Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

References in this section to "we," "us," "our," "SHF," or the "Company" refer to SHF Holdings, Inc. References to "management" refer to our officers and Board of Directors. The following discussion and analysis of our financial performance and results of operations should be read in conjunction with our consolidated financial statements and the notes to those financial statements included elsewhere in this Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements." Our actual results may differ materially from those contained in or implied by any forward-looking statements. Unless otherwise stated, all share and per share amounts for all periods presented have been adjusted to reflect the 2026 Reverse Stock Split (as defined below).

Overview

The Company was founded in 2015 by PCCU and is headquartered in Golden, Colorado. We operate a proprietary compliance technology platform that enables financial institutions to provide banking and lending services to cannabis related businesses ("CRBs") operating legally under applicable state law.

Because cannabis remains a federally controlled substance under the Controlled Substances Act ("CSA"), most financial institutions have historically been unwilling to serve CRBs, creating significant demand for the compliance infrastructure and risk management services we provide. We are not a bank or credit union and do not hold customer deposits. Instead, we provide compliance monitoring, onboarding, and reporting services that allow our financial institution clients to accept and maintain CRB deposit accounts in a manner consistent with Bank Secrecy Act ("BSA") requirements, FinCEN guidance, and applicable anti-money laundering regulations.

Through our financial institution clients, we facilitate access to business checking and savings accounts, cash management, commercial lending, remote deposit, automated clearing house payments, wire transfers, and courier services through third-party relationships. By enabling CRBs to deposit cash receipts through regulated financial institutions, our platform helps to reduce the safety risks associated with high cash volumes and gives CRBs access to financial tools that help them operate more efficiently. In select markets, we also license our Safe Harbor Program to other financial institutions, providing them know your customer due diligence tools, compliance monitoring, program management support, and regulatory exam assistance.

We generate revenue primarily through account fee income based on the number of active accounts and the size of deposit balances in such accounts, loan program income on CRB loans we source and service on behalf of our financial institution clients, and investment income earned on CRB-related deposits held at those institutions. Since 2015, the Company has assisted in the processing of more than $38.7 billion in cannabis-related depository funds and has supported its financial institution clients through more than 25 state and federal banking examinations.

Relationship with PCCU

PCCU is the Company's primary financial institution client and the source of a significant majority of its revenue. The relationship is governed by the Second Amended CAA, which replaced the First Amended Commercial Alliance Agreement (the "First Amended CAA") effective October 1, 2025.

The First Amended CAA introduced several significant changes to the Commercial Alliance Agreement, 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% to up to 65%, reflecting the completion of the September 2025 Recapitalization (as defined below); (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.

The concentration of our business with PCCU and the re-assumption of the indemnification obligation each represent material risks to the Company. Any loss of or material adverse change to the PCCU relationship, or any significant loan defaults in the CRB portfolio for which we are required to fund indemnification payments, could have a material adverse impact on our liquidity, financial condition, and results of operations. See "Related Party Relationships."

Industry and Regulatory Environment

Federal Regulatory Developments - Rescheduling to Schedule III

The federal regulatory environment for cannabis continues to evolve in ways the Company believes are material to its industry.

In August 2023, the U.S. Department of Health and Human Services recommended that the Drug Enforcement Administration ("DEA") reschedule cannabis from Schedule I to Schedule III of the CSA, and in May 2024 the U.S. Department of Justice ("DOJ") issued a Notice of Proposed Rulemaking to that effect, although the rescheduling process was stayed and effectively stalled for much of 2025.

On December 18, 2025, President Trump signed an Executive Order directing the Attorney General to expeditiously complete the rulemaking process to reschedule cannabis to Schedule III. In April 2026, the Attorney General issued a final order, effective April 28, 2026, rescheduling Food and Drug Administration-approved cannabis products and products regulated under state medical marijuana licenses to Schedule III. The DEA held an expedited administrative hearing from June 29, 2026 through July 15, 2026 on the proposed transfer of marijuana generally from Schedule I to Schedule III, and post-hearing briefs were filed on August 17, 2026. On September 29, 2026, before issuing a recommended decision, the DEA's Chief Administrative Law Judge stayed the proceeding to consider a motion to add a September 2026 Government Accountability Office report on federal drug-scheduling procedures to the hearing record. On October 22, 2026, the Chief Administrative Law Judge admitted the report into the record and permitted limited supplemental briefing on it, with initial briefs due October 29, 2026 and replies due November 5, 2026, but denied a request to reopen the hearing for additional testimony and evidence. The Chief Administrative Law Judge is expected to issue a recommended decision to the DEA Administrator, who will make the final determination. The stay does not affect the April 2026 order. The April 2026 order is the subject of consolidated petitions for review in the U.S. Court of Appeals for the District of Columbia Circuit; on September 9, 2026, the court denied a motion to stay the order pending review, and the order remains in effect. There can be no assurance as to the timing or outcome of the DEA proceeding or the pending litigation, or as to whether broader rescheduling will occur.

While medical cannabis produced and sold by state-licensed operators who have applied for DEA licenses is now Schedule III, all other cannabis remains a Schedule I controlled substance under federal law, which creates ongoing legal and compliance risks for us and for the financial institutions we serve. Proposed federal legislation could also affect our market. The SAFER Banking Act, which would provide a safe harbor for depository institutions that serve CRBs, has not been reintroduced in the current Congress. On March 18, 2026, the Capital Lending and Investment for Marijuana Businesses ("CLIMB") Act (H.R. 7987) was introduced in the U.S. House of Representatives and referred to the House Committee on Financial Services. Among other things, the CLIMB Act would protect financial institutions, insurers and other service providers from federal penalties solely for serving state-legal cannabis businesses and would permit such businesses to list on national securities exchanges. The Preparing Regulators Effectively for a Post-Prohibition Adult-Use Regulated Environment Act (H.R. 2935 and S. 3576) would establish a federal commission to recommend a regulatory framework for cannabis following the end of federal prohibition. Neither bill has advanced beyond referral to committee, and there can be no assurance that either will be enacted. If enacted, the CLIMB Act or similar legislation could expand the availability of banking, lending and capital markets services to CRBs, which could increase demand for compliant financial services but could also increase competition in our market, including from larger financial institutions. Conversely, changes in federal or state enforcement priorities could adversely affect our clients and, in turn, our business. We monitor legislative and regulatory developments closely, as they are a primary driver of both the demand for, and the risks associated with, our services.

