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”) ( 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
