Delaware
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001-40679
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86-2365445
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(State or Other Jurisdiction of
Incorporation or Organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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Tonya Mitchem Grindon
Nathanael P. Kibler
Andrew T. Yonchak
Baker, Donelson, Bearman, Caldwell &
Berkowitz, PC
1600 West End Avenue, Suite 2000
Nashville, TN 37203
(615) 726-5600
(615) 744-5607 (fax)
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Ben A. Stacke
Jonathan L.H. Nygren
Griffin D. Foster
Faegre Drinker Biddle & Reath LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
(612) 766-7000
(612) 766-1600 (fax)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated ☒
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Smaller reporting company ☒
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Emerging growth company ☒
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By Order of the Board of Directors,
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/s/ R. Andrew White
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R. Andrew White
Chief Executive Officer
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By Order of the Board of Directors,
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/s/ R. Andrew White
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R. Andrew White
Chief Executive Officer
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(1)
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Proposal 1 — The NTA Proposal — To consider and vote on an amendment (the “NTA Amendment”) to the Amended and Restated Certificate of Incorporation of SEPA, dated July 27, 2021, as amended on December 20, 2022 (the “Current Charter”), which amendment shall
be effective, if adopted and implemented by SEPA, prior to the consummation of the proposed Business Combination, to remove from the Current Charter the redemption limitation contained under Section 9.2(a) of the Current Charter
preventing SEPA from redeeming shares of SEPA’s Class A common stock, par value $0.0001 per share (“Class A Common Stock” or “Public Shares”), if it would have less than $5,000,001 of net tangible assets. A copy of the NTA Amendment is
attached to the accompanying proxy statement/prospectus as Annex C. The NTA Proposal is described in more detail in the accompanying proxy statement/prospectus under the heading “Proposal 1: The NTA Proposal.”
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(2)
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Proposal 2 — The Business Combination Proposal — To consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination, pursuant to which Merger Sub will merge with and into
SANUWAVE, with SANUWAVE continuing as the surviving entity of the Business Combination and becoming a subsidiary of SEPA as described in more detail in the accompanying proxy statement/prospectus.
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A copy of the Merger Agreement is appended to the accompanying proxy
statement/prospectus as Annex A. The Business Combination Proposal is described in more detail in the accompanying proxy statement/prospectus under the heading “Proposal 2: The Business
Combination Proposal.”
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(3)
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Proposal 3 — The Charter Proposal — To consider and vote on a proposal to approve, in connection with the Merger Agreement, the replacement of the Current Charter with the proposed new Second Amended and Restated Certificate of Incorporation of SEPA (the
“Proposed Charter”), in the form appended to the accompanying proxy statement/prospectus as Annex D, to be effective upon the filing with and acceptance by the Delaware Secretary of State, pursuant to which, among other things,
the name of SEPA will be changed to “SANUWAVE Health, Inc.” and certain blank check provisions will be removed from the Current Charter. The Charter Proposal is conditioned on the approval of the Business Combination Proposal.
Therefore, if the Business Combination Proposal is not approved, then the Charter Proposal will have no effect, even if approved by SEPA Stockholders. The Charter Proposal is described in more detail in the accompanying proxy
statement/prospectus under the heading “Proposal 3: The Charter Proposal.”
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(4) – (11)
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Proposals 4 – 11 — The Organizational Documents Proposals — To consider and vote, on an advisory and non-binding basis, on eight (8) separate proposals to approve certain governance provisions in the Proposed Charter. These separate votes are not otherwise
required by Delaware law, separate and apart from the Charter Proposal, but are required by Securities and Exchange Commission guidance requiring that stockholders have the opportunity to present their views on important corporate
governance provisions. The Merger is not conditioned on the separate approval of the Organizational Documents Proposals (separate and apart from approval of the Charter Proposal). The Organizational Documents Proposals are described in
more detail in the accompanying proxy statement/prospectus under the heading “Proposals 4 – 11: The Organizational Documents Proposals.”
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(12)
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Proposal 12 — The Nasdaq Proposal — To consider and vote upon a proposal to approve, for purposes of complying with Nasdaq Listing Rules 5635(a), (b) and (d), the issuance of more than 20% of the issued and outstanding shares of Class A Common Stock and the
resulting change in control in connection with the Business Combination, PIPE Investment, and transactions contemplated thereby. The Nasdaq Proposal is described in more detail in the accompanying proxy statement/prospectus under the
heading “Proposal 12: The Nasdaq Proposal.”
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(13)
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Proposal 13 — The Incentive Plan Proposal — To consider and vote on a proposal to approve the SANUWAVE Health, Inc. 2023 Equity Incentive Plan (the “Incentive Plan”), in the form appended to the accompanying proxy statement/prospectus as Annex E.
The board of directors of SEPA (the “SEPA Board”) intends to adopt the Incentive Plan, subject to approval from the SEPA Stockholders, effective immediately prior to the Closing, to be used by the post-Business Combination company
(the “Company” or “Combined Company”). The Incentive Plan Proposal is described in more detail in the accompanying proxy statement/prospectus under the heading “Proposal 13:
The Incentive Plan Proposal.”
