SHF Holdings, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 56 Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that their objectives are met. The design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation can provide absolute assurance that all control deficiencies and instances of fraud, if any, have been detected. As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, solely due to the material weakness described below, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2025. Management’s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles; ● provide reasonable assurance that receipts and expenditures are being made only in accordance with management and director authorization; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on this assessment, management concluded that, due to the material weakness described below, our internal control over financial reporting was not effective as of December 31, 2025. Material Weakness A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Previously Reported Material Weaknesses and Remediation As initially reported in our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the period ended September 30, 2025, management identified several material weaknesses in the Company’s internal control over financial reporting. These weaknesses primarily related to the Company’s ability to appropriately apply GAAP and SEC reporting requirements to complex transactions, including revenue recognition, accounting for financial instruments, forward purchase arrangements, and stock-based compensation. Additional weaknesses existed in management’s going-concern evaluation process and information technology access controls. 57 During 2025, the Company implemented a comprehensive remediation plan focused on strengthening technical accounting expertise, enhancing review controls, and improving documentation and segregation of duties. Key remediation actions included: ● Hiring a Chief Executive Officer, who also serves as Chief Financial Officer, and a Senior Vice President of Finance and Controller, who serves as Principal Accounting Officer, both with extensive SEC-registrant experience to oversee technical accounting, financial reporting, and internal controls; ● Engaging a financial advisory firm with expertise in financial reporting to assist management in evaluating and accounting for complex and non-routine transactions, including the Series B Preferred Stock and related Series B Warrant issuances; ● Implementing enhanced review procedures over financial statement preparation, including secondary reviews of all complex accounting analyses; and ● Upgrading information technology access controls and removing unnecessary privileged user access within key financial systems. As of December 31, 2025, management believes the remediation actions described above adequately address all previously identified material weaknesses. Management notes that while the material weakness related to the completeness and accuracy of account activity fee income has been remediated, sufficient time has not elapsed to conclude that the related controls are operating effectively. Material Weakness Identified During the Year Ended December 31, 2025 Loan Documentation and Credit Loss Estimation Process: In connection with the Company’s initial recognition of indemnification liabilities under the Second Amended CAA, the Company was required for the first time to measure a stand-ready guarantee liability at fair value under ASC 460 and an expected credit loss liability under ASC 326-20. Both measurements rely on underlying CRB loan documentation maintained in connection with the Company’s credit administration responsibilities under the agreement. During the audit, certain loan documentation used in connection with these measurements was identified as out of date or inconsistent with the terms of the underlying loans. While the Company’s valuation conclusions were determined to be fairly stated as of December 31, 2025, the absence of a formalized loan documentation review and maintenance process represents a control deficiency that, if not remediated, could result in a material misstatement of the indemnification and expected credit loss liabilities in future periods. To remediate this material weakness, management is in the process of developing a standardized documentation checklist to ensure that all relevant inputs are consistently captured and considered in the expected credit loss estimation under ASC 326. Full implementation of these procedures is expected to be completed by the second quarter of 2026, after which the controls will be subject to ongoing monitoring by management to assess operating effectiveness. A failure to maintain effective internal controls over financial reporting could result in errors in our financial statements that could require us to restate past financial statements, cause us to fail to meet our reporting obligations, and cause investors to lose confidence in our reported financial information, all of which could materially and adversely affect the Company. Changes in Internal Control Over Financial Reporting Other than the remediation actions described above, there were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company’s management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation of the remaining material weakness and the continued improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting guidance and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards. Item 9B. Other Information. None . Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 58 PART III Item 10. Directors, Executive Officers and Corporate Governance. Executive Officers and Directors Our directors and executive officers are as follows: Name Position Terrance E. Mendez Chief Executive Officer and Chief Financial Officer, Director Richard Carleton Director Francis A. Braun III Director Jonathon Niehaus Director Sundie Seefried Director Douglas Beck Principal Accounting Officer, Senior Vice President of Finance Jeffrey Kay Chief Marketing Officer Michael Regan Chief Investment and Strategy Officer Directors Terrance E. Mendez. Mr. Mendez currently serves as the Chief Executive Officer and Chief Financial Officer for the Company, a position he has held since February 2025 after initially being appointed Co-Chief Executive Officer in January 2025. Mr. Mendez has also served as the Company’s Interim Chief Financial Officer since the resignation of the Company’s prior Chief Financial Officer, James H. Dennedy, in June 2025. Mr. Mendez also serves as the Chief Executive Officer of Amos Advisory Solutions (“AMOS”) since August 2016, a management and outsource consulting firm through which he has held executive leadership roles in several cannabis and cannabis-related business. In connection with his employment with AMOS, Mr. Mendez served from November 2023 to May 2025 he served as the Chief Financial Officer of 42 Degrees, a cannabis extractor and distributor. From February 2022 to February 2024, he served as the Chief Executive Officer of Devi Holdings, a vertically integrated multi-state cannabis operator. From December 2019 to April 2021, he served as the Chief Executive Officer, of Dalwhinnie Enterprises, a single state vertical integrated cannabis operator. Mr. Mendez was employed from July 2017 to August 2019, as the Vice President of Finance and Chief Accounting Officer by Hitachi Vantara, a subsidiary of Hitachi, Ltd. (OTCMKTS: HTHIY), a technology conglomerate. From March 2014 to November 2016, Mr. Mendez served as Vice President and Chief Audit Executive by Arrow Electronics Inc. (NYSE: ARW), an electronics components manufacturer. From September 2011 to March 2014, Mr. Mendez was employed as Vice President of FP&A and was a Segment Financial Controller by Broadridge Financial Solutions Inc. (NYSE:BR). Mr. Mendez spent 14 years in public accounting with Arthur Andersen & Co. and Deloitte Touche LLP. Mr. Mendez is a Certified Public Accountant in the States of New York, New Jersey and Colorado and a Charted Global Management Accountant. He holds a Bachelor of Science in Economics from the University of Pennsylvania’s Wharton School of Business. Mr. Mendez’s finance and accounting expertise is a strong asset to the Board of Directors, and he also has extensive management and industry experience. Age: 50. Richard Carleton. Mr. Carleton has served as the CEO of the Canadian Securities Exchange (“CSE”) since July 1, 2011. The CSE is a recognized stock exchange in Canada, subject to the oversight of the British Columbia Securities Commission and the Ontario Securities Commission. The CSE was re-organized in November, 2025 to create a holding company (CNSX Global Markets Inc.). CNSX holds 100% of the issued and outstanding shares of the CSE and the National Stock Exchange of Australia. Mr. Carleton is the CEO of CNSX Global Markets. Mr. Carleton is a member of the board of the Canadian Securities Exchange (2024), CNSX Global Markets (2025) and the National Stock Exchange of Australia (2025). Mr. Carleton is also a member of the board of Blue Ocean Technologies LLC, the Operator of Blue Ocean ATS, a US-regulated trading platform offering trading certain securities between 8 p.m. and 4 a.m. Eastern Time. Blue Ocean is a private company. Mr. Carleton is a board member (and chair) of Tetra Digital Inc., the operator of a digital asset custodian, a software services business and company exploring the issuance of a Canadian dollar denominated stablecoin. To Mr. Carleton’s knowledge, none of these companies is an affiliate or in any way related to the Company. On September 28, 2022, Mr. Carleton was appointed as a member of the Board of Directors in connection with the closing of our initial business combination. Mr. Carleton received his Bachelor of Arts in History from the University of Ottawa (1981) and his LLB from the University of Toronto (1985). He has also completed the Executive Development Program at the Wharton School, University of Pennsylvania. Age: 66. Francis A. Braun III. Francis A. (Skip) Braun III was appointed to the Board of Directors in May 2025. He has served as a senior advisor to Stout since April 2024 and as a member of CrossCountry Consulting’s advisory counsel since February 2024. Mr. Braun was appointed to the Board of Directors of Polarx Therapeutics, Inc. in January 2026 and serves as the chair of its audit committee. Mr. Braun was appointed to the Board of Directors of Elite Express Holdings Inc. in August 2025 and served through October 2025. Mr. Braun has also served as a director of Crown Bank in New Jersey since October 2024 and is the chairman of the bank’s audit committee. From July 2024 to July 2025 Mr. Braun served as a consultant to Kohlberg Kravis Roberts & Co. L.P., and from December 2016 to July 2023, Mr. Braun served as a Partner at Grant Thornton LLP. Mr. Braun is considered a financial expert under the Sarbanes-Oxley rules and has 40 years of diversified experience serving public and private companies during his time in public accounting with Arthur Andersen LLP, Deloitte & Touche LLP and Grant Thornton LLP. He holds a Bachelor of Science in Commerce, Accounting from Rider University. Age: 65. Jonathon Niehaus. On September 28, 2022, Mr. Niehaus was appointed as a member of the Board of Directors in connection with the closing of the initial business combination. Mr. Niehaus currently serves as the Managing Partner of Interactive Global Solutions, a global consulting company, a position he has held since January 2011. Mr. Niehaus previously served as a member of the board of managers of SHF, LLC d/b/a Safe Harbor Financial (“SHF Predecessor”) from February 2022 until September 2022. From 2003 until 2011, Mr. Niehaus served as a Global SVP for First Data Corporation and the Western Union Company. In this capacity, Mr. Niehaus was responsible international government relations and public affairs. In addition, he spearheaded outreach to US attorneys general in matters relating to compliance and anti-money laundering activities. Mr. Niehaus was thereafter appointed to be a senior advisor to the Alliance Partnership, an international rule of law initiative run by the Attorney General Alliance. Mr. Niehaus is an active board member, serving as the chair of the Farnsworth Group, a multi-state architecture and engineering firm and chair of the Make A Difference Foundation which focusses on green energy initiatives internationally. He has also served as advisor to other private companies as well as serving 10 years on the board of the Colorado Great Outdoors Trust Fund. Mr. Niehaus received his Bachelor of Science in Journalism Communications from the University of Iowa. Mr. Niehaus’ background enables him to share his expertise in legal, regulatory, and compliance matters with the Board of Directors. Age: 70. Sundie Seefried. Ms. Seefried served as the Chief Executive Officer of the Company from July 2021 until February 2025 and currently serves as a member of the Board of Directors, a position she has held since April 2024. Prior to joining the Company, Ms. Seefried served as the Chief Executive Officer of PCCU, the major shareholder of Safe Harbor Financial, from 2001 until June 2021 and as the Chief Executive Officer of Eagle Legacy Services, a former company owned by PCCU, LLC from January 2020 until March 2021. Ms. Seefried previously served as a board member of the Colorado Division of Financial Services from 2019 until 2021, and as a board member of the Credit Union Association from 2007 until 2015. Ms. Seefried received her Bachelor of Science in Business Management from the University of Maryland and her Master of Business Administration in Finance from Regis University, Colorado. Age: 63. 59 Executive Officers Mr. Mendez’ biographical information is set forth above in “–– Directors .” Douglas Beck . On September 24, 2025, Mr. Beck was appointed Principal Accounting Officer and will continue to serve as the Company’s Senior Vice President of Finance, Controller, a position that he has held since May 2025. Prior to his appointment as the Company’s Senior Vice President of Finance, Controller, Mr. Beck served as the Chief Financial Officer of AiAdvertising, Inc. from November 2024 to April 2025 and the Chief Financial Officer of ShiftPixy, Inc. from January 2023 to March 2024. Mr. Beck also served as a consultant to Beyond Air Inc. from September 2021 to December 2022 and as its Chief Financial Officer from November 2018 to August 2021. He received a Bachelor of Science in Accounting from Fairleigh Dickinson University and is also a licensed Certified Public Accountant. Age: 65. Jeffrey Kay . On September 24, 2025, Mr. Kay was appointed Chief Marketing Officer. Mr. Kay joined the Company in April 2025 as Senior Vice President of Marketing. Mr. Kay has more than 30 years of marketing and brand leadership experience across the cannabis, financial services and consumer products industries. Prior to that, Mr. Kay founded and served as Chief Executive Officer of Brandfan, a marketing agency providing strategic and creative services to clients across various industries from July 2012 to April 2025. He has also served as Chief Marketing Officer for multiple cannabis operators, including 42 Degrees from September 2024 to March 2025 and Devi Holdings from April 2023 to April 2025, where he oversaw brand development, product strategy, and growth initiatives. Earlier in his career, he held senior positions with The Marketing Arm (Omnicom), EastWest Marketing Group, and DDB Needham. Mr. Kay has also served on the boards of Devi Holdings and AFC Warehouse Holdings, both cannabis-related companies, and Fifth Street Floating Rate Corp. (NASDAQ: FSFR), a publicly traded financial services company, where he contributed to strategic planning and governance matters. Mr. Kay earned a Bachelor of Science degree from the University of Maryland College of Business and Management. Age: 57. Michael Regan . On September 24, 2025, Mr. Regan was appointed Chief Investment & Strategy Officer. Mr. Regan joined the Company in March 2025 and previously held the position of Head of Investor Relations and Data Science from March 2025 to June 2025 and the position of Vice President, Strategic Finance and Corporate Development from June 2025 to September 2025. Prior to joining the Company in March 2025, Mr. Regan served as the Director of Research and Founding Partner of Excelsior Equities, LLC from December 2022 to December 2024, and Founder of MJResearchCo LLC from May 2020 to December 2022. While at MJResearchCo, Mr. Regan served as a consultant to HAL Extraction from November 2020 to December 2022. Mr. Regan has extensive capital markets and investment experience, with over 13 years of experience at hedge funds Roubaix Capital, Hawkshaw Capital, and Copper Arch Capital, and 5 years of experience at investment banks Excelsior Equities, Deutsche Bank, Credit Suisse, and DLJ. He received a Bachelor of Science in Business Administration, major in finance, from Georgetown University, and a Master of Business Administration from the Massachusetts Institute of Technology’s Sloan School of Management. He holds FINRA Series 7, Series 24, Series 86, and Series 87 licenses (inactive; expiration 2026). Age: 48. Family Relationships There are no family relationships between our Board of Directors and any of our executive officers. Code of Ethics We have adopted a Code of Ethics and Business Conduct applicable to all officers, directors and employees. A copy of our Code of Ethics and Business Conduct is filed as Exhibit 14 to this Form 10-K. Insider Trading Policy The Company’s Insider Trading Policy governs the purchase, sale and other acquisitions and dispositions of the Company’s securities by the Company and all of its directors, officers and employees. This policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the Nasdaq listing standards. A copy of the Insider Trading Policy is filed as Exhibit 19 to this Form 10-K. Shareholder Nominees There have been no material changes to the procedures by which our security holders may recommend nominees to the Company’s Board of Directors since the filing of the definitive proxy statement for the Company’s 2025 annual meeting of shareholders with the SEC on May 28, 2025. Additional information required by this Item 10 will be presented in the proxy statement for our 2026 Annual Meeting of Shareholders (the “Proxy Statement”) in the sections titled “Proposal 1: Election of Class II Directors,” “Management and Corporate Governance,” and “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference to the Proxy Statement. Item 11. Executive Compensation. We qualify as both a “smaller reporting company” and an “emerging growth company” under the rules promulgated by the SEC, and we have elected to comply with the disclosure requirements applicable to smaller reporting and emerging growth companies. Accordingly, this executive compensation summary is not intended to meet the disclosure requirements of larger reporting companies. As a smaller reporting company, we are required to disclose the executive compensation of our named executive officers, which consist of the following individuals, for the fiscal years ended December 31, 2025 and December 31, 2024, respectively: (i) any individual serving as our principal executive officer or acting in a similar capacity, during the fiscal year ended December 31, 2025; (ii) the two other most highly compensated executive officers of the Company serving as executive officers at the end of the most recently completed fiscal year; and (iii) up to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer at the end of the most recently completed fiscal year. 60 Summary Compensation Table The following table discloses compensation paid or to be paid to our named executive officers for the fiscal years ended December 31, 2025 and December 31, 2024. Name and Principal Position Fiscal Year Salary ($) Bonus ($) Stock Awards ($) (1) All Other Compensation ($) Total ($) Terrance E. Mendez (2)(3)(4) 2025 326,967 360,000 373,569 143,211 1,203,747 Chief Executive Officer and Chief Financial Officer 2024 - - - 72,827 72,827 Jeffrey Kay 2025 175,194 50,000 50,000 - 275,194 Chief Marketing Officer 2024 - - - - - James H. Dennedy (5) 2025 121,470 - - - 121,470 Former Chief Financial Officer 2024 334,699 38,000 26,459 - 399,158 Michael Regan 2025 93,304 50,000 123,446 - 266,750 Chief Investment & Strategy Officer 2024 - - - - - Douglas Beck 2025 106,452 - 86,371 - 192,823 Principal Accounting Officer, Senior Vice President of Finance 2024 - - - - - Sundie Seefried (6)(7) 2025 16,544 - - 7,376 23,920 Former Chief Executive Officer 2024 316,728 46,667 32,518 - 395,913 Donnie Emmi (8) 2025 126,982 22,500 - - 149,482 Former Chief Legal Officer 2024 331,508 38,000 26,459 - 395,967 (1) Amounts represent the aggregate grant date fair value of stock awards or option awards, as applicable, granted during the year measured pursuant to Financial Accounting Standard Board Accounting Standards Codification Topic 718 (Topic 718), the basis for computing stock-based compensation in our financial statement. (2) Prior to becoming the co-Chief Executive Officer on January 21, 2025, and for the year 2024 all income earned by Mr. Mendez was through his engagement as an independent contractor. (3) Mr. Mendez became our Chief Financial Officer on June 6, 2025 following Mr. Dennedy’s resignation. (4) Pursuant to the terms of Mr. Mendez’s employment agreement, if the agreement is not renewed or is terminated without cause, the Company is obligated to pay severance equal to the CEO’s then-current annual base salary. The severance is considered a nonretirement postemployment benefit that is accounted for under ASC 712-10, and a liability is accrued when it becomes probable that a payment will be made, and the amount is estimable. Since the amount is defined and the amount is probable, an accrual is deemed required. See “ Narrative Disclosure to Summary Compensation Table––Employment Agreements––Agreement with Terrance E. Mendez .” (5) Mr. Dennedy resigned as Chief Financial Officer on June 6, 2025. (6) Ms. Seefried resigned as co-Chief Executive Officer on February 28, 2025. (7) Pursuant to Ms. Seefried’s employment agreement, in 2025 the Company paid for her participation in the Consolidated Omnibus Budget Reconciliation Act insurance program following her resignation as co-Chief Executive Officer on February 28, 2025. (8) Mr. Emmi resigned as Chief Legal Office on June 6, 2025. Narrative Disclosure to Summary Compensation Table Overview The Company has developed an executive compensation program which is designed to align compensation with the Company’s business objectives and the creation of stockholder value, while enabling the Company to attract, motivate and retain individuals who contribute to the long-term success of the Company. Decisions on the executive compensation program, as described below, are determined and/or ratified by the Board of Directors with recommendations given by the Compensation Committee. The decisions regarding executive compensation reflect our belief that the executive compensation program must be competitive in order to attract and retain our executive officers. The Compensation Committee will seek to implement our compensation policies and philosophies by linking a significant portion of our executive officers’ cash compensation to performance objectives and by providing a portion of their compensation as long-term incentive compensation in the form of equity awards. The compensation for our executive officers has three primary components: base salary, an annual cash incentive bonus, and long-term incentive compensation in the form of equity awards. Base Salary The Company’s practice has been to ensure that base salary is fair to the executive officers, competitive within the industry and reasonable in light of the Company’s cost structure. The Compensation Committee determines base salaries and manages the base salary review process, subject to existing employment agreements. Annual Bonuses The Company uses annual cash incentive bonuses for the executive officers to tie a portion of their compensation to financial and operational objectives achievable within the applicable fiscal year. The Company expects that, near the beginning of each year, the Compensation Committee will select the performance targets, target amounts, target award opportunities and other term and conditions of annual cash bonuses for the executive officers, subject to the terms of any employment agreement. Following the end of each year, the Compensation Committee will determine the extent to which the performance targets were achieved and the amount of the award that is payable to the executive officers. Equity Awards The Company uses equity awards to reward long-term performance of the executive officers. The Company believes that providing a meaningful portion of the total compensation package in the form of equity awards will align the incentives of its executive officers with the interests of its stockholders and serve to motivate and retain the individual executive officers. Equity awards are awarded under the Plan, which has been adopted by the Board of Directors. 