The Company believes the most financially material consequence of rescheduling would be the elimination of Section 280E of the Internal Revenue Code, which currently prohibits cannabis businesses from deducting ordinary and necessary business expenses and results in effective federal tax rates materially higher than those of other industries, and its elimination could improve cash flows and profitability for state-legal cannabis operators. Because Section 280E applies only to trafficking in Schedule I and Schedule II controlled substances, it no longer applies to activities involving marijuana covered by the April 2026 order, but it continues to apply to adult-use cannabis businesses unless and until broader rescheduling occurs.

On June 17, 2026, Nasdaq published guidance on the Nasdaq Listing Center (identification number 1877) stating that state-licensed medical marijuana companies that register with the DEA and operate in compliance with federal law are eligible to list on Nasdaq if they can provide an opinion of counsel from a law firm, acceptable to Nasdaq, with expertise in controlled substance regulatory compliance confirming that the company operates in compliance with the DOJ order and applicable requirements of the CSA.

Key Metrics

Management monitors the following operational metrics to assess the health and trajectory of the core banking services business.

Total account balances, number of accounts and average account balances

Our ability to generate account fee income and investment income is directly tied to the number of active CRB accounts we manage and the total deposit balances maintained at our financial institution clients. We monitor account activity including daily deposits, withdrawals, and ending balances on an ongoing basis. Average account balances represent the average aggregate ending balance of onboarded and monitored CRB deposits held at financial institution clients over the revenue generating period. Average account balance is total account balances divided by total active accounts at period end. Trailing 14-day average balances represent the aggregate ending balance of onboarded and monitored CRB deposits held at financial institution clients over the 14 calendar days at the period end and represent a period end balance that smooths our clients' two-week payroll cycles.

Account Fees per Average Active Account

Our fee income is generated from active accounts and account-level transaction activity. We track account openings and closings on a daily, weekly, and monthly basis and monitor account fees per average active account as an indicator of pricing efficiency and revenue quality.

For The Three Months Ended September 30,				2026				2025				Change				Change (%)
Average deposit balance		(1)		$	112,025,924			$	107,976,219			$	4,049,705				3.8	%
Trailing 14-day average account balance		(2)		$	119,316,672			$	111,101,336			$	8,215,336				7.4	%
Average monthly account fees		(3)		$	231,460			$	270,501			$	(39,041	)			(14.4	)%
Average active accounts		(4)			761				774				(13	)			(1.7	)%
Average account balance		(5)		$	147,209			$	139,444			$	7,765				5.6	%
Average monthly fees per account		(6)		$	304			$	349			$	(45	)			(12.9	)%

For The Nine Months Ended September 30,				2026				2025				Change				Change (%)
Average deposit balance		(1)		$	108,797,735			$	105,178,610			$	3,619,125				3.4	%
Trailing 14-day average account balance		(2)		$	119,316,672			$	111,101,336			$	8,215,336				7.4	%
Average monthly account fees		(3)		$	233,965			$	280,456			$	(46,491	)			(16.6	)%
Average active accounts		(4)			763				773				(10	)			(1.3	)%
Average account balance		(5)		$	142,509			$	136,105			$	6,404				4.7	%
Average monthly fees per account		(6)		$	306			$	363			$	(57	)			(15.7	)%

	(1)	Represents the average deposit balance over the period.
	(2)	Represents the average balance for the 14 calendar days ending on September 30th, which represents a period end balance that smooths our clients' two-week payroll cycles.
	(3)	Reported account activity fee revenue.
	(4)	Represents the average of ending active accounts for each of the three months therein.
	(5)	Refer to the below section - Discussion of Results of our Operations for additional discussion of trends.
	(6)	Represents the average of account activity fee revenue for the three and nine months therein.

For the three and nine months ended September 30, 2026, the Company continued to grow its deposit base and expand the scale of its client relationships. Average deposit balances increased $4.0 million, or 3.8%, to $112.0 million for the three-month period, and $3.6 million, or 3.4%, to $108.8 million for the nine-month period, each compared to the same periods last year. Active accounts reduced by 1.7% for the three-month period, while the nine-month period reduced by 1.3%; in each case, average account balance increased, rising 5.6% to $0.1 million for the three-month period and 4.7% to $0.1 million for the nine-month period. Average account fee revenue was $0.2 million for both the three- and nine-month periods, decreasing 14.4% and 16.6%, respectively, compared to the prior year periods, as average fees collected per account decreased 12.9% to $304.00 for the three-month period and 15.7% to $306.00 for the nine-month period. This decline reflects a continued shift in the account portfolio toward larger, higher-balance relationships, which generate proportionately lower fee revenue relative to their deposit contribution but can support the Company's growing deposit base and associated investment income.

Recent Events

Reverse Stock Split

On September 30, 2026, the Company effected a 1-for-12 reverse stock split of its Common Stock (the "2026 Reverse Stock Split") pursuant to a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware, which became effective on September 30, 2026. The 2026 Reverse Stock Split was approved by the Company's stockholders on November 6, 2025, and the 1-for-12 ratio was approved by the board of directors of the Company (the "Board" or the "Board of Directors") on September 16, 2026. No fractional shares were issued, and stockholders who were otherwise entitled to a fractional share received a number of shares rounded up to the nearest whole share. The 2026 Reverse Stock Split did not change the par value of the Common Stock or the number of authorized shares. Proportional adjustments were made to the number of shares issuable upon exercise or conversion of, and the exercise or conversion prices of, the Company's outstanding warrants, stock options, restricted stock units and Series B Convertible Preferred Stock, as well as to the number of shares reserved under the Company's Amended and Restated - 2022 Equity Incentive Plan.

Nasdaq Listing Compliance

On April 22, 2026, we received a letter from Nasdaq notifying us that the closing bid price of our Common Stock had been below $1.00 per share for 30 consecutive business days, as required by Nasdaq Listing Rule 5550(a)(2). We were provided an initial compliance period through October 19, 2026. On September 30, 2026, we effected the 2026 Reverse Stock Split. However, the closing bid price of our Common Stock did not remain at or above $1.00 for the required 10 consecutive business days, and we did not regain compliance by October 19, 2026.

On October 20, 2026, Nasdaq granted us a second compliance period of 180 calendar days through April 19, 2027. To regain compliance, the closing bid price of our Common Stock must be at least $1.00 for a minimum of 10 consecutive business days before that date. Since implementing the 2026 Reverse Stock Split, our Common Stock has consistently traded below $1.00 per share. In connection with the Proposed Transaction (as defined below), the Company may seek stockholder approval of a reverse stock split to the extent needed to meet Nasdaq's bid price requirement.

