Standard Premium Finance Q3 profit rises 45.5%
Nine-month earnings grew alongside a 22.3% rise in the provision for credit losses.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Standard Premium Finance Holdings, Inc. (SPFX) reported third-quarter revenue of $3,583,982, up 11.5% from a year earlier, and net income of $401,695, up 45.5%. Loan originations were $48,020,850, compared with $41,034,533. Costs and expenses increased 5.8% to $3,007,561; the provision for credit losses was $465,366, up 42.6%.
For the first nine months, revenue rose 12.3% to $10,361,948 and net income increased 36.3% to $1,185,412. Originations were $141,480,855, compared with $118,965,469. The nine-month provision for credit losses rose 22.3% to $1,169,780 from $956,539; gross premium-finance receivables were $92,252,728 at quarter-end. At September 30, 2026, the company reported $1,338 in cash, $61,764,846 of line-of-credit principal outstanding, and $3,789,972 of availability. The revolving facility has a $75,000,000 commitment and matures September 25, 2028.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue rose 11.5% to $3,583,982 year over year.
- Moderate pointNine-month net income rose 36.3% to $1,185,412 year over year.
Negative
- None.
Filing Explained
Company-option preferred conversion could dilute common ownership; executive cash awards remain conditional, capped at four hundred sixty thousand dollars.
Form 10-Q is an unaudited quarterly report with interim financial statements and updates on risks and liquidity. At
Cash performance awards for the CEO and CFO are payable on
Key Figures
Key Terms
Rule of 78 financial
Cost of Funds Rate, Net (Non-GAAP) financial
Reserve Ratio financial
accordion feature financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue and net income did SPFX report for the first nine months of 2026?
What interest rate did SPFX earn on new loans in the first nine months of 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period
ended
or
For the transition period from to .
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices and Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
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 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
There were
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flow, our potential future business acquisitions, future economic performance, operating income and management’s plans, strategies, goals and objectives for future operations and growth. These forward-looking statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect,” “should,” “seek,” “project,” “plan,” “would,” “could,” “can,” “may,” and similar terms. Any statement that is not a historical fact is a forward-looking statement. It should be understood that these forward-looking statements are necessarily estimates reflecting the best judgment of senior management, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described in Part I. “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 20, 2026. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements.
Each of the terms “Company” and “Standard Premium” as used herein refers collectively to Standard Premium Finance Holdings, Inc. and its wholly owned subsidiaries, unless otherwise stated.
STANDARD PREMIUM FINANCE HOLDINGS, INC.
TABLE OF CONTENTS
Part I – FINANCIAL INFORMATION
| ||
Item 1. |
Financial Statements | 1 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 29 |
Item 4. |
Controls and Procedures | 29 |
PART II – OTHER INFORMATION
| ||
Item 1. |
Legal Proceedings | 30 |
Item 1A. |
Risk Factors | 30 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 30 |
Item 3. |
Defaults Upon Senior Securities | 30 |
Item 4. |
Mine Safety Disclosures | 30 |
Item 5. |
Other Information | 30 |
Item 6. |
Exhibits | 30 |
| SIGNATURES | 32 | |
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
STANDARD PREMIUM FINANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
SEPTEMBER 30, 2026
Table of Contents
| CONSOLIDATED FINANCIAL STATEMENTS: | ||||
| Consolidated Balance Sheets as of September 30, 2026 (unaudited) and December 31, 2025 | 2 | |||
| Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025 (unaudited) | 3 | |||
| Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025 (unaudited) | 4 | |||
| Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2026 and 2025 (unaudited) | 5 | |||
| Condensed Notes to Consolidated Financial Statements (unaudited) | 6 – 22 | |||
| 1 |
Standard Premium Finance Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 2026 (unaudited) and December 31, 2025
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Premium finance contracts and related receivable, net of allowance for credit losses of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Operating lease assets | ||||||||
| Finance lease assets | ||||||||
| OTHER ASSETS | ||||||||
| Cash surrender value of life insurance | ||||||||
| Deferred tax asset | ||||||||
| TOTAL OTHER ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Cash overdraft | $ | $ | ||||||
| Line of credit, net | ||||||||
| Drafts payable | ||||||||
| Note payable - current portion | ||||||||
| Note payable - stockholders and related parties - current portion | ||||||||
| Operating lease obligation - current portion | ||||||||
| Finance lease obligation - current portion | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Note payable, net of current portion | ||||||||
| Note payable - stockholders and related parties, net of current portion | ||||||||
| Life insurance policy loan | ||||||||
| Operating lease obligation, net of current portion | ||||||||
| TOTAL LONG-TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (see Note 14) | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid in capital | ||||||||
| Retained earnings | ||||||||
| TOTAL STOCKHOLDERS' EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
See accompanying condensed notes to the consolidated unaudited financial statements.
| 2 |
Standard Premium Finance Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2026 and 2025
(unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| REVENUES | ||||||||||||||||
| Finance charges | $ | $ | $ | $ | ||||||||||||
| Late charges | ||||||||||||||||
| Origination fees | ||||||||||||||||
| TOTAL REVENUES | ||||||||||||||||
| OPERATING COSTS AND EXPENSES | ||||||||||||||||
| Interest | ||||||||||||||||
| Salaries and wages | ||||||||||||||||
| Commissions | ||||||||||||||||
| Provision for credit losses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Postage | ||||||||||||||||
| Insurance | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| TOTAL COSTS AND EXPENSES | ||||||||||||||||
| INCOME BEFORE INCOME TAXES | ||||||||||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET INCOME | ||||||||||||||||
| PREFERRED SHARE DIVIDENDS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | $ | $ | $ | ||||||||||||
| Net income per share attributable to common stockholders | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying condensed notes to the consolidated unaudited financial statements.
| 3 |
Standard Premium Finance Holdings, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Ninex Months Ended September 30, 2026 and 2025
(unaudited)
| Series A Preferred Stock | Common Stock | Additional Paid-in | Retained | Total Stockholders' | ||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Dividends paid on preferred stock | — | — | — | — | — | ( | ) | ( | ||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||
| BALANCE AT MARCH 31, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||
| Dividends paid on preferred stock | — | — | — | — | — | ( | ) | ( | ||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||
| BALANCE AT JUNE 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||
| Dividends paid on preferred stock | — | — | — | — | — | ( | ) | ( | ||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Retained | Stockholders' | ||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||
| Retirement of treasury stock | — | — | ( | ) | ( | ) | — | — | ( | |||||||||||||||||
| Retirement of repurchased common stock | — | — | ( | ) | ( | ) | — | ( | ) | ( | ||||||||||||||||
| Dividends paid on preferred stock | — | — | — | — | — | ( | ) | ( | ||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||
| BALANCE AT MARCH 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||
| Retirement of repurchased common stock | — | — | ( | ) | ( | ) | — | ( | ) | ( | ||||||||||||||||
| Treasury stock | — | — | — | — | ( | ) | — | ( | ||||||||||||||||||
| Issuance of common stock | — | — | ( | ) | — | - | ||||||||||||||||||||
| Dividends paid on preferred stock | — | — | — | — | — | ( | ) | ( | ||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||
| BALANCE AT JUNE 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||
| Retirement of treasury stock | — | — | ( | ) | ( | ) | — | — | ( | |||||||||||||||||
| Dividends paid on preferred stock | — | — | — | — | — | ( | ) | ( | ||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||
See accompanying condensed notes to the consolidated unaudited financial statements.
| 4 |
Standard Premium Finance Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Three and Nine Months Ended September 30, 2026 and 2025
(unaudited)
For the Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||
| NET INCOME | $ | $ | ||||||
| ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Depreciation | ||||||||
| Amortization of right to use asset - operating lease | ||||||||
| Amortization of finance lease asset | ||||||||
| Provision for credit losses | ||||||||
| Amortization of loan origination fees | ||||||||
| Stock compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase)/Decrease in prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| (Increase)/Decrease in deferred tax asset, net | ( | ) | ( | ) | ||||
| Increase/(Decrease) in drafts payable | ||||||||
| Increase/(Decrease) in accrued expenses and other current liabilities | ||||||||
| Increase/(Decrease) in operating lease liability | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Disbursements under premium finance contracts receivable, net | ( | ) | ( | ) | ||||
| Payments made on cash surrender value of life insurance | ( | ) | ( | ) | ||||
| Sale of property and equipment | — | |||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Cash overdraft | ( | ) | ||||||
| Proceeds from line of credit | ||||||||
| Proceeds from loan on cash surrender value of life insurance | ||||||||
| Proceeds from notes payable | ||||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Proceeds from notes payable - stockholders and related parties | ||||||||
| Repayments of notes payable - stockholders and related parties | ( | ) | ( | ) | ||||
| Repayment of finance lease obligation | ( | ) | ( | ) | ||||
| Repurchase of common stock | ( | ) | — | |||||
| Repayment of other loans | — | ( | ) | |||||
| Treasury stock | ( | ) | — | |||||
| Dividends paid on Series A Convertible Preferred Stock | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| NET CHANGE IN CASH | ( | ) | ( | ) | ||||
| CASH AT THE BEGINNING OF THE PERIOD | ||||||||
| CASH AT THE END OF THE PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||||||||
| Operating lease assets obtained in exchange for lease liabilities | $ | — | $ | |||||
See accompanying condensed notes to the consolidated unaudited financial statements.
| 5 |
Standard Premium Finance Holdings, Inc. and Subsidiary
Condensed Notes to Consolidated Financial Statements
September 30, 2026
(unaudited)
1. Principles of Consolidation and Description of Business
Standard Premium Finance Holdings, Inc. (“SPFX” or the “Holding”) was incorporated on May 12, 2016, pursuant to the laws of the State of Florida.
