{"url_path":"/sec/shfs/10-q/2026/item-4a","section_key":"item-4a","section_title":"Item 4A Controls and Procedures.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1854963/0001493152-26-023748-index.html","accession_number":"0001493152-26-023748","cik":"0001854963","ticker":"SHFS","issuer_name":"SHF Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1854963/0001493152-26-023748-index.html","primary_entity_key":"0001854963","primary_entity_name":"SHF Holdings, Inc."},"word_count":980,"has_tables":true,"body_markdown":"**Item\n4A. Controls and Procedures.**\n\n \n\n**Evaluation\nof Disclosure Controls and Procedures**\n\n \n\nDisclosure\ncontrols and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded,\nprocessed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is\naccumulated and communicated to our management, including our principal executive officer and principal financial officer or persons\nperforming similar functions, as appropriate to allow timely decisions regarding required disclosure.\n\n \n\nWe\ndo not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and\nprocedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the\ndisclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there\nare resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure\ncontrols and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all\nour control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain\nassumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated\ngoals under all potential future conditions.\n\n \n\nAs required by Rules 13a-15 and 15d-15 under the Exchange Act, our\nChief Executive Officer / Chief Financial Officer and our Principal Accounting Officer carried out an evaluation of the effectiveness\nof the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer / Chief\nFinancial Officer and Principal Accounting Officer concluded that, solely due to the below-mentioned material weaknesses, the Company’s\ndisclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective as of March\n31, 2026.\n\n \n\n**Material\nWeaknesses**\n\n \n\nA\nmaterial weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a\nreasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented\nor detected on a timely basis.\n\n \n\nAs disclosed in Item 9A of the Company’s Annual Report\non Form 10-K for the year ended December 31, 2025, management identified, during the fourth quarter of 2025, a material weakness in internal\ncontrol over financial reporting related to the Company’s loan documentation and expected credit loss estimation process (the “Loan\nDocumentation Material Weakness”). This material weakness arose in connection with the Company’s initial recognition, under the Second\nAmended CAA effective October 1, 2025, of a stand-ready guarantee liability at fair value under ASC 460 and an expected credit loss liability\nunder ASC 326-20. Both measurements rely on underlying CRB loan documentation maintained as part of the Company’s credit administration\nresponsibilities under the Second Amended CAA. In connection with the year-end audit, certain loan documentation used in connection with\nthese measurements was identified as out of date or inconsistent with the terms of the underlying loans. The Loan Documentation Material\nWeakness remained outstanding as of March 31, 2026.\n\n \n\nWhile the Company’s valuation conclusions with respect\nto the stand-ready guarantee liability and the expected credit loss liability were determined to be fairly stated as of March 31, 2026,\nthe absence of a formalized loan documentation review and maintenance process represents a control deficiency that, if not remediated,\ncould result in a material misstatement of the Company’s indemnification liability under ASC 460 or its expected credit loss liability\nunder ASC 326-20 in future periods.\n\n \n\n15\n\n[Table of Contents](#toc_001)\n\n \n\n**Status of Previously Remediated Material Weakness**\n\n \n\nAs also disclosed in Item 9A of the Company’s Annual\nReport on Form 10-K for the year ended December 31, 2025, the previously identified material weakness related to the completeness and\naccuracy of account activity fee income earned on CRB deposits held at PCCU has been remediated. As of March 31, 2026, sufficient time\nhas not yet elapsed to enable management to conclude that the related controls are operating effectively. Management will continue to\nmonitor the operating effectiveness of these controls during 2026.\n\n** **\n\n**Remediation of Loan Documentation Material Weakness**\n\n \n\nManagement is actively engaged in remediating\nthe Loan Documentation Material Weakness. As described in the Company’s Annual Report on Form 10-K, the remediation plan\nincludes the design and implementation of a standardized loan documentation checklist intended to ensure that all relevant inputs\nare consistently captured and considered in the Company’s measurement of the stand-ready guarantee liability under ASC 460 and\nthe expected credit loss liability under ASC 326-20. During the three months ended March 31, 2026, the Company hired a consultant to\nreview the loan program. Management expects to complete the full implementation of the remediation plan by the third quarter of\n2026. The material weakness will not be considered remediated until the applicable controls have been designed and have operated\neffectively for a sufficient period of time, and management has concluded, through testing, that the controls are operating\neffectively.\n\n \n\nA failure to maintain effective internal controls\nover financial reporting could result in errors in our financial statements that could require us to restate past financial statements,\ncause us to fail to meet our reporting obligations, and cause investors to lose confidence in our reported financial information, all\nof which could materially and adversely affect the Company.\n\n** **\n\n**Changes in Internal Control Over Financial Reporting**\n\n \n\nOther than the remediation activities described above\nwith respect to the Loan Documentation Material Weakness, there were no changes in our internal control over financial reporting (as defined\nin Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2026 that have materially\naffected, or are reasonably likely to materially affect, our internal control over financial reporting.\n\n \n\n**PART\nII - OTHER INFORMATION**"}