FAVO S-1: 20,621,250-share resale, 1818 Park and $10M Dolomite pact
Rhea-AI Filing Summary
Stewards, Inc. has filed an S-1 for the resale of up to 20,621,250 shares of common stock by existing investors. The shares include 9,750,000 shares issued in a private placement, 487,500 shares issued as a registration delay payment, and 10,383,750 shares issuable from related warrants and pre-funded warrants. The company will not receive proceeds from these resale transactions, but may receive cash if the warrants are exercised.
Stewards operates two main platforms: a private credit business focused on merchant cash advances to U.S. small and medium-sized businesses, and a real estate division that acquires income-producing properties, including the $190 million stock-for-liabilities acquisition of the 1818 Park mixed-use asset in Florida. The company is also pursuing a measured digital-asset strategy, including a $10,000,000 pre-funded warrant agreement with the Dolomite Foundation paid in $DOLO tokens.
Positive
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As filed with the Securities and Exchange Commission on November 17, 2025.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| 6159 | ||||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code 1.833.328.6477
Spring Valley Solutions, LLC
3651 Lindell Rd Ste D121
Las Vegas, NV, 89103, USA
T: (702) 982-5686
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Scott Doney, Esq. The Doney Law Firm 3651 Lindell Rd Ste D121 Las Vegas, NV 89103 (702) 982-5686 |
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging Growth Company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION DATED NOVEMBER 17, 2025
20,621,250 Shares of Common Stock
This prospectus relates to the resale of up to 20,621,250 shares of common stock, par value $0.0001 per share, of Stewards, Inc . (formerly known as Favo Capital, Inc.) (the “Company,” “we,” “us,” or “our”) by the selling stockholders named in this prospectus. These shares were issued to the selling stockholders pursuant to a Securities Purchase Agreement, in connection with a private placement that closed on December 12, 2024, and July 30, 2025. The shares include 9,750,000 shares of common stock issued in the private placement and an additional 487,500 shares issued as a registration delay payment, as well as 10,383,750 shares issuable upon the exercise of warrants and pre-funded warrants issued in the same private placement.
The selling stockholders may sell the shares from time to time at the market price prevailing at the time of sale, at prices related to such prevailing market prices, or in negotiated transactions or a combination of such methods. See “Plan of Distribution” for a more complete description of the ways in which the shares of common stock may be sold. We will not receive any proceeds from the sales of these shares by the selling stockholders. However, we may receive proceeds from the exercise of the warrants and pre-funded warrants if they are exercised for cash.
Our common stock is currently quoted on the OTC Pink Market operated by OTC Markets Group Inc. under the symbol “SWRD.” On November 14, 2025, the closing price of our common stock on the OTC Pink Market was $7.00 per share. In connection with this offering, we have applied to list our common stock on the Nasdaq Capital Market (“Nasdaq”). We will proceed with this offering even if we are not listed on Nasdaq. No assurance can be given that our Nasdaq listing application will be approved or that the trading prices of our common stock on the OTC Pink Market will be indicative of the prices if our common stock were traded on the Nasdaq Capital Market.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is November 17, 2025.
TABLE OF CONTENTS
| ABOUT THIS PROSPECTUS | 1 | |||
| INDUSTRY AND MARKET DATA | 1 | |||
| TRADEMARKS | 1 | |||
| CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | 2 | |||
| PROSPECTUS SUMMARY | 3 | |||
| RISK FACTORS | 36 | |||
| USE OF PROCEEDS | 78 | |||
| MARKET FOR OUR COMMON STOCK | 78 | |||
| DESCRIPTION OF THE BUSINESS | 79 | |||
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 97 | |||
| MANAGEMENT AND BOARD OF DIRECTORS | 107 | |||
| EXECUTIVE AND DIRECTOR COMPENSATION | 113 | |||
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 118 | |||
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 119 | |||
| DESCRIPTION OF CAPITAL STOCK | 121 | |||
| SELLING STOCKHOLDERS | 125 | |||
| PLAN OF DISTRIBUTION | 127 | |||
| EXPERTS | 128 | |||
| LEGAL MATTERS | 128 | |||
| WHERE YOU CAN FIND MORE INFORMATION | 129 | |||
| INDEX TO FINANCIAL STATEMENTS | 130 | |||
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ABOUT THIS PROSPECTUS
This prospectus constitutes a part of a registration statement on Form S-1 (together with all amendments and exhibits thereto, the “Registration Statement”) filed by us with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”). As permitted by the rules and regulations of the SEC, this prospectus omits certain information contained in the Registration Statement, and reference is made to the Registration Statement and related exhibits for further information with respect to Stewards, Inc. and the securities offered hereby. With regard to any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the SEC, in each instance reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such reference.
You should rely only on information contained in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus. Neither the delivery of this prospectus nor the sale of our securities means that the information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted.
For investors outside the United States: We have not taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities covered hereby and the distribution of this prospectus outside of the United States.
The information in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since those dates.
No person is authorized in connection with this prospectus to give any information or to make any representations about us, the securities offered hereby, or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us.
We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus.
INDUSTRY AND MARKET DATA
We are responsible for the disclosure in this Prospectus. However, this Prospectus includes industry data that we obtained from internal surveys, market research, and publicly available information and industry publications. The market research, publicly available information and industry publications that we use generally state that the information contained therein has been obtained from sources believed to be reliable. The information therein represents the most recently available data from the relevant sources and publications, and we believe remains reliable. We did not fund and are not otherwise affiliated with any of the sources cited in this Prospectus. Forward-looking information obtained from these sources is subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this Prospectus.
TRADEMARKS
We own or have rights to use various trademarks, service marks, and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks, and tradenames of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names, or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks, and trade names referred to in this prospectus may appear without the ®, TM, or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable owner of these trademarks, service marks and trade names.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this prospectus may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, statements regarding our Company and management’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including our financial condition and results of operations. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Other important factors that we think could cause our actual results to differ materially from expected results are summarized below. Other factors besides those listed could also adversely affect us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Statements regarding the following subjects, among others, may be forward-looking:
| • | negative impacts from a continued spread of COVID-19, including on the U.S. or global economy or on our business, financial position, or results of operations; |
| • | market trends in our industry, energy markets, commodity prices, interest rates, the debt and lending markets, or the general economy; |
| • | our plans and expectations regarding future financial results, expected operating results; |
| • | the sufficiency of our cash and our liquidity; |
| • | development of new financial products and improvements to our existing financial products; |
| • | the adequacy of our agreements with our syndicate partners; |
| • | our ability to obtain financing, our ability to comply with debt covenants or cure any defaults; |
| • | actions and initiatives of federal, state and local governments and changes to federal, state and local government policies, regulations, tax laws and rates and the execution and impact of these actions, initiatives and policies; |
| • | our ability to obtain and maintain financing arrangements on favorable terms; |
| • | general volatility of the securities markets in which we participate; |
| • | the impact of weather conditions, natural disasters, accidents or equipment failures, or other events that disrupt our operations or negatively impact the value of our assets; |
| • | availability of and our ability to attract and retain qualified personnel; and |
| • | our understanding of our competition. |
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Forward-looking statements are based on beliefs, assumptions and expectations as of the date of this prospectus. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements after the date of this prospectus, whether as a result of new information, future events or otherwise.
The risks included here are not exhaustive. Other sections of this registration statement may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. You should read this entire prospectus and should consider, among other things, the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, and the exhibits to the registration statement of which this prospectus is a part before making your investment decision. This prospectus contains forward-looking statements and information relating to Stewards, Inc. See “Cautionary Note Regarding Forward-Looking Statements” above.
In this Prospectus, the terms “SWDR,” the “Company,” “we,” “us,” “our” or “ours” refer to Stewards, Inc. and its wholly owned subsidiaries.
Company Overview
We are a diversified financial services company with two complementary business platforms: Private Credit and Real Estate. Our strategy is to provide alternative financing solutions to small and medium-sized businesses (SMBs) underserved by traditional lenders, while also building a portfolio of income-producing and value-enhancing real estate assets. Together, these businesses are designed to broaden our revenue base, strengthen the balance sheet with tangible assets, and support long-term, capital-efficient growth.
The Private Credit Division provides revenue-based funding and related financing products to SMBs nationwide. Since 2020, we have originated more than $153 million in funding and supported over 10,000 businesses across the United States. The Real Estate Division, launched in 2025, targets strategic investments in residential, mixed-use, and commercial properties designed to generate stable rental income and have the potential for long-term value appreciation. These real estate holdings improve our overall capital efficiency by anchoring the balance sheet with durable, income-producing assets, lowering our blended cost of capital, and providing recurring cash flows that enhance liquidity management.
As part of our broader strategic plan, we are pursuing a measured integration of digital-asset technologies across both business segments to enhance liquidity, settlement efficiency, and access to capital. Through partnerships with established financial-technology providers, including the Dolomite Foundation, the Company is developing frameworks for the use of digital payment instruments in its Private Credit operations and evaluating opportunities for tokenization within its Real Estate platform. These initiatives are intended to improve operational transparency, reduce transaction costs, and expand financing optionality within existing regulatory and accounting standards.
While each division operates independently, they are designed to complement one another. The real estate business provides steady, long-term income and strengthens overall financial stability, while the private credit business offers faster-turnover funding with attractive near-term returns. Together, they create a balanced model in which real estate adds stability and efficiency, private credit drives growth, and digital-asset infrastructure provides additional flexibility and modernization of the Company’s capital management strategy.
Private Credit Overview
Our Private Credit Division provides alternative financing solutions to SMBs across the United States. The core of our business is the origination and funding of merchant cash advances (MCAs), both directly and through syndication arrangements with our partners. These MCA activities represent our principal line of business and generate the substantial majority of our revenues.
Since 2020, we have originated over $153 million in capital and supported more than 10,000 SMBs nationwide. We are headquartered in Fort Lauderdale, Florida, with operations in New York and the Dominican Republic. In addition to our MCA business, we occasionally act as a broker for other funders, earning commissions when SMB customers we refer obtain financial products such as MCA or lines of credit. These brokerage activities are ancillary to our MCA operations and represent a smaller portion of our business.
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Our MCA business is conducted through operating subsidiaries that sit under our private credit holding company. These subsidiaries include FAVO Funding LLC, Honeycomb LLC, and Fore Funding LLC, which originate and service MCA transactions. Our brokerage activities, which consist of referring merchants to third-party funders and earning commissions, are conducted through Fore Funding LLC and DBOSS Funding LLC, also held within the same private credit platform.
Merchant Cash Advances
Merchant cash advances (“MCAs”) have evolved as an alternative capital source primarily for small businesses, and they represent the principal product we currently originate and fund. In our MCA transactions, a merchant sells a portion of its future receipts to us at a discount in exchange for an upfront lump-sum payment. The merchant then remits a specified percentage of its sales receipts, typically through daily Automated Clearing House (“ACH”) transfers, until we have received the full amount of purchased receipts.
Unlike loans or securities, MCAs are structured as purchases and sales of future receipts and the assignment of related rights. Our small and medium-sized business (“SMB”) customers typically use these advances for working capital, such as inventory purchases, equipment financing, or other immediate business needs.
While MCAs constitute a core component of our revenue model, we also generate brokerage income on a limited basis by referring merchants to third-party funders for products such as MCAs and lines of credit. These brokerage activities account for a smaller share of our business relative to our directly originated and syndicated MCA portfolios.
We operate a direct and syndication revenue-based funding platform to serve SMBs in need of liquidity to fulfill their financial responsibilities. Through our direct sales, marketing, underwriting, and operational platform, and in collaboration with our six primary Syndication Partners, each of which operates in the same revenue-based financing business as Stewards, we provide funding solutions for customers. These syndication arrangements allow us to participate in a percentage of approved transactions, with participation amounts ranging from 10% to 95% of the deal value. Pursuant to Master Participation Agreements and related agreements, Stewards not only originates and funds transactions but also provides servicing and collection services on behalf of itself and its Syndication Partners. This structure enables us to diversify risk, leverage partner deal flow, and expand the scale of our funding platform while maintaining consistency with our underwriting criteria.
We originate and provide revenue-based financing to businesses primarily through MCAs. We provide convenient, fully automated financial solutions to our customers. An SMB customer who enters into an MCA commits to delivering a percentage of its receipts through ACH or wire debits or by splitting credit card receipts until all purchased receipts are remitted to us.
We believe traditional lenders face a number of challenges and limitations that make it difficult to address the capital needs of SMBs, such as:
§ Organizational and Structural Challenges. The costly combination of physical branches and manually intensive underwriting procedures makes it difficult for traditional lenders to efficiently serve SMBs. They also serve a broad set of customers, including both consumers and enterprises, and are not solely focused on addressing the needs of SMBs.
§ Technology Limitations. Many traditional lenders use legacy or third-party systems that are difficult to integrate or adapt to the shifting needs of small businesses. These technology limitations make it challenging for traditional lenders to aggregate new data sources, leverage advanced analytics and streamline and automate credit decisions and funding.
§ Products not Designed for SMBs. SMBs are not well served by traditional loan products. We believe that traditional lenders often offer products characterized by larger loan sizes, longer durations and rigid collateral requirements. By contrast, SMBs often seek small loans for short-term investments.
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As a result, we believe that SMBs feel underserved by traditional lenders. Our solution was built specifically to address SMBs’ capital needs. We offer products to SMBs to enable them to access capital. We facilitate eligible merchants to secure cash advances and accelerate the growth of their business by providing access to simple, fast, and convenient working capital under MCAs. This structure has some advantages over the structure of a conventional loan. Most importantly, payments towards an MCA can be modified for hardships suffered by a business, giving the merchant greater flexibility with which to manage their cash flow, particularly during an unforeseen event. MCAs are processed much faster than a typical loan, giving borrowers quicker access to capital.
Direct and Syndicated Funding
A key challenge in the merchant cash advance industry is securing sufficient capital to meet strong demand from small businesses. We address this challenge through two complementary channels: (i) direct funding, where we originate, underwrite, fund, and service MCAs on our own balance sheet, and (ii) syndicated funding, where we participate alongside six established syndication partners under Master Participation Agreements. Syndication participation levels generally range from 10% to 95% of each transaction, subject to our investment guidelines.
Our direct portfolio consists of MCAs that we originate and service end-to-end, allowing us to capture full economics, including origination and administrative fees. By contrast, syndicated transactions are originated by our partners, with our participation aligned to our underwriting standards. To manage risk, we actively monitor exposures and do not participate in any syndication arrangement where our share would exceed 40% of a partner’s total portfolio.
We generate revenues from both models: (i) factor rate returns, origination, and administrative fees on our direct portfolio, and (ii) participations in syndicated transactions, supplemented by servicing and collection fees earned on receivables we manage on behalf of partners. This approach balances higher-margin direct fundings with the capital efficiency and risk diversification benefits of syndication. The table below outlines key differences between the two models.
| Aspect | Direct Funding | Syndicated Funding |
| Definition | A single funder provides the entire merchant cash advance directly. | Multiple funders co-fund a single MCA through a syndication structure. |
| Revenue Model | Factor-rate revenues accrue entirely to the direct funder. | Revenues are shared pro rata among participants; the lead funder typically earns servicing fees and profit allocations. |
| Capital Deployment | Fully funded from the company’s own capital. | Capital is pooled from several investors, enabling larger transactions. |
| Risk Exposure | 100% of performance risk rests with the direct funder. | Risk is distributed among participants, limiting exposure for any one investor. |
| Underwriting | Relies solely on the funder’s internal, AI-enabled data-driven underwriting process. | The lead funder applies its underwriting and servicing standards to all participants’ portions. |
| Funding Scale | Constrained by the funder’s available reserves. | Greater capacity to fund larger or multiple deals through pooled participation (e.g., 10%–95% of deal size). |
| Administration | Originator manages servicing, collections, and remittances directly. | The lead funder administers servicing and distributes proceeds to syndicate participants under Master Participation Agreements. |
| Economic Participation | All returns (and losses) accrue to the originator. | Returns are distributed according to participation levels; lead funder receives priority servicing fees. |
| Speed of Execution | Often faster, with fewer parties involved. | May require additional coordination but leverages partner networks for deal flow. |
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Direct vs. Syndicated Funding Structures
In direct fundings, the merchant enters into a bilateral purchase and sale agreement with a single funder. The funder advances its own capital, bears all risk of non-performance, and retains all revenue, including origination fees, administrative fees, and MCA income. The agreement is relatively straightforward, with no third-party stakeholders.
By contrast, syndicated fundings involve multiple parties: the merchant, a lead funder, and syndicate participants (investors or co-funders). The merchant contract is executed with the lead funder, while the syndicate participants enter into a Master Participation Agreement (and, where applicable, Independent Sales Organization agreements) governing their respective rights and obligations. These agreements outline servicing authority, profit-sharing mechanics, and the allocation of risk among participants. Syndicated contracts are inherently more complex than direct fundings, as amendments or enforcement actions require coordination among multiple parties.
In direct fundings, the funder provides the entire advance from its own capital and assumes 100% of the exposure. In syndicated fundings, the lead funder may contribute a portion (e.g., 60%) while syndicate partners contribute the balance (e.g., 40%). Losses are borne pro rata, and syndicate participants typically have limited recourse against the lead funder, except in cases of mismanagement or breach of fiduciary duty. Most syndicated MCAs are structured as non-recourse transactions, meaning the risk of merchant non-performance is shared collectively across all participants.
Syndicated transactions may also carry additional costs, such as platform fees charged by syndication partners (generally 3%–5% of remittances), and administrative costs associated with servicing multiple stakeholders. These fees can increase the effective cost of capital relative to direct fundings.
For direct fundings, our revenue includes origination fees, administrative fees, MCA income, and ancillary fees (e.g., non-sufficient funds, collections, Uniform Commercial Code filings), all recognized over the contract term as payments are received.
For syndicated fundings, we do not typically retain origination or administrative fees. Instead, our revenue is derived from:
• our proportionate share of MCA income
• servicing and collection fees earned as lead funder and servicer, and
• rebates from syndication partners, based on portfolio size and volume.
Year
|
Direct Funding | Syndicated Funding
|
Total Funding
|
| 2023 | $17,284,157 | $17,351,122 | $34,635,279 |
| 2024 | $12,997,355 | $18,025,300 | $31,022,655 |
| YTD Q3 2025 | $5,859,035 | $9,785,698 | $15,644,733 |
Our direct funding portfolio has SMBs across multiple segments and industry types, but most of our merchants fall into the services, construction, and retail industries. These include restaurants, construction and development projects, physical fitness facilities, accounting and bookkeeping practices, home furnishings and equipment stores, and automotive repair shops, among others.
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The composition of our syndication portfolio closely aligns with that of our direct investments, both of which are strategically shaped by evolving market dynamics. Key determinants include macroeconomic conditions, the influence of domestic and international government policy decisions, and the relative advantages of specific U.S. geographic regions. Regulatory and policy environments, whether supportive or restrictive, impact sector performance and are carefully considered in our portfolio construction and allocation strategy.
Although syndication currently represents a larger share of total funding volume, our strategic priority is to expand direct funding given its higher margin profile and greater control over underwriting and servicing economics. The Simplified Acquisition was undertaken specifically to increase our capacity for direct originations. Over time, we expect direct funding to comprise a greater portion of total originations, with syndication continuing to play a complementary role in providing capital efficiency and risk diversification.
MCA – Syndication Partners
We identify leading funders in the industry through market research, funding forums, the Revenue Based Funding Coalition (RBFC), and long-term business relationships, all of which have established underwriting and operational capabilities that allow partners to participate in their deal flow. The RBFC includes funders, brokers, Independent Sales Organizations, and industry vendors that provide technology and operational services to the sector. It was established to educate policymakers and regulators on issues affecting the non-bank commercial finance industry and to support responsible growth of revenue-based financing. At the same time, the MCA industry remains subject to ongoing regulatory scrutiny at both the federal and state levels, and participation in industry groups such as the RBFC reflects our effort to stay aligned with evolving standards and compliance expectations.
We currently maintain relationships with six syndication partners, three core partners and three secondary partners, all of whom operate in the Merchant Cash Advance industry and provide revenue-based financing solutions. From time to time, we syndicate on various deals that our partners have approved for funding, with syndication participation amounts typically ranging from 10% to 95% of the transaction value. These arrangements are governed by Master Participation Agreements and Independent Sales Organization agreements, which establish the terms of engagement and responsibilities of each party.
As part of these syndication arrangements, Stewards originates, funds, and services transactions, including collections, both for its own account and on behalf of its syndication partners. To manage concentration risk, we do not participate in any syndication arrangement where our exposure exceeds 40% of a partner’s total portfolio. We also actively manage participation amounts to ensure diversification and maintain a balanced portfolio mix. All syndication partners are provided with investment guidelines aligned with our internal underwriting standards, and they are required to adhere to those criteria, ensuring consistency and risk alignment across all investments. This framework enables Stewards to leverage the scale and capabilities of its partners to expand access to funding for SMBs while maintaining rigorous risk management discipline.
Brokered Products
In addition to our direct and syndicated MCA operations, we act as an intermediary in brokering financial products, earning commissions from funders when transactions close. Within this category, merchant cash advances and lines of credit are the meaningful contributors, while equipment financing and business term loans comprised the balance. Our activity in U.S. Small Business Administration (SBA) loans and invoice factoring was not material during the reporting period, though these products remain available as part of our platform and may contribute to revenues in the future as merchant demand evolves.
Our role in these transactions is limited to acting as an intermediary: we identify merchants with financing needs, match them with appropriate funders, and earn referral or brokerage fees, typically calculated as a percentage of the funded amount, once the transaction is completed. We do not originate or fund these products directly and do not assume credit risk on the underlying obligations.
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This brokerage activity complements our MCA operations by broadening merchant relationships and creating repeat commission opportunities. Applications are sourced through marketing initiatives, including online advertising, outbound calling, trade show participation, and referrals, with additional support from a call center located in the Dominican Republic. We maintain relationships with a network of funding sources, such as commercial banks, online lenders, SBA-approved institutions, and factoring companies.
Once a funder approves and funds a transaction, our role is complete, and we earn compensation directly from the funder, typically built into the financing cost. By offering MCAs and lines of credit through third-party partners alongside our direct activities, we diversify our revenue streams and expand our reach, while continuing to maintain our primary focus on revenue-based funding solutions.
While brokerage commissions represented approximately 20% of our total revenues for the year ended December 31, 2024, we do not view this segment as a core growth driver. We position brokerage primarily as a complementary offering that broadens merchant relationships, rather than as a business line we intend to scale.
MCA - Cost of Sales
We incur sales commissions costs for direct and syndicated originations. Commission expense is recognized over the term of the deal. Additionally, we incur marketing expenses associated with direct MCA originations. Marketing expenses consist of various lead generation, internet, phone, advertising, and other costs associated with new account originations. Marketing expenses are recognized as incurred.
MCA Platform and Service Fees
For each Syndicated MCA origination, we are charged a platform or servicing fee. The fee is calculated as a percentage of the advance receipt collected on our behalf and is deducted from the amount disbursed.
MCA Credit Losses
Under the current expected credit loss (CECL) model of ASC 326, we recognize an allowance for a portion of the receipts at the time of concluding a deal and additional allowances based on the amount of time since a payment was last received and whether the receivable has been handed over to collections. The approach is based on the Company's internal knowledge and historical default rates over the expected life of the receipts and is adjusted to reflect current economic conditions. This evaluation takes into account the customer's ability and intention to pay the consideration when it is due along with incorporating changes in the forward-looking estimates. If the expected financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly.
Underwriting Process and Credit Assessment of Merchant Customers
Our underwriting process is central to both our direct MCA portfolio and our syndicated funding activities. Each merchant applicant is evaluated using a structured combination of automated data analysis, artificial intelligence (AI), and human review to assess the business’s ability to generate consistent receivables and meet repayment obligations.
We apply a multi-step framework designed to filter out higher-risk applicants and identify merchants most likely to perform, with fewer than 5% of applications proceeding to funding. This process integrates anomaly detection and fraud-prevention tools with professional underwriter judgment, allowing us to evaluate applications efficiently while maintaining credit discipline. Over time, this selective approach has resulted in portfolio performance with loss and default levels consistent with the high thresholds established by our underwriting standards.
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Integration of Artificial Intelligence and Automation
We employ a combination of automation, machine learning, and human oversight within our underwriting process. These tools help authenticate documents, identify inconsistencies, and structure raw data into decision-ready formats. Human underwriters remain responsible for final approvals, ensuring that technology outputs are reviewed within a controlled decision framework.
AI-driven capabilities are applied within secure, compliance-oriented environments. All merchant data is collected with applicant consent, either through direct submissions (e.g., bank statements, tax filings, credit reports) or third-party data-aggregation providers. Data is handled under encryption and access-controlled systems. We do not disclose, sell, or repurpose merchant data for non-underwriting uses.
Key capabilities include:
• Document authentication and fraud detection: Identifying tampering or inconsistencies in submitted records.
• Anomaly detection: Flagging unusual cash-flow activity or mismatches in bank transaction data.
• Automated structuring: Converting bank statements and financial documents into standardized data for review.
• Risk scoring: Predictive models that compare applicants against internal credit parameters.
Applications flagged by automation are escalated for manual review. This blended model allows for efficient processing while maintaining oversight and compliance.
Data Collection and Analysis
We collect a range of information from merchants during the application process, including:
• Traditional credit bureau data (e.g., consumer and commercial credit histories).
• Government and legal records (e.g., state filings, tax records, liens, judgments).
• Behavioral and transactional data (e.g., bank activity, repayment patterns, landlord feedback).
• Digital presence and reputation data (e.g., online visibility, reviews, social media).
• Network-shared performance data from other funders on defaults or fraud.
Because small businesses lack a standardized credit score equivalent to consumer FICO ratings, we supplement bureau data with these alternative sources. Greater emphasis is placed on demonstrated business performance, cash-flow resilience, and repayment history than on an owner’s personal credit profile.
Below is a description of our underwriting process for applicant merchants, with four steps to completion.
1. Initial Screening
✔ Verify document integrity and application completeness. ✔ Apply automatic decline rules (e.g., prohibited industries, prior defaults, negative banking history). ✔ Use anomaly-detection tools to flag inconsistencies in financial submissions. ✔ Confirm business legitimacy through entity verification and basic fraud checks.
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2. Full Underwriting
✔ Analyze business expenses, legal compliance, and online presence. ✔ Review historical bank statements and repayment trends. ✔ Assess revenue concentration, seasonality, and debt obligations. ✔ Supplement automated scoring with underwriter review. ✔ Price transactions according to internal risk models and repayment capacity.
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3. Approval
✔ Transactions are escalated based on size and risk profile: ✔ Up to $35,000: approved by senior underwriters. ✔ $35,000 – $100,000: requires underwriting committee approval.✔ Above $100,000: reviewed by the CFO and requires final approval from the CEO. ✔ Decisions incorporate both model outputs and manual judgment.
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4. Final Verification and Funding
✔ Conduct background checks for legal and financial risks. ✔ Re-verify revenue consistency using most recent bank data. ✔ Confirm terms with a recorded verification call. ✔ Wire transfers are executed by the CFO or Credit Controller, subject to executive authorization. |
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Efficiency and Risk Considerations
Our process is designed to be more efficient than traditional bank lending, generally allowing approvals and funding within 24–72 hours versus weeks for banks. Efficiency is achieved through automated data aggregation, AI-driven anomaly detection, and human oversight.
We depend on third-party providers for certain inputs, such as bank-statement verification, credit bureau data, and fraud detection. Disruptions in these services could affect our ability to process applications efficiently, as described in our risk factors.
Over time, we believe that this disciplined, technology-enhanced underwriting process has contributed to portfolio performance consistent with our selective funding standards, supporting stable cash flows and risk-adjusted returns.
Integration of Digital Asset Strategy within Private Credit
The Company is evaluating the integration of digital-asset infrastructure within its Private Credit operations to enhance liquidity management, settlement efficiency, and transparency across funding channels. As part of this initiative, the Company has entered into a strategic partnership with the Dolomite Foundation, a Cayman-based entity that develops tokenized financial infrastructure and digital-settlement frameworks. Through this relationship, the Company intends to explore the use of U.S.-dollar-denominated digital instruments and related blockchain settlement tools to facilitate the movement of funds among institutional lenders, subsidiaries, and counterparties. The objective of this framework is to shorten funding cycles, reduce transaction costs, and strengthen auditability within the Company’s credit origination, syndication, and servicing processes. The Company’s participation in these activities will be implemented on a measured basis, consistent with applicable banking, securities, and anti-money-laundering regulations, and subject to continuing review by management and external advisors.
Real Estate Overview
Our Real Estate Division, launched in 2025, focuses on acquiring and managing income-producing properties that complement our private credit platform. We target residential, mixed-use, and commercial assets in strategic U.S. markets that provide stable cash flows and have the potential for long-term value appreciation.
The division emphasizes stabilized, cash-flowing properties that diversify revenue streams and strengthen the Company’s overall asset base with tangible collateral. By anchoring the balance sheet in real estate, we enhance institutional creditworthiness, improve access to competitively priced financing, and support capital efficiency. These investments are conducted through subsidiaries established for property acquisition and management, structured to support our real-estate strategy while accommodating applicable noncontrolling preferred interests. The objective of these entities is to broaden our revenue base and support sustainable long-term growth.
Strategic Role of the Real Estate Division
The Real Estate Division plays a complementary role to our MCA and broader private credit operations. Tangible, income-generating real estate assets enhance the depth and quality of our balance sheet, which broadens the collateral base available for institutional financing arrangements and supports access to lower-cost capital. This stronger asset position improves lender confidence and provides flexibility in structuring credit facilities, ultimately enhancing net yields across our MCA originations and related credit activities.
In addition, recurring income from rental streams and condominium sales provides supplemental cash flow that offsets variability inherent in the MCA portfolio. Over time, appreciation in property values may further enhance shareholder value through refinancing or selective asset sales, though the division’s primary role is to improve capital efficiency and financial resilience rather than to serve as a direct source of short-term liquidity.
By combining the steady, asset-backed stability of real estate with the faster turnover and scalability of private credit, the Company aims to create a balanced model that enhances credit quality, reduces overall cost of capital, and supports sustainable growth across both business segments.
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Target Acquisition Strategy
Our real estate division is focused on acquiring well-located, income-producing properties at attractive entry prices relative to replacement cost or market comparables. We target assets in the US that have strong underlying fundamentals and sustained tenant demand, seeking opportunities where operational, leasing, or capital structure enhancements can drive value creation. Our acquisition approach is disciplined and data-driven, evaluating both current income potential and future upside through repositioning or improved capital deployment.
Acquisitions are guided by defined financial criteria. We generally target properties expected to deliver internal rates of return (IRR) and capitalization rate spreads that are accretive to our weighted average cost of capital (WACC). We also consider loan-to-value (LTV) thresholds, projected funds from operations (FFO) contribution, and the stability of expected cash flows in assessing each opportunity. This framework provides consistency in evaluating potential transactions and ensures that capital is allocated with the objective of balancing risk, return, and liquidity.
Value creation is achieved through two primary models:
• Rental Model: We focus on maintaining high occupancy levels, capturing market rent growth, controlling operating expenses, and implementing targeted capital improvements to enhance tenant experience and asset performance.
• Condominium Model: Where applicable, we seek to optimize unit pricing, manage sales velocity, and implement focused marketing campaigns to maximize sales proceeds. While condominium projects may involve higher development and redevelopment costs relative to stabilized rental assets, we evaluate them within a disciplined financial framework that considers expected absorption rates, pricing sensitivity, and project-level return thresholds. Our intent is to maintain a balanced mix, with stabilized rental assets representing the core of the portfolio and condominium projects pursued selectively where market demand and projected returns justify the added risk. In condominium transactions, we also assess occupancy and absorption targets as key performance indicators to ensure that projected timelines and sales velocity align with overall capital allocation discipline.
Exit Strategies
We evaluate multiple exit strategies for each asset at the time of acquisition and throughout the hold period, with the objective of maximizing total return and maintaining flexibility in capital deployment. Our primary strategy is a long-term hold, whereby properties are retained to generate recurring rental income and potential capital appreciation. This approach supports predictable cash flows and strengthens the balance sheet, which in turn improves the Company’s overall capital efficiency and weighted average cost of capital (WACC).
Where market conditions, interest rate environments, or asset performance create favorable opportunities, we may pursue a sale, refinancing, or recapitalization to optimize return on invested capital (ROIC). These decisions are guided by disciplined financial criteria, including expected yields, debt costs, and projected cash-on-cash returns, rather than reliance on asset sales for short-term liquidity. Potential strategies may include selling an asset outright, entering into a joint venture with new capital partners, or refinancing to unlock equity while retaining ownership.
For condominium projects, we may implement a phased sell-down strategy to optimize pricing and absorption rates while managing supply risk. Select units may be retained within the rental portfolio to generate ongoing income and preserve long-term optionality. Across all property types, our exit planning is structured to align with long-term capital allocation discipline, balancing current income generation with capital recycling into higher-yielding opportunities.
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Leasing & Sales
We employ a disciplined, market-responsive approach to both leasing and sales activities, designed to optimize occupancy, rental yields, and asset value across its portfolio. For rental assets, lease structures may include fixed-term agreements, percentage-based leases tied to tenant sales performance, or hybrid models that combine base rent with variable components. Renewal options are strategically incorporated to enhance tenant retention, minimize downtime, and maintain consistent revenue streams. Lease terms are negotiated to align with market demand, asset positioning, and long-term strategic objectives, while protecting downside risk through creditworthy tenant selection and appropriate security provisions.
For assets operated under a condominium sales model, we implement a phased release strategy to manage market absorption and achieve optimal pricing. Units are brought to market in stages, allowing us to respond dynamically to buyer demand, interest rate conditions, and competitive supply. This approach is supported by targeted marketing campaigns, pre-sale strategies, and selective retention of certain units for ongoing rental income or future disposition. By maintaining flexibility in leasing and sales strategies, we seek to balance predictable cash flows with opportunities for potential capital appreciation and value realization.
Property Management
Our property management practices are designed to preserve and enhance asset value while ensuring the operational integrity of our real estate portfolio. Currently, properties are managed by experienced third-party firms engaged under agreements that include defined performance benchmarks addressing occupancy levels, tenant retention, service quality, and cost efficiency.
Management activities focus on timely and responsive tenant service, preventative maintenance programs to extend the useful life of building systems and improvements, and disciplined control of operating expenses. Performance is monitored on an ongoing basis, with operational adjustments implemented as necessary to maintain market competitiveness, mitigate vacancy risk, and support stable long-term income generation.
Performance Monitoring
We employ a structured, data-driven approach to monitoring the performance of our real estate assets to ensure they meet targeted financial and operational benchmarks. Key performance indicators include occupancy levels, net operating income (NOI), lease expiration schedules, rent collection trends, and, for condominium projects, sales velocity and absorption rates. These metrics are reviewed regularly at both the property and portfolio levels, enabling management to identify trends, risks, and opportunities in real time.
Insights derived from this monitoring process inform tactical and strategic decisions, including adjustments to marketing campaigns, leasing incentives, and tenant mix optimization. In addition, capital expenditure priorities are continuously reassessed to ensure that property improvements deliver measurable returns and align with evolving market conditions. This active management framework is intended to maintain asset competitiveness, maximize revenue, and preserve long-term value.
1818 Park
Overview
On July 11, 2025, we entered into multi-entity member interest purchase agreements to acquire 1818 Park, a 281,493-square-foot mixed-use property located in Hollywood, Florida. The asset comprises approximately 237,173 square feet of residential space, 19,737 square feet of commercial space, 16,800 square feet of parking facilities, 5,171 square feet of office space, and 2,612 square feet of storage. The residential component includes 273 rental units in a mix of studios, one-bedroom, two-bedroom, and three-bedroom layouts, of which two are penthouse residences, the largest of which spans 2,319 square feet. The commercial component features a diversified tenant mix including a national bank branch, a hair salon, multiple food and beverage operators, and a 12,000-square-foot food hall. The office component includes one 4,113-square-foot office currently under development and nearing completion. As of August 1, 2025, occupancy was approximately 93%, supported by an established tenant base.
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The acquisition of 1818 Park aligns closely with our real estate division’s acquisition criteria. The property was secured at a favorable price relative to replacement cost and market comparables, in a location (Young Circle) characterized by strong population growth, robust tenant demand, and ongoing economic investment. The asset’s diversified mix of residential, commercial, and food hall space provides multiple income streams and diversification benefits that reduce reliance on any single segment.
Operationally, we intend to pursue initiatives aimed at enhancing occupancy, optimizing lease terms, and implementing targeted capital improvements to support rental growth and tenant retention. In addition, we are evaluating potential refinancing options with respect to the existing Blackstone senior mortgage loan. Any such refinancing, if achieved, may reduce the interest burden and improve the relationship between operating cash flows and debt service requirements. There can be no assurance, however, that such refinancing will be completed on favorable terms, or at all. These initiatives, together with the property’s established tenant base and location within a growth corridor, are expected to strengthen the property’s long-term positioning, while also addressing current cash flow challenges.
Purchase Price and Consideration
On July 11, 2025, we completed the acquisition of the 1818 Park property in Hollywood, Florida through a multi-entity transaction structured as follows:
| • | Block 40 Managers, LLC – Acquired 100% of the membership interests in the property management company responsible for day-to-day operations, tenant services, and facility oversight. | ||
| • | Block 40 Investment Holdings, LLC – Acquired 100% of the membership interests in the investment holding entity, which owns certain contractual rights and interests related to 1818 Park. | ||
| • | Block 40, LLC – Acquired the membership interests in the investment holding entity that owns all assets and certain liabilities of the primary property-owning entity, including the real estate, fixtures and contracts, as well as the existing Blackstone secured mortgage debt and other obligations. | ||
The total purchase price was $190 million, structured entirely as a stock-for-liabilities transaction. Consideration consisted of the issuance of shares of our common stock to the sellers and the assumption of certain indebtedness and other liabilities.
Issuing equity rather than using cash or additional debt preserved liquidity for our private credit operations and avoided incremental leverage that could restrict future financing flexibility. The structure strengthened our balance sheet by adding a substantial income-generating real estate asset, which enhances the Company’s overall capital efficiency, broadens the collateral base considered by institutional lenders, and supports access to more competitively priced financing. By making the seller a shareholder, the transaction further aligns their interests with the Company’s long-term performance and value creation, reinforcing management’s focus on sustainable growth and shareholder returns.
This multi-entity structure ensured continuity of operations, preserved key contractual rights, and facilitated a seamless transition for tenants, positioning the asset for operational stability and long-term value creation.
Acquisition and Financing Structure
The acquisition of 1818 Park was completed through the purchase of all of the membership interests of Block 40, LLC, the entity that owns the property and its related liabilities. As a result, the Company acquired indirect ownership of the real estate asset together with the obligations tied to it. As part of this transaction, the Company assumed a senior secured mortgage loan originally in the principal amount of $84.0 million. Following scheduled principal repayments in the weeks after closing, the outstanding loan balance will be reduced to approximately $73.6 million by Q3 2025.
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On June 1, 2022, Block 40 Property, LLC entered into a senior secured mortgage loan in the original principal amount of $84.0 million with Deutsche Bank, maturing on June 1, 2025. On June 1, 2025, Blackstone, as the new holder of the loan, extended the maturity date by one month. On July 1, 2025, Blackstone further extended the maturity date to June 1, 2026. In connection with the June and July 2025 extensions, the interest rate increased from Term SOFR plus 2.75% to Term SOFR plus 3.00%, and the existing interest rate cap agreement remains in effect. As part of the extension agreements, the borrower was also required to make scheduled principal curtailments, which reduce the outstanding loan balance in line with agreed amortization milestones, to approximately $73.6 million.
The loan is secured by a first-priority mortgage lien on the property, an assignment of leases and rents, and certain reserve and cash accounts, and is generally non-recourse subject to customary carve-outs.
Key Loan Features
| • | Borrower: Block 40 Property, LLC (entity that owns the property and subsidiary of Block 40, LLC) | |
| • | Original Loan Amount: $84.0 million | |
| • | Scheduled Principal Payments: $10,375,000 by September 25,2025 | |
| • | Current Balance (post-closing repayments): Approximately $73.6 million (expected by Q3 2025) | |
| • | Lender / Agent: Blackstone (successor to Deutsche Bank AG, New York Branch) | |
| • | Interest Rate: Term SOFR + 3.00% per annum (floating) | |
| • | Interest Rate Protection: Interest rate cap agreement in place to mitigate rate risk | |
| • | Maturity Date: June 1, 2026 | |
| • | Collateral: First priority mortgage lien on 1818 Park, assignment of leases and rents, security interest in reserve/cash management accounts, and collateral assignment of the interest rate cap | |
| • | Recourse: Non-recourse except for customary carve-outs (fraud, misappropriation, certain covenant breaches) | |
| • | Guaranty of Carry Costs: Personal guaranties from prior owners covering debt service shortfalls, taxes, insurance, and essential operating expenses |
1818 Park Property Management
On November 14, 2025, the Company’s subsidiary, Block 40, LLC, engaged GCF Development, LLC under a Management Agreement dated November 14, 2025, to exclusively manage, lease, operate, and administer our property at 1818 Park. Under the agreement, the Manager will receive monthly fees starting December 1, 2025 including: (i) 5/6 of a $92,031.25 loan-guarantee fee (surviving termination while guarantees exist), (ii) $120,000 overhead/administrative fee, and (iii) $25,000 project-management fee for 18 months. All accrued fees are due by the earlier of seven days post-uplisting or December 19, 2025.
We may terminate on 30 days’ notice with a 12-month break fee if within the first 24 months (no fee thereafter, but loan-guarantee fee persists). Manager may terminate on 60 days’ notice. Manager maintains required liability and E&O insurance, receives broad indemnification for good-faith acts within scope, and may assign to affiliates or successors without consent. The agreement supersedes all prior understandings, and is governed by Florida law.
EB-5 Investor Exchange Offer
As part of the July 11, 2025, acquisition of the Block 40 Entities and Hollywood Circle Capital, LLC, the Company assumed the obligations associated with EB-5 investors in Block 40, LLC. These investors held preferred membership interests with accumulating preferred return features that, absent conversion or repurchase, would have continued indefinitely. The total EB-5 preferred membership interests were included in the $190 million contractual purchase price allocation for the transaction.
Following the acquisition on August 28, 2025, we initiated an offer to these EB-5 investors to exchange their preferred membership interests for shares of our common stock. The objective of this exchange is to reduce the long-term accrual burden associated with the EB-5 preferred return structure, simplify the capital structure, and align the interests of these legacy investors with those of our common stockholders. These obligations are specific to the 1818 Park real estate transaction and are structurally distinct from the Company’s other preferred return arrangements in its private credit business.
On September 30, 2025, the Company executed an exchange agreement offering these EB-5 investors the opportunity to convert their preferred membership interests into shares of the Company’s common stock, with elections due by October 31, 2025. As of the conversion deadline, a total of 16,988,538.00 shares were issued to participating investors. The objective of this exchange was to eliminate the long-term accrual burden associated with the EB-5 preferred return structure, simplify the capital structure, and align the interests of legacy investors with those of the Company’s common shareholders. These obligations are specific to the 1818 Park real estate transaction and are structurally distinct from the Company’s preferred return arrangements within its private credit business.
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Tenant Base
The property generates rental income from both residential and commercial tenants, with residential units comprising the majority of leased space and retail, dining, office, and co-working uses contributing additional revenue. The residential portion consists of multiple unit types, with leases generally structured as fixed-term agreements that include renewal options and periodic rent escalations, and occupancy has remained consistently high across a diversified tenant base. The commercial component includes retail, dining, service, and food hall tenants operating under fixed-rent, percentage-of-sales, and hybrid lease structures, with agreements typically providing base rent, renewal rights, and customary landlord protections, while office and co-working areas are also available for lease to professional tenants and are expected to further contribute to revenue diversification as leasing progresses. No individual tenant represents a material portion of the property’s total rental revenue, and the tenant base is diversified across residential and commercial categories, reducing concentration risk and limiting reliance on any single tenant or use type.
Strategic Integration with Private Credit Operations
The inclusion of 1818 Park in our real estate portfolio strengthens our balance sheet by adding a sizable income-producing asset that generates recurring cash flows. While the property is subject to a first-priority mortgage, both its operating performance and equity value may be considered by institutional lenders in evaluating our credit profile, which could enhance our ability to obtain or negotiate credit facilities at more favorable terms.
The property’s tenant base is diversified across residential and commercial leases. Longer-term commercial leases provide a stable source of revenue, while the recurring turnover and renewal cycle of residential units creates opportunities to adjust pricing in line with prevailing market conditions. This diversification reduces reliance on any single tenant category and mitigates cash flow volatility.
By integrating income-generating real estate into our capital structure, we aim to improve overall capital efficiency by anchoring our balance sheet with tangible assets, providing supplemental cash flows to offset variability in merchant cash advance performance, and supporting access to competitively priced debt financing. This complementary structure aligns with our broader strategy of balancing the higher-velocity nature of private credit activities with the stability and asset backing provided by long-term real estate holdings.
Integration of Digital Asset Strategy within Real Estate
Within its Real Estate segment, the Company is assessing opportunities to apply digital-asset technologies to improve capital efficiency, transparency, and investor participation in property-backed structures. In collaboration with the Dolomite Foundation, the Company is evaluating the development of frameworks that may enable tokenized representations of ownership or participation interests in income-producing properties or related financing instruments. Such structures could, in the future, facilitate fractional participation by qualified investors, expand access to alternative funding channels, and improve secondary liquidity for certain classes of real-estate-linked assets. The Company expects these efforts to be undertaken in coordination with its valuation consultants, auditors, and existing financing counterparties to ensure consistency with prevailing accounting standards, property laws, and securities regulations. Any implementation will be subject to regulatory review and internal governance approval before deployment.
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Digital-Asset Strategy within the Overall Business
The Company has initiated a digital-asset integration strategy designed to enhance operational efficiency and capital management across both its Private Credit and Real Estate segments. Rather than operating as a separate division, this framework is intended to support existing business lines through the measured adoption of digital-finance technologies. The Company is developing relationships with financial-technology providers, including the Dolomite Foundation, to facilitate the use of U.S.-dollar-denominated digital payment instruments and tokenized settlement tools that may improve liquidity and funding flexibility. Within its Private Credit operations, these instruments are expected to streamline the transfer of funds among institutional lenders, subsidiaries, and counterparties, while maintaining adherence to applicable banking, securities, and anti-money-laundering requirements. Within the Real Estate segment, the Company is evaluating the potential use of digital representations of ownership or participation interests in real-asset portfolios to expand access to institutional capital and improve balance-sheet efficiency. All digital-asset activities are being pursued on a limited and controlled basis, subject to ongoing oversight by management and external advisors, and are intended to complement the Company’s core objective of building a diversified, capital-efficient financial platform.
Dolomite Strategic Agreement
On November 3, 2025, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Dolomite Foundation, a Cayman Islands foundation acting for itself and on behalf of its syndicate of investors (the “Dolomite Syndicate”). Pursuant to the Agreement, the Company agreed to issue pre-funded warrants to purchase up to 2,450,980 shares of its common stock. The economic value per warrant share is $4.08, based on the 30-trading-day volume-weighted average price (VWAP) of the Company’s common stock for the period from September 19, 2025 to October 30, 2025. The actual exercise price of the prefunded warrants is $0.0001 per share, with substantially all consideration delivered upfront via $DOLO tokens as in-kind payment. The transaction provides for an aggregate investment amount of $10,000,000, payable in $DOLO tokens as in-kind consideration. The warrants are structured in ten equal tranches of $1,000,000 each, becoming exercisable upon achievement of specified $DOLO 30-day VWAP milestones. Tokens will be held in a jointly controlled multi-signature wallet on the Arbitrum One blockchain, requiring a three-of-four authorization threshold (two company signatories and two investor signatories) for any release. Shares issued upon exercise of the warrants will be subject to a 12-month lock-up period, and all unissued tranches are subject to cancellation in the event that $DOLO’s 30-day VWAP falls below $0.01. The structure is designed to align the Company’s digital-asset exposure with Dolomite’s platform development milestones while minimizing immediate dilution and supporting the Company’s longer-term liquidity and capital-efficiency objectives. Proceeds of the transaction are intended to support continued growth of the Private Credit and Real Estate segments and the controlled implementation of the Company’s digital-asset strategy.
Recent Developments on Financing Strategy
On November 16, 2025, following a comprehensive review of financing alternatives, our Board of Directors ratified the continued use of: (i) the Series A Preferred Stock facility (up to 81,250,000 shares at $0.25 per share, ~$2.5–$3.0 million remaining); and (ii) the $100 million Loan Agreement with Stewards International (8.0% interest, warrants at $0.76/share). The Board determined these are the only viable funding sources currently available. The Board concluded that continued reliance on affiliate financing is necessary to fund operations and growth. Management was directed to cease Series A issuances upon full authorization and to pursue the Loan Agreement only until superior third-party terms are secured.
No external financing alternatives were identified despite active exploration. The company’s bridge raise in 2024 raised $4.3 million but short of the $6 million needed at the time and the offering amounts raised were matched dollar-for-dollar by affiliates of the company. The company could not reach an acceptable agreement for a larger raise with investment bank backing. The company continues to seek the best forms of financing available to it, and lacking available alternatives, plans to use the current financing sources described above.
Revenue Model and Distribution by Offering
We generate revenue through two primary business lines: (i) merchant cash advances and related financing solutions for small and medium-sized businesses, and (ii) real estate activities, including the leasing of residential and commercial spaces and the potential sale of condominium units. For each of these offerings, our revenue model is defined by the contractual terms of our agreements, and our ability to reach customers and counterparties is supported by a mix of direct marketing, referral networks, broker relationships, and strategic partnerships. The following provides a detailed description of how we generate revenue, the types of agreements that govern these activities, our distribution methods, and the degree of customer concentration associated with each line of business.
Merchant Cash Advances (MCAs)
• Revenue Model: We generate revenue from MCAs primarily through factor rates applied to the purchase of future receipts. These receipts are remitted by merchants via daily or weekly automated debits until the purchased amount is satisfied.
• Related Agreements: Each MCA is documented by a standardized purchase and sale agreement, which sets forth the advance amount, purchased receipts amount, remittance schedule, and factor rate. In syndicated MCA transactions, we act as servicer under syndication agreements, earning servicing fees, retained participations, and profit allocations. Syndication agreements generally provide that we manage collections and distribute remittances, with servicing compensation paid on a priority basis.
• Distribution: Applications are sourced through direct marketing, referrals, industry partnerships, and independent sales organizations (ISOs). ISOs submit merchant applications under broker agreements, which typically provide for referral compensation based on funded amounts.
• Customer Dependence: Our MCA activities are diversified across a large number of small and medium-sized businesses. We are not dependent on any single merchant or a small group of merchants, and no individual customer accounts for a material portion of our MCA revenues.
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Real Estate Activities
• Revenue Model: Our real estate strategy contemplates generating revenue from both (i) recurring rental income from residential and commercial leases and (ii) the marketing and sale of condominium units. At present, our revenues are derived exclusively from rental income, which is generated under tenant lease agreements providing for monthly rental payments, security deposits, and customary landlord protections. While the marketing and sale of condominium units remain part of our long-term strategy, no condominium sales have been completed to date, and no revenue has been recognized from condominium transactions.
• Related Agreements: Leasing revenue is governed by lease agreements that specify rental rates, term lengths, renewal options, and maintenance obligations. In the future, condominium sales will be documented through purchase and sale agreements that define purchase price, deposit requirements, and closing conditions.
• Distribution: We market rental opportunities through broker networks, digital and traditional advertising campaigns, referral programs, and on-site promotional activities directed at potential tenants. In anticipation of future condominium sales, we also maintain marketing infrastructure that can be extended to prospective buyers. In certain cases, we establish relationships with co-investors and developers through joint ventures or co-investment agreements to support property development and positioning.
• Customer Dependence: While real estate revenues are inherently more concentrated by project than our MCA activities, we maintain a diversified base of tenants across properties, which reduces reliance on any single tenant. We are not dependent on any single tenant, buyer, or co-investor for our real estate activities.
Distribution
Our financing solutions are marketed and distributed through both direct channels and independent sales organizations (ISOs). A significant percentage of our MCA deal flow is sourced through ISOs, who submit merchant applications to us under broker agreements. We also acquire customers directly through online marketing, referrals, and industry partnerships. We are not dependent on any single customer or a small group of customers for our financing or real estate activities. Our customer base is diversified across a wide range of merchants, developers, and investment partners, which reduces concentration risk and limits dependence on any individual relationship
Our real estate activities currently generate revenue solely from the leasing of residential and commercial spaces within our projects. Leasing revenue is supported by marketing efforts directed at potential tenants, which may include broker networks, digital and traditional advertising, referral programs, and on-site promotional campaigns. While our long-term real estate strategy also contemplates revenue from the marketing and sale of condominium units, no such sales have yet occurred. Compared to our MCA distribution network, real estate revenues are more concentrated by project, but we maintain a diversified base of tenants across properties, which reduces reliance on any single party.
Listing on the Nasdaq Capital Market
Our common stock is currently quoted on the OTC Pink Market. We have applied to list our common stock on the Nasdaq Capital Market ("Nasdaq"). If our listing application is approved, we expect to list our common stock on Nasdaq, at which point our common stock will cease to be traded on the OTC Pink Market. No assurance can be given that our listing application will be approved. This offering will occur even if Nasdaq does not approve the listing of our common stock.
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Implications of Being a Controlled Company
If listed on Nasdaq, we would be a “controlled company” within the meaning of Nasdaq Listing Rule 5615(c) because Vincent Napolitano, Shaun Quin, and Glen Steward (the “Original Board Members”), through a voting agreement governing 10,000,000 shares of Series B Preferred Stock, each with 50 votes per share, collectively control approximately 87% of the voting power of our company.
After listing, our Original Board Members will have the ability to control the outcome of matters submitted to the shareholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets.
Under the Nasdaq Listing Rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group, or another company is a “controlled company” and is permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain corporate governance requirements, including:
• the requirement that a majority of the board of directors consisting of independent directors;
• the requirement that a listed company having a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;
• the requirement that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
• the requirement for an annual performance evaluation of the nominating and governance committee and compensation committee;
On the other hand, a controlled company must still comply with the exchange’s other corporate governance standards. These include having an audit committee and the special meetings of independent or non-management directors. As a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. Although we are eligible to rely on these exemptions, we do not intend to do so, even if we are deemed a controlled company. Instead, we have appointed independent directors (Zachary Graeve and Wael Barsoum) and established fully independent committees to comply with Nasdaq’s standard governance requirements, ensuring robust oversight and enhanced protections for our shareholders. We plan to appoint two additional independent directors at or shortly after listing, such that we will have a majority of independent directors. However, we could elect to rely on these exemptions in the future, and if we do, shareholders would not have the same protections afforded to shareholders of companies subject to all Nasdaq corporate governance requirements.
Name Change
On August 7, 2025, the Board of Directors and a majority of shareholders of the Company approved a change in the name of the Company from Favo Capital Inc. to Stewards, Inc. On November 14, 2025, the Company’s previously announced corporate actions became effective, including its change of name from Favo Capital, Inc. to Stewards, Inc. and the corresponding change of its trading symbol from “FAVO” to “SWRD.”
Reverse Stock Split
On August 7, 2025, our board and a majority of our shareholders approved a reverse stock split within the range of 1-for-2 to 1-for-100 of our issued and outstanding shares of common stock and authorized the Board, in its discretion, to determine the final ratio in connection with the reverse stock split. On November 6, 2025, however, the Company’s board of directors resolved to abandon the reverse stock split. As such, the Company withdrew its application for a reverse stock split with FINRA.
Summary Risk Factors
Investing in our securities involves risks. You should carefully consider the risks described in the “Risk Factors” section beginning on page 36 before deciding to invest in our securities. If any of these risks actually occur, our business, financial condition and/or results of operations would likely be materially adversely affected. In each case, the trading price of our securities would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:
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Risks Related to Our Financial Condition
| • | We have a history of losses, and we may be unable to achieve profitability. |
| • | There is no guarantee that cash flow from operations and/or debt and equity financings will provide sufficient capital to meet our expansion goals, working capital needs or fund our operations. |
| • | We have substantial debt which could adversely affect our ability to raise additional capital to fund operations and prevent us from meeting our obligations under outstanding indebtedness. |
| • | Because we have a limited operating history, you may not be able to accurately evaluate our operations. |
| • | As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all. |
Risks Related to Our Private Credit Business and Industry
· Our growth may not be sustainable and depends on our ability to attract new customers, retain revenue from existing customers and increase sales to both new and existing customers.
· We are subject to risks relating to the availability of capital to fund SMB customers, the ability of our customers to generate sales to remit receipts, general macroeconomic conditions, legal and regulatory risks and the risk of fraud.
· Merchant cash advance businesses have historically been, and may in the future remain, more likely to be affected or more severely affected than large enterprises by adverse economic conditions.
· If merchants provide information to us that is incorrect or fraudulent, we may misjudge a merchant’s qualification to receive a cash advance and as a result, their operating results as well as ours may be harmed.
· An increase in customer defaults rates may reduce overall profitability.
· Allowance for losses is determined based upon both objective and subjective factors and may not be adequate to absorb losses. Merchants may fail to deliver cash advanced income in full.
· Investors have risks from inflation and from deflation.
· Merchant cash advance businesses may be unable to collect cash advance income on the cash advances made to customers.
· We may not be able to successfully implement our growth strategy on a timely basis or at all.
· The merchant cash advance industry is not currently pervasively regulated, however, future regulations or in the way future regulations are applied to the merchant cash advance industry could adversely affect our business.
· Determination by a legislative or judicial body that a cash advance is a loan, rather than a purchase of future receipts, will adversely affect the merchant cash advance business and Company's business.
· Many of our specialty finance investment transactions involve borrowers about which little, if any, information is publicly available, which may impair our ability to identify borrowers able to repay our advances and adversely affect the price of our publicly traded securities.
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· Failure to continue to innovate and respond to evolving technological changes may reduce demand for cash advances.
· Due diligence in merchant cash advance transactions is not as stringent as that of traditional loans, which presents a greater risk of fraud and inaccurate valuations.
· Our growth strategy involves building on our success in financial solutions, which may present risks and challenges that we have not yet experienced.
· The markets in which we participate are highly competitive. We may not be able to compete successfully against current and future competitors.
