Finance

Safe Harbor Financial Reports Financial Results for Second Quarter and Six Months Ended June 30, 2024


Safe Harbor Financial Services, Inc.Safe Harbor Financial Services, Inc.

Safe Harbor Financial Services, Inc.

–Net Income increased to $0.9 million in the second quarter of 2024

–Loan Interest Income increased 203.6% year-over-year

–Excluding impairment expense in 2023, Operating Expenses decreased 34.5% versus 2023

–Cash and cash equivalents increased 25% to $6.1 million

GOLDEN, Colo., Aug. 14, 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 second quarter and six months ended June 30, 2024.

Second Quarter 2024 Financial and Operational Summary

  • Net Income increased to approximately $0.9 million, compared to a net loss of approximately $17.6 million in the same period of 2023;

  • Revenue was approximately $4.0 million, compared to approximately $4.6 million for the second quarter of 2023;

  • Operating Expenses decreased to $3.7 million, compared to $22.5 million in the second quarter of 2023;

  • Adjusted EBITDA(1) increased 14.5% to approximately $0.97 million, compared to approximately $850,000 for the second quarter of 2023(1).

Six-month 2024 Financial & Operational Summary

  • Net Income increased to approximately $3.0 million, compared to a net loss of approximately $19.0 million in the first half of 2023;

  • Revenue was approximately $8.1 million, compared to approximately $8.8 million for the first half of 2023;

  • Operating Expenses decreased to approximately $7.5 million, compared to approximately $28.3 million in the first half of 2023;

  • Adjusted EBITDA(1) increased 63.5% to approximately $2.06 million, compared to approximately $1.26 million for the first half 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.

“During the quarter, we experienced strength across our business, as well as operated more efficiently, both of which contributed meaningfully to our strong results,” said Sundie Seefried, Chief Executive Officer of Safe Harbor Financial. “A major contributor to our favorable results was our lending platform, which posted record quarterly loan income of approximately $1.8 million in the second quarter of 2024, an increase of over 203% year-over year. This improvement helped to drive our gross margins substantially higher as we focused on shifting to higher margin products, which in addition to streamlining the business, improved improve our bottom-line.”

“During the second quarter we launched our Small Business Line of Credit Program, exemplifying our commitment to supporting the capital requirements of the cannabis industry, addressing the growing demand from small and mid-sized cannabis businesses, and diversifying our income sources. We also recently recouped the entire principal from a $3.1 million defaulted loan, further demonstrating the strength of our underwriting process. The money collected from this loan also increased our lending capacity, allowing Safe Harbor to more effectively meet client credit needs,” added Seefried.

Second Quarter 2024 Operational Highlights

  • On April 15, 2024, the Company appointed CEO Sundie Seefried to the Board of Directors.

  • On June 5, 2024, Safe Harbor announced a new small business line of credit program with the origination of three new lines of credit.

Subsequent Operational Highlights

  • On July 9, 2024, the Company announced it successfully exited a $3.1 million loan in default, collecting 100% of principal, as well as over $200,000 in accrued interest.

  • On July 25, 2024, Safe Harbor announced it was teaming up with BIPOCann to empower minority-owned cannabis businesses.

Second Quarter 2024 Financial Results

For the second quarter ended June 30, 2024, total revenue was $4.0 million, compared to $4.6 million in the prior year period. The decrease in revenue was due to a reduction in deposit activity and onboarding income and was primarily attributable to the decrease in the number of accounts related to the Abaca acquisition. For the three months ended June 30, 2024, PCCU accounted for $1,206,922 of the revenue generated from deposits, activities, and client onboarding, compared with $1,385,845 during the same period last year. In Q2 2024, the Company recognized $121,108 in account hosting expenses, in accordance with the Commercial Alliance Agreement, compared with account hosting expenses of $60,833 for Q2 2023.

Operating expenses for the second quarter 2024 decreased to $3.7 million, compared to $22.5 million in the prior year period, which was comprised of the following:

  • Compensation and employee benefits decreased in the three months ended June 30, 2024, compared to compared to Q2 2023 due to a reduction in stock-based compensation and a decrease in the headcount.

  • Rent expenses decreased in the second quarter of 2024 compared to the second quarter of 2023 due to reduction in the number of lease properties.

  • Provision for credit losses decreased in the three months ended June 30, 2024 to a benefit for this expense item compared to and expense in the three months ended June 30, 2023 due to a decrease in the loan loss rate.

