DEF: SHF Holdings Seeks Shareholder Approval for Key Capital Actions

SHF Holdings, Inc. is seeking stockholder approval for six key proposals at a special meeting, including increasing authorized shares, approving equity issuances, and authorizing a reverse stock split to maintain Nasdaq listing.

Summary

• A special meeting of stockholders will be held virtually on November 6, 2025, at 10:00 a.m. Mountain Time, with October 14, 2025, as the record date for voting.
• Stockholders will vote on a proposal to increase the number of authorized shares of common stock from 130,000,000 to 1,000,000,000.
• A proposal seeks approval for the issuance of common stock upon the conversion of 31,052 shares of Series B Convertible Preferred Stock and the exercise of SPA Warrants to acquire up to 1,999,543 shares of common stock, both with a conversion/exercise price of $7.7644.
• Approval is requested for the issuance of common stock to CREO Investments LLC under a Purchase Agreement, allowing for sales up to $150,000,000 (potentially increasing to $500,000,000), subject to an Exchange Cap of 582,899 shares (19.99% of outstanding shares prior to the agreement).
• A proposal addresses the participation of company management and a director in certain offerings, specifically the conversion of 284 Series B Preferred Stock and exercise of 5 SPA Warrants purchased by them.
• Stockholders will vote on granting the Board authority to effect a reverse stock split of outstanding common stock within a range of 2-for-1 to 12-for-1, at the Board's discretion, primarily to maintain Nasdaq listing.
• An additional proposal seeks authority to adjourn the Special Meeting if necessary to solicit more votes or establish a quorum.
• As of the record date, 2,953,473 shares of common stock were outstanding and entitled to vote.
• The company previously executed a 1-for-20 reverse stock split on March 4, 2025, and regained Nasdaq compliance on April 7, 2025, but cannot guarantee continued compliance.
• The closing price of common stock on October 13, 2025, was $3.73.
• The Board recommends a vote FOR all proposals.

Sentiment

Score: 4

Explanation: While the company is proactively addressing capital needs and Nasdaq listing, the necessity for another reverse stock split so soon after a previous one, coupled with significant potential dilution from new equity issuances, indicates underlying challenges. The capital raise is positive for funding operations, but the terms and dilution are concerning for existing shareholders.

Positives

• Increasing authorized shares provides the company with greater flexibility for future capital raises and strategic business opportunities.
• The capital raises through the Series B Preferred Stock, SPA Warrants, and the Purchase Agreement with CREO are intended to provide essential funding for the company's business plan.
• The proposed reverse stock split aims to maintain the company's listing on Nasdaq, which is crucial for market visibility, liquidity, and access to capital markets.
• Maintaining Nasdaq listing helps avoid delisting to less liquid and efficient over-the-counter markets.
• Rounding up fractional shares in a reverse stock split benefits stockholders who would otherwise hold fractional entitlements.

Negatives

• The issuance of additional shares through the SPA Issuance, Common Stock Issuance, and Management Participation Proposals will result in significant dilution for current stockholders not participating in these offerings.
• Dilution will reduce current stockholders' percentage interest in the company's voting power, liquidation value, and aggregate book value.
• The potential for significant dilution could lead to a decline in the prevailing market prices for common stock.
• There is a negative perception among investors and analysts regarding reverse stock splits, and the company has a history of previous reverse stock splits followed by stock price declines.
• No guarantee exists that a reverse stock split will increase or maintain the stock price proportionally, or improve liquidity and attract institutional investors.
• An increased number of odd lots (fewer than 100 shares) after a reverse stock split may lead to higher transaction costs for some investors.

Risks

• The effect of the reverse stock split on the price or liquidity of common stock is uncertain, and the price may not increase proportionally or remain elevated.
• The effect of a 20% Issuance on the price or liquidity of common stock could be negative.
• The amount and timing of sales of common stock pursuant to the Purchase Agreement are uncertain.
• The company's ability to maintain compliance with the listing standards of The Nasdaq Capital Market, particularly the $1.00 minimum bid price requirement, is not guaranteed.
• Failure to raise additional capital could adversely affect the company's financial performance and growth, and lead to the loss of important business opportunities.
• The company may be unable to fulfill its obligations under the Purchase Agreement and SPA without an increase in authorized shares.
• Issuance of preferred stock may have rights, preferences, and privileges senior to those of common stock, further diluting common stockholders' interests.
• The reverse stock split may decrease the liquidity of common stock and result in higher transaction costs for investors holding odd lots.
• Delisting from Nasdaq could lead to limited market quotations, reduced liquidity, designation as a 'penny stock,' limited news/analyst coverage, and decreased ability to obtain future financing.
• The market price of common stock may decline after a reverse stock split due to factors unrelated to the split, similar to past experiences.