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(14)
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Proposal 14 — The Adjournment Proposal — To consider and vote upon a proposal to adjourn the Stockholder Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if it is determined by the SEPA Board
that more time is necessary or appropriate to approve one or more Proposals at the Stockholder Meeting. The Adjournment Proposal is described in more detail in the accompanying proxy statement/prospectus under the heading “Proposal 14: The Adjournment Proposal.”
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(a)
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hold Public Shares or hold Public Shares through Units and elect to separate their Units into the underlying Public Shares and
SEPA Public Warrants prior to exercising Redemption Rights with respect to the Public Shares; and
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(b)
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prior to 5:00 p.m., Eastern Time, on , 2023 (two business days prior to the vote at the Stockholder Meeting), (i) submit a
written request to the Transfer Agent (A) requesting that SEPA redeem the applicable Public Shares for cash and (B) identifying themselves as a beneficial holder and providing their legal name, phone number and address and (ii) deliver
share certificates (if any) and other redemption forms to the Transfer Agent, physically or electronically through The Depository Trust Company.
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By Order of the Board of Directors
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/s/ Andrew White
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Andrew White
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Chief Executive Officer
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(1)
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Proposal 1 — The Warrant Amendment Proposal — To consider and vote upon
an amendment to the Warrant Agreement, dated as of July 21, 2021, a copy of which is attached as Annex B to the accompanying proxy statement/prospectus, to provide that, upon closing of the Business Combination (the “Closing”),
the then outstanding SEPA Public Warrants will be canceled and exchanged for the right to receive 450,336 shares of SEPA’s Class A common stock, par value $0.0001 per share, (i.e., approximately 0.0499 shares of Class A Common Stock for each public warrant) and the then outstanding SEPA Private Placement Warrants will be canceled and exchanged for the right to receive 400,000 shares
of Class A Common Stock (i.e., approximately 0.0499 shares of Class A Common Stock for each private placement warrant). The Warrant
Amendment Proposal is described in more detail in the accompanying proxy statement/prospectus under the heading “Warrant Holder Proposal 1: The Warrant Amendment Proposal.”
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(2)
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Proposal 2 — The Warrant Holders Adjournment Proposal — To consider and
vote upon a proposal to approve the adjournment of the Warrant Holders Meeting to a later date or dates, if necessary, (a) to permit further solicitation and vote of proxies in the event that there are insufficient votes for the
approval of the Warrant Amendment Proposal at the Warrant Holders Meeting or (b) if the board of directors of SEPA determines before the Warrant Holders Meeting that it is not necessary or no longer desirable to proceed with the
proposals. The Warrant Amendment Proposal is described in more detail in the accompanying proxy statement/prospectus under the heading “Warrant Holder Proposal 2: The Warrant
Holders Adjournment Proposal.”
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By Order of the Board of Directors
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/s/ Andrew White
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Andrew White
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Chief Executive Officer
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(1)
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“Aggregate Exercise Price” means the sum of (a) the sum of the exercise prices of all in-the-money SANUWAVE Options; and (b)
the sum of the exercise prices of all in-the-money SANUWAVE Warrants, in each case outstanding as of immediately prior to the Effective Time.
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(2)
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“Company Fully Diluted Shares” means the sum of (i) the number of shares of SANUWAVE Stock that are issued and outstanding
(other than any SANUWAVE securities cancelled pursuant to Section 1.09 of the Merger Agreement); (ii) the number of shares of SANUWAVE Stock issuable upon the exercise of in-the-money SANUWAVE Options outstanding (whether or not
then vested or exercisable); (iii) the number of shares of SANUWAVE Stock issuable upon the exercise of in-the-money SANUWAVE Warrants assumed by SEPA outstanding; and (iv) the number of shares of SANUWAVE Stock issuable upon conversion
of the SANUWAVE Convertible Notes assumed by SEPA, in each case as of immediately prior to the Effective Time.
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•
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the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
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the inability to consummate the Business Combination, including due to any failure to obtain approval of the SEPA Stockholders
or SANUWAVE Stockholders or 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 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;
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delays in obtaining or the inability to obtain any necessary regulatory approvals required to complete the Business
Combination;
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the inability to obtain or maintain the listing of the Class A Common Stock on Nasdaq following the Business Combination;
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costs related to the Business Combination;
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changes in applicable laws or regulations; and
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the possibility that SEPA or SANUWAVE may be adversely affected by other economic, business, and/or competitive factors.
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Q.
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Why am I receiving this proxy statement/prospectus?
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A.
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You are receiving this proxy statement/prospectus in connection with the Stockholder Meeting. SEPA is holding the Stockholder
Meeting to consider and vote upon the Proposals described below. Your vote is important. You are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
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Q.
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Are the Proposals conditioned on one another?
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A.