Standard Premium Finance Management Corporation (“SPFMC”) was incorporated on April 23, 1991, pursuant to the laws of the State of Florida, to engage principally in the insurance premium financing business. SPFMC is a licensed insurance premium finance company in forty-three states. Standard Premium Finance Leasing, Inc. (“SPFL”) was incorporated on August 20, 2025, pursuant to the laws of the State of Florida, to engage principally in leasing arrangements. As of September 30, 2026, SPFL has not engaged in any material activity.
The accompanying consolidated financial statements include the accounts of SPFX and its wholly-owned subsidiaries SPFMC and SPFL. SPFX and its subsidiaries are collectively referred to as (“the Company”). All intercompany balances and transactions have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements (unaudited), which include the accounts of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2025.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiaries for the fiscal year ended December 31, 2025, have been omitted.
Cash and Cash Equivalents and Cash Overdraft
The Company considers short-term interest-bearing
investments with initial maturities of three months or less to be cash equivalents. The Company had $
The Company experienced a cash overdraft of $
Revenue Recognition
Finance charges on insurance premium installment contracts are initially recorded as unearned interest and are credited to income monthly over the term of the finance agreement. An initial service fee, where permissible, and the first month’s interest, on a pro rata basis, are recognized as income at the inception of a contract. The initial service fee can only be
| 6 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
2. Summary of Significant Accounting Policies (Continued)
charged once to an insured in a twelve-month period. In accordance with industry practice, finance charges are recognized as income using the “Rule of 78s” method of amortizing finance charge income, which does not materially differ from the interest method of amortizing finance charge income on short term receivables. Late charges are recognized as income when charged. Unearned interest is netted against Premium Finance Contracts and Related Receivables on the balance sheets for reporting purposes.
The provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”) provide guidance on the recognition, presentation, and disclosure of revenue in financial statements. Management evaluated ASC 606 and determined that it is not applicable to the Company’s revenue streams. However, the Company follows ASC 835, Interest, and ASC 310, Receivables, to recognize its finance charge, late charge, and origination fee revenue as these revenue streams are exempt from ASC 606.
Premium Finance Contracts and Related Receivable
The Company finances insurance premiums on policies
primarily for commercial enterprises. The Company amortizes these loans over the term of each contract, which varies from three to eleven
monthly payments, and manages these loans on a collective basis based on similar risk characteristics. As of September 30, 2026 and December
31, 2025, the portfolio has an amortized cost basis of $
Allowance for Credit Losses
In developing a measurement of credit loss, institutions are required to segment financial assets into pools that share similar risk characteristics. The Company uses ARCSys, a third-party SaaS platform, to support its allowance for credit losses (ACL) estimation process under ASC 326, “Financial Instruments – Credit Losses”. Management remains responsible for the selection of methodologies, key assumptions, and the resulting ACL. Management, leveraging the third-party ARCSys platform, performs its own analysis each reporting period to assist with the determination process of how financial assets should be segregated by risk. Based on this internal risk analysis performed on the Company’s historical datasets, assets are designated into asset classes based on asset codes and other credit quality indicators to provide structure based on similar risk characteristics or areas of risk concentration. Management, with support from the ARCSys segmentation module, updated its allowance estimation model by including portfolio segmentation and the application of a separate methodology for each portfolio segment. The Company classifies its portfolio into two primary segments: (1) Due from Insured and (2) Due from Insurance Carrier. The segmentation is based on the respective payment and risk characteristics of each portfolio segment. The Company develops a systematic and repeatable methodology to determine its allowance for credit losses at the portfolio segment level.
The Company utilized the ARCSys Vintage PD/LGD model, as defined below, for determining expected future credit losses for the Due from Insured portfolio segment. PD is a measure of the likelihood that a borrower will default on an asset or other financial obligation over the contractual life of the loan. Default refers to the failure by the borrower to make scheduled payments. Defaults are tracked historically by the percentage of assets in default to assets remaining in the pool by vintage cohort based on month after origination. Additionally, Loss Given Default (LGD) is a measure of the expected loss on a loan or asset in the event of default by the borrower. The expectation of future defaults and loss given default are used as
| 7 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
2. Summary of Significant Accounting Policies (Continued)
the basis for the allowance for credit losses on each asset by segment. The asset-level allowances for credit losses are then aggregated by asset segment for reporting purposes within the ARCSys Disclosure modules.
The Company utilized the ARCSys Individual Asset DCF (Discounted Cash Flow) module, as defined below, for determining expected future credit losses for the Due from Insurance Carrier portfolio segment. In the ARCSys DCF model, projected cash flows by asset are adjusted for expected losses, prepayments, and amortization, and are discounted to their present value using the effective interest rate. The effective interest rate used in the DCF model is based on the stated rate that is adjusted for deferred fees and costs, and premiums and discounts. The technique considers future cash flows, adjusted for potential default and prepayment activity, based on the Company's own historical experience stored within the ARCSys data warehouse. The difference between the discounted cash flow and the current amortized cost basis of the asset represents the allowance for credit losses. These asset-level allowances for credit losses are then aggregated for reporting purposes at the segment level. The ARCSys platform captures the unique cash flow profile of each segment over the remaining contractual term, consistent with the "Life of Loan" concept required by ASC 326.
Reasonable and Supportable Forecasting
When estimating credit losses, management considers the need to adjust historical segment loss, default, or prepayment information to reflect the extent to which management expects current conditions and reasonable and supportable forecasts to differ from the conditions that existed for the period over which historical information was evaluated and utilized in the model.
The Company has established a 12-month reasonable and supportable forecast period. Management utilizes the ARCSys Q-Factor and Forecasting module, which allows management to evaluate appropriate macroeconomic variables and environmental factors, and incorporate them into the estimation engine. For the remaining life of the assets beyond the forecast period, management incorporates a transition to historical loss experience (reversion).
Off-Balance Sheet Credit Exposures
In accordance with ASC 326, management has evaluated the portfolio for off-balance sheet credit exposures. Due to the specific nature of the Company’s current financial assets, there are no applicable off-balance sheet exposures (such as unfunded commitments or lines of credit) that are not unconditionally cancellable. Consequently, no separate allowance for off-balance sheet credit losses is required at this time.
Qualitative Adjustments and Environmental Factors
The adjustments to historical loss information may be qualitative in nature and should reflect changes related to relevant data which reflect differences in current asset-specific risk characteristics, such as differences in underwriting standards, portfolio mix, or asset term within a segment at the reporting date.
Management utilizes the ARCSys "Environmental Factor" framework to document and quantify adjustments for:
| · | Nature and volume of the Company’s financial assets. |
| · | The volume, trend, and severity of past-due financial assets, nonaccrual assets, and internal risk rating migrations, work-outs and restructurings. |
| · | Changes to the underlying value or liquidity of collateral on financial assets. |
| · | Management’s lending policies and procedures, including changes in underwriting standards, collections, write-offs and recovery practices. |
| · | The quality of the credit review system. |
| 8 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
2. Summary of Significant Accounting Policies (Continued)
| · | The experience, ability, and depth of lending, investment, and collections management, as well as other relevant staff. |
| · | The effect of other external factors, such as competition and regulatory, legal, and technological environments. |
| · | Actual and expected changes in the general market condition of either the geographical area or industry in which the Company has exposure. |
| · | Actual and expected changes in international, national, regional, and local economic and business conditions and developments that affect collectability of financial assets, including unemployment rates and GDP forecasts. |
| · | Additionally, concentration of credit and external factors such as competition, legal, and regulatory requirements are also assessed to refine the overall estimate of expected credit losses. |
Governance and Finalization
To ensure the integrity of the financial reporting process, the Company maintains strict governance controls over the allowance for credit losses calculation. At the end of each reporting period, once management has reviewed and approved the final calculation, the period is finalized within the ARCSys platform. Following this approval, the period is locked; no further edits or modifications can be made to the methodology, data, or qualitative factors for that specific period, supporting a robust audit trail and consistency for external reporting.
