SHF (US:SHFS)2025-11-12 11:17Revenue and Income - Total revenue for the three months ended September 30, 2025, was $1.83 million, a decrease of 47.3% compared to $3.48 million in the same period of 2024[203]. - Account fee income for the three months ended September 30, 2025, was $963,098, down 41.5% from $1.65 million in 2024[203]. - Loan interest income decreased by 61.9% to $510,754 for the three months ended September 30, 2025, compared to $1.34 million in 2024[203]. - Other income for the three months ended September 30, 2025, increased by 660.2% to $1,396,754 compared to $183,745 in 2024, primarily reflecting financing-related transactions[228]. - For the three months ended September 30, 2025, the company reported a net loss of $179,508 compared to a net income of $353,817 for the same period in 2024[243]. - Adjusted EBITDA for the three months ended September 30, 2025, was $(620,478), a decrease from $764,285 in the same period of 2024[243]. Expenses and Cost Management - Total operating expenses for the three months ended September 30, 2025, were $3.05 million, a reduction of 7.7% from $3.31 million in 2024[213]. - Compensation and employee benefits decreased by 7.8% to $1.70 million for the three months ended September 30, 2025, primarily due to a reduction in headcount[217]. - General and administrative expenses decreased by 7.9% to $856,389 for the three months ended September 30, 2025, compared to $929,406 in 2024[219]. - The Company has implemented cost-reduction measures, resulting in a $1.0 million increase in non-cash stock-based compensation year over year[214]. - The Company expects the full effect of its cost-containment initiatives to become more evident in 2026[216]. - General and administrative expenses decreased by $0.6 million, or 20.9%, for the nine months ended September 30, 2025, primarily due to a $0.5 million reduction in intangible asset amortization[221]. Financial Position and Cash Flow - As of September 30, 2025, the company had cash and cash equivalents of $0.9 million and no material debt outstanding, improving liquidity significantly[250]. - The company raised gross proceeds of $6.3 million through Series B Convertible Preferred Stock and Series B Warrant financing during the third quarter[250]. - For the nine months ended September 30, 2025, the company used $2.4 million of cash in operating activities, primarily to fund a net loss of $1.6 million[253]. - The company generated $0.5 million of net cash from financing activities for the nine months ended September 30, 2025, reflecting proceeds from convertible notes and Series B financing[255]. Account and Transaction Activity - Average monthly deposit balance decreased by 2.9% year-over-year to $107,976,219 for the third quarter of 2025[247]. - Average account fees dropped by 34.1% year-over-year to $270,501 for the three months ended September 30, 2025[247]. - The company experienced a 3.9% increase in average active accounts, rising to 774 for the third quarter of 2025[247]. - The company anticipates that improved U.S. economic conditions and potential regulatory easing could lead to higher account balances and transaction activity over time[248]. Debt and Interest - The Company recognized a $3.2 million gain on extinguishment of debt related to the settlement of its FPA obligations, settling $7.3 million by issuing shares valued at $4.0 million[233]. - Interest expense for the three months ended September 30, 2025, increased by $0.1 million due to non-cash interest expense related to convertible notes issued in September 2025[231]. - There was no credit loss expense for the three- and nine-month periods ended September 30, 2025, compared to an expense of $0.0 million and a benefit of $0.2 million in the comparable 2024 periods[227]. Hosting and Professional Services - Total hosting-related fees increased by $0.04 million in 2025, reflecting a $0.18 million increase in account hosting fees offset by a $0.10 million decrease in investment hosting fees and a $0.04 million decrease in loan servicing fees[220]. - Account hosting fees for the three months ended September 30, 2025, increased by 146.4% to $322,795 compared to $131,002 in 2024, while total account hosting fees for the nine months increased by 156.6% to $914,539 from $356,369[224]. - Professional services expense increased by $1.2 million, or 85.9%, for the nine months ended September 30, 2025, driven by transition-related legal and advisory costs[226]. Interest Income Allocation - The interest income split under the new loan yield allocation formula is approximately 39% to the Company, with the remainder retained by PCCU[211].