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Each of the NTA Proposal, the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, and the Incentive Plan
Proposal is interdependent upon the others and each must be approved in order for SEPA to complete the Business Combination contemplated by the Merger Agreement. The Organizational Documents Proposals are conditional upon the Charter
Proposal; the Adjournment Proposal is not conditioned on the approval of any other proposal.
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Q.
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Why is SEPA proposing the Business Combination?
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A.
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SEPA was incorporated to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination transaction. Since SEPA’s incorporation, the SEPA Board has sought to identify suitable candidates in order to effect such a transaction. In its review of SANUWAVE, the SEPA Board considered a variety of factors
weighing positively and negatively in connection with the Business Combination. After careful consideration, the SEPA Board has determined that the Business Combination presents a highly attractive business combination opportunity. The
SEPA Board believes that, based on its review and consideration, the Business Combination with SANUWAVE presents an opportunity to increase stockholder value. However, there can be no assurance that the anticipated benefits of the
Business Combination will be achieved.
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Q.
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What will happen in the Business Combination?
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A.
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Pursuant to the terms of the Merger Agreement, a business combination between SEPA and SANUWAVE will be effected. More
specifically, and as described in greater detail in this proxy statement/prospectus, at the Effective Time:
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Merger Sub will merge with and into SANUWAVE, with SANUWAVE being the surviving company following the Merger and continuing in
existence as a wholly owned subsidiary of SEPA;
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each issued and outstanding share of SANUWAVE Common Stock will be automatically converted into shares of Class A Common Stock
of SEPA at the Conversion Ratio (as defined in the Merger Agreement); and
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outstanding Company Convertible Securities (as defined in the Merger Agreement) of SANUWAVE will be assumed by SEPA and will be
converted into the right to receive Class A Common Stock, reserved from issuance from the Merger Consideration, if not exercised or converted, as applicable, prior to the Effective Time.
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Q.
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What consideration will the SANUWAVE Securityholders receive in connection with the
acquisition of SANUWAVE by SEPA?
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A.
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Pursuant to the terms of the Merger Agreement, the Merger Consideration, consisting of 7,793,000 shares of Class A Common Stock
of SEPA, will be issued, or otherwise reserved for issuance, to the SANUWAVE Securityholders, as follows:
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each share of SANUWAVE Common Stock that is outstanding will be automatically converted into shares of Class A Common Stock of
SEPA at the Conversion Ratio (as defined in the Merger Agreement);
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each SANUWAVE Convertible Note that is outstanding, and has not been exchanged for shares of SANUWAVE Common Stock prior to the
Effective Time will, to the extent permitted by the terms of such convertible note, automatically be assumed by SEPA and convertible into the number of shares of Class A Common Stock of SEPA, reserved from issuance from the Merger
Consideration, equal to the product of (i) the number of shares of SANUWAVE Common Stock subject to such convertible note as of immediately prior to the Effective Time multiplied by (ii) the Conversion Ratio;
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each outstanding SANUWAVE Option (whether vested or unvested, exercisable or unexercisable) that is outstanding as of
immediately prior to the Effective Time will be assumed by SEPA and automatically converted into the right to receive an option to acquire the number of shares of Class A Common Stock, reserved from issuance from the Merger Consideration,
equal to the product of (i) the number of shares of SANUWAVE Common Stock subject to such option as of immediately prior to the Effective Time multiplied by (ii) the Conversion Ratio; and
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each SANUWAVE Warrant that is outstanding and unexercised, and has not been exchanged for shares of SANUWAVE Common Stock prior
to the Effective Time will, to the extent permitted by the terms of such warrant, automatically be assumed by SEPA and converted into a warrant to purchase the number of shares of Class A Common Stock, reserved from issuance from the
Merger Consideration, equal to the product of (1) the number of shares of SANUWAVE Common Stock subject to such warrant multiplied by (2) the Conversion Ratio.
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Q.
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What equity stake will current SEPA Stockholders and SANUWAVE Stockholders hold in the
Combined Company immediately after the completion of the Business Combination?
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A.
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Upon the completion of the Business Combination (assuming, among other things, that no SEPA Stockholders exercise Redemption
Rights with respect to their Class A Common Stock upon completion of the Business Combination), the SANUWAVE Stockholders are expected to own approximately 66.0% of the Combined Company’s outstanding Class A Common Stock and the current
holders of Class A Common Stock are expected to own approximately 11.0% of the Combined Company’s outstanding Class A Common Stock.