This comprehensive approach, supported by the ARCSys audit trail and governance controls, is intended to help ensure that the allowance for credit losses reflects management's best judgment of future losses based on reasonable and supportable forecasts.
Allowance for Amounts Due from Agents
Management separately forms an estimate for the allowance for credit losses for amounts due from agents. The Company estimates expected credit losses in accordance with ASC 326 using a historical loss rate methodology applied to pooled receivables that share similar risk characteristics. For this analysis, management considers historical loss information, updated for current conditions and reasonable and supportable forecasts that affect the expected collectability of the amortized cost basis pool. Historical loss rates are adjusted through qualitative factors to reflect current economic conditions and forward-looking information over a reasonable and supportable forecast period. Given the short-term nature of agent receivables, historical loss experience, as adjusted for current conditions, is considered a reasonable basis for estimating expected credit losses.
The Company utilizes CreditSafe, a credit quality reporting agency, to monitor agents for forecasts of credit risk. Credit quality information obtained from CreditSafe is considered in management’s qualitative assessment of collectability. As of September 30, 2026 and December 31, 2025, the Company did not expect any material degradation to the credit quality of the agents it currently underwrites or anticipates underwriting in a way that would affect the allowance for credit losses. Since agent balances are constantly fluctuating through the normal course of business, the Company utilizes agent inactivity, defined as a minimum of twelve months without a change in balance, as a key factor when determining the allowance for credit losses. Receivables from inactive agents are considered to present a higher risk of credit loss and are evaluated accordingly within the allowance analysis.
The Company writes off receivables when they are deemed uncollectible based on specific facts and circumstances, including the agent’s financial condition and collection efforts. Recoveries of amounts previously written off are recorded as increases to the allowance for credit losses when received.
| 9 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
2. Summary of Significant Accounting Policies (Continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions used in valuation of deferred tax assets, allowance for credit losses, depreciable lives of property and equipment, and valuation of stock-based compensation.
Concentration of Credit and Financial Instrument Risk
Financial instruments that potentially subject the
Company to concentrations of credit risk are primarily cash and accounts receivable from customers, agents, and insurance companies. The
Company maintains its cash balances at two banks, which are insured by the Federal Deposit Insurance Corporation up to $
| Schedule of reconciliation between uninsured balances and cash per the consolidated balance sheets | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Uninsured balance | $ | $ | ||||||
| Plus: Insured balances | ||||||||
| Plus: Balances at institutions that do not exceed FDIC limit | ||||||||
| Plus: Cash overdraft | ||||||||
| Less: Outstanding checks | ( | ) | ( | ) | ||||
| Cash per Consolidated Balance Sheet | $ | $ | ||||||
The Company controls its credit risk in accounts receivable through credit standards, limits on exposure, by monitoring the financial condition of insurance companies, by adhering to statutory cancellation policies, and by monitoring and pursuing collections from past due accounts. We cancel policies at the earliest permissible date allowed by the statutory cancellation regulations.
Approximately
Cash Surrender Value of Life Insurance
The Company is the owner and beneficiary of a life
insurance policy on its president. The gross cash surrender value relative to the policy in place at September 30, 2026 and December 31,
2025, was $
Amortization of Line of Credit Costs
Amortization of line of credit costs is computed using the straight-line method over the life of the loan.
| 10 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
2. Summary of Significant Accounting Policies (Continued)
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Furniture and equipment
Computer equipment and software
Leasehold improvements
Fair Value of Financial Instruments
The Company’s carrying amounts of financial instruments as defined by FASB ASC 825, “Disclosures about Fair Value of Financial Instruments”, including premium finance contracts and related receivables, prepaid expenses, cash surrender value of life insurance, drafts payable, accrued expenses and other current liabilities, approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of the line of credit and notes payable are based on current rates at which the Company could borrow funds with similar remaining maturities and the carrying value approximates fair value.
Income Taxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Uncertain tax positions are recognized only when the
Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the
merits of the position. The Company has
The Company filed consolidated tax returns for the
years ended December 31, 2025 and 2024, which are subject to examination by federal and state tax jurisdictions. The Company’s tax
returns for the previous three years remain open for audit by the respective tax jurisdictions. No income tax returns are currently under
examination by taxing authorities. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income
tax expense. The Company did
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with FASB ASC Topic No. 718, “Stock Compensation,” which establishes the requirements for expensing equity awards. The Company measures and recognizes as compensation expense the fair value of all share-based payment awards based on estimated grant date fair values. Our stock-based compensation includes issuances made to directors, executives, employees and consultants, which includes employee stock options related to our 2019 Equity Incentive Plan and stock warrants. The determination of fair value involves a number of significant estimates. We use the Black-Scholes option pricing model to estimate the value of employee stock options and stock warrants, which requires a number of assumptions to determine the model inputs. These
| 11 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
2. Summary of Significant Accounting Policies (Continued)
include the expected volatility of our stock and employee exercise behavior which are based expectations of future developments over the term of the option.
Earnings per Common Share
The Company accounts for earnings (loss) per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method.
As of September 30, 2026 and 2025, the Company had potentially dilutive securities outstanding, including stock options, stock warrants, and convertible preferred stock. All outstanding stock options and warrants were fully vested as of the respective dates. The Company’s Series A Convertible Preferred Stock is convertible into common stock at 80% of the average market price over a 30-day period, at the Company’s discretion. These instruments were evaluated for dilutive effect and included in the diluted EPS calculation to the extent they were not antidilutive.
Reconciliation of Weighted-Average Shares Outstanding – Three Months Ended:
| Schedule of outstanding options and warrants on earnings per share | ||||||||
| September 30, 2026 | September 30, 2025 | |||||||
| Basic weighted-average shares outstanding | ||||||||
| Effect of dilutive stock options (treasury stock method) | ||||||||
| Effect of dilutive preferred stock (if-converted method) | ||||||||
| Diluted weighted-average shares outstanding | ||||||||
Reconciliation of Weighted-Average Shares Outstanding – Nine Months Ended:
| September 30, 2026 | September 30, 2025 | |||||||
| Basic weighted-average shares outstanding | ||||||||
| Effect of dilutive stock options (treasury stock method) | ||||||||
| Effect of dilutive preferred stock (if-converted method) | ||||||||
| Diluted weighted-average shares outstanding | ||||||||
The Company determined that all outstanding warrants as of September 30, 2026 and 2025 were antidilutive and therefore excluded them from
the diluted EPS computation. No adjustments to net income were required for the diluted earnings per share calculation for the periods
presented.
| 12 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
Leases
The Company recognizes and measures its leases in accordance with ASC Topic 842, “Leases”. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments calculated using the Company’s incremental borrowing rate.
3. Premium Finance Contracts, Related Receivable and Allowance for Credit Losses
Premium Finance Contracts and Related Receivable represent monthly payments due on insurance premium finance contracts. The Company finances insurance policies over periods from three to eleven months for businesses and consumers who make an initial down payment of, on average, 25 percent of the insurance policy amounts. The entire amount of the contract is recorded including amounts due for finance charges and services charges. These receivables are reported net of unearned interest for financial statements purposes. Upon cancellation of an insurance premium finance contract, the unearned premium on the contract becomes due from the insurance carrier. The Company segregates its Premium Finance Contracts Receivable into two segments for reporting and allowance calculation purposes. The segments are (1) Due from Insured and (2) Due from Insurance Carrier. Amounts due from agents represent balances related to (1) an agent’s unearned commission due to a policy cancellation and (2) down payments collected by the agents on behalf of the insured, which are due to us.