We intend to evaluate all available options to regain compliance, including a further reverse stock split, which would require stockholder approval. Because we effected the 2026 Reverse Stock Split, our options are limited:

	●	If our bid price again falls below $1.00 per share for 30 consecutive business days within one year after the 2026 Reverse Stock Split, we would not be eligible for any compliance period, and Nasdaq would issue a Staff Delisting Determination.
	●	Our cumulative reverse split ratio over the past two years is 240-to-one. A further reverse stock split could, depending on the ratio and timing, exceed the 250-to-one threshold above which Nasdaq would not provide a compliance period.

Opifex Term Sheet

On October 23, 2026, we entered into a non-binding term sheet with Opifex Media, Inc., a Beverly Hills, California-based media holding company focused on the creator economy ("Opifex"), for a proposed transaction in which a wholly owned subsidiary of the Company would merge with and into Opifex, and Opifex's security holders would receive newly issued shares of Common Stock (the "Proposed Transaction"). See Note 18, Subsequent Events. If the Proposed Transaction results in a change of control under Nasdaq Listing Rule 5110(a), the combined company would be required to satisfy Nasdaq's initial listing requirements, which are more stringent than the continued listing requirements. The term sheet is non-binding (other than certain specified provisions) and the Proposed Transaction is subject to numerous conditions, including Nasdaq approval. There can be no assurance that definitive agreements will be executed, that the Proposed Transaction will be completed before April 19, 2027, or at all, or that it would result in our regaining or maintaining compliance with Nasdaq listing requirements. See Part II, Item 1A., "Risk Factors- The Proposed Transaction with Opifex may not be completed, and if completed would substantially dilute our existing stockholders and change our business."

If we do not regain compliance by April 19, 2027, Nasdaq will notify us that our securities are subject to delisting, and we may request a hearing before a Nasdaq Hearings Panel. See Note 17, Commitments and Contingencies.

Proposed Market Value of Listed Securities Requirement. On July 22, 2026, the SEC approved a Nasdaq rule that would require listed companies to maintain a minimum market value of listed securities ("MVLS") of $5.0 million. A company whose MVLS remains below $5.0 million for 30 consecutive business days would become immediately subject to suspension and delisting, without a compliance period, and a hearing request would not stay the suspension.

The approval order was stayed on July 29, 2026 following notices of intention to petition for review. On September 11, 2026, the SEC granted the petitions for review, and the order remains stayed. Nasdaq has since proposed that the 30-business-day measurement period begin only after the stay terminates. The rule is not currently in effect, and there is no prescribed timeline for the SEC's decision. A reverse stock split would not cure an MVLS deficiency because MVLS is based on the aggregate market value of the Company's listed securities rather than its per-share price. The Company could become subject to immediate suspension and delisting proceedings, without the benefit of a compliance period, as soon as 30 consecutive business days after the rule takes effect. See Part II, Item 1A, "Risk Factors."

Effect on Our Business. The loss of our Nasdaq listing would adversely affect:

	●	the liquidity and market price of our Common Stock;
	●	our ability to raise capital, including through the ELOC (as defined below); and
	●	our ability to complete the Proposed Transaction.

In addition, a suspension or threatened suspension of trading could constitute a "Triggering Event" under the Certificate of Designations of Rights and Preferences (the "Series B Certificate of Designations") of the Series B Convertible Preferred Stock, par value $0.0001 per share (the "Series B Convertible Preferred Stock"). See "Liquidity and Capital Resources" and Note 2, Basis of Presentation and Summary of Significant Accounting Policies, Note 16, Stockholders' Equity, and Note 18, Subsequent Events. There can be no assurance that we will regain compliance with the minimum bid price requirement or maintain compliance with any other Nasdaq listing requirement.

Components of our Results of Operations

Revenue

The Company generates revenue through four primary streams. Account fee income consists of fees charged to financial institution clients based on the number of active CRB accounts managed, account-level transaction activity, and deposit balances. These fees compensate the Company for providing BSA compliance monitoring, onboarding, account management, and related regulatory reporting services. Loan program income represents the Company's contractual share of interest earned on CRB loans originated and serviced by the Company on behalf of its financial institution clients, primarily PCCU. The Company's share of loan program income is currently determined in accordance with the Second Amended CAA. Investment income represents interest earned on CRB deposit balances held at financial institution clients and is based on the prevailing market rates applied to those balances. In addition, the Company earns fees from licensing its proprietary Program to other financial institutions and from ancillary services provided to businesses serving the cannabis industry.

Operating Expenses

Operating expenses consist of compensation and employee benefits, professional services, general and administrative expenses, rent expense, and provision (benefit) for credit losses.

	●	Compensation and employee benefits consist of employee wages, payroll taxes, employee benefits, and non-cash stock-based compensation. Stock-based compensation has increasingly been used as a component of total compensation to preserve cash and align employee and consultant incentives with the performance of the Common Stock.
	●	Professional services consist of legal fees, audit and accounting fees, general consulting fees, and board-related fees. Legal fees include both ongoing corporate legal services and costs associated with the Company's active litigation matters.
	●	General and administrative expenses include the asset hosting fee paid to PCCU under the First Amended CAA or the Second Amended CAA, as applicable, insurance, advertising and marketing, travel and entertainment, franchise taxes, and other office and operating expenses. The asset hosting fee represents consideration paid to PCCU for access to its banking platform, regulated deposit infrastructure, and bank charter and is one of the largest components of general and administrative expenses. See "Related Party Relationships."
	●	Rent expense reflects the cost of the Company's corporate office. The Company closed its Arkansas office during 2025, thereby reducing its ongoing rent obligations.
	●	Credit benefit reflects the amortization of and changes in the Company's estimates on loans it is obligated to indemnify. Under the Second Amended CAA, we receive up to 65% of loan program income generated by PCCU's CRB loan portfolio. In exchange, we are obligated to indemnify PCCU for up to 65% of net losses of a default on any loan covered by the Second Amended CAA. This obligation has no maximum dollar limit and covers principal, accrued interest, fees, legal costs, collection costs, and collateral disposition costs, net of any recoveries.

