Safe Harbor Financial completed a recapitalization on September 30 2025 that raised $6.8 million in new capital and eliminated $18.8 million of senior secured debt, restoring the company’s shareholder equity to the $2.5 million threshold required for Nasdaq listing. The transaction converted the debt into Series B preferred stock and warrants, providing a permanent equity cushion and a mechanism for future capital raises.
As part of the deal, Safe Harbor secured a $150 million equity line of credit that can be expanded to $500 million. The line is intended to fund lending and platform expansion in the cannabis‑banking market, where capital intensity is high and regulatory uncertainty remains.
The recapitalization comes after a period of financial strain. In 2024 the company posted a net loss of $48.3 million, a sharp increase from the $17.3 million loss in 2023, and a current ratio of just 0.4, indicating short‑term obligations far exceeded liquid assets. The debt elimination and new capital are therefore a critical step toward stabilizing liquidity and meeting regulatory requirements.
CEO Terry Mendez emphasized that the recapitalization is part of a broader strategy to cut costs and focus on high‑margin lending. “We have eliminated $19 million in debt while significantly cutting costs, and raised nearly $7 million in new cash,” he said. “We believe we have positioned Safe Harbor for long‑term strategic success.” The company also highlighted a $3 million annualized run‑rate expense reduction, driven by workforce optimization and technology investments.
Investors reacted cautiously to the announcement. Despite the positive liquidity improvement, the market remained wary of the company’s persistent losses, high leverage, and weak current ratio. The 16 % drop in pre‑market trading on November 10 reflected concerns that the recapitalization does not immediately resolve profitability challenges.
The recapitalization addresses immediate liquidity and compliance needs, but the company’s long‑term viability will depend on its ability to generate sustainable earnings. Continued cost discipline, disciplined lending, and strategic use of the equity line will be essential for turning the company’s financial position around and unlocking growth in the cannabis‑banking sector.
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