10-K: SHF Holdings Reports 2025 Financials Amidst Strategic Shifts

SHF Holdings, Inc. filed its annual report for the fiscal year ended December 31, 2025, detailing a significant revenue decline, strategic adjustments to its commercial alliance agreement, and ongoing efforts to address internal control weaknesses.

Summary

• SHF Holdings, Inc. reported total revenue of $7.7 million for the year ended December 31, 2025, a decrease of 49.7% from $15.2 million in 2024.
• The company experienced a net loss of $2.2 million for 2025, an improvement from a net loss of $48.3 million in 2024, which was heavily impacted by a deferred tax asset valuation adjustment.
• Operating expenses decreased by 41.5% to $13.1 million in 2025, primarily due to the absence of goodwill and intangible asset impairment charges recorded in the prior year.
• The company executed a Second Amended and Restated Commercial Alliance Agreement (Second Amended CAA) with Partner Colorado Credit Union (PCCU), effective October 1, 2025, increasing its share of loan program income to up to 65% while reinstating a 65% indemnification obligation for loan defaults.
• A material weakness in internal controls related to loan documentation and credit loss estimation was identified in Q4 2025, though remediation efforts are underway.
• The company acquired substantially all assets of 420 IT Solutions in December 2025 to enhance its compliance platform and expand service offerings.
• SHF Holdings has substantial doubt about its ability to continue as a going concern, despite implementing measures to preserve liquidity and improve its revenue profile.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the significant revenue decline, ongoing operating losses, going concern doubts, and identified material weaknesses in internal controls, despite some positive steps like the Second Amended CAA and an acquisition.

Positives

• The net loss improved significantly to $2.2 million in 2025 from $48.3 million in 2024.
• Operating expenses were reduced by 41.5% to $13.1 million, largely due to the absence of prior year impairment charges.
• The Second Amended CAA increases the company's share of loan program income to up to 65%, potentially boosting future revenue.
• The company acquired 420 IT Solutions, adding complementary capabilities to its compliance platform.
• The company has access to a $150 million Equity Line of Credit (ELOC) for potential capital raises.
• Cash and cash equivalents increased to $6.8 million as of December 31, 2025, from $2.3 million in the prior year.

Negatives

• Total revenue declined by 49.7% to $7.7 million in 2025.
• The company incurred recurring operating losses and negative cash flows from operations, leading to substantial doubt about its ability to continue as a going concern.
• A material weakness in internal controls related to loan documentation and credit loss estimation was identified.
• The company's revenue is highly concentrated, with 86.7% derived from PCCU in 2025.
• The Second Amended CAA reinstates a 65% indemnification obligation for loan defaults, posing a significant financial risk.
• The company's common stock has traded below $1.00 per share, creating a risk of Nasdaq delisting.
• The investment in Aditxt, Inc. preferred securities is illiquid and subject to impairment.

Risks

• Substantial doubt exists about the Company's ability to continue as a going concern due to recurring operating losses and negative cash flows.
• The Company's revenue is highly concentrated with PCCU, and any adverse change in this relationship could materially impact operations.
• The Second Amended CAA imposes an unlimited indemnification obligation for loan defaults, which could exceed available cash.
• The Company faces risks related to Nasdaq listing compliance, including potential delisting if its stock price or market capitalization falls below required thresholds.
• Changes in federal or state laws and regulations concerning the cannabis industry could adversely affect the Company's business.
• Disruptions at PCCU, the Company's primary financial institution partner, could immediately impair operations.
• The Company's loan portfolio is concentrated in the cannabis industry, making collateral subject to valuation discounts and legal uncertainties.
• A material weakness in internal controls related to loan documentation and credit loss estimation could lead to misstatements in financial statements.

Future Outlook

The company's future outlook is heavily influenced by its ability to navigate its going concern status, successfully implement the Second Amended CAA, and remediate its internal control weaknesses. Management is focused on improving client retention, expanding lending capacity, and capitalizing on potential favorable changes in the federal cannabis banking regulatory environment. The company anticipates that the Second Amended CAA will support improved loan production and client retention.