  • For the quarter ended June 30, 2024, general and administrative expenses decreased across various categories including: i) approximately $345,271 in investment hosting fees due to a reduction in investment income, and (ii) approximately $206,560 in amortization and depreciation due to the reduction in the gross value of intangible assets from impairment recorded in 2023.

  • The Company incurred significant impairment charges to goodwill and long-lived intangible assets in the second quarter of 2023. Removing these one-time, non-cash expenses, operating expenses for the comparable prior year quarter were $5.6 million.

Second quarter 2024 net income was approximately $0.9 million, compared to a net loss of $17.6 million in the prior year period. The improvement in net income in Q2 2024 was the result of lower expenses across the Company and the greater number of performing loans at better interest rates than the previous period.

First Six Months 2024 Financial Results

For the six-months ended June 30, 2024, total revenue decreased to $8.1 million, compared to approximately $8.8 million in the prior year period. The decrease in revenue for the first six months of 2024 was due to a reduction in deposit activity and onboarding income and was primarily attributable to the decrease in the number of accounts related to the Abaca acquisition. For the six months ended June 30, 2024, PCCU accounted for $2,424,598 of the revenue generated from deposits, activities, and client onboarding. Related to this revenue, the Company recognized $277,721 in account hosting expenses, in accordance with the Commercial Alliance Agreement. For the six months ended June 30, 2023, PCCU contributed $2,763,684 to the revenue from similar sources, with account hosting expenses amounting to $116,258 as per the Loan Servicing Agreement provisions.

First six-months of 2024 operating expenses decreased to $7.5 million, compared to $28.3 million in the prior year period, which was comprised of the following:

  • Compensation and employee benefits decreased in the six-month period ended June 30, 2024 compared to the six month period ended June 30, 2023 on account of stock-based compensation and also the decrease in the headcount.

  • Rent expenses decreased in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to reduction in the number of lease properties.

  • (Benefit)/ Provision for credit losses decreased in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to a decrease in the estimated loss rate.

  • For the six months of 2024, general and administrative expenses decreased across various categories including: i) approximately $632,675 in investment hosting fees due to a reduction in investment income and ii) approximately $407,165 in amortization and depreciation due to the reduction in the gross value of intangible assets from impairment recorded in 2023.

Net income for the first six-months of 2024 was approximately $3.0 million, compared to a net loss of approximately $19.0 million in the prior year period. The driver of the net income produced in the first six months of 2024 was due to lower expenses across the Company and the greater number of performing loans at better interest rates than the previous period.

As of June 30, 2024, the Company had cash and cash equivalents of $6.1 million, compared to $4.9 million at December 31, 2023.

For more information on the Company’s second quarter 2024 financial results, please refer to our Form 10-Q for the quarter ended June 30, 2024 filed with the U.S. Securities & Exchange Commission (the “SEC”) and accessible at www.sec.gov.

SHF Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

June 30, 2024
(Unaudited)

 

 

December 31, 2023

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,111,982

 

 

$

4,888,769

 

Accounts receivable – trade

 

 

302,749

 

 

 

121,875

 

Accounts receivable – related party

 

 

1,003,251

 

 

 

2,095,320

 

 

 

 

 

 

 

 

 

 

Prepaid expenses – current portion

 

 

378,102

 

 

 

546,437

 

Accrued interest receivable

 

 

23,250

 

 

 

13,780

 

Short-term loans receivable, net

 

 

12,853

 

 

 

12,391

 

Other current assets

 

 

 

 

 

82,657

 

Total Current Assets

 

$

7,832,187

 

 

$

7,761,229

 

Long-term loans receivable, net

 

 

376,809

 

 

 

381,463

 

Property, plant and equipment, net

 

 

7,430

 

 

 

84,220

 

Operating lease right to use assets

 

 

781,693

 

 

 

859,861

 

Goodwill

 

 

6,058,000

 

 

 

6,058,000

 

Intangible assets, net

 

 

3,408,036

 

 

 

3,721,745

 

Deferred tax asset

 

 

43,793,536

 

 

 

43,829,019

 

Prepaid expenses – long term position

 

 

487,500

 

 

 

562,500

 

Forward purchase receivable

 

 

4,584,221

 

 

 

4,584,221

 

Security deposit

 

 

19,102

 

 

 

18,651

 

Total Assets

 

$

67,348,514

 

 

$

67,860,909

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

154,445

 

 

$

217,392

 

Accounts payable-related party

 