Discussion of our Results of Operations for the Three and Nine Months Ended September 30, 2026 Compared to the Three and Nine Months Ended September 30, 2025

Revenue

Three Months Ended September 30,		2026				2025				Change ($)				Change (%)
Account fee income		$	798,006			$	963,098			$	(165,092	)			(17.1	)%
Loan program income			869,273				510,754				358,519				70.2	%
Investment income			283,755				340,688				(56,933	)			(16.7	)%
Safe Harbor Program income			1,251				19,230				(17,979	)			(93.5	)%
Total		$	1,952,285			$	1,833,770			$	118,515				6.5	%

Nine Months Ended September 30,		2026				2025				Change ($)				Change (%)
Account fee income		$	2,490,567			$	3,045,292			$	(554,725	)			(18.2	)%
Loan program income			2,547,883				1,606,947				940,936				58.6	%
Investment income			788,515				901,527				(113,012	)			(12.5	)%
Safe Harbor Program income			35,499				57,690				(22,191	)			(38.5	)%
Total		$	5,862,464			$	5,611,456			$	251,008				4.5	%

Account fee income

Account fee income decreased by $0.2 million, or 17.1%, for the three months ended September 30, 2026, compared to the same period in 2025. The decline was primarily due to lower revenue from a merchant service partner, which reduced account fee income by approximately $0.1 million year over year. Account fee income was also negatively impacted by competitive pressures on fees.

Account fee income decreased by $0.6 million, or 18.2%, for the nine months ended September 30, 2026, compared to the same period in 2025. The decline was primarily due to lower revenue from a merchant service partner, which reduced account fee income by approximately $0.3 million year over year. In addition, lower average fees collected from PCCU-hosted accounts contributed approximately $0.2 million to the overall decrease.

Loan program income

For the three months ended September 30, 2026, loan program income was $0.9 million, compared to $0.5 million for the three months ended September 30, 2025, an increase of $0.4 million, or 70.2%. For the nine months ended September 30, 2026, loan program income was $2.5 million, compared to $1.6 million for the nine months ended September 30, 2025, an increase of $0.9 million, or 58.6%.

The increase for both periods was primarily driven by the Second Amended CAA, which increased the Company's share of loan program income to 65% from approximately 35% under the First Amended CAA. This increase was partially offset by a decline in the average loan portfolio balance to $51.34 million for the nine months ended September 30, 2026, from $53.11 million for the same period in 2025, reflecting fewer loans outstanding year over year.

Investment income

For the three months ended September 30, 2026, investment income was $0.3 million, compared to $0.3 million for the three months ended September 30, 2025. The average investable deposit base grew to $53.4 million from $42.9 million between those periods, but the benefit of that growth was offset by a decline in the Interest on Reserve Balances (IORB) rate from 4.40% to 3.65%.

For the nine months ended September 30, 2026, investment income was $0.8 million, compared to $0.9 million for the nine months ended September 30, 2025, a decrease of $0.1 million, or 12.5%. The average investable deposit base grew to $49.2 million from $37.5 million between those periods, but the benefit of that growth was more than offset by a decline in the IORB rate from approximately 4.40% to 3.65% during the nine months ended September 30, 2025 and 2026, respectively.

On September 16, 2026, the Federal Reserve increased its target federal funds rate by 25 basis points and raised the IORB rate to 3.90%, effective September 17, 2026. This increase is expected to have a favorable impact on the yield earned on the Company's investable deposits and may contribute to higher investment income in future periods. Based on our average investable deposit base at September 30, 2026, the Company estimates that a 25-basis-point increase in the federal funds by the Federal Reserve would contribute approximately $0.2 million in incremental annualized investment income. Actual results will depend on future balances, partner institution arrangements and any subsequent changes in interest rates, including rate decreases.

Operating expenses

For The Three Months Ended September 30,		2026				2025				Change ($)				Change (%)
Compensation and employee benefits		$	1,516,406			$	1,695,786			$	(179,380	)			(10.6	)%
General and administrative expenses			890,142				856,389				33,753				3.9	%
Professional services			722,167				442,312				279,855				63.3	%
Rent expense			50,012				56,529				(6,517	)			(11.5	)%
Amortization of contract asset			129,072				-				129,072				100.0	%
Credit benefit			(353,412	)			-				(353,412	)			100.0	%
Total operating expenses		$	2,954,387			$	3,051,016			$	(96,629	)			(3.2	)%

For The Nine Months Ended September 30,		2026				2025				Change ($)				Change (%)
Compensation and employee benefits		$	4,654,679			$	4,651,318			$	3,361				0.1	%
General and administrative expenses			2,845,293				2,305,018				540,275				23.4	%
Professional services			2,660,780				2,654,183				6,597				0.2	%
Rent expense			162,415				180,720				(18,305	)			(10.1	)%
Amortization of contract asset			387,216				-				387,216				100.0	%
Credit benefit			(1,056,107	)			-				(1,056,107	)			100.0	%
Total operating expenses		$	9,654,276			$	9,791,239			$	(136,963	)			(1.4	)%

Total operating expenses

For the three months ended September 30, 2026, total operating expenses decreased by $0.1 million, or 3.2%, to $3.0 million, compared to $3.1 million for the same period in 2025. For the nine months ended September 30, 2026, total operating expenses decreased $0.1 million, or 1.4%, to $9.7 million, compared to $9.8 million for the same period in 2025.

For the three-month period, the change was primarily attributable to a credit benefit recognized during the period and lower compensation and employee benefits expenses, partially offset by an investment in marketing and business development captured in general and administrative expenses.

For the nine-month period, the change was primarily driven by the credit benefit recognized during the period, which was offset by higher general and administrative expenses, mainly resulting from increased marketing and technology expenditures, as well as the non-cash amortization of contract asset.

Compensation and employee benefits

For the three months ended September 30, 2026, compensation and employee benefits expenses decreased by $0.2 million, or 10.6%, to $1.5 million, compared to $1.7 million for the same period in 2025. The decrease was primarily driven by savings from the departure of certain executive officers, partially offset by the impact of staff increases and salary adjustments to support strategic growth initiatives, primarily the build-out of the Company's managed services business that offers outsourced consulting and operational support directly to CRBs and financial institutions ("Managed Services"). Compensation and employee benefits attributable to Managed Services personnel were approximately $0.1 million for the three months ended September 30, 2026.

For the nine months ended September 30, 2026, compensation and employee benefits expenses increased by $0.003 million, or 0.1%, to $4.7 million, compared to $4.7 million for the same period in 2025. The increase was primarily driven by investments in staff to support strategic growth initiatives, principally the development of the Company's Managed Services offering, which accounted for approximately $0.4 million of the increase, offset in part by savings from the departure of certain executive officers and a decrease in stock-based compensation expense, as no stock awards were granted in 2026. The Company expects compensation and employee benefits associated with its Managed Services personnel to continue at an annualized rate of approximately $0.5 million as it develops this business.