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No
Redemptions
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%
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10%
Redemptions
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%
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25%
Redemptions
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%
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50%
Redemptions
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%
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Maximum
Redemptions
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%
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SANUWAVE Securityholders(1)
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7,793,000
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66.0%
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7,793,000
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66.3%
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7,793,000
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66.8%
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7,793,000
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67.7%
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7,793,000
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69.6%
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SEPA Class A Stockholders(2)
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1,304,259
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11.0%
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1,241,984
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10.6%
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1,148,572
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9.9%
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992,886
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8.6%
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681,512
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6.1%
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SEPA Class B Stockholders(3)
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1,249,374
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10.6%
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1,249,374
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10.6%
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1,249,374
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10.7%
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1,249,374
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10.9%
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1,249,374
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11.2%
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SEPA Public Warrant Holders(4)
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450,336
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3.8%
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450,336
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3.8%
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450,336
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3.9%
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450,336
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3.9%
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450,336
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4.0%
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SEPA Private Placement Warrant Holders(5)
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400,000
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3.4%
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400,000
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3.4%
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400,000
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3.46%
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400,000
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3.5%
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400,000
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3.6%
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Sponsor Debt Conversion(6)
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100,000
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0.8%
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100,000
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0.9%
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100,000
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0.9%
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100,000
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0.9%
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100,000
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0.9%
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PIPE Investors(7)
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518,488
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4.4%
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518,488
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4.4%
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518,488
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4.4%
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518,488
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4.5%
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518,488
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4.6%
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Total shares of Class A Common Stock
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11,815,457
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100%
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11,753,182
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100%
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11,659,770
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100%
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11,504,084
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100%
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11,192,710
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100%
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(1)
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SANUWAVE Securityholders consist of holders of shares of SANUWAVE Common Stock in addition to holders of in-the-money SANUWAVE
Warrants and in-the-money SANUWAVE Options that are not exercised prior the Closing and holders of SANUWAVE Convertible Notes that are not converted prior to the Closing.
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(2)
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Pursuant to the Voting and Non-Redemption Agreements, certain SEPA Stockholders agreed not to redeem an aggregate of
681,512 shares of Class A Common Stock. As a result, the maximum number of shares of Class A Common Stock that may be redeemed in connection with the Business Combination is 622,747 shares of Class A Common Stock.
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(3)
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Reflects the conversion of Class B Common Stock to Class A Common Stock, pursuant to the Class B Charter Amendment to be entered
into prior to Closing, amending the Class B Common Stock conversion ratio to 0.277 shares of Class A Common Stock for each share of Class B Common Stock.
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(4)
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Reflects the conversion of the SEPA Public Warrants into 450,336 shares of Class A Common Stock (i.e., approximately 0.0499
shares of Class A Common Stock for each public warrant) pursuant to the Warrant Agreement Amendment.
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(5)
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Reflects the conversion of the SEPA Private Placement Warrants into 400,000 shares of Class A Common Stock (i.e., approximately
0.0499 shares of Class A Common Stock for each private placement warrant) pursuant to the Warrant Agreement Amendment.
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(6)
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On October 11, 2022, SEPA issued the Sponsor Note to the Sponsor in the original principal amount of up to $1,000,000 (together
with all accrued but unpaid interest, fees, expenses and other amounts payable under the Sponsor Note, the “Outstanding Indebtedness”). In accordance with the Merger Agreement and as a part of the PIPE Investment, the Sponsor has agreed
to cancel and release the Outstanding Indebtedness in exchange for, and in consideration of, the issuance to the Sponsor by SEPA of 100,000 shares of Class A Common Stock.
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(7)
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The Merger Agreement provides that SANUWAVE’s obligation to consummate the Business Combination is conditioned on, among other
things, that as of the Closing, SEPA have at least $12,000,000 resulting from (i) proceeds from Class A Common Stock that has not been redeemed in the Redemption and (ii) proceeds of the PIPE Investment. Assuming SEPA Stockholders redeem
the maximum amount (622,747 shares of Class A Common Stock), then SEPA will need to obtain at least $5,184,880 (or 518,488 shares of Class A Common Stock at a price of $10.00 per share) in the PIPE Investment in order to satisfy the
Minimum Cash Condition. SEPA may raise more or less than such amount in the PIPE Investment depending on the number of redemptions, market conditions, and other factors.
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Q.
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Did the SEPA Board obtain a third-party valuation or fairness opinion in determining
whether or not to proceed with the Business Combination?
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A.
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Yes. The SEPA Board obtained a fairness opinion from of ValueScope, Inc. For a description of the opinion issued by ValueScope,
Inc. to the SEPA Board, please see “Proposal 2: The Business Combination Proposal — Opinion of ValueScope, Inc. as Fairness Opinion Provider.” The SEPA Board obtained and considered a fairness
opinion for a number of reasons: (i) to determine whether experienced, independent valuation specialists would judge the negotiated purchase price to be fair to SEPA, from a financial point of view, (ii) to help the SEPA Board ensure that
its own determination as to whether to accept and recommend the Merger was reasonable and in the best interests of SEPA Stockholders, (iii) to help the SEPA Board ensure that its own determination as to whether to accept and recommend the
Merger was the result of a reasonable and thorough examination of the relevant facts and (iv) to provide SEPA Stockholders with additional information to consider when deciding whether to vote in favor of the Merger Agreement and the
resulting Business Combination or not, and whether to redeem their shares in SEPA or not.
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Q.
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What happens to the funds deposited in the Trust Account after completion of the Business
Combination?
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A.
