Core Insights - Premarket trading is showing notable activity with early price movements indicating potential opportunities before the market opens [1] Premarket Gainers - Galaxy Payroll Group Limited (GLXG) increased by 39% to $5.34 - Lithium Americas Corp. (LAC) rose by 31% to $7.52 - Senmiao Technology Limited (AIHS) gained 22% to $2.45 - The AES Corporation (AES) saw a 10% increase to $14.53 - Strive, Inc. (ASST) also increased by 10% to $2.77 - Shoulder Innovations, Inc. (SI) rose by 9% to $13.78 - Top KingWin Ltd (WAI) increased by 8% to $3.80 - Southland Holdings, Inc. (SLND) saw a 7% increase to $4.61 - CaliberCos Inc. (CWD) rose by 6% to $4.75 - Mannatech, Incorporated (MTEX) increased by 5% to $10.53 [3] Premarket Losers - Real Messenger Corporation (RMSG) decreased by 16% to $2.01 - Etoiles Capital Group Co., Ltd (EFTY) fell by 14% to $14.45 - Enanta Pharmaceuticals, Inc. (ENTA) dropped by 13% to $10.41 - CollPlant Biotechnologies Ltd. (CLGN) saw an 11% decrease to $2.39 - Fortress Biotech, Inc. (FBIO) declined by 10% to $3.30 - Uni-Fuels Holdings Limited (UFG) fell by 9% to $7.52 - Alset Inc. (AEI) decreased by 9% to $2.30 - JFB Construction Holdings (JFB) saw a 5% decline to $12.20 - SHF Holdings, Inc. (SHFS) dropped by 5% to $6.80 - Phio Pharmaceuticals Corp. (PHIO) decreased by 5% to $2.34 [4]

With significant hedge fund interest, SHF Holdings, Inc. (NASDAQ:SHFS) secures a spot on our list of the 10 Best Bank Penny Stocks to Buy Right Now. SHF Holdings, Inc. (SHFS) Launches its Fully Managed Cannabis Banking Program On September 2, 2025, SHF Holdings, Inc. (NASDAQ:SHFS) launched its Fully Managed Cannabis Banking Program, the first fully outsourced operational and compliance platform for financial institutions serving the regulated cannabis market. Ahead of the PBC Conference 2025, this launc ...

Core Viewpoint - The article discusses the best bank penny stocks to buy, highlighting the impact of anticipated interest rate cuts by the Federal Reserve and the performance of bank shares amid a mixed outlook for the banking sector [1][4]. Economic Context - The Federal Reserve is expected to cut interest rates by at least 25 basis points for the first time in 2025, following three rate cuts in late 2024, with current rates held at 4.25%-4.50% [1]. - U.S. equities have reached record highs, driven by softer labor-market figures and easing inflation, with bank shares performing particularly well [2]. - Small-cap companies, which are heavily reliant on external borrowing, have seen a rally of over 5% since Jerome Powell's remarks at Jackson Hole [2][3]. Banking Sector Performance - The KBW Regional Banking Index (KRX) has returned 10.77% over the past year, while the S&P 500 Banks Index has returned 23.15% year-to-date [2][4]. - Lower interest rates are beneficial for small-cap banks and penny stocks, as they reduce borrowing costs and free up capital for growth [3]. Company Highlights - **CNFinance Holdings Limited (NYSE:CNF)**: - Reported a total loan balance of approximately $1.55 billion, down nearly 30% year-over-year, with interest income declining by 55% to about $57 million [9]. - Registered a net loss of roughly $5.6 million due to an impairment charge but achieved a 103% recovery rate on non-performing loans [10]. - Focuses on micro-credit loan services for small enterprises and aims to stabilize funding channels and manage bad loans effectively [11]. - **SHF Holdings, Inc. (NASDAQ:SHFS)**: - Launched a Fully Managed Cannabis Banking Program, providing an operational and compliance platform for financial institutions serving the cannabis market [12][13]. - This program allows community banks and credit unions to offer compliant cannabis banking without expanding internal teams, thus mitigating reputational and operational risks [13]. - Operates exclusively in the legal cannabis industry, providing banking, credit, payments, and compliance solutions [14]. Methodology for Stock Selection - The list of the best bank penny stocks was curated using the Finviz screener to identify stocks trading under $5, followed by an assessment of hedge fund sentiment using Insider Monkey's database [6].

