s Board of Directors.

As of June 30, 2024, there were 111 Class A preferred

shares issued and outstanding, and 1,101 Class A preferred shares issued and outstanding on December 31, 2023.

The holders of preferred

stock shall be entitled to receive, and the Company shall pay, dividends on shares of preferred stock equal(on an as-if-converted-to-Class-A-Common-Stock

basis) to and in the same form as dividends actually paid on shares of the Class A Common Stock when, as and if such dividends are paid

on shares of the Class A Common Stock.

No other dividends shall be paid on the preferred stock.

The terms of the preferred stock 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 preferred stock to the lower of the Conversion Price and the greater

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

Price”), provided that, so long as a preferred stock holders continues to hold any preferred shares, such preferred stock holder

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

stock at the adjusted Conversion Price .

Additionally, on January 25, 2023, at a special meeting of the Company’s stockholders,

the stockholders approved a reduction in the floor conversion price of the outstanding preferred stock from $ 2.00 per share to $ 1.25

Company is authorized to issue 1,250,000 shares of preferred stock, with a par value of $ 0.0001 per share, with such designation rights

and preferences as may be determined from time to time by the Company’s Board of Directors.

As of September 30, 2024, there were

111 shares of Class A Preferred Stock issued and outstanding, and there were 1,101 shares of Class A Preferred Stock issued and outstanding

on December 31, 2023.

The holders of preferred stock shall be entitled to receive, and the Company shall pay, dividends on shares of

preferred stock equal (on an as-if-converted-to-Class-A-Common-Stock basis) to and in the same form as dividends actually paid on shares

of the Class A Common Stock when, as and if such dividends are paid on shares of the Class A Common Stock.

No other dividends shall be

paid on the preferred stock.

The terms of the preferred stock 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 preferred stock to the lower of the Conversion Price and the greater of (i) 80% of the volume weighted average price of the Class

A Common Stock for the prior five trading days and (ii) $2.00 (the “Floor Price”), provided that, so long as a preferred

stock holders continues to hold any preferred shares, such preferred stock holder will be entitled to receive the aggregate shares of

Class A Common Stock that would be issuable based upon its initial purchase of preferred stock at the adjusted Conversion Price.

Additionally,

on January 25, 2023, at a special meeting of the Company’s stockholders, the stockholders approved a reduction in the floor conversion

price of the outstanding preferred stock from $ 2.00 per share to $ 1.25 per share.

Company is authorized to issue up to 130,000,000 shares of Class A Common Stock, with a par value of $ .0001 per share.

1 unchanged sentence

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

As of June 30, 2024 and December 31, 2023, there were 55,431,001

As of September 30, 2024 and December 31, 2023, there were

55,673,327 and 54,563,372 shares of Class A Common Stock issued and outstanding, respectively.

As of June 30, 2024 and December 31, 2023, 3,667,377

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

As of September 30, 2024 and December

31, 2023, 3,667,377 Class A Common Stock are held by the purchasers under Forward Purchase Agreement dated June 16, 2022, by and among

the Company and such purchasers.

Equity Incentive Plan

compensation expense recognized six months ended June 30, 2024 and June 30, 2023 totaled $ 1,164,261 and $ 2,529,042 , respectively.

compensation expense recognized three months ended June 30, 2024 and June 30, 2023 totaled $ 552,137 and $ 958,260 , respectively.

compensation expense recognized in the nine months ended September 30, 2024 and September 30, 2023 totaled $ 1,551,923 and $ 2,951,336 ,

respectively.

compensation expense recognized in the three months ended September 30, 2024 and September 30, 2023 totaled $ 387,662 and $ 422,294 , respectively.

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

3 unchanged sentences

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

compensation awards in the six months ended June 30, 2024 and June 30, 2023.

compensation awards in the nine months ended September 30, 2024 and September 30, 2023.

options are awarded to encourage ownership of the Company’s Class A Common Stock by employees and to provide increased incentive

6 unchanged sentences

stock options generally have a 10 -year contractual term.

assumptions used to determine the fair value of options granted in the six months ended June 30, 2024, using the Black-Scholes-Merton

assumptions used to determine the fair value of options granted in the nine months ended September 30, 2024, using the Black-Scholes-Merton

model are as follows:

11 unchanged sentences

volatility at 100 % for the current period.

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

The risk-free interest rate used is the current yield on U.S.

Treasury notes with a term equal

to the expected term of the options at the grant date.