 

103,258

 

 

 

577,315

 

 

 

 

 

 

 

 

 

 

Accrued expenses

 

 

949,686

 

 

 

1,008,987

 

Contract liabilities

 

 

66,795

 

 

 

21,922

 

Lease liabilities – current

 

 

153,357

 

 

 

132,546

 

Senior secured promissory note – current portion

 

 

3,072,871

 

 

 

3,006,991

 

Deferred consideration – current portion

 

 

2,952,722

 

 

 

2,889,792

 

Other current liabilities

 

 

77,315

 

 

 

41,639

 

Total Current Liabilities

 

$

7,530,449

 

 

$

7,896,584

 

Warrant liabilities

 

 

1,822,356

 

 

 

4,164,129

 

Deferred consideration – long term portion

 

 

351,000

 

 

 

810,000

 

Forward purchase derivative liability

 

 

7,309,580

 

 

 

7,309,580

 

Senior secured promissory note—long term portion

 

 

9,450,788

 

 

 

11,004,175

 

Net deferred indemnified loan origination fees

 

 

410,035

 

 

 

63,275

 

Lease liabilities – long term

 

 

795,062

 

 

 

875,447

 

Indemnity liability

 

 

1,218,263

 

 

 

1,382,408

 

Total Liabilities

 

$

28,887,533

 

 

$

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 June 30, 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 June 30, 2024, and December 31, 2023, respectively

 

 

5,545

 

 

 

5,458

 

Additional paid in capital

 

 

107,900,303

 

 

 

105,919,674

 

Retained deficit

 

 

(69,444,867

)

 

 

(71,569,821

)

Total Stockholders’ Equity

 

$

38,460,981

 

 

$

34,355,311

 

Total Liabilities and Stockholders’ Equity

 

$

67,348,514

 

 

$

67,860,909

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

SHF Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended
June 30,

 

 

For the six months ended
June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

4,037,535

 

 

$

4,572,508

 

 

$

8,088,334

 

 

$

8,752,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

$

2,264,931

 

 

$

2,540,331

 

 

$

4,544,969

 

 

$

6,199,851

 

General and administrative expenses

 

 

1,001,764

 

 

 

1,852,589

 

 

 

1,985,984

 

 

 

3,391,463

 

Impairment of goodwill

 

 

 

 

 

13,208,276

 

 

 

 

 

 

13,208,276

 

Impairment of finite-lived intangible assets

 

 

 

 

 

3,680,463

 

 

 

 

 

 

3,680,463

 

Professional services

 

 

503,727

 

 

 

620,735

 

 

 

964,677

 

 

 

1,069,981

 

Rent expense

 

 

64,198

 

 

 

71,001

 

 

 

133,635

 

 

 

158,743

 

Provision (benefit) for credit losses

 

 

(97,248

)

 

 

511,880

 

 

 

(166,035

)

 

 

578,546

 

Total operating expenses

 

$

3,737,372

 

 

$

22,485,275

 

 

$

7,463,230

 

 

$

28,287,323

 

Operating income/ (loss)

 

$

300,163

 

 

$

(17,912,767

)

 

$

625,104

 

 

$

(19,534,436

)

Other income /(expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in the fair value of deferred consideration

 

 

211,535

 

 

 

(193,065

)

 

 

396,070

 

 

 

(384,008

)

Interest expense

 

 

(168,830

)

 

 

(160,671

)

 

 

(323,002

)

 

 

(803,931

)

Change in fair value of warrant liabilities

 

 

1,086,286

 

 

 

9,789

 

 

 

2,341,773

 

 

 

442,937

 

Total other income/ (expenses)

 

$

1,128,991

 

 

$

(343,947

)

 

$

2,414,841

 

 

$

(745,002

)

Net income/ (loss) before income tax

 

 

1,429,154

 

 

 

(18,256,714

)

 

 

3,039,945

 

 

 

(20,279,438

)

Income tax benefit/ (expense), net

 

 

(487,627

)

 

 

652,147

 

 

 

(48,742

)

 

 

1,261,424

 

Net income/ (loss)

 

$

941,527

 

 

$

(17,604,567

)

 

$

2,991,203

 

 

$

(19,018,014

)

Weighted average shares outstanding, basic

 

 

55,431,001

 

 

 

43,859,305

 

 

 

55,321,711

 

 

 

34,815,264

 

Basic net income/ (loss) per share

 

$

0.02

 

 

$

(0.40

)

 

