BayFirst Financial (BAFN) registers secondary offering of up to 22.9M shares by selling shareholders; company receives no proceeds

This is a purely secondary offering where existing shareholders are selling up to 22,856,000 shares they received in a conversion. The company itself is offering zero shares and will receive zero proceeds from the sale. All proceeds go to the selling shareholders, not to BayFirst Financial Corp.

The company raised $80,000,000 in April 2026 through a private placement of preferred stock to selling shareholders. In July 2026, these preferred shares converted into 22,856,000 common shares, which will dilute existing common shareholders and are now being registered for resale in this offering.

The company used $9,704,434 of the private placement proceeds to redeem earlier series of preferred stock (Series A and B) in August 2026. This reduces the amount of capital available for other corporate purposes from the $80 million raised.

The bank exited the SBA 7(a) lending business in Q3 2025, representing a strategic shift away from this government-guaranteed small business loan program. This may affect the bank's loan portfolio composition and revenue mix going forward.

This is a secondary offering where existing shareholders are selling their shares. The company receives zero proceeds, meaning no capital is raised for corporate purposes. All sale proceeds go to the selling shareholders, not to BayFirst Financial Corp.

Kenneth R. Lehman owns over 40% of BayFirst's outstanding common stock (approximately 11,428,000 shares) and holds a contractual right to appoint one board member. This concentration gives him significant influence or control over board elections and corporate governance. His economic interests may diverge from those of public shareholders, and he may pursue policies or director appointments that conflict with minority shareholder preferences.

The offering includes shares sold by existing shareholders (secondary shares). Large sales by these selling shareholders, or even the perception that such sales are imminent, could depress the stock price. The company warns that a "market overhang" from the potential for future insider sales may negatively impact the stock even if actual sales do not occur immediately.

BayFirst incorporates by reference the risk factors from its Amended 10-K/A filed August 12, 2026 (one day before this S-1). The risks disclosed here are supplemental to those in the 10-K/A. Investors must review both documents to understand the full risk profile; the amendment timing (one day prior) may indicate recent material changes to previously reported risks.

Kenneth R. Lehman is selling 11,428,000 shares representing 42.38% of the company pre-offering, a highly concentrated position. The table shows 42 selling shareholders will collectively resell 26,969,000 shares (summing the disclosed amounts), with Lehman accounting for approximately 42% of the total shares being registered. All selling shareholders are shown as selling 100% of their holdings (0% remaining post-offering).

As part of the private placement, the Bank and Lehman developed an asset resolution plan resulting in $38.4 million in loan adjustments across over 7,000 SBA loans, plus $1.5 million impairment on a non-marketable equity investment and $1.6 million write-down on USDA loan premiums. This totals approximately $41.5 million in asset adjustments tied to the lead investor's involvement, indicating significant asset quality issues addressed in connection with the capital raise.

Lehman has contractual gross-up rights to maintain his proportionate ownership in future equity issuances and the right to designate one board member to both the Company and Bank boards. These rights give the 42.38% shareholder significant ongoing control and anti-dilution protection, potentially limiting the company's flexibility in future capital raises and governance decisions.

The company faces monthly liquidated damages of 1.0% of the aggregate purchase price to selling shareholders if it fails to maintain an effective registration statement or meet other registration obligations. With 26,969,000 shares being registered, this creates ongoing financial exposure if the company cannot maintain registration effectiveness or public information requirements.

The Board suspended common stock dividends in July 2025, approximately nine months before this filing. The suspension reflects financial constraints, with future dividends subject to debt service requirements, preferred stock obligations, earnings, and regulatory capital requirements. This indicates the company was under financial stress prior to the April 2026 private placement.

The auditor's report includes an explanatory paragraph about restating both 2025 and 2024 consolidated financial statements. A restatement means previously issued financials contained errors material enough to require correction, which can signal accounting control weaknesses or prior misstatements. The nature and magnitude of the restatement would be detailed in the referenced 10-K/A.