· The impact of worldwide economic conditions such as inflation and changes in interest rates, including the resulting effect on the operations of and spending by SMBs and on consumer spending, may adversely affect our business, operating results and financial condition.
· Our business could be harmed if we fail to manage our growth effectively and efficiently.
· Our brand is integral to our success. If we fail to effectively maintain, promote and enhance our brand, our business and competitive position may be harmed.
· Our growth depends in part on the success of our strategic relationships with third parties.
· Security breaches, denial of service attacks, or other hacking and phishing attacks on our systems or other security breaches, including internal security failures, could harm our reputation or subject us to significant liability, and adversely affect our business and financial results.
· System failures, interruptions, delays in service, catastrophic events, inadequate infrastructure and resulting interruptions in the availability or functionality of our platform could harm our reputation or subject us to significant liability, and adversely affect our business and financial results.
· Interruptions or other issues in the proper functioning of or upgrades to our information technology systems could cause disruption to our operations.
· We store personal and other information of our partners, our customers and their consumers and our employees. If the security of this information is compromised or is otherwise accessed without authorization or is perceived to be compromised or accessed without authorization, our reputation may be harmed, and we may be exposed to liability and loss of business.
· Significant increases in the cost or decreases in the availability of the insurance we maintain could adversely impact our financial condition.
· Because we are a “Smaller Reporting Company,” we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less company information than they would receive from a public company that is not a Smaller Reporting Company.
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· Our reliance on syndication partners and contractual arrangements for funding MCAs exposes us to risks if such partners reduce participation, fail to perform, or terminate agreements
· Our dependence on ISOs and other third-party distribution partners for a significant portion of originations subjects us to risks relating to partner performance, regulatory compliance, customer quality, and potential concentration of deal flow.
· Our use of AI, machine learning, and automated tools, together with reliance on third-party data providers, exposes us to risks involving accuracy, operational continuity, data security, and regulatory scrutiny, any of which could materially affect our ability to underwrite, detect fraud, and manage credit risk.
· Our debt financing arrangement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund) increases our fixed debt obligations and may result in shareholder dilution upon the future exercise of associated warrants.
Risks Related to Our Real Estate Business and Industry
· Because we have limited operating history in real estate relative to more established participants, we may face challenges in executing and scaling our strategy, which could materially and adversely affect our results.
· Because repositioning, redevelopment, or execution of our real estate investment strategy may involve construction risk, leasing challenges, regulatory delays, or cost overruns, we may not achieve anticipated returns, and our results of operations and financial condition could be materially and adversely affected.
· Because the value of our properties securing mortgage loans may decline due to market conditions, operational performance, or other factors, the collateral may not be sufficient to repay the indebtedness in the event of a foreclosure or forced sale, which could materially and adversely affect our financial condition and results of operations.
· Because our ability to grow our real estate portfolio depends on sourcing and successfully closing attractive acquisitions on favorable terms, any inability to identify, negotiate, or complete acquisitions in a timely manner, or at expected values, could adversely affect our growth strategy and financial results.
· Because our real estate portfolio is concentrated in select geographic markets, our operating results are subject to local economic conditions, regulatory environments, and real estate market trends in those areas, and adverse developments in these markets could disproportionately affect our performance and financial results.
· We face competition from established real estate owners, operators, and developers with greater resources, market presence, and operating experience, which may limit our ability to source acquisitions, attract tenants, achieve favorable lease terms, or realize our business objectives.
· The valuation of our real estate assets is inherently uncertain and may not accurately reflect the prices we could realize upon sale or refinancing, which could result in material differences between reported values and actual transaction outcomes.
· Market rents and real estate sales prices are subject to fluctuations driven by local supply and demand dynamics, interest rate environments, capital market conditions, and broader economic cycles, and such volatility could materially impact our rental income, asset valuations, and the proceeds we realize upon a sale or refinancing.
· Our real estate revenues depend on our ability to successfully attract condominium buyers and tenants through broker networks, advertising campaigns, referrals, and promotional efforts, and any failure or increased cost in executing these strategies could materially impact sales velocity, occupancy rates, and pricing power.
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Risks Related to 1818 Park
· Our high leverage, upcoming loan maturity, and dependence on refinancing expose us to significant risks, including increased sensitivity to property performance and interest rates, and the possibility that we may be unable to refinance on acceptable terms or may be forced to sell the property under adverse conditions.
· Our exposure to floating interest rates increases our sensitivity to changes in market rates, and rising interest rates could significantly increase our debt service costs, reduce cash flow, and adversely affect our financial condition.
· Our ability to generate rental income depends on maintaining high occupancy levels and stable tenant performance, and any decline in occupancy, increased lease turnover, or tenant defaults could reduce cash flows and adversely affect our financial condition.
· A significant portion of our rental income is derived from a limited number of tenants, and if these tenants experience financial difficulties, default on their leases, or choose not to renew, our revenues could be materially and adversely affected.
· Our financial performance is heavily influenced by local market conditions and broader economic trends, and adverse changes in employment levels, consumer demand, interest rates, or the supply of competitive properties could materially and adversely affect occupancy rates, rental income, and property values.
· We may require additional capital to support operations, fund improvements, or meet debt service obligations, and if we are unable to generate sufficient cash flow from the property or access financing on favorable terms, our liquidity could be constrained, forcing us to defer capital projects, seek dilutive equity, or dispose of assets under unfavorable conditions.
· Our ownership and operation of 1818 Park exposes us to property-specific risks, including physical condition issues, unanticipated capital expenditures, changes in local market demand, competition from nearby properties, and compliance with zoning, building, and environmental regulations, any of which could increase costs, reduce occupancy, or adversely affect the value and cash flow of the property.
· Integration of 1818 Park into our broader company operations may present challenges, including aligning property management systems, financial reporting, compliance controls, and strategic priorities, which could increase costs, divert management attention, or limit our ability to realize expected synergies.
· Our acquisition of 1818 Park through a stock-for-liabilities transaction and the subsequent exchange of EB-5 investor interests for equity expose us to risks related to leverage, dilution, regulatory oversight, and investor relations.
· Because we have limited operating history in real estate relative to more established participants, we may face challenges in executing and scaling our strategy, which could materially and adversely affect our results.
· Because repositioning, redevelopment, or execution of our real estate investment strategy may involve construction risk, leasing challenges, regulatory delays, or cost overruns, we may not achieve anticipated returns, and our results of operations and financial condition could be materially and adversely affected.
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· Because the value of our properties securing mortgage loans may decline due to market conditions, operational performance, or other factors, the collateral may not be sufficient to repay the indebtedness in the event of a foreclosure or forced sale, which could materially and adversely affect our financial condition and results of operations.
· Because our ability to grow our real estate portfolio depends on sourcing and successfully closing attractive acquisitions on favorable terms, any inability to identify, negotiate, or complete acquisitions in a timely manner, or at expected values, could adversely affect our growth strategy and financial results.
· Because our real estate portfolio is concentrated in select geographic markets, our operating results are subject to local economic conditions, regulatory environments, and real estate market trends in those areas, and adverse developments in these markets could disproportionately affect our performance and financial results.
· We face competition from established real estate owners, operators, and developers with greater resources, market presence, and operating experience, which may limit our ability to source acquisitions, attract tenants, achieve favorable lease terms, or realize our business objectives.
· The valuation of our real estate assets is inherently uncertain and may not accurately reflect the prices we could realize upon sale or refinancing, which could result in material differences between reported values and actual transaction outcomes.
· Market rents and real estate sales prices are subject to fluctuations driven by local supply and demand dynamics, interest rate environments, capital market conditions, and broader economic cycles, and such volatility could materially impact our rental income, asset valuations, and the proceeds we realize upon a sale or refinancing.
· Our real estate revenues depend on our ability to successfully attract condominium buyers and tenants through broker networks, advertising campaigns, referrals, and promotional efforts, and any failure or increased cost in executing these strategies could materially impact sales velocity, occupancy rates, and pricing power.
Risks Related to the Dolomite Transaction and the Company’s Digital-Asset Activities
• The Company’s recent financing transaction involving digital tokens presents unique risks, including volatility, valuation uncertainty, and evolving regulatory treatment.
• Because the Company’s investment proceeds under the Securities Purchase Agreement are tied to the market value of a single digital token, significant volatility in the $DOLO token price could lead to unpredictable funding levels, valuation changes, and potential tax or liquidity impacts that may adversely affect the Company’s financial condition.
• Tokens issued under the Securities Purchase Agreement are subject to contractual, market, and regulatory restrictions that may delay or prevent their conversion into cash or other usable assets, constraining the Company’s ability to fund operations, repay obligations, or deploy capital in accordance with its strategic objectives.
• Because digital-asset custody depends on emerging technologies and valuation relies on prices from non-regulated markets, the Company may encounter risks related to loss, misstatement, or differing interpretations of applicable accounting standards, which could lead to delays, restatements, or increased audit scrutiny.
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• As regulatory expectations evolve and public scrutiny of digital-asset participation increases, the Company’s association with token-based financing and blockchain initiatives may result in heightened compliance review, delays in listing approval, or negative investor perception, any of which could impact access to capital and market valuation.
• Because the delivery and custody of tokens under the Securities Purchase Agreement depend on the performance and reliability of the Dolomite Foundation and its designated escrow agents, any operational failure, insolvency, or breach by those parties could result in delayed funding, loss of tokens, or limited ability to enforce contractual rights.
• Changes in tax or financial-reporting treatment of digital-asset transactions could increase the Company’s tax liabilities, create reporting mismatches, or require restatements.
• Failures, vulnerabilities, or cyberattacks affecting blockchain networks or custody systems could result in loss or misstatement of the Company’s digital assets.
• Because the Company’s token holdings under the Securities Purchase Agreement are limited to $DOLO, a single digital asset issued by a third-party platform, adverse movements in the digital-asset market or unfavorable regulatory developments affecting similar tokens could have a disproportionate impact on the Company’s liquidity, valuation, and overall financial condition.
• Changes in accounting or classification standards for digital assets could require the Company to revise its financial reporting, resulting in restatements or compliance costs.
Risks Related to Acquisitions
| • | We have in the past made, and in the future may make, acquisitions and investments that could divert management’s attention, result in operating difficulties and dilution to our shareholders and otherwise disrupt our operations and adversely affect our business, operating results or financial position. |
| • | Businesses we acquire may not have disclosure controls and procedures and internal controls over financial reporting, cybersecurity controls and data privacy compliance programs, or their existing controls and programs may be weaker than or otherwise not in conformity with ours. |
| • | We may consider potential business or asset acquisitions in different industries, and stockholders may have no basis at this time to ascertain the merits or risks of any business or asset that we may ultimately operate or acquire. |
| • | Resources will be expended in researching potential acquisitions and investments that might not be consummated. |
| • | Subsequent to an acquisition or business combination, we may be required to take write-downs or write-offs, incur restructuring costs, and incur impairment or other charges that could have a significant negative effect on our financial condition, results of operations, and share price, which could cause stockholders to lose some or all of their investments. |
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Risks Related to Our Management and Control Persons
· We rely heavily on our management, and the loss of their services could adversely affect our business.
· Our status as a controlled company and the concentration of voting power among our Founders could limit your ability to influence corporate matters.
· If we are unable to attract and retain qualified personnel, especially our design and technical personnel, we may not be able to execute our business strategy effectively.
· Provisions in the Nevada Revised Statutes and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.
· Our officers and directors have limited experience managing a public company.
Risks Related to Legal Uncertainty
· Claims made against us from time to time can result in litigation that could distract management from our business activities and result in significant liability or damage to our brand.
· We may be classified as an inadvertent investment company if we acquire investment securities in excess of 40% of our total assets.
· We may be subject to tax and regulatory audits which could subject us to liabilities.
· Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.
· Nevada law and certain anti-takeover provisions of our corporate documents could entrench our management or delay or prevent a third party from acquiring us or a change in control even if it would benefit our shareholders.
· If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common shares.
· Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
· Deficiencies in disclosure controls and procedures and internal control over financial reporting could result in a material misstatement in our financial statements.
· There may be deficiencies with our internal controls that require that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions by the SEC.
· We may be unable to protect our intellectual property from infringement by third parties, and the third parties may claim that we are infringing on their intellectual property, either of which could materially or adversely affect us.
· We may be exposed to liabilities under the Foreign Corruption Practices Act and any determination that we violated these laws could have a materially adverse effect on our business.
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Risks Related to Our Securities
| • | We have the right to issue additional common stock and preferred stock without the consent of our stockholders, which would have the effect of diluting investors’ ownership and could decrease the value of their investment. |
| • | Our Series A Preferred Stock, and all of our existing and future indebtedness rank senior to our common stock in the event of a liquidation, winding up or dissolution of our business. |
| • | We do not expect to pay dividends on our common stock in the foreseeable future. Any return on investment may be limited to the value of our common stock. |
Risks Related to the Market for our Stock
| • | If a market for our common stock does not develop, shareholders may be unable to sell their shares. |
| • | The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control. |
| • | Because we are subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced. |
| • | We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted. |
| • | If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline. |
| • | FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities. |
| • | We may be unable to protect our intellectual property from infringement by third parties, and the third parties may claim that we are infringing on their intellectual property, either of which could materially or adversely affect us. |
| • | We may be exposed to liabilities under the Foreign Corruption Practices Act and any determination that we violated these laws could have a materially adverse effect on our business. |
Risks Relating to this Offering
| • | The market price of our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares. |
| • | There is no assurance that once listed on the Nasdaq Capital Market we will not continue to experience volatility in our share price. |
| • | The number of shares being registered for resale with this offering is significant in relation to our outstanding shares. |
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Corporate History
We were incorporated on July 12, 1999, in the State of Nevada under the name “Beeston Enterprises Ltd.” Since the middle of 2006 to 2014, the Company has been in the exploration stage, primarily engaged in the acquisition, exploration, and development of mining properties.
On October 4, 2018, the District Court of Nevada appointed Custodian Ventures, LLC as custodian for Beeston Enterprises Ltd., proper notice having been given to the officers and directors of Beeston Enterprises Ltd. There was no opposition. The custodianship was granted by the court because the prior officers and directors of Beeston Enterprises Ltd. had abandoned its business and had failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets in accordance with Chapter 78 of the Nevada Revised Statutes.
On October 12, 2018, we filed a certificate of reinstatement with the state of Nevada, and appointed David Lazar as President, Secretary, Treasurer and Director.
On March 5, 2003, we filed an SB-2 registration statement. On October 29, 2018, we filed a Form 15 with the Securities and Exchange Commission to suspend the Company’s Section 15(d) reporting obligations under the Exchange Act.
On December 12, 2018, Custodian Ventures, LLC sold (i) the 25,000,000 shares of Series C Preferred Stock to Vincent Napolitano, (ii) 5,000,000 shares of common stock to Liro Holdings, LLC, and (iii) 468,350,000 shares of common stock to Favo Group, LLC for an aggregate purchase price of $175,000. At this point there was a change of control of our company and David Lazar resigned as President, Secretary, Treasurer and Director and Vincent Napolitano was appointed as President, Secretary, Treasurer and Director.
On December 26, 2018, we changed our name to Favo Realty, Inc. and we received a market effective from FINRA on January 9, 2019. At the time, we were a real estate investment company, intending to invest in a diversified portfolio of quality commercial real estate properties and other real estate investments located throughout the United States and Puerto Rico.
On January 9, 2019, we received a market effective date from FINRA for a 1-for-50 reverse stock split on our common stock outstanding, as well as a change in symbol to “FAVO.”
On April 6, 2019, we acquired RLT Atwood, a cryptocurrency mining operation listed on Merj Exchange (Seychelles Stock Exchange) with its mining operations in Sweden and created FAVO Blockchain Inc.
On January 31, 2020, we entered into a stock purchase agreement with Basebay, LLC. Pursuant to the agreement, we sold Favo Blockchain Inc., our wholly owned subsidiary, to Basebay, LLC. With this transaction, we no longer operate in the crypto-currency industry.
On September 2, 2020, we changed our name from Favo Realty, Inc. to Favo Capital, Inc., which is the point at which our business changed from a real estate investment company, to a private credit company providing alternative financing solutions to small and medium-sized businesses (SMBs) across the United States.
On May 31, 2023, we entered into an acquisition and financing agreement between the principals of FAVO Group and Stewards Investment Capital Limited. As part of the acquisition, the principals of FAVO Group transferred 100% of their membership interest in Favo Group LLC, FAVO Group Human Resources, LLC, FAVO Funding LLC, Honeycomb Sub Fund LLC, FORE Funding LLC, FORE Funding CA LLC and FAVO Funding CA LLC into our company. These consolidation entities with Stewards, Inc. are referred to herein as the “FAVO Group of Companies.” Stewards Investment Capital Limited will also serve on the advisory board for a 3 year term and for these services they will receive 15,000,000 shares of the Company’s common stock.
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Business activities of the entities acquired through common control is as follows:
• Favo Group LLC- Acted as the management company and tasked with ensuring smooth operations across all entities.
• Favo Funding LLC- Direct Merchant Cash Advance Funder.
• Stewards Inc syndicated deals with FAVO Funding LLC.
• Honeycomb Sub Fund LLC- Syndication company that syndicates on deals with other third-party funders.
• Fore Funding LLC- The sales office for FAVO Funding LLC and also acts as broker for other third-party funders.
• Favo Funding CA LLC- Direct Merchant Cash Advance Funder for businesses in California state, no activity for the periods presented.
• Fore Funding CA LLC- Sales office for business in California state, no activity for the periods presented.
• Favo Group Human Resources LLC- Payroll processing for Stewards Inc.
As consideration for the acquisition, the Company will pay $14,200,000 in cash, Senior Secured Notes and equity to an entity (FAVO Holdings LLC) owned by the previous members, namely Shaun Quin and Vincent Napolitano.
The Company raised the financing for this transaction by selling 18 million shares of its Series A Preferred Stock at $0.25 for total of $4,500,000. $4,500,000 in cash has been paid to the principals of FAVO for the transfer of their membership. $2,500,000 of this financing was paid on the closing date of this transaction. The remaining $2,000,000 was paid as follows: $1,250,000 on August 31, 2023, and the remaining $750,000 on October 26, 2023.
The Company currently has an outstanding debt note from its acquisition of the FAVO Group of Companies, dated June 1, 2023, in the aggregate principal face value amount of $4,700,000, which requires payments of $1,500,000 on May 31, 2024, which has been made, $1,600,000 due on May 31, 2025 which has been paid, and the final payment due on May 31, 2026, for $1,600,000. The interest rate per annum is variable on the three payments of 6%, 3% and 1%, respectively.
On June 7, 2023, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase our authorized shares of preferred stock from 25,000,000 shares to 50,000,000 shares, par value $0.0001 per share. The Amendment did not increase our authorized shares of common stock, which remained at 500,000,000 shares, par value $0.0001 per share.
On November 27, 2023, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase our authorized shares of preferred stock from 50,000,000 shares to 100,000,000 shares, par value $0.0001 per share. The Amendment did not increase our authorized shares of common stock, which remained at 500,000,000 shares, par value $0.0001 per share.
On November 29, 2023, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Certificate of Designation for the Series C Preferred Stock to decrease our authorized shares of Series C preferred shares from 25,000,000 shares down to 18,750,000 shares.
On November 29, 2023, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Certificate of Designation for the Series A Preferred Stock to increase our authorized shares of Series A preferred shares from 20,000,000 shares up to 81,250,000 shares.
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On January 2, 2024, the Company completed the acquisition of the proprietary software platform and call center operations of LendTech CRM Solutions LLC, Believe PMF EIRL, and DBOSS Funding, LLC (collectively, the “Simplified Acquisition”). We refer to this transaction as the “Simplified Acquisition” because it involved the purchase of a group of affiliated businesses and assets (together, the “Simplified Companies”) through a single coordinated transaction structure, rather than separate acquisitions of each entity. The total consideration for the Simplified Acquisition was approximately $2,167,996, consisting of 1,000,000 shares of the Company’s restricted common stock issued at closing, an additional 2,000,000 shares to be issued on each of the first and second anniversaries of the closing date, $400,000 in cash, and $692,469 in deferred commission measured at fair value. Of this total, approximately $1,650,000 represented the consideration paid specifically for the proprietary software platform and call center operations. Based upon the timing of the Simplified Acquisition, the Company’s consolidated financial statements for the year ended December 31, 2024 reflect the results of Stewards for the portion of the period after the completion of the Simplified Acquisition. The Company’s consolidated financial statements for the year ended December 31, 2023 do not reflect the results of the Simplified Companies.
The Simplified Companies are engaged in the business of using proprietary software and call centers in the Dominican Republic and Florida to offer secured and unsecured financial products and services to clients with funders across the United States. The business generates revenue primarily from commissions earned from funders.
The primary reason for the business combination was to grow our direct funding business and improve overall margins by leveraging the synergies between the Company and the Simplified Companies.
In connection with our operations, we entered into a Business Commission Agreement dated December 21, 2023, with Robinpaws, LLC, a Florida limited liability company solely owned by Robin Nadeau-Camus. The agreement was a condition of a larger asset purchase transaction and provides for a four-year term. Under the original agreement, Robinpaws agreed to refer new business clients to Favo Capital, Inc. in exchange for a combination of fixed annual compensation and commissions.
On January 24, 2025, the agreement was amended to significantly modify the compensation structure, particularly for renewals and lender bonuses. The amendment introduced a new two-tiered structure for renewals, whereby a 50% commission is paid only if the renewal falls within specific qualifying categories, such as renewals with the same lender paying off an existing position, LOC or equipment financing arrangements, collateral-based programs, or one-position payoffs. Renewals not meeting these criteria are treated as “new business” and paid at the tiered new business commission rates of 0.75% or 1.25%. The amendment also reduced the commission on lender bonuses and professional service fees from 50% to 30%. All other material terms of the original agreement remained in effect.
During the year ended December 31, 2023, the agreement generated no commission expense. For the year ended December 31, 2024, the agreement generated approximately $489,557 in commission expense. For the six months ended June 30, 2025, the agreement generated approximately $312,616 in commission expense.
On February 15, 2024, the Company filed with the Secretary of State of the State of Nevada Amended and Restated Articles of Incorporation.
On September 9, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain purchasers (the “Purchasers”) for the purchase and sale of Company’s securities. In an initial closing, the Company issued 8,000,000 of the Common Units, each such Common Unit consisted of one share of the Company’s common stock with a par value $0.0001 per share (“Common Stock”), common warrants (“Warrants”) to purchase one Common Stock, for every one share of common stock purchased and a pre-funded warrant (“Pre-funded Warrant”) to purchase 3/200th share of Common Stock purchased. Pursuant to the Securities Purchase Agreement, the Common Units were sold at a purchase price of $0.25 per share, with five-year Warrants having exercise price of $0.40 per share and the Pre-funded Warrants having exercise price of $0.0001 per share.
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The sale of the Units to the Purchasers closed on December 12, 2024. The aggregate gross proceeds to the Company from the December 2024 offering were approximately $2,000,000 before deducting placement agent fees and expenses and other transaction costs of $207,600.
On May 8, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase 32,000,000 shares of Series A preferred shares for a total investment of $8,000,000.
On May 9, 2025, Vincent Napolitano, our officer, director and majority shareholder of the Company issued a notice of conversion to our company to convert 18,750,000 shares of his Series C Preferred Stock into 18,750,000 shares of our company’s common stock, as provided for under the Certificate of Designation, as amended, for the Series C Preferred Stock.
On the same date, we instructed our transfer agent to convert the 18,750,000 shares of Series C Preferred Stock into common stock and, as per the instructions of Mr. Napolitano, to issue 18,750,000 new shares of common stock to entities related to our officers and directors, as follows:
VK Nap Family (10,359,375 shares)
S & T Quin Family Limited Partnership (5,578,125 shares)
Stewards Investment Capital (2,812,500 shares)
As a result of the above conversion, there are no outstanding shares of our Series C Preferred Stock and there has been an increase in our outstanding shares of common stock of 18,750,000 shares.
On July 11, 2025, the Company entered into and closed on three separate membership interest purchase agreements (“MIPAs”), two of which were for the purchase of all of the outstanding membership interests in Block 40 Investments Holdings, LLC and Block 40 Managers, LLC (the “Block 40 Entities”) from the member owners of the Block 40 Entities and the last for the purchase of all of the outstanding membership interests that Hollywood Circle Capital, LLC held in Block 40, LLC (the “Transaction”). In exchange, the Company agreed to issue an aggregate of 69,636,906 shares of our restricted common stock to the member owners of the Block 40 Entities pro rata to their holdings, valued at $0.76 per share, and for the membership interests that Hollywood Circle Capital, LLC held in Block 40, LLC.
The Block 40 Entities and Hollywood Circle Capital, LLC own 100% of the membership interests of Block 40, LLC (“Block 40”). Block 40 owns 1818 Park, a modern, mixed-use development that features residential, office, and retail components. The property, detailed at 1818Park.com, is a newly built, stabilized asset boasting high occupancy and long-term lease agreements across its tenant base, offering durable cash flow and positioning Stewards in the heart of Young Circle, one of South Florida’s most vibrant commercial hubs.
On July 14, 2025, the Company signed subscription agreements with Forfront Capital LLC to purchase 1,000,000 shares of Series A preferred shares for a total investment of $250,000.
In a second closing under the initial Securities Purchase Agreement dated September 9, 2024, the Company issued 1,750,000 Common Units to the Purchasers. Each Common Unit was sold at a purchase price of $0.25 per share and consisted of one share of common stock, a five-year warrant exercisable at $0.40 per share, and a pre-funded warrant exercisable at $0.0001 per share. The sale of the Common Units closed on July 30, 2025, resulting in aggregate gross proceeds of approximately $437,500, before deducting placement agent fees, expenses, and other transaction costs totaling $51,350.
Pursuant to the terms of the initial Securities Purchase Agreement, the Company subsequently issued an additional 5% in common stock and 5% in warrants to all participants from both the first and second closings, in connection with an extension of the effectiveness deadline to December 31, 2025. As a result, the Company issued 487,500 shares of common stock and warrants to purchase 487,500 shares of common stock to the investors.
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Effective August 1, 2025, the Company transferred its 100% interest in FC Sub Fund LLC (the “VIE”) to Forfront Capital LLC for a consideration of $1. Forfront is a related party. The VIE was not previously consolidated by the Company, as the Company was not the primary beneficiary of the VIE. The Company is still continuing its involvement with the entity in the form of a 2% management fee arrangement for managing the VIE’s assets.
On August 4, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase 4,000,000 shares of Series A preferred shares for a total investment of $1,000,000.
On August 7, 2025, the Board of Directors and a majority of shareholders of the Company approved a change in the name of the Company from Favo Capital, Inc. to Stewards Inc. On November 14, 2025, the Company’s previously announced corporate actions became effective, including its change of name from Favo Capital, Inc. to Stewards, Inc. and the corresponding change of its trading symbol from “FAVO” to “SWRD,”
On August 7, 2025, our board and a majority of our shareholders approved a reverse stock split within the range of 1-for-2 to 1-for-100 of our issued and outstanding shares of common stock and authorized the Board, in its discretion, to determine the final ratio in connection with the reverse stock split. On November 6, 2025, however, the Company’s board of directors resolved to abandon the reverse stock split. As such, the Company withdrew its application for a reverse stock split with FINRA.
On August 25, 2025, we filed a withdrawal of our certificate of designation, as amended, for our Series C Preferred Stock.
On August 25, 2025, our board and shareholders approved the creation of Series B Preferred Stock and we later filed a certificate of designation with the State of Nevada. The certificate of designation provides that 10,000,000 authorized shares of preferred stock are designated as Series B Preferred Stock. The Series B Preferred Stock shall have no value in the event of the liquidation of our company or any rights to distributions declared by our company. After five years, the Series B Preferred Stock is convertible into shares of Common Stock on a 1 for 1 basis. Each share of Series B Preferred Stock is entitled to fifty (50) votes on any matter brought before the voting shareholders of our company.
Also on August 25, 2025, we entered into a Conversion Agreement with Forfront, LLC, an affiliate of our company, for it to convert 10,000,000 shares of Series A Preferred Stock into 10,000,000 shares of our newly created Series B Preferred Stock.
Finally, on August 25, 2025, we entered into Voting Agreement with Forfront, LLC, in which Forfront agreed to vote its shares of Series B Preferred Stock in accordance with the direction of our original board members, which includes Vincent Napolitano, Shaun Quin and Glen Steward, with the President of our company receiving an irrevocable proxy from Forfront to vote its shares in accordance with the direction of our founders.
The conversion to Series B Preferred Stock and the Voting Agreement are part of a strategic initiative to streamline our capital structure, enhance governance control during a critical phase involving corporate rebranding, and align leadership with long-term objectives without diluting economic interests of non-affiliate shareholders. The Board determined this related-party transaction to be fair under Nevada law and ratified it by majority voting power.
On August 26, 2025, following the MIPA acquisition of the Block 40 Entities and the membership interest in Block 40 held by Hollywood Circle Capital, LLC, we initiated an offer to EB-5 investors in Block 40, LLC to exchange their preferred membership interests for shares of our common stock. These EB-5 interests were legacy obligations specific to the Block 40 real estate project and were included in the $190 million purchase price allocation. The EB-5 preferred interests in Block 40 carried accumulating preferred returns that continued indefinitely unless converted or otherwise repurchased. By offering equity in exchange, we seek to reduce the long-term accrual burden of these obligations, strengthen the balance sheet with a more permanent capital structure, and align these legacy investors with the Company’s long-term growth strategy.
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On September 1, 2025, the Company entered into a debt financing arrangement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund), pursuant to which it may raise up to $50 million through the issuance of unsecured and unsubordinated debt notes (the “Favo Debt Notes”). The notes carry a fixed annual interest rate of 8.00%, with a maturity date in August 2030. In connection with this facility, the Company agreed to issue warrants to the noteholder, exercisable for up to 65,789,474 shares of the Company’s common stock at a fixed price of $0.76 per share, with the number of warrants proportionately tied to each note issuance under the facility. The warrants are subject to a delayed exercise period, commencing no earlier than 12 months following an IPO or the maturity date, whichever is later, and are structured to minimize dilution around the time of the Company’s planned public offering. The Company has preliminarily assessed the warrant terms and determined that they meet the criteria for classification within equity rather than as a liability under applicable accounting guidance. To date, no funds have been drawn or invested under the facility. Proceeds from the issuance of the Stewards debt notes are to be used exclusively for (i) refinancing existing indebtedness, which currently carries an effective annual interest rate of approximately 15% and matures in June 2026, and (ii) funding the Company’s general operational needs. This refinancing is intended to materially reduce cash interest expense, strengthen the Company’s balance sheet, and improve financial flexibility to support long-term growth.
On September 16, 2025, the Company appointed Zachary Graeve to its Board of Directors as an independent director and Chair of the Nominating and Corporate Governance Committee. Mr. Graeve brings over 20 years of experience in corporate governance, investor relations, and capital markets strategy to support the Company’s growth and planned uplisting initiatives.
On September 23, 2025, the Company entered into a Note Purchase Agreement with accredited investor Valeriya Nayshevska for the purchase of a secured promissory note in the principal amount of $1,000,000. The proceeds from this transaction are intended for general corporate purposes and investments in merchant cash advances, secured real estate loans, and other revenue-based financing activities. The Note Purchase Agreement provides for the potential issuance of additional secured notes on identical terms, with each note ranking pari passu in right of payment. The funds were received on October 3, 2025.
On September 29, 2025, the Company appointed Dr. Wael Barsoum to its Board of Directors as an independent director. Dr. Barsoum is a seasoned healthcare executive and former CEO of Cleveland Clinic Florida, bringing extensive governance and operational leadership experience to support the Company’s growth and oversight initiatives.
On September 30, 2025, the Company issued a corresponding Secured Promissory Note to J & T Family, LLC in the principal amount of $1,000,000. The note bears interest at 15% per annum, payable monthly, and is secured by the Company’s receivables and right-to-receive interests within its short-term trade finance operations. All notes issued under the Note Purchase Agreement are pari passu in payment priority and governed by the laws of the State of Nevada. The funds were received on the same day.
On October 14, 2025, the Company issued an automatic convertible promissory note in the principal amount of $400,000 to Rob Harpur. The note bears simple interest at 1.0% per annum and matures on October 14, 2026. At the holder’s option, all or any portion of the outstanding principal and accrued interest may be converted into shares of the Company’s common stock at a fixed conversion price of $0.76 per share. The note may also be prepaid by the Company prior to maturity upon written notice. The transaction provides a flexible financing mechanism that can convert into equity upon maturity or qualified financing, and the proceeds are intended to support general corporate and lending operations.
On October 15, 2025, the Board of Directors of FAVO Capital, Inc. appointed Gary F. Baumann as an independent member of the Board. Mr. Baumann brings more than 25 years of experience in construction and commercial litigation, including advising large-scale infrastructure projects on compliance and risk management. The Company believes his expertise in legal governance and institutional operations will strengthen Board oversight and support its long-term strategic growth across financial services and real-asset investment segments.
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On October 28, 2025, Mr. Gary Baumann resigned as a member of the Board of Directors of FAVO Capital, Inc. and from all committee appointments. The resignation was not the result of a disagreement with the Company, known to an executive officer of the Company, on any matter relating to the Company’s operations, policies, or practices.
On October 30, 2025, the Company’s Board of Directors approved and executed a Debt Exchange Agreement with 315-352 Associated, LLC and SHB Equities, LLC, pursuant to which outstanding promissory notes originally issued under Note Purchase Agreements dated April 1, 2021 and December 15, 2022, were exchanged for shares of the Company’s common stock. The aggregate principal and accrued interest of approximately $104,000 was converted into common shares at a fixed price of $0.76 per share. The transaction was approved by unanimous written consent of the Board and eliminates the related-party debt obligations from the Company’s balance sheet while strengthening shareholders’ equity.
On October 30, 2025, FAVO Capital, Inc. (the “Company”) executed Amendment No. 1 to the Loan Agreement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund) (the “Lender”), originally dated September 17, 2025. The Amendment increases the aggregate principal amount authorized under the unsecured, unsubordinated debt note facility from $50,000,000 to $100,000,000, with corresponding adjustments to the number of notes and associated warrants to purchase up to 131,578,947 shares of the Company’s common stock at an exercise price of $0.76 per share. All other terms of the Loan Agreement, including the fixed annual interest rate of 8.00%, maturity date of August 31, 2030, and use of proceeds for refinancing existing debt and funding general operational needs, remain substantially unchanged. Proceeds from the expanded facility will continue to support the Company’s private credit and real estate operations, including working capital, payroll, and other ordinary-course business expenses. The debt note facility is expected to enhance liquidity, extend the Company’s operational runway, and reduce the weighted average cost of capital.
On October 30, 2025, FAVO Capital, Inc. (the “Company”) executed a Second Amendment to the Business Commission Agreement with Robinpaws LLC, a Florida limited liability company solely owned by Robin Nadeau-Camus. The Second Amendment replaces all prior compensation terms under the original Business Commission Agreement (dated December 21, 2023) and the First Amendment (dated April 1, 2024). Under the revised terms, all previous commission and renewal payment obligations are terminated and replaced with a fixed compensation package consisting of:
1. A lump-sum cash payment of $460,000, payable in three monthly installments beginning January 1, 2026, as follows: $200,000 in month one, $200,000 in month two, and $60,000 in month three; and
2. The issuance of 2,125,000 restricted shares of FAVO Capital, Inc. common stock to Robinpaws LLC within thirty (30) days of the effective date of the amendment, at an acquisition value of $0.76 per share.
All other provisions of the Commission Agreement remain unchanged. The amendment settles all prior compensation obligations under the agreement and finalizes the structure of payments owed to Ms. Nadeau-Camus and Robinpaws LLC.
This amendment does not create any new debt obligation or contingent liability to the Company and was executed in the ordinary course of business as part of contractual restructuring of existing compensation arrangements.
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On November 3, 2025, the Company, doing business as Stewards Inc., entered into a Securities Purchase Agreement (the “Agreement”) with Dolomite Foundation, a Cayman Islands foundation acting for itself and on behalf of its syndicate of investors (the “Dolomite Syndicate”). Pursuant to the Agreement, the Company agreed to issue pre-funded warrants to purchase up to 2,450,980 shares of its common stock. The economic value per warrant share is $4.08, based on the 30-trading-day volume-weighted average price (VWAP) of the Company’s common stock for the period from September 19, 2025 to October 30, 2025. The actual exercise price of the prefunded warrants is .0001 per share, with substantially all consideration delivered upfront via $DOLO tokens as in-kind payment. The transaction provides for an aggregate investment amount of $10,000,000, payable in $DOLO tokens as in-kind consideration. The warrants are structured in ten equal tranches of $1,000,000 each, becoming exercisable upon achievement of specified $DOLO 30-day VWAP milestones. Tokens are held in a jointly controlled multi-signature wallet on the Arbitrum One blockchain, requiring a three-of-four authorization threshold (two company signatories and two investor signatories) for any release. Shares issued upon exercise of the warrants will be subject to a 12-month lock-up period, and all unissued tranches are subject to cancellation in the event that $DOLO’s 30-day VWAP falls below $0.01. The structure is designed to align the Company’s digital-asset exposure with Dolomite’s platform development milestones while minimizing immediate dilution and supporting the Company’s longer-term liquidity and capital-efficiency objectives. Proceeds of the transaction are intended to support continued growth of the Private Credit and Real Estate segments and the controlled implementation of the Company’s digital-asset strategy.
On November 6, 2025, the Board of Directors and the majority shareholders of Favo Capital, Inc. approved the abandonment of the previously authorized reverse stock split, originally approved on August 7, 2025, which had provided for a potential split ratio between 1-for-2 and 1-for-100. The Board determined that proceeding with the reverse split was no longer in the best interest of the Company or its shareholders. On the same date, the Board and majority shareholders approved an amendment to the Company’s Articles of Incorporation to change its corporate name from Favo Capital, Inc. to Stewards, Inc. The Company will also request a corresponding change to its trading symbol, with “SWRD” submitted as the first preference, followed by “SWTR,” “STWR,” and “STWT.” The name change will become effective upon acceptance by FINRA and the issuance of a new CUSIP number.
On November 13, 2025, the Board of Directors and the majority shareholder of the Company approved several uplisting-related corporate actions, including the establishment of a new post-uplisting leadership structure, the election of executive officers and independent directors effective upon Nasdaq listing, and the planned expansion of the Board to include additional independent directors, including an Audit Committee chair who qualifies as a financial expert. The Board also approved a one-time issuance of 3,000,000 restricted stock units to twelve key contributors under the 2024 Equity Incentive Plan, adopted a comprehensive executive compensation program with phased implementation through 2028, and established a formal non-executive director compensation program to align the Company’s governance practices with Nasdaq standards. All actions were ratified by the majority shareholder on the same date.
On November 14, 2025, the Company’s previously announced corporate actions became effective, including its change of name from Favo Capital, Inc. to Stewards, Inc. and the corresponding change of its trading symbol from “FAVO” to “SWRD,”
On November 14, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase 1,280,000 shares of Series A preferred shares for a total investment of $320,000.
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SUMMARY OF THE OFFERING
| Shares offered by the selling stockholders | This prospectus relates to the resale of up to 20,621,250 shares of common stock, consisting of 9,750,000 shares issued in the private placement closings on December 12, 2024, and July 30, 2025; 487,500 shares issued as a registration delay payment; 10,237,500 shares issuable upon exercise of common warrants; and 146,250 shares issuable upon exercise of pre-funded warrants. |
| Shares to be outstanding after this offering | 202,466,642 shares of common stock, assuming no exercise of the warrants or pre-funded warrants. If all warrants and pre-funded warrants are exercised, there would be 212,850,392 shares outstanding. |
| Use of Proceeds | We will not receive any proceeds from the sale of shares by the selling stockholders. We may receive up to $4,095,000 from the exercise of the common warrants and $14.63 from the exercise of the pre-funded warrants, if exercised for cash, which would be used for general corporate purposes, servicing debt interest, and expenses related to uplisting to Nasdaq. |
| Risk Factors | Investing in our securities involves a high degree of risk and purchasers of our securities may lose their entire investment. See “Risk Factors” starting on page 36 and the other information included and incorporated by reference into this prospectus for a discussion of risk factors you should carefully consider before deciding to invest in our securities. |
| Trading market and symbol | Our common stock is currently quoted on the OTC Pink Market under the symbol “SWRD.” |
| Note: The number of shares outstanding after this offering is based on 192,229,142 shares of common stock outstanding on November 17, 2025, but does not include: |
| • | 20,000,000 shares that were reserved for equity awards under our Stewards, Inc. 2024 Equity Incentive Plan adopted on August 21, 2024; | |
| • | 10,237,500 shares issuable upon exercise of warrants, with an initial exercise price of $0.40 per share; | |
| • | 146,250 shares issuable upon exercise of prefunded warrants, with an initial exercise price of $0.0001 per share; | |
| • | 64,020,000 shares issuable upon conversion of our outstanding Series A Preferred Stock; and | |
| • | 10,000,000 shares issuable upon conversion of our outstanding Series B Preferred Stock. |
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RISK FACTORS
An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition, or results of operations could suffer. In that case, the trading price of our shares of Common Stock could decline and you may lose all or part of your investment. See “Cautionary Statement Regarding Forward-Looking Statements” above for a discussion of forward-looking statements and the significance of such statements in the context of this prospectus.
Risks Related to our Financial Condition
We have a history of losses, and we may be unable to achieve profitability.
We have incurred net losses of $8,658,780 and $7,673,207 for the fiscal years ended December 31, 2024, and 2023, respectively. As of September 30, 2025, we had an accumulated deficit of approximately $51,228,402. These losses and accumulated deficit are a result of, among other things, the substantial investments we made to grow our business and expenses incurred in connection with our acquisitions. We expect to make significant expenditures to grow our business in the future.
We plan to make opportunistic and deliberate investments in sales and marketing to attract new businesses to the financial products we offer. We also plan to continue to selectively pursue acquisition opportunities, which require that we incur various expenses and fees of external advisors. Businesses we have acquired and may in the future acquire have different levels of profitability than us, which may affect our overall profitability, particularly until we are able to realize expected synergies. These increased expenditures will make it harder for us to achieve profitability and we cannot predict with certainty whether we will achieve profitability in the near term or at all.
Historically, certain of our costs have increased each year due to these factors and we expect to continue to incur increasing costs to support our anticipated future growth. If the costs associated with acquiring new customers, including online advertising and paid search costs, outbound lead generation, scaling our field sales teams, or the terms on which our partners refer clients to us, materially rise in the future, our expenses may rise significantly. If we are unable to generate adequate revenue growth and manage our expenses and restructure our debt, we may continue to incur significant losses and may not achieve or maintain profitability, which could cause the trading price of our shares to further decline. Failure to generate adequate revenue growth, as well as other related factors, may cause decreases in asset values, such as our goodwill, that are deemed to be other than temporary, which may result in further impairment losses.
We may make decisions that will reduce our short-term operating results if we believe those decisions will improve the experiences of our customers and their consumers and if we believe such decisions will improve our operating results over the long-term. These decisions may not be consistent with the expectations of investors and may not produce the long-term benefits that we expect, in which case our business may be materially and adversely affected.
There is no guarantee that cash flow from operations and/or debt and equity financings will provide sufficient capital to meet our expansion goals, working capital needs or fund our operations.
Our current strategic plan includes the expansion of our company both organically and through acquisitions if market conditions and competitive conditions allow. Due to the long-term nature of investments in acquisitions and other financial needs to support organic growth, including working capital, we expect our long-term and working capital needs to periodically exceed the short-term fluctuations in cash flow from operations. We anticipate that we may need to raise additional external capital from the sale of common stock, preferred stock and/or debt instruments as market conditions may allow, in addition to cash flow from operations (which may not always be sufficient), to fund our growth and working capital needs.
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In the event that we need to raise significant amounts of external capital at any time or over an extended period, we face a risk that we may need to do so under adverse capital market conditions with the result that our existing shareholders, as well as persons who acquire our common stock, may incur significant and immediate dilution should we raise capital from the sale of our common or preferred stock. Similarly, we may need to meet our external capital needs from the sale of secured or unsecured debt instruments at interest rates and with such other debt covenants and conditions as the market then requires. However, there can be no guarantee that we will be able to raise external capital on terms that are reasonable in light of current market conditions. In the event that we are not able to do so, those who acquire our common stock may face significant and immediate dilution and other adverse consequences. Further, debt covenants contained in debt instruments that we issue may limit our financial and operating flexibility with consequent adverse impact on our common stock market price.
We have substantial debt which could adversely affect our ability to raise additional capital to fund operations and prevent us from meeting our obligations under outstanding indebtedness.
As of September 30, 2025, our total indebtedness was approximately $124,216,148, including notes payable of approximately $36,400,527.
This substantial debt could have important consequences, including the following: (i) a substantial portion of our cash flow from operations may be dedicated to the payment of principal and interest on indebtedness, thereby reducing the funds available for operations, future business opportunities and capital expenditures; (ii) our ability to obtain additional financing for working capital, debt service requirements and general corporate purposes in the future may be limited; (iii) we may face a competitive disadvantage to lesser leveraged competitors; (iv) our debt service requirements could make it more difficult to satisfy other financial obligations; and (v) we may be vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry out activities that are important to our growth.
While we currently hold approximately $124,216,148 in outstanding debt, and our annual interest expense currently amounts to approximately $8,200,000, we plan to use additional external capital as market conditions may allow, in addition to cash flow from operations (which may not always be sufficient and refinancing strategy is designed to systematically reduce this liability, improving financial stability and reducing cash flow pressure. By prioritizing the most expensive debt obligations, we anticipate achieving a stronger financial position, leading to sustained profitability within three years.
However, our ability to make scheduled payments of the principal of, or to pay interest on, or to refinance our indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond management’s control. If we are unable to generate sufficient cash flow to service our debt or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt, which could impair our liquidity. Any refinancing of indebtedness, if available at all, could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations. Despite our significant amount of indebtedness, we may need to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial debt.
Because we have a limited operating history, you may not be able to accurately evaluate our operations.
We have had limited operations to date. On September 2, 2020, we changed our name from Favo Realty, Inc. to Favo Capital, Inc., which is the point at which our business changed from a real estate investment company, to a private credit company providing alternative financing solutions to small and medium-sized businesses (SMBs) across the United States, through revenue-based funding solutions. We have recently acquired 1818 Park and are now engage in real estate operations. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
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As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced any significant revenues or profits and may not in the near future, if at all. Further, many of our competitors have a significantly larger industry presence and revenue stream and may have already achieved profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
We depend on affiliate financing to fund operations, and alternative sources are not currently available.
We rely on affiliate investors to purchase Series A Preferred Stock at $0.25 per share and on Stewards International for up to $100 million in debt with warrants exercisable at $0.76 per share—prices significantly below our current market price. On November 16, 2025, our Board evaluated whether to continue with these investments in light of the risks and issues involved in doing so, including claims for self-dealing. The Board concluded they do not, because: (i) the Company is a high-risk, rapidly developing enterprise with limited access to traditional capital markets; (ii) no unaffiliated party has offered financing on comparable terms; (iii) third-party raises had to include affiliate matching to raise funds; and (iv) other offers have been rejected as insufficient and unattractive. While we cannot eliminate the possibility of shareholder claims, the Board believes any such claims would be without merit given the documented absence of viable alternatives and the critical need to maintain liquidity and operational continuity. Any litigation, even if ultimately unsuccessful, could result in significant costs, management distraction, and potential impact on our stock price.
We may be unable to secure alternative financing, jeopardizing operations
Despite our stock price increase, we remain unable to raise capital from unaffiliated sources without significantly higher costs or unacceptable dilution. The Board has determined that refusal to use existing affiliate facilities would threaten liquidity and operational continuity. If better terms do not emerge, we will continue drawing under these facilities—potentially triggering shareholder dissent, regulatory scrutiny, or legal challenges.
Risks Related to Our Private Credit Business and Industry
Our growth may not be sustainable and depends on our ability to attract new customers, retain revenue from existing customers and increase sales to both new and existing customers.
We operate a direct and syndication funding platform to serve small and medium-sized businesses (“SMBs”) in need of liquidity to fulfill their financial responsibilities. Through our direct sales, marketing, underwriting and operational platform and with our syndication partners, we provide funding solutions for customers. We originate and provide financing to businesses primarily through a merchant cash advance (“MCA”) product offering. Under an MCA, businesses receive funds in exchange for a portion of the business’s future receipts at an agreed upon discount and repayment term. The majority of our portfolio will be invested in the MCA business.
We currently maintain relationships with six syndication partners, three core partners and three secondary partners, all of whom operate in the Merchant Cash Advance (MCA) industry and provide revenue-based financing solutions. Pursuant to Master Participation Agreements and related agreements, we participate in approved transactions with these partners at levels generally ranging from 10% to 95% of the deal value. The Company originates, funds, and services transactions, including collections, on behalf of itself and its partners. To manage concentration risk, we do not participate in any syndication arrangement where our exposure exceeds 40% of a partner’s total portfolio. All syndication partners are provided with investment guidelines aligned with our internal underwriting standards, and they are required to adhere to those criteria to ensure consistency and risk alignment across all investments.
We focus on serving small and medium-sized businesses, many of which are in the entrepreneurial or early growth stage of development. These SMBs often lack long credit histories and are more susceptible than larger enterprises to macroeconomic pressures such as inflation, consumer spending shifts, and interest rate increases. As a result, they may have greater turnover or financing needs. Approximately 30–40% of our direct portfolio customers return for multiple rounds of funding.
Our underwriting framework, described above, is designed to address this heightened risk profile by incorporating a wide range of alternative data points beyond traditional credit bureau scores. For example, we may analyze merchant bank statement performance, cash flow patterns, digital footprint, landlord payment history, and government filings, in addition to credit bureau data. By relying on real-time business data and technology-enabled verification, we can better assess the true repayment capacity of SMBs whose financial stability may not otherwise be captured by conventional credit scoring methods.
This approach provides us with visibility into businesses that traditional lenders often overlook, while balancing risk and enabling us to meet the financing needs of entrepreneurial SMBs.
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We may also fail to attract new customers, retain revenue from existing customers or increase sales to both new and existing customers as a result of a number of other factors, including:
§ reductions in our current or potential customers’ spending levels;
§ a decrease in SMB spending, including due to a deteriorating macroeconomic environment;
§ competitive factors affecting the markets for our financial products, including the introduction or innovation of competing financial products and other strategies that may be implemented by our competitors;
§ global political, economic, social and environmental risks that may impact our operations or our customers’ operations and/or decrease consumer spending, including pandemics and other global health crises, natural disasters, acts or threats of war or terrorism and other general security concerns such as the Russian invasion of Ukraine and the Israel-Hamas war;
§ our ability to execute on our financial solutions roadmap, growth strategy and operating plans;
§ our ability to successfully sell and transition new and existing customers to our financial solutions;
§ our ability to meet the demands and requirements of larger customers;
§ a decline in the market share of SMBs relative to large enterprises;
§ a decline in our SMBs’ level of satisfaction with our financial solutions;
§ changes in our relationships with third parties, including syndicate brokers, underwriters, brokers, real estate professionals and others;
§ the timeliness and success of new financial solutions and services we may offer in the future;
§ customer perceptions of business in the context of our growth and in the context of acquisitions we complete;
§ our brand recognition;
§ concerns relating to actual or perceived privacy or security breaches;
§ the frequency and severity of any system outages;
§ terminations of relationships with certain customers or partners for unacceptable business practices, contract breaches or because required by law;
§ technological changes or problems; and
§ our focus on long-term value over short-term results, meaning that we may make strategic decisions that may not maximize our short-term revenue or profitability if we believe that the decisions are consistent with our mission and will improve our financial performance over the long-term.
Due to these factors and the continued evolution of our business, our historical revenue growth rate and operating margin may not be indicative of future performance.
We are subject to risks relating to the availability of capital to fund SMB customers, the ability of our customers to generate sales to remit receipts, general macroeconomic conditions, legal and regulatory risks and the risk of fraud.
We offer MCAs and other financial solutions for SMBs. This program provides cash advances to eligible small businesses and is designed to help them with overall business growth and cash management. Such merchant cash advance programs are subject to risks. For direct fundings, we handle the underwriting process, contract with the merchant directly and fund from our own resources. For syndicated fundings, however, we are dependent on our syndication partners and the lead funder in particular, to operationalize merchant cash advances. Further, if we cannot source capital to fund the advances for our customers, we might have to reduce the availability of this service, or cease offering it altogether.
A decline in macroeconomic conditions could lead to a decrease in the number of our customers eligible for an advance, and/or increase the risk of fraud or non-payment. If more of our customers cease operations, experience a decline in sales, or engage in fraudulent behavior, including subverting our underwriting processes, it would make it more difficult for us to obtain the receipts we have purchased via merchant cash advances or to obtain repayment of merchant cash advances we have made. In addition, if we fail to correctly predict the likelihood of timely repayment of merchant cash advances, our business may be materially and adversely affected. Merchant cash advances are generally unsecured obligations, and they are not guaranteed or insured in any way.
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Loss rates on merchant cash advances may increase due to factors such as prevailing interest rates, the rate of unemployment, the level of consumer and business confidence, commercial real estate values, the value of the U.S. dollar, energy prices, changes in consumer and business spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. While we believe that our underwriting process is designed to establish that our customers will be a reasonable credit risk, our merchant cash advances to SMBs may nevertheless be expected to have a higher default rate than advances made to customers with more established operating and financial histories.
We intend to continue to explore other financial solutions, models, structures and markets to advance cash or capital to our merchants. Some of those models, structures or markets may require, or be deemed to require, additional procedures, partnerships, licenses, regulatory approvals or capabilities. Should we fail to expand and evolve in this manner, or should these new products, models, structures, markets or new regulations or interpretations of existing regulations impose requirements on us that are impractical or that we cannot satisfy, the future growth and success of our merchant cash advance program may be materially and adversely affected.
Merchant cash advance businesses have historically been, and may in the future remain, more likely to be affected or more severely affected than large enterprises by adverse economic conditions.
Our direct funding portfolio has SMBs across multiple segments and industry types, but most of our merchants fall into the services, construction, and retail industries. These include restaurants, construction and development projects, physical fitness facilities, accounting and bookkeeping practices, home furnishings and equipment stores, and automotive repair shops, among others.
The composition of our syndication portfolio closely aligns with that of our direct investments, both of which are strategically shaped by evolving market dynamics. Key determinants include macroeconomic conditions, the influence of domestic and international government policy decisions, and the relative advantages of specific U.S. geographic regions. Regulatory and policy environments, whether supportive or restrictive, impact sector performance and are carefully considered in our portfolio construction and allocation strategy.
Given that our debtor mix involves merchants with a lack of resources compared with larger more established companies, these conditions may result in a decline in the demand for merchant cash advance businesses by potential customers, higher default rates by future customers, or slower rates of receiving cash advance income from third-party debtors. If any merchant cash advance businesses’ future receipts are lower than the Company projected, collection of the merchant cash advance businesses’ income will take longer than projected, which could result in a loss of income to the Company.
We will also bear a loss of income if the customer fails to generate future business sufficiently to deliver the total amount of cash advance income the merchant cash advance businesses expect. If a customer defaults on a cash advance, the cash advance enters a collections process where systems and collections teams initiate contact with the customer for payments owed. If a cash advance contract is subsequently charged off, the merchant cash advance business could sell the contract to a third-party collection agency and receive only a small fraction of the remaining amount payable to that merchant cash advance business in exchange for the sale. There can be no assurance that economic conditions, demand for cash advances, or default rates by customers will remain favorable for the merchant cash advance businesses, which will ultimately affect our business.
Reduced demand for cash advances would negatively impact merchant cash advance businesses growth and revenue, while increased default rates by cash advance customers may inhibit merchant cash advance businesses’ access to capital and negatively impact profitability. Furthermore, if an insufficient number of qualified small businesses apply for the cash advances, merchant cash advance businesses and the Company’s growth and revenue could decline.
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If merchants provide information to us that is incorrect or fraudulent, we may misjudge a merchant’s qualification to receive a cash advance and as a result, their operating results as well as ours may be harmed.
Our decisions to fund are based partly on information provided by applicant merchants. To the extent that these applicants provide information in a manner that we are unable to verify, we may not be able to accurately determine the associated risk. Inaccurate analysis of credit data that could result from false cash advance application information could harm our reputation, business and operating results. This would have a knock-on effect on our own ability to conduct business operations.
While we intend to use identity and fraud checks analyzing data provided by external databases to authenticate each merchant’s identity, there is a risk that these checks could fail, and fraud may occur. We may not be able to recoup funds underlying cash advances made in connection with inaccurate statements, omissions of fact or fraud, in which case our revenue, operating results and profitability will be harmed. Fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negatively impacting operating results, brand and reputation, and require us to take steps to reduce fraud risk, which could increase our costs. This may, in turn, put our company at greater risk to recoup.
An increase in customer defaults rates may reduce overall profitability.
Customer default rates may be significantly affected by economic downturns or general economic conditions beyond our control and beyond the control of individual customers. In particular, loss rates on cash advances may increase due to general economic and business factors such as prevailing interest and rates, the rate of unemployment, the level of consumer and business confidence, commercial real estate values, the value of the U.S. dollar, energy prices, changes in consumer and business spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. If customer default rates increase beyond forecast levels, this will harm merchant cash advance businesses reputation, operating results, and profitability, which will ultimately affect the Company’s own business operations and investors may lose all or part of their investment.
Allowance for losses is determined based upon both objective and subjective factors and may not be adequate to absorb losses. Merchants may fail to deliver cash advanced income in full.
We maintain a reserve for such losses by establishing an allowance for losses, the increase of which results in a charge to its earnings as a provision for losses. We have established an evaluation process designed to determine the adequacy of those allowances for losses. While this evaluation process will use historical and other objective information, the forecasts and establishment of losses are also dependent on our subjective assessment based upon our experience and judgment. Actual losses are difficult to forecast, especially if such losses stem from factors beyond historical experience. As a result, there can be no assurance that our allowance for losses will be comparable to that of traditional banks subject to regulatory oversight or sufficient to absorb losses or prevent a material adverse effect on business, financial condition, and results of operations.
Investors have risks from inflation and from deflation
As a result of inflation, there has been a history of increasing taxes, energy and labor costs, and other operating and capital expenses. If the revenues generated by operations are not sufficient to pay fixed obligations, we may attempt to increase rates on cash advance income in addition to attempting to reduce operating expenses. However, competition may preclude such increases. On the other hand, deflation is likely to cause rates to decrease faster than expenses decrease. Inflation or deflation could have a material adverse effect on merchant cash advance businesses and our business, results of operations, and financial condition.
