Avenir Wellness Solutions Announces Global Settlement with Ionic Ventures, Eliminating Convertible Debt

Rhea-AI Summary

Avenir Wellness Solutions (OTCQB:AVRW) has reached a global settlement with Ionic Ventures to resolve all disputes regarding convertible debt. The settlement includes converting $8.7 million of outstanding convertible notes into approximately 8.3 million shares at $233 thousand value, with a leak-out agreement. The remaining debt will be converted into a new two-year note of $2.85 million with 10%/11% interest. The company expects to recognize a one-time gain of approximately $5.0 million in Q4 2024.

The company has withdrawn its lawsuit against Ionic, acknowledging Ionic's compliance with the 2020 transaction documents. Management believes this settlement significantly strengthens their balance sheet and removes a major obstacle to shareholder investment.

Positive

• Expected one-time gain of $5.0 million in Q4 2024
• Elimination of $8.7 million in convertible debt
• High gross margins reported for last two fiscal years

Negative

• Significant share dilution with issuance of 8.3 million new shares
• New $2.85 million debt note issued with 10%/11% interest rate
• Market cap currently valued at less than half of last year's sales

SHERMAN OAKS, CA / ACCESSWIRE / December 16, 2024 / Avenir Wellness Solutions, Inc. ("Avenir" or the "Company") (OTCQB:AVRW), a proprietary broad platform technology beauty and wellness company, today announced that it has reached a global settlement with its current debt holder Ionic Ventures LLC ("Ionic") to resolve all disputes between the parties.

In connection with the settlement, a portion of the outstanding convertible notes with an aggregate carrying value of $8.7 million as of September 30, 2024 will be converted into approximately 8.3 million shares of the Company's common stock at a value of approximately $233 thousand, subject to a leak-out agreement. The remaining amount of convertible notes will be extinguished in exchange for a new 10%/11% two-year note with a principal amount of $2.85 million to be issued to Ionic, inclusive of legal fees Ionic incurred in defending against the lawsuit filed by Avenir in the dispute. The new note will require payment equal to at least 50% of the net proceeds the Company receives if it completes a qualified financing, asset sale or M&A transactions up to the accreted amount of the note, but not later than the two-year anniversary of the issuance of the note. As a result of the extinguishment, the Company is expected to recognize a one-time gain of approximately $5.0 million during the fourth quarter of 2024.

The Company also has withdrawn its lawsuit filed against Ionic in the State of New York in connection with the convertible notes originally issued in 2020. As part of the settlement, Avenir acknowledged that Ionic at all times conducted itself in compliance with the 2020 transaction documents, and the settlement agreement reflects that Ionic admitted to no wrongful conduct in connection with the underlying transaction. For further information on the settlement, please refer to the recently filed Form 8-K.

"Despite building a plant-based wellness and beauty business with very high gross margins the last two full fiscal years, Avenir's total market cap has been severely depressed with the value of the entire company recently totaling less than half of last year's sales. After discussions with our financial advisors, Board of Directors and largest shareholders, we confirmed it is universally believed that the significant outstanding convertible debt is the primary reason why there is a disconnect between Company's market value with its underlying business. Our shareholders were clear that our top priority should be elimination of the convertible debt and the settlement of litigation commenced against Ionic. As such, we have been in active negotiations with Ionic for the past few months and were able to come to terms that we believe are extremely beneficial to the Company and our shareholders," commented Nancy Duitch, Chief Executive Officer of Avenir.

Duitch added, "We are thrilled with this transaction that, together with a bridge financing we are in the process of completing, significantly strengthens our balance sheet and eliminates the overhang our shareholders have cited as the significant obstacle preventing them from increasing their ownership of our stock."

Brendan O'Neil, Ionic's Manager, stated, "From the outset, we denied and we continue to strongly deny the allegations asserted against us in the underlying litigation. Given Avenir's agreement to reimburse us for the attorneys' fees we incurred in defending against those allegations, included in the new note, and its acknowledgement that Ionic complied in all material respects with the controlling agreements relating to the 2020 financing, we concluded that it made good business sense to bring the dispute to a close."

Overall, Avenir Wellness Solutions has never been in a better position to capitalize on the high intrinsic value of our Nutri-Strip products as well as our unique and proprietary skin care formulations. With 17 patents under our control, the highly positive reviews Seratopical Revolution DNA Complex is receiving, and more new products in development, 2025 is setting up to be a growth year for the Company. We look forward to keeping our shareholders informed of our progress, developments and milestones as we move forward.