61 In connection with the Company’s executive compensation program, the Company has granted equity awards to its executives. Other Compensation The Company maintains various employee benefit plans, including medical, dental, life insurance and 401(k) plans, in which the executive officers participate. Employment Agreements and Offer Letters Agreement with Sundie Seefried On February 11, 2022, the Company entered into an executive employment agreement with Sundie Seefried which became effective September 28, 2022, pursuant to which Ms. Seefried serves as the Chief Executive Officer of the Company. The executive employment agreement provides for an annual base salary of $0.4 million, an initial incentive equity grant of options exercisable for 27,500 shares of the Company’s Common Stock at $133.40 per share that will vest over two years and other customary benefits. The executive employment agreement, which is for a two-year term, also provides for severance in the event of a termination by the Company without cause or by Ms. Seefried for good reason, of one year’s base salary. Ms. Seefried resigned as co-Chief Executive Officer of the Company effective on February 28, 2025. Ms. Seefried continues to be a member of the Board. Agreement with Terrance E. Mendez On January 21, 2025, the Company entered into an executive employment agreement with Mr. Mendez which became effective immediately, pursuant to which Mr. Mendez now serves as the Chief Executive Officer of the Company. Under the terms of the agreement, if the contract is not renewed or is terminated without cause, the Company is obligated to pay severance equal to the Chief Executive Officer’s then-current annual base salary. The agreement also provides for an annual cash bonus opportunity of up to 100% of base salary, and for long-term incentive compensation, the terms of which are to be determined by the Board of Directors. On January 21, 2025, the Company’s Board of Directors granted Mr. Mendez an option to purchase 32,700 shares of our Common Stock at an exercise price of $8.00 per share. The option has a ten-year term. One-third of the option vested immediately upon grant, one-third will vest on the first anniversary of the grant date, and the remaining one-third will vest on the second anniversary of the grant date. The terms of this agreement were not altered in connection with Mr. Mendez assuming the title of the Company’s sole Chief Executive Officer on February 28, 2025. Effective January 1, 2026, Mr. Mendez’s annual base salary was increased to $0.5 million per year. Agreement with James H. Dennedy On January 10, 2023, the Company entered into an executive employment agreement with James Dennedy, pursuant to which Mr. Dennedy serves as the Chief Financial Officer of the Company. The executive employment agreement provides for an annual base salary of $0.3 million, an initial incentive equity grant of options exercisable for 17,500 shares of the Company’s Common Stock at $133.40 per share that will vest over two years and other customary benefits. The executive employment agreement, which is for a two-year term, also provides for severance in the event of a termination by the Company without cause or by Mr. Dennedy for good reason, of one year’s base salary. On April 2, 2024, the Company entered into an amendment to its original agreement with Mr. Dennedy to facilitate business continuity and stagger contract expirations to accommodate the Company’s public reporting schedule. The amendment to Mr. Dennedy’s executive employment extends the term of his employment to May 16, 2026. In addition, the amendment contains a provision that, effective April 1, 2024, deletes and replaces Section 4(b) of Mr. Dennedy’s original agreement such that all PTO that Mr. Dennedy accrued through March 31, 2024, but had not taken, shall be paid to him during the month of April 2024. As a result, no PTO shall accrue or be paid out at the time of termination of Mr. Dennedy’s employment with the Company for any reason. The amendment also adds a provision that Mr. Dennedy shall be entitled to receive supplemental severance in an amount equivalent to six months of his then-current base salary, provided that he executes a release of claims against the Company and its affiliated entities, executives, and employees (including claims related to any non-compete and non-solicit covenants), for the six-month period after the termination of his employment. Mr. Dennedy resigned as Chief Financial Officer on June 6, 2025. Agreement with Donnie Emmi On January 10, 2023, the Company entered into an executive employment agreement with Donnie Emmi, pursuant to which Mr. Emmi serves as the Chief Legal Officer of the Company. The executive employment agreement provides for an annual base salary of $285,000, an initial incentive equity grant of options exercisable for 350,000 shares of the Company’s Common Stock at $6.67 per share that will vest over two years and other customary benefits. The executive employment agreement, which is for a two-year term, also provides for severance in the event of a termination by the Company without cause or by Mr. Emmi for good reason, of one year’s base salary. On April 2, 2024, the Company entered into an amendment to its original agreement with Mr. Emmi to facilitate business continuity and stagger contract expirations to accommodate the Company’s public reporting schedule. The amendment to Mr. Emmi’s executive employment agreement extends the term of his employment to August 22, 2026. In addition, the amendment contains a provision that, effective April 1, 2024, deletes and replaces Section 4(b) of Mr. Emmi’s original agreement such that all PTO that Mr. Emmi accrued through March 31, 2024, but had not taken, shall be paid to him during the month of April 2024. As a result, no PTO shall accrue or be paid out at the time of termination of Mr. Emmi’s employment with the Company for any reason. The amendment also adds a provision that Mr. Emmi shall be entitled to receive supplemental severance in an amount equivalent to six months’ of his then-current base salary, provided that he executes a release of claims against the Company and its affiliated entities, executives, and employees (including claims related to any non-compete and non-solicit covenants), for the six month period after the termination of his employment. Mr. Emmi resigned as Chief Legal Officer on June 6, 2025 62 Offer Letter with Jeffrey Kay Mr. Jeffrey Kay joined the Company in April 2025 as Senior Vice President of Marketing. His annual salary is $0.3 million per annum and an initial incentive equity grant of options exercisable for 23,781 shares of the Company’s Common Stock at $2.22 per share that will vest over three years and other customary benefits. On September 24, 2025, Mr. Kay was appointed Chief Marketing Officer. Mr. Kay joined the Company in April 2025 as Senior Vice President of Marketing. Mr. Kay is an at-will employee.   Offer Letter with Michael Regan Mr. Michael Regan joined the Company in March 2025 to June 2025 as Head of Investor Relations and Data Science, and the position of Vice President, Strategic Finance and Corporate Development from June 2025. On September 24, 2025, Mr. Regan was appointed Chief Investment and Strategy Officer. Mr. Regan annual salary was $0.1 million per annum and an initial incentive equity grant of options exercisable for 7,326 shares of the Company’s Common Stock at $6.40 per share that will vest over three years and other customary benefits. On January 1, 2026, Mr. Regan annual salary was increased to $0.2 million per annum. Mr. Regan is an at-will employee. Offer Letter with Douglas Beck Mr. Douglas Beck joined the Company in May 2025 as the Senior VP and Controller of the Company. On September 24, 2025, Mr. Beck was appointed Principal Accounting Officer and will continue to serve as the Company’s Senior Vice President of Finance, Controller, a position that he has held since May 2025. Mr. Beck annual salary was $0.18 million per year and is he eligible to participate in the Company’s benefits. On January 1, 2026, Mr. Beck annual salary was increased to $0.2 million per year. Mr. Beck is an at-will employee. Director Compensation The following table sets forth for the year ended December 31, 2025, certain information as to the total remuneration we paid to our non-employee directors. In 2025, each director received a quarterly cash payment in the amount of $0.006 million and fees in the amount of $0.005 million per committee. In addition, the chair of the Audit Committee received an annual retainer of $20,000; the chair of Compensation Committee received an annual retainer of $0.01 million; the chair of the Nominating and Corporate Governance Committee received an annual retainer of $0.01 million; and the chair of the Board of Directors received an additional $0.015 million. Mr. Mendez did not receive fees for his service as a member of the Board of Directors, and Ms. Seefried did not receive fees for her service as a member of the Board of Directors until after her resignation from her position as co-Chief Executive Officer of the Company. Name Fees Earned or Paid in Cash ($) Option Awards (1) ($) All Other Compensation ($) Total ($) Jonathon Niehaus 55,000 84,142 - 139,142 Sundie Seefried 25,000 84,142 - 109,142 Richard Carleton 39,600 84,142 - 123,742 Francis A. Braun III 39,167 100,000 - 139,167 Douglas Fagan (2) 6,250 84,142 - 90,392 Jennifer Meyers (3) 6,250 84,142 - 90,392 Jonathan Summers (4) 23,791 84,142 - 107,933 Karl Racine (5) 8,750 84,142 - 92,892 (1) Amounts represent the aggregate grant date fair value of option awards granted during the year measured pursuant to Financial Accounting Standard Board Accounting Standards Codification Topic 718 (Topic 718), the basis for computing stock-based compensation in our financial statement. (2) Mr. Fagan resigned from his position as a director of the Company on May 15, 2025. (3) Ms. Meyers resigned from her position as a director of the Company on May 15, 2025. (4) Mr. Summers did not stand for re-election at the 2025 annual meeting of the Company’s stockholders. (5) Mr. Racine resigned from his position as a director of the Company on May 2, 2025. 63 Outstanding Equity Awards at December 31, 2025 The following table sets forth information regarding outstanding stock options or unvested equity awards as of December 31, 2025. Option Awards Restricted Stock Awards Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) Terrance E. Mendez 32,700 32,700 32,700 8.00 January 21, 2035 – – – – 91,751 91,751 91,751 2.40 August 7, 2035 – – – – Jeffrey Kay 23,781 23,781 23,781 2.22 May 7, 2035 – – – – 25,825 25,825 25,825 2.40 August 7, 2035 – – – – Michael Regan 7,326 7,326 7,326 6.40 March 10, 2035 – – – – 45,875 45,875 45,875 2.40 August 7, 2035 – – – – Douglas Beck 45,875 45,875 45,875 2.40 August 7, 2035 – – – – Sundie Seefried 27,500 27,500 27,500 133.40 October 13, 2032 – – – – 11,628 11,628 11,628 9.68 March 3, 2035 There were no outstanding stock options or unvested equity awards as of December 31, 2025 for either Mr. Emmi or Mr. Dennedy. Additional information required by this Item 11 will be presented in the Proxy Statement in the sections titled “Compensation Discussion and Analysis,” “Management and Corporate Governance,” and “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference to the Proxy Statement. 64 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth information with respect to the beneficial ownership of our Common Stock as of April 10, 2026, except as noted, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock, (ii) each of our directors and named executive officers, and (iii) all of our directors and executive officers as a group. Our only class of voting securities is our Common Stock. To our knowledge, none of the shares listed below is held under a voting trust or similar agreement. To our knowledge, there are no pending arrangements, including any pledges by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. There were 4,505,485 shares of Common Stock issued and outstanding on April 10, 2026. Unless otherwise indicated in the following table, the address for each person named in the table is 1526 Cole Blvd., Suite 250, Golden, Colorado 80401. Pursuant to SEC rules, we have included shares of Common Stock that the person has the right to acquire within 60 days after April 10, 2026. Name and Address of Beneficial Owner Shares of Class A Common Stock % of Total Voting Power (1) Terrance E. Mendez 102,651 (2) 2.2 % Sundie Seefried 96,795 (3) 2.1 % Jonathon Niehaus 16,596 (4) * % Richard Carleton 15,635 (4) * % Francis A. Braun III 53,144 (5) 1.2 % Michael Regan 48,317 (5) (8) 1.1 % Douglas Beck 45,875 (5) 1.0 % Jeffrey Kay 8,608 (5) * % (All Executive Officers and Directors as a Group (8 persons)): 387,621 8.0 % Five Percent and Other Holders: Partner Colorado Credit Union 1,080,807 (6) 24.0 % M3 FUNDS, LLC 308,000 (7) 6.8 % * Indicates ownership of less than 1% of the outstanding shares of our Common Stock. (1) The percentage of beneficial ownership of the Company is calculated based on 4,505,485 shares of Common Stock outstanding as of the April 10, 2026, plus vested but unexercised options. (2) Includes (i) 10,900 incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $8.00, and (ii) 91,751 incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $2.40. (3) Includes (i) 27,500 incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $133.40, and (ii) 11,628 incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $9.68. (4) Includes 11,628 incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $9.68. (5) Composed entirely of incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $2.40. (6) Based solely on information contained in a Schedule 13D filed with the SEC on July 21, 2023. The business address of Partner Colorado Credit Union is 6221 Sheridan Blvd, Arvada, CO 80003. (7) Based solely on information contained in a Schedule 13G filed with the SEC on December 30, 2025. The business address of M3 Funds, LLC is 2070 E 2100 S, Suite 250, Salt Lake City, UT 84109. (8) Includes 2,442 incentive stock options that are vested, or vest in the next 60 days, to purchase shares of Common Stock and have an exercise price per share equal to $6.40. 65 Participation by Management and a Director in the Series B Preferred Stock Offering On September 30, 2025, Terrance Mendez, Chief Executive Officer, Interim Chief Financial Officer and Director of the Company, Michael Regan, Chief Investment & Strategy Officer of the Company, Jeffrey Kay, Chief Marketing Officer of the Company, Richard Carleton, a Director of the Company, and Margaret Williams, an employee of the Company, all participated in the Company’s offering of Series B Preferred Stock pursuant to the Series B SPA. Their participation was subject to stockholder approval in accordance with Nasdaq Rule 5635(c), which was obtained on November 6, 2026. In the aggregate, these participants purchased 284 shares of Series B Preferred Stock and received accompanying Series B Warrants to purchase an aggregate of 18,290 shares of Common Stock. Certain members of the Company’s management team and its Board of Directors participated in the Series B SPA as buyers. In the aggregate, management and board participants purchased 284 shares of Series B Preferred Stock and received accompanying Series B Warrants to purchase 18,290 shares of Common Stock. The individual participants and their respective purchases were as follows: Participant Position Series B Convertible Preferred Shares Owned Series B Warrant Shares Owned Amount Paid Terrance E. Mendez Chief Executive Officer and Chief Financial Officer 125 8,050 $ 100,000 Michael Regan Chief Investment and Strategy Officer 63 4,057 $ 50,400 Jeffrey Kay Chief Marketing Office 63 4,057 $ 50,400 Margret Williams VP, BSA and Compliance 20 1,228 $ 16,000 Richard Carleton Board of Director 13 837 $ 10,400 (1) (1) Mr. Carleton also agreed to cancel $10,400 of his Board compensation as consideration for his Series B Preferred Stock and Series B Warrants. Because the issuance of shares of Common Stock underlying the Series B Preferred Stock and Series B Warrants to members of management and the Board constituted compensation under Nasdaq Listing Rule 5635(c), such issuances were conditioned upon and subject to stockholder approval. On November 6, 2025, at a special meeting of stockholders, the Company’s stockholders approved the issuances to members of management and the Board of Directors. The terms of the Series B Preferred Stock and Series B Warrants purchased by management and director participants are identical to those available to all other buyers under the Series B stock purchase agreement or SPA. No preferential terms, discounts beyond the standard $800 per $1,000 stated-value purchase price, or other special arrangements were extended to any management or board participant. For additional information regarding the Series B offering, see “Item 13. Certain Relationships and Related Transactions, and Director Independence” and Note 19 to the Consolidated Financial Statements included in this Annual Report on Form 10-K. Additional information required by this Item 12 will be presented in the Proxy Statement in the sections titled “Certain Relationships and Related Transactions” and “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference to the Proxy Statement. Item 13. Certain Relationships and Related Transactions and Director Independence. In addition to the below, the information required by this Item 13 is incorporated herein by reference to the information in the sections entitled “Certain Relationships and Related Transactions” and “Management and Corporate Governance” in the Proxy Statement. Director Independence Applicable rules of Nasdaq require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent, and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. The Nasdaq independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees, that neither the director nor any of his or her family members has engaged in various types of business dealings with us and that the director is not associated with the holders of more than five percent of our Common Stock. In addition, under applicable Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of the listed company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In February 2026, the Board of Directors, upon recommendation from the Nominating and Corporate Governance Committee, formally adopted and approved the use of the Nasdaq independence definition as the Company’s standard for evaluating a director’s independence. Our Board of Directors has undertaken a review of the independence of each director. Based on information provided by each director concerning their background, employment and affiliations, our Board of Directors has determined that three of our five current directors do not have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing standards of Nasdaq. In making such determination, our Board of Directors considered the relationships that each such non-employee director has with us and all other facts and circumstances that our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. Each of Mr. Carleton, Mr. Niehaus, and Mr. Braun would be considered “independent” members of our Board of Directors as “independence” is defined in Nasdaq Marketplace Rule 5605(a)(2). The Board has determined that Mr. Mendez is not “independent” because he is an executive officer of the Company, and that Ms. Seefried is not “independent” due to her recent previous employment as an executive officer of the Company. The Board’s Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee each consist entirely of each of the independent directors, in accordance with Nasdaq listing standards and applicable SEC rules. 66 Related Party Transaction Policy The Company’s Board of Directors has adopted a written Related Party Transaction Policy that requires the Audit Committee of the Board to review and approve or ratify any transaction between the Company and a “related party,” which is defined as any director, executive officer, nominee for director, or holder of more than 5% of the Company’s outstanding Common Stock, or any immediate family member of any such person in which the amount involved exceeds the lesser of $0.12 million since the Company’s last fiscal year or 1% of the average of the Company’s total assets at year-end for the Company’s last two completed fiscal years. The Audit Committee of the Board evaluates the material facts of each such transaction and determines whether approval or ratification is in the best interests of the Company and its stockholders. Our related party transactions entered into between January 1, 2024 and the date hereof, all of which were previously approved by our Audit Committee, are described below. Identified Related Parties For the fiscal year ended December 31, 2025, the Company identified one related party as defined under ASC 850 and SEC Regulation S-K Item 404. PCCU held approximately 25.2% of the Company’s Common Stock as of December 31, 2025, making it both a significant stockholder and the Company’s most significant commercial counterparty. PCCU also holds the majority of the Company’s cash deposits. Commercial Alliance Agreements The Company’s wholly-owned subsidiary, SHF, LLC, operates substantially all of its business with PCCU. This relationship is governed by the Second Amended CAA, which replaced the First Amended CAA as of October 1, 2025. The Company and PCCU had agreed to the terms for the Second Amended CAA in October 2025 and was executed on February 4, 2026. The First Amended CAA introduced several significant changes to the CAA, including (i) the elimination of the Company’s indemnification obligations for loan-related losses, (ii) a reduction in the Company’s loan program income share to approximately 35% to reflect the incremental risk absorbed by PCCU in connection with the elimination of our indemnification obligations, (iii) the replacement of a multiple per-account fee structure with a single asset hosting fee equal to 1.00% of average daily CRB deposit balances that increased to 1.30% in the event balances exceeded $130 million, and (iv) us receiving 100% of investment income on CRB deposits. The Second Amended CAA fundamentally restructured the economics of the PCCU relationship. The primary changes were that (i) the Company’s share of loan program income increased from approximately 35% up to 65%, reflecting the completion the September 2025 Recapitalization; (ii) the Company now receives up to 65% of loan program income generated by PCCU’s CRB loan portfolio in exchange for being obligated to indemnify PCCU for up to 65% of net losses of a default on any loan covered by the Second Amended CAA, with no contractual cap on total exposure; and (iii) the asset hosting fee structure transitioned from a flat rate to a tiered marginal rate schedule based on average daily deposit balances, with rates ranging from 0.50% on the first $25 million to 1.25% on balances above $125 million, resulting in estimated annual savings of approximately $0.3 million compared to the rates contained in the First Amended CAA. See Part I, Item 1., “Business––Recent Developments––September 2025 Recapitalization.” The Company derives substantially all of its revenue from services performed under the CAA. For the year ended December 31, 2025, revenue generated under the then-in effect agreement with PCCU approximated 86.7% of total Company revenues. As of December 31, 2025, amounts due from PCCU approximated 97% of total accounts receivable. PCCU holds the majority of the Company’s cash and cash equivalents. As of December 31, 2025, and December 31, 2024, $6.8 million and $2.2 million of the Company’s cash was held on deposit at PCCU, respectively. See Part II, Item 7., Part II, Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Years ended December 31, 2025 and 2024––Related Party Relationship with PCCU.” On September 30, 2025, the Company entered into the Debt Cancellation Agreement whereby PCCU cancelled the PCCU Note. At the time of cancellation, the outstanding principal balance was approximately $10.7 million. In consideration for the cancellation, PCCU received 13,436 shares of Series B Preferred Stock and a Series B Warrant to purchase 865,200 shares of Common Stock. As a result, no balance remained outstanding under the PCCU Note as of December 31, 2025. The transaction was accounted for as a debt extinguishment under ASC 470-50. Under the terms of the Series B Preferred Stock and Series B Warrants, PCCU may not convert its preferred shares or exercise its warrant to the extent such action would result in PCCU beneficially owning more than 4.99% of the Company’s Common Stock. Holders of the Series B Preferred Stock have no voting rights and no right to appoint directors of the Company. Series B Preferred Stock Offering See Part III, Item 12., “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters––Participation by Management and a Director in the Series B Preferred Stock Offering” for a discussion regarding the participation by a director and several members of management in the Company’s offering of Series B Preferred Stock pursuant to the Series B SPA. Item 14. Principal Accountant Fees and Services. The information required by this Item 14 is incorporated herein by reference to the information in the section entitled “Proposal 2: Ratification of the Appointment of Macias, Gini & O’Connell, LLP as the Company’s Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2026” in the Proxy Statement. 