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Merchant cash advance businesses may be unable to collect cash advance income on the cash advances made to customers.
Merchant cash advance (“MCA”) businesses, such as Stewards, provide revenue-based financing to small and medium-sized businesses (“SMBs”) by purchasing a portion of their future receipts at a discount. Our debtors are primarily SMBs in industries such as restaurants, construction, physical fitness and accounting services, which use cash advances to manage working capital, purchase inventory, fund marketing, or address short-term liquidity needs.
As an MCA provider, we advance funds to these SMBs in exchange for an agreed-upon percentage of their daily receipts until the purchased receipts have been fully remitted. Payments are typically collected through daily Automated Clearing House (“ACH”) debits or, in some cases, through credit card split processing. Because MCA businesses are not banks, we do not have direct access to the ACH network and instead rely on third-party FDIC-insured depository institutions and payment processors to disburse funds to merchants and collect scheduled payments on our behalf.
Although we build redundancies by working with multiple banks and service our ability to collect receipts could be impaired if these institutions or processors cease providing services, experience operational disruptions, or terminate their agreements with us. While we would seek to transition to alternative providers, there can be no assurance that such transition would be seamless. Any inability to collect receipts on a timely basis could materially impact our revenue, cash flows, and operating results.
Our role within the MCA process is to (i) originate and underwrite advances directly, (ii) service and collect on those advances through our processing partners, and (iii) in the case of syndicated fundings, manage collections on behalf of ourselves and our syndication partners. As such, disruptions in our ability to collect MCA receipts directly affect both our own portfolio and our servicing obligations to syndication partners.
We may not be able to successfully implement our growth strategy on a timely basis or at all.
Our future growth, profitability and cash flows depend upon our ability to successfully implement our growth strategy, which, in turn, is dependent upon a number of factors, including our ability to:
| • | build on our success in financial solutions, such as our merchant cash advance (or similar) offerings; |
| • | accelerate expansion by introducing new financial solutions to our product portfolio; |
| • | continue to establish a footing in the real estate markets; and |
| • | selectively pursue and integrate strategic and value-enhancing acquisitions. |
There can be no assurance that we can successfully achieve any or all of the above initiatives in the manner or time period that we expect. Further, achieving these objectives will require investments which may result in short-term costs without generating any current revenue and therefore may be dilutive to our earnings. We cannot provide any assurance that we will realize, in full or in part, the anticipated benefits we expect our strategy will achieve. The failure to realize those benefits could have a material adverse effect on our business, financial condition and results of operations.
The merchant cash advance industry is not currently pervasively regulated, however, future regulations or in the way future regulations are applied to the merchant cash advance industry could adversely affect our business.
MCA regulation is generally not as stringent as small business loan regulation, but regulations do exist. There have been enactments in New York and California and discussions in several other states to implement regulations on the industry. State usury laws may not apply against merchant cash advance providers, but New York and California, for example, have state laws requiring merchant cash advance providers and other nonbank lenders to provide disclosures similar to those required under the Truth in Lending Act. These laws were enacted in order to create more transparency for small business borrowers surrounding their application for credit from non-conventional banking institutes.
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There are also federal laws that apply to the industry. The Federal Trade Commission (“FTC”), for example, has the authority to sue merchant cash advance providers that engage in deceptive or predatory lending practices. Any merchant cash advance provider that engages in unfair or deceptive trade practices can be subjected to compensatory damages, civil penalties, and a permanent injunction from marketing, selling, or collecting merchant cash advances.
The Gramm-Leach-Bliley Act (“GLBA”) has provisions that prohibit creditors from making false statements to obtain a customer’s bank account information. These laws apply to merchant cash advance providers.
Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires covered financial institutions, including merchant cash advance providers, to collect and report to the Consumer Financial Protection Bureau (“CFPB”) data on small business applications for credit. The rules generally require financial institutions that originate at least 100 small business credit transactions annually to collect and report loan application, origination, and pricing information, as well as certain applicant/borrower demographic information, in a “small business lending application register.” For purposes of the rules, a small business is one with no more than $5 million of gross revenues in its most recent fiscal year.
We cannot predict whether there will be any regulations adopted either by the federal government or individual state governments with respect to the merchant cash advance industry. If any such regulations are adopted and implemented, such regulations could place restrictions on the industry that could adversely affect our business. The adoption of laws or regulations or the regulatory application or judicial interpretation of the laws and regulations applicable to the industry could adversely affect our ability to continue to operate our business. Additionally, any such regulations could make it more difficult for us to collect payments on merchant cash advances by subjecting us to additional licensing, registration and other regulatory requirements in the future or otherwise. A material failure to comply with any such laws or regulations could result in regulatory actions and lawsuits, which could have a material adverse effect on our business and financial condition.
A proceeding relating to one or more allegations or findings of violations of any such laws or regulations could result in modifications in our methods of doing business that could impair our ability to collect payments on our merchant cash advances to customers or could require us to pay damages and/or cancel the balance or other amounts owing under merchant cash advance contracts associated with any such violations. We cannot assure you that such claims will not be asserted against us. To the extent it is determined that the merchant cash advances that have made to our customers were not originated in accordance with any and all applicable laws or regulations, our results of operations could be materially adversely affected.
Determination by a legislative or judicial body that a cash advance is a loan, rather than a purchase of future receipts, will adversely affect the merchant cash advance business and Company's business.
Currently, the merchant cash advance business structures its cash advances a purchase of future receipts, rather than loans. This allows merchant cash advance businesses to avoid applying for and complying with a commercial lending license. Additionally, state usury laws are often, if not always, inapplicable. However, if a legislative or judicial body determines that the merchant cash advances are loans or should be treated as loans, the merchant cash advance business could be found to be in violation of state and federal lending regulations. A material failure to comply with any such laws or regulations could result in regulatory actions, lawsuits, and damage to the merchant cash advance business reputation, which could have a material adverse effect on its business and financial condition.
A proceeding relating to one or more allegations or findings of the merchant cash advance business violation of such laws could result in modifications in its methods of doing business or could impair its ability to collect cash advance income or could result in the requirement that merchant cash advance businesses pay damages and/or cancel the balance of cash advance income associated with such violation. The Company cannot assure you that such claims will not be asserted against merchant cash advance businesses in the future.
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Many of our alternative financing solutions involve borrowers about which little, if any, information is publicly available, which may impair our ability to identify borrowers able to repay our advances and adversely affect the price of our publicly traded securities.
In pursuing our business, we often interact with privately held companies about which very little public information exists. As a result, we are frequently required to make financing decisions based on limited data, much of which is obtained directly from the merchant. To mitigate these risks, we use a combination of traditional credit bureau data, alternative data sources, and automated and AI-driven tools from third-party providers to verify bank statements, analyze cash flow, and detect potential fraud or anomalies.
Notwithstanding these processes, there are limitations. Automated and AI-driven underwriting tools may yield inaccurate or incomplete outputs, may be subject to manipulation, or may fail to detect fraudulent activity. Additionally, we depend on the accuracy and availability of third-party vendors and data sources. Disruptions, errors, or service terminations could materially impair our ability to underwrite effectively.
If we make advances to merchants that are less solvent or profitable than expected, if our AI or automation tools malfunction or are circumvented, or if third-party providers supply inaccurate or incomplete data, our loss rates may increase and our results of operations could be adversely affected, which in turn could negatively impact the trading price of our securities.
Failure to continue to innovate and respond to evolving technological changes may reduce demand for cash advances.
The cash advance industry is characterized by rapidly evolving technology and frequent product introductions. Merchant cash advance businesses rely on technology to make its platform available to customers, determine the creditworthiness of cash advance applicants, and service the cash advances it makes to customers. In addition, merchant cash advance businesses may increasingly rely on technological innovation as it introduces new products, expands its current products into new markets, and continues to streamline the cash advance process. The process of developing new technologies and products is complex and if merchant cash advance businesses are unable to successfully innovate and deliver a superior customer experience, customers' demand for the merchant cash advances may decrease and the merchant cash advance business and ultimately our growth and operations may be harmed.
Due diligence in merchant cash advance transactions is not as stringent as that of traditional loans, which presents a greater risk of fraud and inaccurate valuations.
The required information to be provided by a merchant for a merchant cash advance is less stringent and differs from that provided for traditional capital advances and loans from institutional lenders, giving rise to numerous risks. These risks include, but are not limited to, a funder receiving fraudulent or inaccurate financial data from a merchant, entering into a transaction with a merchant who has historical and/or current credit related issues, and facing market shifts which may outdate the market research a funder uses to create its approval methodology. Although the Uniform Commercial Code governs merchant cash advance transactions as commercial transactions and provides for certain legal protections, the lack of collateral required in merchant cash advance transactions presents a risk of total and unrecoverable loss.
Our growth strategy involves building on our success in financial solutions, which may present risks and challenges that we have not yet experienced.
Our financial solutions, such as our merchant cash advance (or similar) offerings, continue to become an increasingly important part of our business. Our strategy has and will continue to require significant investment in cross-functional operations and management focus, along with investment in supporting technologies and people. The availability of our financial solutions requires us to comply with different and evolving laws governing financial services, as well as the collection, storage and use of information and data, including personal data. We may incur additional costs and operational challenges in complying with these laws, and differences in these laws may cause us to operate our businesses differently in different territories. If so, we may incur additional costs and may not fully realize the investment in our expansion.
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Development of new financial solutions incorporating technology is a complex process and subject to numerous uncertainties. Our success in developing such solutions will depend in part on our ability to develop them in a manner that keeps pace with continuing changes in technology, evolving industry standards, new financial solution and product introductions by competitors, changing client preferences and requirements and the interoperability of such solutions with our platform, including the platforms of companies we acquire, and third-party developed portions thereof.
In addition, we face competition from established financial solutions providers offering existing and proven financial solutions. These financial solutions providers and their financial product offerings benefit from a long history of market acceptance and familiarity as compared to our financial solutions. Potential customers for our financial solutions may be reluctant to adopt our solutions over existing solutions for a variety of reasons, such as transition costs, business disruption, or loss of functionality to which they are accustomed. Customers may also consider our solutions as inferior to similar solutions offered by our competitors. Finally, the marketability of our financial solutions we offer could be significantly affected by changes in economic or market conditions or by the adoption of new technologies and solutions. There can be no assurance that our customers will adopt our financial solutions over other competing solutions.
If we are unable to provide a convenient and consistent experience for our customers, our ability to compete and our results of operations could be adversely affected. In addition, if the solutions we offer do not appeal to our customers, reliably function as designed, or maintain the privacy and security of customer data, we may experience a loss of customer confidence or lost revenue, which could adversely affect our reputation and results of operations.
The markets in which we participate are highly competitive. We may not be able to compete successfully against current and future competitors.
We face competition in various aspects of our business, and we expect such competition to intensify in the future as existing and new competitors introduce new financial solutions or enhance existing solutions. We compete against companies and financial institutions across the retail banking, financial services, consumer technology and financial technology services industries, as well as other nonbank lenders serving credit-challenged consumers, including online marketplace lenders, check cashers, point-of-sale lenders and payday lenders. We may compete with others in the market who may in the future provide offerings similar to ours, particularly companies who may provide money management, lending and other services.
We have competitors with longer operating histories, larger customer bases, greater brand recognition, greater experience and more extensive commercial relationships in certain jurisdictions, and greater financial, technical, marketing and other resources than we do. Our potential new or existing competitors may be able to develop financial products and services better received by customers or may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, regulations or customer requirements. In addition, some of our larger competitors may be able to leverage a larger installed customer base and distribution network to adopt more aggressive pricing policies or terms of service and offer more attractive sales terms or customer promotions, which could cause us to lose potential sales or to sell our financial solutions at lower prices. In addition, there are a number of companies that are not currently direct competitors but that could in the future shift their focus on our industries and offer competing products and services. There is also a risk that certain of our current customers and business partners could terminate their relationships with us and use the insights they have gained from partnering with us to introduce their own competing financial products and services. As our business evolves, the competitive pressure to innovate will encompass a wider range of financial products and services. There can be no assurance that our efforts to require new and existing customers to adopt our financial solutions will be successful and we may lose certain customers, and our operating results may be adversely affected if we are not successful in our efforts.
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The impact of worldwide economic conditions such as inflation and changes in interest rates, including the resulting effect on the operations of and spending by SMBs and on consumer spending, may adversely affect our business, operating results and financial condition.
Our performance is subject to worldwide economic conditions and global events, including political, economic, social and environmental risks that may impact our operations or our customers’ operations. Such conditions and events may adversely affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. Deterioration in general economic conditions, including any rise in unemployment rates, inflation and increases in interest rates, have adversely affected in the past and may in the future adversely affect consumer spending, consumer debt levels and payment card usage, and as a result, have adversely affected in the past and may in the future adversely affect our financial performance by reducing the number of transactions or average purchase amount of transactions processed using our financial solutions. Many of the customers that use our financial solutions are SMBs and many are also in the entrepreneurial stage of their development. SMBs may be disproportionately affected by the aforementioned economic conditions or economic downturns, especially if they sell discretionary goods. SMBs may also be disproportionately affected by other economic conditions, including labor shortages and global supply chain issues. SMBs frequently have limited budgets and may choose to allocate their spending to items other than our platform, especially in times of economic uncertainty or recessions. Economic and geopolitical uncertainties, including the Israel-Hamas war and Russia's invasion of Ukraine may further amplify such risks.
Weakening economic conditions may also adversely affect third parties, including suppliers and partners, with whom we have entered into relationships and upon whom we depend in order to operate and grow our business. Uncertain and adverse economic conditions may also lead to increased write-offs of our receivables, and refunds and chargebacks or potential losses to our merchant cash advance program, any of which could adversely affect our business.
Our business could be harmed if we fail to manage our growth effectively and efficiently.
The growth we have experienced in our business places significant demands on our operational infrastructure. The scalability and flexibility of our financial solutions depends on the functionality of our technology and network infrastructure and its ability to handle increased demand. Any problems with the transmission of increased data and requests could result in harm to our brand or reputation. Moreover, as our business grows, we will need to devote additional resources to improving our operational infrastructure and continuing to enhance its scalability in order to maintain the performance of financial offerings.
To support our growth, we expect to make sales and marketing expenditures to increase sales of our financial products and increase awareness of our brand. A significant portion of our investments in our sales and marketing and research and development activities will precede the benefits from such investments, and we cannot be sure that we will receive an adequate return on our investments.
Our growth has placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial and other resources. We intend to further expand our overall business with no assurance that our revenues will continue to grow. As we grow, we will be required to continue to improve our operational and financial controls and reporting procedures, and we may not be able to do so effectively. Furthermore, some members of our management do not have significant experience managing a large business operation, so our management may not be able to manage such growth effectively. In managing our growing operations, we are also subject to the risks of over-hiring and/or overcompensating our employees and over-expanding our operating infrastructure. As a result, we may be unable to manage our expenses effectively in the future, which may negatively impact our gross profit or operating expenses.
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As a result of our growth, some of our employees have been with us for a short period of time, and many have joined in a remote work environment. As we continue to grow, we must effectively integrate, develop and motivate employees. We may find it difficult to maintain our corporate culture, which could limit our ability to innovate and operate effectively. Any failure to preserve our culture could also negatively affect our ability to recruit and retain personnel, to continue to perform at current levels or to execute on our business strategy effectively and efficiently.
Our brand is integral to our success. If we fail to effectively maintain, promote and enhance our brand, our business and competitive position may be harmed.
We believe that maintaining, promoting and enhancing brands is critical to expanding our business. Maintaining and enhancing our brand will depend largely on our ability to provide high-quality, well-designed, useful, reliable and innovative financial solutions, which we may not do successfully.
Errors, defects, data breaches, disruptions, outages or other performance problems with our technology or related services, including with third-party applications, may harm our reputation and brand. We may introduce new financial solutions or terms of service that SMBs do not like, which may negatively affect our brand. Additionally, if our customers have a negative experience using our financial solutions, such an experience may affect our brand, especially as we try and gain market acceptance.
Any unfavorable media coverage or negative publicity about our industry or our company, including, for example, publicity relating to our financial products, our privacy and security practices, our product changes, our financial reporting, pending or threatened litigation, regulatory activity, or the actions of our partners or our customers, could seriously harm our reputation, even if inaccurate or misleading. Such negative publicity could also adversely affect the size, demographics, engagement, and loyalty of our customers and result in decreased revenue, which could seriously harm our business.
We believe that the importance of brand recognition will increase as competition in our market increases. In addition to our ability to provide reliable and useful solutions at competitive prices, successful promotion of our brand will depend on the effectiveness of our marketing efforts. The success of our brand promotion efforts is partly dependent on our visibility on third-party advertising platforms and changes in the way these platforms operate or changes in their terms or data use practices could make marketing and promotion of our platform and brand more expensive and difficult. Our efforts to market our brand have involved significant expenses. Our marketing spend may not yield increased revenue, and even if it does, any increased revenue may not offset the expenses we incur in building and maintaining our brand.
Our growth depends in part on the success of our strategic relationships with third parties.
We anticipate that the growth of our business will continue to depend on third-party relationships, including strategic partnerships and relationships with our service providers and suppliers, including syndicate brokers, underwriters, brokers, real estate professionals and other partners. In addition to growing our third-party partner ecosystem, we have entered into agreements with, and intend to pursue additional relationships with, other third parties, such as technology and content providers. Some of the third parties that sell our services have direct contractual relationships with our customers, and in these circumstances, we risk the loss of such customers if those third parties fail to perform their contractual obligations, including in the event of any such third party’s business failure. These third-party providers may choose to terminate their relationship with us or to make material changes to their businesses, products or services in a manner that is adverse to us.
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Security breaches, denial of service attacks, or other hacking and phishing attacks on our systems or other security breaches, including internal security failures, could harm our reputation or subject us to significant liability, and adversely affect our business and financial results.
We operate in an industry that is prone to cyberattacks. Failure to prevent or mitigate security breaches and improper access to or disclosure of our data, customer data, or the data of their consumers, could result in the loss or misuse of such data, which could harm our business and reputation. The security measures we have integrated into our internal networks and platforms are designed to prevent or minimize security breaches but may not function as expected or may not be sufficient to protect our internal networks and platforms against certain attacks. In addition, incidents can originate on our partners' websites or systems, which can then be leveraged to access our website or systems, further preventing our ability to successfully identify and mitigate an attack. Threat actors are rapidly evolving the techniques used to sabotage or to obtain unauthorized access to networks in which data is stored or through which data is transmitted. As a result, we may be unable to anticipate these techniques or implement adequate preventative measures to prevent an electronic intrusion into our networks. While we have established cyberattack remediation plans to guide us in triaging and responding to such attacks, there can be no assurance that the measures set forth under such plan will be adequate in all circumstances nor that they will be effective in mitigating, or allowing us to recover from, the effects of such attacks. While we do not yet have insurance coverage and while we plan to obtain coverage in the near future, any coverage we acquire may be insufficient to compensate us for all liabilities that we may incur.
Our customers’ storage and use of data to operate their businesses and deliver services to their consumers is essential to their use of our platform, which stores, transmits and processes our customers’ proprietary information and personal information relating to them, their employees and their consumers. If a security breach were to occur, as a result of third-party action, employee error, breakdown of our internal security processes and procedures, malfeasance or otherwise, and the confidentiality, integrity or availability of our customers’ data were disrupted, we could incur significant liability to our customers, to partners and to individuals whose information was being stored by our customers, and our platform may be perceived as less desirable, which could negatively affect our business and damage our reputation.
Our platform and third-party applications available on, or that interface with, our platform have been and, in the future, may be subject to distributed denial of service attacks (“DDoS”), a technique used by hackers to take an internet service offline by overloading its services. Since techniques used to deliver DDoS attacks are evolving, we may be unable to implement adequate preventative measures or stop DDoS attacks or security breaches while they are occurring. We cannot guarantee that applicable recovery systems, security protocols, network protection mechanisms and other procedures are or will be adequate to prevent network and service interruption, system failure or data loss. In addition, computer malware, viruses, ransomware, extortion, and hacking and phishing attacks or social engineering incidents by third parties are prevalent in our industry. We have experienced such attacks and security incidents in the past and may experience them in the future. For example, in Fiscal 2024 we were the target of frequent phishing and distributed DDoS attempts. Any actual or perceived DDoS attack or security breach could damage our reputation and brand, expose us to a risk of litigation and possible liability and require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the DDoS attack or security breach.
Moreover, our platform and third-party applications available on, or that interface with, our platform could be breached if vulnerabilities in our platform or third-party applications are exploited by unauthorized third parties or due to employee error, breakdown of our internal security processes and procedures, malfeasance, or otherwise. If these third parties fail to adhere to adequate data security practices, or in the event of a breach of their networks, our own and our customers' data may be improperly accessed, used or disclosed. Further, threat actors may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information or otherwise compromise the security of our internal networks, electronic systems and/or physical facilities in order to gain access to our data or our customers’ data. As a result of our increased visibility, the size of our customer base, and the increasing amount of confidential information we process, we believe that we are increasingly a target for such breaches and attacks. This threat may intensify in the event of retaliatory cyberattacks stemming from geopolitical events such as Russia's invasion of Ukraine. In addition to our own platform and applications, some of the third parties we work with may receive information provided by us, by our customers, or by our customers’ consumers through web or mobile applications. If these third parties fail to adhere to adequate data security practices, or in the event of a breach of their networks, our own and our customers’ data may be improperly accessed, used or disclosed.
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Some jurisdictions have enacted laws requiring companies to notify individuals and authorities of data security breaches involving certain types of personal or other data and our agreements with certain customers and partners require us to notify them in the event of a security incident. Similarly, if our suppliers experience data breaches and do not notify us or honor their notification obligations to authorities or users, we could be held liable for the breach. We may not be in a position to assess whether a data breach at one of our suppliers would trigger an obligation or liability on our part. Such mandatory disclosures are costly, could lead to negative publicity, and may cause our customers to lose confidence in the effectiveness of our data security measures. Moreover, if a high-profile security breach occurs with respect to another SaaS provider, customers may lose trust in the security of the SaaS business model generally, which could adversely impact our ability to retain revenue from existing customers or attract new ones. Similarly, if a high-profile security breach occurs with respect to a retailer or eCommerce platform, customers may lose trust in eCommerce more generally, which could adversely impact our customers’ businesses. Any of these events could harm our reputation or subject us to significant liability, and materially and adversely affect our business and financial results.
System failures, interruptions, delays in service, catastrophic events, inadequate infrastructure and resulting interruptions in the availability or functionality of our platform could harm our reputation or subject us to significant liability and adversely affect our business and financial results.
Our brand, reputation and ability to attract, retain and serve our customers are also dependent upon the reliable performance of our platform, including our underlying technical infrastructure. Our platform is mission critical for our customers who rely on it to manage their businesses, and the data collected in connection therewith, including transaction records, information about inventory and customers and other important business information and data. Our systems, those of our third- service providers may experience service interruptions, human error, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks and other geopolitical unrest, cyberattacks or disruptions, computer viruses, ransomware, malware or other events. Our systems are also subject to break-ins, sabotage, and acts of vandalism.
Interruptions or other issues in the proper functioning of or upgrades to our information technology systems could cause disruption to our operations.
Our information technology systems require periodic modifications, upgrades, and replacement that subject us to costs and risks, including potential disruption to our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel or outside firms to implement and operate existing or new systems, diversion of management’s attention from other aspects of our business, and other risks and costs of delays or difficulties in transitioning to new or modified information technology systems or of integrating new or modified information technology systems into our current technical infrastructure.
We are continually improving and upgrading our information technology systems, including systems of the companies we have acquired, which acquired systems we have integrated to varying degrees. Implementation of new information technology systems is complex, expensive, and time-consuming. If we fail to timely and successfully implement new information technology systems, or improvements or upgrades to existing or integrated information technology systems, or if such information technology systems do not operate as intended, this could have an adverse impact on our business, internal controls (including internal controls over financial reporting), results of operations and financial condition.
We heavily rely on our information technology systems to manage our various business operations and regulatory compliance. Our technical infrastructure has in the past and may in the future be subject to damage or interruption from a variety of sources, including power outages, computer and telecommunications failures, fraud, computer viruses, cybersecurity breaches, vandalism, severe weather conditions, catastrophic events, military or political conflicts, terrorism, and human error. If our information technology systems are damaged, fail to function properly, or otherwise become compromised or unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business, results of operations and financial condition.
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We store personal and other information of our partners, our customers and their consumers and our employees. If the security of this information is compromised or is otherwise accessed without authorization or is perceived to be compromised or accessed without authorization, our reputation may be harmed, and we may be exposed to liability and loss of business.
We store personal information and other confidential information of our partners and our customers and may also store credit card information of our customers. We also collect and maintain personal information of our employees. We do not regularly monitor or review the content that our customers upload and store, or the information provided to us through the applications integrated with our platform, and, therefore, we do not control the substance of the content hosted within our platform, which may include personal information. Additionally, we use third-party service providers and sub processors to help us deliver services to customers and their consumers. These service providers and sub processors may store personal information, credit card information and/or other confidential information.
We have in the past experienced and may in the future experience successful attempts by third parties to obtain unauthorized access to the personal information of our partners, our customers and our customers’ consumers, and events or situations as a result of which this information was or could be exposed through human error, malfeasance or otherwise. The unauthorized or inadvertent release or access, or other compromise of this information could have a material adverse effect on our business, financial condition and results of operations. Even if such a data breach were to affect one or more of our competitors or our customers’ competitors, rather than us, the resulting consumer concern could negatively affect our customers and/or our business.
We are also subject to federal, state, provincial and foreign laws regarding cybersecurity and the protection of data. The regulatory framework in Canada, the United States, Europe and many other jurisdictions in respect of privacy issues is constantly evolving and is likely to remain uncertain for the foreseeable future. Numerous laws and regulations, including Canada's Personal Information Protection and Electronic Documents Act, Québec's Law 25, the European Union's General Data Protection Regulation (“GDPR”), the UK's General Data Protection Regulation, the California Consumer Privacy Act as modified by the California Consumer Privacy Rights Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Data Privacy Rights Act, and the Utah Consumer Privacy Act, have detailed requirements concerning the collection, use, disclosure, transfer, safeguarding, and retention of personal data and grant individuals certain rights related to their personal data.
As of early 2025, at least 20 states have passed comprehensive privacy laws that go beyond breach notification to regulate how businesses collect, use, and protect personal data. These laws grant consumers rights like access, deletion, and opting out of data sales, while requiring “reasonable” security measures. Newer laws in states like Texas (Texas Data Privacy and Security Act, effective 2024) and New Jersey (effective 2025) follow this model, with variations in scope and enforcement.
The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. Restrictions imposed by such laws may also impair our merchant's ability to sell or market their products or adversely impact our product development efforts, which could affect our operating results.
In addition to the foregoing, a breach of cybersecurity and data protection laws could result in regulatory investigations, reputational damage, orders to cease or change our data processing, enforcement notices, and / or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.
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The interpretation and application of the above laws are often uncertain and such laws may be interpreted and applied in a manner inconsistent with our current policies and practices or require us to make changes to our platform. Additionally, laws in some jurisdictions, as well as our contracts with certain customers, require us to use industry-standard or reasonable measures to safeguard personal information or confidential information, and thereby mitigate the risk of a security incident. These laws and contractual obligations, which tend to focus on individuals’ financial and payment related information, are increasingly relevant to us, as we have started to process more information from our customers’ consumers through our platform.
Our failure to comply with legal or contractual requirements around the security of personal information could lead to significant fines and penalties imposed by regulators, as well as claims by our partners, our customers and their consumers, our employees or other relevant stakeholders. These proceedings or violations could force us to spend money in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, diversion of management’s time and attention, increase our costs of doing business, and materially adversely affect our reputation and the demand for our solutions.
Significant increases in the cost or decreases in the availability of the insurance we maintain could adversely impact our financial condition.
To protect the Company against various potential liabilities, we maintain a variety of insurance programs, including key man insurance, workers’ compensation and omissions and error insurance. We may reevaluate and change the types and levels of insurance coverage that we purchase. We are self-insured when insurance is not available or not available at reasonable premiums. We are currently looking into acquiring general liability insurance, and cyber security insurance. There are types of losses we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, employee and certain other crime, certain wage and hour and other employment-related claims, including class actions, actions based on certain customer protection laws, and some natural and other disasters or similar events. If we incur such losses and they are material, our business could suffer. Risks associated with insurance plans include:
| • | Insurance costs could increase significantly, or the availability of insurance may decrease, either of which could adversely impact our financial condition; |
| • | Deductible or retention amounts could increase, or our coverage could be reduced in the future and to the extent losses occur, there could be an adverse effect on our financial results depending on the nature of the loss and the level of insurance coverage we maintained; |
| • | Insurance may not be available to us at an economically reasonable cost, or our insurance may not adequately cover our liability in connection with claims brought against us; and |
| • | As our business inherently exposes us to claims, we may become subject to claims for which we are not adequately insured. Unanticipated payment of a large claim may have a material adverse effect on our business. |
Because we are a “Smaller Reporting Company,” we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less company information than they would receive from a public company that is not a Smaller Reporting Company.
We are a “smaller reporting company” as defined in the Exchange Act. As a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors to analyze the Company’s results of operations and financial prospectus in comparison with other public companies.
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Our reliance on syndication partners and contractual arrangements for funding MCAs exposes us to risks if such partners reduce participation, fail to perform, or terminate agreements
A portion of our revenue is generated through syndication transactions, where third-party investors co-fund merchant cash advances. In these transactions, we typically act as the servicer under syndication agreements, which entitles us to servicing fees, retained participations, and profit allocations after repayment of the advance amount. These syndication arrangements expand our funding capacity but also create dependence on external partners whose decisions and capital commitments are outside our control.
If our syndication partners were to reduce their participation levels, delay capital deployment, terminate agreements, or demand terms less favorable to us, our revenue from syndication activities could be materially reduced. Because these arrangements are often concentrated among a limited number of investors, we are exposed to partner concentration risk. In addition, our reliance on contractual agreements creates the possibility of disputes regarding servicing performance, allocation of profits, or interpretation of key provisions. Any disruption in these relationships or disputes under these agreements could impair our ability to originate and service merchant cash advances at scale, reduce our revenue, and materially and adversely affect our business and results of operations.
Our dependence on ISOs and other third-party distribution partners for a significant portion of originations subjects us to risks relating to partner performance, regulatory compliance, customer quality, and potential concentration of deal flow.
We rely on independent sales organizations (ISOs) and other third-party distribution partners to originate a significant percentage of our merchant applications. Our agreements with ISOs typically provide for referral compensation based on funded amounts. If a material number of these ISOs were to cease submitting applications to us, shift their business to competitors, or demand higher compensation, our funded deal volume could decline, and our customer acquisition costs could increase. Because our internal business development resources are limited, we may not be able to quickly replace lost ISO-originated volume with direct originations, which could negatively affect our growth and revenues.
In addition, ISOs operate as independent contractors and are not subject to our direct supervision or control, which exposes us to operational and compliance risks. Misconduct, misrepresentation, or non-compliance by an ISO could harm our reputation, lead to regulatory scrutiny, or result in legal claims against us. Further, increased regulatory attention on ISOs and broker practices in the alternative lending industry could impose new compliance obligations on us as the funder, which may increase costs or reduce the attractiveness of ISO-originated transactions.
Our dependence on third-party ISOs and distribution partners therefore creates both financial and operational risks. If we are unable to effectively manage these relationships, ensure compliance with applicable laws, or diversify our origination channels, our business, financial condition, and results of operations could be materially and adversely affected.
Our use of AI, machine learning, and automated tools, together with reliance on third-party data providers, exposes us to risks involving accuracy, operational continuity, data security, and regulatory scrutiny, any of which could materially affect our ability to underwrite, detect fraud, and manage credit risk.
We rely on artificial intelligence (“AI”), machine learning (“ML”), and automation tools, in combination with human oversight, to support our underwriting, fraud detection, and data analysis processes. While we believe these technologies improve efficiency, reduce fraud risk, and enhance credit decision-making, they also introduce risks that could materially and adversely affect our business, financial condition, and results of operations.
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Our underwriting process depends on sensitive data provided by merchants, including bank statements, financial records, tax filings, and transactional histories. This information is analyzed using AI-enabled tools that structure, authenticate, and evaluate the data. Although we implement strict safeguards, including encryption, access controls, audit trails, and limiting the use of such data exclusively to underwriting and servicing activities, there is a risk that these systems could be subject to unauthorized access, cyberattacks, or data breaches. Any such event could expose us to liability under data privacy laws, regulatory enforcement actions, reputational harm, and loss of customer confidence.
We also rely on third-party providers to aggregate and authenticate financial data, provide credit bureau information, and detect potential fraud. If these providers experience service disruptions, errors, inaccuracies, or terminate their services to us, our ability to process applications efficiently could be materially impaired. Because AI and ML models require continual updates to remain accurate, reliance on third parties introduces the risk that errors in their models could lead to inaccurate underwriting decisions, higher default rates, or lost business opportunities.
In addition, AI-driven analysis is based on patterns and assumptions derived from historical data. These models may fail to predict merchant behavior in changing macroeconomic conditions, during unexpected events, or when applied to businesses with limited operating histories. If our reliance on AI or ML produces inaccurate risk assessments, we could experience increased loss rates or fail to identify fraudulent applications.
Finally, while our AI-enabled underwriting process is designed to accelerate decision-making compared to traditional lenders, it is subject to significant regulatory scrutiny. Regulators may adopt new rules regarding the use of AI, ML, or alternative data in underwriting that could require changes to our processes, increase compliance costs, or limit our ability to use certain data sources. Any such developments could adversely affect our operations and results.
Our debt financing arrangement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund) increases our fixed debt obligations and may result in shareholder dilution upon the future exercise of associated warrants.
On September 1, 2025, we entered into a financing arrangement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund) pursuant to which we may raise up to $50 million through the issuance of unsecured and unsubordinated debt notes (the “Stewards debt notes”). On October 30 the Stewards debt notes were extended to $100 million. While this financing provides us with additional capital resources, it also introduces risks. The Stewards debt notes carry a fixed annual interest rate of 8.0% and mature in August 2030. Servicing this debt will require ongoing cash interest payments, which may limit the funds available for operations, growth initiatives, or other strategic investments. Because the notes are unsecured, in the event of financial distress we would remain fully liable for repayment without the benefit of collateral-based restructuring flexibility.
In connection with the issuance of the Stewards debt notes, we also agreed to issue warrants exercisable for ordinary shares at a fixed price of $0.76 per share. Although the warrants are subject to a delayed exercise period, commencing no earlier than 12 months following an IPO or the maturity date, whichever is later, the eventual exercise of these warrants could result in dilution to existing shareholders. Furthermore, while the warrants are structured to minimize dilution around the time of our planned public offering, investor perception of potential dilution may nevertheless impact the trading price of our common stock.
The proceeds from this financing are required to be used exclusively for (i) refinancing existing debt, including obligations maturing in June 2026 that currently carry an effective interest rate of approximately 15%, and (ii) funding the Company’s general operational needs. The Stewards debt notes are unsecured and unsubordinated obligations of the Company and are not secured against any particular assets. While this structure provides immediate interest savings and reduces our overall cost of capital, it does not generate incremental discretionary growth capital. If we are unable to refinance or repay the remaining portion of our indebtedness as it comes due, or if future financing is not available on acceptable terms, our liquidity and ability to execute our business strategy could be materially and adversely affected.
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Risks Related to the 1818 Park Acquisition and Our Real Estate Business and Industry
Our high leverage, upcoming loan maturity, and dependence on refinancing expose us to significant risks, including increased sensitivity to property performance and interest rates, and the possibility that we may be unable to refinance on acceptable terms or may be forced to sell the property under adverse conditions.
Block 40, LLC, the entity through which we own 1818 Park, has a senior secured mortgage loan expected to be approximately $73.6 million by quarter-end. This loan matures on June 1, 2026. Our level of indebtedness increases our financial leverage and magnifies the impact that adverse changes in property operations, market conditions, or interest rates may have on our financial condition and results of operations. A high degree of leverage reduces our flexibility to respond to changing business and economic conditions, limits our ability to fund capital expenditures or other operational needs, and increases the risk of default if property-level cash flows decline.
Because the loan matures in less than one year, we will be required to either repay or refinance this indebtedness. Our ability to refinance the mortgage on acceptable terms will depend on numerous factors, many of which are outside our control, including the appraised value and performance of the property, the level of interest rates at the time of refinancing, credit market conditions, and lender appetite for real estate exposure in our markets. If we are unable to refinance on acceptable terms, we may be required to contribute additional equity, restructure the loan on unfavorable terms, or sell the property under distressed conditions, any of which could materially and adversely affect our liquidity, financial condition, and results of operations.
Furthermore, the mortgage is secured by 1818 Park, and a failure to meet our debt service obligations could result in foreclosure, which would cause us to lose the property and its associated income streams. Even if refinancing is available, rising interest rates or changes in lending standards could result in materially higher debt service costs, further constraining cash flows available for distribution or reinvestment.
Our exposure to floating interest rates increases our sensitivity to changes in market rates, and rising interest rates could significantly increase our debt service costs, reduce cash flow, and adversely affect our financial condition.
While we have entered into an interest rate cap agreement that provides protection against increases in one-month SOFR above 4% on $73.6 million of notional principal through to 1 July 2026, this protection is limited in both duration and scope. The cap only applies to the SOFR index and does not cover the credit spread we are required to pay under our loan. Moreover, once the cap expires, we will be fully exposed to prevailing floating rates unless we are able to secure new hedging protection, which may be more costly or unavailable on acceptable terms. If benchmark interest rates increase materially, or if replacement protection is unavailable after the cap’s termination, our debt service obligations could rise significantly, reducing our cash flow available for operations, impairing our ability to meet our debt covenants, and adversely affecting our financial condition and results of operations.
In addition, the need to refinance our mortgage loan upon maturity exposes us to further interest rate risk, as prevailing rates at the time of refinancing may be significantly higher than current levels. A sustained increase in market interest rates could therefore reduce the attractiveness of 1818 Park as an investment, depress its valuation, and adversely affect our overall financial condition and results of operations.
Our ability to generate rental income depends on maintaining high occupancy levels and stable tenant performance, and any decline in occupancy, increased lease turnover, or tenant defaults could reduce cash flows and adversely affect our financial condition.
The success of our investment in 1818 Park, and of our broader real estate strategy, depends heavily on our ability to attract and retain tenants on favorable terms. Rental income constitutes the primary source of cash flow for servicing debt and funding operating expenses. If occupancy levels decline due to competitive properties, unfavorable market conditions, or tenant relocations, we may be unable to generate sufficient revenue to cover our costs.
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In addition, tenants may fail to perform under their leases for a variety of reasons, including financial difficulties, bankruptcy, or broader economic downturns. Tenant defaults or non-renewals would require us to incur additional leasing costs, offer rent concessions, or spend significant capital on tenant improvements in order to attract replacement tenants, all of which could materially reduce our cash flows. Even if we are able to re-lease space, there is no assurance that new tenants will pay rental rates equal to or greater than those paid by prior tenants, or that new leases will not include more burdensome terms.
Furthermore, high turnover in occupancy not only increases leasing and marketing costs but also creates potential downtime between tenants, during which no rental income is generated. A sustained decline in occupancy, or the loss of one or more significant tenants, would adversely affect our ability to meet debt service obligations, reduce cash available for distribution, and impair the value of our properties. These risks are heightened by the concentration of income from a limited number of tenants, making us more vulnerable to the performance and creditworthiness of those tenants than if we had a more diversified tenant base.
A significant portion of our rental income is derived from a limited number of tenants, and if these tenants experience financial difficulties, default on their leases, or choose not to renew, our revenues could be materially and adversely affected.
Our rental revenue at 1818 Park, and potentially at other properties we may acquire, is concentrated among a limited number of tenants. As a result, the financial performance of a small group of tenants has a disproportionate impact on our overall cash flow and our ability to meet debt service obligations. If any of these tenants were to experience financial distress, bankruptcy, or operational challenges, they could seek to renegotiate lease terms, delay or withhold payments, or default altogether, materially reducing our revenue.
Even if tenants remain in good financial condition, we are subject to renewal risk at lease expiration. Tenants may elect not to renew their leases for reasons outside of our control, such as relocation, downsizing, or changes in their business strategy. Replacing a departing tenant could require us to offer significant lease concessions, incur material tenant improvement costs, or accept lower rental rates, any of which would negatively affect our cash flow. Additionally, periods of vacancy between tenants would generate no rental income, increasing our reliance on reserves or other sources of liquidity.
Given the limited number of tenants, the loss or default of even one major tenant could materially and adversely affect our results of operations, financial condition, and ability to satisfy debt obligations. This concentration risk reduces the diversification of our income stream and makes us more vulnerable to tenant-specific risks than a portfolio with a broader tenant base.
Our financial performance is heavily influenced by local market conditions and broader economic trends, and adverse changes in employment levels, consumer demand, interest rates, or the supply of competitive properties could materially and adversely affect occupancy rates, rental income, and property values.
The performance of 1818 Park, and any other properties we may acquire, is closely tied to conditions in the surrounding local market as well as broader national and regional economic trends. Local employment levels, population growth, and consumer spending patterns directly affect demand for both residential and commercial space within our properties. An increase in unemployment, a decline in consumer demand, or other adverse economic events in our market could lead to reduced demand for rental units, lower rental rates, and higher vacancy levels.
In addition, interest rates and capital market conditions affect not only the cost of our financing but also the purchasing power and financing ability of prospective tenants and buyers. Rising interest rates or tightening credit conditions may reduce tenant demand, constrain our ability to refinance debt, and lower property valuations. Moreover, increased supply of competitive residential or mixed-use properties in the same market could create downward pressure on occupancy levels, limit our ability to raise rents, and force us to offer greater concessions to attract and retain tenants.
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Because our real estate portfolio is not widely diversified across geographic regions, negative developments in the local economy or broader economic environment could have a disproportionately adverse effect on our business, results of operations, and financial condition.
We may require additional capital to support operations, fund improvements, or meet debt service obligations, and if we are unable to generate sufficient cash flow from the property or access financing on favorable terms, our liquidity could be constrained, forcing us to defer capital projects, seek dilutive equity, or dispose of assets under unfavorable conditions.
The successful operation of 1818 Park requires sufficient liquidity to cover property-level operating expenses, debt service obligations, and periodic capital expenditures, including maintenance, renovations, or tenant improvements. If rental income and other cash flows generated by the property are insufficient, we may need to secure additional capital through borrowings, equity issuances, or asset sales. Our ability to obtain additional financing is subject to numerous factors, including the performance of the property, prevailing interest rate and credit conditions, the strength of the commercial real estate market, and our overall financial condition.
There can be no assurance that financing will be available on acceptable terms, or at all. If we are unable to refinance existing debt at maturity, raise additional debt or equity capital, or sell non-core assets on favorable terms, we may be forced to defer necessary capital projects, reduce operating flexibility, issue additional equity securities at prices that may be dilutive to existing stockholders, or dispose of assets under adverse market conditions, potentially at values below their carrying amounts. Any such outcome could materially and adversely affect our business, liquidity, results of operations, and financial condition.
Our ownership and operation of 1818 Park exposes us to property-specific risks, including physical condition issues, unanticipated capital expenditures, changes in local market demand, competition from nearby properties, and compliance with zoning, building, and environmental regulations, any of which could increase costs, reduce occupancy, or adversely affect the value and cash flow of the property.
Owning and operating 1818 Park involves risks unique to the property itself. The physical condition of the building may require ongoing repairs, capital expenditures, or upgrades that are more extensive than originally anticipated, particularly as the property ages or as building systems deteriorate. Unforeseen maintenance needs or structural issues could significantly increase operating costs and disrupt tenant occupancy.
In addition, the property’s financial performance depends on local market dynamics, including demand for rental units, competition from newly developed or nearby properties, and demographic or economic shifts that may affect tenant demand. If competing properties offer more attractive amenities, pricing, or locations, 1818 Park could experience reduced occupancy or require rent concessions, thereby decreasing revenues.
The property is also subject to extensive regulation, including zoning restrictions, building codes, health and safety requirements, and environmental laws. Failure to comply with these regulations, or changes in applicable laws, could result in increased compliance costs, restrictions on operations, delays in improvements or redevelopment efforts, or the imposition of fines and penalties.
Together, these property-specific risks could impair our ability to maintain stable occupancy, generate consistent cash flow, or preserve the long-term value of 1818 Park, which in turn could adversely affect our financial condition and results of operations.
Integration of 1818 Park into our broader company operations may present challenges, including aligning property management systems, financial reporting, compliance controls, and strategic priorities, which could increase costs, divert management attention, or limit our ability to realize expected synergies.
The acquisition of 1818 Park requires integration into our broader company operations, which presents operational and strategic risks. Property management systems may not seamlessly align with our existing platforms, potentially requiring additional investment in new technology, staff training, or third-party services. Similarly, integrating financial reporting processes and compliance controls across both our private credit and real estate divisions may be complex, time-consuming, and costly.
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In addition, integrating a large mixed-use property into our overall business strategy requires management attention and resources that could otherwise be directed toward our private credit operations or new real estate acquisitions. If our leadership is diverted from core business activities, we may experience inefficiencies, delays in execution, or reduced performance in other parts of our business.
Finally, we may not achieve the expected synergies from combining 1818 Park with our broader operations. Challenges in aligning property-level decision-making with corporate objectives, or in balancing capital allocation priorities across different business lines, may limit our ability to realize the financial and strategic benefits we anticipate. If integration costs are higher than expected or synergies fail to materialize, our financial results, cash flows, and overall growth strategy could be adversely affected.
Our acquisition of 1818 Park through a stock-for-liabilities transaction and the subsequent exchange of EB-5 investor interests for equity expose us to risks related to leverage, dilution, regulatory oversight, and investor relations.
In July 2025, we acquired Block 40, LLC, the owner of 1818 Park, through a $190 million stock-for-liabilities transaction. This acquisition required us to assume significant property-level debt and obligations, which could increase our leverage and limit our financial flexibility. If property performance declines or if real estate market conditions deteriorate, the carrying value of the asset and its contribution to our balance sheet could be adversely affected.
In addition, we initiated an offer to EB-5 investors in Block 40 to exchange their preferred membership interests for shares of our common stock. While intended to align investor interests with our long-term growth strategy, this exchange could result in shareholder dilution and potential disputes if investors challenge the terms, valuation, or tax treatment of the exchange. Further, the EB-5 program itself is subject to federal regulatory oversight, and any changes in interpretation or enforcement could affect investor participation or create compliance risks.
Taken together, the property-level debt and EB-5 exchange expose us to risks related to leverage, dilution, regulatory oversight, and investor relations, any of which could adversely affect our business, financial condition, or results of operations.
Because we have limited operating history in real estate relative to more established participants, we may face challenges in executing and scaling our strategy, which could materially and adversely affect our results.
We established our real estate division in 2025, and our operating history in this segment is limited compared to many established real estate owners, operators, and developers. As a result, we lack the depth of historical performance data, tenant relationships, operating infrastructure, and institutional knowledge that more seasoned participants rely upon when managing risk and pursuing growth. This relative inexperience may limit our ability to anticipate or respond effectively to market cycles, leasing trends, redevelopment challenges, or shifts in financing conditions.
In addition, our ability to scale our real estate platform will require significant investment in property management, leasing capabilities, compliance, and reporting systems. Building these competencies may take longer or prove more costly than anticipated. If we are unable to attract and retain the personnel, third-party partners, or systems necessary to operate at scale, our performance may lag behind competitors, reducing our ability to generate consistent rental income or execute value-enhancement strategies.
Moreover, because our broader business is rooted in private credit, there is a risk that real estate operations could be under-resourced or deprioritized relative to other initiatives, further limiting the effectiveness of our execution. If our limited operating history results in missteps in property management, capital allocation, or market selection, our financial results, growth trajectory, and reputation in the real estate market could be materially and adversely affected.
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Because repositioning, redevelopment, or execution of our real estate investment strategy may involve construction risk, leasing challenges, regulatory delays, or cost overruns, we may not achieve anticipated returns, and our results of operations and financial condition could be materially and adversely affected.
Our real estate strategy includes repositioning, redevelopment, and other value-enhancement initiatives, all of which expose us to execution risks that may prevent us from realizing expected returns. Construction and redevelopment projects are inherently subject to risks such as unexpected structural or environmental conditions, labor shortages, contractor defaults, supply chain disruptions, and material price volatility. These factors can lead to delays or cost overruns that materially increase the capital required to complete a project and extend the time before a property generates stabilized income.
In addition, redevelopment and repositioning require successful leasing execution, which depends on prevailing market demand, competitive supply, and tenant creditworthiness. There can be no assurance that newly redeveloped or repositioned space will be leased on acceptable terms, or within anticipated timeframes. Prolonged lease-up periods, increased concessions, or elevated tenant improvement costs could reduce rental income and delay the achievement of targeted returns.
Regulatory risks also pose challenges to execution. Zoning restrictions, permitting delays, changes in building codes, or unexpected regulatory requirements may materially increase costs or prevent us from proceeding with a planned repositioning or redevelopment. Because such projects often require substantial upfront capital, any inability to complete them as planned could materially reduce our liquidity and constrain our ability to fund other business operations.
Taken together, these risks mean that redevelopment and repositioning initiatives may not deliver the returns we anticipate. If costs materially exceed budget, projects are delayed, or leasing results fall short of expectations, our financial condition, results of operations, and ability to meet debt service obligations could be materially and adversely affected.
Because the value of our properties securing mortgage loans may decline due to market conditions, operational performance, or other factors, the collateral may not be sufficient to repay the indebtedness in the event of a foreclosure or forced sale, which could materially and adversely affect our financial condition and results of operations.
The mortgage loans secured by our real estate holdings are collateralized by the value of the underlying properties. If property values decline as a result of adverse market conditions, weakened tenant demand, unfavorable changes in interest rates, increased competition, or other operational factors, the collateral supporting our loans may not be sufficient to cover the outstanding debt in the event of foreclosure or a forced sale. In such circumstances, we could be required to recognize significant losses, impairments, or write-downs that would adversely affect our financial condition and results of operations.
Real estate values are inherently volatile and subject to factors outside of our control, including local economic conditions, employment trends, capital market liquidity, demographic shifts, and changes in governmental regulations such as zoning, property taxes, and building codes. Additionally, operational factors—such as declining occupancy, tenant defaults, or unexpected capital expenditures—can negatively impact property performance, further reducing collateral value.
If we are unable to maintain property values at levels sufficient to support our mortgage obligations, lenders could foreclose on the property and we could lose our investment, while still remaining liable for any deficiency between the foreclosure proceeds and the outstanding loan balance. Even if we avoid foreclosure, we may be forced to sell properties at depressed valuations to raise liquidity, which could result in significant realized losses. Any such outcomes would materially and adversely impact our ability to meet debt service requirements, execute our business strategy, and protect shareholder value.
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Because our ability to grow our real estate portfolio depends on sourcing and successfully closing attractive acquisitions on favorable terms, any inability to identify, negotiate, or complete acquisitions in a timely manner, or at expected values, could adversely affect our growth strategy and financial results.
Our real estate growth strategy is predicated on identifying, evaluating, and acquiring properties that meet our investment criteria. The success of this strategy depends on our ability to source attractive opportunities, conduct thorough due diligence, negotiate favorable terms, and close transactions efficiently. Competition for high-quality assets is intense, and we face established real estate companies, institutional investors, and private equity firms with greater resources, stronger relationships, and broader operating histories. As a result, we may not be able to acquire desirable properties on terms that meet our return objectives or in sufficient volume to achieve our growth targets.
In addition, acquisitions are subject to numerous uncertainties, including the availability and cost of capital, the accuracy of third-party information, potential regulatory or legal challenges, and the risk that a property may underperform relative to underwriting assumptions. If we are unable to identify and complete acquisitions on favorable terms, our ability to expand our portfolio, diversify revenue streams, and achieve economies of scale will be limited.
Even when acquisitions are successfully completed, integration challenges, such as aligning property management systems, incorporating assets into our compliance framework, and managing financing structures, may delay or prevent us from realizing expected returns. If our acquisitions do not perform as anticipated, or if we are unable to scale our real estate platform through disciplined and timely acquisitions, our growth strategy could be materially and adversely affected, which would negatively impact our financial condition, results of operations, and long-term prospects.
Because our real estate portfolio is concentrated in select geographic markets, our operating results are subject to local economic conditions, regulatory environments, and real estate market trends in those areas, and adverse developments in these markets could disproportionately affect our performance and financial results.
Our real estate investments are concentrated in a limited number of U.S. markets, which exposes us to risks associated with the specific economic, demographic, and regulatory conditions of those regions. Local factors such as employment levels, population growth, consumer demand, infrastructure development, and the availability of financing all directly influence property performance, occupancy rates, and asset values. If one or more of these markets experience an economic downturn, declining real estate demand, or adverse demographic shifts, our revenues and property values could be materially and disproportionately affected.
In addition, local regulations, including zoning laws, rent control measures, property tax assessments, building codes, and environmental restrictions, can significantly impact property operations and profitability. Changes in these laws, or stricter enforcement, could increase our costs, delay redevelopment or repositioning projects, and limit our ability to optimize returns.
Because our current portfolio is not broadly diversified across many geographic areas, the effects of negative developments in one market cannot be easily offset by stronger performance in others. As a result, adverse conditions in the select markets where we operate could materially and adversely impact our financial condition, results of operations, and growth prospects.
We face competition from established real estate owners, operators, and developers with greater resources, market presence, and operating experience, which may limit our ability to source acquisitions, attract tenants, achieve favorable lease terms, or realize our business objectives.
The real estate industry is highly competitive, and we compete with a large number of established owners, operators, and developers who have substantially greater financial resources, broader market presence, deeper operating experience, and longer-standing industry relationships than we do. Many of these competitors are able to access capital at lower costs, pursue larger or more complex transactions, and absorb operating risks more effectively than we can.
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As a result, we may be at a disadvantage in identifying, negotiating, and acquiring attractive properties, particularly those located in supply-constrained or high-demand markets. We may also face challenges in attracting and retaining tenants, as larger and more established landlords may be able to offer more favorable lease terms, greater tenant improvement allowances, or stronger reputational benefits.
In addition, developers with significant resources may introduce new properties that increase competition for tenants in our markets, placing downward pressure on rental rates and occupancy. These dynamics could reduce the performance of our properties, delay or impair our growth strategy, and limit our ability to achieve our business objectives.
The valuation of our real estate assets is inherently uncertain and may not accurately reflect the prices we could realize upon sale or refinancing, which could result in material differences between reported values and actual transaction outcomes.
The value of our real estate assets is inherently subjective and depends on numerous factors, many of which are beyond our control. Independent appraisals, broker opinions, and management estimates rely on assumptions regarding property income, operating expenses, market rent levels, capitalization rates, and broader economic conditions. These assumptions may not prove accurate over time, particularly in periods of market volatility or when comparable transaction data is limited.
Because real estate markets are influenced by local supply and demand dynamics, interest rates, capital availability, and investor sentiment, the values we assign to our properties may differ materially from the amounts we would realize in an actual sale, refinancing, or other transaction. In addition, the carrying values reported in our financial statements may not reflect current market conditions or the liquidity of our properties.
If actual transaction outcomes are materially lower than reported or estimated values, we could be required to record impairment charges, accept less favorable refinancing terms, or dispose of properties under adverse conditions. Any such developments could adversely affect our financial condition, results of operations, and ability to execute our business strategy.
Market rents and real estate sales prices are subject to fluctuations driven by local supply and demand dynamics, interest rate environments, capital market conditions, and broader economic cycles, and such volatility could materially impact our rental income, asset valuations, and the proceeds we realize upon a sale or refinancing.
The performance and value of our real estate assets are highly dependent on external market conditions that we do not control. Market rents can decline if supply of comparable properties increases, demand from tenants weakens, or broader economic conditions reduce consumer or business spending. Similarly, the sales prices achievable for our properties may be adversely affected by higher interest rates, reduced availability of financing, capital market dislocations, or declines in investor appetite for real estate in our target markets.
Volatility in rental rates and property values directly influences our ability to generate stable cash flows and realize expected returns. Lower rental income could reduce operating margins and impair our ability to service debt or fund property improvements, while lower sales prices could limit the proceeds we receive upon a disposition or refinancing. Periods of market stress may also increase the risk that we are forced to sell properties at depressed prices or accept refinancing terms that are less favorable than anticipated.
If market rents or sales prices decline significantly, the value of our assets, our revenues, and our ability to execute our business strategy could be materially and adversely affected.
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Our real estate revenues depend on our ability to successfully attract condominium buyers and tenants through broker networks, advertising campaigns, referrals, and promotional efforts, and any failure or increased cost in executing these strategies could materially impact sales velocity, occupancy rates, and pricing power.
The success of our condominium sales and leasing activities depends on our ability to effectively market properties to potential buyers and tenants. We rely on broker networks, digital and traditional advertising, referral programs, and on-site promotional campaigns to generate sales and leasing activity. If these strategies are unsuccessful, ineffective, or become more costly, we may experience slower sales velocity, higher vacancy rates, extended absorption periods, or reduced rental pricing power.
Competition from other developers and landlords offering comparable residential or commercial properties may also limit our ability to attract buyers and tenants on favorable terms. Market conditions, such as rising interest rates, shifts in consumer demand, or broader macroeconomic downturns, could further weaken the effectiveness of our marketing efforts and diminish demand for our properties.
In addition, the success of our marketing strategies depends on our ability to allocate resources efficiently across multiple projects and adapt to evolving consumer preferences, including increased reliance on digital platforms and broker incentives. Failure to implement effective, targeted, and cost-efficient marketing and sales strategies could materially and adversely affect our real estate revenues, profitability, and overall business performance.
Risks Related to the Dolomite Transaction and the Company’s Digital-Asset Activities
The Company’s recent financing transaction involving digital tokens presents unique risks, including volatility, valuation uncertainty, and evolving regulatory treatment.
