SANUWAVE Health, Inc. (OTCPK:SNWV) entered into a definitive merger agreement to acquire SEP Acquisition Corp. (NasdaqCM:SEPA) from Mercury Sponsor Group I LLC, investors affiliated with Sweat Equity Partners, LP, Mercury Life Sciences and others on August 23, 2023. The proposed business combination values the combined company at a pro forma enterprise value of $127.5 million. 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. 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. In the event that the Merger Agreement is terminated, SANUWAVE shall pay to SEPA by wire transfer of immediately available funds an amount equal to $2,500,000.

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. acted as financial and fairness opinion provider and Baker Donelson, Bearman, Caldwell & Berkowitz, PC served as legal advisors, respectively, to SEPA.