67 PART IV Item 15. Exhibits and Financial Statement Schedules. List of documents filed as part of this Annual Report on Form 10-K: (1) Consolidated Financial Statements The consolidated financial statements required by this item are contained under the section entitled “Index to Consolidated Financial Statements” (and the consolidated financial statements and related notes referenced therein) included beginning on page F-1 of this Annual Report on Form 10-K. (2) Consolidated Financial Statements Schedules All financial statement schedules are omitted because they are either not applicable, not required, or because the information required is included in the above referenced consolidated financial statements and notes thereto. (3) List of Exhibits The exhibit list in the Exhibit Index is incorporated herein by reference as the list of exhibits required as part of this Annual Report on Form 10-K. EXHIBIT INDEX The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K. No. Description of Exhibit 2.1† Unit Purchase Agreement dated February 11, 2022 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 14, 2022). 2.2 First Amendment to Unit Purchase Agreement dated September 19, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 19, 2022). 2.3 Second Amendment to Unit Purchase Agreement dated September 22, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 23, 2022). 2.4 Third Amendment to Unit Purchase Agreement dated September 28, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 29, 2022). 2.5† Agreement and Plan of Merger, dated October 29, 2022, by and among SHF Holdings, Inc., Merger Sub I, Merger Sub II, Rockview Digital Solutions, Inc. d/b/a Abaca and Dan Roda, solely in such individual’s capacity as the representative of Abaca security holders (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 31, 2022). 2.6 Amendment to Agreement and Plan of Merger, dated November 11, 2022, by and among SHF Holdings, Inc., Merger Sub I, Merger Sub II, Rockview Digital Solutions, Inc. d/b/a Abaca and Dan Roda, solely in such individual’s capacity as the representative of the Abaca security holders (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 15, 2022). 68 2.7 Second Amendment to Agreement and Plan of Merger, dated October 26, 2023, by and among SHF Holdings, Inc., Merger Sub I, Merger Sub II, Rockview Digital Solutions, Inc. d/b/a Abaca and Dan Roda, solely in such individual’s capacity as the representative of the Abaca security holders (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 27, 2023). 2.8 First Amendment to Second Amendment to Agreement and Plan of Merger, Warrant Agreement, and Lock-up Agreement dated February 27, 2024 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 4, 2024). 3.1 Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 29, 2022). 3.2 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 20, 2025). 3.3 Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on November 10, 2025). 3.4 Bylaws of the Company (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 filed on June 2, 2021). 3.5 Certificate of Designation of Series B Preferred Stock of SHF Holdings, Inc., dated September 30, 2025 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 3.6 Amendment to SHF Holdings, Inc. Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 10, 2025). 4.1 Form of Warrant (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 4.2 Form of Amended and Restated Warrant (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 17, 2025). 4.3 Description of Registered Securities (incorporated by reference to Exhibit 4.6 to the Company’s Annual Report on Form 10-K filed on April 1, 2024). 10.1 Amended and Restated Commercial Alliance Agreement, dated December 30, 2024, between the Company and Partner Colorado Credit Union (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 7, 2025). 10.2 Form of Convertible Promissory Note, by and between the Company and the Investors (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 2, 2025). 10.3 Common Stock Purchase Agreement, dated as of September 17, 2025, between SHF Holdings, Inc. and CREO Investments LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 23, 2025). 10.4 Registration Rights Agreement dated as of September 17, 2025 between SHF Holdings, Inc. and CREO Investments LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 23, 2025). 10.5† Form of Securities Purchase Agreement, dated September 30, 2025, by and between SHF Holdings, Inc. and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 10.6 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 10.7 Debt Cancellation Agreement, dated September 30, 2025, by and between SHF Holdings, Inc. and Partner Colorado Credit Union (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 10.8 Form of Exchange and Cancellation Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 69 10.9 Amendment No. 1 to Common Stock Purchase Agreement, dated September 30, 2025, by and between SHF Holdings, Inc. and CREO Investments LLC (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on October 3, 2025). 10.10 Form of Amendment to Securities Purchase Agreement, dated October 14, 2025, by and between SHF Holdings, Inc. and the investor identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 17, 2025). 10.11 Executive Employment Agreement, dated January 21, 2025, between the Company and Terrance Mendez (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 27, 2025). 10.12 Letter Agreement dated January 29, 2025 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on February 3, 2025). 10.13 Amended and Restated Senior Secured Promissory Note dated March 3, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 4, 2025). 10.14 Waiver, dated as of May 21, 2025, by and between SHF Holdings, Inc. and Partner Colorado Credit Union (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 28, 2025). 10.15 Amended and Restated – 2022 Equity Incentive Plan (incorporated by reference to Exhibit 3 to the Company’s Annual Report on Form 10-K filed on April 1, 2024). 10.16 SHF Holdings, Inc. Amendment to Amended and Restated – 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 11, 2025). 10.17 Form SHF Holdings, Inc. Stock Option Agreement (incorporated by reference to Exhibit 4 to the Company’s Annual Report on Form 10-K filed on April 1, 2024). 10.18 Form of SHF Holdings, Inc. Restricted Stock Unit Agreement (incorporated by reference to Exhibit 5 to the Company’s Annual Report on Form 10-K filed on April 1, 2024). 10.19 Security Agreement, dated March 29, 2023, by and between the Company and Partner Colorado Credit Union (incorporated by reference to Exhibit 3 to the Company’s Quarterly Report on Form 10-Q filed May 15, 2023). 10.20 Executive Employment Agreement, dated January 10, 2023, between the Company and James H. Dennedy (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K, filed on April 14, 2023). 10.21 Amendment to Employment Agreement dated April 2, 2024 between the Company and James Dennedy (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 8, 2024). 10.22 Executive Employment Agreement, dated January 10, 2023, between the Company and Donald Emmi (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K, filed on April 14, 2023). 10.23 Amendment to Employment Agreement dated April 2, 2024 between the Company and Donald Emmi (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on April 8, 2024). 10.24 Employment Agreement, dated February 11, 2022, between the Company and Sundie Seefried (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on September 4, 2024). 10.25 Amendment to Employment Agreement dated August 1, 2024 between the Company and Sundie Seefried (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 4, 2024). 10.26 Executive Employment Agreement, dated August 16, 2023, between the Company and Tyler Beuerlein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on August 22, 2023). 10.27 Amendment to Employment Agreement dated August 1, 2024 between the Company and Tyler Beuerlein (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 27, 2024). 10.28† Second Amended and Restated Commercial Alliance Agreement, dated February 4, 2026, by and between the Company and PCCU (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 9, 2026). 14* Code of Ethics and Business Conduct. 70 16.1 April 18, 2025 letter from Marcum LLP (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on April 18, 2025). 19* Safe Harbor Financial Policy on Insider Trading. 21.1* Subsidiaries of the Registrant. 23.1* Consent of Macias, Gini & O’Connell, LLP, independent registered public accounting firm. 23.2* Consent of Marcum LLP, independent registered public accounting firm. 31.1* Certification of Principal Executive Officer and Principal Chief Financial Officer Pursuant to Securities and Exchange Act Rule 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002. 31.2* Certification of Principal Accounting Officer Pursuant to Securities and Exchange Act Rule 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002. 32.1** Certificate of Principal Executive Officer and Principal Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certificate of Accounting Principal Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97 Clawback policy (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K filed on April 1, 2024). 101.INS* Inline XBRL Instance Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ** Furnished. † Pursuant to Item 601(a)(5) of Regulation S-K, schedules and similar attachments to this exhibit have been omitted because they do not contain information material to an investment or voting decision and such information is not otherwise disclosed in such exhibit. The Company will supplementally provide a copy of any omitted schedule or similar attachment to the U.S. Securities and Exchange Commission or its staff upon request. Item 16. Form 10-K Summary. None. 71 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHF HOLDINGS INC . Date: April 15, 2026 /s/ Terrance E. Mendez Name: Terrance Mendez Title: Chief Executive Officer and Chief Financial Officer (Principal Executive Officer) Date: April 15, 2026 /s/ Douglas Beck Name: Douglas Beck Title: Principal Accounting Officer, SVP of Accounting and Finance, Controller (Principal Financial and Accounting Officer) Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. Signature Title Date /s/ Terrance E. Mendez Chief Executive Officer and Chief Financial Officer April 15, 2026 Terrance E. Mendez /s/ Douglas Beck Principal Accounting Officer, SVP of Finance, Controller April 15, 2026 Douglas Beck /s/ Jonathon Niehaus Director April 15, 2026 Jonathon Niehaus /s/ Francis Braun III Director April 15, 2026 Francis Braun III /s/ Richard Carleton Director April 15, 2026 Richard Carleton /s/ Sundie Seefried Director April 15, 2026 Sundie Seefried 72 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS SHF HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS INDEX Page Report of Independent Registered Public Accounting Firm (Macias Gini & O’Connell LLP) (PCAOB ID 324 ) F-2 Report of Independent Registered Public Accounting Firm (Marcum LLP) (PCAOB ID 688 ) F-3 Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 F-4 Consolidated Statements of Operations for the years ended December 31, 2025 and December 31, 2024 F-5 Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2025 and December 31, 2024 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and December 31, 2024 F-8 Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and December 31, 2024 F-9 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of SHF Holdings, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of SHF Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2025, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the year then ended, the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph - Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses from operations and experienced negative cash flows from operating activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s plans to address these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Emphasis of Matter - Customer Concentration Note 2 to the financial statements describes the Company’s significant concentration of revenue from a single customer. During the year ended December 31, 2025, approximately 86.7% of the Company’s total revenue was generated from a single customer, which is a related party. The loss of this customer could have a material adverse effect on the Company’s operations and financial position. Our opinion is not modified in respect of this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Macias Gini & O’Connell LLP M acias Gini & O’Connell LLP We have served as the Company’s auditor since 2025 Sacramento, California April 15, 2026 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of SHF Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of SHF Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2024 the related consolidated statement of operations, stockholders’ equity (deficit), and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and may need to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor from 2022 through 2025. Hartford, CT April 10, 2025 F- 3 SHF Holdings, Inc. CONSOLIDATED BALANCE SHEETS December 31, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 6,779,040 $ 2,324,647 Accounts receivable – trade 31,376 134,609 Accounts receivable – related party 1,009,483 968,023 Accounts receivable 1,009,483 968,023 Prepaid expenses 862,400 659,536 Accrued interest receivable - 16,319 Forward purchase receivable - 4,584,221 Loans receivable, net - 13,332 Contract asset 516,283 - Other current assets 3,000,000 3,000,000 Total Current Assets 12,198,582 11,700,687 Long-term loans receivable, net - 378,854 Operating lease right to use assets 547,186 703,524 Investment in preferred securities 1,450,000 - Prepaid expenses 414,329 412,500 Contract asset 2,581,417 - Other assets 15,510 22,722 Total Assets $ 17,207,024 $ 13,218,287 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 189,828 $ 140,723 Accounts payable-related party 171,365 75,608 Accounts payable 171,365 75,608 Accrued expenses 1,310,463 1,301,378 Deferred revenue 15,415 28,335 Lease liabilities 181,963 161,952 Senior secured promissory note - 255,765 Deferred consideration 3,000,000 3,338,343 Forward purchase derivative liability - 7,309,580 Stand-ready guarantee liability 711,667 - Financial indemnification liability 433,968 - Other current liabilities 485,055 72,836 Total Current Liabilities 6,499,724 12,684,520 Warrant liabilities 39,620 1,360,491 Senior secured promissory note - 10,748,408 Stand-ready guarantee liability 1,245,416 - Financial indemnification liability 657,804 - Lease liabilities 528,552 712,882 Total Liabilities 8,971,116 25,506,301 Commitment and Contingencies (Note 20) - - Stockholders’ Equity (Deficit) Convertible preferred stock, $ .0001 par value, 1,250,000 shares authorized, 111 and 111 shares issued and outstanding on December 31, 2025, and December 31, 2024, respectively - - Series B Convertible Preferred Stock, 35,000 authorized, shares, par value $ .0001 , 30,808 and 0 shares issued and outstanding as of December 31, 2025 and December 31, 2024 3 - Convertible preferred stock, value 3 - Class A Common Stock, $ .0001 par value, 1 billion and 130 million shares authorized, 4,281,523 and 2,783,666 issued and outstanding on December 31, 2025, and December 31, 2024, respectively 428 278 Additional paid-in capital 131,152,020 108,467,253 Accumulated deficit ( 122,916,543 ) ( 120,755,545 ) Total Stockholders’ Equity (Deficit) $ 8,235,908 $ ( 12,288,014 ) Total Liabilities and Stockholders’ Equity (Deficit) $ 17,207,024 $ 13,218,287 See accompanying notes to consolidated financial statements F- 4 SHF Holdings, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS 2025 2024 For The Year Ended December 31, 2025 2024 Revenue $ 7,673,532 $ 15,242,560 Operating expenses Compensation and employee benefits 6,266,317 7,783,331 General and administrative expenses 3,294,275 4,018,094 Professional services 3,328,222 2,518,394 Lease expense 232,773 258,477 Amortization of contract asset 129,072 - Credit loss (benefit) expense ( 177,917 ) ( 1,393,131 ) Impairment of goodwill - 6,058,000 Impairment of long-lived intangible assets - 3,090,881 Total operating expenses 13,072,742 22,334,046 Operating loss ( 5,399,210 ) ( 7,091,486 ) Other (income) expenses Interest expense ( 492,643 ) ( 533,390 ) Change in fair value of warrant liabilities 1,320,871 2,803,638 Gain on extinguishment of forward purchase derivative 3,336,213 - Costs incurred to secure financing ( 987,621 ) - Discount on common stock sold pursuant to the ELOC ( 76,553 ) - Change in the fair value of deferred consideration 79,475 361,449 Total other income 3,179,742 2,631,697 Net loss before provision (benefit) for income taxes ( 2,219,468 ) ( 4,459,789 ) Provision (benefit) for income taxes ( 58,470 ) 43,859,686 Net loss ( 2,160,998 ) ( 48,319,475 ) Deemed dividend on Series B Preferred Stock redemption ( 241,435 ) - Net loss attributable to common stockholders $ ( 2,402,433 ) $ ( 48,319,475 ) Weighted average shares outstanding, basic and diluted 2,921,648 2,772,867 Basic and diluted net loss per share $ ( 0.82 ) $ ( 17.43 ) See accompanying notes to consolidated financial statements F- 5 SHF Holdings, Inc. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2025 Shares Amount Shares Amount Shares Amount Capital Deficit ( Deficit) Preferred Stock Series B Convertible Preferred Stock Class A Common Stock Additional Paid-in Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Shares Amount Capital Deficit ( Deficit) Balance, December 31, 2024 111 $ - - $ - 2,783,666 $ 278 $ 108,467,253 $ ( 120,755,545 ) $ ( 12,288,014 ) Reclassification of forward purchase receivable - - - - - - ( 4,584,221 ) - ( 4,584,221 ) Issuance of Class A Common Stock for restricted stock awards, net of tax - - - - 4,292 - 8,768 - 8,768 Issuance of Class A Common Stock for legal settlement - - - - 89,308 9 199,991 - 200,000 Shares of Class A Common Stock withheld for net share settlement - - - - ( 1,421 ) - - - - Issuance of Series B Convertible Preferred Stock and Series B Warrants, net of offering costs - - 31,052 3 - - 23,918,189 - 23,918,192 Redemption of Series B Convertible Preferred Stock - - ( 244 ) - - - ( 474,177 ) - ( 474,177 ) Issuance of common stock due to reverse stock split - - - 40,110 4 ( 4 ) - - Stock compensation expense - - - - - 1,501,950 - 1,501,950 Issuance of Class A Common Stock to Abaca Shareholders - - - 37,517 4 258,864 - 258,868 Issuance of Class A Common Stock for restricted stock award s - - - 1,448 - - - - Issuance of Class A Common from the Equity Line of Credit (ELOC) - - - - 1,326,603 133 1,778,854 - 1,778,987 Discount on common stock sold pursuant to the ELOC - - - - - 76,553 - 76,553 Net loss - - - - - - - ( 2,160,998 ) ( 2,160,998 ) Balance December 31, 2025 111 $ - 30,808 $ 3 4,281,523 $ 428 $ 131,152,020 $ ( 122,916,543 ) $ 8,235,908 F- 6 SHF Holdings, Inc. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2024 Shares Amount Shares Amount Capital (Deficit) Equity Preferred Stock Class A Common Stock Additional Paid-in Accumulated Total Shareholders’ Equity Shares Amount Shares Amount Capital (Deficit) (Deficit) Balance, December 31, 2023 1,101 $ - 2,728,168 $ 273 $ 105,924,859 $ ( 71,569,821 ) $ 34,355,311 Balance 1,101 $ - 2,728,168 $ 273 $ 105,924,859 $ ( 71,569,821 ) $ 34,355,311 Issuance of Class A Common Stock for marketing services - - 12,117 1 149,999 - 150,000 Conversion of PIPE shares ( 990 ) - 39,600 4 866,245 ( 866,249 ) - Issuance of Class A Common Stock for restricted stock award s - - 3,781 - 63,784 - 63,784 Stock compensation cost - - - - 1,462,366 - 1,462,366 Net loss - - - - - ( 48,319,475 ) ( 48,319,475 ) Balance, December 31, 2024 111 $ - 2,783,666 $ 278 $ 108,467,253 $ ( 120,755,545 ) $ ( 12,288,014 ) Balance 111 $ - 2,783,666 $ 278 $ 108,467,253 $ ( 120,755,545 ) $ ( 12,288,014 ) See accompanying notes to consolidated financial statements F- 7 SHF Holdings, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS 2025 2024 For The Year Ended December 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 2,160,998 ) $ ( 48,319,475 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization expense 3,155 711,929 Amortization of contract asset 129,072 - Stock compensation expense 1,523,489 1,575,952 Gain on extinguishment of forward purchase derivative ( 3,336,213 ) - Amortization of prepaid consulting from the issuance of Series B Convertible Preferred Stock and Series B Warrants 59,857 - Net deferred indemnified loan origination fees - ( 63,275 ) Discount on common stock sold pursuant to the ELOC 76,553 - Other non-cash issuance costs related to the ELOC 800,000 - Shares issued in settlement of a legal dispute 200,000 - Non-cash interest on issuance of convertible notes 137,500 - Lease expense ( 7,981 ) 23,181 Credit loss (benefit) expense ( 177,917 ) ( 1,393,131 ) Impairment of goodwill - 6,058,000 Impairment of long-lived intangible assets - 3,090,881 Deferred tax expense, net - 43,859,686 Marketing expense settled via Common Stock - 100,000 Change in fair value of warrant liabilities ( 1,320,871 ) ( 2,803,638 ) Change in the fair value of deferred consideration ( 79,475 ) ( 361,449 ) Changes in operating assets and liabilities: Accounts receivable – trade 103,233 ( 12,734 ) Accounts receivable – related party ( 41,460 ) 1,127,297 Prepaid expenses 561,913 86,901 Other current liabilities ( 48,960 ) 527 Accrued interest receivable 16,319 ( 2,542 ) Other current assets 4,057 ( 2,968,061 ) Accounts payable 49,105 ( 76,672 ) Accounts payable – related party 95,757 ( 501,709 ) Accrued expenses 9,085 292,396 Deferred revenue ( 12,920 ) 6,413 Net cash (used in) provided by operating activities ( 3,417,700 ) 430,477 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of preferred securities 50,000 - Proceeds from loan repayment and sale 392,186 12,394 Net cash provided by investing activities 442,186 12,394 CASH FLOWS FROM FINANCING ACTIVITIES: Tax withholding payments on vesting of restricted stock units ( 12,771 ) - Proceeds from convertible debt 550,000 - Redemption of Series B Convertible Preferred Stock ( 292,800 ) - Gross proceeds from issuance of Series B Convertible Preferred Stock and Series B Warrants 6,130,000 - Offering cost ( 351,646 ) - Proceeds from the sale of Class A Common Stock 1,778,987 - Repayment of financed insurance contract ( 116,098 ) - Repayment of senior secured promissory note ( 255,765 ) ( 3,006,993 ) Net cash provided by (used in) financing activities 7,429,907 ( 3,006,993 ) Net increase (decrease) in cash and cash equivalents 4,454,393 ( 2,564,122 ) Cash and cash equivalents – beginning of period 2,324,647 4,888,769 Cash and cash equivalents – end of period $ 6,779,040 $ 2,324,647 Supplemental disclosure of cash flow information Interest paid $ 388,457 $ 416,852 Non cash transactions: Reclassification of forward purchase receivable $ ( 4,584,221 ) $ - Marketing expense settled by the issuance of Common Stock $ - $ 50,000 Investment in preferred securities $ 1,500,000 $ - Prepaid consulting expense from the issuance of the Series B Convertible Preferred Stock and Series B Warrants $ 371,307 $ - Extinguishment of debt for issuance of Series B Convertible Preferred Stock and Series B Warrants $ 10,748,408 $ - Exchange of forward purchase derivative liability for the issuance of Series B Convertible Preferred Stock and Series B Warrants $ 4,000,867 $ - Exchange of convertible notes for Series B Convertible Preferred Stock and Series B warrants $ 659,997 $ - Financed insurance contract (classified in accrued expense) $ 395,900 $ - Issuance of stock to Abaca shareholders $ 258,868 $ - Accrued redemption payable to Series B holders $ 181,378 $ - Recognition of contract asset with corresponding stand-ready guarantee liability $ 2,135,000 $ - Recognition of contract asset with corresponding financial indemnification liability $ 1,091,772 $ - See accompanying notes to consolidated financial statements F- 8 Notes to Consolidated Financial Statements Note 1 – Organization and Business Operations Business Description SHF Holdings, Inc. (the “Company” or “SHF”) is a Delaware corporation headquartered in Golden, Colorado, whose Class A Common Stock (“Common Stock”) is listed on the Nasdaq Capital Market under the ticker symbol “SHFS.” The Company was founded in 2015 by Partner Colorado Credit Union (“PCCU”) and was among the first financial services companies to provide compliant banking services to Cannabis Related Businesses (“CRBs”). SHF’s mission is to provide reliable and compliant financial services to the legal cannabis, hemp, and related industries by enabling its financial institution (“FI”) customers to deliver compliance-driven banking, lending, and other financial services to CRB clients. The Company operates a proprietary fintech platform across 41 states and territories in the United States. Through this platform, SHF enables its FI customers to compliantly offer the following banking-related services to CRBs: ● Business checking and savings accounts; ● Cash management accounts ● Savings and investment options ● Commercial lending ● Courier services (via third-party relationships) ● Remote deposit services ● Automated Clearing House (“ACH”) payments and origination ● Wire payments. Because many CRBs have historically operated on a largely cash basis due to limited access to traditional banking services, SHF’s platform benefits both CRBs and financial institutions. CRBs gain access to compliant banking services, while financial institutions gain access to a validated, compliantly monitored deposit base. The Company generates revenue primarily from compliance service fees, account based fee income, investment income on custodied deposits, and interest income on loans made to or on behalf of financial institutions serving the cannabis industry. Note 2 – Basis of Presentation and Summary of Significant Accounting Policies Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of SHF Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the Company’s financial condition and results of operations for the periods presented. In connection with the preparation of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, management identified conditions that raised substantial doubt about the Company’s ability to continue as a going concern. Those conditions included recurring operating losses, a net loss of approximately $ 48.3 million (inclusive of significant non-cash charges), limited liquidity relative to near-term obligations, and uncertainty regarding the Company’s ability to satisfy its then-existing indemnification obligations under its Commercial Alliance Agreement (“CAA”) with PCCU. F- 9 Liquidity and Going Concern Liquidity refers to our ability to meet anticipated cash demands, including servicing debt, funding operations, maintaining assets, and covering other routine business expenses. Our primary cash outflows include debt principal and interest repayments, operating costs, and general business expenditures. The main source of our liquidity continues to be cash inflows generated from operational performance. As of December 31, 2025, the Company does not have significant capital investment commitments. Under Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements, Going Concern, the Company is responsible for evaluating whether conditions or events raise substantial doubt about its ability to meet future financial obligations within one year of the financial statement issuance date. This evaluation involves two steps: (1) assessing whether conditions or events raise substantial doubt about the Company’s ability to continue as a going concern, and (2) if substantial doubt is raised, evaluating whether the Company has plans to mitigate that doubt. Disclosures are required if substantial doubt exists or if the Company’s plans alleviate the doubt. As of December 31, 2025, the Company has cash and cash equivalents of $ 6.8 million and net working capital of $ 5.7 million. The Company has incurred recurring losses from operations and experienced negative cash flows from operations, including an operating loss of $ 5.4 million and cash used in operating activities of $ 3.4 million for the year ended December 31, 2025. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date these consolidated financial statements are issued. As of December 31, 2025, management believes our cash and cash equivalents is sufficient enough to meet our financial obligations for the next twelve months. Management has developed and implemented a series of measures intended to preserve liquidity and support the Company’s ability to meet its obligations during the look-forward period. Strengthened Revenue Profile. The Second Amended CAA increased the Company’s share of loan program income from approximately 35 % to 65 % of the PCCU’s loan portfolio. This agreement improves the recurring revenue profile of the Company’s core business on a prospective basis. Additionally, the Company is exploring strategic partnerships with other financial institutions. Access to Additional Capital. The Company has entered into a $ 150 million Equity Line of Credit, providing contingent access to additional capital subject to customary conditions. Expense Management. Management has identified and quantified specific, actionable cost reductions that are within its direct operational control and that it would implement should operating conditions deteriorate below base-case expectations. Cash Flow Monitoring. Management maintains a 52-week rolling cash flow projection that tracks anticipated expenses, revenues, and ending cash balances against budget. Cash positions are reviewed on a bi-weekly basis to ensure the Company maintains adequate liquidity to fund operations. Notwithstanding the measures described above, the Company continues to incur operating losses and negative cash flows from operations, and uncertainty remains as to whether these conditions will be fully resolved within the look-forward period. As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date these consolidated financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. F- 10 Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. Material estimates particularly subject to change in the near term include the financial indemnification liability, valuation allowance for deferred tax assets and the fair value of financial instruments including warrant liabilities. Actual results could differ from those estimates. Reverse Stock Split The Company effected a reverse stock split of 1-for-20 on March 14, 2025. Unless otherwise stated, all share and per share amounts for all periods presented have been adjusted to reflect the reverse stock split. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, balances due from financial institutions, and investments with original maturities of three months or less. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when control of promised services is transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services, following the five-step model under ASC 606. ● Account Fee Income The Company earns fees for compliance services provided to financial institution customers, including account onboarding fees, account maintenance fees, transaction processing fees, and other account activity fees. These fees are recognized at the point in time when the performance obligation is satisfied and no contingencies exist. ● Investment Income The Company earns investment income based on interest earned on daily average deposit balances maintained by CRBs at financial institution customers. This income is recognized as earned over the applicable period. ● Loan Program Income Revenue from loan program income is recognized over the loan period as earned. Under the Commercial Alliance Agreement with PCCU, as amended (the “Amended CAA”), the Company’s share of loan interest income is determined by a loan yield allocation formula and recognized as earned. ● Master Program Agreement Revenue The Company licenses its proprietary Safe Harbor Program to financial institutions under a Master Program Agreement, which grants a non-exclusive, non-transferable right to use the platform. Revenue under these agreements is recognized over the term of the arrangement as services are provided. Stock-Based Compensation The Company measures all equity-based payment arrangements to employees, directors, and non-employee consultants in accordance with ASC 718, Compensation - Stock Compensation . The grant-date fair value of stock-based awards is determined using either the quoted market price of the Company’s Common Stock or the Black-Scholes option valuation model, as appropriate for the instrument type. F- 11 Compensation cost for service-based awards is recognized on a straight-line basis over the requisite service period. For performance-based awards, compensation cost is recognized when it becomes probable that the performance condition will be achieved. Forfeitures are recognized as they occur. For non-employee awards settled in equity including Series B Convertible Preferred Stock and warrants issued to consultants, the Company measures the fair value at the grant date and recognizes the cost over the service period. Where awards are partially vested at issuance, the vested fair value is recorded as a prepaid asset and amortized to expense over the remaining service period. The Black-Scholes option model incorporates the following assumptions: expected term (using the simplified method as the average of contractual term and vesting period); expected stock price volatility (based on the Company’s historical stock price); risk-free interest rate (based on U.S. Treasury rates for maturities approximating expected lives); and expected dividend yield of zero (as the Company has not paid dividends and does not anticipate doing so in the foreseeable future). Changes in assumptions used to estimate fair value could result in materially different results. Convertible Debt and Original Issue Discount The Company accounts for convertible debt instruments under ASC 470-20, Debt with Conversion and Other Options . Debt issuance costs and original issue discounts are recorded as a direct reduction to the carrying amount of the related debt instrument and amortized to interest expense over the contractual term using the effective interest method in accordance with ASC 835-30. Warrant Liabilities and Derivative Instruments The Company evaluates all financial instruments, including warrants and conversion features, at issuance to determine whether they should be classified as equity or liabilities under ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Equity , and ASC 480, Distinguishing Liabilities from Equity . Warrants that do not meet the criteria for equity classification are recorded as liabilities at fair value on the date of issuance. These warrant liabilities are remeasured at fair value at each subsequent reporting date, with changes in fair value recognized in the consolidated statements of operations. Warrants are valued using the Black-Scholes-Merton model. Preferred Stock - Classification and Measurement The Company evaluates preferred stock instruments under ASC 480 and ASC 815-40 to determine the appropriate classification between liabilities, mezzanine equity, and permanent equity. Extinguishment of Liabilities When a financial liability is extinguished through the issuance of equity instruments, the Company accounts for the transaction under ASC 405-20, Liabilities - Extinguishments of Liabilities , and ASC 470-50, Debt - Modifications and Extinguishments . The equity instruments issued are measured at fair value, and any difference between the carrying amount of the extinguished liability and the fair value of the equity issued is recognized as a gain or loss on extinguishment in the consolidated statements of operations. F- 12 Fair Value Measurements The Company utilizes the fair value hierarchy to apply fair value measurements. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair values that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below: Level 1 : Quoted prices for identical assets or liabilities in active markets. Level 2 : Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 : Valuations derived from techniques in which one or more significant inputs are unobservable. Segment Reporting The Company operates as one reportable segment providing financial services and banking solutions to CRBs under ASC 280, Segment Reporting . The chief operating decision maker, the Company’s Chief Executive Officer, reviews financial information on a consolidated basis when allocating resources and assessing performance. Financial Assets Measured at Amortized Cost For financial assets within the scope of ASC 326, the Company measures the allowance for credit losses based on relevant information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions that affect the collectability of the reported amounts. The allowance is deducted from the amortized cost basis of the financial asset on the consolidated balance sheet, and the net amount represents management’s best estimate of the cash flows expected to be collected. Changes in the allowance for credit losses are recognized as credit loss expense or reversal in the consolidated statements of operations. The Company considers the following factors, among others, in estimating expected credit losses: ● Historical loss experience and default rates for instruments with similar risk characteristics; ● The creditworthiness and financial condition of the counterparty; ● Current and forecasted macroeconomic conditions over the reasonable and supportable forecast period, reverting to historical averages beyond that period; and ● Collateral arrangements, recourse provisions, and other credit enhancements. Financial assets are written off against the allowance when management determines that the asset is uncollectible and all reasonable collection efforts have been exhausted. Subsequent recoveries, if any, are credited to the allowance for credit losses. Contract Asset The contract asset recognized in connection with the Second Amended CAA with PCCU are not financial asset within the scope of ASC 326. This asset represent costs incurred to fulfill the contract specifically, the cost of assuming the stand-ready guarantee obligation (ASC 460) and the contingent indemnification exposure (ASC 326). The contract asset is amortized on a systematic and rational basis over the contract term consistent with the release of the underlying guarantee exposure. Contract asset are evaluated for impairment under ASC 340-40-35-2 when facts and circumstances indicate the carrying amount may not be recoverable; any impairment is recognized in the period identified and may not be subsequently reversed. Stand Ready Guarantees – ASC 460 The Company accounts for financial guarantees in accordance with ASC 460, Guarantees . At the inception of a guarantee, the Company recognizes a liability equal to the fair value of the stand-ready obligation assumed. This non-contingent liability represents the value of the obligation undertaken by the Company to stand ready to perform under the guarantee, irrespective of the likelihood that a payment will actually be required. Subsequent to initial recognition, the stand-ready liability is amortized over the contractual term of the guarantee on a systematic basis that reflects the Company’s release from risk. If, at any reporting date, a contingent loss accrual required under ASC 450, Contingencies , exceeds the unamortized ASC 460 carrying amount, the Company records the higher contingent loss estimate in accordance with that guidance. Financial Indemnification Liabilities Under ASC 326-20, the Company recognizes a financial indemnification liability for its indemnification obligation to PCCU under the Second Amended CAA. This liability represents the Company’s up to 65% share of the lifetime expected credit losses on the covered CRB loan portfolio, measured on a probability-weighted basis and updated each reporting period to reflect current conditions and reasonable and supportable forecasts of future economic conditions. The financial indemnification liability methodology considers historical loss experience, borrower-specific credit quality, collateral values, and forward-looking economic assumptions including conditions specific to the cannabis industry. The financial indemnification liability is measured independently from, and recognized in addition to, the ASC 460 stand-ready guarantee liability. The two liabilities coexist separately on the consolidated balance sheet and do not offset or true up to each other. The ASC 460 liability is fixed at inception and released over the guarantee term, while the financial indemnification liability is dynamic and remeasured each quarter. Changes in the financial indemnification liability are recognized as credit loss expense or credit loss income in the consolidated statements of operations in the period of remeasurement. F- 13 Concentration of Risk The Company’s revenues are concentrated in the United States with a single customer, PCCU, which represented the substantial majority of revenues for the years ended December 31, 2025 and 2024 (see Note 10). Substantially all CRB client deposits are maintained at PCCU, and all fund transmissions to and from those deposit accounts are handled directly by PCCU. Financial instruments that potentially subject the Company to concentrations of credit risk consist accounts receivable and cash accounts maintained at financial institutions. At times, account balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) coverage limit of $ 0.3 million. As of December 31, 2025 and December 31, 2024, the Company had approximately $ 6.5 million and $ 2.0 million, respectively, in excess of FDIC coverage. Additionally, amounts due from PCCU represented approximately 97.0 % and 87.8 % of total accounts receivable as of December 31, 2025 and December 31, 2024, respectively, with balances of approximately $ 1.0 million at each date. The Company has not experienced losses on these accounts or receivables, and management does not believe the Company is exposed to significant credit risk on such accounts. Recently Issued Accounting Standards Standards Adopted in 2025 ASU 2023-09 - Income Taxes (Topic 740): In December 2023, the FASB issued ASU 2023-09, which requires additional disaggregated disclosures in the income tax rate reconciliation and disclosures of income taxes paid by jurisdiction. The standard is effective for annual periods beginning after December 15, 2024. The Company adopted this standard prospectively as of January 1, 2025. Adoption did not have a material impact on the Company’s financial statements. This is reported on a prospective basis. ASU 2024-02 - Codification Improvements: In March 2024, the FASB issued ASU 2024-02, which removes references to the FASB Concepts Statements from the Codification. The standard is effective for public entities for years beginning after December 15, 2024. The Company adopted this standard prospectively as of January 1, 2025. Adoption did not have a material impact on the Company’s financial statements. ASU 2024-01 – Compensation - Stock Compensation (Topic 718): Profits Interest and Similar Awards: In March 2024, the FASB issued ASU 2024-01, which clarifies whether profits interest and similar awards are subject to ASC 718. The standard is effective for years beginning after December 15, 2024. The Company adopted this standard prospectively as of January 1, 2025. Adoption did not have a material impact on the Company’s financial statements. Standards Not Yet Adopted ASU 2024-03 / ASU 2025-01 - Disaggregation of Income Statement Expenses (Subtopic 220-40): In November 2024, the FASB issued ASU 2024-03, subsequently clarified by ASU 2025-01 (January 2025), requiring entities to disaggregate certain income statement expense line items in the footnotes, including purchases of inventory, employee compensation, depreciation, and amortization. The standard is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company plans to adopt prospectively and does not anticipate a material impact on its financial reporting. ASU 2024-04 – Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions: In November 2024, the FASB issued ASU 2024-04, which clarifies the accounting for induced conversions of convertible debt. The standard is effective for annual periods beginning after December 15, 2025. The Company plans to adopt prospectively and does not anticipate a material impact on its financial reporting. ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Accounts Receivable and Contract Assets: In July 2025, the FASB issued ASU 2025-05, which provides a practical expedient allowing entities to assume current credit conditions remain unchanged for the remaining life of current accounts receivable and current contract assets under ASC 606. The standard is effective for years beginning after December 15, 2025. The Company is currently evaluating the potential impact on its consolidated financial statements. ASU 2025-08 - Financial Instruments - Credit Losses (Topic 326): Purchased Loans: In December 2025, the FASB issued ASU 2025-08, which expands the population of acquired financial assets subject to the gross-up approach for recognizing credit losses at acquisition. The standard introduces the concept of “purchased seasoned loans” and requires acquired loans (other than credit cards) that have not experienced significant credit deterioration since origination to follow the gross-up approach. The amendments are effective for annual periods beginning after December 15, 2026. Due to the Company’s Second Amended CAA with PCCU, management believes this standard may have a material impact on the Company’s financial statements upon adoption. The Company is currently evaluating the scope and magnitude of that impact. The Company will continue to monitor the development of accounting standards and intends to adopt them in accordance with their respective effective dates. Additional disclosures will be provided in future filings as the Company completes its assessment. F- 14 Note 3 - Deferred Consideration On November 11, 2022, the Company entered into the first Amendment to the Merger Agreement with Rockview Digital Solutions, Inc. (“Abaca”) and other parties. The Merger Agreement included a $ 30 million payment through a mix of cash and stock, including $ 9 million in cash over three annual installments and 105,000 Common Stock (“Common Stock”), alongside deferred stock considerations based on a 10-day volume weighted average price (“VWAP”) formula. A Second Amendment to the Merger Agreement, dated October 26, 2023, introduced deferred stock consideration of 291,791 shares of Common Stock at a recalculated value of $ 40.00 per share. No changes were made to the cash payments. Additionally, 250,000 stock warrants at $ 40.00 per share were issued, and a third-anniversary consideration payment of $ 1.5 million due October 5, 2025 was introduced, payable in cash or Common Stock with a floor value of $ 40.00 per share, at the Company’s discretion. The Company issued 37,517 unregistered shares of Common Stock in lieu of cash, computed using the floor value on October 3, 2025. On October 21, 2025, the Company filed Form S-1 to register the 37,517 shares of Common Stock issued on October 3, 2025 and the 250,000 common shares underlying the Abaca warrants to purchase Common Stock with an exercise price of $ 40.00 per share. On November 21, 2024, the Company deposited the $ 3.0 million second annual cash payment into the registry of the Denver County, Colorado District Court pending resolution of a dispute among former Abaca shareholders regarding the party authorized to receive the payment. See Note 20 Commitments and Contingencies. The adjustments and changes to deferred consideration have been valued and recorded according to ASC 815 in the Company’s consolidated financial statements. The change in the amount of deferred consideration from January 1, 2024, to December 31, 2025: Schedule of Change in Deferred Consideration Cash Considerations Third Anniversary Consideration Payment Total Balance, January 1, 2024 $ 2,889,792 $ 810,000 $ 3,699,792 Fair value adjustment 126,551 ( 488,000 ) ( 361,449 ) Balance, December 31, 2024 3,016,343 322,000 3,338,343 Fair value adjustment ( 16,343 ) ( 63,132 ) ( 79,475 ) Shares issued to Abaca shareholders - ( 258,868 ) ( 258,868 ) Balance, December 31, 2025 $ 3,000,000 $ - $ 3,000,000 The fair value of the third anniversary payment consideration, at the time of settlement, was determined using the Monte Carlo Simulation. model. The following table provides quantitative information regarding Level 3 fair value measurements inputs for the third anniversary payment consideration as of their measurement dates: Schedule of Fair Value Measurements Inputs for the Third Anniversary Payment Consideration December 31, 2024 Stock price $ 9.00 Payment date 10/15/2025 Third anniversary consideration $ 1,500,000 Risk free interest rate 4.2 % Market discount rate 5.8 % Remaining term in years 0.75 Expected volatility 86.2 % On October 3, 2025, the Company issued 37,517 shares of Common Stock in full settlement of the third anniversary consideration payment, resulting in a zero balance for all remaining deferred consideration obligations as of December 31, 2025. The only remaining balance in the table above represents the $ 3.0 million deposited with the District Court registry, which is carried as a restricted asset pending resolution of the shareholder litigation described in Note 20 Commitments and Contingencies. F- 15 Note 4 - Goodwill and Finite-lived Intangible Assets 2024 Impairment As of December 31, 2024, the Company recorded full impairment charges against all remaining goodwill and finite-lived intangible assets, which were derived primarily from the October 2022 acquisition of Abaca. The impairment charges totaled $ 3.1 million, comprised of $ 0.05 million for market-related intangible assets, $ 0.05 million for customer relationships, and $ 3.0 million for developed technology. Impairment expense for the year ended December 31, 2024 was $ 6.1 million. Following these charges, the carrying values of all such assets were zero as of December 31, 2024. 