At September 30, 2026 and December 31, 2025, premium finance contract and agents’ receivable consists of the following:
| Schedule of premium finance contract and agents’ receivable | ||||||||
| Description | September 30, 2026 | December 31, 2025 | ||||||
| Contracts due from insured | $ | $ | ||||||
| Contracts due from insurance carrier | ||||||||
| Amounts due from agents | ||||||||
| Less: Unearned interest | ( | ) | ( | ) | ||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The allowance for credit losses at September 30, 2026 and December 31, 2025 are as follows:
| Schedule of allowance for credit losses | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Allowance for contracts due from insured | $ | $ | ||||||
| Allowance for contracts due from insurance carrier | ||||||||
| Allowance for amounts due from agents | ||||||||
| Total allowance for credit losses | $ | $ | ||||||
Activity in the allowance for credit losses for the nine months ended September 30, 2026 and the year ended December 31, 2025 are as follows:
| Schedule of allowance for credit losses activity | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Balance at the beginning of the year | $ | $ | ||||||
| Current year provision | ||||||||
| Write-offs charged against the allowance | ( | ) | ( | ) | ||||
| Recoveries of amounts previously charged off | ||||||||
| Balance at end of the period | $ | $ | ||||||
| 13 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
3. Premium Finance Contracts, Related Receivable and Allowance for Credit Losses (Continued)
The Company maintains an allowance that includes the expected write-offs of principal and interest. Provisions and write-offs per the note disclosures above are displayed at gross amounts, which include provisions and write-offs of both principal and unearned interest. The write-offs are allocated between the principal (i.e. provision for credit losses) and interest (i.e. contra-revenue) on the income statement. The following table shows a reconciliation between the total provision per this note and provision for credit losses on the consolidated statement of operations:
| Schedule of reconciliation between the total provision per the footnote and the provision for credit losses | ||||||||
| For the three months ended
September 30, | ||||||||
| 2026 | 2025 | |||||||
| Current additions to the allowance | $ | $ | ||||||
| Less: Contra-revenues | ( | ) | ( | ) | ||||
| Provision for credit losses | $ | $ | ||||||
For the nine months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Current additions to the allowance | $ | $ | ||||||
| Less: Contra-revenues | ( | ) | ( | ) | ||||
| Provision for credit losses | $ | $ | ||||||
The aging analyses of contract receivables as of September 30, 2026 and December 31, 2025 are as follows:
| Schedule of aging analyses of past-due contract receivables | ||||||||||||||||||||||||||||
| As of September 30, 2026 | 30–59 Days | 60–89 Days | 90-119 Days | Greater Than 120 Days | Total Past-Due | Current | Grand Total | |||||||||||||||||||||
| Premium finance contracts: | ||||||||||||||||||||||||||||
| Due from insured | $ | $ | $ | — | $ | $ | $ | $ | ||||||||||||||||||||
| Due from insurance carrier | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| As of December 31, 2025 | 30–59 Days | 60–89 Days | 90-119 Days | Greater Than 120 Days | Total
Past-Due | Current | Grand Total | |||||||||||||||||||||
| Premium finance contracts: | ||||||||||||||||||||||||||||
| Due from insured | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Due from insurance carrier | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| 14 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
Inactive agent receivables are defined as agent receivables that have not changed in at least twelve months, which pose a greater risk of credit losses. Agent inactivity is used by management as a credit quality indicator in evaluating receivables. The analysis of active and inactive agents as of September 30, 2026 and December 31, 2025 are as follows:
| Schedule of inactive agent receivables | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Receivables from active agents | $ | $ | ||||||
| Receivables from inactive agents | ||||||||
| Total | $ | $ | ||||||
4. Property and Equipment, Net
The Company’s property and equipment consists of the following:
| Schedule of property and equipment | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Computer Software | $ | $ | ||||||
| Automobile | ||||||||
| Furniture & Fixtures | ||||||||
| Leasehold Improvements | ||||||||
| Computer Equipment | ||||||||
| Property and equipment, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
The Company recorded depreciation expense in other
operating expenses of $
5. Leases
The Company accounts for leases in accordance with
ASC Topic 842. The Company used its incremental borrowing rate of
Office lease – On March 1, 2024, the
Company entered into a two (
Secure facility lease – In August 2025,
the Company entered into a three (
Hardware lease – On September 30, 2022,
the Company entered into a three-year lease for computer hardware. The lease has no renewal option. The lease is $
Server lease – On December 7, 2021, the
Company entered into a five-year lease for a computer server. The lease contains a bargain purchase option, which the Company intends
to exercise. The Company recorded this lease as a finance lease. The lease payments are $
| 15 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
5. Leases (Continued)
| Schedule of lease cost | |||||||
| Leases | Classification | September 30, 2026 | December 31, 2025 | ||||
| Right-of-use assets | Operating lease assets | $ | $ | ||||
| Server lease | Finance lease assets | ||||||
| Total lease assets | $ | $ | |||||
| Current operating lease liability | Current operating lease liabilities | $ | $ | ||||
| Non-current operating lease liability | Long-term operating lease liabilities | ||||||
| Total operating lease liabilities | $ | $ | |||||
| Current finance lease liability | Current finance lease liabilities | $ | $ | ||||
| Non-current finance lease liability | Long-term finance lease liabilities | — | — | ||||
| Total finance lease liabilities | $ | $ | |||||
The weighted-average remaining lease term was
6. Drafts Payable
Drafts payable outstanding represent unpaid drafts
that have not been disbursed by our senior lender as of the reporting date on insurance premium finance contracts received by the Company
prior to the reporting date. As of September 30, 2026 and December 31, 2025, the draft payable balances are $
7. Line of Credit
Relationship with First Horizon Bank (“FHB”)
On February 3, 2021, the Company entered into
an exclusive twenty-four month loan agreement with First Horizon Bank, our senior lender, for a revolving line of credit in the amount
of $
| 16 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
7. Line of Credit (Continued)
At September 30, 2026 and December 31, 2025, the advance
rate was
The Company’s agreements with FHB contain certain covenants and restrictions. Under these covenants and restrictions, all the Company’s assets are pledged to secure the line of credit, and the Company must maintain the following financial ratios: (1) adjusted tangible net worth ratio, (2) interest coverage ratio, (3) adjusted total balance sheet leverage ratio, and (4) cash collection ratio. The loan agreement also provides for certain other non-financial covenants, such as audited financial statements, notice of change of control, budget, permission for any new debt, and copies of filings with regulatory bodies. Management believes it was in compliance with the applicable debt covenants as of September 30, 2026 and December 31, 2025.
8. Other Loans
On April 18, 2020, the Company entered into a $
On June 22, 2022, the Company executed a loan modification
with Woodforest National Bank (“WNB”) allowing for the repayment of the PPP loan to WNB. This loan was fully repaid in April
2025. For the three months ended September 30, 2026 and 2025, the Company paid interest on this loan of $
On April 12, 2024, the Company entered into a
$
| 17 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
9. Notes Payable
At September 30, 2026 and December 31, 2025, the balances of long-term unsecured notes to unrelated parties are as follows:
| Schedule of the balances of long-term unsecured notes to unrelated parties | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Total notes payable - Others | $ | $ | ||||||
| Less current maturities | ( | ) | ( | ) | ||||
| Long-term maturities | $ | $ | ||||||
These are notes payable to individuals. The notes
have interest payable monthly, ranging from
10. Notes Payable – Stockholders and Related Parties
At September 30, 2026 and December 31, 2025, the balances of long-term notes payable to stockholders and related parties are as follows:
| Schedule of related parties | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Total notes payable - Related parties | $ | $ | ||||||
| Less current maturities | ( | ) | ( | ) | ||||
| Long-term maturities | $ | $ | ||||||
These are notes payable to stockholders and related
parties. The notes have interest payable monthly of
| 18 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
11. Equity
Preferred Stock
As of September 30, 2026, the Company was authorized
to issue
In the event of any liquidation, dissolution or winding
up of the Company, the holders of 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, an amount equal to $
Holders of preferred stock are entitled to receive
preferential cumulative dividends, only if declared by the board of directors, at a rate of 7% per annum per share of the liquidation
preference amount of $10 per share. During the three months ended September 30, 2026 and 2025, the Board of Directors has declared and
paid dividends on the preferred stock of $
December 31, 2025 dividends in arrears were declared and paid in January 2026. March 31, 2026 dividends in arrears were declared and paid in April 2026. June 30, 2026 dividends in arrears were declared and paid in July 2026.
