• Safe Harbor Financial Announces Second Quarter 2023 Results

    المصدر: Nasdaq GlobeNewswire / 14 أغسطس 2023 16:05:01   America/New_York

    Revenue of $4.6 million

    Second consecutive quarter of more than $1.1 billion in processed deposits; monthly average Balances on Deposit increased 60% versus the same period last year

    Closed over $15 million in cannabis commercial real estate loans during the quarter

    GOLDEN, Colo., Aug. 14, 2023 (GLOBE NEWSWIRE) --  SHF Holdings, Inc., d/b/a/ Safe Harbor Financial (“Safe Harbor” or the “Company”) (NASDAQ: SHFS), a leader in facilitating financial services and credit facilities to the regulated cannabis industry, announced today its results for the quarter ended June 30, 2023 (“Q2 2023”).

    Q2 2023 Financial and Operational Highlights

    • Revenue increased 147% to $4.6 million, compared to $1.9 million in Q2 2022;
    • Total deposits increased 36% to $1.1 billion compared to $808.4 million in Q2 2022;
    • Monthly average number of accounts held with financial institution (“FI”) clients increased 65% to 1,002 compared to 608 in Q2 2022;
    • Monthly average balances on deposit held with FI clients increased 60% to $230.7 million, compared to $143.8 million in Q2 2022;
    • Loan Book value at the end of Q2 2023 was $35.9 million as compared to $18.5 million in Q2 2022;
    • Ended Q2 2023 with $8.2 million in cash.

    “Our second quarter results reflect the hard work and commitment of our team as well as the confidence our cannabis customers and financial institution partners have in Safe Harbor’s ability to support their growth objectives, operating in an industry that requires an extremely high level of compliance, validation and monitoring,” said Sundie Seefried, Chief Executive Officer of Safe Harbor.

    “Our ability to increase both deposits and lending to Cannabis Related Businesses (CRB’s) in the second quarter resulted in record quarterly revenue and our second consecutive quarter of positive Adjusted EBITDA. Our ability to successfully execute against our emerging lending practice, which resulted in $15 million in loans originated during the quarter, has been a key growth driver this quarter and demonstrates a tremendous opportunity to further expand our fintech platform.  In addition, our relationship with Five Star Bank continues to grow, which has allowed us to increase our deposit capacity by $1 billion, while also providing Safe Harbor the support it requires to expand nationally, further driving shareholder value.”

    Second Quarter 2023 Operational Highlights

    • On April 17, 2023, Safe Harbor announced that, since the beginning of 2023, it successfully negotiated the resolution of approximately $68.6 million in debt obligations, including a $64.7 million deferred payable owed to Partner Colorado Credit Union (PCCU). The debt resolution includes the previously announced agreements Safe Harbor entered into with PCCU that resulted in the settlement of the approximately $64.7 million deferred payable owed to PCCU, comprised of $14.5 million in serviceable debt payable at a 4.25% annual interest rate over a five-year period; and 11.2 million shares of Class A common stock in the Company valued at $50,162,549. The remaining $3.9 million in debt, which was resolved with a payment of $1.7 million in cash and $700,000 in serviceable debt payable at 0% interest over a one-year period;

    • On April 20, 2023, Safe Harbor appointed Douglas Fagan, President and CEO of PCCU, to its Board of Directors;

    • On May 11, 2023, the Company announced its partnership with Five Star Bank, a New York-based subsidiary of Financial Institutions, Inc., to expand crucial access to cannabis banking nationwide. Five Star Bank has the ability to dedicate up to $1 billion in cannabis deposit capacity, which will afford cannabis businesses of all sizes greater access to credit facilities, along with a robust suite of cannabis banking services;

    • On May 16, 2023, Safe Harbor announced it originated approximately $5.5 million in real estate loans to a Tier One Multi-State Operator;

    • On May, 23, 2023, The Company announced that it has opened 13 new accounts through its financial institution partners under its newly expanded Social Equity Program;

    • On June 15, 2023, Safe Harbor announced it originated a $6,695,000 loan for a global real estate investment firm, secured by a first lien on a Class A multitenant cannabis industrial property located in Oakland, California;

    • On June 22, 2023, the Company announced it has expanded its lending and deposit relationship with a tier-one multistate operator through the origination of an additional first lien-secured loan of approximately $2.9 million on a cultivation facility located in a limited license, adult-use cannabis state.