420 IT Asset Acquisition In December 2025, the Company’s wholly-owned subsidiary, Safe Harbor Managed Services LLC, completed an asset acquisition from LBMW LLC, doing business as 420 IT Solutions (“420 IT Solutions”), a managed services business. The purchased assets consist primarily of intellectual property, including a registered trademark, and certain assigned customer contracts and goodwill. No cash consideration was paid. The aggregate purchase price consisted of 125,000 shares of the Company’s Common Stock (the “Earnout Shares”), which vest based on the achievement of net revenue performance targets during the periods ending December 31, 2026 and December 31, 2027, and the assumption of certain specified liabilities. The transaction was accounted for as an asset acquisition under ASC 805-50. The total consideration transferred was measured at the fair value of the Earnout Shares at the acquisition date. Because vesting is contingent solely on future performance conditions, the Earnout Shares are accounted for as contingent consideration and recognized as the performance conditions become probable of achievement. Therefore, the Company did not record any intangible assets and contingent liability as of December 31, 2025. If circumstances change when the revenue target is probable, then the intangible assets and a contingent liability will be recorded within one year from the acquisition date. Note 5 - Loans Receivable As of December 31, 2024, the Company held one commercial real estate loan receivable with a gross carrying value of $ 0.4 million, net of no allowance for credit losses. On July 31, 2025, the Company sold this loan to PCCU, a related party to improve liquidity. Prior to the sale, the Company received a principal payment of $ 0.008 million, reducing the outstanding balance to $ 0.4 million. The loan was sold at carrying value, and no gain or loss was recognized on the sale. See Note 10 Related Party Transactions for further information regarding the Company’s relationship with PCCU. The following table summarizes the activity in commercial real estate loans receivable for the years ended December 31, 2025 and December 31, 2024: Schedule of Commercial Real Estate Loans Receivable December 31, 2025 December 31, 2024 Commercial real estate loans receivable, gross $ 392,186 $ 392,186 Payment ( 7,659 ) - Sale of loans ( 384,527 ) - Transferred to held for sale - - Commercial real estate loans receivable, net - 392,186 Current portion - ( 13,332 ) Non-current portion $ - $ 378,854 Note 6 - Investment in Preferred Securities On September 30, 2025, as partial consideration received in connection with the issuance of 1,875 shares of Series B Convertible Preferred Stock and Series B Warrants to purchase Common Stock (see Note 19), the Company received preferred shares of Aditxt, Inc. (“ADTX”), a publicly traded company. The Series B Convertible Preferred Stock was issued at $ 800 per share. No cash was exchanged in this transaction. The ADTX preferred securities had an estimated fair value and carrying value of $ 1.5 million at the date of receipt. The investment represents less than 20% of the voting interests in ADTX, and the Company does not have the ability to exercise significant influence or control over ADTX. Accordingly, the investment is accounted for under ASC 321, Investments – Equity Securities . Because ADTX’s preferred shares are not actively traded and lack a readily determinable fair value, the Company has elected to measure the investment at cost, less any impairment, adjusted for observable price changes in orderly transactions for identical or similar instruments, as permitted under ASC 321-10-35-2. During the year ended December 31, 2025, ADTX redeemed approximately 43 shares of its preferred stock held by the Company pursuant to the preferred share terms, resulting in cash proceeds of $ 0.05 million. No gain or loss was recognized on this redemption. No impairments or other observable price adjustments were recognized during the year ended December 31, 2025. The following table summarizes the activity in the investment during the year ended December 31, 2025: Schedule of Activity in Investment Shares Amount Initial recognition at fair value (September 30, 2025) 1,500 $ 1,500,000 Proceeds from redemption ( 43 ) ( 50,000 ) Impairment charges - - Observable price adjustments - - Balance, December 31, 2025 1,457 $ 1,450,000 As of December 31, 2025, the investment is classified as a long-term asset on the consolidated balance sheet and continues to be measured in accordance with ASC 321. Any future gains or losses resulting from dispositions or impairments will be recognized in Other Income (Expense) in the consolidated statements of operations. F- 16 Note 7 – Prepaid Expenses Prepaid expenses as of December 31, 2025 and December 31, 2024 consists of the following: Schedule of Prepaid Expenses 2025 2024 Year Ended December 31, 2025 2024 Insurance $ 791,423 $ 808,480 Consulting 325,100 - Marketing - 91,667 Others 160,206 171,889 Prepaid expenses 1,276,729 1,072,036 Less: Current portion 862,400 659,536 Total non-current portion $ 414,329 $ 412,500 Insurance The Company maintains several insurance policies. In addition, in connection with the Company’s de-SPAC transaction, the Company obtained a Directors and Officers liability run-off policy providing coverage through September 2028. Consulting In connection with the September 30, 2025 recapitalization, the Company issued 1,063 shares of Series B Convertible Preferred Stock and accompanying Series B Warrants to purchase 68,453 shares of Common Stock to three independent service providers in exchange for professional and marketing services to be rendered through September 30, 2027. The instruments were measured at grant-date fair value of approximately $ 0.8 million using a third-party valuation specialist and are classified within stockholders’ equity. The fair value was recorded as a prepaid consulting asset and is being amortized to professional services expense on a straight-line basis over the two-year service term. As of December 31, 2025, the unamortized balance was approximately $ 0.3 million. There are claw back features for certain consultants as of December 31, 2025, and the prepaid balance is approximately $ 0.2 million. Marketing In September 2024, the Company entered into a six-month marketing services agreement with an independent third-party marketing services provider for social media, investor engagement, and influencer-related marketing services covering the period September 4, 2024 through March 3, 2025. Compensation consisted of $ 0.2 million in Common Stock, valued at the Nasdaq closing price on September 3, 2024, and a $ 0.1 million cash marketing budget. The stock-based portion was recorded as a prepaid asset and amortized to marketing expense on a straight-line basis over the service term. As of December 31, 2024, the unamortized balance was approximately $ 0.1 million. The arrangement was fully amortized by March 3, 2025. Note 8 - Loan Portfolio Indemnification Obligations Under the Second Amended CAA, the Company indemnifies PCCU for up to 65% of Default-Related Losses on PCCU’s CRB loan portfolio. The Agreement has a stated effective date of October 1, 2025. The Company, and PCCU reached agreement on the material economic terms of the Second Amended CAA on or about October 1, 2025, following completion of the September 2025 Recapitalization. The written agreement was formally executed on February 4, 2026; the intervening period involved only procedural and documentation matters that did not affect the substance of the agreed terms. Accordingly, the Company has given effect to the Second Amended CAA from October 1, 2025, consistent with ASC 606 contract modification guidance. The obligation is recognized as two independent, coexisting liabilities that do not offset each other: (i) a noncontingent stand-ready guarantee liability under ASC 460, measured at fair value at inception, and (ii) a contingent expected credit loss liability under ASC 326-20, representing the Company’s up to 65% share of estimated lifetime expected credit losses on the PCCU CRB portfolio. Each liability is recognized with a corresponding contract asset under ASC 340-40-25-2, as the indemnification costs are directly related to the Agreement and are expected to be recovered through the Company’s up to 65% share of loan program income. The net Day 1 equity impact is zero. F- 17 The following table summarizes the October 1, 2025, inception date, consolidated balance sheet impact of ASC 460 and ASC 326. Schedule of Balance Sheet Impact ASC 460 ASC 326 Total Contract asset $ 2,135,000 $ 1,091,772 $ 3,226,772 Financial indemnification liability - 1,091,772 1,091,772 Stand-ready guarantee liability $ 2,135,000 $ - $ 2,135,000 ASC 460 - Guarantee Liability The issuance of a guarantee imposes a noncontingent obligation to stand ready to perform; initial recognition is required at inception regardless of whether payment is probable. The stand-ready liability is recognized separately from the ASC 326 liability. The stand-ready liability is measured at fair value at inception under ASC 820-10 using a market-based insurance pricing approach, classified as Level 3 due to the absence of observable market inputs for cannabis lending guarantees. The fair value of a guarantee at inception reflects the premium that a market participant (analogized to a specialty insurance carrier) would charge in an arm’s-length transaction to underwrite the same risk. Because no direct market comparable exist for cannabis CRB loan portfolio guarantees, management estimated the standalone selling price by constructing the premium components a specialty financial guarantor would require. The fair value incorporates three components: (a) the expected loss element, representing the probability-weighted losses the guarantor expects to absorb; (b) a stand-ready risk premium, representing the additional compensation a market participant would require for uncertainty, volatility, and the uncapped nature of the commitment beyond expected losses; and (c) a time value adjustment. Key Level 3 inputs are as follows: Schedule of Significant Unobservable Input Significant Unobservable Input Value Pooled Probability of Default or PD (Ratings 2–5) 7.25 % Pooled Loss Given Default or LGD (inclusive of 13% cannabis qualitative premium) 35 % Tranche C PD (Rating 9, individually evaluated) 35 % Tranche C LGD on uncollateralized gap 50 % Stand-ready risk premium loading 120% of expected loss Discount rate 4.0 % Weighted average pay out year – Tranche A 4 years Weighted average pay out year – Tranche B 3 years Weighted average pay out year – Tranche C 2 years Weighted average pay out year – Stand Ready Premium 3 years The maximum potential number of future payments under the guarantee is approximately $ 33.8 million, representing 65 % of the total outstanding CRB loan portfolio balance. The indemnification percentage is subject to reduction under the Agreement’s Listing-Related Adjustment Clause. The stand-ready guarantee liability is reduced through amortization on a straight-line basis over three years, representing the weighted average life of the underlying loan portfolio at inception. The release period and pattern are reassessed at least annually and will be adjusted prospectively if material changes in portfolio composition, paydowns, or maturities indicate that the weighted average life assumption is no longer appropriate. The corresponding contract asset is amortized on the same basis as operating expense partially offset by the liability release to income each period. F- 18 ASC 326-20 - Financial Indemnification Liability Financial indemnification liability are estimated using a PD × LGD framework segmented by PCCU’s internal risk rating scale. Management uses PCCU’s reserve methodology as a baseline and independently evaluates key assumptions, with adjustments where management’s estimates differ from PCCU’s. The cannabis industry specific risk is reflected through a 16.6% qualitative LGD premium and management’s independent assessment of Tranche C. The indemnified portfolio is segmented into three tranches. Loans rated 9 or 10 are individually evaluated rather than included in the pooled analysis: Schedule of Expected Credit Loss Liability Tranche Ratings Loan Balance Loss Method Reserve Tranche A - Pass Rated 2–5 $ 35,544,024 Pooled; rates 0.453 % – 1.81 % $ 406,066 Tranche B - Elevated Risk 6–8 7,168,435 Pooled; rates 3.17 % – 9.21 % 296,304 Tranche C - Specific Risk 9 9,346,394 Individual evaluation 389,402 Total $ 52,058,853 $ 1,091,772 There is a single loan in Tranche C that is individually evaluated due to its past-maturity status (original maturity July 2024) and commercial and industrial or C&I structure secured solely by a UCC filing on business assets with certain personal guarantees. Management applied a 35% PD and 50% LGD on the uncollateralized gap of approximately $ 3.4 million. Loans in the portfolio are secured primarily by real estate used for cannabis-specific purposes, including cultivation facilities, processing facilities, and retail dispensaries, and in certain cases by business assets under UCC filings. Because cannabis-use properties have limited alternative-use marketability under current federal law, management applies a two-step discount to collateral values: (i) elimination of the cannabis license premium (the “green tax”), reflecting that a non-cannabis buyer would not ascribe value to the cannabis operating license embedded in the appraised value; and (ii) a reduction to the remaining value to reflect proceeds realizable from a liquidation sale to a non-cannabis buyer. This methodology results in adjusted portfolio collateral of approximately $ 44.1 million against a gross balance of $ 52.1 million. The portfolio has experienced zero credit losses since program inception. Management supplements this limited loss history with cannabis industry benchmarks and peer data. Cannabis industry-specific risk including 100% single-industry concentration, Schedule I federal status, and collateral marketability constraints is reflected through an embedded 16.6% qualitative LGD premium across all pooled tranches. Expected credit losses are estimated using historical loss rates derived from a five-year lookback period, reflecting 2 restructured loans out of 28 over that period. Management determined that reasonable and supportable forecasts of future economic conditions beyond the historical loss experience could not be made for this portfolio, given its limited loss history and the significant uncertainty surrounding the cannabis regulatory and legal environment. Accordingly, the historical loss rates are applied without forward-looking adjustment, with immediate reversion to historical rates. The financial indemnification liability is remeasured quarterly; changes are recognized as credit loss expense or income per ASC 326-20-35-8. The inception-date contract asset is reduced as underlying loans pay down or mature and is not subject to straight-line amortization. The 65% indemnification percentage is subject to reduction under the Agreement’s Listing-Related Adjustment Clause if the Company fails to maintain NASDAQ listing standards. A reduction would result in a partial release of the ASC 460 liability to income, a downward remeasurement of the financial indemnification liability, and an impairment assessment of the related contract assets. For the year ended December 31, 2025, the Company recognized a reversal of provision of $ 0.2 million, representing the systematic release of the ASC 460 stand-ready guarantee liability computed over the weighted-average remaining life of three years of the covered CRB loan portfolio. As of December 31, 2025, the Company did not change its financial indemnification liability, as such there was no impact on the consolidated statements of operations. As of December 31, 2024, there was no financial indemnification liability as the Company ceased indemnifying the loan portfolio subject to the first amendment to the PCCU CAA. As of December 31, 2024, the Company favorably reversed a $ 1.4 M indemnification liability. For the period between January 1, 2025 and September 30, 2025, the Company did not indemnify loan portfolio. The following table summarizes the changes of the contract asset for the year ended December 31, 2025 and December 31, 2024: Schedule of Contract Asset For the Year Ended December 31, 2025 For the Year Ended December 31, 2024 ASC460 ASC 326 Total ASC 460 ASC 326 Total Beginning balance $ - $ - $ - $ - $ - $ - Initial recognition as per Second Amended CAA 2,135,000 1,091,772 3,226,772 - - - Amortization ( 85,401 ) ( 43,671 ) ( 129,072 ) - - - Ending balance 2,049,599 1,048,101 3,097,700 - - - Less: current portion ( 341,600 ) ( 174,683 ) ( 516,283 ) - - - Total non-current portion $ 1,707,999 $ 873,418 $ 2,581,417 $ - $ - $ - The following table summarizes the changes of the liabilities for the year ended December 31, 2025 and December 31, 2024: Summary of Movement of Liabilities ASC460 ASC 326 Total ASC 460 ASC 326 Total For the Year Ended December 31, 2025 For the Year Ended December 31, 2024 ASC460 ASC 326 Total ASC 460 ASC 326 Total Beginning balance $ - $ - $ - $ - $ 1,393,131 $ 1,393,131 Initial recognition as per Second Amended CAA 2,135,000 1,091,772 3,226,772 - - - Benefit ( 177,917 ) - ( 177,917 ) - ( 1,393,131 ) ( 1,393,131 ) Ending balance 1,957,083 1,091,772 3,048,855 - - - Less: current portion ( 711,667 ) ( 433,968 ) ( 1,145,635 ) - - - Total non-current portion $ 1,245,416 $ 657,804 $ 1,903,220 $ - $ - $ - F- 19 Note 9 - Revenue The following table presents the Company’s revenue disaggregated by type for the years ended December 31, 2025 and 2024: Schedule of Disaggregated Revenue 2025 2024 Year Ended December 31, 2025 2024 Account fee income $ 3,963,097 $ 6,447,201 Loan program income 2,478,082 6,625,576 Investment income 1,155,433 2,092,863 Safe Harbor Program income 76,920 76,920 Total $ 7,673,532 $ 15,242,560 Account fee income consists of fees earned from cannabis-related businesses maintaining accounts with the Company’s financial institution partners, including deposit account fees, account activity fees, and onboarding income. These fees are recognized periodically in accordance with the fee schedules established with financial institution partners. Account fee income also includes merchant income earned through referral arrangements with third-party payment processors, under which the Company receives a percentage of net revenue generated by referred merchants, recognized as earned. Loan program income represents the Company’s allocated share of interest earned on cannabis-related business loans originated by PCCU. Under the First Amended Commercial Alliance Agreement, effective January 1, 2025, the Company’s share of loan program income is determined by a loan yield allocation formula that incorporates the Constant Maturity U.S. Treasury Rate published by the Federal Reserve, along with a proprietary risk rating formula to determine the allocation between the Company and PCCU. Loan program income is recognized over the loan term as earned. Investment income represents the Company’s share of interest earned on net investable cannabis-related business deposit balances held at PCCU, recognized monthly based on the average net daily deposit balance. Under the CAA, investment income was reduced by an investment hosting fee paid to PCCU. Under the First Amended CAA, effective January 1, 2025, the hosting investment fee was eliminated and the Company receives all investment income earned on CRB funds invested on its behalf by PCCU. Safe Harbor Program income represents fees earned under the Company’s Master Program Agreement, which grants licensees a non-exclusive, non-transferable right to implement and utilize the Safe Harbor Program. Revenue is recognized over the term of the agreement as the performance obligation is satisfied. Note 10 - Related Party Transactions The Company identifies related parties in accordance with ASC 850 and Rule 1-02(u) of Regulation S-X. Partner Colorado Credit Union (“PCCU”) - Related Party Status PCCU is a related party because it held approximately 25.2 % and 38.8 % of the Company’s Common Stock as of December 31, 2025 and 2024, respectively. PCCU is also the largest holder of the Company’s Series B Convertible Preferred Stock (approximately 43% of outstanding shares and associated warrants) and holds the majority of the Company’s cash deposits. These factors give PCCU the ability to significantly influence the Company’s management and operating policies. F- 20 Debt Cancellation Agreement On September 30, 2025, the Company and PCCU entered into a Debt Cancellation Agreement under which the approximately $ 10.7 million outstanding principal balance on the Senior Secured Promissory Note (originally dated March 29, 2023) was fully satisfied. In exchange, PCCU received: ● 13,436 shares of Series B Convertible Preferred Stock; and ● A Series B Warrant to purchase 865,200 shares of Common Stock at an exercise price of $ 7.7644 per share. PCCU’s conversion and warrant exercise rights are subject to a 4.99 % beneficial ownership cap. See Note 11 for the accounting treatment of this transaction. Commercial Alliance Agreement (“CAA”) - Major Customer Concentration The Company derives substantially all of its revenue from services provided to PCCU. Revenue under the CAA was $ 6.7 million and $ 12.7 million represented 86.7 % and 83.5 % of total revenue for the years ended December 31, 2025 and 2024, respectively. Amounts due from PCCU represented 97.0 % and 87.8 % of total accounts receivable at those dates. The loss of, or a material change to, this relationship could have a material adverse effect on the Company’s results of operations and financial condition. Agreement history and key terms: Schedule of Agreement History and Key Terms Version Effective Date Key Terms Original CAA March 29, 2023 Per-account servicing fees ($26.08–$28.69/month in 2024); Company indemnified PCCU against loan losses; investment income split 75% Company / 25% PCCU. First Amended CAA December 31, 2024 Term extended to December 31, 2028; indemnification eliminated; per-account fees replaced by a fixed asset hosting fee (0.01 × average daily deposit balance); Company receives 100% of investment income on CRB funds; loan program income split introduced using a Constant Maturity Treasury-based yield allocation formula which was approximately 35%. Second Amended CAA October 1, 2025 Material economic terms agreed on or about October 1, 2025, following completion of the September 2025 Recapitalization; written agreement formally executed on February 4, 2026 following resolution of procedural and documentation matters only. Term extended to December 31, 2031; Company’s loan program income share increased from approximately 35% to up to 65%; indemnification reinstated at the Company’s 65% income share, supported by a minimum cash reserve tied to PCCU’s financial indemnification liability estimate; asset hosting fee changed to a graduated (tiered) structure; NASDAQ compliance provision added (see below). NASDAQ compliance provision. If maintaining the Company’s NASDAQ listing requires a reduction in its indemnification percentage, the loan program income share will adjust downward by a corresponding amount. The Company is actively monitoring its NASDAQ compliance obligations in connection with this provision. See Note 20 - Commitments and Contingencies. Second Amended CAA. Although the Second Amended CAA was formally executed on February 4, 2026, after the balance sheet date, the Company and PCCU reached agreement on the material economic terms on or about October 1, 2025, following completion of the September 2025 Recapitalization. The intervening period between October 1, 2025 and the February 4, 2026 execution date involved only procedural and documentation matters that did not affect the substance of the agreed terms. Accordingly, the Company has given effect to the Second Amended CAA from October 1, 2025, in accordance with ASC 606-10-25-10 through 25-13, and the agreement’s financial statement impacts are treated as a Type 1 recognized subsequent event under ASC 855-10-25-1, as the economic terms relate to conditions existing as of December 31, 2025. Accordingly, the financial effects were recognized in the financial statements for the year ended December 31, 2025, including: ● A retroactive reduction in asset hosting fees of approximately $ 0.06 million (difference between the First Amended CAA flat rate of 1.00% and the tiered rates under the Second Amended CAA for Q4 2025); and ● Recognition of approximately $ 0.4 million in incremental loan program income for Q4 2025, reflecting the increase in the Company’s share from approximately 35% up to 65%. Related Party Balances The following amounts with PCCU are included in the consolidated balance sheets: Schedule of Related Party Balances from Balance Sheet December 31, 2025 December 31, 2024 Cash and cash equivalents $ 6,779,040 $ 2,202,895 Accounts receivable 1,009,483 968,023 Accounts payable 171,365 75,608 Senior Secured Promissory Note - 11,004,173 F- 21 The Company evaluates its related party relationships at each reporting date in accordance with ASC 850 and SEC Regulation S-X Rule 4-08(k). Note 11- Senior Secured Promissory Note and Debt Cancellation Agreement with PCCU The outstanding amounts under the Senior Secured Promissory Note are as follows: Schedule of Outstanding Amounts under Senior Secured Promissory Note December 31, 2025 December 31, 2024 Senior Secured Promissory Note -current $ - $ 255,765 Senior Secured Promissory Note -long-term - 10,748,408 Total $ - $ 11,004,173 The Company and PCCU entered into a Senior Secured Promissory Note and Security Agreement (together, the “PCCU Note”) on March 29, 2023, under which PCCU agreed to lend $ 14.5 million to the Company. On March 1, 