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Share Name | Share Symbol | Market | Type |
---|---|---|---|
SHF Holdings Inc | NASDAQ:SHFS | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.0491 | -8.54% | 0.5259 | 0.462 | 0.5382 | 0.589801 | 0.505 | 0.589 | 90,059 | 01:00:00 |
Q2 2023 Financial and Operational Highlights
“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
Subsequent Operational Highlights
2023 Financial OutlookBased 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 ResultsFor 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 CommonStock | AdditionalPaid-in | Parent-Entity Net | Retained | TotalShareholders’ | |||||||||||||||||||||||||||
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 CommonStock | AdditionalPaid-in | Parent-Entity Net | Retained | TotalShareholders’ | |||||||||||||||||||||||||||
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 CommonStock | AdditionalPaid-in | Parent-Entity Net | Retained | TotalShareholders’ | |||||||||||||||||||||||||||
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 HarborSafe 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 StatementsCertain 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 MediaNick Callaio, Marketing Manager720.951.0619Nick@SHFinancial.org | |
Safe Harbor Investor Relationsir@SHFinancial.org | |
KCSA Strategic CommunicationsPhil Carlsonsafeharbor@kcsa.com |
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