    Subsequent Operational Highlights

    • On July 12, 2023, Safe Harbor announced the launch of interest-bearing commercial deposit accounts to cannabis businesses nationwide through Five Star Bank;

    • On July 27, 2023, the Company announced increased its lending and deposit relationship with a tier one multi-state operator (“MSO”) by originating three new loans for affiliates of the MSO in the aggregate amount of $4,282,000;

    • On August 4, 2023, Safe Harbor announced Chief Executive Officer, Sundie Seefried, won The Green Market Report Cannabis Finance Award for Top CEO.

    2023 Financial Outlook
    Based on the continued strength of the Company's operations, Safe Harbor anticipates that full year 2023 revenue will be in the range of $15.3 million to $16.3 million as compared to the $9.4 million in revenue reported for the 2022 full year.

    Q2 2023 Financial Results
    For the quarter ended June 30, 2023, total revenue increased to $4.6 million, compared to $1.9 million in the prior year period, primarily due to higher investment and deposit, activity and onboarding income.

    Second quarter 2023 operating expenses increased to $22.5 million, compared to $1.5 million in the prior year period. The increase in operating expenses is mainly due to a $13.2 million impairment of goodwill and a $3.7 million impairment of finite lived intangible assets on account of the termination of the Master Services and Revenue Sharing Agreement with Central Bank under which the Company provided expertise and intellectual property to cannabis related businesses primarily located in Arkansas. The Company also had an increase in compensation and employee benefits; stock-based compensation expense, professional service expenses; investment hosting fees as a result of the reorganization; amortization and depreciation expense; and business insurance.

    Net loss for Q2 2023 was $17.6 million, compared to net income of $336,437 in the prior year period, primarily due to a $13.2 million impairment of goodwill and $3.7 million impairment of finite-lived intangible assets. The net loss also includes an increase in professional fees on account increase in compliances as well as increases in compensation, employee benefits, marketing, and insurance.

    As at June 30, 2023, the Company had cash and cash equivalents of $8.2 million, compared to $8.4 million at December 31, 2022.

    SHF Holdings, Inc.
    CONDENSED CONSOLIDATED BALANCE SHEETS
     
      
      June 30, 2023  December 31, 2022 
      (Unaudited)    
    ASSETS        
    Current Assets:        
    Cash and cash equivalents $8,239,095  $8,390,195 
    Accounts receivable – trade  1,425,589   1,401,839 
    Contract assets  1,980   21,170 
    Prepaid expenses – current portion  172,541   175,585 
    Accrued interest receivable  37,229   40,266 
    Short-term loans receivable, net  11,945   51,300 
    Other current assets  -   150,817 
    Total Current Assets $9,888,379  $10,231,172 
    Long-term loans receivable, net  289,668   1,250,691 
    Property, plant and equipment, net  170,206   49,614 
    Operating lease right to use assets  938,029   1,016,198 
    Goodwill  6,058,000   19,266,276 
    Intangible assets, net  6,230,802   10,621,087 
    Deferred tax asset  43,260,743   51,593,302 
    Prepaid expenses – long term position  637,500   712,500 
    Forward purchase receivable  4,584,221   4,584,221 
    Security deposit  22,795   17,795 
    Total Assets $72,080,343  $99,342,856 
    LIABILITIES AND PARENT-ENTITY NET INVESTMENT AND STOCKHOLDERS’ EQUITY        
    Current Liabilities:        
    Accounts payable $1,170,250  $2,851,457 
    Accrued expenses  1,195,872   6,354,485 
    Contract liabilities  60,382   996 
    Lease liabilities – current  184,123   20,124 
    Senior secured promissory note – current portion  1,976,340   - 
    Deferred consideration – current portion  14,636,792   14,359,822 
    Due to seller - current portion  -   25,973,017 
    Other current liabilities  88,416   11,291 
    Total Current Liabilities $19,312,175  $49,571,192 
    Warrant liability  223,573   666,510 
    Deferred consideration – long term portion  2,826,081   2,747,592 
    Forward purchase derivative liability  7,309,580   7,309,580 
    Due to seller – long term portion  -   30,976,783 
    Senior secured promissory note—long term portion  12,523,660   - 
    Lease liabilities – long term  873,883   1,008,109 
    Deferred underwriter fee  -   1,450,500 
    Indemnity liability  1,661,651   499,465 
    Total Liabilities $44,730,603  $94,229,731 
    Commitment and Contingencies (Note 15)        
    Parent-Entity Net Investment and Stockholders’ Equity        
             
    Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 4,221 shares issued and outstanding on June 30, 2023, and Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 14,616 shares issued and outstanding on December 31, 2022, respectively  -   1 
    Class A common stock, $.0001 par value, 130,000,000 shares authorized 46,265,317 issued and outstanding on June 30, 2023, and Class A common stock, $.0001 par value, 130,000,000 shares authorized, 23,732,889 issued and outstanding on December 31, 2022, respectively  4,627   2,374 
    Additional paid in capital  97,923,103   44,806,031 
    Retained deficit  (70,577,990)  (39,695,281)
    Total Parent-Entity Net Investment and Stockholders’ Equity $27,349,740  $5,113,125 
    Total Liabilities and Parent-Entity Net Investment and Stockholders’ Equity $72,080,343  $99,342,856 


    SHF Holdings, Inc.
    Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity
    (Unaudited)

    FOR THE THREE MONTHS ENDED JUNE 30, 2023

                             
      Preferred Stock  Class A Common
    Stock
      Additional
    Paid-in
      Parent-
    Entity Net
      Retained  Total
    Shareholders’
     
      Shares  Amount  Shares  Amount  Capital  Investment  deficit  Equity 
    Balance, March 31, 2023  10,896  $1   40,288,817  $4,029  $90,687,265  $-  $(46,695,249) $43,996,046 
    Conversion of PIPE shares  (6,675)  (1)  5,340,000   534   6,277,642   -   (6,278,174)  - 
    Restricted stock units  -   -   636,500   64   352,244   -   -   352,308 
    Stock option conversion  -   -   -   -   605,952   -   -   605,952 
    Net loss  -   -   -   -   -   -   (17,604,567)  (17,604,567)
    Balance, June 30, 2023  4,221  $-   46,265,317  $4,627  $97,923,103  $-  $(70,577,990) $27,349,740 

    FOR THE THREE MONTHS ENDED JUNE 30, 2022

      Preferred Stock  Class A Common
    Stock
      Additional
    Paid-in
      Parent-
    Entity Net
      Retained  Total
    Shareholders’
     
      Shares  Amount  Shares  Amount  Capital  Investment  deficit  Equity 
    Balance, March 31, 2022  -  $-   -  $-  $-  $7,900,700  $-  $7,900,700 
    Contribution from parent  -   -   -   -   -   74,999   -   74,999 
    Net profit  -   -   -   -   -   336,344   -   336,344 
    Balance, June 30, 2022  -  $-   -  $-  $-  $8,312,043  $-  $8,312,043 

    SHF Holdings, Inc.
    Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity
    (Unaudited)

    FOR THE SIX MONTHS ENDED JUNE 30, 2023

      Preferred Stock  Class A Common
    Stock
      Additional
    Paid-in
      Parent-
    Entity Net
      Retained  Total
    Shareholders’
     