On November 3, 2025, the Company, doing business as Stewards Inc., entered into a Securities Purchase Agreement (the “Agreement”) with Dolomite Foundation, a Cayman Islands foundation acting for itself and on behalf of its syndicate of investors (the “Dolomite Syndicate”). Pursuant to the Agreement, the Company agreed to issue pre-funded warrants to purchase up to 2,450,980 shares of its common stock. The economic value per warrant share is $4.08, based on the 30-trading-day volume-weighted average price (VWAP) of the Company’s common stock for the period from September 19, 2025 to October 30, 2025. The actual exercise price of the prefunded warrants is .0001 per share, with substantially all consideration delivered upfront via $DOLO tokens as in-kind payment. The transaction provides for an aggregate investment amount of $10,000,000, payable in $DOLO tokens as in-kind consideration. The warrants are structured in ten equal tranches of $1,000,000 each, becoming exercisable upon achievement of specified $DOLO 30-day VWAP milestones. Tokens will be held in a jointly controlled multi-signature wallet on the Arbitrum One blockchain, requiring a three-of-four authorization threshold (two company signatories and two investor signatories) for any release. Shares issued upon exercise of the warrants will be subject to a 12-month lock-up period, and all unissued tranches are subject to cancellation in the event that $DOLO’s 30-day VWAP falls below $0.01. The structure is designed to align the Company’s digital-asset exposure with Dolomite’s platform development milestones while minimizing immediate dilution and supporting the Company’s longer-term liquidity and capital-efficiency objectives. Proceeds of the transaction are intended to support continued growth of the Private Credit and Real Estate segments and the controlled implementation of the Company’s digital-asset strategy.
Because the Company’s investment proceeds under the Securities Purchase Agreement are tied to the market value of a single digital token, significant volatility in the $DOLO token price could lead to unpredictable funding levels, valuation changes, and potential tax or liquidity impacts that may adversely affect the Company’s financial condition.
The $DOLO token, which serves as the form of consideration under the Company’s Securities Purchase Agreement (“SPA”) with the Dolomite Foundation, trades on unregulated digital-asset exchanges that are subject to extreme price volatility, varying liquidity, and limited regulatory oversight. The value of the Company’s potential receipts under the SPA depends entirely on the market performance of the $DOLO token. Tokens are released to the Company in stages only after predetermined 30-day volume-weighted average price (“VWAP”) milestones are achieved. If the $DOLO token fails to reach these milestones, the corresponding portion of tokens will not be released, and the associated tranches of pre-funded warrants will be cancelled. Accordingly, the Company may receive less than the total $10 million investment contemplated by the SPA, or experience extended delays in funding.
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Even if milestones are met, $DOLO tokens may fluctuate significantly in value between the date of release and any subsequent liquidation or use by the Company. Because digital-asset markets are decentralized and not subject to the same trading, clearing, or reporting requirements as traditional securities exchanges, token prices may be influenced by speculative activity, large holders, automated trading algorithms, or market manipulation. As a result, the fair value of tokens held by the Company could decline rapidly and materially, adversely affecting reported results and liquidity.
Conversely, material increases in the $DOLO token price could produce unrealized mark-to-market gains for accounting purposes, which may be subject to current U.S. tax recognition even though the Company has not converted the tokens into cash. This could create a cash-flow mismatch, where the Company incurs tax liabilities on paper gains without having liquid assets available to satisfy such obligations. Because the Company’s ability to sell or convert tokens may also be constrained by lock-ups, exposure limits, or market conditions, significant volatility could lead to earnings volatility, unexpected tax obligations, or short-term liquidity strain.
In addition, if $DOLO trading volumes or exchange availability decline, the Company may encounter difficulty obtaining reliable market data to establish fair value under U.S. GAAP. Any resulting valuation adjustments, impairments, or restatements could materially affect the Company’s financial statements and investor perception. There can be no assurance that the Company will be able to realize the expected value of the tokens received under the SPA, or that token price volatility will not materially and adversely affect its results of operations, financial position, or cash flows.
Tokens issued under the Securities Purchase Agreement are subject to contractual, market, and regulatory restrictions that may delay or prevent their conversion into cash or other usable assets, constraining the Company’s ability to fund operations, repay obligations, or deploy capital in accordance with its strategic objectives.
Tokens received from the Dolomite Foundation under the Securities Purchase Agreement (“SPA”) are subject to contractual and market restrictions that may limit the Company’s ability to freely convert, liquidate, or deploy them for operational or treasury management purposes. The SPA and related agreements restrict the sale or disposition of tokens for a defined period following each release, and also impose conditions tied to overall digital-asset exposure on the Company’s balance sheet. These limitations are designed to ensure compliance with applicable securities and listing regulations but may delay or prevent the Company from using tokens to fund operations, repay debt, or pursue other strategic opportunities.
Furthermore, the $DOLO token currently trades in limited volumes on unregulated digital-asset exchanges, and there can be no assurance of sustained liquidity or reliable market access. If trading volumes decline, or if the Company’s counterparties or custodians experience disruptions, the Company may be unable to sell tokens at prevailing market prices or in sufficient quantities to meet short-term liquidity needs. In addition, significant price volatility could make it impractical to hedge exposure through offsetting positions or derivative instruments, particularly if counterparties or compliant products are unavailable.
Because digital tokens are treated as non-cash assets under U.S. GAAP, the Company’s ability to convert them into cash equivalents for operational purposes depends on the existence of functioning exchanges, custodial arrangements, and counterparties willing to transact at observable prices. Any sustained inability to convert or repurpose the tokens could adversely affect the Company’s liquidity, capital resources, and financial condition, and may also increase volatility in reported earnings due to mark-to-market accounting requirements.
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Because digital-asset custody depends on emerging technologies and valuation relies on prices from non-regulated markets, the Company may encounter risks related to loss, misstatement, or differing interpretations of applicable accounting standards, which could lead to delays, restatements, or increased audit scrutiny.
The Company maintains custody of tokens received under the SPA through a multi-signature digital wallet administered in coordination with independent third-party service providers. While multi-signature custody is designed to reduce single-point-of-failure risk, it still depends on the integrity of private key management, secure communication protocols, and coordinated authorization among signatories. A loss, theft, or compromise of any private key, or an operational failure or cyber-security breach affecting one or more custodians, could result in the permanent loss of tokens, as digital assets typically cannot be recovered once transferred or misappropriated. The Company’s ability to access or transfer tokens may also be delayed or restricted if a custodian experiences insolvency, operational downtime, or regulatory enforcement action.
In addition, digital-asset valuation and accounting involve inherent complexity and professional judgment. The fair value of tokens is determined using quoted prices from digital-asset exchanges that are not subject to the same regulatory oversight, market surveillance, or audit standards as national securities exchanges. Prices may vary significantly across exchanges, and trading volumes may be thin or subject to manipulation. Consequently, management’s determination of fair value could differ materially from prices realized upon eventual sale or conversion, potentially requiring valuation adjustments, impairments, or restatements in future reporting periods.
Moreover, as digital-asset accounting guidance continues to evolve, auditors or regulators may challenge the Company’s valuation methods, classification, or disclosures under U.S. GAAP. Any such challenge could result in delayed filings, increased audit costs, or financial statement revisions, and could adversely affect investor confidence in the Company’s financial reporting and controls.
As regulatory expectations evolve and public scrutiny of digital-asset participation increases, the Company’s association with token-based financing and blockchain initiatives may result in heightened compliance review, delays in listing approval, or negative investor perception, any of which could impact access to capital and market valuation.
As the Company expands its participation in digital-asset markets, regulators, exchanges, auditors, and institutional investors may perceive higher operational and compliance risks compared to traditional financial activities. The regulatory environment governing digital assets remains fluid and varies significantly across jurisdictions. U.S. federal and state agencies, including the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and the Financial Crimes Enforcement Network (“FinCEN”), continue to evaluate the classification and treatment of digital tokens, token-based financing structures, and related custody and accounting standards. There can be no assurance that future guidance, rulemaking, or enforcement actions will not impose new licensing, registration, disclosure, or capital requirements that could increase costs, delay filings, or limit the Company’s ability to expand its digital-asset initiatives.
Additionally, national securities exchanges, including Nasdaq, have begun to apply heightened scrutiny to issuers with significant digital-asset exposure. As part of its uplisting review process, Nasdaq may request detailed information on the Company’s digital-asset holdings, valuation methods, internal controls, and counterparty risk management. Any delay or additional disclosure requirements could postpone or jeopardize the Company’s planned uplisting. Even if regulatory compliance is maintained, association with digital-asset activities could create perception risk among certain institutional investors, lenders, or strategic partners who may view the sector as speculative, volatile, or subject to future legal restriction.
The Company’s reputation and access to capital markets therefore depend on maintaining strong compliance standards, transparent disclosures, and alignment with evolving regulatory expectations. Any adverse regulatory development, reputational event, or change in listing standards could materially affect the Company’s ability to complete its planned Nasdaq uplisting, attract institutional investment, or execute its long-term digital-asset strategy.
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Because the delivery and custody of tokens under the Securities Purchase Agreement depend on the performance and reliability of the Dolomite Foundation and its designated escrow agents, any operational failure, insolvency, or breach by those parties could result in delayed funding, loss of tokens, or limited ability to enforce contractual rights.
The Company relies on the Dolomite Foundation and its designated escrow agents for the custody, release, and verification of digital tokens delivered under the Securities Purchase Agreement (“SPA”). All $DOLO tokens associated with the SPA are to be held in a multi-signature wallet structure that requires coordination among several signatories to authorize transfers. The Company does not directly control all private keys associated with the escrow account and must therefore depend on the integrity and operational reliability of the counterparties administering the arrangement. If the Dolomite Foundation, any syndicate member, or an escrow signatory fails to perform its obligations, becomes insolvent, is subject to sanctions, or loses access to wallet credentials, the Company may be unable to obtain the tokens to which it is entitled or may experience delays in receipt. Because blockchain-based transactions are irreversible and not governed by centralized clearing systems, contractual remedies may be limited in practice, and recovery through litigation or arbitration may be uncertain, costly, or impracticable. Any failure or dispute involving the Foundation or its escrow agents could result in the partial or total loss of tokens, delay the funding of the SPA, or adversely affect the Company’s liquidity, financial condition, and ability to execute its digital-asset strategy.
Changes in tax or financial-reporting treatment of digital-asset transactions could increase the Company’s tax liabilities, create reporting mismatches, or require restatements.
The U.S. federal and state tax treatment of digital-asset transactions continues to evolve, and future regulatory or interpretive developments could materially affect how token-based consideration is recognized, valued, or taxed. If tax authorities revise or clarify existing guidance governing mark-to-market recognition, fair-value accounting, or the classification of digital-asset receipts, the Company may be required to amend prior returns, remeasure deferred taxes, or record additional tax liabilities. Inconsistent treatment between book and tax reporting could also increase the Company’s effective tax rate, generate temporary timing differences in earnings, or create uncertainty in forecasting cash-tax obligations. Because digital-asset transactions are novel and may lack precedent under Internal Revenue Service or Financial Accounting Standards Board (“FASB”) rules, subsequent guidance could necessitate changes in accounting policies or financial statement presentation. Any such change could lead to amended filings, higher compliance costs, or potential penalties for underpayment, which could adversely affect the Company’s financial results and investor confidence.
Failures, vulnerabilities, or cyberattacks affecting blockchain networks or custody systems could result in loss or misstatement of the Company’s digital assets.
The operation of blockchain networks, smart-contract systems, and digital-asset custody solutions depends on complex software, cryptographic protocols, and reliable internet infrastructure. Defects, coding errors, or deliberate attacks—such as “51% attacks,” network forks, denial-of-service incidents, or smart-contract exploits—could impair the ability to verify transactions or transfer tokens held by the Company. Because digital assets are generally irreversible once transferred, a loss or compromise of private keys, multisignature access, or custodial systems could permanently reduce or eliminate the Company’s token holdings. In addition, cybersecurity breaches, unauthorized access by insiders or third parties, or operational failures at wallet providers or escrow participants could lead to misappropriation, downtime, or data loss. Any such event could disrupt the Company’s ability to use, account for, or safeguard the tokens received under the Securities Purchase Agreement, and could result in financial loss, increased compliance costs, or adverse effects on financial reporting and investor confidence.
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Because the Company’s token holdings under the Securities Purchase Agreement are limited to $DOLO, a single digital asset issued by a third-party platform, adverse movements in the digital-asset market or unfavorable regulatory developments affecting similar tokens could have a disproportionate impact on the Company’s liquidity, valuation, and overall financial condition.
The Company’s holdings under the Securities Purchase Agreement are limited to $DOLO tokens, a single digital asset issued by an independent third-party ecosystem not controlled by the Company. This concentration increases the Company’s exposure to risks associated with the performance, governance, and adoption of the Dolomite platform. The market value and liquidity of $DOLO may also be closely correlated with overall cryptocurrency market conditions, including changes in investor sentiment, regulatory actions, or macroeconomic developments affecting the digital-asset sector as a whole. A decline in digital-asset valuations—whether or not specific to Dolomite—could materially reduce the value of the Company’s token holdings, affect its reported results, and limit its ability to execute planned transactions. Because the Company does not currently maintain hedging arrangements or significant diversification across other digital assets, adverse movements in the $DOLO token or the broader crypto market could have a disproportionate impact on its financial condition and capital resources.
Changes in accounting or classification standards for digital assets could require the Company to revise its financial reporting, resulting in restatements or compliance costs.
The accounting treatment of digital assets remains subject to evolving guidance from the Financial Accounting Standards Board (“FASB”), the Securities and Exchange Commission (“SEC”), and other regulatory bodies. Future updates to accounting standards or interpretations could change how digital-asset holdings are recognized, measured, or disclosed, including whether tokens are treated as intangible assets, financial instruments, or other asset classes. Such changes may require the Company to adjust previously issued financial statements, modify internal controls, or adopt new valuation methodologies. In addition, uncertainty regarding the classification of tokens received under the Securities Purchase Agreement could create inconsistencies in reporting or timing differences in earnings recognition. Any of these developments could increase audit complexity, lead to additional compliance costs, or affect comparability of financial information across reporting periods.
Risks Related to Acquisitions
We have in the past made, and in the future may make, acquisitions and investments that could divert management’s attention, result in operating difficulties and dilution to our shareholders and otherwise disrupt our operations and adversely affect our business, operating results or financial position.
Pursuing strategic and value-enhancing acquisitions or investment opportunities is one of our key growth strategies and has been an important contributor to our past growth. We may also in the future evaluate potential divestitures to align with our growth strategy. Any transactions that we enter into could be material to our financial condition and results of operations. Acquisitions and integrations or divestitures could create unforeseen operating difficulties and expenditures, whether or not such transactions are ultimately completed. Acquisitions, divestitures, and investments involve a number of risks, such as:
| • | diversion of management time and focus from operating our business; |
| • | use of resources that are needed in other areas of our business; |
| • | in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company; |
| • | in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company; |
| • | in the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company and difficulty converting the customers of the acquired company onto our systems, platforms and contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; |
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| • | in the case of an acquisition, difficulty integrating, supporting or enhancing acquired product lines or services, including difficulty in transitioning acquired solutions developed with different source code architectures to our integrated platforms, difficulty in supporting feature development across our full suite of house-built and acquired solutions and strain on resources from marketing and supporting multiple platforms prior to integration; |
| • | in the case of an acquisition, retention and integration of employees from the acquired company, and preservation of our corporate culture; |
| • | in the case of an acquisition, reliance on certain existing executive teams of acquired companies in new industries; |
| • | in the case of an acquisition or divestiture, difficulty delivering on our product strategy, including building a platform that enables us to drive value across our full ecosystem of merchants, suppliers and consumers; |
| • | unforeseen costs or liabilities; |
| • | adverse effects to our existing business relationships with partners and customers as a result of the acquisition, investment or divestiture; |
| • | the possibility of adverse tax consequences; |
| • | in the case of an acquisition or divestiture, we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for a proposed transaction in a timely manner, or at all; |
| • | fluctuations in the value of our investments, impairment to the value of our investments, or the failure to realize a return on such investments; |
| • | regulatory risks, litigation or other claims inherited from or arising in connection with the acquired company, investment or divestiture; |
| • | in the case of a divestiture, unforeseen loss of institutional knowledge, resources, know-how, or other assets; |
| • | in the case of a divestiture, potential contractual obligations may trigger, such as change of control obligations, which may negatively impact our ability to execute on such divestiture, our business, our financial condition, or our operating results; and |
| • | in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries. |
Acquisitions and investments may also result in dilutive issuances of equity securities, which could adversely affect our share price, or result in issuances of securities with superior rights and preferences to the subordinate voting shares or the incurrence of debt with restrictive covenants that limit our future uses of capital in pursuit of business opportunities. Divestitures may also not be well-received by the market, which could adversely affect our share price.
We
may not be able to identify acquisition or investment opportunities that meet our strategic objectives, or to the extent that such opportunities
are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable to us. In addition,
the acquisitions and investments that we consummate may fail to achieve our strategic objectives, in which case we may shut down, divest,
or otherwise exit the acquired business or investment, which could harm our reputation and adversely affect our financial position and
results of operations.
Businesses we acquire may not have disclosure controls and procedures and internal controls
over financial reporting, cybersecurity controls and data privacy compliance programs, or their existing controls
and programs may be weaker than or otherwise not in conformity with ours.
Upon consummating an acquisition, we seek to implement our disclosure controls and procedures, our internal controls over financial reporting as well as procedures relating to cybersecurity and compliance with data privacy laws and regulations at the acquired company as promptly as possible. Depending upon the nature and scale of the business acquired, the implementation of our disclosure controls and procedures as well as the implementation of our internal controls over financial reporting at an acquired company may be a lengthy process and may divert our attention from other business operations. Our integration efforts may periodically expose deficiencies or suspected deficiencies in the controls, procedures and programs of an acquired company that were not identified in our due diligence undertaken prior to consummating the acquisition. Where there exists a risk of deficiencies in controls, procedures or programs, we may not be in a position to comply with our obligations under applicable laws, regulations, rules and listing standards or we may be required to avail ourselves of scope limitations with respect to certifications required thereunder, and, as a result, our business and financial condition may be materially harmed.
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We may consider potential business or asset acquisitions in different industries, and stockholders may have no basis at this time to ascertain the merits or risks of any business or asset that we may ultimately operate or acquire.
Our business strategy contemplates the potential acquisition of one or more additional operating businesses or other assets that we believe will provide better returns on equity than our previous businesses and/or enhance the returns achieved from our current operating segments. There is no current basis for stockholders to evaluate the possible merits or risks of a target business or asset with which we may ultimately consummate a business combination, acquisition, or other investment. Although we will seek to evaluate the risks inherent in any particular business or acquisition opportunity, we cannot assure stockholders that all of the significant risks present in that opportunity will be properly assessed. Even if we properly assess those risks, some of them may be outside of our control or ability to assess. We may pursue business combinations, asset acquisitions, or investments that do not require stockholder approval and, in those instances, stockholders will most likely not be provided with an opportunity to evaluate the specific merits or risks of any such transaction before we become committed to the transaction(s).
Resources will be expended in researching potential acquisitions and investments that might not be consummated.
The investigation of target businesses and assets and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments has required and will continue to require substantial management time and attention, in addition to costs for accountants, attorneys, and others engaged from time to time to assist management. If a decision is made not to complete a specific business combination, asset acquisition, or other investment, the costs incurred up to that point relating to the proposed transaction likely would not be recoverable and would be borne by us. Furthermore, even if an agreement is reached relating to a specific opportunity, we may fail to consummate the transaction for any number of reasons, including those beyond our control.
Subsequent to an acquisition or business combination, we may be required to take write-downs or write-offs, incur restructuring costs, and incur impairment or other charges that could have a significant negative effect on our financial condition, results of operations, and share price, which could cause stockholders to lose some or all of their investments.
Even if we conduct extensive due diligence on a target business with which we combine or an asset which we acquire, we cannot assure stockholders that this diligence will identify all material issues that may be present with respect to a particular target business or asset, that it would be possible to uncover all material issues through a customary and reasonable amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise, and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and therefore will not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or associated with a target asset, or by virtue of our obtaining debt financing in connection with our future operations. Accordingly, stockholders could suffer a significant reduction in the value of their shares.
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Risks Related to Our Management and Control Persons
We rely heavily on our management, and the loss of their services could adversely affect our business.
Our success is highly dependent upon a well-structured and diversely appointed Board of Directors, Officers and Directors. The loss of Key Personal within the organization could have a material adverse effect on the Company and its business operations.
The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain the services of all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.
Our status as a controlled company and the concentration of voting power among our Founders could limit your ability to influence corporate matters.
As of the date of this prospectus, there are 192,229,142 shares of common stock, 64,220,000 shares of Series A preferred Stock, and 10,000,000 shares of Series B Preferred Stock outstanding.
If listed on Nasdaq, we would be a “controlled company” within the meaning of Nasdaq Listing Rule 5615(c) because Vincent Napolitano, Shaun Quin, and Glen Steward (the “Founders”), through a voting agreement governing 10,000,000 shares of Series B Preferred Stock, each with 50 votes per share, collectively control approximately 87% of the voting power of our company.
Our original board members will have the ability to control the outcome of matters submitted to the shareholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets.
Our status as a controlled company and the concentration of voting power among our original board members could limit your ability to influence corporate matters. This concentrated voting power could discourage others from initiating any potential merger, takeover or other change-of-control transaction that may otherwise be beneficial to our stockholders. Furthermore, this concentrated control will limit the practical effect of your influence over our business and affairs, through any stockholder vote or otherwise. Any of these effects could depress the price of our common stock.
If we are unable to attract and retain qualified personnel, especially our design and technical personnel, we may not be able to execute our business strategy effectively.
Our future success depends on our ability to retain, attract and motivate qualified personnel, including our management, sales and marketing, finance, and especially our design and technical personnel. As the source of our technological and product innovations, our design and technical personnel represent a significant asset. Any inability to retain, attract or motivate such personnel could have a material adverse effect on our business and results of operations.
Provisions in the Nevada Revised Statutes and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.
Members of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised Statutes (“NRS”). Specifically, NRS 78.138 provides that a director or officer is not individually liable to the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law.
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This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty of care.
In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock.
Our officers and directors have limited experience managing a public company.
Our officers and directors have limited experience managing a public company. Consequently, we may not be able to raise any funds or run our public company successfully. Our executive officer’s and director’s lack of experience of managing a public company could cause you to lose some or all of your investment.
Risks Related to Legal Uncertainty
Claims made against us from time to time can result in litigation that could distract management from our business activities and result in significant liability or damage to our brand.
As a company with expanding operations, we increasingly face the risk of litigation and other claims against us. We have no such claims at present. Litigation and other claims may arise in the ordinary course of our business and include employee claims, commercial disputes, landlord-tenant disputes, intellectual property issues, product-oriented allegations and slip and fall claims. These claims can raise complex factual and legal issues that are subject to risks and uncertainties and could require significant management time. Litigation and other claims against us could result in unexpected expenses and liabilities, which could materially adversely affect our operations and our reputation.
In addition, the industries in which we operate, funding and real estate, are characterized by extensive litigation and, from time to time, we may become subject of various claims. Regardless of outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims against us could result in payment of significant monetary damages and/or injunctive relief.
We may be classified as an inadvertent investment company if we acquire investment securities in excess of 40% of our total assets.
We are engaged in the business of being a diversified holding company engaged in significant finance and real estate activities while we continue to seek to acquire or establish other finance or operating businesses or assets. Our acquisition strategy focuses on evaluating acquisition targets that have reasonable growth prospects, and our management spends a significant portion of its time reviewing potential acquisitions, conducting due diligence, and seeking to negotiate transaction terms. From time to time, we may purchase investment securities as part of a deliberate strategy to obtain control of an operating business.
Under the Investment Company Act of 1940 (the “ICA”), a company may fall within the scope of being an “inadvertent investment company” under Section 3(a)(1)(C) of the ICA if the value of its investment securities (as defined in the ICA) is more than 40% of the company’s total assets on an unconsolidated basis (exclusive of government securities and cash and cash equivalents). We do not believe that we are engaged in the business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in the business of investing, reinvesting, or trading in securities. However, we seek prudently to hold excess liquid resources in marketable securities to preserve resources needed to acquire operating businesses or assets and fund our finance and real estate activities.
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The Board of Directors and management regularly monitor our status relative to the inadvertent investment company test under the ICA and believe that the Company is not currently an inadvertent investment company based on the assets test under Section 3(a)(1)(C) of the ICA.
If we were deemed to be an inadvertent investment company and determined to or were required to become a registered investment company, we would be subject to burdensome and costly compliance requirements and restrictions that would limit our activities, including limitations on our capital structure, additional corporate governance requirements, and other limitations on our ability to transact business as currently conducted. We do not believe that it would be practical or feasible for a company of our size, management, and financial resources to operate as a registered investment company. To avoid being deemed an inadvertent investment company or becoming a registered investment company, we may decide or be required to sell certain of our investments on disadvantageous terms, hold a greater proportion of our investments in marketable securities in U.S. government securities or cash equivalents that have a lower rate of return than other investment securities, or make other material modifications to our business operations and strategy, any or all of which could have a material adverse effect on our business, financial condition, results of operations, and future prospects.
We may be subject to tax and regulatory audits which could subject us to liabilities.
We are subject to tax and regulatory audits which could result in the imposition of liabilities that may or may not have been reserved. We are subject to audits by taxing and regulatory authorities with respect to certain of our income and operations. These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if our positions are not accepted by the auditing entity.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.
Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users. The use of consumer data by online service providers is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s Information Practices Act. We face similar risks in international markets where our products and services are offered. Any failure, or perceived failure, by us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of users, which could potentially have an adverse effect on our business.
In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business, our brand or our reputation with users. For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country. In addition, there currently is a data protection regulation applicable to member states of the European Union that includes operational and compliance requirements that are different than those currently in place and that also includes significant penalties for non-compliance.
The interpretation and application of privacy, data protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally. These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices, complicating long-range business planning decisions. If privacy, data protection, data transfer or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results.
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Nevada law and certain anti-takeover provisions of our corporate documents could entrench our management or delay or prevent a third party from acquiring us or a change in control even if it would benefit our shareholders.
Certain provisions of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her best interest. The summary of the provisions of Nevada law set forth below does not purport to be complete and is qualified in its entirety by reference to Nevada law.
The issuance of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse effects on any party contemplating a takeover could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of holders of our common stock.
Under Nevada law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation, does not need to consider only the interests of the corporation’s shareholders in any takeover matter but may also, in his discretion, may consider any of the following:
| (i) | The interests of the corporation’s employees, suppliers, creditors and customers; | ||
| (ii) | The economy of the state and nation; | ||
| (iii) | The impact of any action upon the communities in or near which the corporation’s facilities or operations are located; | ||
| (iv) | The long-term interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence of the corporation; and | ||
| (v) | Any other factors relevant to promoting or preserving public or community interests. | ||
Because our board of directors is not required to make any determination on matters affecting potential takeovers solely based on its judgment as to the best interests of our shareholders, our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our shareholders might believe to be in their best interests or in which such shareholders might receive a premium for their stock over the then market price of such stock. Our board presently does not intend to seek shareholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange rules.
If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common shares.
We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain a smaller reporting company, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement.
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Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
Deficiencies in disclosure controls and procedures and internal control over financial reporting could result in a material misstatement in our financial statements.
We could be adversely affected if there are deficiencies in our disclosure controls and procedures or in our internal controls over financial reporting. The design and effectiveness of our disclosure controls and procedures and our internal controls over financial reporting may not prevent all errors, misstatements or misrepresentations. Consistent with other entities in similar stages of development, we have a limited number of employees currently in the accounting group, limiting our ability to provide for segregation of duties and secondary review. A lack of resources in the accounting group could lead to material misstatements resulting from undetected errors occurring from an individual performing primarily all areas of accounting with limited secondary review. Deficiencies in internal controls over financial reporting which may occur could result in material misstatements of our results of operations, restatements of financial statements, other required remediations, a decline in the price of our common shares, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.
There may be deficiencies with our internal controls that require that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions by the SEC.
We are exposed to potential risks from legislation requiring companies to evaluate internal controls under Section 404a of the Sarbanes-Oxley Act of 2002. As a smaller reporting company, we will not be required to provide a report on the effectiveness of our internal controls over financial reporting until our second annual report, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are a smaller reporting company. We have not yet evaluated whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations. If we are not able to meet the requirements of Section 404a in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC.
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We may be unable to protect our intellectual property from infringement by third parties, and the third parties may claim that we are infringing on their intellectual property, either of which could materially or adversely affect us.
We intend to rely on patent protection, trade secrets, technical know-how and continuing technological innovation to protect our intellectual property, and we expect to require any employees, consultants and advisors that we may hire or engage in the future to execute confidentiality and assignment of inventions agreements in connection with their employment, consulting or advisory relationships. There can be no assurance, however, that these agreements will not be breached or that we will have adequate remedies for any such breach.
Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or may develop intellectual property competitive with ours. Our competitors may independently develop similar technology or otherwise duplicate our financial products and services. As a result, we may have to litigate to enforce and protect our intellectual property rights to determine their scope, validity or enforceability. Intellectual property litigation is particularly expensive, time-consuming, diverts the attention of management and technical personnel and could result in substantial cost and uncertainty regarding our future viability. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection would limit our ability to produce and/or market our products and services in the future and would likely have an adverse effect on any revenues we may in the future be able to generate by the sale or license of such intellectual property.
We may be subject to costly litigation in the event our future services or technology infringe upon another party’s proprietary rights. Third parties may have, or may eventually be issued, patents that would be infringed by our technology. Any of these third parties could make a claim of infringement against us with respect to our technology. We may also be subject to claims by third parties for breach of copyright, trademark or license usage rights. Any such claims and any resulting litigation could subject us to significant liability for damages or injunctions precluding us from utilizing our technology or services or marketing or selling any products or services under the same. An adverse determination in any litigation of this type could require us to design around a third party’s patent, license alternative technology from another party or otherwise result in limitations in our ability to use the intellectual property subject to such claims.
We may be exposed to liabilities under the Foreign Corruption Practices Act and any determination that we violated these laws could have a materially adverse effect on our business.
We are subject to the Foreign Corrupt Practices Act (“FCPA”), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and our employees, consultants, sales agents or distributors may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
Risks Related to Our Securities
We have the right to issue additional common stock and preferred stock without the consent of our stockholders, which would have the effect of diluting investors’ ownership and could decrease the value of their investment.
We have additional authorized, but unissued shares of our common stock that may be issued by us for any purpose without the consent or vote of our stockholders that would dilute stockholders’ percentage ownership of our company.
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Our articles of incorporation authorize the issuance of shares of preferred stock and/or the conversion of existing outstanding preferred stock into common stock, the rights, preferences, designations and limitations of which may be set by the board of directors. Our articles of incorporation have authorized the issuance of up 500,000,000 shares of common stock and up to 100,000,000 shares of preferred stock in the discretion of our Board.
Any authorized but unissued preferred stock may be issued upon board of directors’ approval; no further stockholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation.
Our Series A Preferred Stock and all of our existing and future indebtedness rank senior to our common stock in the event of a liquidation, winding up or dissolution of our business.
In the event of our liquidation, winding up or dissolution, our assets would be available to make payments to holders of all existing and future indebtedness and holders of the Series A Preferred Stock, before payments to holders of our common stock. In the event of our bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying amounts to the holders of our indebtedness and preferred stockholders, to pay anything to common stockholders. As of September 30, 2025, we had total consolidated liabilities of approximately $124,216,148 million, with 64,220,000 shares of Series A Preferred Stock outstanding. As of the date of this prospectus, there are 64,220,000 shares of Series A Preferred Stock outstanding. Any liquidation, winding up or dissolution of our company or of any of our wholly or partially owned subsidiaries would have a material adverse effect on the holders of our common stock.
We do not expect to pay dividends on our common stock in the foreseeable future. Any return on investment may be limited to the value of our common stock.
Since inception, we have never declared a dividend on our common stock, and we do not intend to declare dividends on our common stock in the foreseeable future. The terms of our Series A Preferred stock provide an annual dividend of six percent (6%) of the Stated Value times the number of preferred shares held by such holder. Dividends on the Series A Preferred Stock is payable on a quarterly basis and may be payable, at our option, in cash or shares of our common stock, or a combination thereof.
Other than with respect to our Series A Preferred Stock, our board of directors declares dividends when, in its discretion, it determines that a dividend payment, as opposed to another use of cash, is in the best interests of the stockholders. Such decisions are based on the facts and circumstances then existing including, without limitation, our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant. As a result, we cannot predict when, or whether, another dividend on our common stock will be declared in the future. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.
Risks Related to the Market for our Stock
If a market for our common stock does not develop, shareholders may be unable to sell their shares.
Our common stock is quoted under the symbol “SWRD” on the OTCPink operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities. We do not currently have an active trading market. There can be no assurance that an active and liquid trading market will develop or, if developed, that it will be sustained.
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Our securities are very thinly traded. Accordingly, it may be difficult to sell shares of our common stock without significantly depressing the value of the stock. Unless we are successful in developing continued investor interest in our stock, sales of our stock could continue to result in major fluctuations in the price of the stock.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
Our stock price is subject to a number of factors, including:
| • | Technological innovations or new products and services by us or our competitors; |
| • | Government regulation of our financial products and services; |
| • | The establishment of partnerships with other financial services companies; |
| • | Intellectual property disputes; |
| • | Additions or departures of key personnel; |
| • | Sales of our common stock; |
| • | Our ability to integrate operations, technology, products and services; |
| • | Our ability to execute our business plan; |
| • | Operating results below or exceeding expectations; |
| • | Whether we achieve profits or not; |
| • | Loss or addition of any strategic relationship; |
| • | Industry developments; |
| • | Changes in accounting principles; |
| • | General and industry-specific economic conditions; and |
| • | Period-to-period fluctuations in our financial results. |
The market prices of the securities of early-stage companies, particularly companies like ours without consistent revenues and earnings, have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. In the past, companies that experience volatility in the market price of their securities have often faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in substantial costs, divert our management’s attention and resources and harm our financial condition and results of operations.
Because we are subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced.
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.
We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
We will likely be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
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If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities.
Effective June 30, 2020, the SEC implemented Regulation Best Interest requiring that “A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer.” This is a significantly higher standard for broker-dealers to recommend securities to retail customers than before under FINRA suitability rules. FINRA suitability rules do still apply to institutional investors and require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending securities to their customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information, and for retail customers determine the investment is in the customer’s “best interest” and meet other SEC requirements. Both SEC Regulation Best Interest and FINRA’s suitability requirements may make it more difficult for broker-dealers to recommend that their customers buy speculative, low-priced securities. They may affect investing in our common stock or our preferred stock, which may have the effect of reducing the level of trading activity in our securities. As a result, fewer broker-dealers may be willing to make a market in our common stock or our preferred stock, reducing a stockholder’s ability to resell shares of our common stock or our preferred stock.
Risks Relating to this Offering
The market price of our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares.
Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent public offerings, especially among companies with relatively smaller public floats. If you purchase our common stock in our resale offering, you may not be able to sell those shares at or above the resale offering price. In particular, our common stock may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices, given that we will have relatively small public floats after this offering, and the selling stockholders of the Company are offering resale shares through the resale prospectus. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects.
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The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
§ actual or anticipated fluctuations in our revenue and other operating results;
§ the sale of resale shares by our selling stockholders in the open market;
§ the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
§ actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
§ announcements by us or our competitors of significant services or features, technical innovations, acquisitions, strategic relationships, joint ventures, or capital commitments;
§ price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
§ lawsuits threatened or filed against us; and
§ other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. Stockholders may filed securities class action litigation following periods of market volatility. In the event that we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.
Holders of our common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Common Stock. As a result of this volatility, investors may experience losses on their investment in our Common Stock. Furthermore, the potential extreme volatility may confuse the public investors of the value of our stock, distort the market perception of our stock price and our company’s financial performance and public image, negatively affect the long-term liquidity of our Common Stock, regardless of our actual or expected operating performance. If we encounter such volatility, including any rapid stock price increases and declines seemingly unrelated to our actual or expected operating performance and financial condition or prospects, it will likely make it difficult and confusing for prospective investors to assess the rapidly changing value of our Common Stock and understand the value thereof.
There is no assurance that if we are listed on the Nasdaq Capital Market we will not continue to experience volatility in our share price.
The OTC Pink, where our common stock is currently quoted, is an inter-dealer, over-the-counter market that provides significantly less liquidity than the Nasdaq Capital Market. Our stock is thinly traded due to the limited number of shares available for trading on OTC Pink thus causing large swings in price. As such, investors and potential investors may find it difficult to obtain accurate stock price quotations, and holders of our common stock may be unable to resell their securities at or near their original offering price or at any price. If an active market for our stock develops and continues, our stock price may nevertheless be volatile. If our stock experiences volatility, investors may not be able to sell their common stock. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short period of time. As a result, our shareholders could suffer losses or be unable to liquidate their holdings. We are attempting to list on Nasdaq to create a more active trading market for our shareholders. There are no assurances, however, that will we qualify for listing on the Nasdaq Capital Market, and no assurance can be given that the price of our common stock will become less volatile if we are listed on the Nasdaq Capital Market.
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The number of shares being registered for resale with this offering is significant in relation to our outstanding shares.
We are registering 20,621,250 shares of common stock for resale by certain selling stockholders. The selling stockholders may sell their shares from time to time at the market price prevailing at the time of offer and sale, or at prices related to such prevailing market prices or in negotiated transactions or a combination of such methods.
All of the shares registered for resale on behalf of the selling stockholders are “restricted securities” as that term is defined in Rule 144 under the Securities Act. We have included the resale prospectus in the registration statement to register these restricted shares for sale into the public market by the selling stockholders. These restricted securities, if sold in the market all at once or at about the same time, could depress the market price and also could affect our ability to raise equity capital. Any outstanding shares not registered in the resale prospectus will remain as “restricted shares” in the hands of the holders, except for those sales that satisfy the requirements under Rule 144 or another exemption to the registration requirements under the Securities Act.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the selling stockholders. However, we may receive up to $4,095,000 from the exercise of 10,237,500 common warrants at $0.40 per share and $14.63 from the exercise of 146,250 pre-funded warrants at $0.0001 per share, assuming all warrants are exercised for cash. Any proceeds from warrant exercises will be used for general corporate purposes, servicing interest on debt, and expenses related to our planned uplisting to the Nasdaq Capital Market.
MARKET FOR OUR COMMON STOCK
Our common stock is currently quoted on the OTC Pink under the trading symbol “SWRD.” Quotations on the OTC Pink reflect inter-dealer prices, without retail mark-up, mark-down commission, and may not represent actual transactions. On November 14, 2025, the last reported sale price of our common stock was $7.00 per share.
Holders
As of November 14, 2025, we had approximately 242 shareholders of record of our common stock. The number of stockholders of record does not include certain beneficial owners of our common stock, whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.
DIVIDEND POLICY
We have never declared nor paid any cash dividends on our common stock and currently intend to retain all of our cash and any earnings for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends on our common stock will be at the discretion of the Board of Directors and will be dependent upon our consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.
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DESCRIPTION OF THE BUSINESS
Company Overview
We are a diversified financial services company with two complementary business platforms: Private Credit and Real Estate. Our strategy is to provide alternative financing solutions to small and medium-sized businesses (SMBs) underserved by traditional lenders, while also building a portfolio of income-producing and value-enhancing real estate assets. Together, these businesses are designed to broaden our revenue base, strengthen the balance sheet with tangible assets, and support long-term, capital-efficient growth.
The Private Credit Division provides revenue-based funding and related financing products to SMBs nationwide. Since 2020, we have originated more than $153 million in funding and supported over 10,000 businesses across the United States. The Real Estate Division, launched in 2025, targets strategic investments in residential, mixed-use, and commercial properties designed to generate stable rental income and have the potential for long-term value appreciation. These real estate holdings improve our overall capital efficiency by anchoring the balance sheet with durable, income-producing assets, lowering our blended cost of capital, and providing recurring cash flows that enhance liquidity management.
As part of our broader strategic plan, we are pursuing a measured integration of digital-asset technologies across both business segments to enhance liquidity, settlement efficiency, and access to capital. Through partnerships with established financial-technology providers, including the Dolomite Foundation, the Company is developing frameworks for the use of digital payment instruments in its Private Credit operations and evaluating opportunities for tokenization within its Real Estate platform. These initiatives are intended to improve operational transparency, reduce transaction costs, and expand financing optionality within existing regulatory and accounting standards.
While each division operates independently, they are designed to complement one another. The real estate business provides steady, long-term income and strengthens overall financial stability, while the private credit business offers faster-turnover funding with attractive near-term returns. Together, they create a balanced model in which real estate adds stability and efficiency, private credit drives growth, and digital-asset infrastructure provides additional flexibility and modernization of the Company’s capital management strategy.
Private Credit Overview
Our Private Credit Division provides alternative financing solutions to SMBs across the United States. The core of our business is the origination and funding of merchant cash advances (MCAs), both directly and through syndication arrangements with our partners. These MCA activities represent our principal line of business and generate the substantial majority of our revenues.
Since 2020, we have originated over $153 million in capital and supported more than 10,000 SMBs nationwide. We are headquartered in Fort Lauderdale, Florida, with operations in the Dominican Republic. In addition to our MCA business, we occasionally act as a broker for other funders, earning commissions when SMB customers we refer obtain financial products such as MCA or lines of credit. These brokerage activities are ancillary to our MCA operations and represent a smaller portion of our business.
Our MCA business is conducted through operating subsidiaries that sit under our private credit holding company. These subsidiaries include FAVO Funding LLC, Honeycomb LLC, and Fore Funding LLC, which originate and service MCA transactions. Our brokerage activities, which consist of referring merchants to third-party funders and earning commissions, are conducted through Fore Funding LLC and DBOSS Funding LLC, also held within the same private credit platform.
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Merchant Cash Advances
Merchant cash advances (“MCAs”) have evolved as an alternative capital source primarily for small businesses, and they represent the principal product we currently originate and fund. In our MCA transactions, a merchant sells a portion of its future receipts to us at a discount in exchange for an upfront lump-sum payment. The merchant then remits a specified percentage of its sales receipts, typically through daily Automated Clearing House (“ACH”) transfers, until we have received the full amount of purchased receipts.
Unlike loans or securities, MCAs are structured as purchases and sales of future receipts and the assignment of related rights. Our small and medium-sized business (“SMB”) customers typically use these advances for working capital, such as inventory purchases, equipment financing, or other immediate business needs.
While MCAs constitute a core component of our revenue model, we also generate brokerage income on a limited basis by referring merchants to third-party funders for products such as MCAs and lines of credit. These brokerage activities account for a smaller share of our business relative to our directly originated and syndicated MCA portfolios.
We operate a direct and syndication revenue-based funding platform to serve SMBs in need of liquidity to fulfill their financial responsibilities. Through our direct sales, marketing, underwriting, and operational platform, and in collaboration with our six primary Syndication Partners, each of which operates in the same revenue-based financing business as Stewards, we provide funding solutions for customers. These syndication arrangements allow us to participate in a percentage of approved transactions, with participation amounts ranging from 10% to 95% of the deal value. Pursuant to Master Participation Agreements and related agreements, Stewards not only originates and funds transactions but also provides servicing and collection services on behalf of itself and its Syndication Partners. This structure enables us to diversify risk, leverage partner deal flow, and expand the scale of our funding platform while maintaining consistency with our underwriting criteria.
We originate and provide revenue-based financing to businesses primarily through MCAs. We provide convenient, fully automated financial solutions to our customers. An SMB customer who enters into an MCA commits to delivering a percentage of its receipts through ACH or wire debits or by splitting credit card receipts until all purchased receipts are remitted to us.
We believe traditional lenders face a number of challenges and limitations that make it difficult to address the capital needs of SMBs, such as:
§ Organizational and Structural Challenges. The costly combination of physical branches and manually intensive underwriting procedures makes it difficult for traditional lenders to efficiently serve SMBs. They also serve a broad set of customers, including both consumers and enterprises, and are not solely focused on addressing the needs of SMBs.
§ Technology Limitations. Many traditional lenders use legacy or third-party systems that are difficult to integrate or adapt to the shifting needs of small businesses. These technology limitations make it challenging for traditional lenders to aggregate new data sources, leverage advanced analytics and streamline and automate credit decisions and funding.
Products not Designed for SMBs. SMBs are not well served by traditional loan products. We believe that traditional lenders often offer products characterized by larger loan sizes, longer durations and rigid collateral requirements. By contrast, SMBs often seek small loans for short-term investments.
As a result, we believe that SMBs feel underserved by traditional lenders. Our solution was built specifically to address SMBs’ capital needs. We offer products to SMBs to enable them to access capital. We facilitate eligible merchants to secure cash advances and accelerate the growth of their business by providing access to simple, fast, and convenient working capital under MCAs. This structure has some advantages over the structure of a conventional loan. Most importantly, payments towards an MCA can be modified for hardships suffered by a business, giving the merchant greater flexibility with which to manage their cash flow, particularly during an unforeseen event. MCAs are processed much faster than a typical loan, giving borrowers quicker access to capital.
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Direct and Syndicated Funding
A key challenge in the merchant cash advance industry is securing sufficient capital to meet strong demand from small businesses. We address this challenge through two complementary channels: (i) direct funding, where we originate, underwrite, fund, and service MCAs on our own balance sheet, and (ii) syndicated funding, where we participate alongside six established syndication partners under Master Participation Agreements. Syndication participation levels generally range from 10% to 95% of each transaction, subject to our investment guidelines.
Our direct portfolio consists of MCAs that we originate and service end-to-end, allowing us to capture full economics, including origination and administrative fees. By contrast, syndicated transactions are originated by our partners, with our participation aligned to our underwriting standards. To manage risk, we actively monitor exposures and do not participate in any syndication arrangement where our share would exceed 40% of a partner’s total portfolio.
We generate revenues from both models: (i) factor rate returns, origination, and administrative fees on our direct portfolio, and (ii) participations in syndicated transactions, supplemented by servicing and collection fees earned on receivables we manage on behalf of partners. This approach balances higher-margin direct fundings with the capital efficiency and risk diversification benefits of syndication. The table below outlines key differences between the two models.
| Aspect | Direct Funding | Syndicated Funding |
| Definition | A single funder provides the entire merchant cash advance directly. | Multiple funders co-fund a single MCA through a syndication structure. |
| Revenue Model | Factor-rate revenues accrue entirely to the direct funder. | Revenues are shared pro rata among participants; the lead funder typically earns servicing fees and profit allocations. |
| Capital Deployment | Fully funded from the company’s own capital. | Capital is pooled from several investors, enabling larger transactions. |
| Risk Exposure | 100% of performance risk rests with the direct funder. | Risk is distributed among participants, limiting exposure for any one investor. |
| Underwriting | Relies solely on the funder’s internal, AI-enabled data-driven underwriting process. | The lead funder applies its underwriting and servicing standards to all participants’ portions. |
| Funding Scale | Constrained by the funder’s available reserves. | Greater capacity to fund larger or multiple deals through pooled participation (e.g., 10%–95% of deal size). |
| Administration | Originator manages servicing, collections, and remittances directly. | The lead funder administers servicing and distributes proceeds to syndicate participants under Master Participation Agreements. |
| Economic Participation | All returns (and losses) accrue to the originator. | Returns are distributed according to participation levels; lead funder receives priority servicing fees. |
| Speed of Execution | Often faster, with fewer parties involved. | May require additional coordination but leverages partner networks for deal flow. |
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Direct vs. Syndicated Funding Structures
In direct fundings, the merchant enters into a bilateral purchase and sale agreement with a single funder. The funder advances its own capital, bears all risk of non-performance, and retains all revenue, including origination fees, administrative fees, and MCA income. The agreement is relatively straightforward, with no third-party stakeholders.
By contrast, syndicated fundings involve multiple parties: the merchant, a lead funder, and syndicate participants (investors or co-funders). The merchant contract is executed with the lead funder, while the syndicate participants enter into a Master Participation Agreement (and, where applicable, Independent Sales Organization agreements) governing their respective rights and obligations. These agreements outline servicing authority, profit-sharing mechanics, and the allocation of risk among participants. Syndicated contracts are inherently more complex than direct fundings, as amendments or enforcement actions require coordination among multiple parties.
In direct fundings, the funder provides the entire advance from its own capital and assumes 100% of the exposure. In syndicated fundings, the lead funder may contribute a portion (e.g., 60%) while syndicate partners contribute the balance (e.g., 40%). Losses are borne pro rata, and syndicate participants typically have limited recourse against the lead funder, except in cases of mismanagement or breach of fiduciary duty. Most syndicated MCAs are structured as non-recourse transactions, meaning the risk of merchant non-performance is shared collectively across all participants.
Syndicated transactions may also carry additional costs, such as platform fees charged by syndication partners (generally 3%–5% of remittances), and administrative costs associated with servicing multiple stakeholders. These fees can increase the effective cost of capital relative to direct fundings.
For direct fundings, our revenue includes origination fees, administrative fees, MCA income, and ancillary fees (e.g., non-sufficient funds, collections, Uniform Commercial Code filings), all recognized over the contract term as payments are received.
For syndicated fundings, we do not typically retain origination or administrative fees. Instead, our revenue is derived from:
• our proportionate share of MCA income
• servicing and collection fees earned as lead funder and servicer, and
• rebates from syndication partners, based on portfolio size and volume.
Year
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Direct Funding | Syndicated Funding
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Total Funding
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| 2023 | $17,284,157 | $17,351,122 | $34,635,279 |
| 2024 | $12,997,355 | $18,025,300 | $31,022,655 |
| YTD Q3 2025 | $5,859,035 | $9,785,698 | $15,644,733 |
Our direct funding portfolio has SMBs across multiple segments and industry types, but most of our merchants fall into the services, construction, and retail industries. These include restaurants, construction and development projects, physical fitness facilities, accounting and bookkeeping practices, home furnishings and equipment stores, and automotive repair shops, among others.
The composition of our syndication portfolio closely aligns with that of our direct investments, both of which are strategically shaped by evolving market dynamics. Key determinants include macroeconomic conditions, the influence of domestic and international government policy decisions, and the relative advantages of specific U.S. geographic regions. Regulatory and policy environments, whether supportive or restrictive, impact sector performance and are carefully considered in our portfolio construction and allocation strategy.
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Although syndication currently represents a larger share of total funding volume, our strategic priority is to expand direct funding given its higher margin profile and greater control over underwriting and servicing economics. The Simplified Acquisition was undertaken specifically to increase our capacity for direct originations. Over time, we expect direct funding to comprise a greater portion of total originations, with syndication continuing to play a complementary role in providing capital efficiency and risk diversification.
MCA – Syndication Partners
We identify leading funders in the industry through market research, funding forums, the Revenue Based Funding Coalition (RBFC), and long-term business relationships, all of which have established underwriting and operational capabilities that allow partners to participate in their deal flow. The RBFC includes funders, brokers, Independent Sales Organizations, and industry vendors that provide technology and operational services to the sector. It was established to educate policymakers and regulators on issues affecting the non-bank commercial finance industry and to support responsible growth of revenue-based financing. At the same time, the MCA industry remains subject to ongoing regulatory scrutiny at both the federal and state levels, and participation in industry groups such as the RBFC reflects our effort to stay aligned with evolving standards and compliance expectations.
We currently maintain relationships with six syndication partners, three core partners and three secondary partners, all of whom operate in the Merchant Cash Advance industry and provide revenue-based financing solutions. From time to time, we syndicate on various deals that our partners have approved for funding, with syndication participation amounts typically ranging from 10% to 95% of the transaction value. These arrangements are governed by Master Participation Agreements and Independent Sales Organization agreements, which establish the terms of engagement and responsibilities of each party.
As part of these syndication arrangements, Stewards originates, funds, and services transactions, including collections, both for its own account and on behalf of its syndication partners. To manage concentration risk, we do not participate in any syndication arrangement where our exposure exceeds 40% of a partner’s total portfolio. We also actively manage participation amounts to ensure diversification and maintain a balanced portfolio mix. All syndication partners are provided with investment guidelines aligned with our internal underwriting standards, and they are required to adhere to those criteria, ensuring consistency and risk alignment across all investments. This framework enables Stewards to leverage the scale and capabilities of its partners to expand access to funding for SMBs while maintaining rigorous risk management discipline.
Brokered Products
In addition to our direct and syndicated MCA operations, we act as an intermediary in brokering financial products, earning commissions from funders when transactions close. Within this category, merchant cash advances and lines of credit are the meaningful contributors, while equipment financing and business term loans comprised the balance. Our activity in U.S. Small Business Administration (SBA) loans and invoice factoring was not material during the reporting period, though these products remain available as part of our platform and may contribute to revenues in the future as merchant demand evolves.
Our role in these transactions is limited to acting as an intermediary: we identify merchants with financing needs, match them with appropriate funders, and earn referral or brokerage fees, typically calculated as a percentage of the funded amount, once the transaction is completed. We do not originate or fund these products directly and do not assume credit risk on the underlying obligations.
This brokerage activity complements our MCA operations by broadening merchant relationships and creating repeat commission opportunities. Applications are sourced through marketing initiatives, including online advertising, outbound calling, trade show participation, and referrals, with additional support from a call center located in the Dominican Republic. We maintain relationships with a network of funding sources, such as commercial banks, online lenders, SBA-approved institutions, and factoring companies.
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Once a funder approves and funds a transaction, our role is complete, and we earn compensation directly from the funder, typically built into the financing cost. By offering MCAs and lines of credit through third-party partners alongside our direct activities, we diversify our revenue streams and expand our reach, while continuing to maintain our primary focus on revenue-based funding solutions.
While brokerage commissions represented approximately 20% of our total revenues for the year ended December 31, 2024, we do not view this segment as a core growth driver. We position brokerage primarily as a complementary offering that broadens merchant relationships, rather than as a business line we intend to scale.
MCA - Cost of Sales
We incur sales commissions costs for direct and syndicated originations. Commission expense is recognized over the term of the deal. Additionally, we incur marketing expenses associated with direct MCA originations. Marketing expenses consist of various lead generation, internet, phone, advertising, and other costs associated with new account originations. Marketing expenses are recognized as incurred.
MCA Platform and Service Fees
For each Syndicated MCA origination, we are charged a platform or servicing fee. The fee is calculated as a percentage of the advance receipt collected on our behalf and is deducted from the amount disbursed.
MCA Credit Losses
Under the current expected credit loss (CECL) model of ASC 326, we recognize an allowance for a portion of the receipts at the time of concluding a deal and additional allowances based on the amount of time since a payment was last received and whether the receivable has been handed over to collections. The approach is based on the Company's internal knowledge and historical default rates over the expected life of the receipts and is adjusted to reflect current economic conditions. This evaluation takes into account the customer's ability and intention to pay the consideration when it is due along with incorporating changes in the forward-looking estimates. If the expected financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly.
Underwriting Process and Credit Assessment of Merchant Customers
Our underwriting process is central to both our direct MCA portfolio and our syndicated funding activities. Each merchant applicant is evaluated using a structured combination of automated data analysis, artificial intelligence (AI), and human review to assess the business’s ability to generate consistent receivables and meet repayment obligations.
We apply a multi-step framework designed to filter out higher-risk applicants and identify merchants most likely to perform, with fewer than 5% of applications proceeding to funding. This process integrates anomaly detection and fraud-prevention tools with professional underwriter judgment, allowing us to evaluate applications efficiently while maintaining credit discipline. Over time, this selective approach has resulted in portfolio performance with loss and default levels consistent with the high thresholds established by our underwriting standards.
Integration of Artificial Intelligence and Automation
We employ a combination of automation, machine learning, and human oversight within our underwriting process. These tools help authenticate documents, identify inconsistencies, and structure raw data into decision-ready formats. Human underwriters remain responsible for final approvals, ensuring that technology outputs are reviewed within a controlled decision framework.
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AI-driven capabilities are applied within secure, compliance-oriented environments. All merchant data is collected with applicant consent, either through direct submissions (e.g., bank statements, tax filings, credit reports) or third-party data-aggregation providers. Data is handled under encryption and access-controlled systems. We do not disclose, sell, or repurpose merchant data for non-underwriting uses.
Key capabilities include:
• Document authentication and fraud detection: Identifying tampering or inconsistencies in submitted records.
• Anomaly detection: Flagging unusual cash-flow activity or mismatches in bank transaction data.
• Automated structuring: Converting bank statements and financial documents into standardized data for review.
• Risk scoring: Predictive models that compare applicants against internal credit parameters.
Applications flagged by automation are escalated for manual review. This blended model allows for efficient processing while maintaining oversight and compliance.
Data Collection and Analysis
We collect a range of information from merchants during the application process, including:
• Traditional credit bureau data (e.g., consumer and commercial credit histories).
• Government and legal records (e.g., state filings, tax records, liens, judgments).
• Behavioral and transactional data (e.g., bank activity, repayment patterns, landlord feedback).
• Digital presence and reputation data (e.g., online visibility, reviews, social media).
• Network-shared performance data from other funders on defaults or fraud.
Because small businesses lack a standardized credit score equivalent to consumer FICO ratings, we supplement bureau data with these alternative sources. Greater emphasis is placed on demonstrated business performance, cash-flow resilience, and repayment history than on an owner’s personal credit profile.
Below is a description of our underwriting process for applicant merchants, with four steps to completion.
1. Initial Screening
✔ Verify document integrity and application completeness. ✔ Apply automatic decline rules (e.g., prohibited industries, prior defaults, negative banking history). ✔ Use anomaly-detection tools to flag inconsistencies in financial submissions. ✔ Confirm business legitimacy through entity verification and basic fraud checks.
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2. Full Underwriting
✔ Analyze business expenses, legal compliance, and online presence. ✔ Review historical bank statements and repayment trends. ✔ Assess revenue concentration, seasonality, and debt obligations. ✔ Supplement automated scoring with underwriter review. ✔ Price transactions according to internal risk models and repayment capacity.
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3. Approval
✔ Transactions are escalated based on size and risk profile: ✔ Up to $35,000: approved by senior underwriters. ✔ $35,000 – $100,000: requires underwriting committee approval.✔ Above $100,000: reviewed by the CFO and requires final approval from the CEO. ✔ Decisions incorporate both model outputs and manual judgment.
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4. Final Verification and Funding
✔ Conduct background checks for legal and financial risks. ✔ Re-verify revenue consistency using most recent bank data. ✔ Confirm terms with a recorded verification call. ✔ Wire transfers are executed by the CFO or Credit Controller, subject to executive authorization. |
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Efficiency and Risk Considerations
Our process is designed to be more efficient than traditional bank lending, generally allowing approvals and funding within 24–72 hours versus weeks for banks. Efficiency is achieved through automated data aggregation, AI-driven anomaly detection, and human oversight.