Core Insights - Premarket trading is showing notable activity with significant price movements indicating potential opportunities for traders [1] Premarket Gainers - PepGen Inc. (PEPG) is up 151% at $6.68 [3] - 22nd Century Group, Inc. (XXII) is up 27% at $1.93 [3] - Immuneering Corporation (IMRX) is up 23% at $11.36 [3] - uniQure N.V. (QURE) is up 10% at $52.58 [3] - Lithium Americas Corp. (LAC) is up 9% at $6.60 [3] - Jasper Therapeutics, Inc. (JSPR) is up 9% at $2.55 [3] - American Shared Hospital Services (AMS) is up 8% at $2.75 [3] - PSQ Holdings, Inc. (PSQH) is up 7% at $3.06 [3] - K Wave Media Ltd. (KWM) is up 7% at $2.48 [3] - ClearPoint Neuro, Inc. (CLPT) is up 5% at $20.48 [3] Premarket Losers - Transocean Ltd. (RIG) is down 14% at $3.11 [4] - Cyclerion Therapeutics, Inc. (CYCN) is down 12% at $2.83 [4] - CarMax, Inc. (KMX) is down 11% at $50.38 [4] - ARB IOT Group Limited (ARBB) is down 11% at $10.45 [4] - SHF Holdings, Inc. (SHFS) is down 10% at $6.49 [4] - Digital Brands Group, Inc. (DBGI) is down 10% at $6.21 [4] - Aqua Metals, Inc. (AQMS) is down 9% at $5.29 [4] - Akanda Corp. (AKAN) is down 8% at $3.96 [4] - Galecto, Inc. (GLTO) is down 8% at $3.88 [4] - Platinum Analytics Cayman Limited (PLTS) is down 7% at $11.12 [4]

Core Insights - Several companies and ETFs have experienced significant gains in trading, attracting investor attention [1] Company Performance - uniQure N.V. (QURE) saw its stock price rise to $45.1, an increase of $31.44 or approximately 230.16%, reaching a new year high of $51.19 from a low of $4.45, with a trading volume of 58,563,496 shares [2] - SHF Holdings, Inc. (SHFS) had its stock price jump to $7.01, up by $3.75 or 115.03%, with a day high of $9.18 and a trading volume of 29,808,900 shares [3] ETF Performance - ETFs from Nushares ETF Trust, including Nuveen High Yield Corporate Bond ETF (NHYB), Securitized Income ETF (NSCI), and Nuveen International Aggregate Bond ETF (NXUS), each experienced a 100% increase in their prices, reaching $25.01, $25.03, and $25.02 respectively [4] Market Dynamics - The market movements highlight the volatility in valuations driven by factors such as clinical trial results, regulatory approvals, and market sentiment [5]

Core Insights - Premarket trading is showing notable activity with significant price movements indicating potential trading opportunities before the market opens [1] Premarket Gainers - SHF Holdings, Inc. (SHFS) increased by 150% to $8.17 - Lithium Americas Corp. (LAC) rose by 69% to $5.18 - Aqua Metals, Inc. (AQMS) gained 50% reaching $6.11 - CleanCore Solutions, Inc. (ZONE) up by 44% at $2.87 - Cyclerion Therapeutics, Inc. (CYCN) increased by 33% to $4.03 - Twin Vee Powercats Co. (VEEE) rose by 17% to $2.92 - Solidion Technology, Inc. (STI) up by 11% at $5.09 - China Pharma Holdings, Inc. (CPHI) increased by 11% to $2.18 - Stardust Power Inc. (SDST) rose by 10% to $3.04 - Aligos Therapeutics, Inc. (ALGS) increased by 7% to $11.03 [3] Premarket Losers - Aytu BioPharma, Inc. (AYTU) decreased by 15% to $2.11 - Professional Diversity Network, Inc. (IPDN) down by 13% to $4.10 - STRATA Skin Sciences, Inc. (SSKN) fell by 10% to $2.31 - Cohu, Inc. (COHU) decreased by 9% to $20.68 - Super League Enterprise, Inc. (SLE) down by 9% to $7.74 - CTW Cayman (CTW) fell by 9% to $2.29 - Fitell Corporation (FTEL) decreased by 8% to $7.70 - Soluna Holdings, Inc. (SLNH) down by 8% to $2.16 - StableX Technologies, Inc. (SBLX) decreased by 5% to $5.22 - Indaptus Therapeutics, Inc. (INDP) down by 5% to $2.95 [4]

Core Insights - Safe Harbor Financial has launched the Fully Managed Cannabis Banking Program, the first of its kind, providing operational and compliance outsourcing for financial institutions serving the cannabis market [1][3][4] - The program aims to help community banks and credit unions enter the legal cannabis market without the need for additional staffing or risk management [2][4] Company Overview - Safe Harbor Financial is a fintech leader focused on providing financial services to the regulated cannabis industry, having processed over $26 billion in cannabis-related deposits across 41 U.S. states and territories [4][6] - The company has been operating a similar model privately since 2015 and is now expanding its services to additional financial institutions nationwide [4][6] Program Features - The program includes complete operational outsourcing, managing all aspects from client acquisition to compliance oversight, allowing partner institutions to hold deposits without direct involvement in cannabis services [2][7] - It offers a reputational shield by operating under the Safe Harbor brand, insulating financial institutions from direct association with cannabis [7] - The program is designed to improve efficiency ratios by minimizing startup costs and operational overhead, enabling stronger margins for both financial institutions and cannabis businesses [7] Strategic Importance - The launch comes at a time when financial institutions are increasingly looking for compliant and scalable ways to serve the cannabis market while navigating regulatory complexities [3][4] - Safe Harbor's CEO emphasized the program's role in providing a proven, compliant path to growth for financial institutions interested in cannabis banking [3]