      Shares  Amount  Shares  Amount  Capital  Investment  deficit  Equity 
    Balance, December 31, 2022  14,616  $1   23,732,889  $2,374  $44,806,031  $-  $(39,695,281) $5,113,125 
    Reversal of deferred underwriting cost  -   -   -   -   900,500   -   -   900,500 
    Cumulative effect from adoption of CECL  -   -   -   -   -   -   (581,321)  (581,321)
    Conversion of PIPE shares  (10,395)  (1)  10,066,200   1,006   11,282,369   -   (11,283,374)  - 
    Restricted stock units  -   -   1,266,228   127   1,209,711   -   -   1,209,838 
    Stock option conversion  -   -   -   -   1,319,204   -   -   1,319,204 
    Issuance of shares to PCCU (net of tax)  -   -   11,200,000   1,120   38,405,288   -   -   38,406,408 
    Net loss  -   -   -   -   -   -   (19,018,014)  (19,018,014)
    Balance, June 30, 2023  4,221  $-   46,265,317  $4,627  $97,923,103  $-  $(70,577,990) $27,349,740 

    FOR THE SIX MONTHS ENDED JUNE 30, 2022

      Preferred Stock  Class A Common
    Stock
      Additional
    Paid-in
      Parent-
    Entity Net
      Retained  Total
    Shareholders’
     
      Shares  Amount  Shares  Amount  Capital  Investment  deficit  Equity 
    Balance, December 31, 2021  -  $-   -  $-  $-  $7,339,101  $-  $7,339,101 
                                     
    Contribution from parent  -   -   -   -   -   134,998   -   134,998 
    Net income  -   -   -   -   -   837,944   -   837,944 
                                     
    Balance, June 30, 2022  -  $-   -  $-  $-  $8,312,043  $-  $8,312,043 
                                     


    SHF Holdings, Inc.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
     
      
           
      For the six months ended June 30, 
      2023  2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:        
    Net (loss) / income $(19,018,014) $837,944 
    Adjustments to reconcile net income to net cash provided by operating activities:        
    Depreciation and amortization expense  797,664   1,952 
    Stock compensation expense  2,529,042   - 
    Interest expense  1,187,940   - 
    Provision for credit losses  578,546   295,565 
    Lease expense  107,943   - 
    Impairment of goodwill  13,208,276   - 
    Impairment of finite-lived intangible assets  3,680,463   - 
    Deferred tax benefit  (1,261,424)  - 
    Change in fair value of warrant  (442,937)  - 
    Changes in operating assets and liabilities:        
    Accounts receivable  (23,750)  (208,133)
    Contract assets  19,190   - 
    Prepaid expenses  78,044   (13,450)
    Accrued interest receivable  3,036   (7,206)
    Deferred underwriting payable  (550,000)  - 
    Other current assets  150,817   - 
    Accounts payable  (1,604,082)  75,836 
    Accrued expenses  (440,503)  144,991 
    Deferred loan origination fees  -   118,116 
    Contract liabilities  59,386   (8,333)
    Security deposit  (5,000)  (1,868)
    Net cash (used in) provided by operating activities  (945,363)  1,235,414 
             
    CASH FLOWS USED IN INVESTING ACTIVITIES:        
    Purchase of property and equipment  (208,434)  (8,792)
    Funding of other investment  -   (500,000)
    Repayment of loans, net  1,002,697   24,923 
    Net cash provided by (used in) investing activities  794,263   (483,869)
    CASH FLOWS USED IN FINANCING ACTIVITIES:        
    Net change in parent funding, allocations, and distributions to parent  -   134,998 
    Net cash provided by financing activities  -   134,998 
             
    Net increase in cash and cash equivalents  (151,100)  886,543 
    Cash and cash equivalents – beginning of period  8,390,195   5,495,905 
    Cash and cash equivalents – end of period $8,239,095  $6,382,448 
             
    Supplemental disclosure        
    Shares issued for the settlement of PCCU debt obligation $38,406,408  $- 
    Cumulative effect from adoption of CECL  581,321   - 
    Interest payment on senior secured promissory note  104,678   - 
    Reversal of deferred underwriting cost  900,500   - 

    UNAUDITED Reconciliation of net income to non-GAAP EBITDA and Adjusted EBITDA is as follows:

      Three Months Ended June 30,  Six Months Ended June 30, 
      2023  2022  2023  2022 
    Net (loss)/income $(17,604,567) $336,344  $(19,018,014) $837,944 
    Interest expense  353,736   -   1,187,939   - 
    Depreciation and amortization  401,350   1,135   797,664   1,952 
    Taxes  (652,147)  -   (1,261,424)  - 
    EBITDA $(17,501,628) $337,479  $(18,293,835) $839,896 
                     
    Other adjustments –                
    Provision for credit losses  511,880   227,374   578,546   295,565 
    Change in the fair value of warrants  (9,789)  -   (442,937)  - 
    Stock option conversion  958,260   -   2,529,042   - 
    Impairment of goodwill and finite-lived intangible assets  16,888,739   -   16,888,739   - 
    Loan origination fees and costs  2,922   (653)  747   720 
    Adjusted EBITDA $850,384  $564,200  $1,260,302  $1,136,181 

    Safe Harbor Financial discloses EBITDA and Adjusted EBITDA, both of which are non-GAAP financial measures and are calculated as net income before taxes and depreciation and amortization expense in the case of EBITDA and further adjusted to exclude non-cash, unusual and/or infrequent costs in the case of Adjusted EBITDA. Management of the Company uses this information in evaluating period over period performance because it believes it presents an important metric regarding the Company’s ongoing operating performance.   Investors should consider non-GAAP financial measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.

    Conference Call Details:
    The Company’s Chief Executive Officer, Sundie Seefried and Chief Financial Officer, Jim Dennedy will host a conference call and webcast at 4:30 pm ET / 1:30 pm PT today to discuss the Company's financial results and provide investors with key business highlights.

    Date:Monday, August, 14, 2023
    Time:Webcast Link
    Live webcast and replay:4:30pm ET / 1:30pm PT
    Participant dial in numbers:646-307-1963 or 800-715-9871 (Toll Free)
    Passcode:3046638

    About Safe Harbor
    Safe Harbor is among the first service providers to offer compliance, monitoring and validation services to financial institutions, providing traditional banking services to cannabis, hemp, CBD, and ancillary operators, making communities safer, driving growth in local economies, and fostering long-term partnerships. Currently managing more than 1000 cannabis-related relationships, Safe Harbor, through its financial institution clients, implements high standards of accountability, transparency, monitoring, reporting and risk mitigation measures while meeting Bank Secrecy Act obligations in line with FinCEN guidance on cannabis-related businesses. Over the past eight years, Safe Harbor has facilitated more than $18 billion in deposit transactions for businesses with operations spanning over 40 states and US territories with regulated cannabis markets. For more information, visit www.shfinancial.org.

    Forward-Looking Statements
    Certain statements contained in this press release constitute "forward-looking statements'' within the meaning of federal securities laws. Forward-looking statements may include, but are not limited to, statements with respect to trends in the cannabis industry, including proposed changes in U.S and state laws, rules, regulations and guidance relating to Safe Harbor's services; Safe Harbor's growth prospects and Safe Harbor's market size; Safe Harbor's projected financial and operational performance, including relative to its competitors; new product and service offerings Safe Harbor may introduce in the future; the impact of recent volatility in the capital markets, which may adversely affect the price of the Company's securities; the outcome of any legal proceedings that may be instituted against Safe Harbor; other statements regarding Safe Harbor's expectations, hopes, beliefs, intentions or strategies regarding the future; and the other risk factors discussed in Safe Harbor's filings from time to time with the Securities and Exchange Commission. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "outlook," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would," and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject, are subject to risks and uncertainties. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond the control of Safe Harbor), and other assumptions, that may cause the actual results or performance to be materially different from those expressed or implied by these forward-looking statements.   . We discuss these risks in greater detail in the sections entitled “Risk Factors” in our Annual Report on Form 10-K and, as applicable, in our Quarterly Reports on Form 10-Q filed with the SEC. Given these uncertainties, you should not place undue reliance on these forward-looking statements.   Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

    Contact Information

    Safe Harbor Media
    Nick Callaio, Marketing Manager
    720.951.0619
    Nick@SHFinancial.org
     
      
    Safe Harbor Investor Relations
    ir@SHFinancial.org
     
      
    KCSA Strategic Communications
    Phil Carlson
    safeharbor@kcsa.com
     

     


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