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After completion of the Business Combination, the funds in the Trust Account will be used to pay holders of the Class A Common
Stock who exercise Redemption Rights. As of September 19, 2023, there were cash and marketable securities held in the Trust Account of approximately $13.7 million. These funds will not be released until the earlier of the completion of
the Business Combination or the Redemption of the Class A Common Stock if SEPA is unable to complete a Business Combination by July 30, 2024 (except that interest earned on the amounts held in the Trust Account may be released earlier as
necessary to pay for any franchise or income taxes).
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Q.
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What happens if a substantial number of SEPA Stockholders vote in favor of the Business
Combination Proposal and exercise their Redemption Rights?
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A.
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SEPA Stockholders may vote in favor of the Business Combination and still exercise their Redemption Rights. The Business
Combination may be completed even though the funds available from the Trust Account and the number of SEPA Stockholders is substantially reduced as a result of Redemptions by SEPA Stockholders. Pursuant to Voting and Non-Redemption
Agreements, certain SEPA Stockholders agreed not to redeem (without receiving any cash consideration for this agreement) an aggregate of 681,512 shares of Class A Common Stock (representing approximately $7.1 million (calculated based on
the funds held in the Trust Account as of September 19, 2023) that SEPA would have otherwise been required to pay to redeem such shares in connection with the Business Combination).
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Q.
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What conditions must be satisfied to complete the Business Combination?
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A.
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Unless waived by the parties to the Merger Agreement, and subject to applicable law, the consummation of the Business
Combination is subject to a number of conditions set forth in the Merger Agreement including, among others, receipt of the requisite stockholder approvals contemplated by this proxy statement/prospectus. For a summary of the conditions
that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “Proposal 2: The Business Combination Proposal.”
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Q.
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When do you expect the Business Combination to be completed?
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A.
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It is currently expected that the Business Combination will be completed in the fourth quarter of 2023. This timing depends,
among other things, on the approval of the Proposals to be presented at the Stockholder Meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted at the Stockholder Meeting and SEPA elects to adjourn the
Stockholder Meeting to a later date or dates to permit further solicitation and vote of proxies if reasonably determined to be necessary or desirable by SEPA.
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Q.
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Will SEPA enter into any financing arrangements in connection with the Business
Combination?
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A.
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SEPA and SANUWAVE intend to enter into PIPE Subscription Agreements with PIPE Investors for an estimated aggregate amount of
$5,184,880 for 518,488 shares of Class A Common Stock at a price of $10.00 per share in a private placement in SEPA to be consummated simultaneously with the Closing. Except for the PIPE Investment described in the preceding sentence,
SEPA does not currently expect to enter into any financing arrangements in connection with the Business Combination.
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Q.
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Why is SEPA proposing the Incentive Plan Proposal?
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A.
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The purpose of the Incentive Plan is to enable the Combined Company to offer eligible employees, directors and consultants cash
and stock-based incentive awards in order to attract, retain and reward these individuals and strengthen the mutuality of interests between them and the Combined Company’s stockholders. For more information, see the section entitled “Proposal 11: The Incentive Plan Proposal.”
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Q.
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What changes are being made to the Current Charter in connection with the Business
Combination?
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A:
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The NTA Amendment will remove from the Current Charter the redemption limitation contained under Section 9.2(a) of the Current
Charter preventing SEPA from redeeming shares of its Class A Common Stock if it would have less than $5,000,001 of net tangible assets.
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Q.
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Why is SEPA proposing the Adjournment Proposal?
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A.
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SEPA is proposing the Adjournment Proposal to allow the adjournment of the Stockholder Meeting to a later date or dates,
including if necessary to permit further solicitation and vote of proxies if it is determined by SEPA that more time is necessary or appropriate to approve one or more Proposals at the Stockholder Meeting.
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Q.
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When and where will the Stockholder Meeting be held?
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A.
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The Stockholder Meeting will be held virtually at a.m., Central Time, on , 2023. Only stockholders who held Common Stock
of SEPA at the close of business on , 2023 will be entitled to attend and vote at the Stockholder Meeting and at any adjournments and postponements thereof.
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Q.
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Who is entitled to vote at the Stockholder Meeting?
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A.
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SEPA has fixed , 2023 as the Record Date. If you were a SEPA Stockholder at the close of business on the Record Date, you
are entitled to vote on matters that come before the Stockholder Meeting. However, a SEPA Stockholder may only vote his, her or its shares if he, she or it is present in person virtually or is represented by proxy at the Stockholder
Meeting.
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Q.
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How do I vote?
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A.
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If you are a record owner of your shares of SEPA Common Stock, there are three ways to vote your shares at the Stockholder
Meeting:
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Q.
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What if I do not vote my SEPA shares or if I abstain from voting?
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A.