We depend on third-party providers for certain inputs, such as bank-statement verification, credit bureau data, and fraud detection. Disruptions in these services could affect our ability to process applications efficiently, as described in our risk factors.
Over time, we believe that this disciplined, technology-enhanced underwriting process has contributed to portfolio performance consistent with our selective funding standards, supporting stable cash flows and risk-adjusted returns.
Integration of Digital Asset Strategy within Private Credit
The Company is evaluating the integration of digital-asset infrastructure within its Private Credit operations to enhance liquidity management, settlement efficiency, and transparency across funding channels. As part of this initiative, the Company has entered into a strategic partnership with the Dolomite Foundation, a Cayman-based entity that develops tokenized financial infrastructure and digital-settlement frameworks. Through this relationship, the Company intends to explore the use of U.S.-dollar-denominated digital instruments and related blockchain settlement tools to facilitate the movement of funds among institutional lenders, subsidiaries, and counterparties. The objective of this framework is to shorten funding cycles, reduce transaction costs, and strengthen auditability within the Company’s credit origination, syndication, and servicing processes. The Company’s participation in these activities will be implemented on a measured basis, consistent with applicable banking, securities, and anti-money-laundering regulations, and subject to continuing review by management and external advisors.
Real Estate Overview
Our Real Estate Division, launched in 2025, focuses on acquiring and managing income-producing properties that complement our private credit platform. We target residential, mixed-use, and commercial assets in strategic U.S. markets that provide stable cash flows and have the potential for long-term value appreciation.
The division emphasizes stabilized, cash-flowing properties that diversify revenue streams and strengthen the Company’s overall asset base with tangible collateral. By anchoring the balance sheet in real estate, we enhance institutional creditworthiness, improve access to competitively priced financing, and support capital efficiency. These investments are conducted through subsidiaries established for property acquisition and management, structured to support our real-estate strategy while accommodating applicable noncontrolling preferred interests. The objective of these entities is to broaden our revenue base and support sustainable long-term growth
Strategic Role of the Real Estate Division
The Real Estate Division plays a complementary role to our MCA and broader private credit operations. Tangible, income-generating real estate assets enhance the depth and quality of our balance sheet, which broadens the collateral base available for institutional financing arrangements and supports access to lower-cost capital. This stronger asset position improves lender confidence and provides flexibility in structuring credit facilities, ultimately enhancing net yields across our MCA originations and related credit activities.
In addition, recurring income from rental streams and condominium sales provides supplemental cash flow that offsets variability inherent in the MCA portfolio. Over time, appreciation in property values may further enhance shareholder value through refinancing or selective asset sales, though the division’s primary role is to improve capital efficiency and financial resilience rather than to serve as a direct source of short-term liquidity.
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By combining the steady, asset-backed stability of real estate with the faster turnover and scalability of private credit, the Company aims to create a balanced model that enhances credit quality, reduces overall cost of capital, and supports sustainable growth across both business segments.
Target Acquisition Strategy
Our real estate division is focused on acquiring well-located, income-producing properties at attractive entry prices relative to replacement cost or market comparables. We target assets in the US that have strong underlying fundamentals and sustained tenant demand, seeking opportunities where operational, leasing, or capital structure enhancements can drive value creation. Our acquisition approach is disciplined and data-driven, evaluating both current income potential and future upside through repositioning or improved capital deployment.
Acquisitions are guided by defined financial criteria. We generally target properties expected to deliver internal rates of return (IRR) and capitalization rate spreads that are accretive to our weighted average cost of capital (WACC). We also consider loan-to-value (LTV) thresholds, projected funds from operations (FFO) contribution, and the stability of expected cash flows in assessing each opportunity. This framework provides consistency in evaluating potential transactions and ensures that capital is allocated with the objective of balancing risk, return, and liquidity.
Value creation is achieved through two primary models:
• Rental Model: We focus on maintaining high occupancy levels, capturing market rent growth, controlling operating expenses, and implementing targeted capital improvements to enhance tenant experience and asset performance.
• Condominium Model: Where applicable, we seek to optimize unit pricing, manage sales velocity, and implement focused marketing campaigns to maximize sales proceeds. While condominium projects may involve higher development and redevelopment costs relative to stabilized rental assets, we evaluate them within a disciplined financial framework that considers expected absorption rates, pricing sensitivity, and project-level return thresholds. Our intent is to maintain a balanced mix, with stabilized rental assets representing the core of the portfolio and condominium projects pursued selectively where market demand and projected returns justify the added risk. In condominium transactions, we also assess occupancy and absorption targets as key performance indicators to ensure that projected timelines and sales velocity align with overall capital allocation discipline.
Exit Strategies
We evaluate multiple exit strategies for each asset at the time of acquisition and throughout the hold period, with the objective of maximizing total return and maintaining flexibility in capital deployment. Our primary strategy is a long-term hold, whereby properties are retained to generate recurring rental income and potential capital appreciation. This approach supports predictable cash flows and strengthens the balance sheet, which in turn improves the Company’s overall capital efficiency and weighted average cost of capital (WACC).
Where market conditions, interest rate environments, or asset performance create favorable opportunities, we may pursue a sale, refinancing, or recapitalization to optimize return on invested capital (ROIC). These decisions are guided by disciplined financial criteria, including expected yields, debt costs, and projected cash-on-cash returns, rather than reliance on asset sales for short-term liquidity. Potential strategies may include selling an asset outright, entering into a joint venture with new capital partners, or refinancing to unlock equity while retaining ownership.
For condominium projects, we may implement a phased sell-down strategy to optimize pricing and absorption rates while managing supply risk. Select units may be retained within the rental portfolio to generate ongoing income and preserve long-term optionality. Across all property types, our exit planning is structured to align with long-term capital allocation discipline, balancing current income generation with capital recycling into higher-yielding opportunities.
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Leasing & Sales
We employ a disciplined, market-responsive approach to both leasing and sales activities, designed to optimize occupancy, rental yields, and asset value across its portfolio. For rental assets, lease structures may include fixed-term agreements, percentage-based leases tied to tenant sales performance, or hybrid models that combine base rent with variable components. Renewal options are strategically incorporated to enhance tenant retention, minimize downtime, and maintain consistent revenue streams. Lease terms are negotiated to align with market demand, asset positioning, and long-term strategic objectives, while protecting downside risk through creditworthy tenant selection and appropriate security provisions.
For assets operated under a condominium sales model, we implement a phased release strategy to manage market absorption and achieve optimal pricing. Units are brought to market in stages, allowing us to respond dynamically to buyer demand, interest rate conditions, and competitive supply. This approach is supported by targeted marketing campaigns, pre-sale strategies, and selective retention of certain units for ongoing rental income or future disposition. By maintaining flexibility in leasing and sales strategies, we seek to balance predictable cash flows with opportunities for potential capital appreciation and value realization.
Property Management
Our property management practices are designed to preserve and enhance asset value while ensuring the operational integrity of our real estate portfolio. Currently, properties are managed by experienced third-party firms engaged under agreements that include defined performance benchmarks addressing occupancy levels, tenant retention, service quality, and cost efficiency.
Management activities focus on timely and responsive tenant service, preventative maintenance programs to extend the useful life of building systems and improvements, and disciplined control of operating expenses. Performance is monitored on an ongoing basis, with operational adjustments implemented as necessary to maintain market competitiveness, mitigate vacancy risk, and support stable long-term income generation.
Performance Monitoring
We employ a structured, data-driven approach to monitoring the performance of our real estate assets to ensure they meet targeted financial and operational benchmarks. Key performance indicators include occupancy levels, net operating income (NOI), lease expiration schedules, rent collection trends, and, for condominium projects, sales velocity and absorption rates. These metrics are reviewed regularly at both the property and portfolio levels, enabling management to identify trends, risks, and opportunities in real time.
Insights derived from this monitoring process inform tactical and strategic decisions, including adjustments to marketing campaigns, leasing incentives, and tenant mix optimization. In addition, capital expenditure priorities are continuously reassessed to ensure that property improvements deliver measurable returns and align with evolving market conditions. This active management framework is intended to maintain asset competitiveness, maximize revenue, and preserve long-term value.
1818 Park
Overview
On July 11, 2025, we entered into multi-entity member interest purchase agreements to acquire 1818 Park, a 281,493-square-foot mixed-use property located in Hollywood, Florida. The asset comprises approximately 237,173 square feet of residential space, 19,737 square feet of commercial space, 16,800 square feet of parking facilities, 5,171 square feet of office space, and 2,612 square feet of storage. The residential component includes 273 rental units in a mix of studios, one-bedroom, two-bedroom, and three-bedroom layouts, of which two are penthouse residences, the largest of which spans 2,319 square feet. The commercial component features a diversified tenant mix including a national bank branch, a hair salon, multiple food and beverage operators, and a 12,000-square-foot food hall. The office component includes one 4,113-square-foot office currently under development and nearing completion. As of August 1, 2025, occupancy was approximately 93%, supported by an established tenant base.
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The acquisition of 1818 Park aligns closely with our real estate division’s acquisition criteria. The property was secured at a favorable price relative to replacement cost and market comparables, in a location (Young Circle) characterized by strong population growth, robust tenant demand, and ongoing economic investment. The asset’s diversified mix of residential, commercial, and food hall space provides multiple income streams and diversification benefits that reduce reliance on any single segment.
Operationally, we intend to pursue initiatives aimed at enhancing occupancy, optimizing lease terms, and implementing targeted capital improvements to support rental growth and tenant retention. In addition, we are evaluating potential refinancing options with respect to the existing Blackstone senior mortgage loan. Any such refinancing, if achieved, may reduce the interest burden and improve the relationship between operating cash flows and debt service requirements. There can be no assurance, however, that such refinancing will be completed on favorable terms, or at all. These initiatives, together with the property’s established tenant base and location within a growth corridor, are expected to strengthen the property’s long-term positioning, while also addressing current cash flow challenges.
Purchase Price and Consideration
On July 11, 2025, we completed the acquisition of the 1818 Park property in Hollywood, Florida through a multi-entity transaction structured as follows:
| • | Block 40 Managers, LLC – Acquired 100% of the membership interests in the property management company responsible for day-to-day operations, tenant services, and facility oversight. | ||
| • | Block 40 Investment Holdings, LLC – Acquired 100% of the membership interests in the investment holding entity, which owns certain contractual rights and interests related to 1818 Park. | ||
| • | Block 40, LLC – Acquired the membership interests in the investment holding entity, that owns all assets and certain liabilities of the primary property-owning entity, including the real estate, fixtures, and contracts, as well as the existing Blackstone secured mortgage debt and other obligations. | ||
The total purchase price was $190 million, structured entirely as a stock-for-liabilities transaction. Consideration consisted of the issuance of shares of our common stock to the sellers and the assumption of certain indebtedness and other liabilities.
Issuing equity rather than using cash or additional debt preserved liquidity for our private credit operations and avoided incremental leverage that could restrict future financing flexibility. The structure strengthened our balance sheet by adding a substantial income-generating real estate asset, which enhances the Company’s overall capital efficiency, broadens the collateral base considered by institutional lenders, and supports access to more competitively priced financing. By making the seller a shareholder, the transaction further aligns their interests with the Company’s long-term performance and value creation, reinforcing management’s focus on sustainable growth and shareholder returns.
This multi-entity structure ensured continuity of operations, preserved key contractual rights, and facilitated a seamless transition for tenants, positioning the asset for operational stability and long-term value creation.
Acquisition and Financing Structure
The acquisition of 1818 Park was completed through the purchase of all of the membership interests of Block 40, LLC, the entity that owns the property and its related liabilities. As a result, the Company acquired indirect ownership of the real estate asset together with the obligations tied to it. As part of this transaction, the Company assumed a senior secured mortgage loan originally in the principal amount of $84.0 million. Following scheduled principal repayments in the weeks after closing, the outstanding loan balance will be reduced to approximately $73.6 million by Q3 2025.
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On June 1, 2022, Block 40 Property, LLC entered into a senior secured mortgage loan in the original principal amount of $84.0 million with Deutsche Bank, maturing on June 1, 2025. On June 1, 2025, Blackstone, as the new holder of the loan, extended the maturity date by one month. On July 1, 2025, Blackstone further extended the maturity date to June 1, 2026. In connection with the June and July 2025 extensions, the interest rate increased from Term SOFR plus 2.75% to Term SOFR plus 3.00%, and the existing interest rate cap agreement remains in effect. As part of the extension agreements, the borrower was also required to make scheduled principal curtailments, which reduce the outstanding loan balance in line with agreed amortization milestones, to approximately $73.6 million.
The loan is secured by a first-priority mortgage lien on the property, an assignment of leases and rents, and certain reserve and cash accounts, and is generally non-recourse subject to customary carve-outs.
Key Loan Features
| • | Borrower: Block 40 Property, LLC (entity that owns the property and subsidiary of Block 40, LLC) | |
| • | Original Loan Amount: $84.0 million | |
| • | Scheduled Principal Payments: $10,375,000 by September 25,2025 | |
| • | Current Balance (post-closing repayments): Approximately $73.6 million (expected by Q3 2025) | |
| • | Lender / Agent: Blackstone (successor to Deutsche Bank AG, New York Branch) | |
| • | Interest Rate: Term SOFR + 3.00% per annum (floating) | |
| • | Interest Rate Protection: Interest rate cap agreement in place to mitigate rate risk | |
| • | Maturity Date: June 1, 2026 | |
| • | Collateral: First priority mortgage lien on 1818 Park, assignment of leases and rents, security interest in reserve/cash management accounts, and collateral assignment of the interest rate cap | |
| • | Recourse: Non-recourse except for customary carve-outs (fraud, misappropriation, certain covenant breaches) | |
| • | Guaranty of Carry Costs: Personal guaranties from prior owners covering debt service shortfalls, taxes, insurance, and essential operating expenses |
1818 Park Property Management
On November 14, 2025, the Company’s subsidiary, Block 40, LLC, engaged GCF Development, LLC under a Management Agreement dated November 14, 2025, to exclusively manage, lease, operate, and administer our property at 1818 Park. Under the agreement, the Manager will receive monthly fees starting December 1, 2025 including: (i) 5/6 of a $92,031.25 loan-guarantee fee (surviving termination while guarantees exist), (ii) $120,000 overhead/administrative fee, and (iii) $25,000 project-management fee for 18 months. All accrued fees are due by the earlier of seven days post-uplisting or December 19, 2025.
We may terminate on 30 days’ notice with a 12-month break fee if within the first 24 months (no fee thereafter, but loan-guarantee fee persists). Manager may terminate on 60 days’ notice. Manager maintains required liability and E&O insurance, receives broad indemnification for good-faith acts within scope, and may assign to affiliates or successors without consent. The agreement supersedes all prior understandings, and is governed by Florida law.
EB-5 Investor Exchange Offer
As part of the July 11, 2025 acquisition of the Block 40 Entities and Hollywood Circle Capital, LLC, the Company assumed the obligations associated with EB-5 investors in Block 40, LLC. These investors held preferred membership interests with accumulating preferred return features that, absent conversion or repurchase, would have continued indefinitely. The total EB-5 preferred membership interests were included in the $190 million purchase price allocation for the transaction.
On September 30, 2025, the Company executed an exchange agreement offering these EB-5 investors the opportunity to convert their preferred membership interests into shares of the Company’s common stock, with elections due by October 31, 2025. As of the conversion deadline, a total of 16,617,687 shares were issued to participating investors. The objective of this exchange was to eliminate the long-term accrual burden associated with the EB-5 preferred return structure, simplify the capital structure, and align the interests of legacy investors with those of the Company’s common shareholders. These obligations are specific to the 1818 Park real estate transaction and are structurally distinct from the Company’s preferred return arrangements within its private credit business.
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Tenant Base
The property generates rental income from both residential and commercial tenants, with residential units comprising the majority of leased space and retail, dining, office, and co-working uses contributing additional revenue. The residential portion consists of multiple unit types, with leases generally structured as fixed-term agreements that include renewal options and periodic rent escalations, and occupancy has remained consistently high across a diversified tenant base. The commercial component includes retail, dining, service, and food hall tenants operating under fixed-rent, percentage-of-sales, and hybrid lease structures, with agreements typically providing base rent, renewal rights, and customary landlord protections, while office and co-working areas are also available for lease to professional tenants and are expected to further contribute to revenue diversification as leasing progresses. No individual tenant represents a material portion of the property’s total rental revenue, and the tenant base is diversified across residential and commercial categories, reducing concentration risk and limiting reliance on any single tenant or use type.
Strategic Integration with Private Credit Operations
The inclusion of 1818 Park in our real estate portfolio strengthens our balance sheet by adding a sizable income-producing asset that generates recurring cash flows. While the property is subject to a first-priority mortgage, both its operating performance and equity value may be considered by institutional lenders in evaluating our credit profile, which could enhance our ability to obtain or negotiate credit facilities at more favorable terms.
The property’s tenant base is diversified across residential and commercial leases. Longer-term commercial leases provide a stable source of revenue, while the recurring turnover and renewal cycle of residential units creates opportunities to adjust pricing in line with prevailing market conditions. This diversification reduces reliance on any single tenant category and mitigates cash flow volatility.
By integrating income-generating real estate into our capital structure, we aim to improve overall capital efficiency by anchoring our balance sheet with tangible assets, providing supplemental cash flows to offset variability in merchant cash advance performance, and supporting access to competitively priced debt financing. This complementary structure aligns with our broader strategy of balancing the higher-velocity nature of private credit activities with the stability and asset backing provided by long-term real estate holdings.
Integration of Digital Asset Strategy within Real Estate
Within its Real Estate segment, the Company is assessing opportunities to apply digital-asset technologies to improve capital efficiency, transparency, and investor participation in property-backed structures. In collaboration with the Dolomite Foundation, the Company is evaluating the development of frameworks that may enable tokenized representations of ownership or participation interests in income-producing properties or related financing instruments. Such structures could, in the future, facilitate fractional participation by qualified investors, expand access to alternative funding channels, and improve secondary liquidity for certain classes of real-estate-linked assets. The Company expects these efforts to be undertaken in coordination with its valuation consultants, auditors, and existing financing counterparties to ensure consistency with prevailing accounting standards, property laws, and securities regulations. Any implementation will be subject to regulatory review and internal governance approval before deployment.
Digital-Asset Strategy within the Overall Business
The Company has initiated a digital-asset integration strategy designed to enhance operational efficiency and capital management across both its Private Credit and Real Estate segments. Rather than operating as a separate division, this framework is intended to support existing business lines through the measured adoption of digital-finance technologies. The Company is developing relationships with financial-technology providers, including the Dolomite Foundation, to facilitate the use of U.S.-dollar-denominated digital payment instruments and tokenized settlement tools that may improve liquidity and funding flexibility. Within its Private Credit operations, these instruments are expected to streamline the transfer of funds among institutional lenders, subsidiaries, and counterparties, while maintaining adherence to applicable banking, securities, and anti-money-laundering requirements. Within the Real Estate segment, the Company is evaluating the potential use of digital representations of ownership or participation interests in real-asset portfolios to expand access to institutional capital and improve balance-sheet efficiency. All digital-asset activities are being pursued on a limited and controlled basis, subject to ongoing oversight by management and external advisors, and are intended to complement the Company’s core objective of building a diversified, capital-efficient financial platform.
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Dolomite Strategic Agreement
On November 3, 2025, the Company, doing business as Stewards Inc., entered into a Securities Purchase Agreement (the “Agreement”) with Dolomite Foundation, a Cayman Islands foundation acting for itself and on behalf of its syndicate of investors (the “Dolomite Syndicate”). Pursuant to the Agreement, the Company agreed to issue pre-funded warrants to purchase up to 2,450,980 shares of its common stock. The economic value per warrant share is $4.08, based on the 30-trading-day volume-weighted average price (VWAP) of the Company’s common stock for the period from September 19, 2025 to October 30, 2025. The actual exercise price of the prefunded warrants is .0001 per share, with substantially all consideration delivered upfront via $DOLO tokens as in-kind payment. The transaction provides for an aggregate investment amount of $10,000,000, payable in $DOLO tokens as in-kind consideration. The warrants are structured in ten equal tranches of $1,000,000 each, becoming exercisable upon achievement of specified $DOLO 30-day VWAP milestones. Tokens will be held in a jointly controlled multi-signature wallet on the Arbitrum One blockchain, requiring a three-of-four authorization threshold (two company signatories and two investor signatories) for any release. Shares issued upon exercise of the warrants will be subject to a 12-month lock-up period, and all unissued tranches are subject to cancellation in the event that $DOLO’s 30-day VWAP falls below $0.01. The structure is designed to align the Company’s digital-asset exposure with Dolomite’s platform development milestones while minimizing immediate dilution and supporting the Company’s longer-term liquidity and capital-efficiency objectives. Proceeds of the transaction are intended to support continued growth of the Private Credit and Real Estate segments and the controlled implementation of the Company’s digital-asset strategy.
Recent Developments on Financing Strategy
On November 16, 2025, our Board of Directors held a meeting to evaluate the continued use of our Series A Preferred Stock issuance facility and $100 million Loan Agreement with Stewards International in light of our common stock price. After extensive discussion and inquiry into alternative financing sources, the Board unanimously determined that no third-party capital is currently available on comparable or better terms. The Board further concluded that continued reliance on affiliate financing is necessary to fund operations and growth.
Revenue Model and Distribution by Offering
We generate revenue through two primary business lines: (i) merchant cash advances and related financing solutions for small and medium-sized businesses, and (ii) real estate activities, including the sale of condominium units and the leasing of residential and commercial spaces. For each of these offerings, our revenue model is defined by the contractual terms of our agreements, and our ability to reach customers and counterparties is supported by a mix of direct marketing, referral networks, broker relationships, and strategic partnerships. The following provides a detailed description of how we generate revenue, the types of agreements that govern these activities, our distribution methods, and the degree of customer concentration associated with each line of business.
Merchant Cash Advances (MCAs)
• Revenue Model: We generate revenue from MCAs primarily through factor rates applied to the purchase of future receipts. These receipts are remitted by merchants via daily or weekly automated debits until the purchased amount is satisfied.
• Related Agreements: Each MCA is documented by a standardized purchase and sale agreement, which sets forth the advance amount, purchased receipts amount, remittance schedule, and factor rate. In syndicated MCA transactions, we act as servicer under syndication agreements, earning servicing fees, retained participations, and profit allocations. Syndication agreements generally provide that we manage collections and distribute remittances, with servicing compensation paid on a priority basis.
• Distribution: Applications are sourced through direct marketing, referrals, industry partnerships, and independent sales organizations (ISOs). ISOs submit merchant applications under broker agreements, which typically provide for referral compensation based on funded amounts.
• Customer Dependence: Our MCA activities are diversified across a large number of small and medium-sized businesses. We are not dependent on any single merchant or a small group of merchants, and no individual customer accounts for a material portion of our MCA revenues.
Real Estate Activities
• Revenue Model: Our real estate strategy contemplates generating revenue from both (i) recurring rental income from residential and commercial leases and (ii) the marketing and sale of condominium units. At present, our revenues are derived exclusively from rental income, which is generated under tenant lease agreements providing for monthly rental payments, security deposits, and customary landlord protections. While the marketing and sale of condominium units remain part of our long-term strategy, no condominium sales have been completed to date, and no revenue has been recognized from condominium transactions.
• Related Agreements: Leasing revenue is governed by lease agreements that specify rental rates, term lengths, renewal options, and maintenance obligations. In the future, condominium sales will be documented through purchase and sale agreements that define purchase price, deposit requirements, and closing conditions.
• Distribution: We market rental opportunities through broker networks, digital and traditional advertising campaigns, referral programs, and on-site promotional activities directed at potential tenants. In anticipation of future condominium sales, we also maintain marketing infrastructure that can be extended to prospective buyers. In certain cases, we establish relationships with co-investors and developers through joint ventures or co-investment agreements to support property development and positioning.
• Customer Dependence: While real estate revenues are inherently more concentrated by project than our MCA activities, we maintain a diversified base of tenants across properties, which reduces reliance on any single tenant. We are not dependent on any single tenant, buyer, or co-investor for our real estate activities.
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Distribution
Our financing solutions are marketed and distributed through both direct channels and independent sales organizations (ISOs). A significant percentage of our MCA deal flow is sourced through ISOs, who submit merchant applications to us under broker agreements. We also acquire customers directly through online marketing, referrals, and industry partnerships. We are not dependent on any single customer or a small group of customers for our financing or real estate activities. Our customer base is diversified across a wide range of merchants, developers, and investment partners, which reduces concentration risk and limits dependence on any individual relationship
Our real estate activities currently generate revenue solely from the leasing of residential and commercial spaces within our projects. Leasing revenue is supported by marketing efforts directed at potential tenants, which may include broker networks, digital and traditional advertising, referral programs, and on-site promotional campaigns. While our long-term real estate strategy also contemplates revenue from the marketing and sale of condominium units, no such sales have yet occurred. Compared to our MCA distribution network, real estate revenues are more concentrated by project, but we maintain a diversified base of tenants across properties, which reduces reliance on any single party.
Listing on the Nasdaq Capital Market
Our common stock is currently quoted on the OTC Pink Market. We have applied to list our common stock on the Nasdaq Capital Market ("Nasdaq"). If our listing application is approved, we expect to list our common stock on Nasdaq, at which point our common stock will cease to be traded on the OTC Pink Market. No assurance can be given that our listing application will be approved. This offering will occur even if Nasdaq does not approve the listing of our common stock.
Implications of Being a Controlled Company
If listed on Nasdaq, we would be a “controlled company” within the meaning of Nasdaq Listing Rule 5615(c) because Vincent Napolitano, Shaun Quin, and Glen Steward (the “Founders”), through a voting agreement governing 10,000,000 shares of Series B Preferred Stock, each with 50 votes per share, collectively control approximately 87% of the voting power of our company.
Upon completion of this Offering, our original board members will have the ability to control the outcome of matters submitted to the shareholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets.
Under the Nasdaq Listing Rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group, or another company is a “controlled company” and is permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain corporate governance requirements, including:
§ the requirement that a majority of the board of directors consisting of independent directors;
§ the requirement that a listed company having a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;
§ the requirement that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
§ the requirement for an annual performance evaluation of the nominating and governance committee and compensation committee;
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On the other hand, a controlled company must still comply with the exchange’s other corporate governance standards. These include having an audit committee and the special meetings of independent or non-management directors. As a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. Although we are eligible to rely on these exemptions, we do not intend to do so, even if we are deemed a controlled company. Instead, we have appointed independent directors (Zachary Graeve and Wael Barsoum) and established fully independent committees to comply with Nasdaq’s standard governance requirements, ensuring robust oversight and enhanced protections for our shareholders. We plan to appoint two additional independent directors at or shortly after listing, such that we will have a majority of independent directors. However, we could elect to rely on these exemptions in the future, and if we do, shareholders would not have the same protections afforded to shareholders of companies subject to all Nasdaq corporate governance requirements.
Name Change
On August 7, 2025, the Board of Directors and a majority of shareholders of the Company approved a change in the name of the Company from Favo Capital Inc. to Stewards, Inc. On November 14, 2025, the Company’s previously announced corporate actions became effective, including its change of name from Favo Capital, Inc. to Stewards, Inc. and the corresponding change of its trading symbol from “FAVO” to “SWRD,”
Reverse Stock Split
On August 7, 2025, our board and a majority of our shareholders approved a reverse stock split within the range of 1-for-2 to 1-for-100 of our issued and outstanding shares of common stock and authorized the Board, in its discretion, to determine the final ratio in connection with the reverse stock split. On November 6, 2025, however, the Company’s board of directors resolved to abandon the reverse stock split. As such, the Company withdrew its application for a reverse stock split with FINRA.
Competition
The small business lending market is competitive and fragmented. We expect competition to continue to increase in the future. We believe the principal factors that generally determine a company’s competitive advantage in our market include the following:
§ less stigma associated with MCAs;
§ ease of process to apply for MCAs;
§ brand recognition and trust;
§ MCA features;
§ MCA product fit for business purpose;
§ transparent description of key terms;
§ effectiveness of customer acquisition; and
§ customer experience.
Our principal competitors include traditional banks, revenue-based funders, legacy merchant cash advance providers, and newer, technology-enabled lenders. In our direct space, we face competition from providers of other competing forms of alternative funding that target the same type of small businesses served by the MCA industry and may also compete for use of the capital of potential syndication participants interested in deploying capital in the alternative funding market. While the MCA industry has grown beyond meeting the needs of high-risk businesses and become more well known within the alternative funding market, some of the initial stigma and hesitation towards MCAs remains, and this may provide a competitive advantage to providers of other forms of alternative funding.
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The decreasing stigma and recognition of the critical needs of small businesses met by MCA funding has made it an attractive area for well-recognized companies that have not traditionally participated in the alternative funding market. Some of these companies, including Shopify, have created MCA divisions to provide MCA funding as a complementary service to their existing small business customers.
As noted above, a significant issue within the MCA industry is procuring enough capital to meet merchant demand for MCAs. The entry of larger and established companies to the MCA market provides these companies with the advantage of (i) established name recognition, (ii) an existing merchant customer base that can be readily accessed for MCA offerings, potentially producing more volume and reducing third party fees owed for merchant advertising and recruiting, (iii) easier access to capital to support significant MCA volume, (iv) increased access to merchants’ financial and payment data, and (v) in the event that regulatory changes cause significant structural changes to the MCA industry, these companies may have greater resources in place to quickly adapt to such changes or be able to absorb the costs of such changes.
While the entry of established companies into the MCA market may increase the competition faced by our business, it also provides a discernable benefit as these companies bring increased credibility and attention to the MCA industry and highlight the availability of MCAs as a viable funding source to a broader array of small businesses.
Governmental Regulations
The MCA industry is subject to laws and regulations that apply to businesses in general, including laws and regulations that address information privacy, unfair or deceptive acts or practices, and credit reporting, among other legal requirements.
Because MCAs are structured as purchases and sales of receipts or future cashflow from revenue, instead of loans, the MCA industry has not historically been subject to specific laws and regulations, such as licensing requirements, applicable to lenders. Recently, however, there has been increased legislative and regulatory scrutiny of the MCA industry, which could result in the enactment of specific laws and regulations.
There have been enactments in New York and California and discussions in several other states to implement regulations on the industry. State usury laws may not apply against merchant cash advance providers, but New York and California, for example, have state laws requiring merchant cash advance providers and other nonbank lenders to provide disclosures similar to those required under the Truth in Lending Act. These laws were enacted in order to create more transparency for small business borrowers surrounding their application for credit from nonconventional banking institutes.
There are also federal laws that apply to the industry. The Federal Trade Commission (FTC), for example, has the authority to sue merchant cash advance providers that engage in deceptive or predatory lending practices. Any merchant cash advance provider that engages in unfair or deceptive trade practices can be subjected to compensatory damages, civil penalties, and a permanent injunction from marketing, selling, or collecting merchant cash advances.
The Gramm-Leach-Bliley Act (GLBA) has provisions that prohibit creditors from making false statements to obtain a customer’s bank account information. These laws apply to merchant cash advance providers.
Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires covered financial institutions, including merchant cash advance providers, to collect and report to the Consumer Financial Protection Bureau (CFPB) data on small business applications for credit. The rules generally require financial institutions that originate at least 100 small business credit transactions annually to collect and report loan application, origination, and pricing information, as well as certain applicant/borrower demographic information, in a “small business lending application register.” For purposes of the rules, a small business is one with no more than $5 million of gross revenues in its most recent fiscal year.
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The merchant cash advance industry faces potential regulation from the U.S. Department of Treasury. With the growing emergence of revenue-based funders and merchant cash advance providers as well as concerns raised by small business advocacy groups, the U.S. Department of Treasury (the “Treasury”) released a statement outlining its objectives regarding small business financing, calling for more robust small business borrower protections and effective oversight, with commentators arguing that small businesses should receive enhanced protections. The statement also details the Treasury’s desire to expand small business access to capital through partnerships between traditional and nontraditional lenders. The Treasury highlights two possible types of partnerships: (i) a referral partnership in which merchants that are unable to meet certain criteria or seeking products not offered by their financial institution are directed to a merchant cash advance provider or other alternative financing provider and (ii) co-branded or whitelabel partnerships, where financial institutions contract with non-traditional lenders to integrate technology services.
The legal requirements applicable to both non-traditional and traditional financing institutions may vary depending on the type of partnership. These laws may include consumer protection statutes and regulations, anti-money laundering regulations, and fair lending requirements, in addition to relevant state laws or regulations. Before engaging in these partnerships, traditional financiers may request all transactions be monitored by the institutions’ prudential regulator to the extent and merchant cash advance provider is performing functions on behalf of the financial institution. An increasing number of partnerships may cause the Treasury to re-examine registration requirements for non-traditional financing lenders, including merchant cash advance providers.
We cannot predict whether there will be any regulations adopted either by the federal government or individual state governments with respect to the merchant cash advance industry. If any such regulations are adopted and implemented, such regulations could place restrictions on the industry that could adversely affect our business.
Intellectual Property
We believe that our intellectual property and proprietary rights are vital to our success. To protect our intellectual property and proprietary rights in our brand, technology, products, services, data, improvements and inventions, we plan to rely on a combination of patent, trademark, copyright, trade secret, and other laws, as well as contractual restrictions on disclosure, such as confidentiality agreements with strategic partners, employees, consultants and other third parties. However, we cannot guarantee that such laws or contractual restrictions will provide us with sufficient protection or that we have entered into confidentiality agreements with each party that has or may have had access to our confidential or proprietary information, know-how or trade secrets.
Furthermore, effective patent, trademark, trade dress, copyright, and trade secret protection may not be available in every region where we conduct business. In addition, the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain and still evolving.
Employees
We presently have 121 employees: Vincent Napolitano, our Chairperson, Chief Executive Officer, Secretary, member of the Board of Directors, and a significant stockholder; Shaun Quin, our President and member of the Board of Directors, and a significant stockholder; Glen Steward, our Chief Strategy Officer and member of the Board of Directors and a significant stockholder; Katy Murless, our Chief Financial Officer effective September 1, 2025; and Vaughan Korte, our Chief Operating Officer effective September 1, 2025. In addition, our team includes 4 software engineers, 3 IT technicians, 20 administration staff, and 5 department managers. The balance of 84 employees are sales personnel located across New York, Florida, and the Dominican Republic.
Over time, we may be required to hire employees or continue to engage independent contractors in order to execute the projects necessary to grow and develop the business. These decisions will be made by our officers and directors, if and when appropriate.
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Properties
Our real property at 1818 Park is discussed above. The Company has leased the following office locations:
1) 4300 N. University Drive Suite D-105 Lauderhill, Florida 33351. This location has a 3-year lease of which 1 year remains.
2) Calle La Privada esquina Dominicana Numero 96, sector La Paz, Monsenor Nouel, R.D. Bonao, Dominican Republic. This location has a yearly lease with automatic renewal each year. June 2026 is the current expiry.
3) Edificio JJ, en la calle Las Carreras, La Vega, R.D, Dominican Republic. This location has a yearly lease with automatic renewal each year. February 2026 is the current expiry.
Legal Proceedings
Due to the nature of the Company's business, the Company may at times be subject to claims and legal actions. The Company is currently not involved in any material legal proceedings.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. We caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this prospectus and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.
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Results of Operations
Below is a summary of the results of operations for the years ended December 31, 2024, and 2023.
| For the Years Ended | ||||||||||||||||
| December 31, | ||||||||||||||||
| 2024 | 2023 | $
Change | % Change | |||||||||||||
| Revenue | ||||||||||||||||
| Financing fees | $ | 12,787,262 | $ | 11,800,228 | $ | 987,034 | 8.4 | % | ||||||||
| 12,787,262 | 11,800,228 | 987,034 | 8.4 | % | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Cost of sales | 2,358,114 | 3,497,364 | (1,139,250 | ) | (32.6 | %) | ||||||||||
| 2,358,114 | 3,497,364 | (1,139,250 | ) | (32.6 | %) | |||||||||||
| Gross profit | 10,429,148 | 8,302,864 | 2,126,284 | 25.6 | % | |||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 7,814,809 | 5,318,338 | 2,496,471 | 46.9 | % | |||||||||||
| Allowance for credit losses | 4,019,840 | 5,561,517 | (1,541,677 | ) | (27.7 | %) | ||||||||||
| Professional fees | 2,517,381 | 1,728,146 | 789,235 | 45.7 | % | |||||||||||
| Total operating expense | 14,352,030 | 12,608,001 | 1,744,029 | 13.8 | % | |||||||||||
| Loss from operations | (3,922,882 | ) | (4,305,137 | ) | (382,255 | ) | (8.9 | %) | ||||||||
| Interest expense | (4,643,396 | ) | (3,350,913 | ) | 1,292,482 | 38.6 | % | |||||||||
| Loss on write down of investment | (1,917 | ) | (17,157 | ) | (15,240 | ) | (88.8 | %) | ||||||||
| Gain on sale of fixed asset | 4,230 | — | 4,230 | 100 | % | |||||||||||
| Foreign exchange loss | (38,760 | ) | — | 38,760 | 100 | % | ||||||||||
| Total other income (expenses) | (4,679,843 | ) | (3,368,070 | ) | 1,311,773 | 38.9 | % | |||||||||
| Net loss before income taxes | $ | (8,602,725 | ) | $ | (7,673,207 | ) | 929,518 | 12.1 | % | |||||||
| Income tax expenses | (56,055 | ) | — | 56,055 | 100 | % | ||||||||||
| Net loss | (8,658,780 | ) | (7,673,207 | ) | 985,573 | 12.8 | % | |||||||||
| Preferred shares interest expense | (462,596 | ) | (147,955 | ) | 314,641 | 212.70 | % | |||||||||
| Net loss to common shareholders | (9,121,376 | ) | (7,821,162 | ) | 1,300,214 | 16.6 | % | |||||||||
| Net loss per common share – basic and diluted | $ | (0.10 | ) | $ | (0.11 | ) | (0.01 | ) | (9.0 | %) | ||||||
| Weighted average common shares outstanding – basic and diluted | 92,638,720 | 68,039,666 | 24,599,054 | 36.1 | % | |||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | (9,121,376 | ) | (7,821,162 | ) | 1,300,214 | 16.6 | % | |||||||||
| Unrealized gain on foreign currency translation | 2,671 | — | 2,671 | 100 | % | |||||||||||
| Total comprehensive loss | $ | (9,118,705 | ) | (7,821,162 | ) | 1,297,543 | 16.6 | % | ||||||||
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Revenue
Revenue increased by 8.4% in the amount of $987,034 for the year ended December 31, 2024, compared to the same period in 2023. The increase in revenue was mainly as a result of the acquisition of the Simplified Group of Companies. For the year ended December 31, 2024, $2,165,300 of revenue was derived from brokered commissions directly linked to the Simplified Group of Companies. The growth in revenue from the Simplified Group of Companies was offset by a decrease in direct revenue of 7.45% for the year ended December 31, 2024, compared to the year ended 2023 as well as a decrease in syndicated revenue of 8.34% for the year ended December 31, 2024, compared to the year ended 2023. The decline in direct and syndicated revenue is due to decreased deal flow for the year ended December 31, 2024, compared to the year ended 2023.
We expect that our revenues will increase in future quarters as a result of additional capital raised for direct funding expansion as well as the recent real estate acquisition. A increase in direct funding is driven by the acquisition of our own call center which boosts lead generation as well as the onboarding of new ISO partners.
Our cost of revenue decreased by 32.6% in the amount of $1,139,250 for the year ended December 31, 2024, compared to the year ended 2023. The decrease in the cost of revenue is the result of a lower volume of direct and syndicated deals funded for the year. The lower funding volume in syndicated deals has a direct impact on the amount of fees paid as well as commissions paid for funding or participating in a deal. Discounts also declined 37.62% and collection charges on defaulted accounts declined 43.37% for the year ended December 31, 2024 vs December 31, 2023
Gross profit increased by 25.6% in the amount of $2,126,284 for the year ended December 31, 2024, compared to the year ended 2023. The increase in gross profit is the result of the increase in revenue and the acquisition of the Simplified Group of Companies which resulted in additional revenue driven from brokered commissions.
Operating expenses
Operating expenses increased by 13.8% in the amount of $1,744,029 for the year ended December 31, 2024, compared to the year ended 2023. Listed below are the major changes to operating expenses:
General and administrative expense increased by $2,496,471 for the year ended December 31, 2024, compared to the year ended 2023, mainly as a result of the acquisition of the Simplified Group of Companies. The total amount of general and administrative expenses related to the Simplified Group of Companies for the year ended December 31, 2024 was $2,839,269
Allowance for credit losses decreased by $1,541,677 for the year ended December 31, 2024, compared to the year ended 2023, mainly as a result of improved underwriting and fewer deals concluded for the year.
Professional fees increased by $789,235 for the year ended December 31, 2024, compared to the year ended 2023, primarily due to costs related to audits and legal fees in relation to the Company’s desire to pursue the public listing.
We expect our overall operating expenses to increase on a quarterly basis for the balance of the year and into 2026 as we further implement our business plan. We expect increases in future quarters over all major categories as we engage in efforts to increase brand awareness with our products and services, including advertising campaigns and investor relation services. We also expect an increase in general operating costs and growth initiatives as we ramp up operations and seek to expand them.
We also anticipate that our professional fees will increase following our initial public offering as an SEC reporting issuer, and the increased fees for auditors, accountants and legal professionals for legal and accounting compliance.
Other expense
Other expense increased by $1,311,773 for the year ended December 31, 2024, compared to the year ended 2023, primarily as a result of increased interest expense on our outstanding notes.
Net Loss
We recorded a net loss of $8,658,780 for the year ended December 31, 2024, as compared with a net loss of $7,673,207 for the year ended 2023.
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Below is a summary of the results of operations for the nine months ended September 30, 2025, and 2024.
| Nine Months Ended | ||||||||||||||||
| September 30, 2025 | September 30, 2024 | $ Change | % Change | |||||||||||||
| Revenue | $ | 12,014,133 | 9,566,571 | $ | 2,447,562 | 25.6 | % | |||||||||
| Cost of revenue | 2,077,306 | 1,727,626 | 349,680 | 20.2 | % | |||||||||||
| Gross profit | 9,936,827 | 7,838,945 | 2,097,882 | 26.8 | %) | |||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | 11,315,716 | 5,571,086 | 5,744,630 | 103.1 | % | |||||||||||
| Provision for bad debt expense | 1,539,292 | 3,106,144 | (1,566,852 | ) | (50.4 | %) | ||||||||||
| Professional fees | 2,044,950 | 1,757,637 | 287,313 | 16.3 | % | |||||||||||
| Total operating expenses | 14,899,958 | 10,434,867 | 4,465,091 | 42.8 | % | |||||||||||
| Loss from operations | (4,963,131 | ) | (2,595,922 | ) | (2,367,209 | ) | 91.2 | % | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (5,498,192 | ) | (3,379,040 | ) | (2,119,152 | ) | 62.7 | % | ||||||||
| Loss on write down of investment | — | (1,917 | ) | 1,917 | (100 | %) | ||||||||||
| Other losses | (27,494 | ) | (19,756 | ) | (7,738 | ) | 39.2 | % | ||||||||
| Total other expenses, net | (5,525,686 | ) | (3,400,713 | ) | (2,124,973 | ) | 62.5 | % | ||||||||
| Net loss before income taxes | (10,488,817 | ) | (5,996,635 | ) | (9,889,179 | ) | 16.5 | % | ||||||||
| Income tax provision | (11,084 | ) | — | (11,084 | ) | 100 | % | |||||||||
| Net loss | (10,499,901 | ) | (5,996,635 | ) | (4,503,266 | ) | 75.1 | % | ||||||||
| Net income attributable to noncontrolling interest | (472,307 | ) | — | (472,307 | ) | 100 | % | |||||||||
| Net income attributable to redeemable noncontrolling interest | (96,482 | ) | — | (96,482 | ) | 100 | % | |||||||||
| Net loss to Stewards Inc. | (11,680,690 | ) | (5,996,635 | ) | (5,684,055 | ) | 94.8 | % | ||||||||
| Amounts attributable to Stewards Inc. | ||||||||||||||||
| Net loss | (11,680,690 | ) | (5,996,635 | ) | (5,684,055 | ) | 94.8 | % | ||||||||
| Deemed dividend from conversion of preferred stock | (3,700,000 | ) | — | (3,700,000 | ) | 100 | % | |||||||||
| Dividend on preferred stock | (611,559), | (323,771 | ) | (287,788 | ) | 88.9 | % | |||||||||
| Net loss applicable to common stockholders | (15,380,249 | ) | (6,320,406 | ) | (9,059,843 | ) | 143.3 | % | ||||||||
| Net loss per common share - basic and diluted | (0.12 | ) | (0.07 | )) | (0.05 | ) | 71.4 | % | ||||||||
| Weighted-average common shares outstanding - basic and diluted | 132,552,248 | 91,789,844 | 40,762,404 | 44.4 | % | |||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | (10,499,901 | ) | (5,996,635 | )) | (4,503,266 | ) | 75.1 | % | ||||||||
| Unrealized gain (loss) on foreign currency translation | 2,480 | (1,033 | )) | 3,513 | 340.1 | % | ||||||||||
| Total comprehensive loss | (10,497,421 | ) | (5,997,668 | ) | (4,499,753 | ) | 75.0 | % | ||||||||
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Revenue
Revenue increased by 25.6% in the amount of $2,447,562 for the nine months ended September 30, 2025, compared to the same period in 2024. The increase in revenue was a result of the acquisition of 1818 Park which was the first deal concluded under the Company’s real estate division. Revenue from the Company’s private credit division remained relatively flat with a slight increase of 1.42% for the nine months ended September 30, 2025, compared to the same period in 2024 due to less direct deal volume.
Our cost of revenue increased by 20.24% in the amount of $349,680 for the nine months ended September 30, 2025, compared to same period ended 2024. The increase in cost of revenue is mainly the result of increased fees with syndication partners due to the funding mix as well as increased collection fees from defaulted accounts and discounts on early settlements. Collection charges on defaulted deals increased from $4,605 for the period ended September 30 2024 to $73.865 for the period ended September 30 2025.
Gross profit increased by 26.76% in the amount of $2,097,882 for the nine months ended September 30, 2025, compared to same period ended 2024. The increase in gross profit is the result of the acquisition of 1818 Park.
We expect that our revenues will increase in future quarters as a result of additional capital raised for direct funding expansion as well as the full impact of the recent real estate acquisition. A increase in direct funding is driven by the acquisition of our own call center which boosts lead generation as well as the onboarding of new ISO partners.
Operating expenses
Operating expenses increased in the amount of $4,465,091 for the nine months ended September 30, 2025, compared to the same period in 2024. Listed below are the major changes to operating expenses:
General and administrative expense increased by $5,744,630 for the nine months ended September 30, 2025, compared to the same period in 2024, mainly as a result of the acquisition of 1818 Park. Costs related to 1818 Park amounted to $4,977,604 which includes depreciation expense of $3,342,242.
Bad Debt allowance for credit losses decreased by $1,566,852 for the nine months ended September 30, 2025, compared to the same period in 2024, as a result of lower overall funding and reduced defaults from syndication partners and direct due to better deal management.
Professional fees increased by $287,313 for the nine months ended September 30, 2025, compared to the same period in 2024, mainly due to an increase in accounting fees related to audit finalization and quarter closes.
We expect our overall operating expenses to increase on a quarterly basis for the balance of the year and into 2026 as we further implement our business plan. We expect increases in future quarters over all major categories as we engage in efforts to increase brand awareness with our products and services, including advertising campaigns and investor relation services. We also expect an increase in general operating costs and growth initiatives as we ramp up operations and seek to expand them. The acquisition of 1818 Park will also have an impact on our overall operating expenses.
We also anticipate that our professional fees will increase following our registration statement as an SEC reporting issuer, and the increased fees for auditors, accountants and legal professionals for legal and accounting compliance.
Other expense
Other expenses increased by $2,124,973 for the nine months ended September 30, 2025, compared to the same period in 2024, primarily as a result of increased interest expenses related to notes payable and the acquisition of 1818 Park and the assumption of the related mortgage.
Net Loss
We recorded a net loss attributable to common stockholders. of $15,380,249 for the nine months ended September 30, 2025. The net loss for the same period in 2024 was $6,320,406.
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Liquidity and Capital Resources
As part of our strategy to strengthen financial sustainability, we are focused on reducing and restructuring our current debt obligations. The company currently holds approximately $38,000,527 million in debt notes, with plans to repay or refinance a substantial portion using proceeds from the loan agreement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund) . Our priority is to eliminate the highest-cost debt first, as this will have a direct impact on improving our bottom-line profitability. With annual interest payments currently at approximately $5.5 million, we estimate that reducing our debt load could add between $2.5 million and $5.5 million annually to our net income, depending on the Company’s ability to successfully raise sufficient equity to pay down the debt. This could position the Company for profitability within two to 3 years. Additionally, we anticipate that implementing our proprietary software platform across operations will streamline efficiencies without requiring additional capital allocation to operating expenses, allowing for scalable growth without increasing costs.
On November 16, 2025, following a comprehensive review of financing alternatives, our Board of Directors ratified the continued use of: (i) the Series A Preferred Stock facility (up to 81,250,000 shares at $0.25 per share, ~$2.5–$3.0 million remaining); and (ii) the $100 million Loan Agreement with Stewards International (8.0% interest, warrants at $0.76/share). The Board determined these are the only viable funding sources currently available. The Board concluded that continued reliance on affiliate financing is necessary to fund operations and growth. Management was directed to cease Series A issuances upon full authorization and to pursue the Loan Agreement only until superior third-party terms are secured.
No external financing alternatives were identified despite active exploration. The company’s bridge raise in 2024 raised $4.3m, but short of the $6m needed at the time and the offering amounts raised were matched dollar-for-dollar by affiliates of the company. The company could not reach an acceptable agreement for a larger raise with investment bank backing. The company continues to seek the best forms of financing available to it, and lacking available alternatives, plans to use the current financing sources described above.
The following is a summary of the cash and cash equivalents and restricted cash as of September 30, 2025, and December 31, 2024.
| September 30, 2025 | December 31, 2024 | Change | % Change | |||||||||||||
| Cash, cash equivalents and restricted cash | $ | 6,229,456 | 2,751,386 | $ | 3,478,070 | 126.4 | % | |||||||||
Summary of Cash Flows
Below is a summary of our cash flows for the six months ended September 30, 2025 and 2024.
| Nine Months Ended | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Net cash used in operating activities | 680,434 | (4,959,889 | ) | |||||
| Net cash provided by (used in) investing activities | (4,519,445 | ) | (644,392 | ) | ||||
| Net cash provided by financing activities | 7,314,601 | 4,891,446 | ||||||
| Net change in cash, cash equivalents and restricted cash | 6,229,456 | 433,427 | ||||||
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Operating activities
Net cash provided by operating activities was $680,434 during the nine months ended September 30, 2025, and consisted of a net loss of $10,499,901 and increased by net changes in operating assets and liabilities of $4,745,713 mainly offset by non-cash items including $1,539,292 in bad debt expense.
Net cash used in operating activities was $4,959,889 during the nine months ended September 30, 2024, and consisted of a net loss of $5,996,635, offset by net changes in operating assets and liabilities of $3,481,232, and by non-cash items including $3,106,144 in bad debt.
Investing activities
Net cash used in investing activities for the nine months ended September 30, 2025, was $4,519,445 and consisted of fixed asset and business purchases as well as cash advanced to Block 40, LLC under the promissory note agreement
Net cash used in investing activities for the nine months ended September 30, 2024, was $644,392 and consisted of the purchase of the business in the Simplified acquisition.
Financing activities
Net cash provided by financing activities was $7,314,601 for the nine months ended September 30, 2025, and consisted of proceeds from notes payable and preferred shares proceeds.
Net cash provided by financing activities was $4,891,446for the nine months ended September 30, 2024, and consisted mainly of proceeds from notes payable.
Since our inception, we have financed our operations through private placements of common and preferred stock, convertible notes, and unsecured debt, and we have also issued debt in our company secured by all of our assets. As of September 30, 2025, we had notes payable of $38,000,527. We expect to continue to experience high interest payments in the future as a result of our outstanding liabilities. If we are unable to generate sufficient revenues and/or additional financing to service this debt, there is a risk the lenders will call the notes, secure our assets, as to those applicable secured notes, and demand payment. If after all these recourses are exhausted and the debt becomes unresolvable, like any other company, there’s a risk we could go out of business.
Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the continuation of the Company as a going concern. Although the Company has a positive working capital of $4,899,989 as of September 30, 2025, it has a net loss of $10,499,901 and net cash provided by operating activities of $680,434 for the nine months ended September 30, 2025 and an accumulated deficit of $51,228,402 as of September 30, 2025. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. The Company evaluated conditions and events known or reasonably knowable as of the issuance date and considered only those plans that are probable of being implemented within one year and of mitigating the relevant conditions. The Company has established ongoing sources of revenue through its private credit operations and, beginning in July 2025, through income-producing real estate, such as rental income, of $2,311,855 recognized for the nine months ended September 30, 2025. However, current revenues are not yet sufficient to cover its operating costs and the Company remains dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to increase its revenue and raise additional funding until a registration statement relating to an equity funding facility is in effect. On September 17, 2025, the Company entered into a financing arrangement with Stewards International Funds PCC pursuant to which it may raise up to $100 million through unsecured, unsubordinated notes. While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or that operations will generate sufficient cash flows to meet obligations as they come due. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
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Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. There have been no material changes to our critical accounting policies as described in the footnotes to our financial statements for the year ended December 31, 2024; however, we consider our critical accounting policies to be those related to.
Revenue Recognition
The Company’s main source of revenue is through agreements for the purchase and sale of future receivables/receipts, commonly referred to as a Merchant Cash Advance. Under the contract, the Company will agree to purchase a specified amount of the customer’s future receipts/receivables (the “Purchased Amount”) at a discount (the average discount being a factor of 1.4), in return for providing the customer with upfront proceeds (the “Purchase Price”). The customer is then contractually required to pay the cash related to the future receivables/receipts based on an estimated period which is dependent on the agreed-upon % of the customer’s future receivables/receipts that the customer collects until such time as the purchased receipts have been fully repaid. The average duration of a contract is currently between 8 -12 months. The difference between the Purchased Amount that the customer will repay, and the discounted Purchase Price amount that the Company pays for the future receivables/receipts, is considered the “discount”, which reflects the significant collection risk incurred by the Company for its purchase of future receivables/receipts. These purchase of future receipts arrangements do not constitute a revenue contract under ASC 606 "Revenue from Contracts with Customers". Accordingly, the Company accounts for them in accordance with ASC 310 "Receivables".
The Company recognizes revenue on remittances collected by applying the contractual discount to allocate the remittance against the initial principal held as a receivable and revenue. All upfront income from fees, such as origination and processing fees are booked as income on a straight-line method over the initial period of the contract. The same applies to all direct costs incurred upon the execution of the contract, which primarily consists of commissions paid to the Company’s internal sales team or external partners for sourcing the contract.
As of December 31, 2024, and 2023, deferred commissions cost included within account receivables was $842,924 and $919,280, respectively. Similarly, deferred origination fees included within account receivables was $192,033 and $335,679 as of December 31, 2024, and 2023, respectively.
Following table provides the revenue recognized from each offering
| Revenue | December 31, 2024 | December 31, 2023 | ||||||
| MCAs Income and Fees | $ | 10,225,976 | $ | 11,286,626 | ||||
| Brokerage Commissions | 2,483,084 | 294,472 | ||||||
| Management fee | 44,874 | — | ||||||
| Others | 33,328 | 219,130 | ||||||
| Total Revenue | $ | 12,787,262 | $ | 11,800,228 | ||||
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Credit Losses on Financial Instruments
For its financial instruments subject to credit risk, consisting of its receivables related to its MCA’s, the Company recognizes as an allowance its estimate of lifetime expected credit losses under the current expected credit loss (CECL) model of ASC 326. The approach is based on the Company's internal knowledge and historical default rates over the expected life of the receivables and is adjusted to reflect current economic conditions as well as industry and geographical specific risks. This evaluation takes into account the customer's ability and intention to pay the consideration when it is due along with incorporating changes in the forward-looking estimates. If the expected financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly.
Movement of Credit Losses for the Year:
| Year ended | |||||||||
December 31 | |||||||||
| 2024 | 2023 | ||||||||
| Balance, beginning of period | $ | 16,102,278 | $ | 10,842,493 | |||||
| Current period provision | 4,019,840 | 5,561,517 | |||||||
| Write-offs | (1,087,141 | ) | (301,732 | ) | |||||
| Recoveries | — | — | |||||||
| Balance, end of period | $ | 19,034,976 | $ | 16,102,278 | |||||
The Company had increased write-offs for the period ended December 31, 2024 mainly due to the closing of some of the syndication funds in which the Company participated.
The Company will write off any deals that are deemed to be uncollectible as advised by the Company’s third-party collections and legal team or in the event the merchant has filed for bankruptcy. With regards to deals where the Company has syndicated on the deal, the write off is done at the time the syndication partner identifies these deals are no longer collectable.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2024 and 2023.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has access to at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities, convertible note, notes payable, due to and from related parties and advanced receivables. Fair values were assumed to approximate carrying values for these financial instruments due to their short-term maturities.
Business Combinations
ASC 805, Business Combinations, provides a model for determining whether an acquisition represents a business combination. In order to be a business, the integrated set of activities of the acquired entity needs to have an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired entity must also pass the “Screen Test” which involves determining whether the acquisition represents an in-substance asset acquisition based on whether the fair value of the gross assets acquired is “substantially all” concentrated in a single asset or group of similar assets.
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We use the acquisition method of accounting for business combination transactions, and, accordingly, recognize the fair values of assets acquired and liabilities assumed in our consolidated financial statements. Transaction costs related to the acquisition of the acquired company are expensed as incurred. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The consolidated financial statements include the results of operations of any acquired company since the acquisition date.
Goodwill and Intangible Assets
We recognize the excess of the purchase price over the fair value of identifiable net assets acquired at the acquisition date as goodwill. In accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”), Goodwill is not amortized but is reviewed for impairment annually and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. If the fair value of the reporting unit is greater than the reporting unit’s carrying value, then the carrying value of the reporting unit is deemed to be recoverable. If the carrying value of the reporting unit is greater than the reporting unit’s fair value, goodwill is impaired and written down to the reporting unit’s fair value.