Common Stock
As of September 30, 2026 and December 31, 2025, the
Company was authorized to issue
In December 2025, the Company repurchased
In April 2026, the Company issued
Stock Options
In 2019, the Company’s Board of Directors approved the creation of the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the issuance of incentive stock options to designated employees, certain key advisors and non-employee members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to 300,000 shares of the Corporation’s common stock. The following table summarizes information about employee stock options outstanding at September 30, 2026:
| 19 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
11. Equity (Continued)
| Schedule of employee stock options outstanding | ||||||||||||||||||||||
| Outstanding Options | Vested Options | |||||||||||||||||||||
| Number Outstanding at September 30, 2026 | Weighted Average Remaining Term | Weighted Average Exercise Price | Number Exercisable at September 30, 2026 | Weighted Average Remaining Term | Weighted Average Exercise Price | |||||||||||||||||
| $ | $ | |||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
A summary of information regarding the stock options outstanding is as follows:
| Schedule of share-based payment arrangement, option, activity | ||||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Intrinsic Value | |||||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||||
| Issued | — | — | — | — | ||||||||||||||
| Exercised | — | — | — | — | ||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||||
| Exercisable at September 30, 2026 | $ | $ | ||||||||||||||||
During the three and nine months ended September
30, 2026 and 2025, the Company did not recognize stock option expense. The aggregate intrinsic value is calculated as the difference between
the exercise price of the underlying awards and the closing price of the Common Stock, which was $
Stock Warrants
A summary of information regarding the stock warrants outstanding is as follows:
| Schedule of stock warrants | ||||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Intrinsic Value | |||||||||||||||
| Outstanding at December 31, 2025 | $ | — | ||||||||||||||||
| Issued | — | — | — | — | ||||||||||||||
| Expired | ( | ) | $ | — | — | |||||||||||||
| Exercised | — | — | — | — | ||||||||||||||
| Outstanding at September 30, 2026 | $ | — | ||||||||||||||||
| Exercisable at September 30, 2026 | $ | — | ||||||||||||||||
The warrants vested immediately. During the three and nine months ended September 30, 2026 and 2025, the Company recognized no stock warrant expense. The aggregate intrinsic value is calculated as the difference between the exercise price
| 20 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
11. Equity (Continued)
of the underlying awards and the closing price of
the Common Stock, which was $
12. Executive Compensation Agreements
Restricted Stock Units
On March 31, 2025, the Company entered into five-year employment agreements with its Chief Executive Officer and Chief Financial Officer, which included grants of restricted stock units (“RSUs”) subject to both performance-based and time-based vesting conditions. The fair value of each RSU was determined based on the fair value of the Company’s common stock on the grant date.
In February 2026, the Company entered into additional
agreements with its CEO and CFO to update the performance-based targets for the year ended December 31, 2026. For the year ended December
31, 2026, the performance-based RSU grant consisted of
The time-based RSU grant from March 2025 consisted
of
For the three months ended September 30, 2026 and
2025, the Company recognized $
As of September 30, 2026, the Company had a total
of $
In addition, the Company has not recognized any compensation
expense for
Cash Performance Awards
The February 2026 employment agreements with the Company’s
CEO and CFO also include cash performance awards payable on December 31, 2026, contingent upon the achievement of certain financial and
operational performance targets. As of September 30, 2026, the Company determined that a portion of the performance conditions were probable
of being met and recognized $
| 21 |
| Standard Premium Finance Holdings, Inc. and Subsidiary Condensed Notes to Consolidated Financial Statements September 30, 2026 (unaudited) |
13. Related Party Transactions
The Company has engaged in transactions with related parties primarily shareholders, officers and directors and their relatives that involve financing activities and services to the Company. The following discussion summarizes its activities with related parties.
Office lease
As discussed in Note 5, the Company entered into a three-year lease for its office space in Miami, FL with an entity that is controlled by our CEO and related parties. The Company leases approximately 3,000 square feet of office space. The lease contract expires in February 2027.
Line of credit
As discussed in Note 7, the Company secured its primary
financing in part through the assistance of our CEO who guaranteed the loan to the financial institution. The current line of credit with
First Horizon Bank was initiated at $
Notes payable
As discussed in Note 10, the Company has been advanced
funds by its shareholders. As of September 30, 2026 and December 31, 2025, the amounts advanced were $
14. Commitments and Contingencies
On March 31, 2025, the Company signed five-year employment agreements with its CEO and CFO, which includes performance-based cash and equity compensation. The agreements were amended in February 2026 to update performance-based targets for the year ended December 31, 2026.
From time-to-time, we may be involved in litigation or be subject to claims arising out of our operations or content appearing on our websites in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on our company because of defense and settlement costs, diversion of management resources and other factors.
15. Segment Reporting
The Company is engaged in a single line of business as an insurance premium finance company, providing loans to customers for the purchase of insurance. The Company has identified a committee, the CODM Committee, composed of its Chief Executive Officer and Chief Financial Officer, as the chief operating decision maker (“CODM”), who uses net income to evaluate the results of the business, predominantly in the forecasting process, to manage the Company. Additionally, the CODM uses the availability on its line of credit (see Note 7) and prevailing interest rates, which are not a measure of profit and loss, to make operational decisions while maintaining capital adequacy, such as whether to reinvest profits or pay distributions. The Company’s operations constitute a single operating segment, and therefore, a single reportable segment, because the CODM Committee manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies. The Company's segment revenue and expenses are in line with what is in the Company's consolidated statements of operations and includes all significant categories that are provided to the CODM for review. Also, the segment assets are the same as those reported in the Company's consolidated balance sheets.
16. Subsequent Events
In October 2026, the Board of Directors declared and
paid dividends on the Series A convertible preferred stock of $
| 22 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are an insurance premium financing company, specializing primarily in commercial policies. We make it efficient for companies to access financing for insurance premiums. Enabled by our network of marketing representatives and relationships with insurance agents, we provide a value-driven, customer-focused lending service.
We have offered premium financing since 1991 through our wholly owned subsidiary, Standard Premium Finance Management Corporation. We are generally targeting premium financing loans from $1,000 to $100,000, with repayment terms ranging from 6 to 11 months, although we may offer larger loans under circumstances we deem appropriate. Qualified customers may have multiple loans with us concurrently, which we believe provides opportunities for repeat business, as well as increased value for our customers.
We originate loans primarily in Florida, although we operate in several states. Over the past three years, the Company has expanded its operations, and currently is financing insurance premiums in thirty states. Throughout 2024-2026, we have obtained additional licenses for a total of forty-three states. We intend to continue to expand our market into new states as part of our organic growth strategy. Loans originate primarily through a network of insurance agents solicited by our in-house sales team and marketing representatives.
We generate the majority of our revenue through interest income and the associated fees earned from our loan products. We earn interest based on the “rule of 78” and earn other associated fees as applicable to each loan. These fees include, but are not limited to, a one-time finance charge, late fees, and NSF fees. Our company charges interest to its customers solely by the Rule of 78. Charging interest per the Rule of 78 is the industry standard among premium finance loans. The Rule of 78 is a method to calculate the amount of principal and interest paid by each payment on a loan with equal monthly payments. The Rule of 78 is a permissible method of calculating interest in the states in which we operate. The Rule of 78 recognizes greater amounts of interest income and lesser amounts of principal repayment during the first months of the loan, while decreasing interest income and increasing principal repayment during the final months of the loan. Whenever a loan is repaid prior to full maturity, the Rule of 78 methodology is applied and the borrower is refunded accordingly.
We rely on a diversified set of funding sources for the loans we make to our customers. Our primary source of financing has historically been a line of credit at a bank collateralized by our loan receivables and our other assets. We receive additional funding from unsecured subordinate noteholders that pays monthly interest to the investors. We have also used proceeds from operating cash flow to fund loans in the past and continue to finance a portion of our outstanding loans with these funds. See Liquidity and Capital Resources for additional information regarding our financing strategy.
The Company’s main source of funding is its line of credit, which represented approximately 67% ($61,516,172) of its capital and total liabilities as of September 30, 2026. As of September 30, 2026, the Company’s subordinated notes payable and other loans represented approximately 14% ($12,456,975) of the Company’s capital and total liabilities, operating liabilities provide approximately 9% ($7,910,627) of the Company’s capital and total liabilities, preferred equity provides approximately 2% ($1,660,000) of the Company’s capital and total liabilities, and equity in retained earnings and common stock paid-in capital represents the remaining 8% ($7,729,379) of the Company’s capital and total liabilities.
Key Financial and Operating Metrics
We regularly monitor a series of metrics in order to measure our current performance and project our future performance. These metrics aid us in developing and refining our growth strategies and making strategic decisions.
| As of or for the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Gross Revenue | $ | 3,583,982 | $ | 3,215,771 | ||||
| Originations | $ | 48,020,850 | $ | 41,034,533 | ||||
| Interest Earned Rate | 16.70 | % | 17.70 | % | ||||
| Cost of Funds Rate, Gross | 6.42 | % | 7.17 | % | ||||
| Cost of Funds Rate, Net (Non-GAAP) | 5.30 | % | 5.59 | % | ||||
| Reserve Ratio | 2.79 | % | 2.61 | % | ||||
| Provision Rate | 0.97 | % | 0.80 | % | ||||
| Return on Assets | 1.65 | % | 1.34 | % | ||||
| Return on Equity | 19.76 | % | 15.54 | % | ||||
| As of or for the Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Gross Revenue | $ | 10,361,948 | $ | 9,227,729 | ||||
| Originations | $ | 141,480,855 | $ | 118,965,469 | ||||
| Interest Earned Rate | 16.80 | % | 17.98 | % | ||||
| Cost of Funds Rate, Gross | 6.57 | % | 7.00 | % | ||||
| Cost of Funds Rate, Net (Non-GAAP) | 4.92 | % | 5.25 | % | ||||
| Reserve Ratio | 2.79 | % | 2.61 | % | ||||
| Provision Rate | 0.83 | % | 0.80 | % | ||||
| Return on Assets | 1.76 | % | 1.48 | % | ||||
| Return on Equity | 20.16 | % | 17.15 | % | ||||
| 23 |
Gross Revenue
Gross Revenue represents the sum of interest and finance income, associated fees and other revenue.