Future Outlook

The company anticipates needing to raise additional capital to execute its business plan, which may require issuing more common stock or securities convertible into common stock. The proposed reverse stock split is intended to help maintain Nasdaq listing, increase the per-share price, and improve marketability and liquidity, potentially facilitating future financings. However, there is no guarantee these actions will achieve the desired results or prevent future delisting, and the company undertakes no obligation to update forward-looking statements.

Management Comments

• "We believe that hosting a virtual meeting will enable greater stockholder participation from any location."
• "Our Board recommends a vote FOR each Proposal."
• "The Board believes that effecting the Reverse Stock Split would help us to: maintain the listing of our common stock and warrants on Nasdaq; increase the per share price of our common stock; maintain the marketability and liquidity of our common stock; and provide other potential benefits."
• "The Board is not presently aware of any attempt, or contemplated attempt, to acquire control of the Company and the proposed Proposal 1 Certificate of Amendment to increase the number of authorized shares of common stock is not part of any plan by our Board to recommend or implement a series of anti-takeover measures."

Industry Context

The company's need for a reverse stock split to maintain Nasdaq listing is a common challenge faced by companies whose stock price falls below exchange minimums. The pursuit of capital raises through preferred stock, warrants, and common stock purchase agreements is a standard mechanism for growth-oriented companies, especially those needing to fund their business plans. The associated dilution is a typical trade-off for securing necessary capital in the market.

Comparison to Industry Standards

• NA

Corporate Governance

Related Party Transactions

• One or more directors and/or officers (Management Participants) purchased an aggregate of 284 shares of Series B Preferred Stock and 5 SPA Warrants. Stockholder approval is sought for the issuance of common stock underlying these securities because the conversion and exercise prices may be less than the market price of common stock at the time of conversion or exercise.

Stakeholder Impact

• **Shareholders**: Face significant potential dilution from new equity issuances and the possibility of a reverse stock split. The reverse split could improve stock price and marketability but also carries risks of further price decline and reduced liquidity. They are being asked to vote on critical corporate actions.
• **Management/Directors**: Directly participating in equity offerings, potentially at favorable terms, subject to stockholder approval.
• **CREO Investments LLC**: Will become a significant investor through the Purchase Agreement and SPA, providing substantial capital to the company.
• **Nasdaq**: The company is actively working to maintain compliance with Nasdaq listing standards, which impacts its market presence and investor confidence.

Next Steps

• Stockholders are to vote on the six proposals at the Special Meeting on November 6, 2025.
• If approved, the Board will have the discretion to file the Authorized Shares Amendment and effect the Reverse Stock Split.
• If approved, the company will proceed with the issuance of shares related to the SPA and the Purchase Agreement.
• Final voting results will be published in a Current Report on Form 8-K within four business days after the Special Meeting.
• The Board reserves the right to delay or abandon the Reverse Stock Split even if approved by stockholders.

Key Dates

Recommendation

The company is taking necessary steps to address its capital needs and Nasdaq listing compliance, which are crucial for its long-term viability. However, the significant dilution from the proposed capital raises and the need for another reverse stock split so soon after a previous one indicate ongoing challenges and uncertainty. Investors should hold to see if these strategic actions stabilize the company and improve its market position, but significant upside is not immediately apparent given the dilutive nature and past performance issues.

Keywords

SHF Holdings, proxy statement, special meeting, stockholder vote, authorized shares, common stock, preferred stock, Series B Preferred Stock, SPA Warrants, CREO Investments, capital raise, dilution, reverse stock split, Nasdaq listing, minimum bid price, corporate governance, equity issuance, management participation, financial reporting