SCHEDULE: Madryn Seeks Venus Concept Restructuring, Delisting

Madryn Asset Management, a major shareholder, proposes a debt-for-equity swap and new financing for Venus Concept, potentially leading to majority ownership and discussing delisting.

Summary

• Madryn Asset Management and its affiliates beneficially own 18,763,125 shares of Venus Concept Inc.'s common stock, representing 91.0% of the class.
• Madryn acquired the entire outstanding principal amount of the MSLP Loan from City National Bank of Florida on April 23, 2024.
• On May 3, 2024, Madryn delivered a nonbinding transaction proposal to Venus Concept concerning a proposed restructuring of the company's debt and equity capital structure.
• The proposal involves Madryn exchanging a portion of existing debt (MSLP Loan and/or other debt instruments) for Common Stock and entering into a new senior secured credit facility.
• If the proposal is consummated, Madryn and its affiliates would become the majority owners of Venus Concept's common stock on a fully diluted basis.
• The proposal is contingent on the negotiation and execution of definitive documentation, the company successfully completing an equity financing, and obtaining requisite stockholder consents.
• Madryn has engaged in multiple exchange agreements between May 2024 and September 2025, converting portions of various debt instruments (MSLP Loan, 2023 Convertible Notes, March 2025 Convertible Notes, June 2025 Convertible Notes) into Series Y Preferred Stock.
• Shareholders approved the issuance of common stock underlying certain convertible notes and preferred stock on June 25, 2025, removing Nasdaq convertibility limitations.
• On January 13, 2026, Madryn discussed with Venus Concept's board of directors its desire to reduce operational costs, including the potential delisting and deregistration of the company's Common Stock.

Sentiment

Score: 3

Explanation: The filing indicates a company in significant financial distress requiring a major capital restructuring. While Madryn's active involvement and proposed restructuring could stabilize the company, the terms (debt-for-equity swap, potential delisting) are highly unfavorable for existing public shareholders due to severe dilution and loss of liquidity. The uncertainty of the proposal's execution adds to the negative sentiment.

Positives

• Madryn, as a significant stockholder and lender, is actively engaged in working with the company's management and board on strategic initiatives, which could lead to a more stable financial future.
• The proposed restructuring aims to address the company's current debt and equity capital structure, potentially providing a clearer path forward.
• Shareholder approval on June 25, 2025, removed limitations on convertibility for certain preferred stock and convertible notes, streamlining capital structure.

Negatives

• The proposed debt-for-equity swap would result in Madryn becoming the majority owner on a fully diluted basis, significantly diluting existing public shareholders.
• Discussions about potential delisting and deregistration of the Common Stock could reduce liquidity and access to public markets for current shareholders.
• There is no assurance that a definitive agreement for the proposed restructuring will be executed or consummated.

Risks

• No assurance that a definitive agreement regarding the proposed debt and equity restructuring will be executed or, if executed, that the transaction will be consummated.
• The proposed restructuring is conditioned on the company successfully completing an equity financing and obtaining requisite stockholder consents, which are not guaranteed.
• Potential delisting and deregistration of the company's Common Stock, which could impact liquidity and investor access.
• Uncertainty regarding the outcome and timing for execution of any definitive agreement concerning the proposal and alternatives.

Future Outlook

Madryn intends to continue its active role in working with Venus Concept's management and board on operational, financial, and strategic initiatives. This includes evaluating strategic alternatives and pursuing a non-binding proposal for a comprehensive debt and equity restructuring. If successful, this restructuring would lead to Madryn becoming the majority owner of the company. Madryn also discussed potential delisting and deregistration to reduce operational costs.

Management Comments

• Madryn intends to continue to take an active role in working with the Company's management and the board of directors on operational, financial and strategic initiatives.
• Madryn delivered a nonbinding transaction proposal to the Company concerning a proposed restructuring of the Company's current debt and equity capital structure.
• Madryn discussed with the Company's board of directors its desire for the Company to reduce operational costs, including the potential delisting and deregistration of the Company's Common Stock.

Industry Context

The filing reflects a common scenario where a significant lender/investor steps in to restructure a financially challenged company's capital structure. The move towards a potential debt-for-equity swap and delisting often occurs in companies facing significant financial distress, where public market access becomes less beneficial than private restructuring and cost reduction. This is typical for companies seeking to streamline operations and reduce public company overhead when their market capitalization or trading volume no longer justifies the costs of being publicly listed.

Comparison to Industry Standards

• The proposed debt-for-equity swap, leading to majority ownership by a lender, is a common restructuring mechanism for distressed companies, similar to situations seen with companies undergoing private equity-led restructurings to avoid bankruptcy.
• The high beneficial ownership (91.0%) by Madryn indicates a level of control that is more akin to a private equity firm's stake in a portfolio company rather than a typical public company shareholder, suggesting a significant shift in corporate control.
• The discussion of delisting and deregistration aligns with strategies employed by smaller public companies or those undergoing significant financial restructuring to reduce the substantial costs and regulatory burdens associated with public listing, allowing for a more focused turnaround effort away from public market scrutiny.

Corporate Governance

Related Party Transactions

• Madryn Funds purchased the entire outstanding principal amount of the MSLP Loan from City National Bank of Florida on April 23, 2024, making Madryn a direct lender to Venus Concept.
• Madryn's nonbinding transaction proposal involves exchanging a portion of the MSLP Loan and/or other debt instruments held by Madryn for Common Stock.
• Madryn entered into multiple exchange agreements between May 2024 and September 2025, converting portions of various debt instruments (MSLP Loan, 2023 Convertible Notes, March 2025 Convertible Notes, June 2025 Convertible Notes) into Series Y Preferred Stock.

Stakeholder Impact

• Shareholders: Significant potential for dilution if the debt-for-equity swap proceeds, leading to Madryn becoming the majority owner. Potential loss of liquidity and public market access if the company delists and deregisters.
• Creditors (other than Madryn): The proposed restructuring and new senior secured credit facility could alter the priority and terms of other outstanding debt.
• Management/Board: Increased influence and control by Madryn, potentially leading to changes in strategic direction and operational focus, including cost reduction initiatives.
• Employees: Potential impact from operational cost reductions discussed by Madryn.

Next Steps

• Madryn and Venus Concept intend to continue engaging in discussions relating to the implementation of the proposed restructuring and alternatives.
• Negotiation and execution of definitive documentation for the proposed transaction.
• Venus Concept successfully completing an equity financing.
• Obtaining requisite stockholder consents for the proposed transaction.
• Potential actions by Madryn to acquire or dispose of additional securities, or engage in further discussions regarding the company's business, operations, strategy, and corporate structure.
• Evaluation of potential delisting and deregistration of the Common Stock.

Key Dates

Recommendation

The filing indicates a high probability of severe dilution for existing public shareholders, as Madryn, already a dominant shareholder and lender, proposes a debt-for-equity swap that would make it the majority owner on a fully diluted basis. Furthermore, discussions about potential delisting and deregistration suggest a significant loss of liquidity and public market access. While the restructuring aims to stabilize the company, the terms are highly unfavorable for current minority shareholders, making a 'strong sell' recommendation appropriate to mitigate further losses.

Keywords

Venus Concept Inc., Madryn Asset Management, Schedule 13D, Debt Restructuring, Equity Swap, Delisting, Deregistration, Strategic Alternatives, Shareholder Activism, Corporate Governance, Convertible Notes, Preferred Stock, MSLP Loan