GOLDEN, Colo. — SHF Holdings, Inc., d/b/a/ Safe Harbor Financial, 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.
“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.
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.
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.
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.
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, before making an investment decision. Safe Harbor assumes no obligation to update its forward-looking statements
except as required by law.
