Credit: jozefmicic/Adobe Stock
The cannabis lending company launched by Partner Colorado Credit Union in September 2022 lost $48.3 million in 2024, nearly three times its loss from its first full year of operation.
Much of the losses at Safe Harbor Financial Services (SHFS) were for non-cash charges, but earnings excluding those items weren’t much prettier and the Denver-area company signaled other problems in a separate SEC filing.
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Safe Harbor didn’t file a full 10K with the SEC, but instead filed a press release that provided results for the full year and limited results for the quarter. In a separate “Notice of Late Filing” Monday, it told the SEC it needs more time to file a 10K primarily because of events since Dec. 31 that “require thorough evaluation and disclosure,” including its renegotiated debt with the Denver-area credit union, but also an “assessment of the company’s ability to continue as a going concern.”
“In addition, management has identified material weaknesses in the company’s internal controls over financial reporting to be disclosed in the Form 10-K,” it noted. The company said it expects to file the 10K within two weeks.
Safe Harbor Financial released its results Monday, when it closed at $4.29, down from $4.45 on Friday, March 28. On Tuesday it closed at $4.19.
If those stock prices seem high, it’s the result of a massive reverse stock split last month to keep the stock out of penny range and within Nasdaq’s requirements for listing. The stock's pre-spinoff high of $10.93 Aug. 31 and Sept. 1 of 2022 now appears as $218.60. Its previous post-launch low of $0.31 last Nov. 19-20 now appears as $6.20. The stock has been trading below $6.20 since March 11.
Partner Colorado Credit Union ($623.2 million in assets, 33,318 members at Dec. 31) started out owning just over half the company’s stock. Safe Harbor filed a proxy statement with SEC March 3 showing Partner Colorado owned 38.8% of the company’s shares.
For the three months ending Dec. 31, Safe Harbor Financial’s revenue was $3.7 million, down 18% from 2024’s fourth quarter and down from $3.5 million in the third quarter.
The news release did not show the quarter’s net income, but instead its “adjusted” EBITDA – a non-GAAP version of earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA was $63,581 for the fourth quarter, down from $1.3 million in the fourth quarter of 2023.
Unadjusted EBITDA was not provided for the quarter, but the adjustments were powerful for the year.
Adjusted EBITA for the 12 months of 2024 was a positive $2.9 million, down from $3.6 million in 2023.
Without the adjustments, EBITDA was a loss of $3.2 million, which was an improvement from 2023's $16.6 million loss.
Cash and cash equivalents were $2.3 million Dec. 31, down from $4.9 million a year earlier.
The year’s revenue was $15.2 million, down from $17.6 million in 2023, which the company said was “due to a reduction in deposit activity and onboarding income.”
Partner Colorado (PCCU) accounted for $4.6 million of the revenue generated from deposits, activities and client onboarding. Related to this revenue, the Company recognized $452,371 in account hosting expenses.
After the September 2022 spinoff, PCCU members were promised $56.9 million from Safe Harbor. In an initial concession in early 2023, Partner Colorado members exchanged that promise of cash for a $14.5 million senior secured promissory note, which was to be repaid over five years at 4.25%, or about $268,679 per month.
The press release company still owes the credit union about $11 million on the senior secured promissory note.
On March 3, Partner Colorado postponed payments on debt the company owed the credit union and pushed back repayment for two years, allowing interest-only payments in the interim.
In Monday’s news release, CEO Terry Mendez called it “a redefining transaction for the company.”
“This modification greatly improves our financial stability as we are able to unlock over $6 million in cashflow over the next two years and push the term of the debt obligation out to October 2030,” he said. “This updated debt deal provides Safe Harbor with the financial flexibility needed to enhance and expand our overall business services as we execute on our business strategy throughout 2025 and beyond.”
Contact Jim DuPlessis at [email protected].
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Jim DuPlessis
Jim covers economic data trends emerging for credit unions, as well as branch news and dividends.
