via NewMediaWire – SANUWAVE Health, Inc. (OTCQB: SNWV) (“SANUWAVE”
or the “Company”), a leading provider of next-generation FDA
approved wound care products, today announced a business
combination with SEP Acquisition Corp. (Nasdaq: SEPA) (“SEPA”), a
publicly listed special purpose acquisition company. The
transaction is expected to create a Nasdaq-listed company focused
on the use of directed energy to improve healing in the $45 billion
U.S. wound care market.
Upon completion of the proposed transaction, the combined
company is expected to operate under the SANUWAVE name and will be
listed on the Nasdaq Capital Market under the symbol “SNWV”. The
proposed transaction values the combined company at an enterprise
value of $127.5 million. SANUWAVE investors are anticipated to have
an approximately 69.6% equity ownership in the new entity, assuming
the combined company receives approximately $13.0 million of gross
proceeds at closing, including $12.0 million from non-redeeming
holders of SEPA’s Class A common stock and other PIPE investors,
and $1.0 million from the SPAC sponsor converting a loan into
equity on the same terms as the PIPE. Approximately $8.5
million of capital has already been committed, including $7.0
million of shares of SEPA’s Class A common stock held by investors
affiliated with Sweat Equity Partners and Mercury Life Sciences who
have agreed to enter into voting and non-redemption agreements.
“I am pleased to announce this proposed
transaction to the SANUWAVE and SEPA stockholders,” said SANUWAVE
CEO Morgan Frank. “SEPA is a strong, value-add partner, and this
transaction will allow SANUWAVE to simplify its capital structure
and gain a listing on the Nasdaq Capital Market while funding the
Company for the exciting growth ahead. This is the next step in
putting the Company on sound footing that will allow us to focus on
rapid, profitable growth and to garner an equity valuation
commensurate with our performance.”
“We are excited to partner with SANUWAVE on a
combination of our companies,” said SEPA CEO Andrew White. “We
believe this transaction is a 1+1=3 equation where new capabilities
are created and opportunities opened. Sweat Equity Partners,
together with Mercury Life Sciences, have a broad investor base,
with long track records of success in the medical device and
healthcare sectors, and we’ve already begun working with SANUWAVE
to open new distribution opportunities and markets. We
believe very strongly in this Company and the UltraMIST product and
look forward to being a part of SANUWAVE’s future success.”
About SANUWAVE
SANUWAVE is a rapidly growing commercial stage
medical device company in the $45 billion U.S. wound care
space. It has two FDA approved products and its lead product,
UltraMIST®, has nationwide schedule 1 reimbursement from CMS (the
Centers for Medicare & Medicaid Services, a part of the
Department of Health and Human Services). The Company believes that
wound care is undergoing a major change to evidence-based medicine
and that reimbursement is being restructured around efficacy and
cost effectiveness. To succeed, a product must align the needs of
patients, physicians, and payors, and the Company believes that
this favors SANUWAVE’s directed energy products and that this is
apparent in reimbursement rate trends. The Company has a strong IP
portfolio with over 165 patents, and an attractive financial
profile with high gross margins (for example, during the three
months ended June 30, 2023 the Company’s gross margin was 74%) and
significant recurring revenue from consumables (for example, 59% of
the Company’s revenues in Q2 2023 were from UltraMist applicator
sales). The Company anticipates positive adjusted EBITDA in Q4 2023
as the product manufacturing ramp commences and expects meaningful
growth acceleration and profitability over the next several
years.
The UltraMIST system, which currently constitutes
over 90% of the Company’s revenue, is a low frequency, non-contact
ultrasound system that delivers energy through a fluid mist.
The system never touches the wound and is pain free. This
system promotes wound healing below the surface by modulating cell
membranes to drive increased blood flow and capillary formation and
enhances macrophage mediate VEGF and PDGF release to enhance
removal of damaged tissues by neutrophils. The system also
reduces pro inflammatory cytokines and kills bacteria and biofilms
by lysing cell walls. The system is highly portable (weighing
only 7 pounds) and fits with the “care to the edge” movement of
shifting treatment away from hospitals and toward doctor’s offices,
nursing homes, assisted living facilities, and patient homes.
Treatments take 3 to 20 minutes (average of 6 minutes) and can be
performed by a nurse or physical therapist. The efficacy of the
UltraMIST system is supported by numerous clinical studies
performed at top medical institutions.
The Company has been operating under significant
capacity constraints for the production of UltraMIST systems and
anticipates a significant step function in Q4 2023 and Q1 2024,
which the Company expects will allow for engagement with larger
customers with deeper ordering potential. SANUWAVE
anticipates being able to produce approximately two to three times
more UltraMISTs in 2024 as in 2023. Owing to better pricing
and higher usage rates, the Company is seeing new customers added
that have twice or more the dollar value of consumables use of its
existing customer base, and therefore plans to increase its
capacity to produce consumables by approximately four times over
the next 12 to 18 months to accommodate additional demand for
procedures.