Core Viewpoint - Safe Harbor Financial has launched the Fully Managed Cannabis Banking Program, the first comprehensive operational and compliance outsourcing solution for financial institutions in the cannabis industry, aiming to facilitate compliant banking services without the need for internal staffing or risk management [1][3][4]. Group 1: Program Features - The program is designed for community banks, credit unions, and financial institutions that want to serve the legal cannabis market without expanding their internal teams or taking on new risks [2][4]. - Safe Harbor manages all aspects of the program, including client acquisition, compliance oversight, and account support, while deposits are held by the partner institution [2][7]. - Key features include sticky deposit growth, complete operational outsourcing, a reputational shield, and improved efficiency ratios for financial institutions [7]. Group 2: Market Context - The launch comes as financial institutions are increasingly looking for safe and scalable ways to engage with the cannabis market amid regulatory uncertainties [3][4]. - Safe Harbor has processed over $26 billion in cannabis-related deposits across 41 U.S. states and territories, indicating a strong market presence and experience [4][6]. Group 3: Strategic Expansion - The Fully Managed Cannabis Banking Program represents a strategic expansion of a model that Safe Harbor has operated privately since 2015, now opening its platform to additional partners nationwide [4][6]. - The program also provides a seamless exit strategy for institutions that wish to wind down their cannabis banking operations, allowing for a smooth transition of deposit management and client servicing [5].

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements and notes for the periods ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025 | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Total Assets | $5,955,577 | $13,218,287 | | Total Liabilities | $23,814,748 | $25,506,301 | | Total Stockholders' Deficit | $(17,859,171) | $(12,288,014) | - The company's total assets decreased by approximately **55%** from December 31, 2024, to June 30, 2025, while total liabilities saw a modest decrease. The stockholders' deficit worsened significantly, indicating a deteriorating financial position[20](index=20&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss for the three and six months ended June 30, 2025 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $1,845,334 | $4,037,535 | $3,777,686 | $8,088,334 | | Total operating expenses | $2,816,376 | $3,737,372 | $6,740,223 | $7,463,230 | | Operating (loss) income | $(971,042) | $300,163 | $(2,962,537) | $625,104 | | Net (loss) income | $(930,715) | $941,527 | $(1,757,914) | $2,991,203 | | Basic net (loss) income per share | $(0.33) | $0.34 | $(0.63) | $1.08 | - The company experienced a significant decline in revenue and a shift from net income to net loss for both the three and six months ended June 30, 2025, compared to the prior year. Revenue decreased by **54.3%** for the three months and **53.3%** for the six months, leading to a basic net loss per share of **$(0.33)** and **$(0.63)** respectively[22](index=22&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section outlines changes in stockholders' equity (deficit), including common stock and accumulated deficit, for the periods presented | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Total Stockholders' Deficit | $(17,859,171) | $(12,288,014) | | Class A Common Stock Shares Outstanding | 2,826,468 | 2,783,667 | | Accumulated Deficit | $(122,513,459) | $(120,755,545) | - The total stockholders' deficit increased from **$(12,288,014)** as of December 31, 2024, to **$(17,859,171)** as of June 30, 2025, primarily due to a net loss of **$(1,757,914)** and a reclassification of forward purchase receivable of **$(4,584,221)**[30](index=30&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(1,815,338) | $2,704,637 | | Net cash provided by investing activities | $6,545 | $6,083 | | Net cash used in financing activities | $(268,536) | $(1,487,507) | | Net (decrease) increase in cash and cash equivalents | $(2,077,329) | $1,223,213 | | Cash and cash equivalents – end of period | $247,318 | $6,111,982 | - The company's cash and cash equivalents significantly decreased from **$2,324,647** at the beginning of the period to **$247,318** by June 30, 2025, primarily due to cash used in operating activities of **$(1,815,338)** for the six months ended June 30, 2025, a stark contrast to the cash provided by operations in the prior year[35](index=35&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial instruments, and other significant financial statement items [Note 1 - Organization and Business Operations](index=11&type=section&id=Note%201%20-%20Organization%20and%20Business%20Operations) This note describes SHF Holdings, Inc.'s business, its financial solutions for the cannabis industry, and revenue generation methods - SHF Holdings, Inc. provides financial solutions and compliance services to financial institutions serving the cannabis industry, leveraging a proprietary technology platform for deposit and compliance activities. Revenue is generated from fee income, investment income, loan interest income, and compliance services[38](index=38&type=chunk)[39](index=39&type=chunk) [Note 2 - Basis of Presentation and Summary of Significant Accounting Policies](index=11&type=section&id=Note%202%20-%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of financial statement preparation, significant accounting policies, and the company's going concern assessment - The financial statements are unaudited and prepared in accordance with U.S. GAAP, with certain disclosures condensed or omitted per SEC rules. The company operates as one reportable segment and faces concentration risk with revenues primarily from U.S. financial institutions serving cannabis-related businesses, with substantially all deposits maintained at PCCU[44](index=44&type=chunk)[45](index=45&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Management has identified substantial doubt