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At the Stockholder Meeting, SEPA will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as
present for purposes of determining whether a quorum is present. For purposes of approval, an abstention will have the same effect as a vote “AGAINST” the NTA Proposal, the Business Combination Proposal, and the Charter Proposal but have
no effect on the outcome of the other Proposals. However, if you do not submit a proxy or voting instruction, do not attend the Stockholder Meeting virtually or by proxy and your shares are not otherwise voted at the Stockholder Meeting,
your failure to do so will have the same effect as a vote “AGAINST” the NTA Proposal, the Business Combination Proposal, and the Charter Proposal but have no effect on the outcome of the other Proposals.
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Q.
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If my shares are held in “street name,” will my broker automatically vote them for me?
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A.
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No. Under the rules governing banks and brokers who submit a proxy card with respect to shares held in street name, such banks
and brokers have the discretion to vote on routine matters, but not on non-routine matters. The approval of the NTA Proposal, the Business Combination Proposal, the Charter Proposal, the Organizational Document Proposals, the Nasdaq
Proposal, the Incentive Plan Proposal, and the Adjournment Proposal (if presented) are non-routine matters.
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Q.
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What Proposals must be passed in order for the Business Combination to be completed?
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A.
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The Business Combination will not be completed unless the NTA Proposal, the Business Combination Proposal, the Charter
Proposal, the Nasdaq Proposal, and the Incentive Plan Proposal are approved. If SEPA does not complete a business combination by July 30, 2024, SEPA will be required to dissolve and liquidate itself and return the monies held within its
Trust Account to its SEPA Stockholders.
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Q.
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How does the SEPA Board recommend that I vote on the Proposals?
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A.
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The SEPA Board unanimously recommends that the SEPA Stockholders entitled to vote on the Proposals, vote as follows:
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“FOR” approval of the NTA Proposal;
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“FOR” approval of the Business Combination Proposal;
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“FOR” approval of the Charter Proposal;
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“FOR” approval of the Organizational Documents Proposals;
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“FOR” approval of the Nasdaq Proposal;
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“FOR” approval of the Incentive Plan Proposal; and
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“FOR” approval of the Adjournment Proposal, if presented.
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Q.
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How many votes do I have?
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A.
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SEPA Stockholders have one vote per each share of SEPA Common Stock held by them on the Record Date for the Stockholder
Meeting.
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Q.
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How will the Sponsor and SEPA’s officers and directors vote in connection with the
Proposals?
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A.
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As of the Record Date, the Sponsor and SEPA’s officers and directors own approximately 76.4% of SEPA’s outstanding Common
Stock. Pursuant to the Sponsor Voting Agreement, the Sponsor has agreed to vote its shares (including the Founder Shares) in favor of the Proposals. Accordingly, it is more likely that the necessary stockholder approval of the Proposals
will be received at the Stockholder Meeting, than would be the case if the Sponsor and SEPA’s officers and directors had agreed to vote their shares of Common Stock in accordance with the majority of the votes cast by SEPA Stockholders.
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Q.
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What interests do the Sponsor and SEPA’s officers and directors have in the Business
Combination?
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A.
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In considering the recommendation of the SEPA Board to vote in favor of the Business Combination, SEPA Stockholders should be
aware that, aside from their interests as SEPA Stockholders, the Sponsor and SEPA’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of other SEPA Stockholders generally.
SEPA’s directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, and in recommending to the SEPA Stockholders that they approve the Business Combination. SEPA Stockholders should
take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things:
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Pursuant to the Letter Agreement, 5,031,250 Founder Shares owned by the Sponsor and other insiders became subject to a lock-up
whereby, subject to certain limited exceptions, they agreed not to transfer, assign or sell the Founder Shares until the earlier of (A) one year after the completion of SEPA’s initial
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The Sponsor and SEPA’s officers and directors own 3,645,375 Founder Shares. On March 4, 2021, SEPA’s founder acquired 5,031,250
Founder Shares for an aggregate purchase price of $25,000, or approximately $0.005 per share. Also on March 24, 2021, SEPA’s founder assigned 160,000 Founder Shares (40,000 Founder Shares each) to SEPA’s independent directors at their
original purchase price, 35,000 Founder Shares (5,000 Founder Shares each) to SEPA’s advisors and 20,000 Founder Shares (10,000 Founder Shares each) to SEPA’s Chief Financial Officer and Chief Strategy Officer; SEPA’s directors and
officers also have a pecuniary interests in such Founder Shares through their ownership interest in the Sponsor. Upon conversion to Class A Common Stock, the Founder Shares would have an aggregate market value of approximately
$11.1 million, based on the conversion ratio set forth in the Class B Charter Amendment and the last sale price of $11.03 per share of Class A Common Stock on Nasdaq on September 19, 2023. If SEPA does not consummate the Business
Combination or another initial business combination by July 30, 2024, and SEPA is therefore required to be liquidated, these shares would be worthless, as Founder Shares are not entitled to participate in any redemption or liquidation of
the Trust Account. Given the differential in the purchase price that the Sponsor paid for the Founder Shares as compared to the price of the Units sold in SEPA’s IPO, the Sponsor and SEPA’s directors and officers may earn a positive rate
of return on their investment even if SEPA’s Class A Common Stock trades below the price initially paid for the Units in the IPO and the SEPA Stockholders experience a negative rate of return following the completion of the Business
Combination.
