- Full year revenue increased 34% to $9.4 million, number of active accounts increased 82% to 1040 compared to 2021 -

- Recent agreement to resolve $64.7 million in payment obligations significantly strengthens balance sheet, strongly positions the Company for further growth in 2023 -

GOLDEN, Colo., March 30, 2023 (GLOBE NEWSWIRE) -- SHF Holdings, Inc., d/b/a/ Safe Harbor Financial (“Safe Harbor” or the “Company”) (NASDAQ: SHFS), a leader in facilitating banking, payments, and financial services to the regulated cannabis industry, today announced certain preliminary (unaudited) financial results for the quarter and year ended December 31, 2022. All financial information is provided in U.S. dollars unless otherwise indicated and is prepared under U.S. Generally Accepted Accounting Principles (“GAAP”).

Full Year 2022 Financial Highlights¹

• Revenue increased 34% to $9.4 million, compared to $7.0 million in 2021
• Increased the number of active accounts by 82% to 1040, compared to 572 at the end of 2021
• The Company originated $15.8 million in loans, compared to $4.3 million in 2021
• Ended 2022 with $8.4 million in cash
  

“Safe Harbor had a pivotal year: we completed our go-public transaction to list on the Nasdaq exchange, executed on the strategic acquisition of Abaca, and significantly grew our client base to establish a solid foundation for success in 2023 and beyond,” said Sundie Seefried, Chief Executive Officer at Safe Harbor. “During the year, we expanded topline revenue by 34% and increased our client base by approximately 82%, demonstrating the considerable industry need for the services we provide. We are committed to providing essential banking services to cannabis-related businesses, or CRBs, using the most sophisticated fintech to optimize our customers’ experience. Our recent acquisition of Abaca is perfectly aligned with this goal as it meaningfully enhanced and added key elements to our fintech platform to expedite transactions with our banking partners.

“This momentum has continued in 2023, and we are pleased to have reached an agreement with Partner Colorado Credit Union to resolve our payment obligations to them, which removes a considerable financial constraint and further enhances our ability to execute on our growth strategy. The cannabis industry is maturing, and the fully complaint cannabis banking infrastructure we provide is vital to CRBs as they navigate this complex and dynamic industry. We are excited about the opportunities ahead and look forward to continuing to expand our services to meet the needs of CRBs across the country, while enhancing value for our shareholders.”

2022 Operational Highlights

• On September 29, 2022, Safe Harbor completed its business combination transaction with Northern Lights Acquisition Corp. (the “Business Combination”) and began trading on the Nasdaq Capital Markets.
• On November 16, 2022, the Company acquired Abaca, an industry-leading cannabis fintech platform, for $30 million in cash and common stock. The acquisition increased Safe Harbor’s lending capacity; and added a sophisticated fintech platform and more than 300 cannabis-related business accounts.

Subsequent Operational Highlights

• On February 8, 2023, Safe Harbor announced that Karl A. Racine commenced active participation on the Company’s Board of Directors following his January 2023 departure from the Washington, D.C. Attorney General’s office.
• On March 30, 2023, the Company entered into agreements with Partner Colorado Credit Union (“PCCU”), the Company’s largest stockholder, resulting in the settlement of the approximately $64.7 million deferred payable owed to PCCU (the “Agreement”). Under the terms of the Agreement, the Company has agreed to resolve approximately $64.7 million of total payment obligations owed from the September 28, 2022 business combination in exchange for a 5-year, $14.5 million senior secured note bearing a 4.25% annual interest rate and issuance of 11.2 million shares of Class A common stock in the Company.

Originations and Loan Activity

• For the twelve-month period ended December 31, 2022, Safe Harbor originated loans totaling $15.8 million, compared to $4.3 million for the 2021 full year.
  

Fourth Quarter 2022 Financial Results

For the quarter ended December 31, 2022, total revenue increased to $3.6 million, compared to $1.7 million in the prior year period, primarily due to higher investment and loan interest income.

Fourth quarter 2022 operating expense increased to $7.4 million, compared to $1.0 million in the prior year period, primarily driven by significantly higher compensation and employee expenses, professional service expenses, and amortization expense.

Net loss for the quarter ended December 31, 2022 was $37.0 million, compared to net income of $718,000 million in the prior year period, primarily due to the loss in value of several of the financial instruments placed in connection with the Business Combination.

Full Year 2022 Financial Results¹

For the year ended December 31, 2022, total revenue increased 34% to $9.4 million, compared to $7.0 million in 2021. The increase is due to higher investment and loan interest income, partially offset by lower Safe Harbor program and miscellaneous fee income.

For the full year ended December 31, 2022, total operating expense increased to $11.6 million compared to $3.7 million in 2021, due to the same drivers of expense in the fourth quarter of 2022.

Net loss for the year ended December 31, 2022 was $35.1 million, compared to net income of $3.2 million in 2021, primarily due to the loss in value of several of the financial instruments placed in connection with the Business Combination.

As at December 31, 2022, the Company had cash and cash equivalents of $8.4 million, compared to $5.5 million at December 31, 2021.

¹ See “Financial Disclosure Advisory” below.

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.

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 seven years, Safe Harbor has facilitated more than $17 billion in deposit transactions for customers with operations spanning more than 40 states and US territories with regulated cannabis markets. For more information, visit www.shfinancial.org.

Financial Disclosure Advisory
The Company has not yet completed its reporting process for the fourth quarter and year ended December 31, 2022. The preliminary results presented herein are based on the Company's reasonable estimates and the information available to the Company at this time. As such, the Company's actual results may materially vary from the preliminary results presented herein and will not be finalized until the Company reports its final results for the fourth quarter and year ended December 31, 2022 after the completion of its normal quarter and year end accounting and review procedures, including the assessment of the financial instruments related to the Company’s business combination with Northern Lights Acquisition Corp. that was completed on September 29, 2022 and intellectual property valuation related to the Company’s acquisition of Abaca that was completed on November 16, 2022, both of which are expected to impact Safe Harbor’s balance sheet and GAAP net income as at and for the year ended December 31, 2022, respectively. In addition, any statements regarding the Company's estimated financial performance for the fourth quarter and year ended December 31, 2022 does not present all information necessary for an understanding of the Company's financial condition and results of operations as of and for these reporting periods. The preliminary financial results presented herein were not reviewed by Safe Harbor’s independent registered public accounting firm.

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; 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.

Media Contact
Safe Harbor Financial
Nick Callaio, Marketing Manager
720.951.0619
Nick@SHFinancial.org

Investor Relations Contact
Mattio Communications
ir@mattio.com

SHF Holdings, Inc.
UNAUDITED CONSOLIDATED BALANCE SHEETS

SHF Holdings, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED CONSOLIDATED STATEMENTS OF PARENT-ENTITY NET INVESTMENT AND STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2022, AND 2021

SHF Holdings, Inc. 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

SHF Holdings, Inc.

UNAUDITED Reconciliation of net income to non-GAAP EBITDA and Adjusted EBITDA is as follows:

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.

UNAUDITED PRO FORMA BALANCE SHEET STATEMENT POST IMPACT OF PCCU SETTLEMENT