Originations
Originations represent the total principal amount of Loans made during the period.
Interest Earned Rate
The Interest Earned Rate is the average annual percentage interest rate earned on new loans.
Cost of Funds Rate, Gross
Cost of Funds Rate, Gross is calculated as interest expense divided by average debt outstanding for the period.
Cost of Funds Rate, Net (Non-GAAP)
Cost of Funds Rate, Net is calculated as interest expense divided by average debt outstanding for the period, net of the interest related tax benefit. Cost of Funds Rate, Net is a Non-GAAP operating metric that is useful in comparing the cost of capital of different sources. Debt capital provides a tax benefit that is not provided by preferred equity or common equity capital. The blended tax rate used in this metric is estimated to be 25% for all periods presented. The following tables provide a reconciliation of the Cost of Funds Rate, Net (Non-GAAP) to Cost of Funds Rate, Gross:
| For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cost of Funds Rate, Gross | 6.42 | % | 7.17 | % | ||||
| Less: Tax Benefit | (1.12 | )% | (1.58 | )% | ||||
| Cost of Funds Rate, Net (Non-GAAP) | 5.30 | % | 5.59 | % | ||||
| For the Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cost of Funds Rate, Gross | 6.57 | % | 7.00 | % | ||||
| Less: Tax Benefit | (1.65 | )% | (1.75 | )% | ||||
| Cost of Funds Rate, Net (Non-GAAP) | 4.92 | % | 5.25 | % | ||||
Reserve Ratio
Reserve Ratio is our allowance for credit losses at the end of the period divided by the total amount of principal outstanding on Loans at the end of the period. It excludes net deferred origination costs and associated fees.
Provision Rate
Provision Rate equals the provision for credit losses for the period divided by originations for the period. Because we reserve for probable credit losses inherent in the portfolio upon origination, this rate is significantly impacted by the expectation of credit losses for the period’s originations volume. This rate is also impacted by changes in loss expectations for contract receivables originated prior to the commencement of the period.
Return on Assets
Return on Assets is calculated as annualized net income (loss) attributable to common stockholders for the period divided by average total assets for the period.
Return on Equity
Return on Equity is calculated as annualized net income (loss) attributable to common stockholders for the period divided by average stockholders’ equity attributable to common stockholders for the period.
| 24 |
RESULTS of OPERATIONS
Results of Operations for the Three Months ended September 30, 2026 Compared to the Three Months ended September 30, 2025
| Summary of Comparative Results | ||||||||||||||||
| For the three months ended | ||||||||||||||||
| September 30, 2026 (unaudited) | September 30, 2025 (unaudited) | Increase/ (Decrease) ($) | Increase/ (Decrease) (%) | |||||||||||||
| Revenues: | ||||||||||||||||
| Finance charges | $ | 3,144,165 | $ | 2,850,069 | 294,096 | 10.3 | % | |||||||||
| Late charges | 351,913 | 275,843 | 76,070 | 27.6 | % | |||||||||||
| Origination charges | 87,904 | 89,859 | (1,955 | ) | (2.2) | % | ||||||||||
| Gross revenue | 3,583,982 | 3,215,771 | 368,211 | 11.5 | % | |||||||||||
| Expenses: | ||||||||||||||||
| Interest | 1,187,350 | 1,081,687 | 105,663 | 9.8 | % | |||||||||||
| Salaries and wages | 580,693 | 567,710 | 12,983 | 2.3 | % | |||||||||||
| Commissions | 421,339 | 500,187 | (78,848 | ) | (15.8) | % | ||||||||||
| Provision for credit losses | 465,366 | 326,273 | 139,093 | 42.6 | % | |||||||||||
| Professional fees | 105,435 | 91,023 | 14,412 | 15.8 | % | |||||||||||
| Postage | 28,911 | 31,083 | (2,172 | ) | (7.0) | % | ||||||||||
| Insurance | 18,062 | 18,563 | (501 | ) | (2.7) | % | ||||||||||
| Other operating expenses | 200,405 | 225,525 | (25,120 | ) | (11.1) | % | ||||||||||
| Total costs and expenses | 3,007,561 | 2,842,051 | 165,510 | 5.8 | % | |||||||||||
| Income before income taxes | 576,421 | 373,720 | 202,701 | 54.2 | % | |||||||||||
| Provision for income taxes | 174,726 | 97,696 | 77,030 | 78.8 | % | |||||||||||
| Net income | 401,695 | 276,024 | 125,671 | 45.5 | % | |||||||||||
Revenue
Revenue increased by 11.5% overall or $368,211 to $3,583,982 for the three months ended September 30, 2026 from $3,215,771 for the three months ended September 30, 2025. The increase in revenue was primarily due to a 10.3% or $294,096 increase in finance charges. Revenue from finance charges comprised 87.7% and 88.6% of overall revenue for the three months ended September 30, 2026 and 2025, respectively.
During the three months ended September 30, 2026 compared to the three months ended September 30, 2025, the company’s new loan originations increased by $6,986,317. This increase was due largely to increased marketing efforts throughout our established and new states, primarily by hiring additional marketing representatives in the Midwest. Additionally, the total quantity of loan originations decreased by 164 to 6,166 new loans for the three months ended September 30, 2026 as compared to 6,330 for the three months ended September 30, 2025. The quantity of loan originations is directly correlated to the origination charge revenue, as the Company immediately recognizes an origination fee on substantially all new loans.
Under the terms of the line of credit agreement, the loan receivables and our other assets provide the collateral for the loan. As the receivables increase, driven by new sales, the company has greater borrowing power, giving it the opportunity to generate additional sales. In September 2025, the Company increased its line of credit from $50,000,000 to $75,000,000, with an additional $40 million accordion feature, and extended the maturity until September 2028. The significant expansion in borrowing capacity, along with lower borrowing costs, has allowed the Company to compete for larger premium finance loans, which typically generate lower rates of return and lower dilution rates, as well as continuing its original small-to-medium loan size strategy. See Future Cash Requirements for the Company’s strategy regarding its line of credit.
Expense
Expenses increased by 5.8% or $165,510 to $3,007,561 for the three months ended September 30, 2026 from $2,842,051 for the three months ended September 30, 2025.
The increase in expenses was primarily due to increases in the following categories:
| · | $139,093 increase in provision for credit losses primarily related to the increase in the size of the gross receivables portfolio. | |
| · | $105,663 increase in interest expense as a result of increased borrowings on our line of credit. In funding the growth of the gross receivables portfolio by $14,730,584 to $92,252,728 at September 30, 2026 from $77,522,144 at September 30, 2025, the Company increased borrowings on the line of credit by $13,399,989 to $61,764,846 at September 30, 2026 from $48,364,857 at September 30, 2025. Our line of credit features a variable interest rate based on one-month SOFR. The Company benefited from benchmark interest rate decreases adopted by the Federal Reserve Board at the end of 2025, as well as the execution of an extension on its line of credit in September 2025, which decreased the interest rate margin by an average of 65 basis points. As of September 30, 2026 and 2025, our line of credit’s interest rate was 5.78% and 6.26%, respectively. |
| 25 |
The increase in expenses was partially offset primarily by decreases in the following categories:
| · | $78,848 decrease in commission expense primarily related to the reversal of unclaimed commission payments. | |
| · | $25,120 decrease in other operating expenses due primarily to decreases in other tax accruals, general office maintenance expenses, and the termination of a facility fee related to the amended line of credit agreement executed in September 2025. |
Income before Taxes
Income before taxes increased by $202,701 to $576,421 for the three months ended September 30, 2026 from $373,720 for the three months ended September 30, 2025. This increase was attributable to the net increases and decreases as discussed above.
Income Tax Provision
Income tax provision increased $77,030 to $174,726 for the three months ended September 30, 2026 from $97,696 for the three months ended September 30, 2025. This increase was primarily attributable to an increase in taxable income.
Net Income
Net income increased by $125,671 to $401,695 for the three months ended September 30, 2026 from $276,024 for the three months ended September 30, 2025. This increase was attributable to the $202,701 increase in income before taxes, partially offset by the $77,030 increase in the provision for income taxes.