2025, SHF executed an Amended and Restated Senior Secured Promissory Note with PCCU, replacing the original note dated March 29, 2023. The principal balance on the amended note remained $ 10.7 million, accruing interest at 4.25 % annually. This amended and restated agreement allows for interest-only payments until January 5, 2027, postponing principal payments, with full repayment due by October 5, 2030 On September 30, 2025, the Company entered into a Debt Cancellation Agreement with PCCU. Under the terms of the Debt Cancellation Agreement, the outstanding balance of $ 10.7 million due under the Loan Agreements was deemed fully repaid and satisfied. In exchange, PCCU received: ● 13,436 shares of the Company’s Series B Convertible Preferred Stock, and ● a warrant (the “Series B warrant”) to purchase 865,200 shares of the Company’s Common Stock, subject to adjustment as provided in the warrant agreement. The transaction was accounted for under ASC 470-50, Debt – Modifications and Extinguishments. The fair value of the Series B Convertible Preferred Stock and Series B Warrants to purchase Common Stock issued was estimated at $ 800 per unit, which represented the cash price paid by unaffiliated third-party investors on the same day for identical instruments in accordance with ASC 505, Equity Issuances for Non-Cash Consideration. Because the total fair value of the equity instruments issued equaled the carrying amount of the debt extinguished, the Company did not recognize a gain (loss) on extinguishment of debt. As a result of the Debt Cancellation Agreement, there was no outstanding balance on the Senior Secured Promissory Note as of December 31, 2025. Note 12- Convertible Promissory Notes On August 27, 2025 and September 9, 2025, the Company issued unsecured Convertible Promissory Notes (the “Notes”) to accredited investors in two closings under identical terms. The Notes had an aggregate principal amount of $ 0.7 million, an original issue discount (“OID”) of 20 %, and a maturity date of September 9, 2026 . The Company received aggregate cash proceeds of $ 0.6 million, with the $ 0.1 million difference representing the OID. The Notes did not bear stated interest; the OID represented the investors’ entire yield and was recognized as interest expense over the term of the Notes under ASC 835-30. On September 30, 2025, prior to their maturity date, the Notes were exchanged for Series B Convertible Preferred Stock and Series B Warrants to purchase Common Stock (together, the “Series B instruments”) in connection with the Company’s broader recapitalization. The Series B instruments were issued to the noteholders at $ 800 per unit, the same price paid by unaffiliated third-party investors for identical instruments on the same date. The transaction was accounted for as an extinguishment under ASC 470-50. The carrying amount of the Notes at the exchange date was $ 0.7 million. The fair value of the Series B instruments issued $ 0.8 million exceeded the carrying amount of the Notes extinguished $ 0.7 million. Accordingly, the total financing cost associated with the Notes consisted of (i) the $ 0.1 million OID recognized as interest expense over the period from issuance to exchange, and (ii) the $ 0.1 million net loss on extinguishment recognized upon the exchange of the Notes for Series B instruments, reflecting the excess of the fair value of equity issued over the carrying amount of the debt extinguished. F- 22 Note 13 - Leases The Company has a non-cancellable operating lease for its corporate office space in Golden, Colorado which qualifies for capitalization under ASC 842 Leases. As of December 31, 2025, the Golden, Colorado lease has a remaining term of approximately three-and-two-quarter years and includes an option to extend for up to ten additional years; however, the extension option is not recognized as part of the right-of-use asset as it is not reasonably certain to be exercised. As of December 31, 2025, and December 31, 2024, the net right-of-use asset “ROU” recorded under the operating lease was $ 0.5 million and $ 0.7 million, respectively, and the corresponding lease liability was $ 0.7 million and $ 0.9 million, respectively. During the third quarter of 2025, the property owner of the Golden, Colorado facility became subject to a court-appointed receivership. Throughout the receivership period, the Company continued to occupy the premises and made all rental payments in accordance with the existing lease terms. During the fourth quarter of 2025, the receivership process concluded with the sale of the property to a new owner. The Company’s lease was assumed by the new property owner and continues in full force and effect under its existing terms and conditions. The change in property ownership did not result in a lease modification, reassignment, or early termination, and had no material impact on the Company’s operations or financial position. Management evaluated the assumption of the lease by the new owner under ASC 842-10-35 and concluded that the event did not constitute a lease modification requiring remeasurement. No impairment of the right-of-use asset was identified in connection with this matter. As of December 31, 2025, management has not identified any impairment indicators related to the ROU asset, and no changes to the lease term or measurement have been recorded. The lease was not modified as a result of the new land lord. The Company will continue to monitor the status of the receivership and evaluate whether the event results in a lease modification, remeasurement, or impairment in future periods in accordance with ASC 842-10-35. The Company analyzes contracts above certain thresholds to identify leases and lease components. Lease and non-lease components are not separated for facility space leases. The Company uses its contractual borrowing rate to determine lease discount rates when an implicit rate is not available. Lease cost for the year ended December 31, 2025, and December 31, 2024, included in consolidated statements of operations, is as follows: Schedule of Lease Cost 2025 2024 Year Ended December 31 2025 2024 Operating lease cost $ 232,773 $ 258,477 The following represents the activity for the right of use assets: Schedule of Right of Use Assets December 31, 2025 December 31, 2024 Beginning balance $ 703,524 $ 859,861 Amortization charge for the period ( 156,338 ) ( 156,337 ) Ending balance $ 547,186 $ 703,524 Other information relating to the operating lease is as follows: Weighted average remaining lease term in years 3.5 2.4 Weighted average discount rate 6.9 % 6.9 % Future minimum lease payments as of December 31, 2025 are as follows: Schedule of Future Minimum Lease Payments Year Amount 2026 $ 222,275 2027 226,705 2028 231,216 Thereafter 117,709 Total future minimum lease payments 797,905 Less: imputed interest 87,390 Operating lease liabilities 710,515 Less: current portion 181,963 Non-current portion of lease liabilities $ 528,552 F- 23 Note 14 - Earnings Per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Net loss attributable to common stockholders represents net loss adjusted for deemed dividends on preferred stock. When the Company redeems shares of Series B Convertible Preferred Stock, the excess of the cash redemption price paid over the carrying value of the shares redeemed is treated as a deemed dividend to the preferred stockholders. This deemed dividend is not recognized in the consolidated statements of operations but is deducted from net loss in computing net loss attributable to common stockholders for purposes of the basic and diluted loss per share calculation. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period. For the Company’s diluted loss per share calculation, the Company uses the “if-converted method” for the Series B Convertible Preferred Stock and the “treasury stock method” for warrants and stock options. The Company applies the more dilutive of the two-class method or the if-converted / treasury stock method for each class of potentially dilutive instruments. Because the Company incurred a net loss in both periods presented, all potentially dilutive securities have been excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. Accordingly, basic and diluted weighted-average shares outstanding are identical for both periods presented. During the year ended December 31, 2025, the Company redeemed 244 shares of its Series B Convertible Preferred Stock for total cash consideration of $ 0.5 million, pursuant to the mandatory use-of-proceeds provision of its ELOC agreement. The Series B Convertible Preferred Stock was originally issued at a fair value of $ 589 per share, reflecting the relative fair value allocation of the $800 per unit transaction price between the Series B preferred shares and the accompanying Series B Warrants, based on standalone fair values determined using a Monte Carlo simulation model. The redemption price of $ 0.5 million exceeded the aggregate carrying value of the redeemed shares of $ 0.3 million by $ 0.2 million. This excess represents a deemed dividend to the preferred stockholders and has been deducted from net loss in computing net loss attributable to common stockholders for purposes of loss per share. The deemed dividend is a non-cash item and does not affect the Company’s net loss, stockholders’ equity (deficit), or cash flows from operations. The schedule of loss per shares, basic and diluted is as follows: Schedule of Earning Per Shares, Basic and Diluted For The Year Ended December 31, 2025 2024 Net loss $ ( 2,160,998 ) $ ( 48,319,475 ) Deemed dividend on Series B Preferred Stock redemption ( 241,435 ) - Net loss attributable to common stockholders ( 2,402,433 ) ( 48,319,475 ) Weighted average shares outstanding – basic and diluted 2,921,648 2,772,867 Basic and diluted net loss per share $ ( 0.82 ) $ ( 17.43 ) The following is a schedule of the weighted average shares outstanding - basic and diluted, for the year ended December 31, 2025 and December 31, 2024. Schedule of Weighted Average Shares Outstanding - Basic and Diluted 2025 2024 Weighted Average Shares Calculation – Basic and Diluted Year Ended December 31, 2025 2024 Weighted average shares 2,921,648 2,772,867 Certain share-based equity awards and warrants were excluded from the computation of dilutive loss per share because inclusion of these awards would have had an anti-dilutive effect. The following table reflects the awards that were excluded from diluted net loss per share: Schedule of Share-based Equity Awards and Warrants Excluded from Computation of Earnings 2025 2024 Year Ended December 31, 2025 2024 Shares to be issued to Abaca shareholders - 37,500 Stock options 538,618 113,673 Conversion of Series B Convertible Preferred Stock 3,999,291 - Conversion of preferred stock 4,440 4,440 Warrants 2,601,374 601,829 Total 7,112,296 757,442 F- 24 Note 15 - Forward Purchase Agreement On 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 Common Stock each to Verdun Investments LLC (“Verdun”) and Vellar Opportunity Fund SPV LLC – Series 1 (“Vellar”) through assignment and novation agreements (collectively the “FPA Holders”). Under the FPA, the FPA Holders agreed not to exercise their stock redemption rights in exchange for $ 7.3 million payable in stock or cash at the option of the Company on or before September 28, 2025 (the “FPA Liability”). Forward Purchase Receivable The FPA provided the Company with the right to receive the Reset Price, which is $ 25.00 per share as of June 30, 2025, if the FPA Holders elect to sell their shares prior to the agreement’s maturity on September 28, 2025. Upon sale, the FPA Holders are required to remit the Reset Price per share sold to the Company, and they retain any proceeds in excess of the Reset Price. If the shares are not sold before maturity, the Company will receive the shares back. The Company does not have control over the timing of any share sales and does not share in any price appreciation. The Reset Price was subject to monthly downward adjustment to the lowest of (a) the prior Reset Price, (b) $ 200.00 , and (c) the volume-weighted average price (“VWAP”) of the Company’s shares over the ten most recent trading days of the prior month, but not below $ 100.00 . Additionally, if the Company issues shares or convertible securities at a price lower than the then-current Reset Price, the Reset Price was adjusted to match that lower offering price. If the FPA Holders sell shares prior to maturity, the Company was entitled to receive $ 25.00 per share sold. As of March 31, 2025, the Company’s stock closed at $ 4.2945 per share, and management considered that it was highly improbable that the FPA Holders will sell any shares before the September 28, 2025 settlement date, as doing so would not be economically beneficial. During the first quarter of 2025, the Company reclassified the forward purchase receivable to additional paid-in capital, as the arrangement met the criteria for equity classification under ASC 815-40 and ASC 480. The reconciliation statement of the Common Stock held by the FPA holders is as follows: Schedule of Reconciliation Statement of Common Stock Held By FPA Vellar Midtown East Verdun Total Shares Amount Shares Amount Shares Amount Shares Amount Balance, December 31, 2023 and December 31, 2024 48,560 $ 1,214,005 75,896 $ 1,897,405 58,912 $ 1,472,811 183,368 $ 4,584,221 Less: reclassification to additional paid-in capital - ( 1,214,005 ) - ( 1,897,405 ) - ( 1,472,811 ) - ( 4,584,221 ) Less: issuance of Series B Convertible Preferred Stock and Series B Warrants as per the Exchange and Cancellation Agreements ( 48,560 ) - ( 75,896 ) - ( 58,912 ) - ( 183,368 ) - Balance, December 31, 2025 - $ - - $ - - $ - - $ - Forward Purchase Derivative Liability On September 28, 2025, the Company was required to either (a) make a cash payment or (b) issue Common Stock sufficient to satisfy the FPA derivative liability of $ 7.3 million. However, in September 2025, each of the FPA holders agreed to Exchange and Cancellation Agreements under which they irrevocably cancelled and terminated all of their rights under the FPA, extinguishing the Company’s FPA derivative liability. In return, the holders received Series B Convertible Preferred Stock and Series B Warrants to purchase Common Stock. On September 30, 2025, the Company issued the following securities in full satisfaction of its FPA derivative liability: Schedule of Forward Purchase Agreement Seller Series B Convertible Preferred Stock (shares) Series B Warrants Verdun 1,607 103,485 Midtown 2,070 133,301 Vellar 1,325 85,325 Total 5,002 322,111 At December 31, 2025, the Series B Warrants to purchase Common Stock had an exercise price of $ 7.7644 per share and include customary anti-dilution and adjustment provisions. The Company accounted for the issuance of the Series B Convertible Preferred Stock and Series B Warrants as equity instruments under U.S. GAAP. The exchange of the FPA obligation for Series B Convertible Preferred Stock and Series B Warrants was accounted for as an extinguishment of a liability. The equity instruments issued were measured at their fair value of $ 800 per unit, consistent with the cash price paid by unaffiliated third-party investors for identical securities on the same date. The FPA Liability had been carried on the Company’s balance sheet at $ 7.3 million since December 31, 2022 and, if settled in the ordinary course, would have required the Company to satisfy the amount due either in cash or through the issuance of Class A Common Stock. On September 30, 2025, all three FPA holders agreed to cancel and terminate all of their rights under the FPA in exchange for 5,002 shares of Series B Convertible Preferred Stock and warrants to purchase 322,111 shares of Common Stock, valued at $ 800 per unit, consistent with the price paid by unaffiliated third-party investors for identical instruments on the same date. The aggregate fair value of the equity instruments issued was $ 4.0 million, which was less than the $ 7.3 million carrying amount of the FPA derivative liability. Accordingly, the Company recognized a gain on extinguishment of $ 3.3 million, which is included in Other Income (Expense) in the consolidated statements of operations for the year ended December 31, 2025. This transaction simultaneously preserved the Company’s cash and protected existing stockholders from dilution. Under the terms of the Series B Convertible Preferred Stock Purchase Agreement, each holder’s conversion rights are subject to a 4.99 % beneficial ownership limitation, such that no holder may convert its Series B shares or exercise related warrants to the extent that doing so would cause its ownership of the Company’s Common Stock to exceed 4.99 %. This limitation may be increased to 9.99 % upon 61 days’ written notice but may not be waived entirely. As a result, the conversion and exercise rights of each of Verdun, Midtown, and Vellar are limited at any given time to the extent that doing so would exceed the 4.99 % beneficial ownership threshold. Note 16 - Warrants Public and Private Placement Warrants As of December 31, 2025, and December 31, 2024, the Company had 287,500 public warrants and 13,205 private placement warrants to purchase Common Stock are outstanding, respectively, each with an adjusted exercise price of $ 230 per share. The public and private placement warrants may only be exercised for a whole number of Common Stock. The public and private placement warrants are exercisable and expire on September 28, 2027, or earlier upon redemption or liquidation. F- 25 No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Redemption of warrants will become effective when the price per share of the Common Stock equals or exceeds $ 360.00 per share. Once the warrants become redeemable, the Company may redeem the warrants: ● in whole and not in part; ● at a price of $ 0.01 per warrant; ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; and ● if, and only if, the reported last sale price of the Common Stock equals or exceeds $ 360.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of Common Stock and equity-linked securities) for any 20 trading days within a 30-trading day period commencing no earlier than the date the warrants become exercisable and ending on the third business day before the date on which the Company sends the notice of redemption to the warrant holders. If and when the warrant becomes redeemable by the Company, the Company may exercise its redemption rights; this is also the case if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for the issuance of Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. The private placement warrants are identical to the public warrants, except that the private placement warrants and the Common Stock issuable upon the exercise of the private placement warrants were not transferable, assignable or saleable, subject to certain limited exceptions. Additionally, the private placement warrants are exercisable on a cashless basis and non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private placement warrants are held by someone other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. F- 26 PIPE Warrants As of December 31, 2025 and December 31, 2024, there were 51,125 outstanding PIPE warrants to purchase Common Stock. The PIPE warrants have an adjusted exercise price of $ 100.00 per share of Common Stock to be paid in cash except if the shares underlying the warrants are not covered by an effective registration statement after the nine-month anniversary of the closing date, in which case cashless exercise is permitted. The PIPE warrants are also subject to adjustment for other customary adjustments for stock dividends, stock splits and similar corporate actions. The PIPE warrants are exercisable for a period of five years following the Closing, or September 28, 2027. After the exercise of a PIPE Warrant, the Company may be required to pay certain penalties if it fails to deliver the Common Stock within a specified period of time. Abaca Warrants As of December 31, 2025, and December 31, 2024, the Company had 250,000 Abaca warrants outstanding, each exercisable to purchase one share of the Company’s Common Stock at an exercise price of $ 40.00 per share, payable in cash. The Abaca Warrants become exercisable one year after the effective date of the registration statement covering the underlying shares and expire five ( 5 ) years after that date. The Company may, at its sole discretion, settle exercises of the Abaca warrants in either (i) shares of Common Stock or (ii) cash equal to the intrinsic value of the Warrants (the difference between the fair market value of the Common Stock on the date of exercise and the $ 40.00 exercise price, multiplied by the number of Warrants exercised). On November 10, 2025, the registration statement on Form S-1 covering the shares issuable upon exercise of the Abaca Warrants became effective, thereby satisfying the Company’s commitment to register such shares for resale. Series B Warrants On September 30, 2025, in connection with the issuance of the Company’s Series B Convertible Preferred Stock, the Company also issued Series B Warrants to purchase an aggregate of 1,999,544 shares of Common Stock at an initial exercise price of $ 7.7644 per share, subject to adjustment. The Series B Warrants become exercisable on the date that is six months and one day after the effective date of the Company’s Form S-1 registration statement filed on October 21, 2025 (the “Initial Exercisability Date”), and expire on the third anniversary of the Initial Exercisability Date. Each holder is subject to a 4.99 % beneficial-ownership limitation, which may be increased to up to 9.99 % upon 61 days’ prior written notice to the Company. If a registration statement covering the resale of the underlying shares is not effective at the time of exercise, the holder may elect to exercise the warrants on a cashless basis. The Series B Warrants include down-round and anti-dilution provisions under which the exercise price is subject to reduction if the Company issues shares of Common Stock, or common stock equivalents, at a price below the then-current exercise price. The exercise price and/or number of warrant shares are also subject to automatic resets on the 60th, 90th, and 180th calendar days following the issuance date, and upon standard corporate events such as stock splits, combinations, and stock dividends. All automatic resets occur prior to the Initial Exercisability Date; accordingly, the exercise price and warrant share count in effect on that date will already reflect any adjustments triggered during the pre-exercisability period. The Company evaluated the Series B Warrants under ASC 815-40 and ASC 480. Management concluded that the warrants are indexed to the Company’s own stock and satisfy all conditions for equity classification in stockholders’ equity. In reaching this conclusion, management noted that: (i) the beneficial-ownership limitation is a timing deferral and does not introduce a non-equity observable index; (ii) the down-round feature is disregarded in the indexation analysis under ASC 815-10-15-75A; and (iii) the automatic reset provisions are fully operative before the warrants become exercisable, such that the settlement amount upon exercise is determined solely by reference to a fixed number of shares and a fixed exercise price, subject only to standard anti-dilution adjustments. Because the Series B Warrants are classified in equity, they will not be subsequently remeasured at fair value. This treatment differs from the Company’s other outstanding warrants which are classified as derivative liabilities and remeasured each reporting period (see Note 19). The aggregate fair value of each unit of Series B Convertible Preferred Stock and accompanying Series B Warrant was established at $ 800 , representing the price paid by unaffiliated third-party investors in an arm’s-length transaction on September 30, 2025. Because both instruments are recorded separately on the balance sheet, the Company allocated the $ 800 unit price between them on a fair value basis in accordance with ASC 470-20-30-5. The fair value of each Series B Warrant was estimated using a Monte Carlo simulation model provided by a third-party. The model produced an estimated fair value of $ 211 per Series B Warrant and $ 589 per share of Series B Convertible Preferred Stock. Both instruments are classified in permanent equity and will not be subsequently remeasured. F- 27 Note 17 - Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy ranks the inputs used in measuring fair value as follows: ○ Level 1 – Observable, unadjusted quoted prices in active markets ○ Level 2 – Inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability ○ Level 3 – Unobservable inputs with little or no market activity that require the Company to use reasonable inputs and assumptions The Company uses fair value measurements to record adjustments to certain financial assets and liabilities on a recurring basis. The Company may be required to record certain assets at fair value on a nonrecurring basis in specific circumstances, such as evidence of impairment. Methodologies used to determine fair value might be highly subjective and judgmental in nature; therefore, valuations may not be precise. If the Company determines that a valuation technique change is necessary, the change is assumed to have occurred at the end of the respective reporting period. Assets