SHF (US:SHFS)2024-05-13 20:06PART I – FINANCIAL INFORMATION Financial Statements The company's unaudited statements show a shift from a net loss to a net income in Q1 2024 Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | $4,050,799 | $4,180,379 | | Total operating expenses | $3,725,858 | $5,802,048 | | Operating income/ (loss) | $324,941 | ($1,621,669) | | Net income/ (loss) | $2,049,676 | ($1,413,447) | | Diluted income/ (loss) per share | $0.04 | ($0.06) | Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $67,702,471 | $67,860,909 | | Total Liabilities | $30,735,154 | $33,505,598 | | Total Stockholders' Equity | $36,967,317 | $34,355,311 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,475,123 | ($232,040) | | Net cash provided by investing activities | $3,014 | $470,597 | | Net cash used in financing activities | ($740,544) | $0 | | Net increase in cash and cash equivalents | $737,593 | $238,557 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, a 'going concern' warning, and significant related-party transactions - The company generates income by providing services to financial institutions that serve the cannabis industry, including compliance, account servicing, and loan administration25 - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern for at least twelve months, despite positive results in the current quarter32 Disaggregated Revenue by Type | Revenue Type | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Deposit, activity, onboarding income | $1,620,994 | $2,245,831 | | Safe Harbor Program income | $19,230 | $51,103 | | Investment income | $773,819 | $1,417,152 | | Loan interest income | $1,636,756 | $466,293 | | Total Revenue | $4,050,799 | $4,180,379 | - On April 5, 2024, the company received a notice from Nasdaq for failing to maintain a minimum closing bid price of $1,00 per share and has until October 2, 2024, to regain compliance188 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes improved Q1 2024 profitability driven by lower expenses despite a slight revenue decrease - The company provides a financial services platform for financial institutions serving cannabis-related businesses (CRBs), offering compliance, deposit services, and commercial lending191193 Reconciliation of Net Income to Adjusted EBITDA (Non-GAAP) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income/(loss) | $2,049,676 | ($1,413,447) | | EBITDA | $1,960,672 | ($983,150) | | Adjusted EBITDA | $1,087,360 | $409,918 | - Total revenue decreased by 3.1% YoY, nearly offset by a 251% increase in loan interest income as the company expanded its lending activities217221 - Total operating expenses decreased by 35.8% YoY, primarily due to a 37.7% reduction in compensation and a 36.0% decrease in general and administrative expenses222 Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - As a smaller reporting company, SHF Holdings, Inc, is exempt from providing quantitative and qualitative disclosures about market risk258 Controls and Procedures Disclosure controls were deemed ineffective due to two outstanding material weaknesses in financial reporting - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2024260264 - Two material weaknesses remain outstanding related to Revenue Recognition and the accounting for Complex Financial Instruments266268 - A material weakness related to the provision for credit losses was successfully remediated by March 31, 2024265 PART II - OTHER INFORMATION Legal Proceedings The company reports no legal proceedings for the period - There are no legal proceedings to report275 Risk Factors A material risk arises from non-compliance with Nasdaq's minimum bid price requirement - The company received a notice from Nasdaq on April 5, 2024, for failing to maintain a minimum closing bid price of $1.00 per share276277 - The company has until October 2, 2024, to regain compliance by having its stock close at or above $1.00 for at least 10 consecutive business days277278 - Failure to regain compliance could result in delisting from Nasdaq, which would adversely impact trading, liquidity, and market price276 Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales or repurchases of equity securities - There were no unregistered sales of equity securities during the quarter281 Defaults Upon Senior Securities The company reports no defaults upon senior securities - None284 Other Information No other information was required to be disclosed - None285 Exhibits This section lists all exhibits filed with the report, including agreements and officer certifications - A list of exhibits filed with the report is provided, including merger agreements, the Commercial Alliance Agreement with PCCU, and required officer certifications288289