10-Q: SHF Holdings Faces Going Concern Doubt Amid Litigation

SHF Holdings, Inc. reported a net loss for the period ended June 30, 2026, and faces substantial doubt about its ability to continue as a going concern, alongside ongoing litigation and Nasdaq listing challenges.

Summary

• SHF Holdings, Inc. filed its quarterly report for the period ended June 30, 2026, reporting a net loss of $3.3 million for the six months ended June 30, 2026, compared to a net loss of $1.8 million for the same period in 2025.
• The company has incurred recurring losses and negative cash flows from operations, leading to substantial doubt about its ability to continue as a going concern.
• Revenue increased by 3.5% to $3.9 million for the six months ended June 30, 2026, driven by a significant increase in loan program income, partially offset by a decrease in account fee income.
• The company received a notice from Nasdaq regarding its minimum bid price requirement and has until October 19, 2026, to regain compliance.
• A significant legal dispute regarding the acquisition of Abaca continues, with damages set for trial in August 2026, and the potential loss ranging from $0 to $7.8 million.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the substantial doubt about the company's ability to continue as a going concern, ongoing litigation, and Nasdaq listing compliance issues, despite some revenue growth.

Positives

• Total revenue increased by 3.5% to $3.91 million for the six months ended June 30, 2026, compared to $3.78 million for the same period in 2025.
• Loan program income saw a substantial increase of 53.1% to $1.68 million for the six months ended June 30, 2026, driven by the Second Amended Commercial Alliance Agreement (CAA) with PCCU, increasing the company's share to 65%.
• The company's stockholders' equity of $6.1 million as of June 30, 2026, exceeds the minimum Nasdaq requirement of $2.5 million.
• The company raised $1.1 million in proceeds from the use of its Equity Line of Credit (ELOC) during the six months ended June 30, 2026.

Negatives

• The company incurred a net loss of $3.3 million for the six months ended June 30, 2026, compared to $1.8 million for the same period in 2025.
• There is substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows from operations.
• Account fee income decreased by 18.7% to $1.69 million for the six months ended June 30, 2026, primarily due to lower revenue from a merchant service partner and lower average fees collected from PCCU-hosted accounts.
• The company recognized a loss of $0.3 million on the sale of its investment in preferred securities of ADTX.
• The company received a notice from Nasdaq on April 22, 2026, for failing to maintain a minimum closing bid price of $1.00 per share, with a compliance deadline of October 19, 2026.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern.
• The company is at risk of delisting from Nasdaq if it cannot regain compliance with the minimum bid price requirement by October 19, 2026.
• The ongoing litigation regarding the Abaca acquisition could result in damages of up to $7.8 million, potentially having a material adverse effect on the company's financial position.
• The company's heavy reliance on Partner Colorado Credit Union (PCCU) for revenue presents a significant concentration risk; any loss or material adverse change in this relationship could severely impact operations.
• The company has identified material weaknesses in its internal controls over financial reporting related to loan documentation and expected credit loss estimation, which remain outstanding.

Future Outlook

The company's future outlook is uncertain due to substantial doubt about its ability to continue as a going concern. Management is implementing measures to preserve liquidity and support obligations, including strengthening its revenue profile through the Second Amended CAA, accessing additional capital via the ELOC, and managing expenses. However, the ability to execute these plans involves elements outside of management's control. The company is also monitoring legislative developments, such as the SAFER Banking Act, which could impact the industry.

Management Comments

• Management has concluded that its plans, considered in the aggregate, do not alleviate the 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 unaudited condensed consolidated financial statements are issued.
• The Company intends to continue defending its positions vigorously in the Abaca litigation and may evaluate the possibility of a negotiated resolution.
• Management has identified specific actionable cost reductions that are within its direct operational control and that it would implement should operating conditions deteriorate below base-case expectations, including pausing or restructuring said strategic investments.

Industry Context

StockSavvy.ai notes that SHF Holdings operates in the niche but growing market of providing compliant financial services to cannabis-related businesses (CRBs). The federal rescheduling of cannabis to Schedule III, while not fully implemented, is a significant development that could reduce tax burdens (Section 280E) for CRBs and potentially increase competition by making the industry more attractive to traditional financial institutions. The company's reliance on a single major partner, PCCU, highlights the consolidation and partnership-driven nature of this sector.

Comparison to Industry Standards

• The company's revenue growth of 3.5% for the six months ended June 30, 2026, is modest, but the significant increase in loan program income (53.1%) indicates a successful renegotiation of its primary partnership agreement.
• The substantial doubt about going concern is a critical concern, as many companies in the cannabis-adjacent financial services sector face regulatory uncertainty and profitability challenges.
• The company's net loss of $3.3 million for the six months ended June 30, 2026, reflects ongoing operational costs and the inherent risks of serving a federally illegal industry, which is a common challenge for peers.
• The Nasdaq listing compliance issues are not unique to SHF Holdings; many smaller companies face similar challenges in maintaining minimum bid prices and market capitalization thresholds.

Management Changes

Legal Proceedings

• The company is involved in a lawsuit concerning the acquisition of Abaca, with a ruling against the company on the validity of the Second Amendment and breach of the original Merger Agreement. Damages are set for trial on August 10-11, 2026. The range of potential loss is $0 to $7.8 million.
• The company received a notice from Nasdaq on April 22, 2026, for failing to maintain a minimum closing bid price of $1.00 per share, with a compliance deadline of October 19, 2026.
• A new Nasdaq rule, if effective, could lead to delisting if the company's market capitalization falls below $5 million for 30 consecutive business days.

Related Party Transactions

• Partner Colorado Credit Union (PCCU) is a related party due to its significant stock ownership (8.8% Common Stock, 49.2% Series B Preferred Stock, 43.9% Series B Warrants as of June 30, 2026) and its role as the primary financial institution client.
• The company derives the substantial majority of its revenue from services provided to PCCU under the Second Amended Commercial Alliance Agreement (CAA).
• A Debt Cancellation Agreement was entered into with PCCU on September 30, 2025, satisfying approximately $10.7 million outstanding principal on a Senior Secured Promissory Note in exchange for Series B Convertible Preferred Stock and a Series B Warrant.

Stakeholder Impact

• Shareholders may experience continued stock price volatility and potential delisting from Nasdaq, impacting liquidity and the ability to raise capital.
• The company's ability to continue as a going concern poses a significant risk to all stakeholders.
• Employees may be impacted by potential cost-cutting measures or restructuring if operating conditions deteriorate.
• Creditors and business partners face uncertainty regarding the company's financial stability and ability to meet obligations.

Next Steps

• Regain compliance with Nasdaq's minimum bid price requirement by October 19, 2026.
• Continue defending legal positions in the Abaca litigation, with damages trial scheduled for August 10-11, 2026.
• Implement expense management strategies and explore strategic relationships with additional financial institutions.
• Monitor legislative and regulatory developments in the cannabis industry, particularly regarding federal rescheduling and banking legislation.

Key Dates

Recommendation

The company's financial condition presents significant risks, including substantial doubt about its ability to continue as a going concern, ongoing litigation with a potentially large financial impact, and Nasdaq listing compliance issues. While revenue has seen some growth, the persistent net losses and lack of clear path to profitability, coupled with the going concern warning, outweigh the positives. The potential for delisting and the significant legal liabilities make this a high-risk investment.

Keywords

Cannabis Banking, Financial Technology, Credit Union Services, Regulatory Compliance, Loan Program Income, Commercial Alliance Agreement, Equity Line of Credit, Going Concern