The Company’s goal is to show accelerating,
profitable growth in 2024 and believes that the SEPA transaction
represents the next step in being able to focus on building this
business and transforming the wound care space.
About SEPA
Sweat Equity Partners LP and Mercury Fund,
including Mercury Life Sciences, are the co-sponsors of SEP
Acquisition Corp. Sweat Equity Partners is a family office led by
Andrew White with investments in SaaS, MedTech, CleanTech, PropTech
and Domestic Energy segments. Mercury Life Sciences, a division of
Mercury Fund, is a venture firm and studio dedicated to advancing
innovation and breakthroughs in the field of life sciences,
investing in early-stage biotech, pharma, medtech, and digital
health companies. Over the past 18 years, Mercury Life Sciences has
investments and/or exits in over a dozen life science companies.
For more information, please
see www.SEPLP.com and www.MercuryLifeSciences.com.
Transaction Summary
The business combination values the combined
company at a $127.5 million pro forma enterprise value. The
combined company expects to receive approximately $13.0 million of
gross proceeds, including $12.0 million from non-redeeming holders
of SEPA’s Class A common stock and other PIPE investors, and $1.0
million from the SPAC sponsor converting a loan into equity on the
same terms as the PIPE. Approximately $8.5 million of capital
has already been committed. The net proceeds of this transaction
will be used to fund general corporate purposes. This offering is
expected to be anchored by investors affiliated with Sweat Equity
Partners and Mercury Life Sciences. Assuming $13.0 million in gross
investment proceeds and the closing of the business combination,
existing SANUWAVE shareholders will own approximately 69.62% of the
combined company.
Subject to stockholder approval, all of SEPA’s
shares of Class B common stock are to be exchanged for shares of
Class A common stock at a ratio of one share of Class B common
stock for 0.277 shares of Class A common stock. Furthermore, as a
condition to closing, all of SEPA’s warrants, both public and
private, must be exchanged at the same ratio for shares in the
combined company, which will require stockholder and warrant holder
approval. If approved by warrant holders, the publicly traded
warrants will be valued at $0.50 per warrant and exchanged for
shares of SEPA’s Class A common stock at closing, comprising a
total of 450,336 shares of Class A common stock. In total, SEPA’s
public warrant holders are expected to own approximately 4.0% of
the pro forma combined company at closing. Prior to closing, and as
a condition to closing, SANUWAVE is required to obtain the approval
of the holders of 80.0% of its outstanding convertible promissory
notes and warrants to convert such securities into shares of
SANUWAVE common stock immediately prior to the closing with the
goal of creating a simpler capital structure.
The boards of SANUWAVE and SEPA have unanimously
approved the proposed business combination, which is expected to be
completed in fourth quarter of 2023 subject to, among other things,
approval by SEPA’s stockholders, approval by SANUWAVE’s
stockholders, SANUWAVE’s ability to obtain the approval of the
holders of 80.0% of its outstanding convertible promissory notes
and warrants to convert such securities into shares of SANUWAVE
common stock immediately prior to the closing, and SEPA’s ability
to have at least $12.0 million at closing from proceeds of its
Class A common stock that has not been redeemed and a PIPE
transaction.
Faegre Drinker Biddle & Reath LLP served as
legal advisor to SANUWAVE. ValueScope Inc. and Baker
Donelson, Bearman, Caldwell & Berkowitz, PC served as financial
and legal advisors, respectively, to SEPA.
Additional information about the proposed
transaction, including a copy of the business combination agreement
and investor presentation, will be provided in a Current Report on
Form 8-K to be filed by SEPA and SANUWAVE today with the Securities
and Exchange Commission and will be available
at www.sec.gov.
Conference Call Information
A business update will occur via conference call
on August 24, 2023 at 8:30 a.m. EDT.Telephone access is
available by dialing the following numbers:Conference ID:
13740784Telephone access to the call will be available by dialing
the following numbers:Participant Listening: 1-877-407-0784 or
1-201-689-8560
OR click the Call me™ link for instant telephone
access to the
event.https://callme.viavid.com/viavid/?callme=true&passcode=13732361&h=true&info=company&r=true&B=6
A replay will be made available through September
7, 2023:Replay Dial-In: 1-844-512-2921 or 1-412-317-6671Access ID:
13740784
Forward-Looking Statements
This press release may contain, “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. SEPA’s and
SANUWAVE’s actual results may differ from their expectations,
estimates and projections and consequently, you should not rely on
these forward-looking statements as predictions of future events.