1 unchanged sentence

share during the expected term of the option.

summary of the Company’s stock option activities and related information for the six months ended June 30, 2024 is as follows:

summary of the Company’s stock option activities and related information for the nine months ended September 30, 2024 is as follows:

of Stock Option and Related Information

4 unchanged sentences

Cancelled / Forfeited

June 30, 2024

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

September 30, 2024

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

Average Grant

4 unchanged sentences

Cancelled / Forfeited

June 30, 2023

September 30, 2023

following options were outstanding at their respective exercise price:

1 unchanged sentence

Exercise price options outstanding

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

Stock Units (“RSUs”)

summary of the Company’s RSU activities and related information for the six months ended June 30, 2024 is as follows:

summary of the Company’s RSU activities and related information for the nine months ended September 30, 2024 is as follows:

of Restricted Stock Units

4 unchanged sentences

Cancelled / Forfeited

June 30, 2024

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

September 30, 2024

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

Restricted Stock Units

3 unchanged sentences

Cancelled / Forfeited

June 30, 2023

September 30, 2023

following RSU were outstanding at their respective vest price:

1 unchanged sentence

Vest price RSU outstanding

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

Compensation to Vendor

September 3, 2024, the Company issued 242,326 shares of common stock to Outside The Box Capital Inc.

as compensation for marketing and

distribution services under a Marketing Services Agreement.

The fair value of the common stock issued was determined based on the market

price of the Company’s stock on the grant date, which was $ 0.619 per share, resulting in a total fair value of $ 150,000 .

value of the award is recorded as an expense under “ General and administrative expenses “ in the income statement, with

the expense being recognized over the service period from September 4, 2024, to March 3, 2025, aligning with the period during which

the services are rendered.

In accordance with ASC 718, “Compensation—Stock Compensation,” as updated by ASU 2018-07,

the stock award has been classified as equity as it is settled through the issuance of common stock and does not contain any terms requiring

cash settlement or other liabilities.

Subsequent events

were not any material subsequent events that occurred after the balance sheet date of June 30, 2024 through the date of this report.

previously disclosed by the Company in a Current Report on Form 8-K filed on April 8, 2024, the Company received a notification letter

from the listing qualifications department staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying

the Company that for the 30 prior consecutive business days, the Company did not maintain a minimum bid price requirement for continued

listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the

“Minimum Bid Price Requirement”) for its Class A Common Stock, $0.0001 par value per share (the “Common Stock”),

and thus, the Company no longer met the Minimum Bid Price Requirement.

On October 3, 2024, the Company received notice from Nasdaq Staff

advising that the Company is eligible for an additional 180 calendar day period, or until March 31, 2025, to regain compliance with Nasdaq’s

Minimum Bid Price Requirement based on the Company meeting the continued listing requirement for market value of publicly held shares

and all other applicable requirements for initial listing on The Nasdaq Capital Market with the exception of the bid price requirement,

and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse

stock split, if necessary.

If at any time before March 31, 2025, the bid price of the Common Stock closes at $1.00 per share or more

for a minimum of 10 consecutive business days , the Staff will provide written confirmation that the Company has achieved compliance.

If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the second compliance period, the Common

Stock will become subject to delisting.

In the event that the Company receives notice that the Common Stock is being delisted, the Nasdaq

listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

There can be no assurance that

the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq

Listing Rules.

However, the Company intends to actively monitor the closing bid price for the Common Stock and will consider available

options to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement, including initiating a reverse stock

If the Company chooses to implement a reverse stock split, we must complete the reverse stock split no later than 10 business

days prior to the expiration date of the additional compliance period on March 31, 2025 in order to timely regain compliance.

reported on its Current Report on Form 8-K, on October 17, 2024 the Company caused a declaratory judgment complaint to be filed in the

District Court for the City and County of Denver, Colorado, captioned SHF Holdings, Inc.

Daniel Roda, Gregory W.

Ellis, and James

Carroll, Case No.

2024CV33187, Denver County District Court (“Declaratory Judgement Complaint”).

The Declaratory Judgement

Complaint was filed related to the Amended Abaca Merger Agreement, dated October 26, 2023.

On November 4, 2024, in connection with the

Declaratory Judgment Complaint, the Company filed a motion with the court requesting that the court authorize the Company to deposit

the $ 3,000,000 payment owed pursuant to the Amended Abaca Merger Agreement into the court’s registry so that it can be distributed

in accordance with the terms of the Amended Abaca Merger Agreement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements