--Net Income increased 245% year-over-year to approximately $2.0 million in the first quarter of 2024
--Adjusted EBITDA increased 165.3% to approximately $1.1 million(1)
--Operating Expenses decreased 35.8% versus the same period in 2023
GOLDEN, Colo., May 13, 2024 (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 financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial & Operational Summary
- Net Income increased 245% to approximately $2.0 million, compared to a net loss of approximately $1.4 million in the same period of 2023;
- Revenue was approximately $4.1 million, compared to approximately $4.2 million for the first quarter of 2023;
- Gross profit was approximately $325,000, versus a gross loss of approximately $1.6 million in the first quarter of 2024;
- Operating Expenses decreased 35.8% to $3.7 million, compared to $5.8 million in the first quarter of 2023;
- Adjusted EBITDA increased 165.3% to approximately $1.1 million, compared to $410,000 for the first quarter of 2023(1).
(1) Adjusted EBITDA is a non-GAAP financial metric. A reconciliation of non-GAAP to GAAP measures is included below in this earnings release.
“We continued to expand the breadth of our service offering in the first quarter, advancing several strategic initiatives and establishing a more diversified income base,” said Sundie Seefried, Chief Executive Officer of Safe Harbor Financial. “We have been very successful with this effort, specifically within our lending program, nearly tripling our loan book year-over-year and driving a 251% increase in our loan income to $1.64 million in the first quarter of 2024 compared to $466,293 in the comparable period of 2023.”
“These results speak directly to our unique ability to support the unmet financial needs of the cannabis industry, and the continued growth opportunity for Safe Harbor to address the evolving financial requirements of cannabis related businesses (CRB’s) through our streamlined platform. With the increasing likelihood that cannabis will be reclassified from a Schedule I drug to a Schedule III drug, we believe there will be a material increase of capital from these businesses moved into financial institutions, thereby creating stronger demand for our services,” concluded Seefried.
First Quarter 2024 Operational Highlights
- On January 4, 2024, the Company announced it originated a $9 Million first lien secured loan for a major, MSO-operated cultivation facility in Denver, Colorado.
- On March 12, 2024, Safe Harbor announced it originated a $4.6 Million secured credit facility for a Michigan cannabis operator.
Other Significant Events
- On April 15th, 2024, the Company appointed CEO, Sundie Seefried to its Board of Directors.
First Quarter 2024 Financial Results
For the first quarter ended March 31, 2024, total revenue decreased 3% to $4.1 million, compared to $4.2 million in the prior year period, due to fewer accounts and lower balances on deposit versus the prior year period.
First quarter 2024 net income was approximately $2.0 million, compared to a net loss of $1.4 million in the prior year period. The driver of the net income produced in the first quarter 2024 was due to lower expenses across the Company. Overall, operating expenses in the period decreased approximately 35.8% to $3.7 million, compared to $5.8 million in the prior year period.
As of March 31, 2024, the Company had cash and cash equivalents of $5.6 million, compared to $4.9 million at December 31, 2023.
For more information on the Company’s first quarter 2024 financial results, please refer to our Form 10-Q for the quarter ended March 31, 2024 filed with the U.S. Securities & Exchange Commission (the “SEC”) and accessible at www.sec.gov.
| SHF Holdings, Inc.CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| March 31, 2024(Unaudited) | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,626,362 | $ | 4,888,769 | ||||
| Accounts receivable – trade | 153,208 | 121,875 | ||||||
| Accounts receivable – related party | 1,111,390 | 2,095,320 | ||||||
| Prepaid expenses – current portion | 506,634 | 546,437 | ||||||
| Accrued interest receivable | 16,891 | 13,780 | ||||||
| Short-term loans receivable, net | 12,620 | 12,391 | ||||||
| Other current assets | - | 82,657 | ||||||
| Total Current Assets | $ | 7,427,105 | $ | 7,761,229 | ||||
| Long-term loans receivable, net | 379,863 | 381,463 | ||||||
| Property, plant and equipment, net | 45,366 | 84,220 | ||||||
| Operating lease right to use assets | 820,777 | 859,861 | ||||||
| Goodwill | 6,058,000 | 6,058,000 | ||||||
| Intangible assets, net | 3,564,890 | 3,721,745 | ||||||
| Deferred tax asset | 44,278,374 | 43,829,019 | ||||||
| Prepaid expenses – long term position | 525,000 | 562,500 | ||||||
| Forward purchase receivable | 4,584,221 | 4,584,221 | ||||||
| Security deposit | 18,875 | 18,651 | ||||||
| Total Assets | $ | 67,702,471 | $ | 67,860,909 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 179,242 | $ | 217,392 | ||||
| Accounts payable-related party | 125,693 | 577,315 | ||||||
| Accrued expenses | 645,635 | 1,008,987 | ||||||
| Contract liabilities | 2,692 | 21,922 | ||||||
| Lease liabilities – current | 142,863 | 132,546 | ||||||
| Senior secured promissory note – current portion | 3,028,738 | 3,006,991 | ||||||
| Deferred consideration – current portion | 2,921,257 | 2,889,792 | ||||||
| Other current liabilities | 62,160 | 41,639 | ||||||
| Total Current Liabilities | $ | 7,108,280 | $ | 7,896,584 | ||||
| Warrant liabilities | 2,908,642 | 4,164,129 | ||||||
| Deferred consideration – long term portion | 594,000 | 810,000 | ||||||
| Forward purchase derivative liability | 7,309,580 | 7,309,580 | ||||||
| Senior secured promissory note—long term portion | 10,241,884 | 11,004,175 | ||||||
| Net deferred indemnified loan origination fees | 421,907 | 63,275 | ||||||
| Lease liabilities – long term | 835,598 | 875,447 | ||||||
| Indemnity liability | 1,315,263 | 1,382,408 | ||||||
| Total Liabilities | $ | 30,735,154 | $ | 33,505,598 | ||||
| Commitment and Contingencies (Note 13) | ||||||||
| Stockholders’ Equity | ||||||||
| Convertible preferred stock, $.0001 par value, 1,250,000 shares authorized, 111 and 1,101 shares issued and outstanding on March 31, 2024, and December 31, 2023, respectively | - | - | ||||||
| Class A common stock, $.0001 par value, 130,000,000 shares authorized, 55,431,001 and 54,563,372 issued and outstanding on March 31, 2024, and December 31, 2023, respectively | 5,545 | 5,458 | ||||||
| Additional paid in capital | 107,348,166 | 105,919,674 | ||||||
| Retained deficit | (70,386,394 | ) | (71,569,821 | ) | ||||
| Total Stockholders’ Equity | $ | 36,967,317 | $ | 34,355,311 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 67,702,471 | $ | 67,860,909 | ||||
| SHF Holdings, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) | ||||||||
| For the three months endedMarch 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | 4,050,799 | $ | 4,180,379 | ||||
| Operating Expenses | ||||||||
| Compensation and employee benefits | $ | 2,280,038 | $ | 3,659,520 | ||||
| General and administrative expenses | 984,220 | 1,538,874 | ||||||
| Professional services | 460,950 | 449,246 | ||||||
| Rent expense | 69,437 | 87,742 | ||||||
| Provision (benefit) for credit losses | (68,787 | ) | 66,666 | |||||
| Total operating expenses | $ | 3,725,858 | $ | 5,802,048 | ||||
| Operating income/ (loss) | 324,941 | (1,621,669 | ) | |||||
| Other (income) expenses | ||||||||
| Change in the fair value of deferred consideration | (184,535 | ) | 190,943 | |||||
| Interest expense | 154,172 | 643,260 | ||||||
| Change in fair value of warrant liabilities | (1,255,487 | ) | (433,148 | ) | ||||
| Total other (income)/ expenses | $ | (1,285,850 | ) | $ | 401,055 | |||
| Net income/ (loss) before income tax | 1,610,791 | (2,022,724 | ) | |||||
| Income tax benefit | $ | 438,885 | $ | 609,277 | ||||
| Net income/ (loss) | 2,049,676 | (1,413,447 | ) | |||||
| Weighted average shares outstanding, basic | 55,213,609 | 25,670,730 | ||||||
| Basic net income/ (loss) per share | $ | 0.04 | $ | (0.06 | ) | |||
| Weighted average shares outstanding, diluted | 56,268,075 | 25,670,730 | ||||||
| Diluted income/ (loss) per share | $ | 0.04 | $ | (0.06 | ) | |||
| SHF Holdings, Inc.Condensed Consolidated Statements of Stockholders’ Equity(Unaudited) | ||||||||||||||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2024 | ||||||||||||||||||||||||||||
| Preferred Stock | Class ACommon Stock | AdditionalPaid-in | Retained | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| Balance, December 31, 2023 | 1,101 | $ | - | 54,563,372 | $ | 5,458 | $ | 105,919,674 | $ | (71,569,821 | ) | $ | 34,355,311 | |||||||||||||||
| Conversion of PIPE shares | (990 | ) | - | 792,000 | 79 | 866,170 | (866,249 | ) | - | |||||||||||||||||||
| Restricted stock units (net of tax) | - | - | 75,629 | 8 | (14,325 | ) | - | (14,317 | ) | |||||||||||||||||||
| Stock compensation cost | - | - | - | - | 576,647 | - | 576,647 | |||||||||||||||||||||
| Net Income | - | - | - | - | - | 2,049,676 | 2,049,676 | |||||||||||||||||||||
| Balance, March 31, 2024 | 111 | - | 55,431,001 | 5,545 | 107,348,166 | (70,386,394 | ) | 36,967,317 | ||||||||||||||||||||
| SHF Holdings, Inc.Condensed Consolidated Statements of Stockholders’ Equity(Unaudited) | ||||||||||||||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2023 | ||||||||||||||||||||||||||||
| Preferred Stock | Class ACommon Stock | AdditionalPaid-in | Retained | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| Balance, December 31, 2022 | 14,616 | $ | 1 | 23,732,889 | $ | 2,374 | $ | 44,806,031 | $ | (39,695,281 | ) | $ | 5,113,125 | |||||||||||||||
| Cumulative effect from adoption of CECL | - | - | - | - | - | (581,321 | ) | (581,321 | ) | |||||||||||||||||||
| Conversion of PIPE shares | (3,720 | ) | - | 4,726,200 | 473 | 5,004,727 | (5,005,200 | ) | - | |||||||||||||||||||
| Stock option conversion | - | - | 629,728 | 62 | 1,570,719 | - | 1,570,781 | |||||||||||||||||||||
| Issuance of shares to PCCU (net of tax) | - | - | 11,200,000 | 1,120 | 38,405,288 | - | 38,406,408 | |||||||||||||||||||||
| Reversal of deferred underwriting cost | - | - | - | - | 900,500 | - | 900,500 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (1,413,447 | ) | (1,413,447 | ) | |||||||||||||||||||
| Balance, March 31, 2023 | 10,896 | $ | 1 | 40,288,817 | $ | 4,029 | $ | 90,687,265 | $ | (46,695,249 | ) | $ | 43,996,046 | |||||||||||||||
| SHF Holdings, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) | ||||||||
| For the three months endedMarch 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income/ (loss) | $ | 2,049,676 | $ | (1,413,447 | ) | |||
| Adjustments to reconcile net income/ (loss) to net cash provided by/ (used in) operating activities: | ||||||||
| Depreciation and amortization expense | 195,709 | 751,225 | ||||||
| Stock compensation expense | 562,330 | 1,570,781 | ||||||
| Amortization of deferred origination fees | (27,970 | ) | (14,104 | ) | ||||
| Interest expense | - | 873,289 | ||||||
| (Benefit)/ provision for credit losses | (68,787 | ) | 66,666 | |||||
| Amortization of right of use assets | 9,552 | 17,762 | ||||||
| Income tax benefit | (438,885 | ) | (609,277 | ) | ||||
| Change in the fair value of deferred consideration | (184,535 | ) | 190,943 | |||||
| Change in fair value of warrant | (1,255,487 | ) | (433,148 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable – Trade | (31,333 | ) | (30,716 | ) | ||||
| Accounts receivable – related party | 983,930 | 182,824 | ||||||
| Contract assets | - | (13,019 | ) | |||||
| Prepaid expenses | 77,303 | 77,436 | ||||||
| Accrued interest receivable | (3,111 | ) | (146,106 | ) | ||||
| Deferred underwriting payable | - | (550,000 | ) | |||||
| Other current assets | 82,657 | 150,817 | ||||||
| Other current liabilities | 10,048 | 75,000 | ||||||
| Accounts payable | (38,153 | ) | (533,945 | ) | ||||
| Accounts Payable – related party | (451,622 | ) | (65,288 | ) | ||||
| Accrued expenses | (363,347 | ) | (466,849 | ) | ||||
| Contract liabilities | (19,230 | ) | 78,616 | |||||
| Net deferred indemnified loan origination fees | 386,602 | 8,500 | ||||||
| Security deposit | (224 | ) | - | |||||
| Net cash provided by (used in) operating activities | 1,475,123 | (232,040 | ) | |||||
| CASH FLOWS PROVIDED BY INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | - | (548,671 | ) | |||||
| Net repayment of loans | 3,014 | 1,019,268 | ||||||
| Net cash provided by investing activities | 3,014 | 470,597 | ||||||
| CASH FLOWS USED IN FINANCING ACTIVITIES: | ||||||||
| Repayment of senior secured promissory note | (740,544 | ) | - | |||||
| Net cash used in financing activities | (740,544 | ) | - | |||||
| Net increase in cash and cash equivalents | 737,593 | 238,557 | ||||||
| Cash and cash equivalents – beginning of period | 4,888,769 | 8,390,195 | ||||||
| Cash and cash equivalents – end of period | $ | 5,626,362 | $ | 8,628,752 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Interest paid | $ | 156,414 | $ | - | ||||
| Non-Cash transactions: | ||||||||
| Shares issued for the settlement of PCCU debt obligation | $ | - | $ | 38,406,408 | ||||
| Cumulative effect from adoption of CECL | $ | - | $ | 581,321 | ||||
Reconciliation of Net income (loss) to non-GAAP EBITDA and Adjusted EBITDA(Unaudited)
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 that EBITDA and Adjusted EBITDA present important metrics 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.