about the company's ability to continue as a going concern beyond October 2025, citing insufficient liquidity, reductions in depository activity, loan interest income, and increased legal expenses. The company also fails to meet Nasdaq's minimum equity requirement[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk) - Management's plan to address going concern includes strategic partnerships, renegotiating the Amended PCCU Note, using stock-based compensation, employee restructuring, adjusting Board compensation, and seeking additional capital through debt/equity financing or strategic alternatives[55](index=55&type=chunk)[56](index=56&type=chunk)[60](index=60&type=chunk) [Note 3 - Deferred Consideration](index=17&type=section&id=Note%203%20-%20Deferred%20Consideration) This note details the deferred consideration related to the Abaca Merger, including amendments and fair value adjustments - Deferred consideration from the Abaca Merger, initially **$30 million** in cash and stock, was amended to include **291,791 shares** at **$40.00/share** and **250,000 stock warrants**. A **$1.5 million** third-anniversary consideration, payable in cash or stock (with a **$40.00/share** floor), is now intended to be settled with **37,500 unregistered shares** due to the company's financial condition[80](index=80&type=chunk)[81](index=81&type=chunk) | Metric | January 1, 2024 | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :-------------- | :---------------- | :------------ | | Total Deferred Consideration | $3,699,792 | $3,338,343 | $3,218,303 | | Fair value adjustment (Jan 1 - Dec 31, 2024) | | $(361,449) | | | Fair value adjustment (Jan 1 - Jun 30, 2025) | | | $(120,040) | [Note 4 - Goodwill and Finite-lived Intangible Assets](index=18&type=section&id=Note%204%20-%20Goodwill%20and%20Finite-lived%20Intangible%20Assets) This note explains the full impairment of goodwill and finite-lived intangible assets recognized as of December 31, 2024 - The company recorded a full impairment of its goodwill and finite-lived intangible assets, primarily from the Abaca Merger, as of December 31, 2024. Consequently, no impairment or amortization charges were recognized for the three and six months ended June 30, 2025[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [Note 5 - Loans Receivable](index=18&type=section&id=Note%205%20-%20Loans%20Receivable) This note describes the company's commercial real estate loan receivable, its classification as held for sale, and subsequent sale | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Commercial real estate loans receivable, gross | $385,642 | $392,186 | | Transferred to held for sale | $(385,642) | - | | Commercial real estate loans receivable, net | - | $392,186 | - The company's commercial real estate loan receivable was classified as held for sale as of June 30, 2025, and subsequently sold to PCCU in July 2025. No allowance for credit losses was recorded as the loan was performing[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 6 - Indemnification Liability](index=19&type=section&id=Note%206%20-%20Indemnification%20Liability) This note details the reduction of the company's indemnification liability to PCCU to $0 due to the Amended PCCU CAA - Effective December 31, 2024, the company's indemnification liability to PCCU for credit losses on funded loans was reduced to **$0** due to the Amended PCCU CAA. This eliminated the prior obligation where SHF indemnified PCCU for losses on certain loans[92](index=92&type=chunk)[93](index=93&type=chunk) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Credit loss (benefit) | - | $(97,248) | - | $(166,035) | [Note 7 - Revenue](index=19&type=section&id=Note%207%20-%20Revenue) This note provides a breakdown of revenue by type and explains the significant decline for the three and six months ended June 30, 2025 | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Account fee income | $1,009,730 | $1,681,596 | $2,082,195 | $3,302,590 | | Loan interest income | $555,971 | $1,836,092 | $1,096,193 | $3,472,848 | | Investment income | $260,403 | $500,617 | $560,838 | $1,274,436 | | Safe Harbor Program income | $19,230 | $19,230 | $38,460 | $38,460 | | Total Revenue | $1,845,334 | $4,037,535 | $3,777,686 | $8,088,334 | - Total revenue significantly decreased by **54.3%** for the three months and **53.3%** for the six months ended June 30, 2025, compared to the prior year. This decline was primarily driven by reductions in loan interest income (down **69.7%** and **68.4%** respectively) and account fee income (down **40.0%** and **37.0%** respectively), largely due to changes in the PCCU CAA and reduced average daily deposit balances[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) [Note 8 - Related Party Transactions](index=21&type=section&id=Note%208%20-%20Related%20Party%20Transactions) This note identifies PCCU as a related party and details the impact of the Amended PCCU CAA on the company's financial arrangements - PCCU is a related party due to its significant ownership, role as the primary financial institution customer, sole lending institution, and counterparty to the PCCU Note. The Amended PCCU CAA, effective December 31, 2024, eliminated SHF's indemnification obligations and replaced the prior fee structure with a fixed asset hosting fee and a new loan yield allocation formula for interest income[102](index=102&type=chunk)[109](index=109&type=chunk)[111](index=111&type=chunk) | Related Party Balance | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Accounts receivable | $582,855 | $968,023 | | Accounts payable | $164,917 | $75,608 | | Senior Secured Promissory Note | $10,748,408 | $11,004,173 | - As of June 30, 2025, **$235,993** of cash