Identifiable intangible assets include developed technology, customer relationships, and trade names resulting from acquisitions. Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated economic lives on a straight-line basis. Acquired intangible assets are presented net of accumulated amortization on the consolidated balance sheets. We review the carrying amounts of intangible assets for impairment at the asset group level whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. We measure the recoverability of the asset group by comparing its carrying amount to the future undiscounted cash flows we expect the asset group to generate. If we consider the asset group to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset group exceeds its fair value. In addition, we periodically evaluate the estimated remaining useful lives of long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation or amortization.
The Company amortizes intangible assets subject to amortization on the basis of their expected periods of benefit, generally 4 to 10 years. The Company does not have indefinite-lived intangible assets other than goodwill.
Useful life of the intangible assets are as follows:
| Useful life (In years) | |
| Trade Name | 10 |
| Developed Technology | 4 |
| Customer relationships | 4 |
| In-place leases | 1 year for residential leases 6 years for commercial leases |
Deferred Consideration
The Company elected to account for the deferred consideration under ASC 825, Financial Instruments (“ASC 825”). Accordingly, deferred consideration was recognized at their fair value at the closing of the transaction and are subsequently remeasured each reporting period with changes in fair value recorded in other income (expense) in the consolidated statements of operations and comprehensive loss until settlement. The fair value of the deferred consideration was determined by discounting future payments using the Company’s cost of borrowing.
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MANAGEMENT AND BOARD OF DIRECTORS
The following table lists, as of the date of this prospectus, the names, ages and positions of the individuals who serve as executive officers and directors of Stewards:
| Name | Age | Principal Positions with Us | Date Commenced Serving as Director | |||||
| Vincent Napolitano | 53 | Chief Executive Officer, Chairperson, Secretary and Director | December 12, 2018 | |||||
| Shaun Quin | 43 | President and Director | September 15, 2019 | |||||
| Glen Steward | 54 | Chief Strategy Officer and Director | January 18, 2024 | |||||
| Katy Murless | 41 | Chief Financial Officer and Treasurer | n/a | |||||
| Vaughan Korte | 42 | Chief Operating Officer | n/a | |||||
| Scott McGowan | 47 | Chief Marketing Officer | n/a | |||||
| Zachary Graeve | 44 | Director | September 16, 2025 | |||||
| Wael Barsoum | 56 | Director | September 29, 2025 | |||||
Set forth below is a brief description of the background and business experience of our directors and executive officers.
Vincent Napolitano
Vincent Napolitano is a Founder, the CEO and a Director of Stewards, Inc. He has worked for the company for the past 5 years in such capacities. With over two decades of experience in finance and business development, he has been instrumental in establishing the Company as a trusted partner for businesses seeking alternative financial solutions. Prior to founding the Company, Vincent spent 25 years on Wall Street, holding key positions at prominent firms and developing expertise in structuring complex financial deals. He also served as Chief Investment Officer for multiple special purpose vehicles (SPVs), acquiring private stock in pre-IPO unicorn companies such as Facebook and Twitter.
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Aside from that provided above, Vincent does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Vincent is qualified to serve on our Board of Directors because of his experience and expertise in corporate finance and business development.
Shaun Quin
Shaun Quin is a Founder, the President and a Director of Stewards, Inc. He has worked for the company for the past 5 years in such capacities. He oversees the company’s mission to provide innovative and efficient private credit solutions to small and medium-sized businesses. With over 20 years of global experience as a partner, investor, and director, Shaun has played a key role in shaping the Company’s strategic growth. His expertise in fostering collaboration, building high-performance teams, and developing financial solutions has helped position the company as a leader in private credit.
Aside from that provided above, Shaun does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Shaun is qualified to serve on our Board of Directors because of his experience and expertise in corporate finance and business development.
Glen Steward
Glen Steward is a Founder, the Chief Strategy Officer and a Director of Stewards, Inc. He has over 28 years of investment and trading experience. For the past 5 years, Mr. Steward has served as Chief Investment Officer, Director, and Shareholder of Foundation Fund Managers; Chief Investment Officer, Director, and Shareholder of Secure Clear Trade Finance; Director and Developer of Southern Spirit Properties (Sardinia Bay Estate project); and Chairperson of Stewards Investment Capital.
Aside from the positions noted above, Mr. Steward does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940.
Mr. Steward is qualified to serve on our Board of Directors because of his experience in corporate finance, investment management, and business development.
Katy Murless
Katy Murless is the Chief Financial Officer of Stewards, Inc., a position she assumed effective September 1, 2025. She joined Stewards Investment Capital on December 1, 2024, where she served as Head of U.S. Operations with responsibility for corporate finance, private credit, tax structuring, and investment analysis. From mid 2019 to late 2024, Ms. Murless took time away from professional employment to focus on her family. Earlier in her career, she worked at Deloitte in audit and later at Abax Investments as an assistant portfolio manager overseeing the equity portion of a multi-asset fund. A Chartered Financial Analyst (CFA) and Chartered Accountant, she has over 15 years of experience in financial leadership and investment management.
Aside from that provided above, Katy does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
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Vaughan Korte
Vaughan Korte is the Chief Operating Officer of Stewards, Inc., a position he assumed on September 1, 2025, after serving as the Company’s Chief Financial Officer since October 2021 and initially in an advisory capacity for two years. Prior to joining the Company, Vaughan spent a decade at Adidas AG, most recently as Senior Director of Finance for the Middle East and North Africa, where he oversaw financial operations across 60 countries and managed budgets exceeding $500 million. With over 15 years of financial leadership experience, Vaughan now focuses on operational execution and scaling Stewards’ business platform, ensuring alignment.
Aside from that provided above, Vaughan does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Scott McGowan
Scott McGowan serves as Chief Marketing Officer of Stewards, Inc., a role he assumed on 1 November 2025 after having served as Director of Investor Relations at IBN (InvestorBrandNetwork) from 2022 to present. Over the past five years, Mr. McGowan has led growth-oriented marketing and communications programmes for public-company and private-equity-backed firms, most recently serving as CEO of a strategic investor-relations and communications consultancy, where he advised senior management teams on brand equity, capital-markets positioning and stakeholder outreach. His deep experience in both marketing and investor communications now supports Stewards’ efforts to scale its business platform, enhance its public-company profile and align its marketing strategy with its capital-markets objectives. Aside from the position described above, Mr. McGowan does not hold, and has not held during the past five years, any other directorship in a company with a class of securities registered under Section 12 of the Exchange Act or subject to Section 15(d) of the Exchange Act, nor in any company registered as an investment company under the Investment Company Act of 1940.
Zachary Graeve
Mr. Graeve serves as a Director of Stewards, Inc. He is a corporate executive and governance advisor with more than two decades of experience advising CEOs and boards on disclosure, shareholder engagement, and strategic communications. Over the past five years, Mr. Graeve has led an independent consulting practice specializing in investor relations, capital markets strategy, and governance advisory. In this capacity, he has worked closely with public and private companies to design disclosure frameworks, strengthen board oversight processes, and develop communication strategies to support IPOs, acquisitions, and other transformative corporate events.
In 2025, Mr. Graeve was appointed as an independent director Stewards, Inc., where he contributes to the Company’s governance enhancement and public-company readiness initiatives. He continues to advise executive teams and boards through his practice, providing hands-on guidance in disclosure planning, shareholder engagement, and brand equity positioning.
Aside from the positions noted above, Mr. Graeve does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940.
Mr. Graeve is qualified to serve on our Board of Directors because of his extensive experience in corporate governance, investor relations, and strategic communications. He brings a practical understanding of disclosure obligations, stakeholder alignment, and board-level compliance. Mr. Graeve currently serves as Chairperson of our Nominating and Corporate Governance Committee and as a member of both the Audit Committee and Compensation Committee.
Wael Barsoum
Dr. Barsoum is a Director of Stewards, Inc. Dr. Barsoum is a nationally recognized health care executive and former president and CEO of Cleveland Clinic Florida, where he oversaw transformative growth and operational expansion across the region, scaling the enterprise to more than 1,000 physicians and 12,000 caregivers. He presently serves as president and chief transformation officer at Healthcare Outcomes Performance Company (HOPCo), overseeing international and U.S.-based operations, where he has led large-scale partnerships and value-based care strategies across the U.S.
In addition to his executive roles, Dr. Barsoum has served as the Robert and Suzanne Tomsich Chair in Healthcare Innovation and professor of surgery at the Cleveland Clinic Lerner College of Medicine, underscoring his ongoing leadership in advancing healthcare innovation. He is also appointed by the governor of Florida to serve on the Florida State Medical Board, reflecting his leadership in statewide healthcare governance.
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Aside from the positions noted above, Dr. Barsoum does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940.
Barsoum is qualified to serve on our Board of Directors because he has served on numerous boards and advisory committees, contributing expertise in governance, compliance, and organizational transformation. His leadership has spanned strategy, risk oversight, and transformation at some of the country’s most respected healthcare institutions.
Dr. Barsoum is Chairperson of our Compensation Committee, and a member of our Audit Committee and Nomination Committee.
Significant Employees
We have no significant employees other than our officers and directors.
Family Relationships
No family relationships exist between or among the directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or officers, during the past ten years has:
| • | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| • | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which the person was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| • | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, the person's involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or been associated with persons engaged in any such activity; |
| • | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| • | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| • | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Except as set forth in this Prospectus, to the Company’s knowledge, none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
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Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board of Directors.
Committees of the Board
In preparation for our planned uplisting to the Nasdaq Capital Market, we have strengthened our corporate governance framework by appointing independent directors and establishing formal board committees. As of the date of this prospectus, our Board of Directors has formed the following committees: Nominating and Corporate Governance Committee, and Compensation Committee. These committees were established on November 15, 2025, with charters adopted in accordance with Nasdaq Listing Rules and SEC regulations. The charters are available on our website at www.stewards.com.
We have two independent directors currently on our Board of Directors. We are currently in the process of appointing two additional independent directors, and we expect their appointments at or shortly after listing on Nasdaq. These independent directors will be given committee assignments as determined by the Board of Directors.
Audit Committee
The Audit Committee includes Zachary Graeve and Wael Barsoum, both of whom are independent directors under Nasdaq Listing Rules and SEC Rule 10A-3. The Audit Committee oversees our financial reporting processes, internal controls, independent audits, and compliance with legal and regulatory requirements. Its responsibilities include appointing and overseeing the independent auditor, reviewing financial statements and disclosures, monitoring internal controls and risk management processes, and establishing procedures for handling complaints regarding accounting or auditing matters.
The Company is in the process of identifying and appointing an independent director who qualifies as an Audit Committee Financial Expert, as defined by Item 407(d)(5) of Regulation S-K, to serve as the committee’s chairperson.
The committee has not yet held meetings, as it was recently formed, but will commence regular meetings, including at least quarterly sessions and executive sessions as needed, upon or shortly after our Nasdaq uplisting.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is chaired by Zachary Graeve and includes Wael Barsoum who is an independent director under Nasdaq Listing Rules. The committee is responsible for identifying and recommending qualified director candidates, developing and monitoring corporate governance guidelines, overseeing board and committee evaluations, and managing succession planning for the board and key executives. The committee’s charter emphasizes diversity, independence, and alignment with shareholder interests, consistent with best practices.
The committee has not yet held meetings due to its recent formation but will begin regular activities, including at least annual meetings, upon or shortly after our Nasdaq uplisting.
Compensation Committee
The Compensation Committee is chaired by Wael Barsoum and includes Zachary Graeve who is an independent director under Nasdaq Listing Rules and SEC Rule 10C-1. The committee sets compensation for our CEO and other executive officers, approves equity-based compensation plans (including our 2024 Equity Incentive Plan), and reviews compensation-related disclosures for inclusion in our proxy statements. The committee may engage independent compensation consultants as needed and incorporates clawback policies in accordance with Nasdaq Rule 5608 and the Dodd-Frank Act.
Aside from the following, the committee has not yet held meetings due to its recent formation but will commence regular meetings, including at least semi-annual sessions, upon or shortly after our Nasdaq uplisting.
In preparation for our planned uplisting, and prior to the filing of this registration statement, our Board of Directors and majority shareholders, upon recommendation of the Compensation Committee, approved a comprehensive set of governance, compensation, and equity-award actions, including the adoption of a new Director Compensation Plan, the approval of the Company’s updated executive compensation program and multi-year implementation framework, the one-time RSU Recognition Grant, and the post-uplisting leadership and committee structure.
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Controlled Company Status
As a controlled company under Nasdaq Listing Rule 5615(c), we are exempt from certain corporate governance requirements, including the requirement to have a majority of independent directors on our board, an independent nominating committee, and an independent compensation committee. This exemption applies because our original board members, Vincent Napolitano, Shaun Quin, and Glen Steward, are all employees and collectively control a significant portion of our voting power, primarily through the Series B Preferred Stock, which carries 50 votes per share. Although we are eligible to rely on these exemptions, we do not intend to do so, even if we are deemed a controlled company. Instead, we have appointed independent directors (Zachary Graeve and Wael Barsoum) and established fully independent committees to comply with Nasdaq’s standard governance requirements, ensuring robust oversight and enhanced protections for our shareholders. We plan to appoint two additional independent directors at or shortly after listing, such that we will have a majority of independent directors. However, we could elect to rely on these exemptions in the future, and if we do, shareholders would not have the same protections afforded to shareholders of companies subject to all Nasdaq corporate governance requirements.
Shareholder Communications
Shareholders may communicate with the Board by writing to Stewards, Inc., 4300 N University Drive, Lauderhill, FL 33301, Attention: Corporate Secretary, or by emailing Investor Relations at ir@stewards.com, c/o Investor Brand Network, 1108 Lavaca Street, Austin, TX 78701
Shareholders may specify if their communication is directed to a particular board member, and such communications will be forwarded as appropriate. We plan to formalize a shareholder communication policy post-uplisting to enhance accessibility and responsiveness.
Oversight of Risk Management
Risk management is critical to our business, and our Board of Directors, supported by the newly formed committees, oversees the processes designed to identify, assess, and mitigate risks. Management is responsible for day-to-day risk management, while the Board ensures these processes are adequate and functioning as designed. The Audit Committee will focus on financial and compliance risks, the Nominating and Corporate Governance Committee will oversee governance-related risks, and the Compensation Committee will evaluate risks related to executive compensation. The Board assesses major risks, including economic, financial, legal, regulatory, and competitive risks, to promote our shareholders’ interests and the long-term health of the company. Regular board meetings include agenda items on risk oversight, covering corporate governance, regulatory obligations, operations, significant transactions, insurance, and litigation. The addition of independent directors with expertise in investor relations, compliance, and strategic transformation enhances our risk oversight capabilities.
Code of Business Conduct and Ethics
Our Board of Directors has adopted a code of ethical conduct that applies to our principal executive officer, principal financial officer and senior financial management. This code of ethical conduct is embodied within our Code of Business Conduct and Ethics, which applies to all persons associated with our Company, including our directors, officers and employees (including our principal executive officer, principal financial officer, principal accounting officer and controller). In order to satisfy our disclosure requirements under Item 5.05 of Form 8-K, we will disclose amendments to, or waivers of, certain provisions of our Code of Business Conduct and Ethics relating to our chief executive officer, chief financial officer, chief accounting officer, controller or persons performing similar functions on our website promptly following the adoption of any such amendment or waiver.
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EXECUTIVE AND DIRECTOR COMPENSATION
Compensation of Named Executive Officers
The following summary compensation table sets forth information concerning compensation for services rendered in all capacities during years ended 2024 and 2023 awarded to, earned by or paid to our executive officers.
| Name and Principal Position | Year | Salary ($) | All
Other Compensation ($) | Total ($) | ||||||||||||
| Vincent Napolitano | 2024 | $ | 233,610 | $ | 706,881 | $ | 940,491 | |||||||||
| Chief Executive Officer, Secretary and Director | 2023 | $ | 171,685 | $ | 707,333 | $ | 879,018 | |||||||||
| Shaun Quin | 2024 | $ | 138,507 | $ | 395,659 | $ | 534,166 | |||||||||
| President and Director | 2023 | $ | 128,413 | $ | 410,550 | $ | 538,963 | |||||||||
| Glen Steward | 2024 | $ | 21,841 | $ | 0 | $ | 21,841 | |||||||||
| Chief Strategy Officer and Director | 2023 | $ | 0 | $ | 0 | $ | 0 | |||||||||
| Vaughan Korte | 2024 | $ | 26,250 | $ | 184,513 | $ | 210,763 | |||||||||
| Chief Financial Officer and Treasurer | 2023 | $ | 0 | $ | 163,998 | $ | 163,998 | |||||||||
“Other compensation” consists of amounts paid under management and consulting agreements, vehicle allowances, fuel reimbursements, and medical expense reimbursements. Compensation under the management agreement includes payments made to FAVO Holdings LLC, an entity owned 65 percent by Vincent Napolitano and 35 percent by Shaun Quin. Compensation under the consulting agreement includes payments made to Korte LLC, an entity owned 50 percent by Vaughan Korte.
During the years ended December 31, 2024 and 2023, the Company incurred costs of $83,482 and $0, respectively, payable to Korte LLC for CFO consulting services. Effective June 1, 2024, Mr. Korte transitioned from a consulting arrangement to serving as a full-time officer of the Company under an employment agreement.
Outstanding Equity Awards at Fiscal Year End
There were no outstanding equity awards held by our executive officers as of December 31, 2024 or 2023.
Incentive Plan
On August 21, 2024, our Board of Directors approved the adoption of the Stewards, Inc. 2024 Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan provides a framework for granting equity-based awards to eligible employees, officers, directors, and consultants. Its purpose is to provide for the granting of stock-based awards to eligible participants.
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A total of 20,000,000 shares of common stock are reserved and may be issued under the Incentive Plan. The Incentive Plan provides for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, stock units, performance shares, performance units, and other securities to our employees, officers, directors, and consultants.
The Incentive Plan became effective upon its approval by the stockholders holding the majority of the voting power on August 21, 2024, and, unless earlier terminated, will continue until August 21, 2034.
Recent Corporate Governance and Compensation Actions
During the years ended December 31, 2023 and 2024, none of our directors received compensation for their service on the Board. This reflected our focus on conserving resources during our pre-uplisting phase and preparing for our transition to an SEC-reporting company listed on the Nasdaq Capital Market.
In advance of our planned uplisting, and prior to the filing of this registration statement, our Board of Directors and majority shareholders approved a series of governance, compensation, and equity-related actions intended to align the Company’s leadership structure and compensation framework with public-company standards.
Board and Officer Appointments
The Board approved the post-uplisting leadership structure, including changes to Board composition and certain executive roles, to be effective upon the Company’s uplisting to the Nasdaq Capital Market. Under these actions, Vincent Napolitano will transition from Chief Executive Officer to Chairman Emeritus, Glen Steward will transition from Chief Strategy Officer to President of the Company and Chairman of the Board, and Shaun Quin will assume the role of Chief Executive Officer while continuing to serve as a director. Vaughan Korte (Chief Operating Officer), Katy Murless (Chief Financial Officer), and Scott McGowan (Chief Marketing Officer) will continue in their current roles, which are already effective.
Wael Barsoum will continue his role as an Independent Director and Chair of the Compensation Committee, and Zachary Graeve will continue his role as an Independent Director and Chair of the Nominating and Corporate Governance Committee. The Company intends, as part of the uplisting process and no later than the uplisting effective time, to appoint two additional independent directors, with one to serve as Chair of the Audit Committee, who will meet the financial sophistication requirements of Nasdaq Rule 5605(c)(2) and Section 407 of the Sarbanes-Oxley Act. Following these appointments, the Board will function as a majority-independent board in accordance with Nasdaq Rule 5605.
Approval of One-Time RSU Recognition Grant
The Board and shareholders approved a one-time Restricted Stock Unit (“RSU”) recognition grant consisting of 3,000,000 RSUs issued under the Company’s 2024 Equity Incentive Plan, allocated among twelve recipients at 250,000 RSUs each. For employee participants, the RSUs are subject to triple-trigger vesting, requiring (i) the uplisting of the Company’s common stock to the Nasdaq Capital Market, (ii) the effectiveness of a registration statement on Form S-8 (or equivalent), and (iii) completion of a 12-month continuous-service period following the effectiveness of the Company’s Form S-1 registration statement. For non-employee directors and consultants, only conditions (i) and (ii) apply. The Board also authorized execution of the related RSU award agreements, cap table updates, and required tax, regulatory, and administrative actions. The Compensation Committee has been authorized to issue and execute the related award agreements, and the Company expects to complete this process prior to the uplisting and after the date of this filing. The timing of grant issuance is not contingent on the effectiveness of this registration statement, and no grants under this authorization have yet been executed.
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Approval of New Executive Compensation Program
The Board and shareholders approved the Company’s executive compensation program, which includes a redesigned base salary structure, a short-term incentive (“STI”) plan, a long-term incentive (“LTI”) program comprising RSUs and performance stock units (“PSUs”), stock ownership requirements, clawback provisions, and related governance policies. The program also reflects Nasdaq governance requirements applicable to executive compensation.
The Board further approved a supplemental implementation plan, which sets forth a phased adoption of these compensation elements from 2025 through 2028. The implementation plan is intended to establish the operational and administrative framework necessary to support the Company’s compensation structure over this period.
Administration of the program, including approval of future grants under the 2024 Equity Incentive Plan, oversight of performance goals, review of governance requirements, and engagement of independent compensation advisors, has been delegated to the Compensation Committee, which is composed entirely of independent directors.
Summary of Key Elements of the New Executive Compensation Program
| Base Salary Framework | Salary structure for all executive officers, phased in beginning 2026 based on peer-company comparables. |
| Short-Term Incentive (STI) | Annual cash bonus opportunities tied to financial, operational, and strategic performance, with targets increasing over the 2025–2028 period. |
| Long-Term Incentive (LTI) Program | Mix of Restricted Stock Units and Performance Stock Units. |
| Performance Metrics | Revenue, Adjusted EBITDA, Adjusted EPS, operational and strategic KPIs, and relative total shareholder return. |
| Vesting Schedules | RSUs will generally vest over four years; PSUs vest after a three-year performance period upon certification by the Compensation Committee. |
| Equity Plan Administration | Equity awards are to be issued and governed under the 2024 Equity Incentive Plan. |
| Ownership Guidelines | Executives will be subject to ownership guidelines that provide targets of 6x base salary for the CEO, 5x for the President, 3x for the COO and CFO, and 2x for other officers, with a five-year compliance period and a 50% net-after-tax retention requirement. |
| Clawback Policy | Incentive-compensation recovery rules consistent with SEC Rule 10D-1 and Nasdaq requirements. |
| Governance & Oversight | The Compensation Committee will at least annually review the executive compensation program, approve all grants, monitor performance metrics, and oversee plan administration. |
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Compensation of Directors
During the years ended December 31, 2023, and 2024, no Director of the Company received compensation from us for their services as a Director. This reflects our focus on conserving resources during our pre-uplisting phase as we prepared to transition to an SEC reporting company listed on the Nasdaq Capital Market.
In preparation for our planned uplisting, our Board of Directors, upon the recommendation of our Compensation Committee, has approved the implementation of a Director Compensation Policy and Plan (the “Director Compensation Plan”), to be effective in the fourth quarter of 2025. The Director Compensation Plan is designed to attract and retain highly qualified independent directors, align their interests with those of our shareholders, and support our strategic objectives in the private credit and real estate sectors. The plan applies to our non-employee directors (Zachary Graeve and Wael Barsoum), as our executive directors (Vincent Napolitano, Shaun Quin, and Glen Steward) do not receive separate compensation for their board service.
The Director Compensation Plan, approved by the Compensation Committee and the Board, includes the following components:
§ Annual Cash Retainer: Each non-employee director will receive an annual cash retainer of $30,000, payable quarterly in arrears, for service on the Board.
§ Equity Awards: Each non-employee director will receive an annual equity grant of restricted stock units (RSUs) valued at $135,000, issued under our 2024 Equity Incentive Plan. The RSUs will vest over one year, subject to continued service, and are intended to align directors’ interests with long-term shareholder value. The number of RSUs will be determined based on the fair market value of our common stock on the grant date, as quoted on the Nasdaq Capital Market or, prior to uplisting, the OTC Pink Market. For the current year, grant valuation follows the terms of each director’s appointment agreement; beginning in future periods, annual director grants are expected to occur in connection with the Company’s annual meeting of shareholders (e.g., October 1).
§ Committee Service Fees:
o Audit Committee: The chairperson will receive an additional annual fee of $$16,000, and each member will receive $5,000.
o Nominating and Corporate Governance Committee: The chairperson will receive an additional annual fee of $8,000, and each member will receive $2,500.
Compensation Committee: The chairperson will receive an additional annual fee of $11,000, and each member will receive $3,750.
§ Expense Reimbursement: Non-employee directors will be reimbursed for reasonable out-of-pocket expenses incurred in connection with attending board and committee meetings, including travel and lodging.
The Compensation Committee, chaired by Wael Barsoum and composed entirely of independent directors (Zachary Graeve), will oversee the administration of the Director Compensation Plan. The committee will review the plan annually to ensure it remains competitive, reasonable, and aligned with market standards, taking into account input from independent compensation consultants if needed. Equity awards under the plan are subject to the terms of our 2024 Equity Incentive Plan, which reserves 20,000,000 shares for equity awards, and any material amendments to the plan will be subject to shareholder approval if required by Nasdaq Listing Rule 5635.
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Employment Agreements
Below is a description of the current employment agreement with our executive officers. As we implement our new executive compensation program in 2026, we expect to amend these employment agreements to incorporate the new terms of the plan.
On August 21, 2024, our Board of Directors approved employment agreements in favor of our Chief Executive Officer, Vincent Napolitano, and our President, Shaun Quin, our then Chief Financial Officer, Vaughan Korte and our Chief Strategy Officer, Glen Steward.
The employment agreement with Mr. Napolitano provides that we will compensate him with a yearly salary of $218,270. Mr. Napolitano will also be compensated with a number of shares of restricted common stock annually, as agreed to by our Board of Directors, and he will be eligible to participate in our 2024 Equity Incentive Plan, where executives may be issued equity in our company, as determined by and within the sole discretion of the Board of Directors. He is entitled to participate in the upcoming bonus program expected to be launched by January 1, 2025. He is also entitled to health and vacation benefits, savings plan benefits, and severance for the remainder of his term unless he is terminated for cause, or he voluntarily terminates. Mr. Napolitano agreed to a three month non-solicit restrictive covenant following departure. Mr. Napolitano is entitled to a monthly car allowance of $2,000, in addition to reimbursement for insurance, repairs, maintenance, fuel, and tires.
The employment agreement with Mr. Quin provides that we will compensate him with a yearly salary of $138,528. Mr. Quin will also be compensated with a number of shares of restricted common stock annually, as agreed to by our Board of Directors, and he will be eligible to participate in our 2024 Equity Incentive Plan, where executives may be issued equity in our company, as determined by and within the sole discretion of the Board of Directors. He is entitled to participate in the upcoming bonus program expected to be launched by January 1, 2025. He is also entitled to health and vacation benefits, savings plan benefits, and severance for the remainder of his term unless he is terminated for cause, or he voluntarily terminates. Mr. Quin agreed to a three month non-solicit restrictive covenant following departure. Mr. Quin is entitled to a monthly car allowance of $1,200, in addition to reimbursement for insurance, repairs, maintenance, fuel, and tires.
The employment agreement with Mr. Korte provides that we will compensate him with a yearly salary of $33,800. Mr. Korte will also be compensated with a number of shares of restricted common stock annually, as agreed to by our Board of Directors, and he will be eligible to participate in our 2024 Equity Incentive Plan, where executives may be issued equity in our company, as determined by and within the sole discretion of the Board of Directors. He is entitled to participate in the upcoming bonus program expected to be launched by January 1, 2025. He is also entitled to health and vacation benefits, savings plan benefits, and severance for the remainder of his term unless he is terminated for cause, or he voluntarily terminates. Mr. Korte agreed to a three month non-solicit restrictive covenant following departure.
On March 1, 2025, the Company amended the employment agreement for Mr. Korte, by increasing his bi weekly pay from $1,300.00 to $11,601.60.
On September 1, 2025, Mr. Korte’s employment agreement was amended in connection with his transition to Chief Operating Officer to include a monthly car allowance of up to $1,200, together with coverage of insurance premiums.
The employment agreement with Mr. Steward provides that we will compensate him with a yearly salary of $27,700. Mr. Steward will also be compensated with a number of shares of restricted common stock annually, as agreed to by our Board of Directors, and he will be eligible to participate in our 2024 Equity Incentive Plan, where executives may be issued equity in our company, as determined by and within the sole discretion of the Board of Directors. He is entitled to participate in the upcoming bonus program expected to be launched by January 1, 2025. He is also entitled vacation benefits, savings plan benefits, and severance for the remainder of his term unless he is terminated for cause, or he voluntarily terminates. Mr. Steward agreed to a three month non-solicit restrictive covenant following departure.
On September 1, 2025, we entered into an employment agreement for Ms. Katy Murless.
The employment agreement with Ms. Murless provides that we will compensate her with a yearly salary of $185,000. She does not receive any equity compensation under her agreement. Ms. Murless is entitled to participate in the upcoming bonus program expected to be launched by January 1, 2025. She is also entitled to health and vacation benefits, savings plan benefits, and severance for the remainder of her term unless she is terminated for cause, or she voluntarily terminates. Ms. Murless agreed to a three-month non-solicit restrictive covenant following departure.
On November 1, 2025, we entered into an employment agreement for Mr. Scott McGowan.
The employment agreement with Mr. McGowan provides that we will compensate him with a yearly salary of $240,000. He does not receive any equity compensation under his agreement. Mr. McGowan is entitled to participate in the upcoming bonus program expected to be launched by January 1, 2025. He is also entitled to health and vacation benefits, savings plan benefits, and severance for the remainder of his term unless he is terminated for cause, or he voluntarily terminates. Mr. McGowan agreed to a three-month non-solicit restrictive covenant following departure.
Consulting Agreement
Effective June 1, 2023, we entered into a consulting agreement with Favo Holdings, LLC, an entity owned by Vincent Napolitano (65%) and Shaun Quin (35%), to provide management consulting services to our company in exchange for monthly payments of $85,000.
Pension Benefits and Nonqualified Deferred Compensation
The Company offers eligible full-time employees participation in a 401K plan. The plan provides for an annual company contribution. In addition, employees may contribute a portion of their salary to the plan.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the number of shares of our voting stock beneficially owned, as of November 11, 2025, by (i) those persons known by us to be owners of more than 5% of our voting stock, (ii) each director, (iii) our Named Executive Officers, and (iv) all executive officers and directors as a group:
| Name and Address of Beneficial Owner | Common Stock | Series A Preferred Stock | Series B Preferred Stock | |||||||||||||||||||||||
| Number of Shares Owned | Percent of Class(1)(2) | Number of Shares Owned | Percent of Class(1)(2) | Number of Shares Owned | Percent of Class(1)(2) | |||||||||||||||||||||
| Vincent Napolitano(3) | 40,399,524 | 15.0 | % | — | — | — | — | |||||||||||||||||||
| Shaun Quin(4) | 20,079,913 | 7.5 | % | — | — | — | — | |||||||||||||||||||
| Katy Murless | — | — | — | — | — | — | ||||||||||||||||||||
| Scott McGowan | — | — | — | — | — | — | ||||||||||||||||||||
| Glen Steward(5) | 96,292,500 | 35.7 | % | 64,220,000 | 100 | % | 10,000,000 | (6) | 100% | |||||||||||||||||
| Vaughan Korte | 3,219,062 | 1.2 | % | — | — | — | — | |||||||||||||||||||
| Zachary Graeve | — | — | — | — | — | — | ||||||||||||||||||||
| Wael Barsoum | — | — | — | — | — | — | ||||||||||||||||||||
| All Directors and Executive Officers as a Group (8 persons) | 159,990,999 | 59.4 | % | 64,220,000 | 100 | % | 10,000,000 | (6) | 100% | |||||||||||||||||
| 5% Holders | ||||||||||||||||||||||||||
| Hollywood Circle Holdings LLCI (7) | 36,337,333 | 13.5 | % | — | — | — | — | |||||||||||||||||||
* Less than 1%
| (1) | Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. |
| (2) | The percentage of class is calculated based on 192,229,142 shares of common stock outstanding, 64,220,000 shares of Series A Preferred Stock outstanding, and 10,000,000 shares of Series B Preferred Stock outstanding (with each Series B share carrying 50 votes), in each case as of November 17, 2025. |
| (3) | All shares held in VK Nap Family Trust in which Mr. Napolitano has voting and dispositive control. |
| (4) | All shares held by S&T Quin Family Limited Partnership, in which Shaun Quin has voting and disposition control. |
| (5) | Forfront Capital, LLC, Stewards Investment Capital Limited and Stewards International Funds PCC on behalf of the Stewards Private Credit Fund are affiliate shareholders and Glen Steward, our director, Bilal Adam and Nathaniel Tsang Mang Kin have voting and dispositive authority over these shares. Includes 22,642,500 shares of common stock, 64,220,000 shares of Series A Preferred Stock, 4,830,000 shares of common stock available from warrants, and 4,600,000 shares of common stock available from prefunded warrants. Also includes 10,000,000 shares of Series B Preferred Stock that is subject to a voting agreement in favor of the founders of our company (Glen Steward, Vincent Napolitano and Shaun Quin), with our president holding an irrevocable proxy to vote these shares. |
| (6) | Forfront Capital, LLC is a party to a voting agreement dated August 25, 2025, under which it agreed to vote its Series B Preferred Stock (50 votes per share) at the direction of the Founders, as a group, resulting in approximately 78.3% of the total voting power for director elections. |
| (7) | Hollywood Circle Holdings LLC. is owned by Charles R Abele, Daniel B McCarthy, Harish Mehta, Estate of Cecil Reddy, Jose Boschetti, Peter Jago and various EB-5 investors. |
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Certain Relationships and Related Transactions
The following is a summary of transactions since the periods ended December 31, 2024 and 2023 to which we have been a party in which the amount involved exceeded the lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our then directors, executive officers or holders of more than 5% of any class of our stock at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest. See also “Executive Compensation” for additional information regarding compensation of related parties.
On May 31, 2023, the Company entered into an acquisition and financing agreement between the principals of FAVO Group, Vincent Napolitano and Shaun Quin, and Stewards Investment Capital Limited, beneficially owned by Glen Steward. As part of the acquisition, the principals of FAVO Group transferred 100% of their membership interest in Favo Group LLC, FAVO Group Human Resources, LLC, FAVO Funding LLC, Honeycomb Sub Fund LLC, FORE Funding LLC, FORE Funding CA LLC and FAVO Funding CA LLC into Stewards Inc.
On May 31, 2023, we entered into an acquisition and financing agreement between the principals of FAVO Group LLC and Stewards Investment Capital Limited. As part of the acquisition, the principals of FAVO Group transferred 100% of their membership interest in Favo Group LLC, FAVO Group Human Resources, LLC, FAVO Funding LLC, Honeycomb Sub Fund LLC, FORE Funding LLC, FORE Funding CA LLC and FAVO Funding CA LLC into our company. As consideration for the transfer, we agreed to pay a purchase price of $14,200,000 in cash, Senior Secured Notes and Common Stock. We raised the financing for this transaction by selling 18 million shares of our Series A Preferred Stock at $0.25 for total of $4,500,000. Out of this $5 million, $ 4,500,000 million cash has been to the principles of FAVO Group for the transfer of their membership. Half of this financing was paid on the closing date of this transaction. The remaining $2,000,000 was paid as follows: $1,250,000 on August 31, 2023, and the remaining $750,000 on October 26, 2023.
The Company currently has an outstanding debt note from its acquisition of the Stewards Group of Companies due to Vincent Napolitano and Shaun Quin, dated June 1, 2023, in the aggregate principal face value amount of $4,700,000, which requires payments of $1,500,000 on May 31, 2024, which has been made, $1,600,000 due on May 31, 2025, which has been made, and the final payment due on May 31, 2026 for $1,600,000. The interest rate per annum is variable on the three payments of 6%, 3% and 1%, respectively. The balance due on this note as of December 31, 2024 and 2023, was $3,200,000 and $4,700,000, respectively. The outstanding balance on this note as of September 30, 2025 was $1,600,000.
Effective June 1, 2023, we entered into a consulting agreement with Favo Holdings, LLC (Vincent Napolitano and Shaun Quin) to provide management consulting services to our company in exchange for monthly payments of $85,000.
During the years ended December 31, 2024 and 2023, the Company incurred costs of $1,020,000 and $510,000, respectively, under the management agreement between FAVO Holdings LLC and the Company. For the nine months ended September 30, 2025 and 2024, the Company incurred costs of $765,000 and $765,000, respectively, under the management agreement between FAVO Holdings LLC and the Company.
During the years ended December 31, 2024 and 2023, the Company received $2,800,000 and $1,366,000 from its revolving note agreement with FAVO Holdings and paid back $4,300,000 and $2,562,000, respectively. The balance due on this note as of December 31, 2024 and 2023, was $0 and $1,500,000, respectively. There was no balance due on this note as of September 30, 2025.
During the years ended December 31, 2024 and 2023 the Company paid interest on the notes payable of $210,142 and $268,825, respectively, to FAVO Holdings LLC.
During the years ended December 31, 2024 and 2023 the Company paid expenses on behalf of FAVO Holdings LLC in the amount of $119,587 and $5,945, respectively. As at December 31, 2024 and 2023, $15,418 and $135, respectively, remained outstanding. As at September, 30, 2025, $[*] remained outstanding.
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On July 7, 2023, the Company issued 15,000,000 shares of common stock to a Stewards Investment Capital Limited to serve on the advisory board for a period of 3 years term as per the advisory board agreement. The Company recorded the issuance of shares as stock subscription receivable, as services are not yet rendered and amortizing the same over the 3 years term. For the years ended December 31, 2024 and 2023, the company amortized an amount of $1,250,004 and $729,169, respectively, from stock subscription receivable. During the years ended December 31, 2024 and 2023, Stewards Investment Capital Limited also received cash compensation of $240,000 and 120,000, respectively, for advisory board services. For the nine months ended September 30, 2025 and 2024, the Company amortized an amount of $937,503 each from stock subscription receivable.
On July 17, 2025, the Company entered into a revolving promissory note agreement with VK Nap Family, LLC for $1,500,000, promissory note bears interest at 12% per annum and has a one year term. VK Nap Family LLC is owned by living trusts of Mr. Vincent Napolitano, CEO of the Company and his wife Mrs. Kathleen Napolitano.
Effective August 1, 2025, the Company transferred its 100% interest in FC Sub Fund LLC (the “VIE”) to Forfront Capital LLC for a consideration of $1. Forfront is beneficially owned by Glen Steward. The VIE was not previously consolidated by the Company, as the Company was not the primary beneficiary of the VIE. The Company is still continuing its involvement with the entity in the form of a 2% management fee arrangement for managing the VIE’s assets.
Also on August 25, 2025, we entered into a Conversion Agreement with Forfront, LLC, an affiliate of our company, for it to convert 10,000,000 shares of Series A Preferred Stock into 10,000,000 shares of our newly created Series B Preferred Stock.
Finally, on August 25, 2025, we entered into Voting Agreement with Forfront, LLC, in which Forfront agreed to vote its shares of Series B Preferred Stock in accordance with the direction of our founders, which includes Vincent Napolitano, Shaun Quin and Glen Steward, with the President of our company receiving an irrevocable proxy from Forefront to vote its shares in accordance with the direction of our founders.
The conversion to Series B Preferred Stock and the Voting Agreement are part of a strategic initiative to streamline our capital structure, enhance governance control during a critical phase involving corporate rebranding, and align leadership with long-term objectives without diluting economic interests of non-affiliate shareholders. The Board determined this related-party transaction to be fair under Nevada law and ratified it by majority voting power.
On September 17, 2025, the Company entered into a Loan Agreement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund), pursuant to which it may raise up to $50 million through the issuance of unsecured and unsubordinated debt notes (the “Stewards debt notes”). The debt carries a fixed annual interest rate of 8.00%, with a maturity date in August 2030. In connection with this financing, the Company also agreed to issue warrants to the noteholder, exercisable for ordinary shares at a fixed price of $0.76 per share. The warrants are subject to a delayed exercise period, commencing no earlier than 12 months following an IPO or the maturity date, whichever is later, and are structured to minimize dilution around the time of the Company’s planned public offering. Proceeds from the issuance of the Stewards debt notes are to be used exclusively for (i) refinancing existing indebtedness, which currently carries an effective annual interest rate of approximately 15% and matures in June 2026, and (ii) funding the Company’s general operational needs. This refinancing is intended to materially reduce cash interest expense, strengthen the Company’s balance sheet, and improve financial flexibility to support long-term growth.
On October 30, 2025, the Company executed Amendment No. 1 to the Loan Agreement with Stewards International Funds PCC (on behalf of the Stewards Private Credit Fund) (the “Lender”), originally dated September 17, 2025. The Amendment increases the aggregate principal amount authorized under the unsecured, unsubordinated debt note facility from $50,000,000 to $100,000,000, with corresponding adjustments to the number of notes and associated warrants to purchase up to 131,578,947 shares of the Company’s common stock at an exercise price of $0.76 per share. All other terms of the Loan Agreement, including the fixed annual interest rate of 8.00%, maturity date of August 31, 2030, and use of proceeds for refinancing existing debt and funding general operational needs, remain substantially unchanged. Proceeds from the expanded facility will continue to support the Company’s private credit and real estate operations, including working capital, payroll, and other ordinary-course business expenses. The debt note facility is expected to enhance liquidity, extend the Company’s operational runway, and reduce the weighted average cost of capital.
On November 16, 2025, following a comprehensive review of financing alternatives, our Board of Directors ratified the continued use of: (i) the Series A Preferred Stock facility (up to 81,250,000 shares at $0.25 per share, ~$2.5–$3.0 million remaining); and (ii) the $100 million Loan Agreement with Stewards International (8.0% interest, warrants at $0.76/share). The Board determined these are the only viable funding sources currently available. The Board concluded that continued reliance on affiliate financing is necessary to fund operations and growth. Management was directed to cease Series A issuances upon full authorization and to pursue the Loan Agreement only until superior third-party terms are secured.
No external financing alternatives were identified despite active exploration. The company’s bridge raise in 2024 raised $4.3m, but short of the $6m needed at the time and the offering amounts raised were matched dollar-for-dollar by affiliates of the company. The company could not reach an acceptable agreement for a larger raise with investment bank backing. The company continues to seek the best forms of financing available to it, and lacking available alternatives, plans to use the current financing sources described above.
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DESCRIPTION OF CAPITAL STOCK
This description is intended as a summary and is qualified in its entirety by reference to our amended and restated articles of incorporation (our “Articles”) and amended and restated bylaws, which are filed, or incorporated by reference, as exhibits to the registration statement of which this prospectus forms a part and to the applicable provisions of Nevada law.
Authorized and Outstanding Capital
Our authorized capital stock consists of 500,000,000 shares of Common Stock, par value $0.0001 per share and 100,000,000 shares of preferred stock, par value $0.0001 per share, with 81,250,000 shares designated as Series A preferred stock and 10,000,000 shares designated as Series B Preferred Stock.
As of November 14, 2025, there were 192,229,142 shares of Common Stock outstanding, 64,220,000 shares of Series A preferred stock outstanding and 10,000,000 shares of Series B Preferred Stock outstanding.
Common Stock
The following is a summary of the material rights and restrictions associated with our Common Stock.
Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, and do not have cumulative voting rights. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available for dividend payments. All outstanding, shares of common stock are fully paid and nonassessable and the shares of common stock to be issued upon completion of this offering will be fully paid and nonassessable. The holders of common stock have no preferences or rights of cumulative voting, conversion, or pre-emptive or other subscription rights. There is no redemption or sinking fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in any of our assets remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any.
Preferred Stock
The following is a summary of the material rights and restrictions associated with our Preferred Stock.
We are authorized to issue 100,000,000 shares of preferred stock, $0.0001 par value per share. Pursuant to our Articles, the Board is authorized to authorize and issue preferred stock and to fix the designations, preferences and rights of the preferred stock pursuant to a board resolution without further stockholder authorization. Our Board may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights, liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on our Common Stock, diluting the voting power of our Common Stock, impairing the liquidation rights of our Common Stock, or delaying, deterring, or preventing a change in control. Such issuance could have the effect of decreasing the market price of our Common Stock.
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Series A Preferred Stock
Under the Certificate of Designation, filed on June 5, 2023, holders of Series A Preferred Stock are entitled to a liquidation preference of $0.25 per share, the Stated Value of the preferred stock, over our common stock and Series C Preferred Stock in the event of a dissolution, liquidation or winding up of the company.
After twenty-four months, each share of Series A Preferred Stock may be converted into shares of common stock, the number of which is determined according to the following formula, subject to adjustments for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events: Conversion Amount ($0.25) / Conversion Price ($0.25).
In connection with any conversion, each holder of Series A Preferred Stock is subject to a beneficial ownership limitation of 9.99% of our outstanding common stock. By written notice to the Company, however, any holder may increase or decrease the ownership limitation to any other percentage; provided that (i) any such increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to such holder sending such notice and not to any other holder.
The holders of Series A Preferred Stock vote together with the holders of Common Stock, the Series B Preferred Stock and any other class or series of stock entitled to vote thereon as a single class on an as converted basis.
Each holder shall be entitled to receive an annual dividend of six percent (6%) of the Stated Value times the number of Preferred Shares held by such holder payable on a quarterly basis beginning at the end of the Company’s fiscal quarter following the original issue date. Dividends on the Preferred Shares are payable, at the Company's option, in (a) cash or (b) shares of the Company's Common Stock or a combination thereof.
The Company may, in its sole discretion, elect to redeem all or a portion of the outstanding Preferred Shares at the Redemption Amount. As used herein, the term “Redemption Amount” shall equal the Stated Value. If the Company does not redeem all of the outstanding Preferred Shares, but instead opts for a partial redemption, it must be done in at least $250,000 increments and for every $250,000 redeemed the Company will issue to the Holder a warrant to purchase 1,000,000 shares of the Company’s Common Stock at an exercise price of $0.25 share.
On November 29, 2023, the Company elected to increase its authorized shares of Series A preferred shares from 20,000,000 shares to 81,250,000 shares.
On August 25, 2025, pursuant to a Conversion Agreement with Forfront Capital, LLC, the Company converted 10,000,000 shares of Series A Preferred Stock into 10,000,000 shares of Series B Preferred Stock. The converted Series A shares were subsequently cancelled and retired.
As of November 11, 2025, there were 64,220,000 outstanding shares of Series A Preferred Stock.
Series B Preferred Stock
On August 22, 2025, our board and shareholders approved the creation of Series B Preferred Stock and we later filed a certificate of designation with the State of Nevada. The certificate of designation provides that 10,000,000 authorized shares of preferred stock are designated as Series B Preferred Stock. The Series B Preferred Stock shall have no value in the event of the liquidation of our company or any rights to distributions declared by our company. After five years, the Series B Preferred Stock is convertible into shares of Common Stock on a one for one basis. Each share of Series B Preferred Stock is entitled to fifty (50) votes on any matter brought before the voting shareholders of our company.
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Also on August 22, 2025, we entered into a Conversion Agreement with Forfront, LLC, an affiliate of our company, for it to convert 10,000,000 shares of Series A Preferred Stock into 10,000,000 shares of our newly created Series B Preferred Stock.
Finally, on August 22, 2025, we entered into Voting Agreement with Forfront, LLC, in which Forfront agreed to vote its shares of Series B Preferred Stock in accordance with the direction of our founders, which includes Vincent Napolitano, Shaun Quin and Glen Steward, with the President of our company receiving an irrevocable proxy from Forefront to vote its shares in accordance with the direction of our founders.
As of November 11, 2025, there were 10,000,000 shares of Series B Preferred Stock outstanding, all held by Forfront Capital, LLC, which received the shares in exchange for the cancellation of 10,000,000 Series A Preferred shares pursuant to the Conversion Agreement dated August 25, 2025.
Series C Preferred Stock
On May 9, 2025, pursuant to Certificate of Designation for the Series C Preferred Stock, Mr. Vincent Napolitano converted 18,750,000 Series C Preferred shares into 18,750,000 shares of common stock at par value $0.0001 of Stewards Inc. On May 9, 2025, all outstanding shares of Series C preferred stock were converted on a one for one basis into common stock and distributed as follows; 1) VK Nap Family LLC, 10,359,375 shares 2) S&T Family Limited Partnership, 5,578,125 shares, and 3) Stewards Investment Capital, 2,812,500 shares.
On August 25, 2025, as a result of there being no outstanding shares of Series C Preferred Stock, we filed a withdrawal of the Certificate of Designation with the Nevada Secretary of State.
Dividends
We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if any, our capital requirements and financial position, and general economic conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Incentive Plan
On August 21, 2024, our Board of Directors approved the adoption of the Stewards, Inc. 2024 Equity Incentive Plan (the “Incentive Plan”). The purpose of the Incentive Plan is to foster and promote the Company’s long-term financial success and increase stockholder value by motivating performance through incentive compensation. The Incentive Plan is intended to encourage participants to acquire and maintain ownership interests in the Company and to attract and retain the services of talented individuals upon whose judgment and special efforts the successful conduct of our business is largely dependent.
A total of 20,000,000 shares of common stock are reserved and may be issued under the Incentive Plan. The Incentive Plan provides for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, stock units, performance shares, performance units and other securities to our employees, officers, directors and consultants.
The Incentive Plan became effective upon its approval by the stockholders holding the majority of the voting power on August 21, 2024, and, unless earlier terminated, will continue until August 21, 2034. No securities have yet been issued under the Incentive Plan.
Refer to Executive and Director Compensation for more information on the Incentive Plan.
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Anti-Takeover Effects of Certain Provisions of Our Amended and Restated Articles of Incorporation and Our Bylaws.
Provisions of our amended and restated articles of incorporation, and our amended and restated bylaws could make it more difficult to acquire us by means of a merger, tender offer, proxy contest, open market purchases, removal of incumbent directors and otherwise. These provisions, which are summarized below, are expected to discourage types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because negotiation of these proposals could result in an improvement of their terms.
Calling of Special Meetings of Stockholders.
Our Bylaws provide that special meetings of the stockholders, unless otherwise prescribed by statute, may be called by the Company’s President or the Secretary by resolution of the Board of Directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. The request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted.
Removal of Directors; Vacancies. Vacancies in the Board of Directors including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual or a special meeting of the stockholders. The holders of two-thirds of the outstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office of all or any of the directors by vote at a meeting called for such purpose or by a written statement filed with the secretary or, in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously.
Amendment of Bylaws. The Bylaws may be amended by a majority vote of all the stock issued and outstanding and entitled to vote for the election of directors of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. The Board of Directors by a majority vote of the whole Board at any meeting may amend the Bylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws which shall not be amended by the Board of Directors.
Transfer Agent and Registrar
ClearTrust, LLC, 16540 Pointe Village Dr. Suite 210 Lutz, FL 33558 +1 813-235-4490 www.cleartrustonline.com.
Reverse Stock Split
On August 7, 2025, our board and a majority of our shareholders approved a reverse stock split within the range of 1-for-2 to 1-for-100 of our issued and outstanding shares of common stock and authorized the Board, in its discretion, to determine the final ratio in connection with the reverse stock split. On November 6, 2025, however, the Company’s board of directors resolved to abandon the reverse stock split. As such, the Company withdrew its application for a reverse stock split with FINRA.
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SELLING STOCKHOLDERS
The shares of common stock being offered by the selling stockholders are those restricted shares previously issued to the selling stockholders.
On September 9, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain purchasers (the “Purchasers”) for the purchase and sale of Company’s securities. In an initial closing, the Company issued 8,000,000 of the Common Units, each such Common Unit consisted of one share of the Company’s common stock with a par value $0.0001 per share (“Common Stock”), common warrants (“Warrants”) to purchase one Common Stock, for every one share of common stock purchased and a pre-funded warrant (“Pre-funded Warrant”) to purchase 3/200th share of Common Stock purchased. Pursuant to the Securities Purchase Agreement, the Common Units were sold at a purchase price of $0.25 per share, with five-year Warrants having exercise price of $0.40 per share and the Pre-funded Warrants having exercise price of $0.0001 per share.
The sale of the Units to the Purchasers closed on December 12, 2025. The aggregate gross proceeds to the Company from the December 2024 offering were approximately $2,000,000 before deducting placement agent fees and expenses and other transaction costs of $207,600.
In a second closing, the Company issued 1,750,000 of the Common Units. Pursuant to the Securities Purchase Agreement, the Common Units were sold at a purchase price of $0.25 per share, with five-year Warrants having exercise price of $0.40 per share and the Pre-funded Warrants having exercise price of $0.0001 per share. The sale of the Common Units to the Purchasers closed on July 30, 2025. The aggregate gross proceeds to the Company from the July 2025 offering were approximately $437,500, before deducting placement agent fees and expenses and other transaction costs of $51,350.
The Company issued an additional 5% in common stock and 5% in warrants to all participants of the offering for the first and second closing, in lieu of the effectiveness deadline extension to December 31, 2025. As a result, the Company issued 487,500 shares of common stock and warrants to purchase 487,500 shares of common stock to the investors.
The Company intends to use the net proceeds from the offering for general corporate purposes, servicing interest on debt, and expenses for uplisting to a national exchange.
In connection with the private placement, we signed a registration rights agreement to include the shares in a resale registration. We are registering the shares in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of these shares and except as stated in the table below, the selling stockholders have not had any material relationship with us within the past three years and based on the information provided to us by the selling stockholders, no selling stockholder is a broker-dealer or an affiliate of a broker-dealer.
The table below lists the selling stockholders and other information regarding the ownership of the shares by each of the selling stockholders. The second column lists the number of shares owned by each selling stockholder. The third column lists the shares being offered by this prospectus by the selling stockholders. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person or any member of such group has the right to acquire within sixty (60) days of November 17, 2025. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons, any shares that such person or persons has the right to acquire within sixty (60) days are deemed to be outstanding for such person but not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable.
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The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Common Stock Beneficially Owned Prior to this | Number of Shares Being | Common Stock Beneficially Owned After this Offering | ||||||||||||||
| Name of Selling Stockholder | Offering | Offered | Shares | Percent (1) | ||||||||||||
| MARGHERITA CACIOPPO TRUST IRRV U/A DTD 03/08/2019(2) |
423,000
|
423,000
|
— | — | ||||||||||||
| ROBERT & MARY RIVIERE | 423,000 | 423,000 | — | — | ||||||||||||
| JORDAN G NAYDENOV | 211,500 | 211,500 | — | — | ||||||||||||
| WILLIAM BATZER | 211,500 | 211,500 | — | — | ||||||||||||
| JOHN M RANEY | 846,000 | 846,000 | — | — | ||||||||||||
| DARREN BRUNGARDT | 211,500 | 211,500 | — | — | ||||||||||||
| RICHARD JAFFE | 423,000 | 423,000 | — | — | ||||||||||||
| BRIAN ESKIN | 211,500 | 211,500 | — | — | ||||||||||||
| JAMES & NIDA GODFREY | 211,500 | 211,500 | — | — | ||||||||||||
| THE LOVELY LIVING TRUST DTD 4/1/16(3) | 211,500 | 211,500 | — | — | ||||||||||||
| RICHARD & FRANCES BATZER | 211,500 | 211,500 | — | — | ||||||||||||
| RICHARD & WILLIAM BATZER | 211,500 | 211,500 | — | — | ||||||||||||
| SHB EQUITIES LLC (4) | 211,500 | 211,500 | — | — | ||||||||||||
| PULLIAM TRUST (5) | 211,500 | 211,500 | — | — | ||||||||||||
| RONALD CHUPP | 211,500 | 211,500 | — | — | ||||||||||||
| DANIEL L KOONS & MARGARET KOONS | 423,000 | 423,000 | — | — | ||||||||||||
| DANIEL B KOONS & KIMBERLY A WROBEL | 211,500 | 211,500 | — | — | ||||||||||||
| JEFFREY A NIEZGODA | 423,000 | 423,000 | — | — | ||||||||||||
| GLEN SCHNEIDER | 846,000 | 846,000 | — | — | ||||||||||||
| DANIEL L PASSACANTILLI |
211,500 | 211,500 | — | — | ||||||||||||
| JAMES C GUMINA | 211,500 | 211,500 | — | — | ||||||||||||
| MATTHEW J EAMES | 211,500 | 211,500 | — | — | ||||||||||||
| JOHN DARGER | 211,500 | 211,500 | — | — | ||||||||||||
| FORFRONT CAPITAL, LLC (6) | 8,460,000 | 8,460,000 | — | — | ||||||||||||
| IVAN CAPLAN | 846,000 | 846,000 | — | — | ||||||||||||
| HERBERT FAMILY TRUST DTD 07/05/2023(7) |
105,750 | 105,750 | — | — | ||||||||||||
| PETER V HOUMERE & SARAH W HOUMERE | 211,500 | 211,500 | — | — | ||||||||||||
| BARRY KERN | 211,500 | 211,500 | — | — | ||||||||||||
| DANIEL B. KOONS | 211,500 | 211,500 | — | — | ||||||||||||
| Barger Excavating, Inc.(8) | 211,500 | 211,500 | ||||||||||||||
| DANIEL HIGGINS | 211,500 | 211,500 | ||||||||||||||
| Greg John & Evelyn Ellen FRANKLIN | 211,500 | 211,500 | ||||||||||||||
| HOWARD & Jonathan HOWELL | 423,000 | 423,000 | ||||||||||||||
| JAY ROBERT Ricigliano | 105,750 | 105,750 | ||||||||||||||
| JOSEPH & Yulia Moriarty | 105,750 | 105,750 | ||||||||||||||
| MATTHEW DIMICCO | 634,500 | 634,500 | ||||||||||||||
| STEPHEN CARMEL Living Trust DTD 9/25/20(9) | 211,500 | 211,500 | ||||||||||||||
| Stewards Investment Capital Limited (10) | 16,269,000 | 1,269,000 | ||||||||||||||
| Total | 35,621,250 | 20,621,250 | — | — | ||||||||||||
| (1) | Applicable percentage ownership after this offering is based on 192,229,142 shares of common stock outstanding after offering. As noted above, for purposes of computing percentage ownership after this offering, we have assumed that all shares offered by the selling stockholders will be sold in this offering. |
| (2) | Antonio Cacioppo is the trustee and has voting and dispositive authority over these shares. |
| (3) | Douglas V. Lovely is the trustee and has voting and dispositive authority over these shares. |
| (4) | Henry Bergmann has voting and dispositive authority over these shares. |
| (5) | Gary P. Pulliam and Darlene A. Pulliam have voting and dispositive authority over these shares. |
| (6) | Forfront Capital, LLC is an affiliate shareholder. Glen Steward, our director, along with Nathaniel Tsang Mang Kin and Bilal Adam, have voting and dispositive authority over these shares. While these shares are included in the selling shareholder table in accordance with SEC requirements, the inclusion does not reflect an immediate intention to dispose of such shares. Any sales, if undertaken, are expected to occur gradually over time and in a manner consistent with long-term alignment of interests with the Company. |
| (7) | Hal C. Herbert is the trustee and has voting and dispositive authority over these shares. |
| (8) | Nicholas Barger has voting and dispositive authority over these shares. |
| (9) | Stephen Carmel is the trustee and has voting and dispositive authority over these shares. |
| (10) | Stewards Investment Capital Limited and Stewards International Funds PCC, on behalf of the Stewards Private Credit Fund, are affiliate shareholders. Glen Steward, our director, and Bilal Adam have voting and dispositive authority over these shares. As with other affiliates, the shares are reflected in the selling shareholder table for disclosure purposes, but there is no current plan to sell them immediately upon uplisting to Nasdaq. Any future sales would likely take place over an extended period, underscoring the ongoing commitment of these shareholders to the Company’s long-term growth and performance. |
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PLAN OF DISTRIBUTION
We are registering the shares of common stock to permit the resale of these shares of common stock by the selling stockholders and any of their transferees, pledgees, assignees, donees, and successors-in-interest from time to time after the date of this prospectus.