Results of Operations for the Nine Months ended September 30, 2026 Compared to the Nine Months ended September 30, 2025
| Summary of Comparative Results | ||||||||||||||||
| For the nine months ended | ||||||||||||||||
| September 30, 2026 (unaudited) | September 30, 2025 (unaudited) | Increase/ (Decrease) ($) | Increase/ (Decrease) (%) | |||||||||||||
| Revenues: | ||||||||||||||||
| Finance charges | $ | 9,123,951 | $ | 8,137,249 | 986,702 | 12.1 | % | |||||||||
| Late charges | 953,970 | 809,568 | 144,402 | 17.8 | % | |||||||||||
| Origination charges | 284,027 | 280,912 | 3,115 | 1.1 | % | |||||||||||
| Gross revenue | 10,361,948 | 9,227,729 | 1,134,219 | 12.3 | % | |||||||||||
| Expenses: | ||||||||||||||||
| Interest | 3,307,095 | 3,050,253 | 256,842 | 8.4 | % | |||||||||||
| Salaries and wages | 1,708,139 | 1,599,257 | 108,882 | 6.8 | % | |||||||||||
| Commissions | 1,384,506 | 1,345,768 | 38,738 | 2.9 | % | |||||||||||
| Provision for credit losses | 1,169,780 | 956,539 | 213,241 | 22.3 | % | |||||||||||
| Professional fees | 347,158 | 210,575 | 136,583 | 64.9 | % | |||||||||||
| Postage | 89,608 | 92,073 | (2,465 | ) | (2.7 | %) | ||||||||||
| Insurance | 122,655 | 121,924 | 731 | 0.6 | % | |||||||||||
| Other operating expenses | 602,285 | 694,119 | (91,834 | ) | (13.2 | %) | ||||||||||
| Total costs and expenses | 8,731,226 | 8,070,508 | 660,718 | 8.2 | % | |||||||||||
| Income before income taxes | 1,630,722 | 1,157,221 | 473,501 | 40.9 | % | |||||||||||
| Provision for income taxes | 445,310 | 287,281 | 158,029 | 55.0 | % | |||||||||||
| Net income | 1,185,412 | 869,940 | 315,472 | 36.3 | % | |||||||||||
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Revenue
Revenue increased by 12.3% overall or $1,134,219 to $10,361,948 for the nine months ended September 30, 2026 from $9,227,729 for the nine months ended September 30, 2025. The increase in revenue was primarily due to a 12.1% or $986,702 increase in finance charges. Revenue from finance charges comprised 88.1% and 88.2% of overall revenue for the nine months ended September 30, 2026 and 2025, respectively.
During the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, the company’s new loan originations increased by $22,515,386. This increase was due largely to increased marketing efforts throughout our established and new states, primarily by hiring additional marketing representatives in the Midwest. Additionally, the total quantity of loan originations remained stable, decreasing by 252 for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The quantity of loan originations is directly correlated to the origination charge revenue, as the Company immediately recognizes an origination fee on substantially all new loans.
Under the terms of the line of credit agreement, the loan receivables and our other assets provide the collateral for the loan. As the receivables increase, driven by new sales, the company has greater borrowing power, giving it the opportunity to generate additional sales. In September 2025, the Company increased its line of credit from $50,000,000 to $75,000,000, with an additional $40 million accordion feature, and extended the maturity until September 2028. The significant expansion in borrowing capacity, along with lower borrowing costs, has allowed the Company to compete for larger premium finance loans, which typically generate lower rates of return and lower dilution rates, as well as continuing its original small-to-medium loan size strategy. See Future Cash Requirements for the Company’s strategy regarding its line of credit.
Expense
Expenses increased by 8.2% or $660,718 to $8,731,226 for the nine months ended September 30, 2026 from $8,070,508 for the nine months ended September 30, 2025.
The increase in expenses was primarily due to increases in the following categories:
| · | $256,842 increase in interest expense as a result of increased borrowings on our line of credit. In funding the growth of the gross receivables portfolio by $14,730,584 to $92,252,728 at September 30, 2026 from $77,522,144 at September 30, 2025, the Company increased borrowings on the line of credit by $13,399,989 to $61,764,846 at September 30, 2026 from $48,364,857 at September 30, 2025. Our line of credit features a variable interest rate based on one-month SOFR. The Company benefited from benchmark interest rate decreases adopted by the Federal Reserve Board at the end of 2025, as well as the execution of an extension on its line of credit in September 2025, which decreased the interest rate margin by an average of 65 basis points. As of September 30, 2026 and 2025, our line of credit’s interest rate was 5.78% and 6.26%, respectively. | |
| · | $213,241 increase in provision for credit losses primarily related to the increase in the size of the gross receivables portfolio. | |
| · | $136,583 increase in professional fees primarily due to legal fees, bank audit fees, investor relation costs, and costs associated with a software consulting contract. | |
| · | $108,882 increase in salaries and wages due to hiring additional staff and general pay increases for existing employees. | |
| · | $38,738 increase in commission expense as a result of marketing in new territories to facilitate expansion, directly correlated to the increased originations and reduction in Florida portfolio concentration. |
The increase in expenses was partially offset primarily by a decrease in the following category:
| · | $91,834 decrease in other operating expenses due primarily to decreases in other tax accruals, general office maintenance expenses, and the termination of a facility fee related to the amended line of credit agreement executed in September 2025. |
Income before Taxes
Income before taxes increased by $473,501 to $1,630,722 for the nine months ended September 30, 2026 from $1,157,221 for the nine months ended September 30, 2025. This increase was attributable to the net increases and decreases as discussed above.
Income Tax Provision
Income tax provision increased $158,029 to $445,310 for the nine months ended September 30, 2026 from $287,281 for the nine months ended September 30, 2025. This increase was primarily attributable to an increase in taxable income.
Net Income
Net income increased by $315,472 to $1,185,412 for the nine months ended September 30, 2026 from $869,940 for the nine months ended September 30, 2025. This increase was attributable to the $473,501 increase in income before taxes, partially offset by the $158,029 increase in the provision for income taxes.
| 27 |
LIQUIDITY and CAPITAL RESOURCES as of September 30, 2026
We had $1,338 of cash and a working capital surplus of $18,145,683 at September 30, 2026. A significant working capital surplus is generally expected through the normal course of business due primarily to the difference between the balance in loan receivables and the related line of credit liability. As discussed in the Revenues section, the Company’s line of credit is currently the primary source of operating funds. In September 2025, the Company renewed and amended its agreement with First Horizon Bank, for a three-year $75,000,000 line of credit with an additional $40,000,000 uncommitted accordion feature. The terms of the amended line of credit include an interest rate based on the 1-Month Term SOFR rate plus a margin of 2.10%, with a minimum rate of 2.60%. We anticipate that the interest rate we pay on our revolving credit agreement may increase due to future benchmark interest rate increases by the Federal Reserve Board. Because of the short-term nature of our loans, we are not bound to any particular loan and its fixed interest rate for a long period of time. Based on our estimates and taking into account the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our business and repay our obligations as they become due in the next twelve months.
During the nine months ended September 30, 2026, the Company raised an additional $642,500 in subordinated notes payable, repaid $137,000 in subordinated notes payable, raised an additional $60,000 in subordinated notes payable – related parties, and repaid $60,000 in subordinated notes payable – related parties. The Company utilizes its cash inflows from subordinated debt as a financing source before drawing additionally from the line of credit.
Future Cash Requirements
As the Company anticipates its growth patterns to continue, a larger line of credit is paramount to fueling this growth. The Company’s line of credit is $75,000,000 and its maturity on its line of credit facility September 25, 2028. Extended maturity provides stability for the Company’s future cash requirements.
Uses of Liquidity and Capital Resources
We require cash to fund our operating expenses and working capital requirements, including costs associated with our premium finance loans, capital expenditures, debt repayments, acquisitions (if any), pursuing market expansion, supporting sales and marketing activities, and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing or expanding existing debt or pursuing other debt or equity offerings to provide flexibility with our cash management and provide capital for potential acquisitions.
Off-balance Sheet Arrangements
None.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We consider the following to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:
Allowance for credit losses
We are subject to the risk of loss associated with our borrowers’ inability to fulfill their payment obligations, the risk that we will not collect sufficient unearned premium refunds on the cancelled policies on the defaulted loans to fully cover the unpaid loan principal and the risk that payments due us from insurance agents and brokers will not be paid.