A reconciliation of Net income (loss) to non-GAAP EBITDA and Adjusted EBITDA is as follows:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net income/(loss) | $ | 2,049,676 | $ | (1,413,447 | ) | |||
| Interest expense | 154,172 | 643,260 | ||||||
| Depreciation and amortization | 195,709 | 396,314 | ||||||
| Taxes | (438,885 | ) | (609,277 | ) | ||||
| EBITDA | $ | 1,960,672 | $ | (983,150 | ) | |||
| Other adjustments – | ||||||||
| (Benefit)/ Provision for credit losses | (68,787 | ) | 66,666 | |||||
| Change in the fair value of warrants | (1,255,487 | ) | (433,148 | ) | ||||
| Change in the fair value of deferred consideration | (184,535 | ) | 190,943 | |||||
| Stock based compensation | 612,124 | 1,570,782 | ||||||
| Loan origination fees and costs | 23,373 | (2,175 | ) | |||||
| Adjusted EBITDA | $ | 1,087,360 | $ | 409,918 | ||||
For the quarter ending March 31, 2024, our EBITDA income improved primarily as a result of lower General and Administrative expenses and reduced stock-based compensation. Additionally, the increase in adjusted EBITDA income during this period was mainly attributed to the decrease in General and Administrative expenses. This reduction was driven by lower investment hosting fees, decreased amortization and depreciation expenses, and reduced business insurance costs. Additionally, there were decreases in compensation, employee benefits, marketing expenses, and other insurance costs. These factors contributing to our financial performance are further discussed in the “Discussion of our Results of Operations” section below. Other adjustments include estimated future credit losses not yet realized, including amounts indemnified to PCCU for loans funded by them. The Company had entered into a Commercial alliance agreement with PCCU, pursuant to which the Company agreed to indemnify PCCU for claims associated with CRB activities including any loan default related losses for loans funded by PCCU. Deferred loan origination fees and costs represent the change in net deferred loan origination fees and costs. When included with a new loan origination, we receive an upfront loan origination fee in conjunction with new loans funded by our financial institution partners and incur costs associated with originating a specific loan. For accounting purposes, the cash received for loan origination fees and costs is initially deferred and recognized as interest income utilizing the interest method.
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 on May 13, 2024, to discuss the Company's financial results and provide investors with key business highlights.
For those interested in listening in to the conference call, please dial in and ask to join the Safe Harbor Financial call.
| Date: | Monday, May 13, 2024 |
| Time: | 4:30 p.m. ET / 1:30 p.m. PT |
| Live webcast and replay: | https://edge.media-server.com/mmc/p/q2tyra8n |
| Participant Dial-In: | 646-307-1963 or 800-715-9871 (Toll Free) |
| Passcode: | 9092789 |
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. 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 $21 billion in deposit transactions for businesses with operations spanning over 41 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 and loan performance; 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; Safe Harbor’s ability to make the same or similar loans in the future; 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 SEC. 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. These and other risks are discussed in detail in the periodic reports that Safe Harbor files with the SEC, and investors are urged to review those periodic reports and Safe Harbor’s other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, before making an investment decision. Safe Harbor assumes no obligation to update its forward-looking statements except as required by law.
Contact Information
Safe Harbor MediaNick Callaio, Marketing Manager720.951.0619[email protected]
Safe Harbor Investor Relations[email protected]
KCSA Strategic CommunicationsPhil Carlson[email protected]
