Financial Performance - The Company reported a net income of $941,527 for the three months ended June 30, 2024, compared to a net loss of $17,604,567 for the same period in 2023[133]. - EBITDA for the six months ended June 30, 2024, was $3,753,446, a significant improvement from a loss of $18,677,843 in the prior year[133]. - Adjusted EBITDA for the six months ended June 30, 2024, was $2,061,002, compared to $1,260,302 for the same period in 2023[133]. - Total revenue for the six months ended June 30, 2024, was $8,088,334, a decrease of 7.59% compared to $8,752,887 in 2023[141]. - Total revenue for the three months ended June 30, 2024, was $274,884, compared to $459,001 for the same period in 2023, representing a decrease of approximately 40%[173]. - Total revenue for the six months ended June 30, 2024, was $575,145, down from $849,660 in the same period in 2023, indicating a decline of about 32%[173]. - The revenue from the Commercial Alliance Agreement for the three months ended June 30, 2024, was $3,478,251, compared to $3,411,218 for the same period in 2023[172]. - The total revenue from commercial alliance agreements for the six months ended June 30, 2024, was $575,145, compared to $459,001 for the same period in 2023, showing an increase of about 25%[173]. Operational Metrics - The Company launched a commercial lending program in 2020, which has become the largest revenue component, focusing on senior secured lending with stringent collateral requirements[125]. - The Company expects that fees based on deposits and interest on daily balances will represent a significant portion of revenue by 2024[124]. - The average account balance at period end is calculated by dividing total account balances by the number of accounts, which is crucial for assessing lending capacity[134]. - The Company monitors key metrics such as total account balances, number of accounts, and average account balances to assess business operations[134]. - For the six months ended June 30, 2024, average monthly ending deposit balance decreased to $125,852,436, down 44.51% from $226,798,931 in 2023[136]. - Average active accounts declined to 752, a decrease of 25.51% from 1,010 in the previous year[136]. - The company serviced 24 loans in the six months ended June 30, 2024, compared to 12 loans in the same period of 2023[145]. Income Sources - The Company earns income from onboarding fees and deposit activity, which historically has been the majority of revenue[123]. - Investment income is primarily derived from CRB client deposits, with 25% of this income paid to PCCU as a hosting cost[124]. - Loan interest income increased significantly to $3,472,848, up 224.22% from $1,071,124 in the same period last year[141]. - Investment income for the six months ended June 30, 2024, was $1,274,436, down 55.09% from $2,837,694 in the previous year[141]. Expenses - Operating expenses for the six months ended June 30, 2024, totaled $7,463,230, a decrease of 73.62% from $28,287,323 in 2023[146]. - General and administrative expenses decreased by 41.44% to $1,985,984 in the six months ended June 30, 2024, from $3,391,463 in 2023[146]. - Total operating expenses for the three months ended June 30, 2024, decreased to $3,737,372, a reduction of $1,859,164 or 83.38% compared to $22,485,275 for the same period in 2023[152]. - General and administrative expenses decreased by approximately $850,825 or 45.93% to $1,001,764 for the three months ended June 30, 2024, compared to $1,852,589 in 2023[152]. Cash Flow - The company generated $2,704,637 in cash from operations for the six months ended June 30, 2024, compared to cash used of $964,786 for the same period in 2023, reflecting improved operational efficiency[155]. - For the six months ended June 30, 2024, the company used $1,487,507 in cash for financing activities, primarily due to repayments on the senior secured promissory note[155]. - Cash and cash equivalents increased to $6,111,982 as of June 30, 2024, up from $4,888,769 as of December 31, 2023[154]. Concerns and Future Outlook - The company acknowledges substantial doubt about its ability to continue as a going concern for at least twelve months from the date of the financial statements due to historical negative operating income[158]. - The company expects a shift in trends as it enhances its lending platform, which typically requires borrowers to place deposits[138]. - The company experienced a significant decrease in impairment of goodwill and finite lived intangible assets, with both categories showing a 100% reduction compared to the previous year[152]. - CRB related deposits decreased to $90,562,105 as of June 30, 2024, down from $129,350,998 as of December 31, 2023[171]. Miscellaneous - The company is classified as a smaller reporting company and is not required to provide detailed market risk disclosures[174].
SHF (SHFS) - 2024 Q2 - Quarterly Report