and cash equivalents were held in deposit accounts at PCCU, down from **$2,202,895** on December 31, 2024[112](index=112&type=chunk) [Note 9- Senior Secured Promissory Note](index=23&type=section&id=Note%209-%20Senior%20Secured%20Promissory%20Note) This note describes the amended Senior Secured Promissory Note with PCCU, including its principal balance, interest terms, and security interest - The Senior Secured Promissory Note with PCCU, initially **$14.5 million** at **4.25%** interest, was amended on March 1, 2025. The principal balance is now **$10,748,408**, with interest-only payments until January 5, 2027, and full repayment by October 5, 2030. PCCU retains a first-priority security interest in substantially all company assets[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) | Year Ended December 31, | Amount | | :------------------------ | :------- | | 2025 | - | | 2026 | - | | 2027 | $697,614 | | 2028 | $790,592 | | 2029 | $826,047 | | 2030 | $8,434,155 | | Total | $10,748,408 | [Note 10. - Leases](index=24&type=section&id=Note%2010.%20-%20Leases) This note details the company's operating lease for its corporate office, including remaining term, right-of-use asset, and lease liability - The company has a non-cancellable operating lease for its corporate office in Golden, Colorado, with a remaining term of approximately **four years** as of June 30, 2025. The net right-of-use asset was **$625,355** and the corresponding lease liability was **$794,493** as of June 30, 2025[118](index=118&type=chunk) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Operating lease cost (3 months) | $63,185 | $64,198 | | Operating lease cost (6 months) | $124,191 | $133,635 | | ROU assets ending balance | $625,355 | $703,524 | | Operating lease liabilities | $794,493 | $874,834 | [Note 11 - Earnings Per Share](index=25&type=section&id=Note%2011%20-%20Earnings%20Per%20Share) This note presents basic and diluted earnings per share, highlighting the shift to a net loss per share for the current periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic net (loss) income per share | $(0.33) | $0.34 | $(0.63) | $1.08 | | Diluted net (loss) income per share | $(0.33) | $0.33 | $(0.63) | $1.06 | - The company reported a basic and diluted net loss per share of **$(0.33)** for the three months and **$(0.63)** for the six months ended June 30, 2025, a significant decline from positive earnings per share in the prior year periods. Certain share-based equity awards and warrants were excluded from diluted EPS calculations due to their anti-dilutive effect[121](index=121&type=chunk)[122](index=122&type=chunk) [Note 12 - Forward Purchase Agreement](index=26&type=section&id=Note%2012%20-%20Forward%20Purchase%20Agreement) This note describes the Forward Purchase Agreement, including shares involved, payment due, reset price, and equity reclassification - The Forward Purchase Agreement (FPA) with Midtown East, Verdun, and Vellar involves **190,243 shares** of Common Stock, with a **$7.6 million** payment due by September 28, 2025. The Reset Price is **$25.00 per share** as of June 30, 2025, subject to monthly downward adjustments. Management believes it is highly improbable FPA Holders will sell shares before maturity[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - During the three months ended March 31, 2025, the forward purchase receivable balance was reclassified to additional paid-in capital, as the arrangement met conditions for equity classification[126](index=126&type=chunk) [Note 13 - Warrant Liabilities](index=26&type=section&id=Note%2013%20-%20Warrant%20Liabilities) This note details the various types of warrants outstanding, their exercise prices, expiration dates, and redemption conditions - As of June 30, 2025, the company had **287,500 public warrants**, **13,205 private placement warrants** (exercisable at **$230/share**, expiring September 28, 2027), **51,125 PIPE warrants** (exercisable at **$100/share**, expiring September 28, 2027), and **250,000 Abaca warrants** (exercisable at **$40/share**, exercisable 1 year from effective date and terminating 5 years from registration statement effective date)[128](index=128&type=chunk)[129](index=129&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk) - Public and private placement warrants are redeemable by the company if the Common Stock price equals or exceeds **$360.00 per share** for 20 trading days within a 30-trading day period[131](index=131&type=chunk)[137](index=137&type=chunk) [Note 14 - Financial Instruments](index=28&type=section&id=Note%2014%20-%20Financial%20Instruments) This note explains the fair value measurements for financial instruments, categorizing them by input levels and presenting fair value tables - The company uses fair value measurements for financial instruments, categorizing them into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[68](index=68&type=chunk)[69](index=69&type=chunk)[139](index=139&type=chunk) | Liability | June 30, 2025 (Carrying Amount) | June 30, 2025 (Fair Value) | December 31, 2024 (Carrying Amount) | December 31, 2024 (Fair Value) | | :-------------------------------- | :------------------------------ | :------------------------- | :---------------------------------- | :----------------------------- | | Deferred consideration | $3,131,303 | $3,131,303 | $3,016,343 | $3,016,343 | | Senior Secured Promissory note | $10,748,408 | $6,063,400 | $11,004,173 | $10,221,652 | | Public warrants | $6,354 | $6,354 | $246,445 | $246,445 | | Private placement warrants | $384 | $384 | $9,632 | $9,632 | | PIPE Warrants | $4,440 | $4,440 | $79,512 | $79,512 | | Abaca Warrants | $95,073 | $95,073 | $1,024,900 | $1,024,900 | | Third anniversary