Revenue of
Second consecutive quarter of more than
Closed over
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
“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
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 toPartner 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 appointedDouglas Fagan , President and CEO of PCCU, to its Board of Directors; - On
May 11, 2023 , the Company announced its partnership withFive Star Bank , aNew 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 inOakland, 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 throughFive 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
Q2 2023 Financial Results
For the quarter ended
Second quarter 2023 operating expenses increased to
Net loss for Q2 2023 was
As at
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(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 | ||||||
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, | - | 1 | ||||||
Class A common stock, | 4,627 | 2,374 | ||||||
Additional paid in capital | 97,923,103 | 44,806,031 | ||||||
Retained deficit | (70,577,990 | ) | (39,695,281 | ) | ||||
$ | 27,349,740 | $ | 5,113,125 | |||||
Total Liabilities and Parent-Entity Net Investment and Stockholders’ Equity | $ | 72,080,343 | $ | 99,342,856 |
Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity
(Unaudited)
FOR THE THREE MONTHS ENDED
Preferred Stock | Class A Common Stock | Additional Paid-in | Parent- Entity Net | Retained | Total Shareholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Investment | deficit | Equity | |||||||||||||||||||||||||
Balance, | 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, | 4,221 | $ | - | 46,265,317 | $ | 4,627 | $ | 97,923,103 | $ | - | $ | (70,577,990 | ) | $ | 27,349,740 |
FOR THE THREE MONTHS ENDED
Preferred Stock | Class A Common Stock | Additional Paid-in | Parent- Entity Net | Retained | Total Shareholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Investment | deficit | Equity | |||||||||||||||||||||||||
Balance, | - | $ | - | - | $ | - | $ | - | $ | 7,900,700 | $ | - | $ | 7,900,700 | ||||||||||||||||||
Contribution from parent | - | - | - | - | - | 74,999 | - | 74,999 | ||||||||||||||||||||||||
Net profit | - | - | - | - | - | 336,344 | - | 336,344 | ||||||||||||||||||||||||
Balance, | - | $ | - | - | $ | - | $ | - | $ | 8,312,043 | $ | - | $ | 8,312,043 |
Condensed Consolidated Statements of Parent-Entity Net Investment and Stockholders’ Equity
(Unaudited)
FOR THE SIX MONTHS ENDED
Preferred Stock | Class A Common Stock | Additional Paid-in | Parent- Entity Net | Retained | Total Shareholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Investment | deficit | Equity | |||||||||||||||||||||||||
Balance, | 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, | 4,221 | $ | - | 46,265,317 | $ | 4,627 | $ | 97,923,103 | $ | - | $ | (70,577,990 | ) | $ | 27,349,740 |
FOR THE SIX MONTHS ENDED
Preferred Stock | Class A Common Stock | Additional Paid-in | Parent- Entity Net | Retained | Total Shareholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Investment | deficit | Equity | |||||||||||||||||||||||||
Balance, | - | $ | - | - | $ | - | $ | - | $ | 7,339,101 | $ | - | $ | 7,339,101 | ||||||||||||||||||
Contribution from parent | - | - | - | - | - | 134,998 | - | 134,998 | ||||||||||||||||||||||||
Net income | - | - | - | - | - | 837,944 | - | 837,944 | ||||||||||||||||||||||||
Balance, | - | $ | - | - | $ | - | $ | - | $ | 8,312,043 | $ | - | $ | 8,312,043 | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
For the six months ended | ||||||||
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 | Six Months Ended | |||||||||||||||
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,
Date: | Monday, August, 14, 2023 |
Time: | Webcast Link |
Live webcast and replay: | |
Participant dial in numbers: | 646-307-1963 or 800-715-9871 (Toll Free) |
Passcode: | 3046638 |
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. 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
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
Contact Information
Safe Harbor Media 720.951.0619 Nick@SHFinancial.org | |
Safe Harbor Investor Relations ir@SHFinancial.org | |
safeharbor@kcsa.com |
Source: Safe Harbor Financial Services, Inc.
2023 GlobeNewswire, Inc., source