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

Rhea-AI Summary

SHF Holdings, operating as Safe Harbor Financial (NASDAQ: SHFS), reported its financial results for Q2 2024 and the first half of 2024. Net income for Q2 2024 increased to $0.9 million from a net loss of $17.6 million in Q2 2023, while revenue decreased to $4.0 million from $4.6 million. Adjusted EBITDA rose 14.5% year-over-year to $0.97 million. For the first six months of 2024, net income grew to $3.0 million from a net loss of $19.0 million in the same period of 2023. Revenue for the first half of 2024 decreased to $8.1 million from $8.8 million.

Operating expenses decreased significantly for both periods, mainly due to lower compensation, rent, and provision for credit losses. The company launched a Small Business Line of Credit Program and recouped a $3.1 million defaulted loan, enhancing its financial standing. Cash and cash equivalents increased by 25% to $6.1 million from December 2023.

Positive

• Net income for Q2 2024 increased to $0.9 million from a net loss of $17.6 million in Q2 2023.
• Net income for the first half of 2024 increased to $3.0 million from a net loss of $19.0 million in the same period of 2023.
• Operating expenses for Q2 2024 decreased to $3.7 million from $22.5 million in Q2 2023.
• Operating expenses for the first half of 2024 decreased to $7.5 million from $28.3 million in the same period of 2023.
• Cash and cash equivalents increased by 25% to $6.1 million from December 2023.
• Adjusted EBITDA for Q2 2024 rose 14.5% year-over-year to $0.97 million.

Negative

• Revenue for Q2 2024 decreased to $4.0 million from $4.6 million in Q2 2023.
• Revenue for the first half of 2024 decreased to $8.1 million from $8.8 million in the same period of 2023.

Insights

Financial Analyst

The Q2 2024 results for Safe Harbor Financial show significant improvement in profitability and operational efficiency. The company reported net income of $0.9 million, a substantial turnaround from a $17.6 million loss in Q2 2023. This was driven by a 203.6% year-over-year increase in loan interest income and a 34.5% reduction in operating expenses (excluding 2023 impairment charges).

The company's focus on higher-margin products and streamlining operations has paid off, with gross margins expanding significantly. The launch of a new Small Business Line of Credit Program demonstrates Safe Harbor's commitment to diversifying income sources and addressing market demand. The successful recovery of a $3.1 million defaulted loan showcases strong underwriting practices and bolsters lending capacity.

While revenue decreased slightly to $4.0 million from $4.6 million year-over-year, the improved profitability and 14.5% increase in Adjusted EBITDA indicate effective cost management and a shift towards more profitable business lines. The 25% increase in cash and cash equivalents to $6.1 million strengthens the company's financial position.

Market Research Analyst

Safe Harbor Financial's Q2 results reflect positive trends in the regulated cannabis financial services sector. The company's success in growing its loan portfolio and improving profitability suggests increasing demand for financial services in the cannabis industry. The launch of the Small Business Line of Credit Program is particularly noteworthy, as it addresses a critical need for capital among small and mid-sized cannabis businesses.

The partnership with BIPOCann to empower minority-owned cannabis businesses aligns with industry-wide efforts to promote diversity and could potentially open up new market segments. The successful recovery of a defaulted loan demonstrates the resilience of well-managed cannabis lending operations, which could attract more institutional investors to the sector.

However, the slight decrease in overall revenue indicates ongoing challenges in the cannabis banking landscape, possibly due to regulatory uncertainties or market saturation in certain areas. The company's ability to improve profitability despite this suggests a maturing business model that could be well-positioned for future growth as the cannabis industry continues to evolve and expand.

--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
Nick@SHFinancial.org 

Safe Harbor Investor Relations
ir@SHFinancial.org 

KCSA Strategic Communications
Phil Carlson
safeharbor@kcsa.com 

FAQ

What were Safe Harbor Financial's Q2 2024 net income results?

Safe Harbor Financial reported a net income of $0.9 million for Q2 2024, compared to a net loss of $17.6 million in Q2 2023.

How much did Safe Harbor Financial’s Q2 2024 revenue decrease?

Safe Harbor Financial’s Q2 2024 revenue decreased to $4.0 million from $4.6 million in Q2 2023.

What was Safe Harbor Financial’s adjusted EBITDA for Q2 2024?

The adjusted EBITDA for Safe Harbor Financial in Q2 2024 was $0.97 million, a 14.5% increase year-over-year.

What are Safe Harbor Financial's cash and cash equivalents as of June 30, 2024?

As of June 30, 2024, Safe Harbor Financial had cash and cash equivalents of $6.1 million, a 25% increase from December 2023.

What is the impact of the new Small Business Line of Credit Program on Safe Harbor Financial?

The Small Business Line of Credit Program launched in Q2 2024 aims to support the capital requirements of small and mid-sized cannabis businesses, diversifying Safe Harbor Financial's income sources and enhancing its financial standing.