In developing a measurement of credit loss, institutions are required to segment financial assets into pools that share similar risk characteristics. The Company uses ARCSys, a third-party SaaS platform, to support its allowance for credit losses (ACL) estimation process under ASC 326, “Financial Instruments – Credit Losses”. Management remains responsible for the selection of methodologies, key assumptions, and the resulting ACL. Management, leveraging the third-party ARCSys platform, performs its own analysis each reporting period to assist with the determination process of how financial assets should be segregated by risk. Based on this internal risk analysis performed on the Company’s historical datasets, assets are designated into asset classes based on asset codes and other credit quality indicators to provide structure based on similar risk characteristics or areas of risk concentration. Management, with support from the ARCSys segmentation module, updated its allowance estimation model by including portfolio segmentation and the application of a separate methodology for each portfolio segment. The Company classifies its portfolio into two primary segments: (1) Due from Insured and (2) Due from Insurance Carrier. The segmentation is based on the respective payment and risk characteristics of each portfolio segment. The Company develops a systematic and repeatable methodology to determine its allowance for credit losses at the portfolio segment level.
| 28 |
The Company utilized the ARCSys Vintage PD/LGD model, as defined below, for determining expected future credit losses for the Due from Insured portfolio segment. PD is a measure of the likelihood that a borrower will default on an asset or other financial obligation over the contractual life of the loan. Default refers to the failure by the borrower to make scheduled payments. Defaults are tracked historically by the percentage of assets in default to assets remaining in the pool by vintage cohort based on month after origination. Additionally, Loss Given Default (LGD) is a measure of the expected loss on a loan or asset in the event of default by the borrower. The expectation of future defaults and loss given default are used as the basis for the allowance for credit losses on each asset by segment. The asset-level allowances for credit losses are then aggregated by asset segment for reporting purposes within the ARCSys Disclosure modules.
The Company utilized the ARCSys Individual Asset DCF (Discounted Cash Flow) module, as defined below, for determining expected future credit losses for the Due from Insurance Carrier portfolio segment. In the ARCSys DCF model, projected cash flows by asset are adjusted for expected losses, prepayments, and amortization, and are discounted to their present value using the effective interest rate. The effective interest rate used in the DCF model is based on the stated rate that is adjusted for deferred fees and costs, and premiums and discounts. The technique considers future cash flows, adjusted for potential default and prepayment activity, based on the Company's own historical experience stored within the ARCSys data warehouse. The difference between the discounted cash flow and the current amortized cost basis of the asset represents the allowance for credit losses. These asset-level allowances for credit losses are then aggregated for reporting purposes at the segment level. The ARCSys platform captures the unique cash flow profile of each segment over the remaining contractual term, consistent with the "Life of Loan" concept required by ASC 326.
Stock-Based Compensation
We account for stock-based compensation by measuring and recognizing as compensation expense the fair value of all share-based payment awards made to directors, executives, employees and consultants, including employee stock options related to our 2019 Equity Incentive Plan and stock warrants based on estimated grant date fair values. The determination of fair value involves a number of significant estimates. We use the Black Scholes option pricing model to estimate the value of employee stock options and stock warrants, which requires a number of assumptions to determine the model inputs. These include the expected volatility of our stock and employee exercise behavior which are based expectations of future developments over the term of the option.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2026. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at September 30, 2026 at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2026 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
| 29 |
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company becomes involved in various legal proceedings and claims in the normal course of business. In management’s opinion, the ultimate resolution of these matters will not have a material effect on our financial position or results of operations.
Item 1A. Risk Factors.
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I. “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 20, 2026 (“2025 Form 10-K”), which could adversely affect our business, financial condition, results of operations and cash flows. During the three months ended September 30, 2026, there have been no material changes in our risk factors disclosed in our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended September 30, 2026, no director or
officer of the Company
Item 6. Exhibits.
Exhibit Index
| Exhibit Number | Description
|
| 2.1 | Agreement of Share Exchange dated as of March 22, 2017 by and between Registrant, Standard Premium Finance Management Corporation and the shareholders of Standard Premium Finance Management Corporation. (Incorporated by reference to Exhibit 2.1 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 3.1 | Articles of Incorporation of Registrant filed May 12, 2016. (Incorporated by reference to Exhibit 3.1 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 3.2 | Articles of Amendment to Registrant’s Articles of Incorporation filed May 31, 2016. (Incorporated by reference to Exhibit 3.2 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 3.3 | Articles of Amendment to Registrant’s Articles of Incorporation filed May 17, 2017. (Incorporated by reference to Exhibit 3.3 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 3.4 | Articles of Amendment to Registrant’s Articles of Incorporation filed January 8, 2020. (Incorporated by reference to Exhibit 3.4 to Registrant's Registration Statement on Form 10-Q filed on August 12, 2025) |
| 3.5 | By-laws of Registrant. (Incorporated by reference to Exhibit 3.4 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
|
4.1
|
Description of Securities. (Incorporated by reference to Exhibit 4.1 to Registrant’s Annual Report on Form 10-K filed on March 17, 2023) |
| 10.1* | 2019 Equity Incentive Plan. (Incorporated by reference to Exhibit 10.1 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 10.2* | Form of Employee Incentive Stock Option Award Agreement. (Incorporated by reference to Exhibit 10.2 to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 10.3* | Form of Warrant to Purchase Common Stock. $4.00 (Incorporated by reference to Exhibit 10.3(a) to Registrant's Registration Statement on Form 10 filed on January 19, 2021) |
| 10.4 | Lease Agreement dated March 1, 2024 between Registrant and Marlenko Acquisitions, LLC. (Incorporated by reference to Exhibit 10.7 to Registrant’s Annual Report on Form 10-K filed on March 15, 2024) |
| 10.5* | Schedule of Employee Incentive Stock Options issued on March 1, 2020 and June 29, 2022. (Incorporated by reference to Exhibit 10.7 to Registrant’s Annual Report on Form 10-K filed on March 17, 2023) |
| 10.6 | Loan Agreement dated February 3, 2021 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.9 to Amendment No. 1 to Registrant's Registration Statement on Form 10 filed on March 2, 2021) |
| 10.7 | First Amendment to Loan Agreement dated October 5, 2021 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.9 to Registrant’s Annual Report on Form 10-K filed on March 17, 2023) |
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| 10.8 | Second Amendment to Loan Agreement dated November 30, 2022 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.10 to Registrant’s Annual Report on Form 10-K filed on March 17, 2023) |
| 10.9 | Third Amendment to Loan Agreement dated November 14, 2023 among Standard Premium Finance Management Corporation and First Horizon Bank (Incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-K filed on March 15, 2024). |
| 10.10 | Fourth Amendment to Loan Agreement dated May 21, 2025 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on May 28, 2025) |
| 10.11 | Fifth Amendment to Loan Agreement and Omnibus Amendment to Loan Documents dated September 25, 2025 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on October 1, 2025) |
| 10.12* | Amended and Restated Employment Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.13* | Performance-Based Cash Award Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.14* | Performance-Based Restricted Stock Unit Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.15* | Restricted Stock Unit Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.16* | Amendment to the Amended and Restated Employment Agreement dated February 11, 2026 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.16 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 10.17* | Performance-Based Cash Award Agreement dated February 11, 2026 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.17 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 10.18* | Performance-Based Restricted Stock Unit Agreement dated February 11, 2026 between Standard Premium Finance Holdings, Inc. and William Koppelmann. (Incorporated by reference to Exhibit 10.18 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 10.19* | Amended and Restated Employment Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.20* | Performance-Based Cash Award Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.21* | Performance-Based Restricted Stock Unit Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.17 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.22* | Restricted Stock Unit Agreement dated March 31, 2025 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.8 to Registrant’s Current Report on Form 8-K filed April 2, 2025) |
| 10.23* | Amendment to the Amended and Restated Employment Agreement dated February 11, 2026 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.23 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 10.24* | Performance-Based Cash Award Agreement dated February 11, 2026 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.16 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 10.25* | Performance-Based Restricted Stock Unit Agreement dated February 11, 2026 between Standard Premium Finance Holdings, Inc. and Brian Krogol. (Incorporated by reference to Exhibit 10.25 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 10.26 | Procedures and Guidelines Governing Securities Transactions by Company Personnel (Incorporated by reference to Exhibit 10.15 to Registrant’s Annual Report on Form 10-K filed on March 15, 2024) |
|
14
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Code of Ethics. (Incorporated by reference to Exhibit 14.1 to Registrant’s Annual Report on Form 10-K filed on March 31, 2021) |
| 19 | Procedures and Guidelines Governing Securities Transactions by Company Personnel (Incorporated by reference to Exhibit 10.15 to Registrant’s Annual Report on Form 10-K filed on March 15, 2024) |
| 21 | Subsidiaries of the Registrant. (Incorporated by reference to Exhibit 10.16 to Registrant’s Annual Report on Form 10-K filed on March 20, 2026) |
| 31.1 | Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer. |
| 31.2 | Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer. |
|
32.1
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Section 1350 Certifications of Principal Executive Officer and Principal Financial Officer. |
______________________________________
* Indicates a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: November 9, 2026 |
||||||||
| STANDARD PREMIUM FINANCE HOLDINGS, INC. | ||||||||
| By: | /s/ William Koppelmann | |||||||
| William Koppelmann | ||||||||
| Chairman, President and Chief Executive Officer (Principal Executive Officer) |
||||||||
| By: | /s/ Brian Krogol | |||||||
| Brian Krogol | ||||||||
| Chief Financial Officer (Principal Financial Officer) |
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