SHF Holdings, Inc. (SHFS) - Q1 2026 10-Q Summary
Business Context and Reporting Period
Company: SHF Holdings, Inc.
Reporting Period: Three months ended March 31, 2026
Business Model: SHF provides a proprietary fintech platform enabling financial institutions to offer compliant banking and lending services to cannabis-related businesses (CRBs). The Company is not a bank but acts as a compliance and technology intermediary.
Key Relationship: Partner Colorado Credit Union (PCCU) is the primary client, representing approximately 90% of revenue. The relationship is governed by the Second Amended Commercial Alliance Agreement (CAA), effective October 1, 2025, which increased SHF's share of loan program income to up to 65% in exchange for indemnifying PCCU for up to 65% of loan losses.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $1,975,439 | $1,932,352 |
| Net Loss | $(1,779,217) | $(827,199) |
| Net Loss Per Share (Basic & Diluted) | $(0.43) | $(0.30) |
| Operating Loss | $(1,763,356) | $(1,991,495) |
| Cash and Cash Equivalents (End of Period) | $5,897,470 | $931,397 |
| Net Cash Used in Operating Activities | $(1,078,657) | $(1,140,730) |
| Total Assets | $15,687,691 | $17,207,024 |
| Total Liabilities | $8,962,410 | $8,971,116 |
| Stockholders' Equity | $6,725,281 | $(16,949,407) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 2.2% year-over-year, driven primarily by a 55.6% increase in Loan Program Income ($840k vs $540k) due to the new revenue split under the Second Amended CAA. This was partially offset by a 19.0% decline in Account Fee Income and a 17.8% decline in Investment Income due to lower interest rates.
- Wider Net Loss: Net loss increased by approximately $952k year-over-year. While operating expenses decreased slightly (4.7%) due to a $316k credit benefit from liability remeasurement and lower professional fees, the loss was exacerbated by the absence of a $1.1M gain from the change in fair value of warrant liabilities seen in Q1 2025.
- Liquidity Position: Cash balances improved significantly to $5.9M from $0.9M in the prior year period, supported by $172k in proceeds from the Equity Line of Credit (ELOC).
- Equity Structure: Stockholders' equity turned positive ($6.7M) compared to a deficit in Q1 2025, following the September 2025 Recapitalization and subsequent ELOC draws.
Guidance, Outlook, Risks, and Contingencies
- Going Concern: Management has concluded that substantial doubt exists regarding the Company's ability to continue as a going concern for at least 12 months due to recurring operating losses and negative cash flows. Mitigation plans include the ELOC (up to $150M), cost reductions, and the improved revenue profile from the Second Amended CAA.
- Nasdaq Compliance: The Company received notice on April 22, 2026, of non-compliance with the $1.00 minimum bid price requirement. It has 180 days (until October 19, 2026) to regain compliance. Additionally, a proposed new Nasdaq rule regarding a $5M minimum market value of listed securities could pose an immediate delisting risk if adopted.
- Material Litigation: In the SHF Holdings, Inc. v. Roda case regarding the Abaca acquisition, the District Court ruled the Second Amendment to the Merger Agreement void ab initio. Damages are set for trial in August 2026. The potential loss range is estimated between $0 and $7.8 million. A $3.0M payment related to this dispute is currently held in court registry.
- Internal Controls: The Company identified a material weakness in internal controls related to loan documentation and expected credit loss estimation. Remediation is expected by Q3 2026.
- Subsequent Events: Post-period, the Company voluntarily reduced the conversion/exercise price of Series B Preferred Stock and Warrants to $0.65 per share to encourage capital raises. Additional ELOC draws and Series B conversions occurred after March 31, 2026.
Investor Verification Checklist
- Going Concern Status: Verify the Company's ability to access the ELOC given the "Material Adverse Effect" clause and current stock price volatility.
- Nasdaq Delisting Risk: Monitor the stock price to ensure it meets the $1.00 bid price requirement and track the status of the proposed $5M market value rule.
- Litigation Exposure: Assess the potential financial impact of the Abaca litigation trial scheduled for August 2026, specifically the risk of the $3.0M court deposit being awarded to plaintiffs plus additional damages.
- Revenue Concentration: Confirm the stability of the relationship with PCCU, which accounts for ~90% of revenue and holds all client deposits.
- Indemnification Liability: Review the $2.7M total liability (Stand-Ready Guarantee + Financial Indemnification) and the credit quality of the underlying $51.5M cannabis loan portfolio.