$

0.05

 

 

$

(0.55

)

Weighted average shares outstanding, diluted

 

 

56,485,467

 

 

 

43,859,305

 

 

 

56,376,177

 

 

 

34,815,264

 

Diluted income / (loss) per share

 

$

0.02

 

 

$

(0.40

)

 

$

0.05

 

 

$

(0.55

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

SHF Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

FOR THE THREE MONTHS ENDED JUNE 30, 2024

 

 

Preferred Stock

 

 

Class A
Common Stock

 

 

Additional
Paid-in

 

 

Retained

 

 

Total Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance, March 31, 2024

 

 

111

 

 

$

       –

 

 

 

55,431,001

 

 

$

5,545

 

 

$

107,348,166

 

 

$

(70,386,394

)

 

$

36,967,317

 

Conversion of PIPE shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock units (net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35,478

 

 

 

 

 

 

35,478

 

Stock compensation cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

516,659

 

 

 

 

 

 

516,659

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

941,527

 

 

 

941,527

 

Balance, June 30, 2024

 

 

111

 

 

 

 

 

 

55,431,001

 

 

$

5,545

 

 

$

107,900,303

 

 

$

(69,444,867

)

 

$

38,460,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE THREE MONTHS ENDED JUNE 30, 2023

 

 

Preferred Stock

 

 

Class A
Common Stock

 

 

Additional
Paid-in

 

 

Retained

 

 

Total Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

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

)

 

 

 

Stock option conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

605,953

 

 

 

 

 

 

605,953

 

Restricted stock units

 

 

 

 

 

 

 

 

636,500

 

 

 

64

 

 

 

352,244

 

 

 

 

 

 

352,308

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHF Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

FOR THE SIX MONTHS ENDED JUNE 30, 2024

 

 

Preferred Stock

 

 

Class A
Common Stock

 

 

Additional
Paid-in

 

 

Retained

 

 

Total Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

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

 

 

 

21,153

 

 

 

 

 

 

21,161

 

Stock compensation cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,093,306

 

 

 

 

 

 

1,093,306

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,991,203

 

 

 

2,991,203

 

Balance, June 30, 2024

 

 

111

 

 

 

 

 

 

55,431,001

 

 

 

5,545

 

 

 

107,900,303

 

 

 

(69,444,867

)

 

 

38,460,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE SIX MONTHS ENDED JUNE 30, 2023

 

 

Preferred Stock

 

 

Class A
Common Stock

 

 

Additional
Paid-in

 

 

Retained

 

 

Total Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

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

 

 

(10,395

)

 

 

(1

)

 

 

10,066,200

 

 

 

1,006

 

 

 

11,282,369

 

 

 

(11,283,374

)

 

 

 

Stock option conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,319,204

 

 

 

 

 

 

1,319,204

 

Restricted stock units

 

 

 

 

 

 

 

 

1,266,228

 

 

 

127

 

 

 

1,209,711

 

 

 

 

 

 

1,209,838

 

Reversal of deferred underwriting cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

900,500

 

 

 

 

 

 

900,500

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

SHF Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

 

 

 

 

 

 

 

 

For the six months ended
June 30,

 

 

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income/ (loss)

 

$

2,991,203

 

 

$

(19,018,014

)

Adjustments to reconcile net income/ (loss) to net cash provided by/ (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

390,499

 

 

 

797,664

 

Stock compensation expense (net of RSU tax adjustment)

 

 

1,114,467

 

 

 

2,529,042

 

Amortization of net deferred indemnified loan origination fees

 

 

(55,842

)

 

 

(27,923

)

Interest expense

 

 

 

 

 

803,931

 

(Benefit)/ provision for credit losses

 

 

(166,035

)

 

 

578,546

 

Lease expense

 

 

18,594

 

 

 

107,943

 

Impairment of goodwill

 

 

 

 

 

13,208,276

 

Impairment of finite-lived intangible assets

 

 

 

 

 

3,680,463

 

Deferred tax expense/(benefit), net

 

 

45,953

 

 

 

(1,261,424

)

Change in the fair value of deferred consideration

 

 

(396,070

)

 

 

384,008

 

Change in fair value of warrant

 

 

(2,341,773

)

 

 

(442,937

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable – trade

 

 

(180,874

)

 

 

(113,122

)

Accounts receivable – related party

 

 

1,092,069

 

 

 

89,372

 

Contract assets

 

 

 

 

 

19,190

 

Prepaid expenses

 