Company Management will be hosting an investor webcast/call to discuss the settlement agreement and provide an update on the Company on Wednesday, December 18, 2024 at 1:00pm PST / 4:00pm EST. Questions may be submitted prior to the webcast by emailing them to investor@avenirwellness.com. To participate in the webcast, please join us at:

https://us06web.zoom.us/j/83688826398?pwd=NzGBQ928B7m34yGgLPBPLI77BY4lGF.1
Meeting ID: 836 8882 6398
Passcode: 797030

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About Avenir Wellness Solutions, Inc.

Avenir Wellness (OTCQB: AVRW) is a broad platform technology company that develops proprietary wellness, nutraceutical, and topical delivery systems. The technology, which is based on fifteen current patents, offers a number of unique immediate- and controlled-release delivery vehicles designed to improve product efficacy, safety, and consumer experience for a wide range of active ingredients. The Company will continue down the path of creating new technologies that is part of its incubator strategy in order to monetize its intellectual property by expanding its product lines utilizing the technology. And, as a vertically integrated platform company, Avenir also looks to partner with or license its IP technology to wellness companies worldwide. For more information visit: www.avenirwellness.com.

About The Sera Labs, Inc.

The Sera Labs, Inc. ("Sera Labs"), a wholly owned subsidiary of Avenir, is a trusted leader in the health, wellness, and beauty sectors with innovative products using cutting-edge technology. Sera Labs creates high-quality products that use science-backed, proprietary formulations. More than 25 products are sold under the brand names Seratopical™, Seratopical Revolution™, SeraLabs™, and Nutri-Strips™. Sera Labs sells its products at affordable prices, making them easily accessible on a global scale. Strategically positioned in the growth market categories beauty, health & wellness, Sera Labs products are sold direct-to-consumer (DTC) via online website orders, including opt-in subscriptions, and also sold online and in-store at major national drug, grocery chains, convenience stores, and mass retailers and on Amazon.com. For more information visit: www.seralabshealth.com and follow Sera Labs on Facebook and Instagram at @seratopical, as well as on X (Twitter) at @sera_ labs.

Forward Looking Statement

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which statements are subject to considerable risks and uncertainties. Forward-looking statements include all statements other than statements of historical fact contained in this press release, including statements regarding the future growth and success of our organization. We have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "could," "estimate," "expected," "intend," "may," "plan," "predict," "project," "should," "will," or "would," and similar expressions or the negative of these expressions.

Forward-looking statements represent our management's current expectations and predictions about trends affecting our business and industry and are based on information available as of the time such statements are made. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy or completeness. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by the forward-looking statements. Some of the risks and uncertainties that may cause our actual results to materially differ from those expressed or implied by these forward-looking statements are described in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as well as in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable law, we expressly disclaim any intent or obligation to update any forward-looking statements, or to update the reasons actual results could differ materially from those expressed or implied by these forward-looking statements, whether to conform such statements to actual results or changes in our expectations, or as a result of the availability of new information.

Contacts:

Investor Relations
Hanover International Inc.
E: investor@avenirwellness.com
T: (760) 564-7400

SOURCE: Avenir Wellness Solutions, Inc.

View the original press release on accesswire.com

FAQ

How will the Ionic Ventures settlement affect AVRW's debt structure in 2024?

The settlement converts $8.7 million of convertible notes into 8.3 million shares and creates a new $2.85 million two-year note with 10%/11% interest, resulting in a $5.0 million one-time gain in Q4 2024.

What is the impact of AVRW's debt conversion on existing shareholders?

Existing shareholders will experience dilution due to the issuance of approximately 8.3 million new shares, though the company believes removing the convertible debt overhang will benefit shareholder value.

How much gain will AVRW recognize from the Ionic Ventures debt settlement?

AVRW expects to recognize a one-time gain of approximately $5.0 million during the fourth quarter of 2024 from the debt extinguishment.

What are the terms of AVRW's new note with Ionic Ventures?

The new note has a principal amount of $2.85 million with 10%/11% interest over two years, requiring payment of at least 50% of net proceeds from qualified financing, asset sales, or M&A transactions.