Our common stock is currently quoted on the OTC Pink Market. We have applied for a listing of our common stock on Nasdaq, but the listing is not a prerequisite to conducting the resale offering. The common stock may be sold by the selling stockholders from time to time at the market price prevailing at the time of offer and sale, or at prices related to such prevailing market prices or in negotiated transactions or a combination of such methods, either on the OTC Markets, or Nasdaq, as the case may be.
A selling stockholder may use any one or more of the following methods when selling the securities:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| • | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| • | an exchange distribution in accordance with the rules of the applicable exchange; |
| • | privately negotiated transactions; |
| • | settlement of short sales; |
| • | in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security; |
| • | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| • | a combination of any such methods of sale; or |
| • | any other method permitted pursuant to applicable law. |
The selling stockholders may also sell shares under Rule 144 of the Securities Act, if available, rather than under this prospectus. The selling stockholders shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if it deems the purchase price to be unsatisfactory at any particular time.
The selling stockholders or their respective pledgees, donees, transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell shares in block transactions to market makers or other purchasers at a price per share which may be below the then existing market price. We cannot assure you that all or any of the shares offered in this prospectus will be issued to, or sold by, the selling stockholders. The selling stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus, may be deemed to be “underwriters” as that term is defined under the Securities Act, the Exchange Act and the rules and regulations of such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
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We are required to pay all fees and expenses incident to the registration of the shares, including fees and disbursements of counsel to the selling stockholders, but excluding brokerage commissions or underwriter discounts.
The selling stockholders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter. The selling stockholders have not entered into any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.
The selling stockholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. The selling stockholders and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the Exchange Act, and the rules and regulations under such act, including, without limitation, Regulation M. These provisions may restrict certain activities of and limit the timing of purchases and sales of any of the shares by, the selling stockholders or any other such person. In the event that any of the selling stockholders are deemed an affiliated purchaser or distribution participant within the meaning of Regulation M, then the selling stockholders will not be permitted to engage in short sales of common stock. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. In addition, if a short sale is deemed to be a stabilizing activity, then the selling stockholders will not be permitted to engage in a short sale of our common stock. All of these limitations may affect the marketability of our common stock.
If a selling stockholder notifies us that it has a material arrangement with a broker-dealer for the resale of the shares, then we would be required to amend the registration statement of which this prospectus is a part and file a prospectus supplement to describe the agreements between the selling stockholder and the broker-dealer.
INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
EXPERTS
The Company’s financial statements for the years ended December 31, 2024 and 2023, included in this Prospectus have been audited by Turner, Stone and Company, an independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The Doney Law Firm will provide opinions regarding the validity of the shares of our common stock offered pursuant to this Prospectus. The address of the Doney Law Firm is 3651 Lindell Rd Ste D121, Las Vegas, NV 89103.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada corporate law and our bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and file reports, proxy statements and other information with the SEC. The SEC’s website contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of that site is http://www.sec.gov.
We have filed a registration statement on Form S-1 with the SEC under the Securities Act of 1933, as amended, with respect to the securities offered in this prospectus. This prospectus, which is filed as part of a registration statement, does not contain all of the information set forth in the registration statement, some portions of which have been omitted in accordance with the SEC’s rules and regulations. Statements made in this prospectus as to the contents of any contract, agreement or other document referred to in this prospectus are not necessarily complete and are qualified in their entirety by reference to each such contract, agreement or other document that is filed as an exhibit to the registration statement of which this prospectus is a part.
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INDEX TO FINANCIAL STATEMENTS
| Page | ||
| Report of Independent Registered Public Accounting Firm (PCAOB Firm ID 76) | F-1 | |
| Consolidated Balance Sheets as of December 31, 2024, and 2023 | F-2 | |
| Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024, and 2023 | F-3 | |
| Consolidated Statements of Changes in Stockholders' Deficit for the years ended December 31, 2024, and 2023 | F-4 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2024, and 2023 | F-5 | |
| Notes to Consolidated Financial Statements | F-6 |
(Note: The audited financial statements indexed here for the years ended December 31, 2024 and 2023 are presented under our prior name, Favo Capital, Inc.)
| Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 | F-29 |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025, and 2024 (Unaudited) | F-30 |
| Condensed Consolidated Statements of Changes of Mezzanine Equity and Stockholders’ Equity (Deficit) (Unaudited) | F-31 |
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025, and 2024 (Unaudited) | F-32 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | F-33 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Favo Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Favo Capital, Inc. and its subsidiaries (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recurring losses from operations and negative cash flows from operating activities, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Turner, Stone & Company, L.L.P.
We have served as the Company’s auditor since 2024.
Dallas, Texas
April 15, 2025
| F-1 |
FAVO CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
| December
31, 2024 | December
31, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Advance
receivables (net of allowance for credit losses of $ | ||||||||
| Due from related party | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Goodwill | ||||||||
| Fixed assets, net of accumulated depreciation | ||||||||
| Intangible assets, net of accumulated amortization | ||||||||
| Operating lease right of use asset, net | ||||||||
| Other assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Notes payable, related party | ||||||||
| Syndicate payable | ||||||||
| Due to related party - current | ||||||||
| Deferred consideration - current | ||||||||
| Operating lease obligation - current | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Operating lease obligation - noncurrent | ||||||||
| Other non-current liabilities | ||||||||
| Due to related party - noncurrent | ||||||||
| Deferred consideration - noncurrent | ||||||||
| Notes payable, net | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Series A Preferred stock, par value per share; shares authorized; and shares issued and outstanding as of December 31, 2024 and 2023, respectively. | ||||||||
| Series C Preferred stock, par value per share; shares authorized; shares issued and outstanding as of December 31, 2024 and 2023. | ||||||||
| Common stock, par value per share; shares authorized; and shares issued and outstanding as of December 31, 2024 and 2023, respectively | ||||||||
| Stock subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive gain | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-2 |
FAVO CAPITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administrative expenses | ||||||||
| Allowance for credit losses | ||||||||
| Professional fees | ||||||||
| Total operating expense | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Loss on write down of investment | ( | ) | ( | ) | ||||
| Gain on sale of fixed asset | ||||||||
| Foreign exchange loss | ( | ) | ||||||
| Total other income (expenses) | ( | ) | ( | ) | ||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expenses | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Preferred shares interest expense | ( | ) | ( | ) | ||||
| Net loss to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding – basic and diluted | ||||||||
| Comprehensive loss: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Unrealized gain on foreign currency translation | ||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these consolidated financial statements
| F-3 |
FAVO CAPITAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Series C Preferred Stock | Series A Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||
| Number of Shares | Par Value | Number of Shares | Par Value | Number of Shares | Par Value | Additional Paid-in Capital | Subscription receivable | Accumulated Deficit | Total Stockholders' Deficit | |||||||||||||||||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Preferred stock conversion | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares issued in common control acquisition. | ||||||||||||||||||||||||||||||||||||||||
| Adjustment to equity for common control transaction. | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Retained earnings Distribution | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for the promissory note extension | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock issuances | ||||||||||||||||||||||||||||||||||||||||
| Preferred shares interest expense | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Subscription Receivable | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | (7,673,207 | ) | (7,673,207 | ) | |||||||||||||||||||||||||||||||
| Balance - December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Series C Preferred Stock | Series A Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Par Value | Number of Shares | Par Value | Number of Shares | Par Value | Additional Paid-in Capital | Subscription receivable | Accumulated Deficit | Accumulated Other Comprehensive Gain | Total Stockholders' Deficit | ||||||||||||||||||||||||||||||||||
| Balance - December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued for promissory note extension. | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with private offering, net of issuance costs. | ||||||||||||||||||||||||||||||||||||||||||||
| Common
Stock issued for Simplified Companies acquisition. | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of deferred shares on Simplified Companies acquisition. | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock issuances for cash. | ||||||||||||||||||||||||||||||||||||||||||||
| Amortization of advisory board shares issued in advance. | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
FAVO CAPITAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Loss on sale of investments | ||||||||
| Allowance for credit losses | ||||||||
| Common stock issued for services | ||||||||
| Finance charges for extension of promissory note | ||||||||
| Operating lease ROU asset amortization | ( | ) | ||||||
| Amortization of advisory board shares issued in advance. | ||||||||
| Depreciation and amortization expense | ||||||||
| Gain on sale of assets | ( | ) | ||||||
| Interest expense on deferred consideration | ||||||||
| Foreign exchange loss | ||||||||
| Changes in assets and liabilities | ||||||||
| Advances receivable, net | ( | ) | ( | ) | ||||
| Due from related party | ( | ) | ||||||
| Other current assets | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Syndicate payable | ||||||||
| Operating lease obligation | ( | ) | ||||||
| Due to related party | ||||||||
| Other non-current liabilities | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Sale of property and equipment | ||||||||
| Cash paid for Simplified Companies acquisition | ( | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | $ | ( | ) | $ | ( | ) | ||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from preferred stock issuance | ||||||||
| Cash paid in common control transaction | ( | ) | ||||||
| Payments made against promissory note -related party | ( | ) | ||||||
| Payments made against notes payable related party | ( | ) | ( | ) | ||||
| Proceeds from notes payable-related party | ||||||||
| Proceeds from notes payable | ||||||||
| Payments made against notes payable | ( | ) | ||||||
| Retained earnings distribution | ( | ) | ||||||
| Issuance of common stock | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | $ | $ | ||||||
| NET CHANGE IN CASH | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| CASH – BEGINNING OF PERIOD | ||||||||
| CASH – END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | ||||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Conversion of series C preferred stock | $ | $ | ||||||
| Common stock issued in common control acquisition | ||||||||
| Issuance of note payable in common control acquisition | ||||||||
| Issuance of common stock for promissory note extension | ||||||||
| Issuance of common stock Simplified Companies acquisition | ||||||||
| Deferred equity for Simplified Companies acquisition | ||||||||
| Deferred commission for Simplified Companies acquisition | ||||||||
| Stock issued for serving on advisory board | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
FAVO CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and basis of accounting
Favo Capital, Inc. was incorporated as
Beeston Enterprises Ltd. (“the Company”) on
On May 31,
2023, the Company entered into an acquisition agreement with the principals of FAVO Group LLC. As part of the acquisition, the principals
of FAVO Group transferred
On June 7, 2023, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase our authorized shares of preferred stock from shares to shares, par value per share. The Amendment did not increase our authorized shares of common stock, which remained at shares, par value per share.
On November 27, 2023, we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase our authorized shares of preferred stock from shares to shares, par value per share. The Amendment did not increase our authorized shares of common stock, which remained at shares, par value per share.
On November 22, 2023, we elected to decrease our authorized shares of Series C preferred shares from shares down to shares.
On November 27, 2023, we elected to increase our authorized shares of Series A preferred shares from shares up to shares.
The accompanying financial statements are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”).
| F-6 |
Note 2- Going Concern
The accompanying
consolidated financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has
positive working capital of $
Note 3 – Summary of significant accounting policies
Principles of Consolidation
The Company prepares its consolidated financial statements on the accrual basis of accounting. All intercompany accounts, balances and transactions have been eliminated in the consolidation as at December 31, 2024 and December 31, 2023.
Revenue Recognition
The Company’s main source of revenue is through agreements for the purchase and sale of future receivables/receipts, commonly referred to as a Merchant Cash Advance. Under the contract, the Company will agree to purchase a specified amount of the customer’s future receipts/receivables (the “Purchased Amount”) at a discount, in return for providing the customer with upfront proceeds (the “Purchase Price”). The customer is then contractually required to pay the cash related to the future receivables/receipts based on an estimated period and agreed-upon % of the customer’s future receivables/receipts that the customer collects. The difference between the Purchased Amount that the customer will repay, and the discounted Purchase Price amount that the Company pays for the future receivables/receipts, is considered the “discount”, which reflects the significant collection risk incurred by the Company for its purchase of future receivables/receipts. These purchase of future receivables arrangements do not constitute a revenue contract under ASC 606 "Revenue from Contracts with Customers". Accordingly, the Company accounts for them in accordance with ASC 310 "Receivables"
The Company recognizes revenue on remittances collected by applying the contractual discount to allocate the remittance against the initial principal held as a receivable and revenue. All upfront income from fees, such as origination and processing fees are booked as income on a straight-line method over the initial period of the contract. The same applies to all direct costs incurred upon the execution of the contract, which primarily consists of commissions paid to the Company’s internal sales team or external partners for sourcing the contract.
As of December
31, 2024, and 2023, deferred commissions cost included within account receivables was $
| F-7 |
Following table provides the revenue recognized from each offering
| Revenue | December 31, 2024 | December 31, 2023 | ||||||
| MCAs Income and Fees | $ | $ | ||||||
| Brokerage Commissions | ||||||||
| Management fee | ||||||||
| Others | ||||||||
| Total Revenue | $ | $ | ||||||
Variable Interest Entities
We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests is considered a variable interest entity (“VIE”). We consolidate VIEs when we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct activities that most significantly affect the economic performance of the VIE and have the obligation to absorb the majority of their losses or benefits. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable GAAP.
Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is a VIE and, if so, whether we are the primary beneficiary.
Property, equipment and leasehold improvements.
Property, equipment and leasehold improvements are stated at historical cost less accumulated depreciation and impairment. The historical cost of acquiring an item of property and equipment or undertaking leasehold improvements includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use.
Maintenance and repairs are charged to expense as incurred. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets.
The estimated useful lives of depreciable assets are as follows:
| Computers and equipment | |
| Office furniture and fixtures | |
| Vehicles | |
| Leasehold improvements | Shorter of the lease term or the estimated useful life |
Advance receivables
Advance receivables are recorded at net realizable value, net of an allowance for expected credit losses.
| F-8 |
Credit Losses on Financial Instruments
For its financial instruments subject to credit risk, consisting of its receivables related to its MCA’s, the Company recognizes as an allowance its estimate of lifetime expected credit losses under the current expected credit loss (CECL) model of ASC 326. The approach is based on the Company's internal knowledge and historical default rates over the expected life of the receivables and is adjusted to reflect current economic conditions as well as industry and geographical specific risks. This evaluation takes into account the customer's ability and intention to pay the consideration when it is due along with incorporating changes in the forward-looking estimates. If the expected financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly.
Movement of Credit Losses for the Year:
Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for (reversal of) credit losses | ||||||||
| Charge-offs | ( |
) | ( |
) | ||||
| Recoveries | ||||||||
| Ending balance | $ | $ | ||||||
The Company had increased write-offs for the period ended December 31, 2024 mainly due to the closing of some of the syndication funds in which the Company participated.
The Company will write off any deals that are deemed to be uncollectible as advised by the Company’s third party collections and legal team or in the event the merchant has filed for bankruptcy. With regards to deals where the Company has syndicated on the deal, the write off is done at the time the syndication partner identifies these deals are no longer collectable.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2024 and 2023.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has access to at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities, convertible note, notes payable, due to and from related parties and advanced receivables. Fair values were assumed to approximate carrying values for these financial instruments due to their short-term maturities.
| F-9 |
Provision for Income Taxes
The Company accounts for income taxes in accordance with ASC 740 and other authoritative guidance utilizing the asset and liability method. This method requires the recognition of deferred assets or liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets or liabilities are calculated as the difference between the financial statements and the tax bases of assets and liabilities applying enacted tax rates in effect for the period in which the differences are expected to settle. The Company records deferred tax assets or liabilities when management determines it is more likely than not that the tax position will be sustained. A valuation allowance is required for deferred tax assets if, based on available evidence, it is more likely than not that all or some portion of the asset will not be realized due to the inability to generate sufficient taxable income in the period or of the character necessary to use the benefit of the deferred tax asset. On the basis of the evaluation, as of December 31, 2024, the Company has recorded a full valuation allowance against the Company’s net deferred tax asset.
We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The company has not identified any uncertain tax positions.
We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 2024 and 2023, and expenses for the years ended December 31, 2024 and 2023, and cumulative from inception. Actual results could differ from those estimates made by management.
Stock Subscription Receivable
Stock subscription receivables are recorded when the shares have been issued against future services from the subscriber. Since the shares had already been issued and the expense will be recorded when the services are received from the subscriber, the Company recorded the amount as stock subscriptions receivable in the equity section of the consolidated balance sheets.
Warrants
The Company accounts for stock warrants granted either as a liability or equity in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (“ASC 815-40”). Under ASC 815-40, contracts that may require settlement for cash are liabilities, regardless of the probability of the occurrence of the triggering event. Liability-classified warrants are measured at fair value on the issuance date and at the end of each reporting period. Any change in the fair value of the warrants after the issuance date is recorded in the consolidated statements of operations and comprehensive loss as a gain or loss. If warrants do not require liability classification under ASC 815-40, in order to conclude warrants should be classified as equity, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or another applicable GAAP standard. Equity-classified warrants are accounted for at fair value on the grant date with no changes in fair value recognized after the issuance date.
The Company has issued warrants to purchase shares of its common stock in connection with its financing activities. The Company classifies these warrants as equity and recorded the warrants at fair value as of the date of issuance on the Company’s consolidated balance sheet with no subsequent remeasurement. The issuance date fair value of the outstanding warrants was estimated using the Black-Scholes Model. The Black-Scholes Model required inputs such as the expected term of the warrants, expected volatility and risk-free interest rate. These inputs were subjective and required significant analysis and judgment. For the estimate of the expected term, the Company used the full remaining contractual term of the warrant. The estimate of expected volatility assumption is based on the volatility observed on the Company’s peer group. The risk-free rate is based on the yield available on U.S. Treasury zero-coupon issues corresponding to the expected term of the warrants.
| F-10 |
Syndicate Payable
A portion of the Company’s direct funding portfolio are funded by syndication partners who participate alongside the Company in the deal and therefore economically benefit directly from the performance of the deal but also bare the risk with regards to nonperformance. The syndicated portion of an individual deal will vary based on the size of the deal or the syndicated partners participation threshold. All syndication partners sign participation contracts with the Company which details the relationship between the syndicate partner and the Company as well as any relevant collection fees the Company will receive under the relationship.
All deals and the syndicates participation are tracked separately in the Company’s customer relationship management (“CRM”) which operates on a wallet basis. The syndicate partner has access to the CRM and therefore has the ability to track the performance of every deal as well as monitor any payments received.
Foreign Currency Translation and Transactions
The functional currency of our wholly owned subsidiaries is the applicable local currency. The translation of foreign currencies into U.S. dollars is performed for assets and liabilities using current foreign currency exchange rates in effect at the balance sheet date, and for revenues and expense accounts using average foreign currency exchange rates during the period. Capital accounts are translated at historical foreign currency exchange rates. Translation gains and losses are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). Adjustments that arise from foreign currency exchange rate changes on transactions denominated in a currency other than the functional currency are included in other loss on the consolidated statements of operations.
Segment Reporting
The Company’s current source of revenue is from one main product, namely Merchant Cash Advances. Our revenue generation is limited to within the United States and although the Company is exploring alternative products to add to its alternative finance offering, none of these have been finalized yet. Our chief operating decision-maker (“CODM”) is our Chief Executive Officer (“CEO”). The CEO reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. We manage our operations and allocate resources as a single operating segment.
Leases
The Company applies the accounting guidance ASC 842, Leases. The Company determines if an arrangement contains a lease at inception based on whether there is an identified property, plant or equipment and whether the Company controls the use of the identified asset throughout the period of use. Operating leases are included in the accompanying consolidated balance sheets. Operating lease right of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease and are included in current and non-current liabilities. Operating lease ROU assets and lease liabilities are recognized at the lease inception date based on the present value of lease payments over the lease term discounted based on the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate (which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease). Because the Company’s operating leases generally do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at lease commencement date for borrowings with a similar term.
The Company’s operating lease ROU assets are measured based on the corresponding operating lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. The Company does not assume renewals or early terminations unless it is reasonably certain to exercise these options at commencement. The Company elected the practical expedient which allows the Company to not allocate consideration between lease and non-lease components. Variable lease payments are recognized in the period in which the obligation for those payments is incurred. In addition, the Company elected the practical expedient such that it does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less of all asset classes. Operating lease expense is recognized on a straight-line basis over the lease term.
| F-11 |
Business Combinations
ASC 805, Business Combinations, provides a model for determining whether an acquisition represents a business combination. In order to be a business, the integrated set of activities of the acquired entity needs to have an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired entity must also pass the “Screen Test” which involves determining whether the acquisition represents an in-substance asset acquisition based on whether the fair value of the gross assets acquired is “substantially all” concentrated in a single asset or group of similar assets.
We use the acquisition method of accounting for business combination transactions, and, accordingly, recognize the fair values of assets acquired and liabilities assumed in our consolidated financial statements. Transaction costs related to the acquisition of the acquired company are expensed as incurred. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The consolidated financial statements include the results of operations of any acquired company since the acquisition date.
Goodwill and Intangible Assets
We recognize the excess of the purchase price over the fair value of identifiable net assets acquired at the acquisition date as goodwill. In accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”), Goodwill is not amortized but is reviewed for impairment annually and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. If the fair value of the reporting unit is greater than the reporting unit’s carrying value, then the carrying value of the reporting unit is deemed to be recoverable. If the carrying value of the reporting unit is greater than the reporting unit’s fair value, goodwill is impaired and written down to the reporting unit’s fair value.
Identifiable intangible assets include developed technology, customer relationships, and trade names resulting from acquisitions. Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated economic lives on a straight-line basis. Acquired intangible assets are presented net of accumulated amortization on the consolidated balance sheets. We review the carrying amounts of intangible assets for impairment at the asset group level whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. We measure the recoverability of the asset group by comparing its carrying amount to the future undiscounted cash flows we expect the asset group to generate. If we consider the asset group to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset group exceeds its fair value. In addition, we periodically evaluate the estimated remaining useful lives of long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation or amortization.
The Company amortizes intangible assets subject to amortization on the basis of their expected periods of benefit, generally 4 to 10 years. The Company does not have indefinite-lived intangible assets other than goodwill.
Useful life of the intangible assets are as follows:
| Useful life (In years) | |
| Trade Name | |
| Developed Technology | |
| Customer relationships |
As of December
31, 2024, the Company had gross intangible assets of $
| F-12 |
Deferred Consideration
The Company elected to account for the deferred consideration under ASC 825, Financial Instruments (“ASC 825”). Accordingly, deferred consideration was recognized at their fair value at the closing of the transaction and are subsequently remeasured each reporting period with changes in fair value recorded in other income (expense) in the consolidated statements of operations and comprehensive loss until settlement. The fair value of the deferred consideration was determined by discounting future payments using the Company’s cost of borrowing.
Subsequent Event
The Company evaluated subsequent events through the date when financial statements are issued for disclosure consideration.
Adoption of Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280 - Improvements to Reportable Segment Disclosures. ASU 2023-07 will improve reportable segment disclosure requirements, primarily through enhanced annual and interim disclosures about significant segment expenses that are regularly provided to the CODM. The disclosure required under ASU 2023-07 is required for public entities with a single reportable segment. ASU 2023-07 will be effective for the Company for annual periods beginning on January 1, 2024 and interim periods beginning on January 1, 2025. The amendments of this guidance apply retrospectively to all prior periods presented in the consolidated financial statements. Early adoption is permitted. The amendments were applied retroactively to all prior periods presented in the consolidated financial statements and adoption of ASU 2023-07 do not have a material impact on our consolidated financial statements.
Recently issued accounting guidance - not yet adopted:
In November 2024, the Financial Account Standards Board (FASB), issued Accounting Standards Update (ASU) 2024-04, Debt-Debt with Conversions and Other Option. ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures.
On November 04, 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03), which requires new disclosures to disaggregate prescribed natural expenses underlying any income statement caption. ASU 2024-03 is effective for annual periods in fiscal years beginning after December 15, 2026, and interim periods thereafter. Early adoption is permitted. ASU 2024-03 applies on a prospective basis for periods beginning after the effective date. However, retrospective application to any or all prior periods presented is permitted. We are assessing the impact that ASU 2024-03 will have on our consolidated financial statements and disclosures, if any.
In March 2024, the United States Securities and Exchange Commission (SEC) issued Final Rulemaking Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors. This release is intended to improve consistency, completeness and transparency related to climate risks and events. The disclosure requirements related to this new rule will be phased in, and effective for the Company beginning in fiscal year 2027 on a prospective basis. The Company is currently evaluating the potential impact of this release on its financial statements and disclosures.
| F-13 |
In March 2024, the Financial Account Standards Board (FASB), issued Accounting Standards Update (ASU) 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This ASU intends to provide an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. This ASU is effective for all public entities for annual reporting periods beginning after December 15, 2024, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on its disclosures.
.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which enhances the annual income tax disclosures for the effective tax rate reconciliation and income taxes paid. The amendments are effective for public business entities, for annual periods beginning after December 15, 2024 and for annual periods beginning after December 15,2025 for all other entities. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 applies on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. We are assessing the impact that ASU 2023-09 will have on our consolidated financial statements, if any.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU covers a variety of codification topics, and the effective date for each amendment will be the date on which the SEC‘s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently evaluating the potential impact of this guidance on its disclosures.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Note 4 – Acquisitions
Simplified Companies acquisition in 2024:
On January 2, 2024,
the Company completed the acquisition by acquiring
In accordance with ASC 805, the acquisition was accounted for as a business combination under the acquisition method. The purchase consideration was allocated to the working capital, tangible and intangible assets acquired based on their estimated fair values as of the acquisition date with the excess recorded as goodwill, as follows:
| Goodwill | $ | |||
| Tangible assets | ||||
| Intangible assets | ||||
| Net assets acquired | $ |
| F-14 |
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):
| Fair Value | Useful life (in years) | |||||||
| Trade Name | $ | |||||||
| Developed Technology | $ | |||||||
| Customer Relationships | $ | |||||||
The fair value of the intangible asset was determined by applying the income approach, direct cost method and multi period excess earnings method. The fair value measurements are based on significant unobservable inputs, including management estimates and assumptions, and thus represents Level 3 measurements.
There was no transaction costs associated with the acquisition for the year ended December 31, 2024.
The goodwill balance is primarily attributed to the assembled workforce and synergies after the acquisition. No material measurement period adjustments were recognized during the year ended December 31, 2024.
Stewards, Inc.
obtained control of the Simplified Companies upon transfer of cash consideration to the selling shareholders. The total consideration
transferred in the acquisition was $
| Cash | $ | |||
| Working capital adjustment | ||||
| Equity | ||||
| Deferred equity | ||||
| Deferred commission | ||||
| Total purchase consideration | $ |
The aggregate purchase
consideration includes shares of the Company’s common stock for a fair value of $
The amounts of revenue and earnings of Simplified Companies included in the Company’s consolidated income statement from the acquisition date to the year ending December 31, 2024 are as follows:
| December 31, 2024 | ||||
| Revenue | $ | |||
| Net profit/ (loss) | $ | ( | ) | |
We are unable to provide the pro forma information required under ASC 805-10-50-2(h) as the disclosure is impracticable since the required pre-acquisition historical information could not be obtained from the acquiree.
The Company entered
into Business commission agreement with selling shareholder for new business referrals and business renewals. As these business commissions
are paid primarily for the benefit of the acquirer and based on post combination efforts by the selling shareholder, these commissions
have been accounted separately from the business combination. The Company recognized commission expenses of $
| F-15 |
FAVO Group Acquisition in 2023:
On May 31, 2023, the Company entered into an
acquisition with the principals of FAVO Group LLC. As part of the acquisition, the principals of FAVO Group transferred
Business activities of the entities acquired through common control is as follows:
Favo Group LLC- Acted as the management company and tasked with ensuring smooth operations across all entities.
Favo Funding LLC- Direct Merchant Cash Advance Funder. Stewards Inc syndicated deals with FAVO Funding LLC.
Honeycomb Sub Fund LLC- Syndication company that syndicates on deals with other third party funders.
Fore Funding LLC- The sales office for FAVO Funding LLC and also acts as broker for other third party funders.
Favo Funding CA LLC- Direct Merchant Cash Advance Funder for businesses in California state, no activity for the periods presented.
Fore Funding CA LLC- Sales office for business in California state, no activity for the periods presented
Favo Group Human Resources LLC- Payroll processing for Stewards Inc.
As consideration for the acquisition, the Company
will pay $
The Company raised the financing for this transaction
by selling 18 million shares of its Series A Preferred Stock at for total of $
As the Company and the Stewards Group of Companies were under common control at the time of the FAVO Group acquisition, the acquisition was deemed to be a transaction under common control under ASC 805, “Business Combinations.” Therefore, we accounted for this transaction at the carrying amount of the net assets acquired and the results of operations have been combined for Stewards and (Favo Group LLC, FAVO Group Human Resources, LLC, FAVO Funding LLC, Honeycomb Sub Fund LLC, FORE Funding LLC, FORE Funding CA LLC and FAVO Funding CA LLC) from the date of common control. At time of acquisition Vincent Napolitano and Shaun Quin combined held 76% of the Company’s common stock and Vincent Napolitano held 18,750,000 of the Company’s series C preferred stock. As at June 30, 2023 post the acquisition Vincent Napolitano and Shaun Quin combined held 56% of the Company’s common stock and Vincent Napolitano held 18,750,000 of the Company’s series C preferred stock.
The ownership of the entities at the time of the acquisition was as follows:
| Entity | Vincent Napolitano | Shaun Quin | FAVO Group LLC | |||||||||
| FAVO Group LLC | % | % | — | |||||||||
| FAVO Group Human Resources LLC | — | % | % | |||||||||
| FAVO Funding LLC | % | % | — | |||||||||
| Honeycomb Sub Fund LLC | % | % | — | |||||||||
| FORE Funding LLC | % | % | — | |||||||||
| FORE Funding CA LLC | % | % | — | |||||||||
| FAVO Funding CA LLC | % | % | — | |||||||||
| F-16 |
As a result of the acquisition, the prior period consolidated financial statements for the periods in which the entities were under common control have been adjusted. Accordingly, the Company’s prior period consolidated financial statements from the date of common control under FAVO have been adjusted to include the financial information of all the entities for that same period. The $14.2 million consideration has been adjusted in equity given it’s a common control transaction.
Assets acquired and liabilities assumed are reported at their historical carrying amounts. The balance sheets of the Favo Group LLC, FAVO Group Human Resources, LLC, FAVO Funding LLC, Honeycomb Sub Fund LLC, FORE Funding LLC, FORE Funding CA LLC and FAVO Funding CA LLC as at when common control was established have been included in the Consolidated balance sheet of the Company, following are the assets acquired and liabilities assumed:
| Current assets | $ | |||
| Fixed assets | ||||
| Other non current assets | ||||
| Total Assets | $ | |||
| Current liabilities | $ | |||
| Other liabilities | ||||
| Long term liabilities | ||||
| Total liabilities | $ | |||
| Net liabilities | $ | ( | ) |
Post acquisition the Company’s organizational structure is as follows.
The acquisition further enhances the funding capabilities of the Company as a direct to merchant funder and reduced costs by internalizing the management company. Through the acquisition, the Company also now has an internal sales department that can be leveraged to fund more internal deals. The acquisition also gave the Company access to a larger capital pool, given the Stewards Group of Companies already had raised a substantial amount of capital.
| F-17 |
Note 5 – Fair Value Measurements
The Company records its financial assets and liabilities at fair value. The carrying amounts of certain of the Company’s financial instruments, including cash, trade and other receivables, net, and accounts payable, approximate their fair value due to their short maturities. Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting guidance for fair value establishes a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs used in valuation techniques. The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
Level 1 - Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs, either directly or indirectly, other than quoted prices in active markets for identical assets or liabilities, such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities; therefore, requiring an entity to develop its own valuation techniques and assumptions.
An entity may choose to measure many financial instruments and certain other items at fair value at specified election dates.
The Company’s Simplified Companies deferred consideration was carried at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. Any subsequent changes in the estimated fair value of the deferred consideration are recorded in the consolidated statements of operations.
The following tables set forth the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as follows:
| December 31, 2024 | ||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Deferred consideration (current and non-current) | $ | $ | $ | $ | ||||||||||||||||
|
||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Deferred consideration (current and non-current) | $ | $ | $ | $ | ||||||||||||||||
| F-18 |
Note 6 – Fixed Assets, net
At December 31, 2024 and 2023, fixed assets consisted of the following:
December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Cost | Accumulated depreciation | Net Book Value | Cost | Accumulated depreciation | Net Book Value | |||||||||||||||||||
| Computers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Furniture and Fixtures | ||||||||||||||||||||||||
| Office Equipment | ||||||||||||||||||||||||
| Vehicles | ||||||||||||||||||||||||
| Leasehold improvements | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Depreciation expense
for the years ended December 31, 2024 and 2023 was $
During the years
ended December 31, 2024, the Company sold vehicle costing $
Note 7 – Related Party Transactions
During the years
ended December 31, 2024 and 2023 the Company incurred costs of $
During the years
ended December 31, 2024 and 2023 the Company paid interest on the notes payable of $
During the years
ended December 31, 2024 and 2023 the Company paid expenses on behalf of FAVO Holdings LLC in the amount of $
On July 7, 2023,
the Company issued shares of common stock to a Stewards Investment Capital Limited to serve on the advisory board for a period
of 3 years term as per the advisory board agreement. The Company recorded the issuance of shares as stock subscription receivable, as
services are not yet rendered and amortizing the same over the 3 years term. For the years ended December 31, 2024 and 2023, the company
amortized an amount of $
In 2023, before the FAVO Group acquisition in May 2023 (Note 4) by Stewards, Inc., Favo Group LLC and Fore Funding LLC distributed their profits and , respectively, as per the terms and conditions in the LLC agreements. The profits were distributed to the members of the LLC, respectively, namely Vincent Napolitano and Shaun Quin.
| F-19 |
Executive compensation
For the years ended December 31, 2024 and 2023, compensation to executives of the Company was and , respectively. Below are the details by Executive.
| December 31, 2024 | December 31, 2023 | |||||||||||||||
| Non - Equity | Equity | Non - Equity | Equity | |||||||||||||
| Chief Executive Officer Vincent Napolitano | $ | $ | $ | $ | ||||||||||||
| President Shaun Quin | ||||||||||||||||
Chief Financial Officer Vaughan Korte | ||||||||||||||||
| Chief Strategy Officer Glen Steward | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Non - Equity compensation includes payroll, compensation under the management and consulting agreements, vehicle allowance, fuel and medical expenses. The compensation under the management agreement includes payments made to FAVO Holdings LLC, which is currently owned 65% by Vincent Napolitano and 35% by Shaun Quin. The compensation under the consulting agreement includes payments made to Korte LLC, a company owned 50% by Vaughan Korte.
During the years
ended December 31, 2024 and 2023, the Company incurred costs of $
Note 8 – Notes payable – related party
During the years
ended December 31, 2024 and 2023, the Company received $
During the year
ended December 31, 2023, the Company issued $
Note 9 – Notes payable
On June 14, 2024,
the Company entered into the renewal of secured promissory note with J&T Family Trust which provided (i) for additional commitments
with an aggregate principal amount of $
The Company plans to use these proceeds for short-term trade finance business and working capital.
The Company received
additional funds from other investors of $
As
of December 31, 2024 and 2023, the total outstanding note principal were $
| F-20 |
Note 10 – Commitments and contingencies
Operating leases
On November 25,
2020, the Company entered into an office lease agreement with AM Property Holding II Corp, agent for 1025 II, LLC. The Company moved
into suite 311 on the third floor of the building located at 1025 Old Country Road, Westbury, New York. On September 15, 2021, the Company
ended the aforementioned lease agreement and entered into a new lease agreement with the existing landlord and moved into Suite 421 on
the fourth floor of the same building. The lease accrues interest based on a weighted average interest rate of
On January 2, 2024,
the company acquired two leases as part of Simplified Companies acquisition as described below. Each lease was recognized and measured
at fair value based on the remaining lease term at the date of acquisition by applying ASC 842 - Leases. The fair value of
the ROU assets and Lease liabilities acquired was $
During the year ended December 31, 2024, the Company also added a second call center location in Le Vega, Dominican Republic.
The following table presents the Company’s ROU assets and lease liabilities as of December 31, 2024, and December 31, 2023:
| For the Years Ended | ||||||||
| Lease Classification | December 31, 2024 | December 31, 2023 | ||||||
| ROU Assets: | ||||||||
| Operating | $ | $ | ||||||
| Total ROU assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current: | ||||||||
| Operating | $ | $ | ||||||
| Noncurrent: | ||||||||
| Operating | ||||||||
| Total lease liabilities | $ | $ | ||||||
| Maturity of Lease Liabilities | Operating | ||||
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| Total lease payments | |||||
| Less: Interest | |||||
| Present value of lease liabilities | $ | ||||
| For the Years Ended | ||||||||
| Schedule of weighted average remaining lease term and discount rate |
December 31, 2024 |
December 31, 2023 | ||||||
| Operating leases: | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate | % | % | ||||||
| F-21 |
Note 11- Net loss per share attributable to common stockholders
Because the Company was in a net loss position for the years ended December 31, 2024 and 2023, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:
| For the Years Ended | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Numerator: | ||||||||
| Net Loss to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average shares of common stock outstanding, basic and diluted | ||||||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
The financial instruments that could potentially dilute basic earnings per share in the future and that have been excluded from the computation of diluted net loss per share because including them would have had an antidilutive effect were as follows:
| As of December 31, | ||||||||
| 2024 | 2023 | |||||||
| Convertible preferred stock series A and series C | ||||||||
| Warrants | ||||||||
| Total | ||||||||
Note 12 – Income taxes
U.S. and foreign components of income (loss) before income taxes were as follows:
| For the Years Ended | |||||||||
| December 31, 2024 | December 31, 2023 | ||||||||
| U.S | $ | ( | ) | $ | ( | ) | |||
| Foreign | ( | ) | |||||||
| Total | $ | ( | ) | $ | ( | ) | |||
Provision for income taxes for the year ended December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | |||||||
| Current | ||||||||
| Federal | $ | $ | ||||||
| State - incl franchise taxes | ||||||||
| Foreign | ||||||||
| $ | $ | |||||||
| Deferred | ||||||||
| Federal | $ | $ | ||||||
| State - incl franchise taxes | ||||||||
| Foreign | ||||||||
| $ | $ | |||||||
| F-22 |
The differences between the company’s income tax benefit and the benefit computed at the 21% United States statutory income tax rate were as follows:
| For the Years Ended | ||||||||
| December 31 | ||||||||
| 2024 | 2023 | |||||||
| Income tax recovery at statutory rates (at a rate of 21% for all years presented) | $ | ( | ) | $ | ( | ) | ||
| State income taxes, net of federal benefit | ( | ) | ||||||
| Expenses not deducted for tax purposes | ||||||||
| Prior year true up | ( | ) | ||||||
| Foreign tax expenses | ||||||||
| Change in Valuation Allowance | ||||||||
| $ | $ | |||||||
The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and liabilities are as follows:
| December 31 | ||||||||
| Deferred tax assets | 2024 | 2023 | ||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Deferred commissions | ||||||||
| Amortization of intangible assets | ||||||||
| Charitable contributions | ||||||||
| Operating lease liability | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ( | ) | ||||
| Deferred tax liabilities | ||||||||
| Right-of-use asset | ( | ) | ||||||
| Depreciation | ( | ) | ||||||
| Total deferred tax liabilities | $ | ( | ) | $ | ||||
| Net deferred tax liabilities | $ | $ | ||||||
The Company accounts for income taxes in accordance with ASC 740 and other authoritative guidance utilizing the asset and liability method. This method requires the recognition of deferred assets or liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets or liabilities are calculated as the difference between the financial statements and the tax bases of assets and liabilities applying enacted tax rates in effect for the period in which the differences are expected to settle. The Company records deferred tax assets or liabilities when management determines it is more likely than not that the tax position will be sustained. A valuation allowance is required for deferred tax assets if, based on available evidence, it is more likely than not that all or some portion of the asset will not be realized due to the inability to generate sufficient taxable income in the period or of the character necessary to use the benefit of the deferred tax asset. On the basis of the evaluation, as of December 31, 2024, the Company has recorded a full valuation allowance against the Company’s net deferred tax asset.
These NOLs do not expire and may be used to offset future taxable income, subject to applicable tax laws and limitations. The Company’s federal NOLs carried forward as of December 31, 2024 are $21,479,789.
| F-23 |
We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The company has not identified any uncertain tax positions.
We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. The Company has recorded no penalties and interest in the tax expense for the years ending December 31, 2024 and 2023.
The Company’s income tax returns are open for Examination by U.S. federal and state taxing authorities for the tax years ending December 31, 2021 to December 31, 2023. The Company is not currently under examination by any taxing authorities.
Note 13 – Variable Interest Entity (“VIE”)
The Company holds variable interest in a VIE which is not consolidated because it was determined that the Company is not the primary beneficiary of the VIE. The Company’s involvement with the entity is in the form of direct membership interest and management fee arrangement for program of investment management for assets of VIE. The Company’s maximum exposure to loss relating to non-consolidated VIE is the carrying value of its initial investment in the VIE.
The Company’s maximum exposure to loss relating to the non-consolidated VIE is as follows:
| Non- Consolidated VIE | December 31, 2024 | December 31, 2023 | ||||||
| Unconsolidated VIE assets | $ | $ | ||||||
| Unconsolidated VIE liabilities | $ | ( | ) | $ | ||||
| Due from related party | $ | $ | ||||||
| Stewards, Inc. exposure | $ | $ | ||||||
Note 14 – Stockholders Equity
Common Stock
On May 31, 2023,
pursuant to Certificate of Designation for the Series C Preferred Stock, Mr. Vincent Napolitano converted
On July 1, 2023,
the Company issued shares of common stock to a consultant for services valued at $
On July 7, 2023, the Company issued shares of common stock at a price of per share to a Stewards Investment Capital Limited for serving on the advisory board for a 3 year term from June 2023 to May 2026. The outstanding stock subscription receivable pertains to remaining service period from Jan 2025 to May 2026 and there are no significant conditions or contingencies associated with the services.
On July 14, 2023,
the Company issued shares of common stock to another consultant for services valued at $
| F-24 |
On July 7, 2023, the Company issued another shares of common stock to Favo Holdings, LLC in accordance with the FAVO Group Acquisition. On the same date, the Company also issued a further shares to LIRO Holdings LCC in in connection with the promissory note extension.
On December 5,
2023, the Company issued shares of common stock to a third party for services valued at $
In 2023,
before the FAVO Group acquisition in May 2023 (Note 4) by Stewards, Inc., Favo Group LLC and Fore Funding LLC distributed their
profits $
On February 28, 2024, the Company issued shares of common stock to ROBINPAWS LLC as part of the purchase consideration for the business acquisition.
On February 28,2024,
the Company issued shares of common stock to a consultant for services valued at $
On July 24, 2024,
the Company issued shares of commons stock to a consultant for services valued at $
On July 24, 2024,
the Company issued shares of common stock to LIRO Holdings for the extension of their existing notes valued at $
As of December 31, 2024 the Company has shares of common stock authorized and shares of common stock issued and outstanding. The remaining authorized shares of common stock are available for purposes of satisfying the conversion of preferred stock and the exercise and future grant of common stock options, warrants and restricted shares.
Securities Purchase agreement
On September 9, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain purchasers (the “Purchasers”) for the purchase and sale of Company’s securities. In an initial closing, the Company issued of the Common Units,
The
sale of the Units to the Purchasers closed on December 12, 2024. The aggregate gross proceeds to the Company from the December
2024 offering were approximately $
In a second closing, the Company issued of the Common Units. Pursuant to the Securities Purchase Agreement, the
The Company issued an additional 5% in common stock and 5% in warrants to all participants of the offering for the first and second closing, in lieu of the effectiveness deadline extension to December 31, 2025. As a result, the Company issued 487,500 shares of common stock and warrants to purchase 487,500 shares of common stock to the investors.
Common Stock Warrants
On September 9,
2024, the Company entered into a securities purchase agreement with certain purchasers and issued
| F-25 |
As of December 31, 2024 and 2023, the following common stock warrants were outstanding:
| Issuance date | Expiration date | Balance sheet classification | Exercise price per share | December 31, 2024 | December 31, 2023 | ||||||||||
| Stockholders’ equity | $ | ||||||||||||||
The fair value
of common stock warrants issued at exercise price of $
| Dividend Yield | |||
| Expected Volatility | |||
| Risk- free interest rate | |||
| Expected term |
The aggregate fair
value of the Common Stock Warrants of $
Preferred Stock
Series C Preferred Stock
On December 6,
2018, the Company created 25,000,000 shares of Series C Preferred Stock out of the 25,000,000 shares that were already authorized. On
that same date, the Company issued shares of the Series C preferred stock to Custodian Ventures, LLC, for a promissory note
valued at $
The following is a description of the material rights of our Series C Preferred Stock.
Each share of Series
C Preferred Stock shall have a par value of per share.
| F-26 |
In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of the Series C Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the price per share actually paid to the Corporation upon the initial issuance of the Series C Preferred Stock (each, the “the Original Issue Price”) for each share of Series C Preferred Stock then held by them, plus declared but unpaid dividends. Unless the Corporation can establish a different Original Issue Price in connection with a particular sale of Series C Preferred Stock, the original issue price shall be $0.0001 per share for the Series C Preferred Stock. If, upon the occurrence of any liquidation, dissolution or winding up of the Corporation, the assets and funds thus distributed among the holders of the Series C Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the entire assets and funds of the corporation legally available for distribution shall be distributed ratably among the holders of the each series of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.
The Series C Preferred Stock shares are nonredeemable other than upon the mutual agreement of the Company and the holder of shares to be redeemed, and even in such case only to the extent permitted by this Certificate of Designation, the Corporation’s Articles of Incorporation and applicable law.
Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Issue Price of the Series C Preferred Stock by the Series C Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion.
Each share of Series C Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Series C Conversion Price in effect for such share immediately upon the earlier of (i) except as provided below in Section 4(c), the Corporation’s sale of its Common Stock in a public offering pursuant to a registration statement under the Securities Act of 1933, as amended; (ii) a liquidation, dissolution or winding up of the Corporation as defined in section 2(c) above but subject to any liquidation preference required by section 2(a) above; or (iii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series C Preferred Stock.
On May 31, 2023,
pursuant to Certificate of Designation for the Series C Preferred Stock, Mr. Vincent Napolitano converted
On June 7, 2023, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase the authorized shares of Preferred Stock of the Company (the “Amendment”). The Amendment increased the authorized shares of Preferred Stock the Company may issue from shares to shares of Preferred Stock, par value per share. The Amendment did not increase the Company’s authorized shares of Common Stock, which remains at shares, par value per share. The Amendment was approved by the board of directors by unanimous written consent resolution dated May 31, 2023 signed by all the members of the board of directors. The Amendment was also approved by certain shareholders of the Company holding a majority of the total issued and outstanding voting shares of the Company by written consent resolution dated May 31, 2023.
On November 22, 2023, the Company elected to decrease its authorized shares of Series C preferred shares from shares down to shares.
As of December 31, 2024 and 2023, 18,750,000 shares of Series C preferred stock remained outstanding, respectively.
| F-27 |
Series A Preferred Stock
On May 31, 2023,
pursuant to Article III of our Articles of Incorporation, our Board of Directors voted to designate a class of preferred stock entitled
Series A Preferred Stock, consisting of up to shares, par value .
On November 27, 2023, the Company elected to increase its authorized shares of Series A preferred shares from shares to shares.
From June 30, 2023 to December 5, 2023, the Company issued another shares of Series A Preferred stock to Forfront Capital, LLC in accordance with the FAVO Group Acquisition and additional investments.
In the year ended December 31, 2024, the Company issued another shares of Series A Preferred Stock to Forefront Capital LLC for additional investment.
As of December 31, 2024 and 2023, and shares of Series A preferred stock with par value of $0.0001 remained outstanding, respectively.
Note 15. Segment Information
We operate and manage our business as a single segment for the purposes of assessing performance and making operating decisions. Our chief executive officer, who is our chief operating decision maker (“CODM”) , reviews the Company’s financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources. Our CODM evaluates company performance based on net loss, as included in the consolidated statements of operations and comprehensive loss, ensuring resource allocation decisions support company goals. The measure of segment assets is total assets, as included in the consolidated balance sheets. Refer to the consolidated financial statements for other financial information regarding our single reportable segment.
The following table presents certain financial data for the Company’s reportable segment, including significant segment expenses regularly provided to the chief operating decision maker to assess performance of the Company.
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ||||
| Professional fees | ( | ) | ( | ) | ||||
| Other segment expenses | ( | ) | ( | ) | ||||
| Net loss before income taxes | $ | ( | ) | $ | ( | ) | ||
Other segment expenses consist of interest expenses, loss on write down of investment and gain on sale of property, equipment and exchange loss. These are disclosed in the consolidated statements of operations and comprehensive loss.
Note 16– Subsequent Events
Subsequent events have been evaluated through April 15, 2025, which is the date these Consolidated Financial Statements were available for issuance. Except for the events noted below, we are not aware of any subsequent events that would require recognition or disclosure in the Consolidated Financial Statements.
On February 12, 2025, the Company’s Board approved the following in line with the letter of engagement signed with D Boral Capital LLC regarding the Company’s underwritten offering. To offer and sell (i) $15,000,000 in shares of common stock or more depending on the outcome once underwritten, (ii) an overallotment of 15% of the offering in shares of common stock at the option of Boral Securities (the “Option Shares”), and (iii) the Corporation is authorized to file a resale prospectus for the selling shareholders of the Corporation that participated in the bridge financing and signed registration rights agreements.
On February 28, 2025 the Company issued Robinpaws LLC 2,000,000 shares of common stock in line with the business purchase agreement for Simplified Companies acquisition.
| F-28 |
STEWARDS, INC. (FORMERLY FAVO CAPITAL, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash, cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Advance receivables (net of
allowance for credit losses of $ | ||||||||
| Prepaid expense | ||||||||
| Other current assets | ||||||||
| Due from related parties | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use asset | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Syndicate payable | ||||||||
| Due to related parties - current | ||||||||
| Deferred consideration - current | ||||||||
| Other current liabilities | ||||||||
| Operating lease liabilities - current | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Due to related parties | ||||||||
| Other non-current liabilities | ||||||||
| Deferred consideration | ||||||||
| Long-term debt | ||||||||
| Notes payable, net | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| MEZZANINE EQUITY | ||||||||
| Redeemable noncontrolling interest | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Series A preferred stock, par value per share; and shares authorized; and shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Series B preferred stock, par value per share; shares authorized; and shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Series C preferred stock, par value per share; shares authorized; and shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Common stock, par value per share; shares authorized; and shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Paid-in capital | ||||||||
| Stock subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Non controlling interest | ||||||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-29 |
STEWARDS, INC. (FORMERLY FAVO CAPITAL, INC.)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Revenues: | ||||||||||||||||
| Income, financing and brokerage | $ | $ | $ | $ | ||||||||||||
| Income from rental property | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenue, financing and brokerage | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Provision for credit losses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on write down of investment | ( | ) | ( | ) | ||||||||||||
| Other losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense): | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income attributable to noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| Net income attributable to redeemable noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to Stewards, Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Amounts attributable to Stewards, Inc.: | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deemed dividend from conversion of preferred stock | ( | ) | ( | ) | ||||||||||||
| Dividend
on preferred stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss applicable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average common shares outstanding - basic and diluted | ||||||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Unrealized gain (loss) on foreign currency translation | ( | ) | ( | ) | ||||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-30 |
STEWARDS, INC. (FORMERLY FAVO CAPITAL, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Mezzanine Equity | Stockholders' Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Noncontrolling Interest | Number of Shares | Par Value | Number of Shares | Par Value | Number of Shares | Par Value | Number of Shares | Par Value | Paid-In Capital | Stock Subscription Receivable | Accumulated Deficit | Accumulated Other Comprehensive Income | Non Controlling Interest | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for Simplified Companies acquisition | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock subscription receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock cash dividend | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series C preferred stock to common stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series A preferred stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for stock subscription receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock and warrants related to registration rights payment arrangement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock cash dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A to Series B preferred stock | ( | ) | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series A preferred stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock subscription receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Block 40 acquisition and acquired noncontrolling interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of redeemable preferred stock to noncontrolling interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued dividend on noncontrolling interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from private offering, net of issuance costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock and warrants related to registration rights payment arrangement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend on noncontrolling interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock cash dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss (income) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Par Value | Number of Shares | Par Value | Number of Shares | Par Value | Number of Shares | Par Value | Paid-In Capital | Stock Subscription Receivable | Accumulated Deficit | Other Comprehensive Income (Loss) | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||
| Balances as at December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Common stock issued for Simplified Companies acquisition | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred equity consideration on Simplified Companies acquisition | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for stock subscription receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock cash dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at March 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||
| Common stock issued for promissory note extension | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for stock subscription receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock issuances | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock cash dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||
| Common stock issued for promissory note extension | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for stock subscription receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock cash dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances as at September 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-31 |
STEWARDS, INC. (FORMERLY FAVO CAPITAL, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Loss on sale of investments | ||||||||
| Amortization of debt issuance costs | ||||||||
| Interest expense on deferred consideration | ||||||||
| Operating lease right-of-use asset amortization | ||||||||
| Provision for credit losses | ||||||||
| Issuance of common stock and warrants related to registration rights payment arrangement | ||||||||
| Issuance of common stock for services | ||||||||
| Amortization of stock subscription receivable | ||||||||
| Accrued dividend on redeemable noncontrolling interest | ||||||||
| Changes in assets and liabilities: | ||||||||
| Advance receivables, net | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Syndicate payable | ( | ) | ( | ) | ||||
| Due from related parties | ( | ) | ( | ) | ||||
| Other non-current assets | ( | ) | ||||||
| Other non-current liabilities | ( | ) | ||||||
| Due to a related party | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Cash paid for acquisition of a business | ( | ) | ||||||
| Payment of deferred consideration | ( | ) | ( | ) | ||||
| Cash assumed from the acquisition | ||||||||
| Cash advanced under promissory note to Block 40 | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from notes payable | $ | $ | ||||||
| Repayment of notes payable | ( | ) | ||||||
| Payments made against promissory notes payable, related party | ( | ) | ( | ) | ||||
| Proceeds from the issuance of Series A preferred stock | ||||||||
| Repayment of long-term debt | ( | ) | ||||||
| Proceeds from the issuance of common stock | ||||||||
| Proceeds from issuance of redeemable preferred stock to noncontrolling interest | ||||||||
| Series A Preferred Stock cash dividend | ( | ) | ( | ) | ||||
| Payments made against notes payable, related party | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Effect of Exchange Rate Changes on Cash | ( | ) | ||||||
| Cash, Cash Equivalents and Restricted Cash, Beginning | ||||||||
| Cash, Cash Equivalents and Restricted Cash, Ending | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW | ||||||||
| INFORMATION | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Acquisition of real estate property in exchange of common stocks, excluding cash assumed | $ | $ | ||||||
| Effective settlement of promissory note to Block 40 at acquisition | $ | $ | ||||||
| Deemed dividend from conversion of Series A to Series B preferred stock | $ | $ | ||||||
| Issuance of deferred equity consideration | $ | $ | ||||||
| Common stock issued at acquisition | $ | $ | ||||||
| Deferred equity consideration at acquisition | $ | $ | ||||||
| Other deferred consideration at acquisition | $ | $ | ||||||
| Issuance of common stock for promissory note extension | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-32 |
STEWARDS, INC. (FORMERLY FAVO CAPITAL, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Organization
Stewards,
Inc. (“the Company”) was incorporated as Beeston Enterprises Ltd. on
Note 2 - Going Concern
The
accompanying condensed consolidated financial statements have been prepared assuming the continuation of the Company as a going concern.
Although the Company has a positive working capital of $
| F-33 |
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements as of September 30, 2025, and for the three and nine months ended September 30, 2025 and 2024, have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position, results of operations, and cash flows for the interim periods presented have been reflected herein.
Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the FASB.
Unaudited Condensed Consolidated Financial Statements
The condensed consolidated balance sheet as of September 30, 2025 and the condensed consolidated statements of operations and comprehensive loss, mezzanine equity and stockholders’ equity (deficit) for the nine months ended September 30, 2025 and 2024, and three months ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of September 30, 2025 and its results of operations for the nine months ended September 30, 2025 and 2024 and three months ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024. The financial data and the other financial information disclosed in the notes to the condensed consolidated financial statements related to the nine months period are also unaudited. The results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2024 included herein was derived from the audited consolidated financial statements as of that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2024 and 2023.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Restricted cash balances represent funds held in escrow to comply with the requirements of a certain loan agreement. These amounts primarily relate to reserves for tenant deposits, property taxes, insurance, and interest, and are not available for general operating purposes until the related obligations are settled.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheet as of September 30, 2025 that sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows.
| September 30, 2025 | December 31, 2024 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | $ | ||||||
| F-34 |
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Estimates and assumptions reflected in the condensed consolidated financial statements include, but are not limited to, revenue recognition, the useful lives and carrying value of long-lived assets, the provision for credit losses, share-based compensation, and income taxes. Actual results could differ from those estimates.