General and administrative expenses

For the three and nine months ended September 30, 2026, general and administrative expenses increased $0.03 million and $0.5 million, or 3.9% and 23.4%, to $0.9 million and $2.8 million, compared to $0.9 million and $2.3 million for the same periods in 2025, respectively. The increase was primarily due to strategic investments in (i) investor related marketing intended to increase market awareness of the Company's business developments, (ii) brand marketing intended to build awareness of the Company's expanded capabilities, including its broader lending program, its expanded consulting support for CRBs under its Managed Services offering, and its efforts to onboard additional financial institution clients to its platform, (iii) marketing of the Company's compliant and transparent pooled employer retirement plan, which has facilitated more in-depth conversations with multi-state operators that would not otherwise bank through the Company, and (iv) the development of infrastructure supporting the Company's efforts to embed artificial intelligence capabilities into its operating environment resulting in higher subscription costs and, for the three-month period, higher franchise tax expense. The Company partially recovered its investor relations marketing investment through issuances under its ELOC facility during the period. These increases were partially offset by lower PCCU account hosting fees under the Second Amended CAA.

Professional services

Professional services consist primarily of legal fees, as well as audit and accounting fees, consulting fees and Board fees. For the nine months ended September 30, 2026, professional services expense was $2.7 million, an increase of $0.01 million, or 0.2%, compared to $2.7 million for the same period in 2025. For the three months ended September 30, 2026, professional services expense increased $0.3 million, or 63.3%, to $0.7 million, compared to $0.4 million for the same period in 2025.

The comparison is affected by non-cash, equity-based compensation to service providers:

	●	The nine months ended September 30, 2025 included $0.7 million of stock-based compensation for professional services, including the equity awards granted to consultants in 2025.
	●	The nine months ended September 30, 2026 included $0.1 million of amortization of Series B Convertible Preferred Stock and Common Stock purchase warrants (as amended and restated, the "Series B Warrants" and, together with the Series B Convertible Preferred Stock, the "Series B Securities") issued to service providers in the September 2025 Recapitalization.

Excluding these non-cash amounts, professional services expense increased approximately $0.6 million and $0.4 million for the nine and three months ended September 30, 2026, respectively.

The increase was driven primarily by legal fees, which represent the majority of professional services expense, and related audit and accounting fees. These costs arise from obligations under the Series B Securities and from matters the Company must address as a Nasdaq-listed company, including:

	●	Series B registration statements. Preparing and filing registration statements required under the Registration Rights Agreement entered into with the initial purchasers of the Series B Securities (the "Registration Rights Agreement"), including the registration statements filed in May and July 2026, the reimbursement of Series B holders' counsel fees as required by that agreement, together with the related auditor consents and reviews;
	●	Series B transactions. The Series B conversion price reduction in May through July 2026, and the related holder communications and filings;
	●	Abaca litigation. The Abaca (as defined below) litigation, including summary judgment proceedings and trial preparation for the August 2026 trial; and
	●	Nasdaq and stockholder matters. Nasdaq listing compliance matters and the 2026 Reverse Stock Split, including related SEC and Nasdaq filings.

As described in our Annual Report on Form 10-K for the year ended December 31, 2025, we had expected professional services costs to decline from 2025 levels as non-recurring matters were completed. Instead, recurring legal and accounting costs associated with the Series B Securities, the Abaca litigation and Nasdaq compliance have remained elevated.

We expect professional services expense to increase in the fourth quarter of 2026 and to remain elevated in future periods. Expected drivers of these expenses include:

	●	an additional registration statement required as a result of the October 2026 reduction in the Series B conversion price;
	●	the Proposed Transaction;
	●	any further reverse stock split; and
	●	any post-trial proceedings or appeal in the Abaca matter.

Rent expense

For the three and nine months ended September 30, 2026, rent expense was $0.05 million and $0.2 million, respectively, compared to $0.06 million and $0.2 million for the same periods in 2025, a decrease of $0.01 million, or 11.5%, and $0.02 million, or 10.1%, respectively, primarily due to the closure of the Company's Arkansas office during 2025.

Amortization of contract asset

For the three and nine months ended September 30, 2026, amortization of the contract asset was $0.1 million and $0.4 million, respectively, compared to $0 for the same periods in 2025. The contract asset is amortized on a systematic and rational basis over the contract term, consistent with the release of the underlying guaranteed exposure, discussed in Note 6, Contract Asset, to the accompanying unaudited condensed consolidated financial statements, following the October 1, 2025, effective date of that agreement.

Credit benefit losses related to our stand ready guarantee and financial indemnification liabilities

For the three and nine months ended September 30, 2026, the Company recognized a credit benefit of $0.4 million and $1.1 million, respectively, compared to no benefit for the same periods in 2025. In accordance with ASC 460, the stand-ready guarantee liability is recognized on a straight-line basis over a weighted-average remaining loan maturity of three years; during the three and nine months ended September 30, 2026, the Company reduced this liability, which was recognized as a benefit within operating expenses. In addition, the Company remeasured its expected liability under ASC 326 and benefited from a risk reduction on certain loans as of September 30, 2026, resulting in a reduction of the financial indemnification liability, which was also recognized as a credit benefit.

Other Income Expense

For The Three Months Ended September 30,		2026				2025				Change				Change %
Change in the fair value of deferred consideration		$	-			$	(40,565	)		$	40,565				(100.0	)%
Gain on extinguishment of debt			-				3,336,213				(3,336,213	)			(100.0	)%
Costs incurred to secure financing			-				(988,837	)			988,837				(100.0	)%
Interest expense			-				(252,640	)			252,640				(100.0	)%
Interest income			14,583				-				14,583				n/m
Change in fair value of warrant liabilities			8,125				(657,417	)			665,542				(101.2	)%
Total Other (Expense) Income		$	22,708			$	1,396,754			$	(1,374,046	)			(98.4	)%