 

243,335

 

 

 

78,045

 

Accrued interest receivable

 

 

(9,469

)

 

 

3,036

 

Deferred underwriting payable

 

 

 

 

 

(550,000

)

Other current assets

 

 

82,657

 

 

 

150,817

 

Other current liabilities

 

 

25,203

 

 

 

 

Accounts payable

 

 

(62,950

)

 

 

(1,597,740

)

Accounts payable – related party

 

 

(474,057

)

 

 

(6,342

)

Accrued expenses

 

 

(59,296

)

 

 

(440,503

)

Contract liabilities

 

 

44,873

 

 

 

59,386

 

Net deferred indemnified loan origination fees

 

 

402,601

 

 

 

8,500

 

Security deposit

 

 

(451

)

 

 

(5,000

)

Net cash provided by (used in) operating activities

 

 

2,704,637

 

 

 

(964,786

)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

 

(208,434

)

Net repayment of loans

 

 

6,083

 

 

 

1,022,120

 

Net cash provided by investing activities

 

 

6,083

 

 

 

813,686

 

CASH FLOWS USED IN FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repayment of senior secured promissory note

 

 

(1,487,507

)

 

 

 

Net cash used in financing activities

 

 

(1,487,507

)

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

1,223,213

 

 

 

(151,100

)

Cash and cash equivalents – beginning of period

 

 

4,888,769

 

 

 

8,390,195

 

Cash and cash equivalents – end of period

 

$

6,111,982

 

 

$

8,239,095

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

Interest paid

 

$

325,327

 

 

$

104,678

 

Non-Cash transactions:

 

 

 

 

 

 

 

 

Shares issued for the settlement of PCCU debt obligation

 

$

 

 

$

38,406,408

 

Cumulative effect from adoption of CECL

 

 

 

 

 

581,321

 

Reversal of deferred underwriting cost

 

 

 

 

 

900,500

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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 to non-GAAP EBITDA and Adjusted EBITDA is as follows:

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net (loss)/income

 

$

941,527

 

 

$

(17,604,567

)

 

$

2,991,203

 

 

$

(19,018,014

)

Interest expense

 

 

168,830

 

 

 

160,671

 

 

 

323,002

 

 

 

803,931

 

Depreciation and amortization

 

 

194,790

 

 

 

401,350

 

 

 

390,499

 

 

 

797,664

 

Taxes

 

 

487,627

 

 

 

(652,147

)

 

 

48,742

 

 

 

(1,261,424

)

EBITDA

 

$

1,792,774

 

 

$

(17,694,693

)

 

$

3,753,446

 

 

$

(18,677,843

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other adjustments –

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Benefit)/ Provision for credit losses

 

 

(97,248

)

 

 

511,880

 

 

 

(166,035

)

 

 

578,546

 

Change in the fair value of warrants

 

 

(1,086,286

)

 

 

(9,789

)

 

 

(2,341,773

)

 

 

(442,937

)

Change in the fair value of deferred consideration

 

 

(211,535

)

 

 

193,065

 

 

 

(396,070

)

 

 

384,008

 

Stock based compensation

 

 

552,137

 

 

 

958,260

 

 

 

1,164,261

 

 

 

2,529,042

 

Impairment of goodwill and finite-lived intangible assets

 

 

 

 

 

16,888,739

 

 

 

 

 

 

16,888,739

 

Loan origination fees and costs

 

 

23,800

 

 

 

2,922

 

 

 

47,173

 

 

 

747

 

Adjusted EBITDA

 

$

973,642

 

 

$

850,384

 

 

$

2,061,002

 

 

$

1,260,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the period six months and three months ended June 30, 2024, our EBITDA income improved primarily as a result of 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 has 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 August 14, 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:

Wednesday, August 14, 2024

 

Time:

4:30 p.m. ET / 1:30 p.m. PT

 

Live webcast and replay:

https://edge.media-server.com/mmc/p/d2eee4n4

 

Participant Dial-In:

646-307-1963 or 800-715-9871 (Toll Free)

 

Passcode:

9502925

 

 

 

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 $23 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.

Cautionary Statement Regarding 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 historical performance; new product and service offerings Safe Harbor may introduce in the future; the impact 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.

Contact Information
Safe Harbor Media
Nick Callaio, Marketing Manager
720.951.0619
[email protected]

Safe Harbor Investor Relations
[email protected]

KCSA Strategic Communications
Phil Carlson
[email protected]



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