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The Sponsor and SEPA’s directors and officers may be incentivized to complete the Business Combination, or an alternative
initial business combination with a less favorable company or on terms less favorable to shareholders, rather than to liquidate, in which case the Sponsor would lose its entire investment. As a result, the Sponsor may have a conflict of
interest in determining whether SANUWAVE is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination.
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Simultaneously with the closing of the IPO, the Sponsor purchased 7,850,000 warrants at a price of $1.00 per warrant. Each
private placement warrant is exercisable to purchase one share of Class A Common Stock at a price of $11.50 per share. Such warrants will expire worthless if SEPA fails to complete an initial business combination by July 30, 2024.
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Pursuant to the Sponsor Voting Agreement, the Sponsor has agreed to vote all of the Sponsor’s shares of SEPA in favor of the
Business Combination and to otherwise take (or not take, as applicable) certain other actions in support of the Business Combination and the other matters to be submitted to SEPA Stockholders for approval in connection with the Business
Combination. The Sponsor Voting Agreement also prevents transfers of SEPA shares held by the Sponsor between the date of the Sponsor Voting Agreement and the termination of such Sponsor Voting Agreement, except for certain permitted
transfers where the recipient also agrees to comply with the Sponsor Voting Agreement.
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On October 11, 2022, SEPA issued the Sponsor Note to the Sponsor, pursuant to which SEPA could borrow up to $1,000,000 at a 6%
interest rate on or before October 11, 2024 to cover, among other things, expenses related to a business combination. As of September 19, 2023, SEPA has borrowed $960,000 under the Sponsor Note.
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In order to finance transaction costs in connection with the Business Combination, the Sponsor or an affiliate of the Sponsor,
or certain of SEPA’s officers and directors may, but are not obligated to, loan SEPA
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The Sponsor has agreed that it will be liable to SEPA if and to the extent any claims by a third party (other than SEPA’s
independent auditors) for services rendered or products sold to SEPA, or a prospective target business with which SEPA has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i)
$10.10 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the amount of
interest which may be withdrawn to pay taxes as well as expenses relating to the administration of the Trust Account, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust
Account.
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The fact that SEPA has provisions in its Current Charter which waive the corporate opportunities doctrine, which means that
SEPA’s officers and directors have not been obligated to bring all corporate opportunities to SEPA. The potential conflict of interest relating to the waiver of the corporate opportunities doctrine in the Current Charter did not, to
SEPA’s knowledge, impact the search for an acquisition target or prevent SEPA from reviewing any opportunities as a result of such waiver.
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Q.
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Do I have Redemption Rights?
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A.
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Pursuant to the Current Charter, SEPA Stockholders will be entitled to redeem their Class A Common Stock for a pro rata share
of the Trust Account (which would have amounted to approximately $10.48 per share of Class A Common Stock based on the amount in the Trust Account as of September 19, 2023) net of taxes payable. If a SEPA Stockholder exercises its
Redemption Rights, then such SEPA Stockholder will be exchanging its Class A Common Stock for cash.
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Q.
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How do I exercise my Redemption Rights?
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A.
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If you are a SEPA Stockholder and you seek to have your shares redeemed, you must, no later than 5:00 p.m., Eastern Time, on
, 2023 (two (2) business days before the Stockholder Meeting), (i) submit your request in writing to SEPA’s Transfer Agent (A) requesting that SEPA redeem your shares for cash, at the address listed at the end of this section and (B)
identifying yourself as a beneficial holder and providing your legal name, phone number and address and (ii) deliver your stock certificates (if any) and other redemption forms to SEPA’s Transfer Agent physically or electronically using
The Depository Trust Company’s DWAC system.
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Q.
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May the Sponsor, SEPA’s directors, officers, or their affiliates purchase shares in
connection with the Business Combination?
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A.
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The Sponsor and SEPA’s directors, officers, or their affiliates may purchase Class A Common Stock in privately negotiated
transactions or in the open market either prior to or after the Closing of the Business Combination, including from SEPA Stockholders who would have otherwise exercised their Redemption Rights. However, the Sponsor, directors and officers
have no current commitments or plans to engage in such transactions and have not formulated any terms or conditions for any such transactions at the date of this proxy statement/prospectus. If SEPA engages in such transactions, any such
purchases will be subject to limitations regarding possession of any material nonpublic information not disclosed to the seller of such shares and they will not make any such purchases if such purchases are prohibited by Regulation M
under the Exchange Act. Any such purchase after the Record Date would include a contractual acknowledgement that the selling stockholder, although still the record holder of the Class A Common Stock, is no longer the beneficial owner
thereof and therefore agrees not to exercise its Redemption Rights. In the event the Sponsor or SEPA’s directors, officers or their affiliates purchase shares in privately negotiated transactions from SEPA Stockholders who have already
elected to exercise their Redemption Rights, such selling SEPA Stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in
excess of the per-share pro rata portion of the aggregate amount then on deposit in the Trust Account.