For The Nine Months Ended September 30,		2026				2025				Change				Change %
Change in the fair value of deferred consideration		$	-			$	79,475			$	(79,475	)			(100.0	)%
Gain on extinguishment of debt			-				3,336,213				(3,336,213	)			(100.0	)%
Costs incurred to secure financing			-				(988,837	)			988,837				(100.0	)%
Interest expense			(6,870	)			(480,767	)			473,897				(98.6	)%
Interest income			38,031				-				38,031				n/m
Net loss on disposal of investment in preferred securities			(340,408	)			-				(340,408	)			n/m
Issuance cost from the sale of the Common Stock			(210,109	)			-				(210,109	)			n/m
Change in fair value of warrant liabilities			39,322				596,823				(557,501	)			(93.4	)%
Total Other (Expense) Income		$	(480,034	)		$	2,542,907			$	(3,022,941	)			(118.9	)%

Total other (expense) income

For the three months ended September 30, 2026, total other income (expense), net was income of $0.02 million, compared to income of $1.4 million for the three months ended September 30, 2025, a decrease of $1.4 million. The decrease was primarily due to a non-recurring $3.3 million gain on the extinguishment of the forward purchase derivative, recognized in the three months ended September 30, 2025 upon termination of the Forward Purchase Agreement (the "FPA") in connection with the September 2025 Recapitalization. The absence of this gain was partially offset by two prior-year items that did not recur in the current period: (i) $1.0 million of costs incurred to secure financing, primarily $0.8 million of non-cash costs related to the ELOC, and (ii) a $0.7 million loss on the change in fair value of warrant liabilities.

For the nine months ended September 30, 2026, total other income (expense), net was expense of $0.5 million, compared to income of $2.5 million for the nine months ended September 30, 2025, a decrease of $3.0 million. The decrease was primarily due to the non-recurring $3.3 million gain on the extinguishment of the forward purchase derivative recognized in the prior-year period upon termination of the FPA in connection with the September 2025 Recapitalization, a $0.6 million decrease in the gain on the change in fair value of warrant liabilities reflecting changes in the Company's stock price, a $0.3 million loss on the sale of the Company's investment in preferred securities, and $0.2 million of issuance costs related to the ELOC in the current period. These decreases were partially offset by two prior-year items that did not recur: $1.0 million of costs incurred to secure financing, primarily $0.8 million of non-cash costs related to the ELOC, and $0.5 million of interest expense. The Company had no interest-bearing secured debt during 2026 following the cancellation of the PCCU senior secured promissory note in September 2025.

Change in Fair Value of Deferred Consideration

The third-anniversary payment obligation was fully extinguished in October 2025 upon settlement and accordingly no further changes in fair value were recognized during 2026. For the three months ended September 30, 2026, the Company recognized no change in the fair value of deferred consideration, compared to a loss of $0.04 million for the three months ended September 30, 2025. For the nine months ended September 30, 2026, the Company recognized no change in the fair value of deferred consideration, compared to a gain of $0.1 million for the nine months ended September 30, 2025. The gain recognized for the nine months ended September 30, 2025 primarily resulted from a decline in the Company's stock price, reducing the third-anniversary payment obligation during that period prior to settlement.

Interest Expense

The Company had no secured debt outstanding as of and during the nine-month period ended September 30, 2026.

Interest expense for the three and nine months ended September 30, 2026, related entirely to the financing of an insurance policy, a routine, unsecured financing arrangement. By contrast, interest expense for the three and nine months ended September 30, 2025, was attributable to the Senior Secured Promissory Note to PCCU (the "PCCU Note"), which the Company repaid in full prior to the current period.

For the three months ended September 30, 2026, interest expense was $0, compared to $0.3 million for the three months ended September 30, 2025, a decrease of $0.3 million, or 100.0%. For the nine months ended September 30, 2026, interest expense was less than $0.1 million, compared to $0.5 million for the nine months ended September 30, 2025, a decrease of $0.5 million, or 98.6%.

Interest Income

For the three and nine months ended September 30, 2026, the Company recognized interest income of less than $0.1 million, compared to no interest income for the same periods in 2025. Interest income relates to earnings on available cash held in an interest-bearing, cash-equivalent money market account.

Net loss on disposal of investment in preferred securities

The Company received the Aditxt Inc. ("ADTX") preferred shares in 2025 in connection with the restructuring of certain of its Series B Convertible Preferred Stock and associated warrants, and not as part of any investment strategy in the biotechnology sector. At the time of receipt, the Company anticipated recovering at least $1.5 million from the eventual sale of these shares. However, ADTX was subsequently delisted on June 23, 2026, prior to the Company's ability to liquidate the shares, which adversely affected the value realized on disposition.

For the nine months ended September 30, 2026, the Company recognized a loss of $0.3 million on the sale of its investment in preferred securities of ADTX, compared to no such loss for the same periods in 2025. During the nine months ended September 30, 2026, ADTX redeemed 23 shares, and the Company liquidated its remaining 1,434 shares of ADTX preferred stock through a combination of open-market and privately negotiated transactions, generating proceeds of approximately $1.1 million, of which approximately $0.3 million remained receivable as of September 30, 2026, and is included in other current assets in the condensed unaudited consolidated balance sheet as of September 30, 2026. The liquidation of the 1,434 shares occurred during the three months ended June 30, 2026.

Cost incurred to Secure Financing

The Company did not incur any costs to secure financing during the three or nine months ended September 30, 2026. During the three and nine months ended September 30, 2025, the Company incurred costs to secure financing of $1.0 million. These consisted primarily of $0.8 million of non-cash costs related to the Company's ELOC, representing the fair value of 1,000 shares of Series B Convertible Preferred Stock and a Series B Warrant to purchase 5,364 shares of Common Stock issued to the ELOC investor as consideration for its purchase commitment, which were expensed in full upon issuance. These costs were non-recurring and related to the financing transactions completed in connection with the September 2025 Recapitalization.

Issuance cost from the sale of the Common Stock

For the nine months ended September 30, 2026, issuance costs from the sale of Common Stock under the ELOC were $0.2 million. No issuance costs were incurred for the three months ended September 30, 2026 or for the three and nine months ended September 30, 2025. Issuance costs represent the difference between the market price of the Common Stock on the draw date and the price on the settlement date, multiplied by the number of shares issued.

Change in Fair Value of Warrant Liabilities

For the three months ended September 30, 2026, the Company recognized a gain of less than $0.1 million from changes in the fair value of warrant liabilities, compared to a loss of $0.7 million for the three months ended September 30, 2025, an increase of $0.7 million, or 101.20%. For the nine months ended September 30, 2026, the Company recognized a gain of less than $0.1 million from changes in the fair value of warrant liabilities, compared to a gain of $0.6 million for the nine months ended September 30, 2025, a decrease of $0.6 million, or 93.4%. The year-over-year decrease was due to the changes in the Company's stock price during each period. As of September 30, 2026, all outstanding warrants were out of the money.