and Liabilities Reported at Fair Value on a Recurring Basis Public Warrants: Public warrants are recorded at fair value on a recurring basis. The Company obtains exchange traded price, of Level 1 inputs, based on observable data to value these warrants. Private Placement Warrants: Private Placement Warrants are recorded at fair value on a recurring basis based upon an internal Company assessed value of these derivatives with Level 3 inputs, which are derived from the Black-Scholes model. PIPE Warrants: PIPE Warrants are recorded at fair value on a recurring basis based upon an internal Company assessed value of these derivatives with Level 3 inputs, which are derived from the Black-Scholes model. Abaca Warrants: Abaca Warrants are recorded at fair value on a recurring basis. The Company assessed the value of these derivatives with Level 3 inputs. Level 3 inputs, based on unobservable data derived from the Black-Scholes model. Third anniversary payment consideration: The third anniversary payment consideration was classified as a derivative liability under ASC 815, Derivatives and Hedging, and was recorded at fair value on a recurring basis using Level 3 inputs. On October 3, 2025, the third anniversary payment of $ 1.5 million, which was due in October 2025, was settled in full through the issuance of 37,517 shares of Common Stock at a floor value of $ 40.00 per share at the Company’s election. As a result of this settlement, the liability was fully extinguished during the year ended December 31, 2025. Forward purchase option derivatives: Forward purchase option derivatives are recorded at fair value on a recurring basis. On September 30, 2025, all three FPA holders entered into Exchange and Cancellation Agreements with the Company, pursuant to which they irrevocably cancelled, waived, and terminated all of their rights under the FPA in exchange for shares of Series B Convertible Preferred Stock and Series B Warrants to purchase Class A Common Stock. This transaction extinguished the FPA derivative liability in its entirety and was accounted for as a debt extinguishment under ASC 405-20, resulting in a gain on extinguishment of $ 3.3 million recognized in Other Income (Expense) for the year ended December 31, 2025. F- 28 The 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 December 31, 2025 and December 31, 2024: Schedule of Financial Assets and Liabilities Recorded at Fair Value December 31, 2025 December 31, 2024 Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Unobservable Inputs (Level 3) Description Liabilities: PIPE warrants $ 280 $ - $ 280 $ 79,512 $ - $ 79,512 Public warrants 10,896 10,896 - 246,445 246,445 - Private placement warrants 14 - 14 9,632 - 9,632 Abaca warrant 28,430 - 28,430 1,024,900 - 1,024,900 Forward purchase derivative liability - - - 7,309,580 - 7,309,580 Third anniversary payment consideration - - - 322,000 - 322,000 Assets Measured at Fair Value on a Nonrecurring Basis Assets that are measured at fair value on a nonrecurring basis primarily comprises of property, plant and equipment, right-to-use assets, finite lived intangible assets and goodwill. The Company does not record these at fair value on a recurring basis, however, the carrying value of the assets may be reduced to fair value when the Company determines that impairment has occurred. As of December 31, 2024, the Company had no assets or liabilities measured at fair value on a non-recurring basis. During the year ended December 31, 2025, the Company recognized the ASC 460 stand-ready guarantee liability under the Second Amended CAA at fair value on a non-recurring basis upon initial recognition on October 1, 2025. This liability was measured at inception only and is not remeasured at fair value in subsequent reporting periods. The carrying amount as of December 31, 2025 was $ 2.1 million, reflecting the systematic release of the liability as the Company is progressively released from risk on the underlying loan portfolio. The fair value measurement for stand-ready guarantee liability was prepared internally by management using an insurance-pricing methodology, reflecting the premium that a knowledgeable, willing third-party surety or specialty insurer would charge to assume the indemnification obligation in an arm’s-length transaction, consistent with the market participant framework of ASC 820-10-35-9. The following table summarizes this non-recurring fair value measurement as of the initial recognition date: Schedule of Non-Recurring Fair Value Measurement December 31, 2025 Carrying amount $ Fair value $ Fair value measurement using Level 1 $ Level 2 $ Level 3 $ Liabilities Stand-ready guarantee liability $ 2,135,000 $ 2,135,000 $ - $ - $ 2,135,000 Level 3 Measurement - Significant Unobservable Inputs The ASC 460 Guarantee liability was classified as Level 3 because its fair value was determined using significant unobservable inputs for which there is no active market. The following table summarizes the valuation methodology and significant unobservable inputs used in the Level 3 measurement: Schedule of Valuation Methodology and Significant Unobservable Inputs Input Value Used Sensitivity Probability of Default -Tranches A & B (Ratings 2–5, pooled) 7.25%, derived from loan level analysis of the portfolio. An increase raises fair value Probability of Default - Tranche C (Rating 9, individually evaluated) 35%, based on Rating 9 definition, past-maturity status, and personal guarantees An increase raises fair value Loss Given Default - Tranches A & B 25.00% for Tranche A and 35% for Tranche B, inclusive of 13% cannabis-specific qualitative premium reflecting court access limitations, collateral possession restrictions, and refinancing risk An increase raises fair value Loss Given Default - Tranche C (uncollateralized gap) 50%, representing the midpoint of the Rating 9 anticipated loss range applied to the uncollateralized exposure An increase raises fair value Stand-Ready Risk Premium 120% loading applied to total expected loss, reflecting compensation for uncapped exposure, cannabis concentration risk, portfolio illiquidity, and six-year guarantee term commitment An increase raises fair value Discount Rate 4.0% risk-free rate (6-year Treasury) An increase reduces fair value Weighted Average Payout Timing Tranche A: 4 years; Tranche B: 3 years; Tranche C: 2 years; Stand-ready premium: 3 years — based on the portfolio’s contractual maturity profile A longer weighted average payout timing reduces fair value F- 29 Fair Value of Financial Instruments The following tables present the carrying amounts and fair values of financial instruments on a non-recurring basis, by the level of valuation inputs in the fair value hierarchy, as of December 31, 2025 and December 31, 2024: Schedule of Carrying Amounts and Fair Values of Financial Instruments Level 1 $ Level 2 $ Level 3 $ December 31, 2025 Carrying amount $ Fair value $ Fair value measurement using Level 1 $ Level 2 $ Level 3 $ Assets Cash and cash equivalents $ 6,779,040 $ 6,779,040 $ 6,779,040 $ - $ - Forward purchase agreement Loans Investment in preferred securities 1,450,000 1,450,000 - - 1,450,000 Liabilities Deferred consideration 3,000,000 3,000,000 3,000,000 - - Public warrants 10,896 10,896 10,896 - - Private placement warrants 14 14 - - 14 PIPE warrants 280 280 - - 280 Abaca warrants 28,430 28,430 - - 28,430 Level 1 $ Level 2 $ Level 3 $ December 31, 2024 Carrying amount $ Fair value $ Fair value measurement using Level 1 $ Level 2 $ Level 3 $ Assets Cash and cash equivalents $ 2,324,647 $ 2,324,647 $ 2,324,647 $ - $ - Forward purchase agreement 4,584,221 4,584,221 4,584,221 - - Loans 360,552 359,505 - - 359,505 Liabilities Deferred consideration 3,016,343 3,016,343 3,016,343 - - Senior secured promissory note 11,004,173 10,221,652 - - 10,221,652 Public warrants 246,445 246,445 246,445 - - Private placement warrants 9,632 9,632 - - 9,632 PIPE warrants 79,512 79,512 - - 79,512 Abaca warrants 1,024,900 1,024,900 - - 1,024,900 Third anniversary payment consideration 322,000 322,000 - - 322,000 Forward purchase derivative 7,309,580 7,309,580 - - 7,309,580 The change in the liability 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: Schedule of Fair Value Assets Measured on Recurring Basis PIPE Warrants Abaca Warrant Private Placement Warrants Third anniversary payment consideration Forward Purchase Derivative For the Year Ended December 31, 2025 PIPE Warrants Abaca Warrant Private Placement Warrants Third anniversary payment consideration Forward Purchase Derivative Balance, January 1, 2025 $ 79,512 $ 1,024,900 $ 9,632 $ 322,000 $ 7,309,580 Fair value adjustment ( 79,232 ) ( 996,470 ) ( 9,618 ) ( 63,133 ) - Exchanged for Common Stock - - - 258,867 - Exchanged for Series B Convertible Preferred Stock and Series B Warrants - - - - ( 7,309,580 ) Balance, December 31, 2025 $ 280 $ 28,430 $ 14 $ - $ - PIPE Warrants Abaca Warrant Private Placement Warrants Third anniversary payment consideration Forward Purchase Derivative For the Year ended December 31, 2024 PIPE Warrants Abaca Warrant Private Placement Warrants Third anniversary payment consideration Forward Purchase Derivative Balance, January 1, 2024 $ 273,124 $ 3,384,085 $ 25,070 $ 810,000 $ 7,309,580 Beginning balance $ 273,124 $ 3,384,085 $ 25,070 $ 810,000 $ 7,309,580 Fair value adjustment ( 193,612 ) ( 2,359,185 ) ( 15,438 ) ( 488,000 ) - Balance, December 31, 2024 $ 79,512 1,024,900 $ 9,632 $ 322,000 $ 7,309,580 Ending balance $ 79,512 1,024,900 $ 9,632 $ 322,000 $ 7,309,580 F- 30 As of December 31, 2025 and on December 31, 2024, the fair market of the private placement warrants, Abaca warrants and PIPE warrants, were based on Black-Scholes Merton option pricing model. The valuation was performed by the Company as of December 31, 2025, and by a third-party prior for prior periods. During the year ended December 31, 2025 and December 31, 2024, there were no changes in the classification of financial instruments within Level 2 and Level 3 of the fair value hierarchy. The following table provides quantitative information regarding Level 3 fair value measurements inputs as it relates to the private placement warrants, public warrants, third anniversary payment consideration and Abaca warrants as of their measurement dates: Schedule of Level 3 Fair Value Measurements Inputs PIPE Warrants Private Warrants Third Anniversary Payment Consideration Abaca Warrants PIPE Warrants Private Warrants Third Anniversary Payment Consideration Abaca Warrants As on December 31, 2025 As on December 31, 2024 PIPE Warrants Private Warrants Third Anniversary Payment Consideration Abaca Warrants PIPE Warrants Private Warrants Third Anniversary Payment Consideration Abaca Warrants Exercise price $ 100 $ 230.00 $ - $ 40.00 $ 100.00 $ 230.00 $ - $ 40.00 Share price $ 1.06 $ 1.06 $ - $ 1.06 $ 9.00 $ 9.00 $ 9.00 $ 9.00 Expected term (years) 1.7 1.7 - 2.8 2.7 2.7 0.8 3.87 Volatility 115 % 115 % - 115 % 103 % 103 % 103 % 103 % Risk-free rate 3.5 % 3.5 % - 3.5 % 4.3 % 4.3 % 4.3 % 4.3 % Measurement input 3.5 % 3.5 % - 3.5 % 4.3 % 4.3 % 4.3 % 4.3 % On October 3, 2025, the Company issued 37,517 shares of Common Stock to the Abaca shareholders as part of the third anniversary consideration payment under the acquisition agreement (see Note 3), valued at $ 0.3 million. Note 18 - Income Taxes The major components of income tax expense (benefit) for the year ended December 31, 2025 and December 31, 2024 as follows: Schedule of Major Components of Income Tax For The Year Ended December 31, 2025 2024 Current income tax: Current (benefit) tax on profits $ ( 58,470 ) $ 30,665 Deferred tax: - Deferred taxation - current year - 43,829,019 Income tax (benefit) expense $ ( 58,470 ) $ 43,859,686 The tables below reconcile the United States effective tax rate of 21% to the Company’s income tax (benefit) for the years ended December 31, 2025 (pursuant to ASU 203-09) and December 31, 2024. Schedule of Effective Income Tax Rate Reconciliation December 31, 2025 Net loss before income taxes $ ( 2,219,468 ) United States federal statutory tax rate ( 466,088 ) 21.0 % Arkansas tax benefit, net of federal tax benefit ( 58,470 ) 2.6 % Deferred state income taxes, no federal benefit ( 172,158 ) 7.8 % Permanent differences, net Changes in valuation allowance 1,476,893 ( 66.5 )% Non-taxable or non-deductible items Change in fair market value of warrant liability ( 277,383 ) 12.5 % Gain on extinguishment of forward purchase derivative and exchange of debt ( 700,605 ) 31.6 % Costs incurred to secure financing 168,000 ( 7.6 )% Other ( 52,114 ) 2.4 % Prior year true up of deferred taxes 23,455 ( 1.0 )% Income tax benefit $ ( 58,470 ) 2.6 % December 31, 2024 Net loss before income taxes $ ( 4,459,789 ) United States federal statutory income tax rate of 21% ( 936,555 ) State income tax benefit, net of federal benefit ( 8,418 ) Permanent differences, net 583,678 Valuation allowance charges affecting the provision for income taxes 44,277,923 Other ( 56,942 ) Total $ 43,859,686 F- 31 As of December 31, 2025 and December 31, 2024, the significant component of the Company’s deferred tax assets and liabilities as follows: Schedule of deferred tax assets and liabilities   December 31, 2025 December 31, 2024 Change Deferred tax assets:     Capital loss carryover  $ 70,627  $ 70,627  $ - Stock option expense 2,043,599 1,674,554 369,045 Deferred revenue 3,774 6,935 ( 3,161 ) Fixed assets 8,794 23,992 ( 15,198 ) Transaction costs 924,764 942,062 ( 17,298 ) Forward purchase contract - 8,155,953 ( 8,155,953 ) Goodwill 26,180,613 28,404,108 ( 2,223,495 ) NOL carry forward 16,551,647 5,030,672 11,520,975 Accrued expenses 3,917 - 3,917 Contract assets 789,914 - 789,914 Right of use assets 173,934 214,124 ( 40,190 ) Total deferred tax assets 46,751,583 44,523,027 2,228,556 Deferred tax liabilities:             Lease liabilities ( 133,944 ) ( 172,195 ) 38,251 Financial indemnification liability ( 267,266 ) - ( 267,266 ) Stand ready liability ( 522,648 ) - ( 522,648 ) Total deferred tax liabilities ( 923,858 ) ( 172,195 ) ( 751,663 ) Net deferred tax assets 45,827,725 44,350,832 1,476,893 Valuation allowance ( 45,827,725 ) ( 44,350,832 ) ( 1,476,893 ) Deferred tax asset  $   -  $   - $ - The Company offsets tax assets and liabilities only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. The Company does not consider their deferred tax assets to be realizable and has established full valuation allowance during the year ended December 31, 2025 and December 31, 2024. As of December 31, 2025, the Company has US federal tax loss carryovers $ 67.7 million. The Company has US federal tax loss carryovers $ 20.4 million arising from 2020 through 2022 which have an unlimited carryover period. The Company has State of Colorado loss carryovers arising in 2022 of $ 21.4 million which begin to expire in 2042. The Company currently has no tax examinations in progress. The Company has open years for examination from Federal, State of Arkansas and Colorado for the years ending December 31, 2020 and forward and from State of Colorado from December 31, 2021 and forward. The Company does not have any uncertain tax positions as of December 31, 202 5 . The Company has open years for examination from Federal and State of Arkansas for the years ended December 31, 2020 and forward and from State of Colorado from December 31, 2021 and forward. Section 382 Limitations on Net Operating Loss Carryforwards Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change,” generally defined as a cumulative increase of more than 50 percentage points in the stock ownership of 5% shareholders within a rolling three-year period may have its ability to utilize pre-change net operating loss (“NOL”) carryforwards and certain other tax attributes significantly limited on an annual basis. Since inception, the Company has undergone a number of significant equity transactions, including its initial public offering, the reverse acquisition of Northern Lights Acquisition Corp., the acquisition of Abaca, various share issuances to settle obligations, and its September 2025 recapitalization. The Company has not completed a Section 382 analysis to determine whether one or more ownership changes have occurred or to quantify any resulting annual limitation. If it is determined that an ownership change has occurred, the annual limitation could materially reduce the Company’s ability to utilize its existing NOL carryforwards and other deferred tax assets to offset future taxable income. F- 32 Note 19 - Stockholders’ Equity (Deficit) Preferred Stock The Company is authorized to issue up to 1,250,000 shares of preferred stock, par value $ 0.0001 per share. The Board of Directors has the authority to establish the specific rights, preferences, and designations of any series of preferred stock. As of December 31, 2025 and December 31, 2024, there were 111 shares of convertible preferred stock issued and outstanding. Holders of preferred stock are entitled to receive dividends only if and when dividends are paid on the Company’s Common Stock. In that event, preferred stockholders receive dividends on an as-converted-to-Common-Stock basis, in the same form as dividends paid to the Common Stockholders. No additional or separate dividends are payable on the preferred stock. The preferred stock is convertible into shares of Common Stock. The initial conversion price was $ 200 per share. The conversion price is subject to downward adjustment at five specified intervals 10, 55, 100, 145, and 190 days after the effectiveness of a registration statement covering the shares issuable upon conversion. At each adjustment date, the conversion price resets to the lower of (i) the then-current conversion price and (ii) the greater of 80% of the five-day volume weighted average price of the Common Stock and $50 (the “Floor Price”). Regardless of any price resets, each preferred stockholder retains the right to receive the total number of shares of Common Stock that would have been issuable at the adjusted conversion price based on their original investment amount. On January 25, 2023, stockholders approved a further reduction in the Floor Price from $ 40.00 per share to $ 25.00 per share at a special meeting. Series B Convertible Preferred Stock On September 30, 2025, the Company entered into a Series B SPA with certain institutional and accredited investors (the “Buyers”). Under the Series B SPA, the Company issued 31,052 shares of Series B Convertible Preferred Stock (out of 35,000 authorized shares) and accompanying Series B Warrants to purchase 1,999,544 shares of Common Stock. The purchase price was $ 800 per $ 1,000 stated value per unit, representing the arm’s-length transaction price established by independent ELOC investors. The aggregate consideration received was $ 24.3 million, consisting of $ 6.1 million from the Company’s Series B Convertible Preferred Stock and warrant financing (approximately $ 5.9 million from third-party accredited investors and $ 0.2 million from management and board participation, with stockholder approval obtained on November 6, 2025), approximately $ 0.6 million in cash proceeds from unsecured Notes issued in August and September 2025 that were subsequently exchanged for Series B Convertible Preferred Stock and warrants at closing, along with $ 10.7 million from the cancellation of debt and $ 7.3 million from the termination of the FPA. Offering costs of $ 0.4 million were charged to additional paid-in capital. The Series B Convertible Preferred Stock, including its reset and anti-dilution provisions, was evaluated and determined to meet the criteria for classification within permanent stockholders’ equity, as the reset features are indexed to the Company’s own stock and the instrument does not embody an unconditional obligation to transfer assets. Both the Series B Convertible Preferred Stock and the accompanying Series B Warrants were measured at fair value at issuance at $ 800 per unit, consistent with the price paid by unaffiliated third-party investors for identical instruments on the same date in accordance with ASC 820. No subsequent remeasurement is performed. The Series B Convertible Preferred Stock has a stated value of $ 1,000 per share and ranks senior to all classes of Common Stock with respect to dividends and distributions upon liquidation. Dividends accrue only when declared by the Board of Directors, calculated on an as-converted basis. Each share is convertible at the holder’s option into Common Stock at an initial conversion price of $ 7.7644 per share, subject to proportional adjustment for stock splits, stock dividends, combinations, and similar events. The Series B Convertible Preferred Stock includes automatic price reset and anti-dilution provisions that are substantially similar to those in the Series B Warrants. The conversion price resets automatically at 60, 90, and 180 days after the applicable date to the lower of the then-current market price or the prior conversion price, subject to a floor of $ 1.5528 per share as defined in the Certificate of Designation. Additional downward adjustments apply if the Company subsequently issues equity at a price below the then-current conversion price. Holders are subject to a 4.99 % beneficial ownership cap, which may be increased to 9.99 % upon 61 days’ written notice. With the consent of the Required Holders (as defined in the Series B instruments), the Board may also voluntarily reduce the conversion price for any period permitted under Nasdaq rules. Because the Series B Convertible Preferred Stock and Series B Warrants were issued together as a unit, the $ 800 per unit of proceeds was allocated between the two instruments on a relative fair value basis in accordance with ASC 470-20-30-5. To perform this allocation, the Company used a Monte Carlo simulation model to estimate the standalone fair value of each instrument, arriving at approximately $ 589 per share of Series B Convertible Preferred Stock and $ 211 per Series B Warrant. These standalone fair values were used solely to calculate each instrument’s proportionate share of the $ 800 unit proceeds; they do not represent the transaction price of either instrument individually. Both instruments were determined to qualify for equity classification under ASC 815-40 and ASC 480 and will not be remeasured in subsequent periods. F- 33 At a special meeting of stockholders held on November 6, 2025, the Company’s stockholders approved four actions relevant to the Company’s capital structure. First, stockholders approved the issuance of Common Stock upon conversion of the Series B Convertible Preferred Stock and exercise of the Series B Warrants, including participation by members of management and the Board of Directors. Because those issuances constituted compensation under Nasdaq Listing Rule 5635(c), they were conditioned upon and subject to this stockholder approval. No preferential pricing or special terms were extended to management or director participants beyond those available to all other Buyers. Second, stockholders approved the issuance of shares of Common Stock to the counterparty under the Company’s ELOC agreement (see Common Stock section below). Third, stockholders approved an increase in the number of authorized shares of Common Stock from 130,000,000 to 1,000,000,000 shares. This increase was necessary to ensure the Company maintains a sufficient reserve of authorized but unissued shares to satisfy its obligations upon conversion of the Series B Convertible Preferred Stock, exercise of the Series B Warrants, and future draws under the ELOC, and to maintain the flexibility to issue Common Stock or securities convertible into common stock for general corporate purposes if an attractive opportunity to do so arises. Fourth, stockholders authorized the Board of Directors, in its sole discretion, to affect a reverse stock split of the Company’s outstanding Common Stock at any ratio between 2-for-1 and 12-for-1 , if and when the Board determines such action to be in the best interests of the Company and its stockholders. As of December 31, 2025, no reverse stock split had been effected pursuant to this authorization. The Company filed registration statements on Form S-1 on October 17 and October 21, 2025 to register the resale of shares issuable upon conversion of the Series B Convertible Preferred Stock and exercise of the Series B Warrants, as well as shares issuable under its ELOC. The registration statement covering the ELOC became effective on November 7, 2025, and the registration statement covering the Series B Convertible Preferred Stock and Series B Warrants became effective on November 12, 2025. In January 2026, the first automatic price reset under the Series B Convertible Preferred Stock and Series B Warrants occurred, 60 days after the applicable date as provided in the Certificate of Designation and warrant agreements. Because the Company’s Common Stock was trading below the floor price at the time of the reset, the conversion price of the Series B Convertible Preferred Stock and the exercise price of the Series B Warrants each reset to the floor price of $ 1.5528 per share. No further automatic resets remain under the 60, 90, and 180-day reset schedule. The reset to the floor price significantly increases the number of shares of Common Stock potentially issuable upon conversion and exercise of these instruments. The Company is required to register the additional shares resulting from the reset and has initiated the necessary steps