payment consideration | $87,000 | $87,000 | $322,000 | $322,000 | | Forward purchase derivative | $7,309,580 | $7,309,580 | $7,309,580 | $7,309,580 | - The fair value of private placement warrants, PIPE warrants, and Abaca warrants as of June 30, 2025, and December 31, 2024, was determined using the Black-Scholes Merton option pricing model. The Abaca third anniversary payment consideration was valued using a Monte Carlo Simulation[142](index=142&type=chunk) [Note 15 - Income Taxes](index=30&type=section&id=Note%2015%20-%20Income%20Taxes) This note discusses the company's net operating losses, deferred tax assets, and potential limitations on their utilization - As of June 30, 2025, the company had net operating losses (NOL) of approximately **$22.9 million**, with fully reserved deferred tax assets of **$44.9 million**. NOLs can be carried forward indefinitely but are limited to offsetting **80%** of taxable income, and potential ownership changes under Section 382 could further limit their utilization[144](index=144&type=chunk)[145](index=145&type=chunk) - The company has no unrecognized income tax benefits as of December 31, 2024, and June 30, 2025[146](index=146&type=chunk) [Note 16 - Stockholders' Deficit](index=31&type=section&id=Note%2016%20-%20Stockholders'%20Deficit) This note details changes in stockholders' deficit, including a reverse stock split, outstanding shares, and stock compensation expense - A **1-for-20** reverse stock split of Common Stock became effective on March 14, 2025. As of June 30, 2025, there were **111 shares** of Convertible Preferred Stock outstanding and **2,826,648 shares** of Common Stock issued and outstanding[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The 2022 Equity Incentive Plan authorized **351,857 shares** for issuance, with **179,884** remaining available as of June 30, 2025. Stock compensation expense for stock options was **$23,666** and **$764,914** for the three and six months ended June 30, 2025, respectively[151](index=151&type=chunk)[155](index=155&type=chunk) - Unrecognized stock compensation expense related to stock options was **$261,971** as of June 30, 2025, expected to be recognized over approximately **1.8 years**. For RSUs, unrecognized expense was **$19,098**, expected over **six months**[156](index=156&type=chunk)[159](index=159&type=chunk) [Note 17- Commitments and Contingencies](index=33&type=section&id=Note%2017-%20Commitments%20and%20Contingencies) This note addresses Nasdaq compliance, legal disputes, and settlement offers, outlining potential impacts on the company - The company is not in compliance with Nasdaq's minimum stockholders' equity requirement of **$2.5 million**, with a deficit of approximately **$17.9 million** as of June 30, 2025. A compliance plan was submitted to Nasdaq on May 22, 2025, but there's no assurance of regaining compliance[164](index=164&type=chunk)[165](index=165&type=chunk) - The company is involved in a legal dispute regarding a **$3.0 million** contingent merger consideration payment from the Abaca acquisition, with funds held by the Denver County District Court. A counterclaim alleging breach of contract was filed against the company, which is vigorously defending the action[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) - A settlement offer of **$300,000** to a former employee was accepted and finalized in Q3 2025, with **$100,000** payable in cash over **12 months** and **89,308 shares** of Common Stock issued for the remaining **$200,000**[172](index=172&type=chunk)[173](index=173&type=chunk) [Note 18 - Subsequent Events](index=35&type=section&id=Note%2018%20-%20Subsequent%20Events) This note reports on events occurring after the reporting period, including plan amendments, loan sales, and new tax legislation - On July 8, 2025, stockholders approved an amendment to the 2022 Equity Incentive Plan, increasing authorized shares from **351,857** to **626,749** and providing for automatic annual increases to maintain **15%** of outstanding shares[174](index=174&type=chunk) - On July 31, 2025, the company sold a **$385,642** loan receivable to PCCU for **$384,527**[175](index=175&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law in July 2025, enacting tax changes. The company is evaluating its impact but does not anticipate a material change to its effective income tax rate due to a full valuation allowance[176](index=176&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and operational results for the periods ended June 30, 2025 [Overview](index=37&type=section&id=Overview) This section provides an overview of SHF Holdings, Inc.'s business, its fintech platform, and services offered to the cannabis industry - SHF Holdings, Inc. provides compliant financial services to the legal cannabis, hemp, and related industries through its proprietary fintech platform, operating in **42 states** and territories. Services include business checking, cash management, commercial lending, and compliance monitoring for CRBs[180](index=180&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk) - The platform mitigates risks associated with high cash volumes in the cannabis industry by facilitating daily deposits and ensuring compliance with Bank Secrecy Act/FinCEN guidance. Since inception, the company has processed approximately **$25.6 billion** in cannabis-related depository funds[181](index=181&type=chunk)[182](index=182&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue and operating expenses for the three and six months ended June 30, 2025 | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Account fee income | $1,009,730 | $1,681,596 | $(671,866) | (40.0)% | | Loan interest income | $555,971 | $1,836,092 | $(1,280,121) | (69.7)% | | Investment income | $260,403 | $500,617 | $(240,214) | (48.0)% | | Safe Harbor Program income | $19,230 | $19,230 | - | 0.0% | | Total Revenue | $1,845,334 | $4,037,535 | $(2,192,201) | (54.3)% | | Operating Expense Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Compensation and employee benefits | $1,583,051 | $2,264,931 | $(681,880) | (30.1)% | | General and administrative expenses | $457,803 | $1,001,764 | $(543,961) | (54.3)% | | Professional services | $712,337 | $503,727 | $208,610 | 41.4% | | Rent expense | $63,185 | $64,198 | $(1,013) | (1.6)% | | Provision (benefit) for credit losses | - | $(97,248) | $97,248 | (100.0)% | | Total operating expenses | $2,816,376 | $3,737,372 | $(920,996) | (24.6)% | - Total operating expenses decreased by **24.6%** for the three months and **9.7%** for the six months ended June 30, 2025, driven by reductions in compensation and employee benefits (**30.1%** and **34.9%** respectively, due to headcount reductions and lower stock compensation) and general and administrative expenses (**54.3%** and **27%** respectively, from franchise taxes and marketing). Professional services increased significantly (**41.4%** and **129.3%**) due to legal fees and non-cash stock compensation to directors[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Other Income / (Expenses)](index=43&type=section&id=Other%20Income%20%2F%20(Expenses)) This section details non-operating income and expenses, including fair value changes in deferred consideration and warrant liabilities | Other Income/(Expenses) Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Change in fair value of deferred consideration | $(40,960) | $211,535 | $(252,495) | 119.4% | | Interest expense | $(115,341) | $(168,830) | $53,489 | (31.7)% | | Change in fair value of warrant liabilities | $138,158 | $1,086,286 | $(948,128) | 87.3% | | Total Other Income/(Expenses) | $(18,143) | $1,128,991 | $(1,147,134) | 101.6% | - Total other income/(expenses) shifted from a gain of **$1,128,991** in Q2 2024 to a loss of **$(18,143)** in Q2 2025. This was primarily due to a significant decrease in the change in fair value of warrant liabilities (down **87.3%**) and a negative change in the fair value of deferred consideration (down **119.4%**), both largely influenced by a decline in the company's stock price[207](index=207&type=chunk)[209](index=209&type=chunk) [Income Taxes](index=43&type=section&id=Income%20Taxes) This section discusses the company's income tax benefit for the current periods, contrasting it with prior year expenses - The company recorded an income tax benefit of **$(58,470)** for the three and six months ended June 30, 2025, a reversal from income tax expenses of **$487,627** and **$48,742** in the prior year periods, respectively. This change resulted from a reversal of estimated accrual[210](index=210&type=chunk) [Key Metrics](index=43&type=section&id=Key%20Metrics) This section presents key financial and operational metrics, including non-GAAP measures like EBITDA and Adjusted EBITDA, and average account data - Management monitors EBITDA and Adjusted EBITDA as non-GAAP financial measures to evaluate operating performance and strategic decisions, acknowledging their limitations as analytical tools[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(930,715) | $941,527 | $(1,757,914) | $2,991,203 | | EBITDA | $(872,767) | $1,792,774 | $(1,585,739) | $3,753,446 | | Adjusted EBITDA | $(949,014) | $973,642 | $(2,176,257) | $2,061,002 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Average monthly deposit balance | $103,756,620 | $125,852,436 | $(22,095,816) | (17.6)% | | Average Account fees | $285,433 | $432,888 | $(147,455) | (34.1)% | | Average active accounts | 772 | 752 | 20 | 2.7% | | Average account balance | $134,400 | $167,283 | $(32,883) | (19.7)% | | Average fees per account | $370 | $576 | $(206) | (35.8)% | - Despite an increase in the average number of active accounts (up **2.7%** for six months), average monthly deposit balances decreased by **17.6%** and average fees per account declined by **35.8%** for the six months ended June 30, 2025, primarily due to a reduction in high-value accounts[221](index=221&type=chunk)[222](index=222&type=chunk) [Liquidity, Capital Resources and Capital Resources](index=47&type=section&id=Liquidity,%20Capital%20Resources%20and%20Capital%20Resources) This section addresses the company's liquidity position, working capital deficit, going concern issues, and management's remediation plans - As of June 30, 2025, the company had cash and cash equivalents of **$247,318**, a net working capital deficit of **$7,381,312**, and an accumulated deficit of **$122,513,459**. Cash used in operating activities for the six months ended June 30, 2025, was **$1,815,338**[224](index=224&type=chunk) - Management believes substantial doubt exists about the company's ability to continue as a going concern beyond October 2025 due to insufficient liquidity, reduced revenue, increased legal expenses, and failure to meet Nasdaq's minimum equity requirement[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) - Management's plan includes strategic partnerships, renegotiating debt terms, using stock-based compensation, employee restructuring, adjusting Board compensation, and seeking additional capital or strategic alternatives, though no assurance can be given of successful execution or financing[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [Cash Flows](index=48&type=section&id=Cash%20Flows) This section analyzes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 - For the six months ended June 30, 2025, the company used **$1,815,338** in operating activities, primarily due to