Financial Condition

Cash and cash equivalents

Cash and cash equivalents were $4.4 million as of September 30, 2026, and $6.8 million as of December 31, 2025.

Cash flows

For the nine months ended September 30, 2026, net cash used in operating activities was $4.0 million, compared to $2.4 million in 2025, an increase of $1.7 million. The increase reflects a $2.7 million higher net loss, which included a $1.1 million non-cash credit benefit that is deducted in reconciling to operating cash flow and therefore does not reduce cash used. Non-cash charges added back in 2026 included $0.4 million of contract asset amortization, a $0.3 million loss on the sale of ADTX preferred securities and $0.2 million of ELOC issuance discount, while the 2025 period had included a $3.3 million non-cash gain on extinguishment of the forward purchase derivative. Changes in operating assets and liabilities provided $0.1 million in 2026 versus $0.7 million in 2025; the 2025 period benefited from a $0.6 million increase in accounts payable and a $0.5 million reduction in prepaid expenses that did not recur.

Investing activities provided $0.5 million of cash during the nine months ended September 30, 2026, primarily from $0.8 million of proceeds received from the sale of preferred securities, partially offset by $0.3 million of expenditures related to internally generated intangible assets.

Financing activities provided $1.1 million of cash during the nine months ended September 30, 2026, primarily from proceeds received under the Company's ELOC, compared to $0.5 million of cash provided by financing activities during the same period in 2025, which consisted of proceeds from the issuance of convertible debt ($0.6 million) and Series B Convertible Preferred Stock ($0.2 million), partially offset by the repayment of the PCCU Note ($0.3 million).

Liquidity

Liquidity refers to our ability to meet anticipated cash demands, including funding operations, servicing contractual obligations, and covering other routine business expenditures. Our primary cash outflows include operating costs, professional services and general business expenditures. Our sources of liquidity are our existing cash and cash equivalents, cash flows from operations to the extent achieved and, subject to the restrictions described below, the sale of Common Stock pursuant to the Equity Line of Credit (the "ELOC"). As of September 30, 2026, we do not have significant capital investment commitments.

As of September 30, 2026, the Company had cash and cash equivalents of $4.4 million, working capital of $3.7 million, and total stockholders' equity of $5.2 million, which is $2.7 million above the minimum stockholders' equity requirement of $2.5 million under Nasdaq Listing Rule 5550(b)(1). The Company has incurred recurring losses from operations and negative cash flows from operations, including an operating loss of $3.8 million and net cash used in operating activities of $4.0 million for the nine months ended September 30, 2026, and an accumulated deficit of $127.2 million as of September 30, 2026.

In addition, a trial on damages and the remaining claims in the Abaca litigation was held on August 10 and 11, 2026, and the Denver County District Court (the "Court") has not issued its ruling. The Company assesses a loss as reasonably possible but not probable and estimates the range of reasonably possible loss at $0 to $7.8 million. An adverse ruling at or near the upper end of that range would exceed the Company's available liquidity. The $3.0 million second anniversary payment deposited in the Court's registry is not available to fund operations. See Note 17, Commitments and Contingencies.

Subsequent to September 30, 2026, the conversion price of the Series B Convertible Preferred Stock was reduced to $0.1210 per share, and holders have converted 19,529 preferred shares into approximately 131.2 million shares of Common Stock. As a result, the Company is required to register approximately 157.0 million shares of Common Stock for resale under the Registration Rights Agreement unless this requirement is waived by the applicable holders of the Series B Convertible Preferred Stock. No such waiver has been executed. The Company did not file the required registration statement by the November 6, 2026 filing deadline, and a filing failure under the Registration Rights Agreement has occurred. Failure to meet the applicable filing or effectiveness deadlines would require cash registration delay payments of approximately $0.3 million for each 30-day period until cured, except for any period during which all of a holder's registrable securities may be sold under Rule 144 under the Securities Act. Because the applicable Rule 144 holding period for the Series B securities has been satisfied, the Company has concluded that no registration delay payments are owed as a result of the filing failure. If the registration statement is not filed by November 11, 2026, a Triggering Event will occur under the Series B Certificate of Designations. In addition, certain events, including a failure to timely file a required registration statement or a suspension or threatened suspension of trading of the Common Stock on Nasdaq, could constitute a Triggering Event under the Series B Certificate of Designations. On October 20, 2026, Nasdaq granted the Company a second compliance period through April 19, 2027 to regain compliance with the minimum bid price requirement. See Note 16, Stockholders' Equity, Note 17, Commitments and Contingencies, and Note 18, Subsequent Events.

Material Cash Requirements. The Company's material cash requirements over the next twelve months include:

	●	operating expenses, including professional services costs, which the Company expects to remain elevated (see "Results of Operations: Professional services");
	●	operating lease payments of approximately $0.2 million;
	●	accrued Series B Convertible Preferred Stock redemption obligations of $0.5 million;
	●	the costs of registration statements required under the Registration Rights Agreement, if any; and
	●	transaction costs related to the Proposed Transaction.

Management has developed and is implementing 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 with PCCU, effective October 1, 2025, increased the Company's share of loan program income from approximately 35% to up to 65% of the loan program income generated by PCCU's CRB loan portfolio, improving the recurring revenue profile of the Company's core business on a prospective basis. For the nine months ended September 30, 2026, this change increased loan program income by approximately $0.9 million compared to the same period in 2025. In addition, 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. The Company is also exploring strategic relationships with additional financial institutions.
●	Access to Additional Capital: On September 17, 2025, the Company entered into the ELOC with an institutional investor (the "ELOC Investor"), under which the Company may, at its sole discretion and subject to customary conditions, sell up to $150.0 million of newly issued shares of Common Stock to the investor party thereto. The ELOC expires on September 17, 2028. For the nine months ended September 30, 2026, the Company raised $1.1 million from the use of the ELOC. The Company's continued ability to access the ELOC is subject to a number of conditions, including the absence of any Material Adverse Effect (as defined in Note 16, Stockholders' Equity, in subsection "Equity Line of Credit and Related Series B Redemption Obligation"), and there can be no assurance that the Company will be able to draw the full amount of the commitment. See Note 16, Stockholders' Equity. In addition, 25% of the proceeds of each draw must be used to redeem shares of Series B Convertible Preferred Stock, and the Company's ability to use the ELOC is limited by the current trading price of the Common Stock.
●	Expense Management: The Company has made strategic investments in marketing, lending and system development. 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.
●	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.