to do so. Failure to timely complete that registration would constitute a breach of the Company’s obligations to the Series B holders. Common Stock As of December 31, 2025, the Company is authorized to issue up to 1,000,000,000 shares of Common Stock, par value $ 0.0001 per share. Holders of Common Stock are entitled to one vote for each share held. As of December 31, 2025 and December 31, 2024, there were 4,281,523 and 2,783,666 shares of Common Stock issued and outstanding, respectively. Equity Line of Credit and Related Series B Redemption Obligation On September 17, 2025, the Company entered into the ELOC with an institutional investor (the “ELOC Investor”), pursuant to which the Company, at its sole discretion, may issue and sell up to $ 150.0 million of newly issued shares of Common Stock from time to time. The facility is subject to customary conditions and limitations, including a 4.99 % beneficial ownership cap and a 19.99% exchange cap applicable to the ELOC Investor. The facility expires on September 17, 2028. The Company filed a registration statement on Form S-1 to register the resale of shares issuable under the facility. That registration statement became effective on November 7, 2025, at which point the Company became eligible to draw on the facility. On November 6, 2025, stockholders approved the issuance of shares of Common Stock under the ELOC in excess of 19.99 % of the Company’s shares outstanding as of the date of the agreement, as required under Nasdaq Listing Rule 5635. F- 34 Each sale of Common Stock under the ELOC will be priced at a 10% discount to the lowest intraday stock price on the draw date. This discount represents a cost to the Company and will be recognized as an expense in the period in which the shares are sold. The ELOC provides that, with the mutual consent of the Company and the ELOC Investor, the total facility commitment may be expanded up to $ 500.0 million. Any such increase would require the Company to issue additional commitment shares equal to 0.75% (75 basis points) per $100 million of incremental commitment, payable in shares of Common Stock valued at the average closing price for the five trading days preceding the date of issuance. As consideration for the ELOC Investor’s purchase commitment, the Company issued to the ELOC Investor 1,000 shares of Series B Convertible Preferred Stock and a Series B Warrant to purchase 64,369 shares of Common Stock on September 30, 2025, valued at $ 800 per unit, or $ 0.8 million in aggregate. This commitment fee was recorded within Other Expense and expensed in full upon issuance. In addition, the Company incurred $ 0.2 million in other ELOC-related issuance costs, which were also expensed as incurred. Accordingly, the Company’s initial commitment-fee obligation under the ELOC has been satisfied in full. On September 30, 2025, the Company and the ELOC Investor executed Amendment No. 1 to the ELOC Agreement, which requires the Company to apply 25% of the net cash proceeds received from each draw under the facility toward the redemption of outstanding shares of Series B Convertible Preferred Stock. Pursuant to the Certificate of Designation governing the Series B Convertible Preferred Stock, such redemptions are permitted only at 120% of the $ 1,000 stated value per share, plus any accrued but unpaid dividends, resulting in a cash redemption price of $ 1,200 per share. As a result, for each dollar of shares sold under the ELOC at market, the Company retains approximately $ 0.675 in net cash after the 10 % pricing discount and the 25% Series B redemption obligation. Redemptions of Series B Convertible Preferred Stock does not create treasury stock, rather these redeemed shares are considered retired and cancelled per our Certificate of Designation. This mandatory use-of-proceeds provision represents a contractual earmark of future equity proceeds but does not create a separate liability at issuance, because no redemption obligation arises until the Company actually receives proceeds by electing to draw under the facility. Consistent with ASC 480-10-25-4 through 25-14, the Series B Convertible Preferred Stock continues to be classified in permanent equity, as any redemption remains conditional on the Company’s discretionary decision to utilize the ELOC and does not constitute an unconditional obligation to transfer assets. Under the ELOC, Material Adverse Effect includes any material adverse change in the enforceability of the agreement, our results of operations, assets, business, or financial condition taken as a whole, or our ability to perform our material obligations in a timely manner. Company specific deterioration including a significant decline in revenues or cash flows, loss of key customers or contracts, material litigation or regulatory action, failure to maintain required licenses or permits, a material weakness in internal controls, or loss of key management personnel is not excluded from this definition and could independently trigger the Investor’s termination rights. The Company’s representations and warranties regarding the absence of a Material Adverse Effect must remain true and correct not only at the initial closing of the facility, but also at the time of each subsequent VWAP Purchase Notice throughout the term of the agreement. As a result, even after the facility has commenced and initial drawings have been made, any supervening adverse development could prevent us from accessing the remaining unfunded commitment. If a Material Adverse Effect occurs and is continuing, the Investor has the right to terminate the Purchase Agreement upon ten (10) Trading Days’ written notice. In that event, we would lose access to any remaining unfunded portion of the $ 150 million commitment. While the ELOC excludes certain broad macroeconomic, industry-wide, and geopolitical events from the definition of Material Adverse Effect, no such exclusion applies to adverse developments that are specific to our business or operations. There can be no assurance that a Material Adverse Effect will not occur during the term of the Purchase Agreement. Should one occur, and should we be unable to secure alternative financing on acceptable terms, or at all, our liquidity position, business operations, financial condition, and results of operations could be materially and adversely affected. During the year ended December 31, 2025, the Company issued 1,326,603 shares of Common Stock under the ELOC, generating net proceeds of $ 1.8 million, equivalent to an average price of $ 1.341 per share. In connection with these draws, the Company sold shares of Common Stock at a contractual 10% discount to the lowest intraday stock price on each draw date. This pricing discount represents a direct cost of accessing the ELOC facility and resulted in a non-cash charge of approximately $ 0.08 million, which was recognized in the statement of operations for the year ended December 31, 2025. The recorded expense reflects the difference between the fair market value of the shares issued on the settlement date and the proceeds received pursuant to the ELOC Agreement. 2022 Equity Incentive Plan The Amended and Restated - 2022 Equity Incentive Plan (the “Plan”) was approved by the Company’s stockholders on June 28, 2022. On April 30, 2025, the Plan was amended to provide that the total number of shares of Common Stock that may be issued, under the Plan will automatically increase upon the occurrence of a Dilution Event (as defined in the Plan) and on the first trading day of each calendar year, beginning with calendar year 2026, by such number of shares of Common Stock necessary to make the total shares of Common Stock authorized under the Plan equal to fifteen percent (15%) of the total outstanding shares of Common Stock on the last day of the prior calendar year (subject to a maximum annual increase of 50,000 shares of Common Stock). The Plan permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, stock bonus awards, and performance compensation awards. The Company has not issued stock appreciation rights, restricted stock, stock bonus awards, or performance compensation awards in the year ended December 31, 2025 and December 31, 2024. As of December 31, 2025, a total of 626,749 shares of Common Stock were authorized for issuance under the Plan, of which 78,799 shares remained available for future issuances. F- 35 Stock Options Stock options are awarded to encourage ownership of the Company’s Common Stock by employees and to provide incentives for employees to render services and to exert maximum effort for the success of the Company. The Company’s incentive stock options generally permit net-share settlement upon exercise. The option exercise price, vesting schedule and exercise period are determined for each grant by the administrator (person appointed by board to administer the stock plans) of the applicable plan. The Company’s stock options generally have a 10 -year contractual term. The assumptions used to determine the fair value of options granted in the year ended December 31, 2025 using the Black-Scholes-Merton option model are as follows: Schedule of Fair Value of Options Granted Black-Scholes-Merton Model Dividend yield - Risk-free interest rate 3.5 % to 4.4 % Expected volatility 93.4 % to 115.5 % Expected term in years 5 to 6.5 The assumptions used to determine the fair value of options granted in the year ended December 31, 2024 using the Black-Scholes-Merton model are as follows: Dividend yield 0 % Risk-free interest rate 3.6 % to 4.2 % Expected volatility 100 % Expected term in years 6 to 6.5 A summary of the Company’s stock option activities and related information for the year ended December 31, 2025 is as follows: Stock Option No. of Stock Option Weighted-Average Grant Date Exercise Price Weighted-Average Remaining Contractual Life (In Years) Balance, January 1, 2025 105,090 $ 98.55 0.65 Granted 540,827 3.89 9.5 Forfeited ( 107,299 ) - - Cancelled / Forfeited - - - Balance, December 31, 2025 538,618 $ 11.25 9.3 Vested and expected to vest December 31, 2025 538,618 $ 11.25 9.3 Stock Option No. of Stock Option Weighted-Average Grant Date Exercise Price Weighted- Average Remaining Contractual Life (In Years) January 1, 2024 114,301 $ 108.62 1.65 Granted - - - Forfeited - - - Cancelled / Forfeited ( 9,211 ) ( 76.60 ) - December 31, 2024 105,090 $ 98.55 0.65 The options forfeited during the period were associated with awards previously granted to former officers and employees whose service with the Company terminated prior to vesting or exercise. On August 7, 2025, the Company granted 183,501 performance-based stock option awards to certain executive officers, including the Chief Executive Officer, Chief Investment and Strategic Officer, and Principal Accounting Officer. These options were issued under the 2022 Stock Option and Incentive Plan and are performance-based awards that vest only upon the Company’s successful completion of an equity transaction resulting in proceeds in excess of $ 4 million. The performance condition is non-market based as defined in ASC 718-10-20. F- 36 The performance condition was satisfied on September 30, 2025 upon the closing of the Company’s Series B Convertible Preferred Stock financing, gross cash proceeds of $ 6.7 million, exceeding the $ 4.0 million threshold required for vesting. Accordingly, the Company recognized $ 0.3 million of stock-based compensation expense during the year ended December 31, 2025 in connection with these awards. The following options were outstanding as of December 31, 2025, at their respective exercise price: Schedule of Options Outstanding Exercise Price Options Outstanding December 31, 2025 $1.27 25,000 $2.22 23,781 $2.40 364,893 $6.40 7,326 $7.80 5,731 $8.00 32,700 $9.68 34,884 $31.20 9,978 $62.54 6,825 $133.40 27,500 Total 538,618 Stock compensation expense recognized for stock options for the year ended December 31, 2025 and December 31, 2024 was $ 1.5 million and $ 1.6 million. Stock compensation expenses is comprised of the following: Schedule of Stock Compensation Expenses 2025 2024 Year Ended December 31 2025 2024 Compensation and employee benefits $ 796,565 $ 1,575,952 Professional services 688,993 - Total $ 1,485,558 $ 1,575,952 As of December 31, 2025, there was $ 0.3 unrecognized stock compensation expense related to stock options. The unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately 1.6 years based on vesting under the award service conditions. The weighted-average fair value of the stock options granted for the year ended December 31, 2025 was $ 3.00 per share. There were no stock options granted for the year ended December 31, 2024. Restricted Stock Units (“RSUs”) A summary of the Company’s RSU activities and related information for the year ended December 31, 2025 and December 31, 2024 is as follows: Schedule of Restricted Stock Units Restricted Stock Units No. of RSU Weighted- Average Grant Date Fair Value Per RSU Weighted- Average Remaining Contractual Life (in Years) January 1, 2025 8,583 $ 26.20 1.00 Granted - - - Vested ( 5,740 ) - - Expired - - - Cancelled / Forfeited ( 2,843 ) - - December 31, 2025 - - - F- 37 Restricted Stock Units No. of RSU Weighted- Average Grant Date Fair Value Per RSU Weighted- Average Remaining Contractual Life (in Years) January 1, 2024 16,175 $ 26.20 2.00 Granted - - - Vested ( 5,392 ) 26.20 - Expired - - - Cancelled / Forfeited ( 2,200 ) 26.20 - December 31, 2024 8,583 26.20 1.00 Stock compensation expense for RSU for the year ended December 31, 2025 and December 31, 2024 $ 0.04 million and $ 0.06 million, respectively. All RSU awards recognized during the year ended December 31, 2025, and 2024 relate to employee stock awards. For the year ended December 31, 2025 and December 31, 2024, the Company completed a net share settlement for 4,292 and 5,392 , restricted shares on behalf of certain employees that participate in the Plan upon the vesting of the restricted shares pursuant to the terms of the Plan, respectively. The net share settlement was in connection with payroll taxes incurred on restricted shares that vested and were transferred to the employees during the year ended December 31, 2025 and December 31, 2024 which created taxable income for the employees. At the employees’ request, the Company has paid these taxes on behalf of the employees in exchange for the employees returning an equivalent value of restricted shares to the Company. These transactions resulted in a decrease of $ 0.00 million and $ 0.1 million for the year ended December 31, 2025 and December 31, 2024, to stockholders’ deficit on the consolidated balance sheets as the cash payment of the taxes effectively were a repurchase of the restricted shares granted in previous years. As of December 31, 2025, there was $ 0.0 million of unrecognized stock compensation expense related to RSU awards. Note 20 - Commitments and Contingencies Contractual Commitments The Company has an employment agreement with its Chief Executive Officer. Under the terms of the agreement, if the contract is not renewed or is terminated without cause, the Company is obligated to pay severance equal to the CEO’s then-current annual base salary. The agreement also provides for an annual cash bonus opportunity of up to 100% of base salary, based on performance criteria established by the Board of Directors, and for long-term incentive compensation, the terms of which are to be determined by the Board of Directors. The Company is party to contractual obligations, including lease liabilities related to operating leases, and stipulated cash bonus arrangements with employees. These obligations are time-based and are reflected in the accompanying consolidated financial statements. The Company expects to meet these commitments in the ordinary course of business. In addition, the Company has entered into deferred bonus agreements with certain non-executive employees. These agreements provide for cash bonus payments upon the employee’s continued employment through specified payment dates as set forth in each individual arrangement. As of December 31, 2025, the aggregate amount of deferred bonuses outstanding under these agreements was approximately $ 0.1 million. The Company expects to fund these obligations from operating cash flows in the ordinary course of business. Acquisition of 420 IT Solutions On December 19, 2025, Safe Harbor Managed Services LLC, a wholly-owned subsidiary of the Company, entered into an Asset Purchase Agreement with 420 IT Solutions and its founders. The Company accounted for this transaction as an asset purchase pursuant to ASC 805, Business Combinations . F- 38 The aggregate purchase price consisted of 125,000 Earnout Shares, plus the assumption of certain identified liabilities under contracts assigned to the Company. The Earnout Shares are subject to performance-based vesting over a two-year earnout period ended December 31, 2027. Intangible assets and contingent consideration are recognized as the performance conditions become probable of achievement. The Company evaluated the achievement of the performance obligation and deemed this unlikely to be reached. Therefore, the intangible assets and contingent liability were not recorded as of December 31, 2025. If circumstances change when the revenue target is probable, then the intangible assets and a contingent liability will be recorded. The Company has one year to evaluate this transaction. Legal and Related Matters 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 an unfavorable or favorable outcome could have a material impact on the Company’s results of operations, balance sheets, and cash flows due to defense costs, and could divert management resources. The Company cannot predict the timing or outcome of these claims and other proceedings. With respect to the cases described below, the Company evaluates associated developments on a regular basis and accrues a liability when it believes a loss is probable and the amount can be reasonably estimated. Abaca - Denver County District Court On October 17, 2024, the Company filed a complaint in the District Court for the City and County of Denver, Colorado, captioned SHF Holdings, Inc. v. Daniel Roda, Gregory W. Ellis, and James R. Carroll , Case No. 2024CV33187. The lawsuit arises from a dispute over the terms of the Company’s October 2022 acquisition of Abaca, which was subsequently amended by a First Amendment in November 2022 and a Second Amendment in October 2023. The Second Amendment restructured certain merger consideration, including introducing warrants and modifying payment timing. The defendants contend the Second Amendment is invalid under Delaware law and seek to have it set aside, which would reinstate the original payment terms and potentially increase the Company’s obligations. The Company maintains that the Second Amendment was validly executed and is binding. On November 21, 2024, at the Company’s request, the disputed merger payment of $ 3.0 million was deposited into the Denver County District Court’s registry pending resolution of the dispute. This amount is reflected in the Company’s financial statements. On December 19, 2024, the defendants filed an answer and counterclaims against the Company alleging breach of contract and related causes of action, and a third-party claim was asserted against Fred Niehaus, the Company’s Chairman. On January 16, 2025, the Company filed a motion to dismiss all counterclaims. On April 18, 2025, the Court issued an order denying the Company’s motion to dismiss most counterclaims, while dismissing the claims against Mr. Niehaus with prejudice. The Court also dismissed Gregory W. Ellis as a counter-plaintiff and third-party plaintiff because Mr. Ellis lacked standing to bring any claim, and denied a third-party’s request to intervene in the litigation. The Court further clarified that the Delaware statutes cited by the defendants (DGCL §§ 251(d) and 264(b)) govern pre-closing amendments and do not authorize post-merger amendments altering consideration a finding consistent with the Company’s legal position. F- 39 The case is currently in active discovery. The Company filed a motion for summary judgment on December 16, 2025, covering Counterclaims I through IV. The defendants filed cross-motions for summary judgment on January 23, 2026, covering Counterclaims I through V and a declaratory judgment claim. All briefing on summary judgment is complete as of the date of this filing, and rulings are pending. A court date is scheduled for May 2026. The Company is vigorously defending against the counterclaims and continues to monitor the proceedings and potential financial exposure. If the District Court upholds the Second Amendment, its cash obligation is limited to the $ 3.0 million already deposited in the District Court’s registry, with additional exposure limited primarily to legal fees. The Company currently considers an adverse outcome reasonably possible but not probable. The estimated range of loss is $0 to $7.8 million. Accordingly, no accrual has been recorded for this contingency beyond the $3.0 million already reflected in the financial statements. Nasdaq Listing Compliance As a condition of continued listing, the Company is required to maintain (i) a minimum of $2.5 million in stockholders’ equity under Nasdaq Listing Rule 5550(b)(1), and (ii) a minimum closing bid price of $1.00 per share for 30 consecutive business days under Nasdaq Listing Rule 5550(a)(2). The Company continuously monitors its compliance with these requirements. As of December 31, 2025, the Company’s stockholders’ equity was approximately $8.2 million, which exceeds the $2.5 million minimum. However, the Company’s Class A common stock is currently trading below $1.00 per share. If the closing bid price remains below $1.00 for 30 consecutive business days, Nasdaq may issue a deficiency notice, and the Company would have 180 days to regain compliance. In addition, the Company is aware of a proposed new Nasdaq rule filed with the SEC on January 13, 2026, that would require listed companies to maintain a minimum market value of listed securities of at least $5 million. Under the proposed rule, if a company’s market value of listed securities falls below $5 million for 30 consecutive business days, Nasdaq would immediately suspend trading and delist the company’s securities without a cure period and without a stay of suspension during any appeal. The SEC has extended its review period and is expected to make a decision on this proposed rule by April 29, 2026. If adopted, the rule would become effective 60 days after SEC approval. Based on the Company’s current stock price and number of shares outstanding as of the date of this filing, the Company may not be in compliance with this proposed requirement at the time of its adoption and could be subject to immediate delisting as soon as 30 business days after the rule takes effect. There can be no assurance that the Company will maintain compliance with these or any other Nasdaq listing requirements in the future. Failure to do so could ultimately result in the delisting of the Company’s common stock, which would adversely affect stockholders’ ability to trade their shares and the Company’s ability to raise capital. Furthermore, as described elsewhere in this Annual Report, a delisting event or a compliance failure that triggers the Listing-Related Adjustment Clause in the Second Amended CAA would simultaneously reduce the Company’s loan program income share, compounding the adverse financial impact of any such event. Note 21 - Subsequent Events The Company has evaluated events and transactions occurring after December 31, 2025, through the date these financial statements were issued, and has identified the following matters requiring disclosure. Unless otherwise noted, these are non-recognized subsequent events under ASC 855-10 that do not adjust amounts in the December 31, 2025 financial statements but are material enough to warrant disclosure. Second Amended and Restated Commercial Alliance Agreement On February 4, 2026, SHF LLC, a wholly owned subsidiary of the Company, executed the Second Amended CAA with PCCU, a related party. The agreement carries a retroactive effective date of October 1, 2025. The Company had agreed to the terms for the Second Amended CAA in October 2025 and was executed on February 4, 2026, see Note 10 - Related Party Transactions. Price Reset of Series B Convertible Preferred Stock and Warrants Subsequent to December 31, 2025, the first and only automatic price reset under the Company’s Series B Convertible Preferred Stock and accompanying Series B Warrants occurred, see Note 19 Stockholders’ Equity (Deficit). ELOC Subsequent to December 31, 2025, the Company has continued to draw on its ELOC, under which the Company may raise up to $ 150.0 million through the issuance of shares of its common stock. The Company issued 223,962 shares of Common Stock under the ELOC after December 31, 2025, receiving gross proceeds of approximately $ 0.2 million at average share price of $ 0.77 . These transactions will be reflected in the Company’s first quarter 2026 financial statements. No Other Material Subsequent Events The Company has evaluated all other events and transactions occurring after December 31, 2025, through the date these financial statements were issued, and has determined that no other events or transactions have occurred that would require recognition or disclosure in these financial statements. F- 40