Words such as “expect,” “estimate,” “project,” “budget,”
“forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,”
“should,” “believes,” “predicts,” “potential,” “might” and
“continues,” and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements may
include, without limitation, the satisfaction of the closing
conditions to the transactions described above (the “Transactions”)
and the timing of the closing of the Transactions. These
forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from expected results. Most of these factors are outside the
control of SEPA and SANUWAVE, and are difficult to predict. Factors
that may cause such differences include, but are not limited to:
(1) the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement; (2) the
inability to consummate the Transactions, including due to any
failure to obtain approval of the stockholders of SEPA or SANUWAVE,
or the other conditions to the closing in the merger
agreement, such as the requirements that (i) SANUWAVE obtain
the approval of the holders of 80% of its outstanding convertible
promissory notes and warrants to convert such securities into
shares of SANUWAVE’s common stock immediately prior to the closing
and (ii) SEPA shall have at least $12.0 million at closing
resulting from proceeds of (a) SEPA’s Class A common stock that has
not been redeemed and (b) a private placement; (3) delays in
obtaining or the inability to obtain any necessary regulatory
approvals required to complete the Transactions; (4) the inability
to obtain or maintain the listing of SEPA’s securities on Nasdaq
following the Transactions; (5) costs related to the Transactions;
(6) changes in applicable laws or regulations; (7) the possibility
that SEPA or SANUWAVE may be adversely affected by other economic,
business, and/or competitive factors; and (8) other risks and
uncertainties to be identified in the registration statement/proxy
statement (when available) relating to the Transactions, including
those under “Risk Factors” therein, and in other filings with the
SEC made by SEPA and SANUWAVE. SEPA and SANUWAVE caution that the
foregoing list of factors is not exclusive, and caution readers not
to place undue reliance upon any forward-looking statements, which
speak only as of the date made. Neither SEPA nor SANUWAVE
undertakes or accepts any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in its expectations or any change in events,
conditions or circumstances on which any such statement is based,
subject to applicable law.
Readers are referred to the most recent reports
filed with the SEC by SEPA and SANUWAVE. Readers are cautioned not
to place undue reliance upon any forward-looking statements, which
speak only as of the date made, and neither SEPA nor SANUWAVE
undertakes any obligation to update or revise the forward-looking
statements, whether as a result of new information, future events
or otherwise.
Important Information About the Transactions
and Where to Find It
SEPA and SANUWAVE will file relevant materials
with the Securities and Exchange Commission (the “SEC”), including
a Form S-4 registration statement to be filed by SEPA, which will
include a prospectus with respect to SEPA’s securities to be issued
in connection with the proposed Merger and a proxy statement with
respect to SEPA’s and SANUWAVE’s stockholder meetings at which
SEPA’s and SANUWAVE’s stockholders will be asked to vote on the
proposed merger and related matters. SEPA’S and SANUWAVE’S
STOCKHOLDERS AND OTHER INTERESTED PERSONS ARE ADVISED TO READ, WHEN
AVAILABLE, THE FORM S-4 AND THE AMENDMENTS THERETO AND OTHER
INFORMATION FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTIONS,
AS THESE MATERIALS WILL CONTAIN IMPORTANT INFORMATION ABOUT SEPA,
SANUWAVE, AND THE TRANSACTIONS. When available, the proxy statement
contained in the Form S-4 and other relevant materials for the
Transactions will be mailed to stockholders of SEPA and SANUWAVE as
of a record date to be established for voting on the proposed
merger and related matters. The preliminary Form S-4 registration
statement and preliminary proxy statement, the final Form S-4
registration statement and definitive proxy statement and other
relevant materials in connection with the Transactions (when they
become available), and any other documents filed by SEPA and
SANUWAVE with the SEC, may be obtained free of charge at the SEC’s
website (www.sec.gov). SEPA’s stockholders will also be able to
obtain a copy of such documents, without charge, by directing a
request to SEPA at 3737 Buffalo Speedway, Suite 1750 Houston, Texas
77098. SANUWAVE’s stockholders will be able to obtain a copy of
such documents, without charge, by directing a request to SANUWAVE
at 11495 Valley View Road, Eden Prairie, Minnesota 55344.
Participants in Solicitations
SEPA and SANUWAVE and their respective directors,
executive officers and employees and other persons may be deemed to
be participants in the solicitation of proxies from the
stockholders of SEPA and SANUWAVE, respectively, in respect of the
proposed business combination. SEPA and SANUWAVE stockholders and
other interested persons may obtain more detailed information
regarding the names and interests in the Transactions of SEPA’s and
SANUWAVE’s directors and executive officers in SEPA’s and
SANUWAVE’s filings with the SEC, including when filed, the Form S-4
registration statement and the proxy statement. These documents can
be obtained free of charge from the sources indicated above.
Disclaimer
This communication shall not constitute a
solicitation of a proxy, consent or authorization with respect to
any securities or in respect of the proposed business combination.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities pursuant to the
proposed Transactions or otherwise, nor shall there be any sale of
securities in any jurisdiction in which the offer, solicitation or
sale would be unlawful prior to the registration or qualification
under the securities laws of any such jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
CONTACT:Investors@Sanuwave.com
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