Prior-Period Presentation
Certain prior-period amounts in the condensed consolidated balance sheets, condensed consolidated statement of operations and comprehensive loss, and condensed consolidated statement of cash flows have been reclassified to be consistent with the current-period presentation. There are no significant reclassifications.
Rental Real Estate
The Company records rental real estate and improvements at cost, including acquisition and closing costs. The acquisition of rental property is typically accounted for as an asset acquisition. The Company allocates the purchase price and acquisition costs to land, buildings and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. The intangible assets and liabilities represent the value of in-place leases at the date of acquisition. The rental real estate is presented as Fixed Assets, Net and the in-place leases is presented as part of Intangible Assets, Net in the condensed consolidated balance sheets.
The estimated fair values of the tangible assets of an acquired property are determined by valuing the property as if it were vacant. Management determines the as-if-vacant fair value of a property using independent appraisers, generally utilizing the cost approach, the income approach and the comparable sales approach and reconciling any differences to determine the most appropriate measure of fair value for an acquisition. The most significant assumptions when using the income approach include the discount rate as well as the future exit capitalization rates, occupancy levels, and rental rates. The comparable sales approach considers the property compared to recent sales transactions of similar properties, adjusting the sales prices of those properties to arrive at an estimated fair value of the property being valued. The cost approach considers the amount required to replace the service capacity of an asset (replacement cost.)
The fair value of acquired in-place lease intangibles are determined based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. In-place leases are amortized using the straight-line method over the weighted average years remaining calculated on terms of all of the leases in-place when acquired. Most of the Company’s lease are relatively short term. As such, the Company has determined that its above-market and below-market lease intangibles are not significant.
Fixed Assets, Net
Fixed assets are stated at historical cost less accumulated depreciation and amortization. The historical cost of acquiring a fixed asset includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. Maintenance and repairs are charged to expense as incurred.
When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets. Land is carried at cost and not depreciated. The assets’ residual values, useful lives, and methods of depreciation are reviewed at each financial year-end, and adjusted prospectively if appropriate. Assets are tested for impairment whenever there is an indication that the carrying amount may not be recoverable.
| F-35 |
The estimated useful lives of depreciable assets are as follows:
| Building | ||
| Site improvements | ||
| Computers and equipment | ||
| Office furniture and fixtures | ||
| Vehicles | ||
| Leasehold improvements | Shorter of the lease term or the estimated useful life |
Intangible Assets
Identifiable intangible assets include trade names, developed technology, customer relationships, and in-place leases resulting from acquisitions. Acquired intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated economic lives on a straight-line basis. Acquired intangible assets are presented net of accumulated amortization on the condensed consolidated balance sheets. We review the carrying amounts of intangible assets for impairment at the asset group level whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. We measure the recoverability of the asset group by comparing its carrying amount to the future undiscounted cash flows we expect the asset group to generate. If we consider the asset group to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset group exceeds its fair value. In addition, we periodically evaluate the estimated remaining useful lives of long-lived intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation or amortization.
The Company amortizes intangible assets subject to amortization on the basis of their expected periods of benefit. The Company does not have indefinite-lived intangible assets other than goodwill.
Useful life of the intangible assets are as follows:
| Trade name | ||
| Developed technology | ||
| Customer relationships | ||
| In-place leases |
Acquisitions
The Company evaluates acquisitions pursuant to Accounting Standards Codification (“ASC”) 805, “Business Combinations,” to determine whether the acquisition should be classified as either an asset acquisition or a business combination. Acquisitions for which substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets are accounted for as an asset acquisition. For asset acquisitions, we allocate the purchase price of these properties on a relative fair value basis and capitalize direct acquisition related costs as part of the purchase price. If the acquisition meets the definition of a business combination, the Company records the fair value of the assets acquired and liabilities assumed and will evaluate the existence of goodwill or a bargain purchase gain. Acquisition costs are expensed for business combinations.
Concentration of Credit Risk
Cash and cash equivalents consist of financial instruments that potentially subject the Company to a concentration of credit risk in the event of a default by the related financial institution holding the cash or securities, to the extent of the value recorded in the condensed consolidated balance sheets. The Company maintains its cash accounts in financial institutions with Federal depository insurance coverage (“FDIC”) of $250,000. The Company has not experienced losses on these accounts, and management believes that the Company is not exposed to significant risks on such accounts.
| F-36 |
Fair Value of Financial Instruments
ASC 825, Disclosures About Fair Value of Financial Instruments, requires the disclosure of fair value information about financial instruments. ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2025 and December 31, 2024.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has access to at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (market-corroborated inputs).
Level 3 - Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, advance receivables, accounts payable and accrued liabilities, deferred consideration, notes payable, and due to and from related parties. Fair values were assumed to approximate carrying values for these financial instruments due to their short-term maturities.
Foreign Currency Translation and Transactions
The functional currency of our wholly owned subsidiaries is the applicable local currency. The translation of foreign currencies into U.S. dollars is performed for assets and liabilities using current foreign currency exchange rates in effect at the balance sheet date, and for revenues and expense accounts using average foreign currency exchange rates during the period. Capital accounts are translated at historical foreign currency exchange rates. Translation gains and losses are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). Adjustments that arise from foreign currency exchange rate changes on transactions denominated in a currency other than the functional currency are included in other loss on the condensed consolidated statements of operations and comprehensive loss.
Redeemable Noncontrolling Interests and Noncontrolling Interests
On July 11, 2025, the Company acquired a controlling interest in Block 40, LLC. The interests held by third-party holders of Block 40’s Class B Preferred Units are reflected as noncontrolling interests. Classification of these interests depends on the presence of redemption features that are not solely within the Company’s control. Class B Preferred Units that are redeemable for cash upon USCIS denial of the Class B Member’s Form I-526 petition are presented outside of permanent equity as redeemable noncontrolling interests, under mezzanine equity, in accordance with ASC 480-10-S99-3A. Class B Preferred Units that do not contain redemption features that are outside the issuer’s control are classified within permanent equity as noncontrolling interests in accordance with ASC 810-10.
For interests classified as redeemable, the Company evaluates each reporting period whether the instruments are currently redeemable or whether redemption has become probable. If the instruments are currently redeemable, or become probable of redemption, the carrying amount is adjusted to the redemption amount as of the reporting date, with the corresponding offset recorded within accumulated deficit. As of September 30, 2025, management concluded that the relevant redemption conditions had not been met and that redemption was not probable.
| F-37 |
Income From Rental Property
Income from rental property includes rental, storage, parking and other rental property related income charged to leases. The Company leases a mixed-use residential and commercial property to tenants primarily under non-cancelable operating leases that generally contain provisions for minimum base rents plus reimbursement for certain operating expenses. Total minimum annual lease payments are recognized in rental income on a straight-line basis over the term of the related lease, regardless of when payments are contractually due, when collectability is probable. Rental revenue recognition commences when the tenant takes possession of or controls the physical use of the leased space. Lease termination fees, which are included in rental income, are recognized when the related leases are canceled and we have no continuing obligation to provide services to such former tenants.
Our lease agreements with tenants generally contain provisions that require tenants to reimburse us for certain property expenses. Estimated reimbursements from tenants for these property expenses, which include real estate taxes, insurance, common area maintenance and other recoverable operating expenses, are recognized as revenues in the period that the expenses are incurred. Subsequent to year-end, we perform final reconciliations on a lease-by-lease basis and bill or credit each tenant for any cumulative annual adjustments. As the timing and pattern of revenue recognition is the same and as the lease component would be classified as an operating lease if it were accounted for separately, rents and tenant reimbursements are treated as a combined lease component and presented as a single line item “Income From Rental Property” in the Company’s condensed consolidated statements of operations and comprehensive loss.
The Company record revenues and expenses on a gross basis for lessor costs (which include real estate taxes) when these costs are reimbursed to us by our tenants. Conversely, we record revenues and expenses on a net basis for lessor costs when they are paid by our tenants directly to the taxing authorities on our behalf.
Lessor Accounting
We evaluate new leases originated or leases assumed as part of an acquisition transaction under ASC Topic 842: Leases to determine lease classification. Generally, all of our leases have historically been classified as operating leases. A lease is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, there is a purchase option that the tenant is reasonably certain to exercise, the lease term, including extension options that the tenant is reasonably certain to exercise, is for more than a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), if the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or if the asset is so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor, if applicable. As of September 30, 2025 and December 31, 2024, we did not have any leases that were classified as sales-type or financing leases under sale-leaseback rules.
Segment Reporting
The Company evaluated segment reporting in accordance with ASC 280, Segment Reporting, and concluded that the Company is comprised of two operating segments. This conclusion is based on the discrete operating results regularly reviewed by the chief operating decision maker (“CODM”), the President of the Company, to assess the performance of the business and to make resource allocations. These two operating segments also represent our two reportable segments: (i) Financing Solutions, and (ii) Real Estate Operations. Substantially all the Company’s revenues are derived from within the United States, no geographical segments are presented. See Note 16, “Segment Information”, for further information.
| F-38 |
Recently Adopted Accounting Pronouncements
There were no new accounting pronouncements adopted during the nine months ended September 30, 2025.
Accounting Pronouncement Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures. The amendments require enhanced disclosures in connection with an entity's effective tax rate reconciliation, income taxes paid disaggregated by jurisdiction, and clarification on uncertain tax positions and related statement impacts. The amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this amendment on its consolidated financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This amendment is expected to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This information is not generally presented in the financial statements today. The amendments in this update do not change or remove current expense disclosure requirements.
This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact of the new standard.
In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"). ASU 2025-05 provides the option to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. ASU 2025-05 is effective for the Company for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years. The Company does not expect adoption of ASU 2025-05 to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). ASU 2025-06 clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of ASU 2025-06 on its consolidated financial statements.
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing and the business interest expense limitation, among other tax changes. Many of the tax provisions of the OBBBA are designed to accelerate tax deductions, which could lead to lower cash tax payments. The new legislation has multiple effective dates, with certain provisions effective in 2025 and others in the future. While the Company continues to assess the impact of the tax provisions of the OBBBA on its consolidated financial statements, the Company currently believes that the tax provisions of the legislation are not expected to have a material impact on the Company’s statement of operations and comprehensive loss.
| F-39 |
Note 4 - Business Combinations
Block 40 Entities Acquisition
On
July 11, 2025, the Company entered into and closed on three separate membership interest purchase agreements (“MIPAs”), two
of which were for the purchase of all of the outstanding membership interests in Block 40 Investments Holdings, LLC and Block 40 Managers,
LLC (the “Block 40 Entities”) from the member owners of the Block 40 Entities and the last for the purchase of all of the
outstanding membership interests that Hollywood Circle Capital, LLC held in Block 40, LLC (the “Block 40 Acquisition”). The
Block 40 Entities and Hollywood Circle Capital, LLC own the membership interests of Block 40, except for the Class B Preferred Equity
Units. Block 40 owns 1818 Park, a modern, mixed-use development that features residential, office, and retail components. The Company
completed the Block 40 acquisition by issuing shares, resulting in consideration of $
The
acquisition was accounted for as an asset acquisition as substantially of the fair value of gross assets acquired was concentrated in
a single identifiable asset (1818 Park). As part of the acquisition, the Company also assumed indebtedness (the “Mortgage Loan”)
of $
| Total consideration | $ | |||
| Identifiable assets acquired and liabilities assumed: | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivables | ||||
| Other current assets | ||||
| Building | ||||
| Land | ||||
| Site improvements | ||||
| In-place leases (residential) | ||||
| In-place leases (commercial) | ||||
| Mortgage loan | ( | ) | ||
| Promissory note | ( | ) | ||
| Accounts payable and accrued liabilities | ( | ) | ||
| Total net assets acquired | $ |
The promissory note represents the cash advanced by the Company to Block 40 in May 2025. This amount was eliminated in consolidation and therefore is not presented in the condensed consolidated balance sheet as of September 30, 2025.
| F-40 |
Simplified Funding Acquisition
On
January 2, 2024, the Company acquired a
The Simplified Companies are engaged in the business of using proprietary software and call centers in the Dominican Republic and Florida to offer secured and unsecured financial products and services to clients with funders across the United States. The business generates revenue from the commissions generated from the funders.
The primary reason for the business combination is to grow direct funding business and improve overall margins by leveraging the synergies between the Company and the Simplified Companies.
In accordance with ASC 805, the acquisition was accounted for as a business combination under the acquisition method. The purchase consideration was allocated to the working capital and tangible and intangible assets acquired based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill, as follows:
| Goodwill | $ | |||
| Tangible assets | ||||
| Intangible assets | ||||
| Net assets acquired | $ |
The fair value of the intangible assets was determined by applying the income approach, direct cost method and multi-period excess earnings method. The fair value measurements are based on significant unobservable inputs, including management estimates and assumptions, and thus represent Level 3 measurements.
There were no transaction costs associated with the acquisition.
The goodwill is primarily attributed to the assembled workforce and synergies after the acquisition. No material measurement-period adjustments were recognized after the acquisition date.
The
Company obtained control of the Simplified Companies upon the transfer of cash consideration to the selling shareholders. The total consideration
transferred in the acquisition was $
| Cash, including working capital adjustment | $ | |||
| Equity | ||||
| Deferred consideration | ||||
| Total purchase consideration | $ |
The
equity consideration represents shares of the Company’s common stock, of which
| F-41 |
Note 5 – Allowance for Credit Losses
The change in the allowance for expected credit losses on advance receivables during the nine months ended September 30, 2025 is summarized as follows:
| Balance as of January 1, 2025 | $ | |||
| Provision for credit losses | ||||
| Charge-offs | ( | ) | ||
| Recoveries | ||||
| Balance as of September 30, 2025 | $ |
Note 6 - Fixed Assets, Net
At September 30, 2025 and December 31, 2024, fixed assets consisted of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Land | $ | $ | ||||||
| Building | ||||||||
| Site improvements | ||||||||
| Computers | ||||||||
| Furniture and fixtures | ||||||||
| Office equipment | ||||||||
| Leasehold improvements | ||||||||
| Fixed assets, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
Depreciation
expense for the nine months ended September 30, 2025 and 2024 was $
Note 7 - Intangible Assets, Net and Goodwill
The carrying values of amortizable intangible assets are summarized as follows:
| September 30, 2025 | ||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
| Trade name | $ | $ | $ | |||||||||
| Developed technology | ||||||||||||
| Customer relationships | ||||||||||||
| In-place leases | ||||||||||||
| $ | $ | $ | ||||||||||
| F-42 |
| December 31, 2024 | ||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
| Trade name | $ | $ | $ | |||||||||
| Developed technology | ||||||||||||
| Customer relationships | ||||||||||||
| $ | $ | $ | ||||||||||
Amortization
expense related to intangible assets for the nine months ended September 30, 2025 and 2024 was $
The
Company’s goodwill balance was $
The Company acquired in-place leases as part of the Block 40 Acquisition. These in-place leases are amortized using the straight-line method over the estimated remaining economic life. The recoverability of the carrying value of these intangible assets is evaluated when events or changes in circumstances indicate that the asset’s value may be impaired. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value, which is determined based on discounted future cash flows, through a change to the consolidated statement of operations and comprehensive loss.
Note 8 - Leases
Lessor- Operating leases
The Company’s Block 40 property is leased to tenants primarily under non-cancelable operating leases. Future minimum lease payments to be received under non-cancelable operating leases as of September 30, 2025 are as follows:
| Reminder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total future minimum lease payments | $ |
The future minimum lease payments in the table above excludes tenant reimbursements of operating expenses, and the amortization of above/below-market lease intangibles.
Note 9 - Related-Party Transactions
From time to time, the Company enters into transactions with its affiliates that are considered to be related-party transactions. As of September 30, 2025 and December 31, 2024, the balances with such affiliates were included in the condensed consolidated balance sheets as due from related parties.
For
the nine months ended September 30, 2025 and 2024 the Company paid expenses of $
| F-43 |
The
Company has a management agreement with FAVO Holdings LLC under which the FAVO Holdings LLC is paid $
The
Company issued $
The
Company issued shares of common stock to Stewards Investment Capital Limited in July 2023 to serve on the advisory board for
a period of 3 years term as per the advisory board agreement. The Company recorded the issuance of shares as stock subscription receivable
at the time of issuance, as services are not yet rendered. The Company amortizes the stock subscription receivable over the 3 years term
on a straight-line basis. For the nine months ended September 30, 2025 and 2024, the Company amortized an amount of $
On
July 17, 2025, the Company entered into a revolving promissory note agreement with VK Nap Family, LLC for $
On
September 17, 2025, the Company entered into a Loan Agreement with Stewards International Funds PCC(on behalf of the Stewards Private
Credit Fund) (“Stewards”) to issue up to $50 million of unsecured, unsubordinated notes (each $100,000 face value), fundable
between September 1, 2025 and August 31, 2026 (the “Closing date”). Notes bear fixed interest at
On October 30, 2025, the Company entered into Amendment No.1 to the Loan Agreement to increase the aggregate principal amount of the notes from $50 million to $100 million and made related adjustments to the number of notes and warrants.
Variable Interest Entity
Effective
August 1, 2025, the Company transferred its
| F-44 |
Note 10 – Notes Payable, Net
From time to time, the Company enters into secured promissory note agreements with various parties. The proceeds from these arrangements are used primarily to support the Company’s short-term trade finance operations and general working capital needs. The secured promissory notes are collateralized by advance receivables of the Company. The terms and conditions of each note may vary depending on the nature of the transaction and the counterparties involved.
As
of September 30, 2025 and December 31, 2024, the total outstanding note payable was $
Future minimum principal payments as at September 30, 2025 are as follows:
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| $ |
Note 11 – Long-term Debt
On
July 11, 2025, the Company assumed a Mortgage Loan as part of the Block 40 Acquisition. The Mortgage Loan accrues interest based upon
the Secured Overnight Financing Rate (“SOFR”) plus a spread of
Future minimum principal payments at September 30, 2025 for the next five years are as follows:
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| $ |
Note 12 - Commitments and Contingencies
Legal Proceedings
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies, and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals.
| F-45 |
Operating Leases
On
November 25, 2020, the Company entered into an office lease agreement with AM Property Holding II Corp, the agent for 1025 II, LLC. The
Company moved into Suite 311 on the third floor of the building located at 1025 Old Country Road, Westbury, New York. On September 15,
2021, the Company ended the aforementioned lease agreement and entered into a new lease agreement with the existing landlord and into
Suite 421 on the fourth floor of the same building. The lease accrues interest based on a weighted-average interest rate of
On January 2, 2024, the Company acquired two leases as part of the Simplified Companies acquisition. Each lease was recognized and measured at fair value based on the remaining lease term at the date of acquisition by applying ASC 842, Leases. The office spaces for these leases are located in Lauderhill, Florida and Bonao, Dominican Republic. In 2024, the Company added a second call center location in Le Vega, Dominican Republic.
The
Company recorded operating lease expenses of $
As of September 30, 2025, the following table reconciles the undiscounted cash flows for the following years and total of the remaining years to the operating lease obligation recorded in the condensed consolidated balance sheets, the future minimum annual lease payments under the operating leases were as follows:
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| Total future lease payments | $ | ||||
| Less: Interest | ( | ) | |||
| Present value of lease liabilities | $ |
The
weighted-average remaining lease term and discount rate related to the Company’s operating lease liabilities as of September 30,
2025 are
Note 13 - Net Loss Per Share Attributable to Common Stockholders
Basic net loss per share attributable to common stockholders is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing net loss by the weighted-average number of common shares outstanding plus potential common shares. Convertible preferred stock and common warrants are considered potential common shares and are included in the computation of diluted net loss per share using the if-converted method and treasury stock method, respectively, when their effect is dilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Because the Company was in a net loss position for the nine months ended and three months ended September 30, 2025, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been anti-dilutive.
The financial instruments that could potentially dilute basic net loss per share in the future and that have been excluded from the computation of diluted net loss per share (because including them would have had an anti-dilutive effect) were as follows:
| September 30, 2025 | September 30, 2024 | |||||||
| Convertible preferred stock | ||||||||
| Convertible mezzanine equity | ||||||||
| Common stock warrants | ||||||||
| Total number of shares | ||||||||
| F-46 |
Note 14 - Income Taxes
The
Company recorded an income tax provision of $
Note 15- Redeemable Noncontrolling Interest and Noncontrolling Interest
Block 40 Class B Preferred Equity Units
Pursuant to the Company’s acquisition of the membership interests in the Block 40 Entities, the Company assumed the obligations associated with the EB-5 investors in Block 40, LLC. From September 15, 2015 and through May 31, 2024, Block 40, LLC issued Class B Preferred Equity Units through six offerings which raised $44.9 million, with an additional $5.0 million still owed to the Company as of September 30, 2025, by issuing 88 Class B Preferred Equity Units to investors. The investments were structured in such a way as to qualify the investor for the EB-5 Employment Creation Visa (“EB-5 Visa”). The EB-5 Visa provides a method for foreign nationals who invest capital and thereby support the creation of jobs in the United States to obtain lawful permanent resident status in the United States, which is commonly referred to as a “Green Card.” The funding from the issuance of the Class B Preferred Equity Units was then used by Block 40 for the construction and development of the Block 40 property located in Hollywood, Broward County, Florida.
As
of September 30, 2025, there are 61 investors in Class B Preferred Equity whose Form I-526 petitions have been approved. Their total
equity holdings of $
After
the Block 40 asset acquisition, the Company received an amount of $
Note 16 - Stockholders’ Equity (Deficit)
Common Stock
As of September 30, 2025, the Company has shares of common stock authorized and shares of common stock issued and outstanding. The remaining authorized shares of common stock are available for purposes of satisfying the conversion of preferred stock and the exercise and future grant of common stock options, warrants and restricted shares.
The
Company completed the acquisition of the Simplified Companies on
| F-47 |
On
May 9, 2025, pursuant to Certificate of Designation for the Series C Preferred Stock, Mr. Vincent Napolitano converted
On September 9, 2024, the Company entered into a securities purchase agreement (the “ Securities Purchase Agreement”) with certain purchasers (the “Purchasers) for the purchase and sale of Company’s securities. In an initial closing, the Company issued (i) of the Common Units, .
In a second closing dated August 14, 2025, the Company issued (i) of the .
On
June 4, 2025, the Company issued common stock to various stockholders for the first closing as registration delay payments based
on the Registration Rights Agreement entered into as part of the offering that occurred in December 2024. On August 14, 2025, the Company
issued common stock to various stockholders for the second closing as registration delay payments based on the Registration Rights
Agreement entered into as part of the offering that occurred in December 2024. The stock issuance on June 4, 2025 and August 14, 2025
were valued at $
Common Stock Warrants
As
part of the Purchase Agreement dated September 9, 2024, the Company issued
As
part of the Purchase Agreement dated September 9, 2024, the Company further issued
| F-48 |
On
June 4, 2025, the Company issued
The fair value of the common stock warrants was determined using Black-Scholes model, based on the following assumptions at the issuance date:
| Dividend Yield | |||
| Expected Volatility | |||
| Risk- free interest rate | - | ||
| Expected term |
Series A Preferred Stock
On
May 8, 2025, the Company issued to Stewards International Funds PCC shares of Series A preferred shares for a total investment
of $
On
July 14, 2025, the Company signed subscription agreements with Forfront Capital LLC to purchase shares of Series A preferred
shares for a total investment of $
On
August 4, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase shares of Series
A preferred shares for a total investment of $
On
September 2, 2025, the Company signed subscription agreements with Forfront Capital LLC to purchase shares of Series A preferred
shares for a total investment of $
Also on August 25, 2025, the Company entered into a Conversion Agreement with Forfront, LLC, an affiliate of the Company, for it to convert shares of Series A Preferred Stock into shares of the newly created Series B Preferred Stock.
As of September 30, 2025 and December 31, 2024, the Company is authorized to issue shares of Series A preferred stock, and shares of which were issued and outstanding respectively.
The following is a description of the material rights of the Company’s Series A preferred stock:
Voting
-
Dividend
-
| F-49 |
Liquidation
Preference - Holders of Series A preferred stock are entitled to a liquidation preference of $
Conversion
Rights -
In connection with any conversion, each holder of Series A Preferred Stock is subject to a beneficial ownership limitation of 9.99% of our outstanding common stock.
Redemption
-
Series C Preferred Stock
On May 9, 2025, pursuant to Certificate of Designation for the Series C Preferred Stock, Series C preferred stocks were converted into shares of common stock at par value of Stewards, Inc.
On August 25, 2025, the Company filed a withdrawal to the certificate of designation, as amended, for the Series C preferred stock.
As of September 30, 2025, Series C preferred stocks have been withdrawn. As of December 31, 2024, the Company is authorized to issue shares of Series C preferred stock, all of which remained issued and outstanding.
The following is a description of the material rights of the Company’s Series C preferred stock:
Voting
-
Conversion
-
Each share of Series C preferred stock shall automatically be converted into shares of common stock at the applicable Series C Conversion Price in effect for such share immediately upon the earlier of (i) except as provided below in Section 4(c), the Company’s sale of its common stock in a public offering pursuant to a registration statement under the Securities Act of 1933, as amended; (ii) a liquidation, dissolution or winding up of the Company as defined in Section 2(c) above but subject to any liquidation preference required by Section 2(a) above; or (iii) the date specified by written consent or agreement of the holders of a majority of the then-outstanding shares of Series C preferred stock.
Dividend
-
| F-50 |
Liquidation Preference - In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, subject to the rights of any existing series of preferred stock or to the rights of any series of preferred stock that may, from time to time hereafter, come into existence, the holders of the Series C preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock by reason of their ownership thereof, an amount per share equal to the price per share actually paid to the Company upon the initial issuance of the Series C preferred stock (each, the “the Original Issue Price”) for each share of Series C preferred stock then held by them, plus declared but unpaid dividends. Unless the Company can establish a different Original Issue Price in connection with a particular sale of Series C preferred stock, the Original Issue Price shall be $0.0001 per share for the Series C preferred stock. If, upon the occurrence of any liquidation, dissolution or winding up of the Company, the assets and funds thus distributed among the holders of the Series C preferred stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of any existing series of preferred stock or to the rights of any series of preferred stock that may, from time to time hereafter, come into existence, the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the each series of preferred stock in proportion to the preferential amount each such holder is otherwise entitled to receive.
Series B Preferred Stock
On August 25, 2025, the Board of Directors and shareholders of the Company approved the creation of Series B Preferred Stock. Under the Certificate of Designation, filed on August 25, 2025, each share of Series B Preferred Stock shall have a par value of per share.
Also
on August 25, 2025, the Company entered into a Conversion Agreement with Forfront, LLC, an affiliate of the Company, for it to convert
shares of Series A Preferred Stock into shares of the newly created Series B Preferred Stock. The conversion has
been treated as preferred stock extinguishment where the fair value of Series B preferred stock has been recognized and the carrying
value of Series A preferred stock has been derecognized with the difference recorded in accumulated deficit. The difference of $
Finally, on August 25, 2025, the Company entered into a Voting Agreement with Forfront, LLC, the sole Holder of the Series B Preferred Stock, in which Forfront agreed to vote its shares of Series B Preferred Stock in accordance with the direction of a majority vote of the Company’s three founders, which includes Vincent Napolitano, Shaun Quinn and Glen Steward, with the Company’s President receiving an irrevocable proxy to vote the shares. The term of the irrevocably proxy under the Voting Agreement terminates upon the earlier of (i) a period of fifteen (15) years from August 25, 2025, with the ability to extend; (ii) mutual written agreement of the parties to terminate the Voting Agreement; (iii) when there are no shares of Series B Preferred Stock outstanding; or (iv) the dissolution or liquidation of the Company.
The conversion to Series B Preferred Stock and the Voting Agreement are part of a strategic initiative to streamline our capital structure, enhance governance control during a critical phase involving corporate rebranding, and align leadership with long-term objectives without diluting economic interests of non-affiliate shareholders. The Board determined this related-party transaction to be fair under Nevada law and ratified it by majority voting power.
The following is a description of the material rights of the Company’s Series B preferred stock:
Voting
-
Conversion
-
Dividend
-
Liquidation Preference - The Series B Preferred Stock shall not have any value in the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary.
| F-51 |
Note 17 - Segment Information
Operating segments are defined as components of an entity for which separate discrete financial information is available and is regularly reviewed by the CODM. The CODM evaluates, oversees, and manages the Company’s operations and financial performance through two reportable segment that are organized primarily by type of business activity. Specifically, the segments include: Financing Solutions and Real Estate Operations.
The Company is operating as a private credit company focused on providing alternative financing solutions to small and medium-sized businesses across the United States. In July 2025, the Company expanded its U.S. operations into real estate through the acquisition of Block 40, LLC (“Block 40”), these operations are in the United States.
While the Company operates across multiple customer types and geographic locations, the CODM regularly receives and reviews discrete financial information disaggregated by these segments, which are used as the basis for evaluating performance and allocating resources.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies reported in the Company’s 2024 audited consolidated financial statements and additional accounting policies disclosed under summary of significant accounting policies in the unaudited condensed consolidated financial statements as of September 30, 2025.
The CODM does not review expense items at a level lower than those presented in the table below. Information about reportable segments, and reconciliation of such information to the Consolidated Financial Statements as of and for the three and nine months ended September 30, 2025 and 2024 follows:
| Three Months Ended September 30, 2025 | ||||||||||||||||
| Financing Solutions | Real Estate Operations | Consolidating
Eliminations | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Significant segment-level expenses: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Provision for bad debt expense | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Other segment expenses(1) | ( | ) | ||||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||
| Financing Solutions | Real Estate Operations | Consolidating
Eliminations | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Significant segment-level expenses: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Provision for credit losses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Other segment expenses(1) | ( | ) | ||||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Total Assets | $ | $ | $ | ( | ) | $ | ||||||||||
| F-52 |
| Three Months Ended September 30, 2024 | ||||||||||||||||
| Financing Solutions | Real Estate Operations | Consolidating
Eliminations | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Significant segment-level expenses: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Provision for bad debt expense | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Other segment expenses(1) | ||||||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Nine Months Ended September 30, 2024 | ||||||||||||||||
| Financing Solutions | Real Estate Operations | Consolidating
Eliminations | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Significant segment-level expenses: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Provision for credit losses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Other segment expenses(1) | ||||||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Total Assets | ( | ) | ||||||||||||||
(1)Other segment expenses consist of foreign exchange losses and other losses. These are disclosed in the condensed consolidated statements of operations and comprehensive loss.
Note 18 - Subsequent Events
Subsequent events have been evaluated through November 14, 2025, which is the date these condensed consolidated financial statements were available for issuance. The Company is not aware of any subsequent events that would require recognition or disclosure in the condensed consolidated financial statements except for the event discussed below.
Reverse Stock Split
On August 7, 2025, the Board of Directors approved a reverse stock split of the Company’s issued and outstanding common stock at a ratio of not less than 1-for-2 and not greater than 1-for-100, subject to receipt of a market effective date from FINRA. The Company has yet to file the documentation for this reverse stock split with the State of Nevada but has initiated the process with FINRA. The reverse stock split will not be effective until FINRA provides a market effective date. On November 6, 2025, the Board of Directors and the majority shareholders of Stewards, Inc. approved the abandonment of the previously authorized reverse stock split, originally approved on August 7, 2025, which had provided for a potential split ratio between 1-for-2 and 1-for-100. The Board determined that proceeding with the reverse split was no longer in the best interest of the Company or its shareholders.
| F-53 |
Share Exchange Agreement on Block 40 LLC’s Class B Preferred Units
The Company has entered into a Share Exchange Agreement dated September 30, 2025 with certain noncontrolling shareholders of Block 40 (the “Investors”) to exchange the Class B preferred units in Block 40 LLC for the Company’s common stock.
Note Payable
On September 23, 2025, the Company entered into a revolving promissory note agreement with an investor for $1,000,000, promissory note bears interest at 15% per annum. This amount has been received on October 3, 2025.
Second Amendment to Business Commission Agreement
On October 30, 2025, the Company executed a Second Amendment to the Business Commission Agreement with Robinpaws LLC. The Second Amendment replaces and terminates all prior compensation terms under the original agreement and the first amendment and establishes a fixed compensation package consisting of:
| • | A lump-sum cash payment of $460,000, payable in three monthly installments beginning January 1, 2026 through March 31,2026 ($200,000, $200,000, and $60,000); and | ||
| • | The issuance of 2,125,000 shares of the Company’s common stock to Robinpaws LLC within thirty (30) days of the amendment’s effective date. | ||
Securities Purchase Agreement and Pre-Funded Warrants
On November 3, 2025, the Company, doing business as Stewards Inc., entered into a Securities Purchase Agreement (the “Agreement”) with Dolomite Foundation, a Cayman Islands foundation acting for itself and on behalf of its syndicate of investors (the “Dolomite Syndicate”). Pursuant to the Agreement, the Company agreed to issue pre-funded warrants to purchase up to 2,450,980 shares of its common stock. The economic value per warrant share is $4.08, based on the 30-trading-day volume-weighted average price (VWAP) of the Company’s common stock for the period from September 19, 2025 to October 30, 2025. The actual exercise price of the prefunded warrants is .0001 per share, with substantially all consideration delivered upfront via $DOLO tokens as in-kind payment. The transaction provides for an aggregate investment amount of $10,000,000, payable in $DOLO tokens as in-kind consideration. The warrants are structured in ten equal tranches of $1,000,000 each, becoming exercisable upon achievement of specified $DOLO 30-day VWAP milestones. Tokens are held in a jointly controlled multi-signature wallet on the Arbitrum One blockchain, requiring a three-of-four authorization threshold (two company signatories and two investor signatories) for any release. Shares issued upon exercise of the warrants will be subject to a 12-month lock-up period, and all unissued tranches are subject to cancellation in the event that $DOLO’s 30-day VWAP falls below $0.01. The structure is designed to align the Company’s digital-asset exposure with Dolomite’s platform development milestones while minimizing immediate dilution and supporting the Company’s longer-term liquidity and capital-efficiency objectives. Proceeds of the transaction are intended to support continued growth of the Private Credit and Real Estate segments and the controlled implementation of the Company’s digital-asset strategy.
| F-54 |
20,621,250 Shares of Common Stock
_____________________
PROSPECTUS
_____________________
November 17, 2025
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
| 131 |
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
| Securities and Exchange Commission Registration Fee | $ | 13,570.68 | ||
| Transfer Agent Fees* | $ | 2,000 | ||
| Accounting fees and expenses* | $ | 10,000 | ||
| Legal fees and expenses* | $ | 10,000 | ||
| Blue Sky fees and expenses* | $ | — | ||
| Total* | $ | 35,570.68 |
* Estimated
Item 14. Indemnification of Directors and Officers.
The Nevada Revised Statutes limits or eliminates the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. Our bylaws include provisions that require the company to indemnify our directors or officers against monetary damages for actions taken as a director or officer of our Company. We are also expressly authorized to carry directors’ and officers’ insurance to protect our directors, officers, employees and agents for certain liabilities. Our articles of incorporation do not contain any limiting language regarding director immunity from liability.
The limitation of liability and indemnification provisions under the Nevada Revised Statutes and our bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s fiduciary duties. Moreover, the provisions do not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the common shares being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
| 132 |
Item 15. Recent Sales of Unregistered Securities.
For the past three years, the Company has engaged in the following equity events:
On March 8, 2021, the Company authorized the issuance of 800,000 restricted shares of Common Stock to Richard Dubi and Liro Holdings, controlled by Rocco Trotta for services valued at $336,000 or $0.42 per share.
On June 30, 2021, the Company authorized the issuance of 750,000 restricted shares of Common Stock to Richard Dubi and Liro Holdings, controlled by Rocco Trotta for services valued at $315,000 or $0.42 per share.
On August 5, 2021, the holder of the August 8, 2020, convertible note in the amount of $110,000, elected to convert their entire note into 218,916 shares of common stock.
On October 15, 2021, the Company issued 50,000 shares of common stock to a consultant (Jospeh Manopella) for services valued at $31,500.
On October 25, 2021, the Company issued 100,000 shares of common stock to a consultant (James Fellus) for services valued at $63,000.
On May 6, 2022, the Company issued 500,000 shares of common stock to consultants (Christopher Snead) for services valued at $250,000.
On July 13, 2022, the Company issued 100,000 shares of common stock to a consultant (Tania Fellus) for services valued at $50,000.
On that same date, the Company issued another 100,000 shares of common stock to a consultant (Bryan Dumas) for services valued at $50,000.
On September 13, 2022, the Company issued 250,000 shares of common stock to a consultant (Phyllis Ann Francis) for services valued at $87,500.
On May 31, 2023, pursuant to Certificate of Designation for the Series C Preferred Stock, Mr. Vincent Napolitano converted 6,250,000 Series C Preferred shares into 25,000,000 common shares at par value $0.0001 of Stewards, Inc.
On May 31, 2023, the holder of the Series C Preferred Stock mutually agreed with Shaun Quin, current President and Glen Steward, current Chief Strategy Officer and as per the Master Acquisition Agreement, that upon the filing of the S-1 Registration and the public sale of the company’s common shares, that the Series C Preferred Shares will be redeemed and converted to common stock and split pro-rata amongst these Directors. The pro-rata split was agreed as such. Vincent Napolitano will hold 55.25% ownership; Shaun Quin will hold 29.75% ownership, and Glen Steward will hold 15% ownership of the converted Series C Preferred Stock to common shares of the company, which can be held in their personal names or transferred to an entity of their choosing.
Therefore, increasing the shareholding of Vincent Napolitano by 10,359,375 shares of common stock, Shaun Quin, through his nominated entity S & T Quin Family Limited Partnership by 5,578,125 shares of common stock and Glen Steward, through his nominated entity Stewards Investment Capital by 2,812,500 shares of common stock.
On June 7, 2023, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase the authorized shares of Preferred Stock of the Company. The amendment increased the authorized shares of Preferred Stock the Company may issue from 25,000,000 shares to 50,000,000 shares of Preferred Stock, par value $0.0001 per share. The Amendment did not increase the Company’s authorized shares of Common Stock, which remained at 500,000,000 shares, par value $0.0001 per share.
| 133 |
On July 1, 2023, the Company issued 1,600,000 shares of common stock to a consultant (Liro Holdings/Rocco Trotta) for services valued at $400,000.
On July 7, 2023, the Company issued 15,000,000 shares of common stock to a consultant (Stewards Investment Capital (Glen Steward)) for services valued at $3,750,000.
On July 7, 2023, the Company issued 400,000 shares of common stock to another consultant (Gennaro Trotta) for services valued at $100,000.
On July 7, 2023, the Company issued another 20,000,000 shares of common stock to Favo Holdings, LLC (Vincent Napolitano and Shaun Quin) in accordance with the FAVO Group Acquisition. On the same date, the Company also issued a further 2,400,000 shares to LIRO Holdings LCC in lieu of the promissory note extension.
On November 27, 2023, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to increase the authorized shares of Preferred Stock of the Company. The amendment increased the authorized shares of Preferred Stock the Company may issue from 50,000,000 shares to 100,000,000 shares of Preferred Stock, par value $0.0001 per share. The Amendment did not increase the Company’s authorized shares of Common Stock, which remained at 500,000,000 shares, par value $0.0001 per share.
On November 29, 2023, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Certificate of Designation for the Series C Preferred Stock to decrease its authorized shares of Series C preferred shares from 25,000,000 shares down to 18,750,000 shares.
On November 29, 2023, the Company we filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Certificate of Designation for the Series A Preferred Stock to increase its authorized shares of Series A preferred shares from 20,000,000 shares to 81,250,000 shares.
On December 5, 2023, the Company issued 200,000 shares of common stock to a third party (Earnest P. Hart) for services valued at $50,000.
From June 30, 2023, to December 5, 2023, the Company issued 28,420,000 shares of Series A Preferred stock to Forfront Capital, LLC in accordance with the FAVO Group acquisition.
On January 1, 2024, the Company issued 1,000,000 shares of common stock to a third party (Robin Paws) for the Simplified acquisition valued at $250,000.
On February 28, 2024, the Company issued 125,000 shares of common stock to a third party (Sebastian Darmodihardjo) for services valued at $31,250.
On April 19, 2024, the Company issued 600,000 shares of common stock to an investor (Liro Holdings (Rocco Trotta)) for shares valued at $150,000.
On June 18, 2024 the Company issued 600,000 shares of Series A Preferred stock to Forfront Capital, LLC as per the signed subscription agreement.
As of June 30, 2024, and December 31, 2023, 89,279,734 and 87,554,734 shares of common stock with par value of $0.0001 remains outstanding, respectively.
On July 24, 2024, the Company issued 200,000 shares to a third party (Earnest P. Hart)for services valued at $50,000.
| 134 |
On October 18, 2024 the Company issued 5,000,000 shares of Series A Preferred stock to Forfront Capital, LLC as per the signed subscription agreement.
On October 21, 2024 the Company issued 3,000,000 shares of Series A Preferred stock to Forfront Capital, LLC as per the signed subscription agreement.
On September 9, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain purchasers (the “Purchasers”) for the purchase and sale of Company’s securities. In an initial closing, the Company issued 8,000,000 of the Common Units, each such Common Unit consisted of one share of the Company’s common stock with a par value $0.0001 per share (“Common Stock”), common warrants (“Warrants”) to purchase one Common Stock, for every one share of common stock purchased and a pre-funded warrant (“Pre-funded Warrant”) to purchase 3/200th share of Common Stock purchased. Pursuant to the Securities Purchase Agreement, the Common Units were sold at a purchase price of $0.25 per share, with five-year Warrants having exercise price of $0.40 per share and the Pre-funded Warrants having exercise price of $0.0001 per share.
The sale of the Units to the Purchasers closed on December 12, 2025. The aggregate gross proceeds to the Company from the December 2024 offering were approximately $2,000,000 before deducting placement agent fees and expenses and other transaction costs of $207,600.
In a second closing, the Company issued 1,750,000 of the Common Units. Pursuant to the Securities Purchase Agreement, the Common Units were sold at a purchase price of $0.25 per share, with five-year Warrants having exercise price of $0.40 per share and the Pre-funded Warrants having exercise price of $0.0001 per share. The sale of the Common Units to the Purchasers closed on July 30, 2025. The aggregate gross proceeds to the Company from the July 2025 offering were approximately $437,500, before deducting placement agent fees and expenses and other transaction costs of $51,350.
The Company issued an additional 5% in common stock and 5% in warrants to all participants of the offering for the first and second closing, in lieu of the effectiveness deadline extension to December 31, 2025. As a result, the Company issued 487,500 shares of common stock and warrants to purchase 487,500 shares of common stock to the investors.
On May 8, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase 32,000,000 shares of Series A preferred shares for a total investment of $8,000,000.
On May 9, 2025, pursuant to Certificate of Designation for the Series C Preferred Stock, Mr. Vincent Napolitano converted 18,750,000 Series C Preferred shares into 18,750,000 shares of common stock at par value $0.0001 of Stewards, Inc. On May 9, 2025, all outstanding shares of Series C preferred stock were converted on a one for one basis into common stock and distributed as follows; 1) VK Nap Family LLC, 10,359,375 shares 2) S&T Family Limited Partnership, 5,578,125 shares, and 3) Stewards Investment Capital, 2,812,500 shares.
On July 11, 2025, the Company entered into membership interest purchase agreement with Block 40 Investment Holding LLC, Block 40 Managers, LLC and Hollywood Circle Capital LLC (together “Block 40 entities”) for the acquisition of 100% of the equity interest of Block 40 entities by issuing common stock of 69,636,906 shares at $0.76 per share.
On July 14, 2025, the Company signed subscription agreements with Forfront Capital LLC to purchase 1,000,000 shares of Series A preferred shares for a total investment of $250,000.
On August 4, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase 4,000,000 shares of Series A preferred shares for a total investment of $1,000,000.
| 135 |
The securities described above were issued pursuant to the Stewards, Inc. 2024 Incentive Plan or in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required. The recipients of the securities in the transactions described above acquired the securities for their own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof. Appropriate legends were affixed to the instruments representing such securities issued in such transactions.
On August 25, 2025, our board and shareholders approved the creation of Series B Preferred Stock and we later filed a certificate of designation with the State of Nevada. The certificate of designation provides that 10,000,000 authorized shares of preferred stock are designated as Series B Preferred Stock. The Series B Preferred Stock shall have no value in the event of the liquidation of our company or any rights to distributions declared by our company. After five years, the Series B Preferred Stock is convertible into shares of Common Stock on a 1 for 1 basis. Each share of Series B Preferred Stock is entitled to fifty (50) votes on any matter brought before the voting shareholders of our company.
Also on August 25, 2025, we entered into a Conversion Agreement with Forfront, LLC, an affiliate of our company, for it to convert 10,000,000 shares of Series A Preferred Stock into 10,000,000 shares of our newly created Series B Preferred Stock.
On September 2, 2025, the Company signed subscription agreements with Forfront Capital LLC to purchase 200,000 shares of Series A preferred shares for a total investment of $50,000
On October 14, 2025, the Company issued an automatic convertible promissory note in the principal amount of $400,000 to Rob Harpur. The note bears simple interest at 1.0% per annum and matures on October 14, 2026. At the holder’s option, all or any portion of the outstanding principal and accrued interest may be converted into shares of the Company’s common stock at a fixed conversion price of $0.76 per share. The note may also be prepaid by the Company prior to maturity upon written notice. The transaction provides a flexible financing mechanism that can convert into equity upon maturity or qualified financing, and the proceeds are intended to support general corporate and lending operations.
On October 30, 2025, FAVO Capital, Inc. (the “Company”) executed a Second Amendment to the Business Commission Agreement with Robinpaws LLC, a Florida limited liability company owned by Robin Nadeau-Camus. The amendment replaced all prior commission and renewal payment terms with a fixed compensation consisting of $460,000 in cash, payable over three months beginning January 1, 2026, and the issuance of 2,125,000 restricted shares of common stock at $0.76 per share. All other terms of the agreement remain unchanged. The amendment was executed in the ordinary course of business to settle prior compensation obligations and did not create any new debt or contingent liability.
On October 30, 2025, the Company’s Board of Directors approved and executed a Debt Exchange Agreement with 315-352 Associated, LLC and SHB Equities, LLC, pursuant to which outstanding promissory notes originally issued under Note Purchase Agreements dated April 1, 2021 and December 15, 2022, were exchanged for shares of the Company’s common stock. The aggregate principal and accrued interest of approximately $104,000 was converted into common shares at a fixed price of $0.76 per share. The transaction was approved by unanimous written consent of the Board and eliminates the related-party debt obligations from the Company’s balance sheet while strengthening shareholders’ equity.
On November 3, 2025, the Company, doing business as Stewards Inc., entered into a Securities Purchase Agreement (the “Agreement”) with Dolomite Foundation, a Cayman Islands foundation acting for itself and on behalf of its syndicate of investors (the “Dolomite Syndicate”). Pursuant to the Agreement, the Company agreed to issue pre-funded warrants to purchase up to 2,450,980 shares of its common stock. The economic value per warrant share is $4.08, based on the 30-trading-day volume-weighted average price (VWAP) of the Company’s common stock for the period from September 19, 2025 to October 30, 2025. The actual exercise price of the prefunded warrants is .0001 per share, with substantially all consideration delivered upfront via $DOLO tokens as in-kind payment. The transaction provides for an aggregate investment amount of $10,000,000, payable in $DOLO tokens as in-kind consideration. The warrants are structured in ten equal tranches of $1,000,000 each, becoming exercisable upon achievement of specified $DOLO 30-day VWAP milestones. Tokens will be held in a jointly controlled multi-signature wallet on the Arbitrum One blockchain, requiring a three-of-four authorization threshold (two company signatories and two investor signatories) for any release. Shares issued upon exercise of the warrants will be subject to a 12-month lock-up period, and all unissued tranches are subject to cancellation in the event that $DOLO’s 30-day VWAP falls below $0.01. The structure is designed to align the Company’s digital-asset exposure with Dolomite’s platform development milestones while minimizing immediate dilution and supporting the Company’s longer-term liquidity and capital-efficiency objectives. Proceeds of the transaction are intended to support continued growth of the Private Credit and Real Estate segments and the controlled implementation of the Company’s digital-asset strategy.
On November 14, 2025, the Company signed subscription agreements with Stewards International Funds PCC to purchase 1,280,000 shares of Series A preferred shares for a total investment of $320,000.
| 136 |
Item 16. Exhibits and Financial Statement Schedules.
EXHIBIT INDEX
| Exhibit # | Exhibit Description | Incorporated by Reference Form | Date Filed | Exhibit # | To Be Filed By Amendment | File or Furnished Herewith | ||||||
| 2.1 | Membership Interest Purchase Agreement, dated May 30, 2023, with FAVO Funding CA LLC | X | ||||||||||
| 2.2 | Membership Interest Purchase Agreement, dated May 30, 2023, with FAVO Funding LLC | X | ||||||||||
| 2.3 | Membership Interest Purchase Agreement, dated May 30, 2023, with FAVO Group Human Resources LLC | X | ||||||||||
| 2.4 | Membership Interest Purchase Agreement, dated May 30, 2023, with FAVO Group LLC | X | ||||||||||
| 2.5 | Membership Interest Purchase Agreement, dated May 30, 2023, with FORE Funding CA LLC | X | ||||||||||
| 2.6 | Membership Interest Purchase Agreement, dated May 30, 2023, with FORE Funding LLC | X | ||||||||||
| 2.7 | Membership Interest Purchase Agreement, dated May 30, 2023, with Honeycomb Sub Fund LLC | X | ||||||||||
| 2.8 | Asset Purchase Agreement, dated December 2023 | X | ||||||||||
| 2.9 | Membership Interest Purchase Agreement, dated July 11, 2025, with Block 40 Managers, LLC | X | ||||||||||
| 2.10 | Membership Interest Purchase Agreement, dated July 11, 2025, with Block 40 Investments Holdings, LLC | X | ||||||||||
| 2.11 | Membership Interest Purchase Agreement, dated July 11, 2025, with Hollywood Circle Capital LLC | X | ||||||||||
| 3.1 | Amended and Restated Articles of Incorporation of Favo Capital, Inc. | X | ||||||||||
| 3.2 | Amended and Restated Bylaws of Favo Capital, Inc. | X | ||||||||||
| 3.3 | Certificate of Designation for Series A Preferred Stock | X | ||||||||||
| 3.4 | Certificate of Designation for Series C Preferred Stock | X | ||||||||||
| 3.5 | Amended Certificate of Designation for Series C Preferred Stock | X | ||||||||||
| 3.6 | Second Amended Certificate of Designation for Series C Preferred Stock | X | ||||||||||
| 3.7 | Amended Certificate of Designation for Series A Preferred Stock | X | ||||||||||
| 3.8 | Certificate of Withdrawal for Series C Preferred Stock | X | ||||||||||
| 3.9 | Certificate of Designation for Series B Preferred Stock | X | ||||||||||
| 3.10 | Certificate of Amendment, dated November 12, 2025 | X | ||||||||||
| 4.1 | Form of Warrant | X | ||||||||||
| 4.2 | Form of Prefunded Warrant | X | ||||||||||
| 4.3 | Promissory Note, dated June 1, 2023, in favor of Vincent Napolitano and Shaun Quin | X | ||||||||||
| 4.4 | Form of Secured Promissory Note | X | ||||||||||
| 4.5 | Convertible Promissory Note, dated October 14, 2025 | X | ||||||||||
| 4.6 | Warrant Agreement, dated September 30, 2026 | X | ||||||||||
| 4.7 | Form of Prefunded Warrant | X | ||||||||||
| 5.1 | Legal Opinion of the Doney Law Firm | X | ||||||||||
| 10.1 | Master Acquisition Financing Agreement, dated May 31, 2023 | X | ||||||||||
| 10.2 | Form of Securities Purchase Agreement | X | ||||||||||
| 10.3 | Form of Registration Rights Agreement | X | ||||||||||
| 10.4 | Employment Agreement by and between Favo Capital, Inc. and Vincent Napolitano dated August 20, 2024 | X | ||||||||||
| 10.5 | Employment Agreement by and between Favo Capital, Inc. and Shaun Quin dated August 21, 2024 | X | ||||||||||
| 10.6 | Employment Agreement by and between Favo Capital, Inc. and Glen Steward dated August 21, 2024 | X | ||||||||||
| 10.7 | Employment Agreement by and between Favo Capital, Inc. and Vaughan Korte dated August 21, 2024 | X | ||||||||||
| 10.8 | Favo Capital 2024 Equity Incentive Plan | X | ||||||||||
| 10.9 | Consulting Agreement dated June 1, 2023, between Favo Capital, Inc. and Favo Holdings, LLC | X | ||||||||||
| 10.10 | Business Commission Agreement, dated January 1, 2024 | X | ||||||||||
| 10.11 | Amendment to Business Commission Agreement, dated January 24, 2025 | X | ||||||||||
| 10.12 | Amended Employment Agreement with Vaughan Korte, dated March 1, 2025 | X | ||||||||||
| 10.13 | Conversion Agreement, dated August 25, 2025 | X | ||||||||||
| 10.14 | Voting Agreement, dated August 25, 2025 | X | ||||||||||
| 10.15 | Favo Capital, Inc. and Katy Murless dated September 1, 2025 | X | ||||||||||
| 10.16 | Loan Agreement, dated September 1, 2025 | X | ||||||||||
| 10.17 | Amendment to Loan Agreement, dated October 30, 2025 | X | ||||||||||
| 10.18 | Securities Purchase Agreement, dated November 3, 2025 | X | ||||||||||
| 10.19 | Second Amendment to Business Commission Agreement | X | ||||||||||
| 10.20 | Form of Note Purchase Agreement for Secured Promissory Notes | X | ||||||||||
| 10.21 | Employment Agreement by and between Favo Capital, Inc. and Scott McGowan, dated November 1, 2025 | X | ||||||||||
| 14.1 | Code of Ethics | X | ||||||||||
| 21.1 | Subsidiaries of the Registrant | X | ||||||||||
| 23.1 | Consent of Turner, Stone & Company, L.L.P., independent registered public accounting firm | X | ||||||||||
| 23.2 | Consent of the Doney Law Firm (included in Exhibit 5.1) | X | ||||||||||
| 107 | Filing Fees | X |
| 137 |
Item 17. Undertakings.
The undersigned hereby undertakes:
(1) To file, during any period in which offers, or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” or “Calculation of Filing Fee” table or exhibit in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (l)(i), (l)(ii) and (l)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(l)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
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(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser;
(6) For purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(7) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(8) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in Lauderhill, Florida, on November 17, 2025.
| Stewards, Inc. | |
| By: | /s/ Vincent Napolitano |
Vincent Napolitano Chief Executive Officer, Principal Executive Officer and Director |
| By: | /s/ Katuischia Murless |
| Katuischia Murless | |
| Title: | Chief Financial Officer, Principal Executive Officer, Principal Accounting Officer and Treasurer |
POWER OF ATTORNEY
Each officer and director of Stewards, Inc. whose signature appears below constitutes and appoints the company’s President, Shaun Quin, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for him or her and in his or her name, place and stead, in any and all capacities, to execute any or all amendments, including any post-effective amendments and supplements to this Registration Statement, and any additional Registration Statement filed pursuant to Rule 462, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
* * * *
Pursuant to the requirements of the Securities Act of 1933, this Form S-1 has been signed by the following persons in the capacities indicated on the dates specified.
| By: | /s/ Vincent Napolitano |
Vincent Napolitano Chief Executive Officer and Director | |
| November 17, 2025 |
| By: | /s/ Katuischia Murless |
| Katuischia Murless | |
| Title: | Chief Financial Officer, Principal Executive Officer, Principal Accounting Officer and Treasurer |
| Date: | November 17, 2025 |
| By: | /s/ Glen Steward |
| Glen Steward | |
| Title: | Chief Strategy Officer and Director |
| Date: | November 17, 2025 |
| By: | /s/ Shaun Quin |
| Shaun Quin | |
| Title: | President and Director |
| Date: | November 17, 2025 |
| By: | /s/ Wael Barsoum |
| Wael Barsoum | |
| Title: | Director |
| Date: | November 17, 2025 |
| By: | /s/ Zachary Graeve |
| Zachary Graeve | |
| Title: | Director |
| Date: | November 17, 2025 |
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FAQ
What is Stewards, Inc. (ticker FAVO/SWRD) registering in this S-1?
The S-1 covers the resale of up to 20,621,250 shares of Stewards, Inc. common stock by selling stockholders, including shares already issued and shares underlying warrants and pre-funded warrants from a prior private placement.
Does Stewards, Inc. receive any cash from the 20,621,250-share resale offering?
Stewards, Inc. will not receive proceeds from selling stockholders’ resales. The company may receive cash only if the related warrants and pre-funded warrants are exercised for cash.
What are the main businesses of Stewards, Inc. (FAVO)?
Stewards is a diversified financial services company with two platforms: a Private Credit Division focused on revenue-based funding and merchant cash advances to SMBs, and a Real Estate Division that acquires and manages income-producing residential, mixed-use, and commercial properties.
How significant is the 1818 Park acquisition for Stewards, Inc.?
On July 11, 2025, Stewards acquired 1818 Park, a 281,493-square-foot mixed-use property in Hollywood, Florida, in a $190 million stock-for-liabilities transaction, adding a sizable income-generating real estate asset and assuming a senior mortgage originally sized at $84.0 million.
What is the Dolomite Foundation pre-funded warrant deal mentioned in the Stewards S-1?
On November 3, 2025, Stewards agreed to issue pre-funded warrants for up to 2,450,980 shares of common stock to the Dolomite Foundation and its syndicate, for an aggregate $10,000,000 in $DOLO tokens. The warrants carry a nominal exercise price of $0.0001 per share and are structured in ten tranches tied to $DOLO VWAP milestones.
Where is Stewards, Inc. common stock traded and what is the company’s uplisting plan?
Stewards’ common stock currently trades on the OTC Pink Market under the symbol “SWRD.” In connection with this S-1, the company has applied to list on the Nasdaq Capital Market, but the offering will proceed even if Nasdaq listing is not approved.
How much private credit funding has Stewards originated to date?
Since 2020, Stewards’ Private Credit Division has originated more than $153 million in funding and supported over 10,000 small and medium-sized businesses across the United States through merchant cash advances and related products.
