SHF Holdings, Inc.

SHF Holdings, Inc. v. Roda, Ellis, and Carroll (Denver District Court)

On October 17, 2024, the Company filed a complaint in the District Court for the City and County of Denver, Colorado, captionedSHF Holdings, Inc. v. Daniel Roda, Gregory W. Ellis, and James R. Carroll, Case No. 2024CV33187. The lawsuit arises from a dispute over the terms of the Company’s October 2022 acquisition of Abaca pursuant to a merger agreement that was subsequently amended in November 2022 and in October 2023 (the “Second Amendment”).

The Second Amendment restructured certain merger consideration, including introducing warrants and modifying payment timing. The defendants contend the Second Amendment is invalid under Delaware law and seek to have it set aside, which would reinstate the original payment terms and potentially increase the Company’s obligations. The Company maintains that the Second Amendment was validly executed and is binding.

On November 21, 2024, at the Company’s request, the disputed merger payment of $3.0 million was deposited into the Denver County, Colorado District Court’s registry pending resolution of the dispute.

On December 19, 2024, the defendants filed an answer and counterclaims against the Company. On April 18, 2025, the District Court issued an order denying the Company’s motion to dismiss most of the counterclaims, but the District Court did dismiss claims against the Company’s Chairman, Fred Niehaus, with prejudice. The District Court also clarified that the Delaware statutes cited by the defendants govern pre-closing amendments and do not authorize post-merger amendments altering consideration, a finding that is consistent with the Company’s legal position.

The case is currently in active discovery. A ruling on the summary judgement briefing is pending, and a court date is scheduled for May 2026.

Financial Exposure

The Company has assessed its potential exposure under ASC 450, see Note 20 Commitments and Contingencies. If the District Court upholds the Second Amendment, which the Company believes was validly executed and is binding, its cash obligation is limited to the $3.0 million already deposited in the District Court’s registry, with additional exposure limited primarily to legal fees. The Company currently considers an adverse outcome reasonably possible but not probable. Accordingly, no accrual has been recorded for this contingency beyond the $3.0 million already reflected in the financial statements. The estimated range of loss is $0 to $7.8 million. For additional details regarding this matter, please refer to Note 20 to the consolidated financial statements included in this Annual Report on Form 10-K, and to the Company’s Current Reports on Form 8-K filed with the SEC on October 18, 2024 and December 19, 2024.

Other Legal Matters

In addition to the foregoing, from time to time we may be party to various legal proceedings and claims arising in the ordinary course of business. These may include disputes relating to the ownership of funds in particular accounts, the collection of delinquent accounts, credit relationships, challenges to security interests in collateral, and foreclosure matters incidental to our regular business activities.

We assess our legal liabilities and contingencies at least quarterly using the most recently available information, advice of legal counsel, and applicable accounting guidance under ASC Topic 450. Where a loss is probable and can be reasonably estimated, we record a reserve in our consolidated financial statements. These reserves are adjusted each quarter to reflect relevant developments. Where a loss is not probable or cannot be reasonably estimated, we do not accrue a reserve.

Based on information currently available to us and the advice of counsel, we are not aware of any pending or threatened legal proceedings or claims, other than the matter described above, that we believe are likely to have, individually or in the aggregate, a material adverse effect on our business, financial position, results of operations, or cash flows. We note, however, that legal proceedings are inherently uncertain, and the ultimate resolution of any matter could differ from our current assessments. An unfavorable outcome in one or more matters, depending on its magnitude, could be material to our financial results for a particular period.