a net loss of **$1,757,914**. This contrasts with **$2,704,637** cash provided by operations in the prior year[236](index=236&type=chunk) - Investing activities generated **$6,545** in cash for the six months ended June 30, 2025, from loan proceeds. Financing activities used **$268,536**, mainly for repayment of senior secured promissory notes[237](index=237&type=chunk) [Emerging Growth Company Status](index=48&type=section&id=Emerging%20Growth%20Company%20Status) This section clarifies the company's status as an Emerging Growth Company and its election for an extended accounting transition period - The company is an 'emerging growth company' (EGC) and has elected to use the extended transition period for complying with new or revised accounting standards, which may make its financial statements not comparable to non-EGCs or those that early adopt[239](index=239&type=chunk) [Internal Control Over Financial Reporting](index=49&type=section&id=Internal%20Control%20Over%20Financial%20Reporting) This section discusses identified material weaknesses in internal controls over financial reporting as of June 30, 2025 - Management identified material weaknesses in internal controls over financial reporting as of June 30, 2025, necessitating additional analysis to ensure fair presentation of interim financial statements[241](index=241&type=chunk)[245](index=245&type=chunk) [Related Party Relationships](index=49&type=section&id=Related%20Party%20Relationships) This section identifies PCCU as a related party due to its significant ownership and various financial and operational roles - PCCU is a related party, holding significant ownership, serving as the most significant financial institution customer, sole lending institution, and counterparty to the PCCU Note, where the majority of the company's deposits are maintained[242](index=242&type=chunk) [Item 3A. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, SHF Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[243](index=243&type=chunk) [Item 4A. Controls and Procedures](index=49&type=section&id=Item%204A.%20Controls%20and%20Procedures) This section evaluates the company's disclosure controls and procedures, concluding they were ineffective due to identified material weaknesses and outlining remediation efforts - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to identified material weaknesses[245](index=245&type=chunk)[248](index=248&type=chunk) - **Revenue Recognition:** Inability to support completeness and accuracy of activity fee income from PCCU's system - **Accounting for Financial Instruments:** Incorrect classification of the Amended PCCU Note as a current liability - **Accounting for Forward Purchase Receivables:** Failure to appropriately reclassify receivables to additional paid-in-capital and inadequate valuation documentation - **Going Concern:** Failure to recognize substantial doubt about the company's ability to continue as a going concern as of December 31, 2024, based on financial projections - **Information Technology:** Lack of regular monitoring, review, and restriction of privileged user access to key financial applications (Jack Henry system and company's accounting system) - **Determination of stock compensation expense:** Initial reversal of previously recognized stock compensation expense for vested stock options and incorrect inputs in the Black-Scholes option pricing model[251](index=251&type=chunk) - Remediation efforts include replacing the former CFO with an SVP Controller, enhancing support, and implementing improved technology security procedures. However, there is no assurance that these efforts will prevent all future errors[250](index=250&type=chunk)[252](index=252&type=chunk) [PART II - OTHER INFORMATION](index=52&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings, with management believing their final disposition will not materially adversely affect its financial position - The company is involved in routine legal proceedings and claims, with management assessing that their ultimate outcome will not have a material adverse effect on the business, financial position, results of operations, or cash flows[257](index=257&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, SHF Holdings, Inc. is not required to provide the detailed risk factor disclosures typically found in this item - The company is a smaller reporting company and is not required to provide the information otherwise required by Item 1A (Risk Factors)[258](index=258&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the reporting period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[259](index=259&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[260](index=260&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[261](index=261&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[262](index=262&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - The exhibits include various agreements such as the Agreement and Plan of Merger (and amendments), the Second Amended and Restated Certificate of Incorporation, Bylaws, and employment agreements. It also includes certifications and XBRL taxonomy documents[264](index=264&type=chunk)[265](index=265&type=chunk)

For more information or to schedule a meeting with Safe Harbor during the conference, please contact Kimberly Ann Seefried at Kimberly.Seefried@shfinancial.org. About Safe Harbor DENVER, July 23, 2025 (GLOBE NEWSWIRE) -- SHF Holdings, Inc., d/b/a Safe Harbor Financial ("Safe Harbor" or the "Company") (NASDAQ: SHFS), a leader in providing reliable, compliant financial services to the regulated cannabis industry, announced CEO Terry Mendez will speak at the PBC Conference 2025, the premier B2B event for payme ...