Management Comments

• Management believes that the combination of its established compliance and banking infrastructure, expanded on-site review capabilities, emerging managed services business, and growing network of capital and strategic partnerships positions it to serve cannabis businesses and financial institutions more comprehensively than any other provider in its market.
• Management believes that the primary reason the vast majority of U.S. financial institutions have not entered the cannabis banking market is regulatory risk and the compliance burden.
• Management believes that passage of the SAFER Banking Act or related federal cannabis banking legislation, or regulatory relief related to the rescheduling of cannabis to Schedule III, would meaningfully lower that barrier and expand the scope of financial institutions willing to enter the cannabis banking market.
• Management's focus for 2026 is on improving client retention through the Company's expanding lending capability, enhanced client service technology, and continued new account development driven by new marketing and customer acquisition processes.

Industry Context

StockSavvy.ai notes that SHF Holdings operates in the highly regulated and evolving cannabis financial services sector. The industry faces significant headwinds due to the federal illegality of cannabis, leading to banking access challenges for cannabis-related businesses (CRBs). While state-level legalization continues to expand, federal regulatory developments such as potential rescheduling to Schedule III and legislative efforts like the SAFER Banking Act are critical factors influencing the market and SHF's competitive landscape. The company's strategy is positioned to benefit from these potential regulatory tailwinds, but also faces increased competition if barriers to entry are lowered.

Comparison to Industry Standards

• The U.S. state-licensed cannabis market revenues were estimated at $30.4 billion in 2025, with forecasts projecting growth to over $76 billion by 2030, indicating a strong underlying market demand.
• Despite market growth, only about 11% of U.S. depository institutions were filing marijuana-related SARs as of December 2024, highlighting the limited participation of traditional financial institutions.
• Less than 200 financial institutions nationwide are estimated to have dedicated cannabis banking programs, underscoring the niche market SHF operates within.
• The company's revenue decline in 2025 due to account attrition and lower pricing reflects broader industry pressures, including oversupply and constrained operator liquidity, which impacted profitability for many cannabis companies (only 27% were profitable in 2024).

Legal Proceedings

• SHF Holdings, Inc. v. Roda, Ellis, and Carroll: A dispute over the terms of the Abaca acquisition, with a $3.0 million payment deposited in court registry pending resolution. A ruling on summary judgment is pending, and a court date is scheduled for May 2026. The estimated range of loss is $0 to $7.8 million.

Related Party Transactions

• The company's relationship with Partner Colorado Credit Union (PCCU) is a significant related party transaction, with PCCU holding substantial equity and being the primary customer.
• Revenue from PCCU constituted 86.7% of total revenue in 2025.
• Amounts due from PCCU represented 97.0% of total accounts receivable as of December 31, 2025.
• The Senior Secured Promissory Note with PCCU was cancelled on September 30, 2025, in exchange for Series B Convertible Preferred Stock and Series B Warrants.

Stakeholder Impact

• Shareholders may experience dilution due to potential future equity issuances under the ELOC and conversion of Series B Preferred Stock and Warrants.
• The company's going concern status and potential Nasdaq delisting could negatively impact share price and liquidity for shareholders.
• Employees may be affected by cost-reduction measures, including workforce restructuring and discontinuation of 401(k) matching contributions.
• Financial institution partners, particularly PCCU, are critical to operations; disruptions at PCCU could severely impair the company's ability to serve clients.

Next Steps

• Remediate the material weakness in internal controls related to loan documentation and credit loss estimation by the second quarter of 2026.
• Continue to monitor Nasdaq listing compliance and take actions to maintain compliance.
• Focus on improving client retention through enhanced lending capabilities and client service technology.
• Explore strategic partnerships with other financial institutions to reduce revenue concentration.
• Manage operating costs and improve cash generation to support indemnification obligations.

Key Dates

Recommendation

While the company has taken steps to improve its financial position and strategic agreements, the significant revenue decline, recurring operating losses, going concern doubts, and identified material weaknesses in internal controls present substantial risks. The potential for dilution from financing activities and the concentration risk with PCCU also warrant caution. The company's ability to execute its turnaround plan and navigate regulatory changes will be critical. A 'hold' recommendation reflects a wait-and-see approach until clearer signs of sustainable improvement and risk mitigation are evident.

Keywords

SHF Holdings, SEC Filing, 10-K, Cannabis Banking, Financial Services, Compliance, Loan Program, PCCU, Commercial Alliance Agreement, Internal Controls, Going Concern, Nasdaq Listing