Proposed Transaction. On October 23, 2026, the Company entered into a non-binding term sheet with Opifex, a Beverly Hills, California-based media holding company focused on the creator economy, regarding the Proposed Transaction. The Company does not intend to draw on the ELOC until the earlier of the closing of the Proposed Transaction or the termination of the term sheet. The Company has also agreed not to make certain payments without Opifex's consent while the term sheet is in effect, including voluntary payments to holders of the Series B Securities, litigation settlements, and bonuses, retention or change-of-control payments not previously in effect and disclosed. These restrictions limit the sources of liquidity and the actions available to management during the pendency of the Proposed Transaction.

Notwithstanding the measures described above, the Company continues to incur operating losses and negative cash flows from operations, the ELOC is not expected to be available while the Proposed Transaction is pending, and the Company's ability to execute on its expense-management plans involves elements outside of management's sole control. Accordingly, management has concluded that management's 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 the unaudited condensed consolidated financial statements included in this Quarterly Report are issued. See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, to the unaudited condensed consolidated financial statements.

Litigation

We are a party to litigation in the Court arising from our October 2022 acquisition of Rockview Digital Solutions, Inc. (d/b/a Abaca) ("Abaca"). On April 23, 2026, the Court ruled on the parties' cross-motions for summary judgment. It held that the October 2023 amendment to the Abaca merger agreement is void and that we breached the original merger agreement with respect to the first anniversary parent shares. It reserved damages and the remaining claims, including the counterclaim concerning the $3.0 million second anniversary cash payment, for trial. Trial was held on August 10 and 11, 2026. The Court has not issued its ruling, and we cannot predict when it will rule or the outcome.

We assess a loss as reasonably possible but not probable, and estimate the range of reasonably possible loss at $0 to $7.8 million. Other than the $3.0 million second anniversary payment deposited into the Court's registry in November 2024, which is reflected as deferred consideration and is not available to fund operations, no amount has been accrued.

An adverse ruling at or near the upper end of the range would exceed our cash and cash equivalents of $4.4 million as of September 30, 2026, and could have a material adverse effect on our financial position, results of operations and liquidity. If a judgment is entered against us, we may seek to appeal. However, staying enforcement of a money judgment pending appeal generally requires posting a bond or other security, which we may not be able to obtain or fund.

Legal fees related to this matter were a significant component of professional services expense in 2026, and we expect to continue to incur legal costs through any post-trial proceedings or appeal.

Under the term sheet, Opifex would acquire the Company subject to this litigation, and its resolution would not be a condition to closing.

In addition, the Company may evaluate the possibility of a negotiated resolution of the dispute. While the term sheet for the Proposed Transaction remains in effect, any settlement requires Opifex's consent. The Company's ability to fund any payment in cash would be materially constrained by its available cash. Its ability to raise additional funds would also be constrained by the terms of its existing securities: the Company has agreed not to use the ELOC while the Proposed Transaction is pending, 25% of any ELOC proceeds must be used to redeem Series B Convertible Preferred Stock, and the Series B Securities contain restrictions on certain financings and issuances of equity securities. Litigation is inherently uncertain, and there can be no assurance that any negotiated resolution will be reached or that its terms would be favorable to the Company. See Part II, Item 1A. "Risk Factors-An adverse ruling in the Abaca litigation could have a material adverse effect on our financial position, results of operations and liquidity."

See Note 17, Commitments and Contingencies, to the unaudited condensed consolidated financial statements and Part II, Item 1, "Legal Proceedings."

Critical Accounting Estimates

As of September 30, 2026, there were no significant changes in the application or the nature of accounting estimates that are considered critical in nature from those presented in our Annual Report on Form 10-K.

Emerging Growth Company Status

We are an emerging growth company ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act also provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period, for as long as it is available. We will remain an EGC until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act, which is December 31, 2026, and (b) in which we have total annual gross revenue of at least $1.07 billion, (2) the date on which we are deemed to be a large accelerated filer, which means the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to "emerging growth company" have the meaning provided in the JOBS Act. The Company will cease to be an EGC on December 31, 2026.

Smaller Reporting Company

We are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K, which allows us to take advantage of certain exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the shares of our Common Stock held by non-affiliates exceeds $250.0 million as of the prior June 30, and (ii) our annual revenue exceeded $100.0 million during such completed fiscal year or the market value of the shares of our Common Stock held by non-affiliates exceeds $700.0 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.

Internal Control Over Financial Reporting

In connection with the preparation of our unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2026, we identified material weaknesses in our internal controls over financial reporting. Refer to Part I, Item 4 of this document for additional details.

For the nine months ended September 30, 2026, management has implemented remediation measures to address the material weakness related to the completeness and accuracy of account activity fee income; however, the material weakness will not be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively.

Related Party Relationships

PCCU is the federally regulated credit union through which the Company's CRB clients hold their deposit accounts and obtain loans, and it holds the majority of the Company's client deposits. As of September 30, 2026, PCCU held approximately 8.8% of the Company's Common Stock, 49.2% of the Series B Convertible Preferred Stock and 43.9% of the Series B Warrants. Accordingly, all transactions and arrangements between the Company and PCCU for the three and nine months ended September 30, 2026 and 2025 are presented and disclosed as related party transactions in accordance with ASC 850 and Regulation S-X. PCCU has not had contractual rights to appoint members of the Board of Directors since May 21, 2025.

On October 21, 2026, PCCU sold all 13,340 shares of Series B Convertible Preferred Stock it held to another holder of Series B Convertible Preferred Stock in a privately negotiated transaction to which the Company was not a party. Following the sale, PCCU:

	●	holds no Series B Convertible Preferred Stock;
	●	beneficially owns less than 5% of the Company's outstanding Common Stock;
	●	has no representation on the Board of Directors; and
	●	has no other ability to significantly influence the Company's management or operating policies.

Accordingly, effective October 21, 2026, the Company no longer considers PCCU a related party.

PCCU remains the Company's most significant customer and financial institution partner. It accounted for $5.4 million, or 93%, of total revenue for the nine months ended September 30, 2026, under the Second Amended CAA. The Company's results of operations and liquidity remain highly dependent on that relationship. Further, PCCU continues to hold Series B Warrants to purchase 360,532 shares of Common Stock at an exercise price of $18.6336 per share. See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, Note 10, Related Party Transactions, and Note 18, Subsequent Events to the unaudited condensed consolidated financial statements.