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Weeks after SHF Holdings, Inc., d/b/a Safe Harbor Financial (Nasdaq: SHFS) bragged about surpassing $25 billion in processed cannabis-related funds, the company’s CEO has left and now the company is pausing its principal payments to Partner Colorado Credit Union (“PCCU”) related to its Senior Secured Promissory Note.

In a statement, PCCU said it has agreed to temporarily pause receipt of principal payments due in February and March 2025 while the parties discuss a potential modification of the Note. The company told investors that it is working towards finalizing a modification within the two months, although there is no assurance that an agreement will be reached.

“This Letter Agreement represents PCCUs commitment to work with us as we develop new solutions to capitalize on, scale and expand our service offerings,” said Terry Mendez, co-CEO of Safe Harbor Financial. “PCCU’s willingness to engage in these discussions reflects our longstanding relationship. The temporary pause in principal payments is expected to improve our liquidity by approximately $510,000.”

CEO departure

Last week, Sundie Seefried, the CEO, announced her plans to retire in 30 days. Safe Harbor said it signed a three-year executive employment agreement with Terry Mendez to serve as co-CEO, who will be appointed CEO upon Seefried’s retirement. Post-transition, Seefried will remain on the Board of Directors. This wasn’t long after the company amended its employment contract with Seefried during the third quarter.

Sinking ship

Despite Safe Harbor’s transaction bragging, the company warned investors in its last quarter that it was in trouble. Safe Harbor reported revenue from the quarter ending September was down 19.6% and revenue for deposit activity and onboarding was $1.6 million, a decrease of 26% versus the comparable prior year period. Revenue earned in the three months ended December 30, 2024, for investment income was $475,000, a decrease of approximately 60% versus the comparable prior year period.

At the end of September 2024, the company had $5,861,475 in cash and a net working capital deficit of $2,520,441, compared to $4,888,769 in cash and a net working capital deficit of $135,355 as of December 31, 2023.

It told investors there was substantial doubt about its ability to continue.

It seems that the source of the company’s problems stemmed from the Abaca Merger, “where the purchase price exceeded the fair value of the net identifiable assets acquired.” Not only did the Abaca deal result in fewer accounts, the company was caught up in litigation over the $3 million owed for the merger.