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Q.
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Is there a limit on the number of shares I may redeem?
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A.
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The Current Charter provides that each SEPA Stockholder, together with any affiliate or any other person with whom such SEPA
Stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the
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Q.
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What are the material U.S. federal income tax consequences to stockholders that exercise
their Redemption Rights?
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A.
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SEPA Stockholders that elect to exercise their Redemption Rights generally will recognize capital gain or loss equal to the
difference between the amount of cash received on the Redemption of the Class A Common Stock and such stockholder’s adjusted tax basis in such Class A Common Stock, which generally will be equal to the cost of such Class A Common Stock. A
SEPA Stockholder who purchased the Class A Common Stock in the IPO generally will have a tax basis in the shares of Class A Common Stock that were part of the Units equal to the portion of the purchase price of such Units allocated to the
Class A Common Stock (such allocation based on the relative fair market value of the Class A Common Stock and the warrants at the time). However, in certain circumstances, the cash paid to such stockholders will be treated as dividend
income for U.S. federal income tax purposes. For a more complete discussion of the material U.S. federal income tax consequences to SEPA Stockholders that elect to exercise their Redemption Rights, see the discussion in the section
entitled “Proposal 2: The Business Combination Proposal — Material U.S. Federal Income Tax Consequences to Redemption.”
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Q.
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What are the material U.S. federal income tax consequences to SEPA Stockholders that do not
exercise their Redemption Rights?
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A.
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The parties to the Merger Agreement intend for the Business Combination to qualify as a “reorganization” within the meaning of
Section 368(a) of the Code for U.S. federal income tax purposes. Provided that the Business Combination qualifies as a reorganization, no gain or loss generally will be recognized by a U.S. Holder (as defined below) of SANUWAVE Common
Stock for U.S. federal income tax purposes on the exchange of its shares of SANUWAVE Common Stock for Class A Common Stock of SEPA in the Business Combination. For a more complete discussion of the material U.S. federal income tax
consequences of the Business Combination, please carefully review the information set forth in the section titled “Tax Treatment of Business Combination” of this proxy statement/prospectus. The tax consequences of the Business Combination
to any particular SANUWAVE Stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, SANUWAVE Stockholders are urged to consult with, and rely solely upon, their own tax advisors as to the specific tax
consequences of the Business Combination, including the effects of U.S. federal, state or local, or non-U.S. tax laws.
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Q.
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What happens if the Business Combination is not completed?
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A.
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If a SEPA Stockholder has tendered shares to be redeemed but the Business Combination is not completed, the Redemptions will be
canceled and the tendered shares will be returned to the relevant SEPA Stockholders as appropriate. The current deadline set forth in the Current Charter for SEPA to complete its initial Business Combination is July 30, 2024.
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Q.
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Why am I receiving this proxy statement/prospectus?
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A.
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You are receiving this proxy statement/prospectus in connection with the Warrant Holders Meeting. SEPA is holding the Warrant
Holders Meeting to consider and vote upon the Warrant Holder Proposals described below. Your vote is important. You are encouraged to vote as soon as possible after carefully reviewing this proxy
statement/prospectus.
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Q.
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Why is SEPA providing SEPA Public Warrant Holders with the opportunity to vote on the
Warrant Agreement Amendment?
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A.
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We are seeking approval of the Warrant Agreement Amendment, which will amend the Warrant Agreement to provide that, at Closing,
the then outstanding SEPA Public Warrants will be canceled and exchanged for the right to receive 450,336 shares of Class A Common Stock (i.e., approximately 0.0499 shares of Class A Common Stock
for each public warrant) and the then outstanding SEPA Private Placement Warrants will be canceled and exchanged for the right to receive 400,000 shares of Class A Common Stock (i.e., approximately
0.0499 shares of Class A Common Stock for each private placement warrant).
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Q.
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Why is SEPA proposing the Warrant Holders Adjournment Proposal?
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A.
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SEPA is proposing the Warrant Holders Adjournment Proposal to allow the adjournment of the Warrant Holders Meeting to a later
date or dates, including if necessary to permit further solicitation and vote of proxies if it is determined by SEPA that more time is necessary or appropriate to approve the Warrant Amendment Proposal at the Warrant Holders Meeting.
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Q.
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What constitutes a quorum at the Warrant Holders Meeting?
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A.
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A quorum will be present at the Warrant Holders Meeting if the holders of at least 50% of the outstanding SEPA Public Warrants
are represented in person (which would include presence at the virtual meeting) or by proxy. As of the Record Date , SEPA Public Warrants would be required to achieve a quorum.
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Q.
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What vote is required to approve each proposal at the Warrant Holders Meeting?
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A.
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The Warrant Amendment Proposal: The approval of the Warrant Amendment Proposal
requires the affirmative vote of the holders of at least 50% of the then outstanding SEPA Public Warrants. Abstentions and broker non-votes will count as a vote “AGAINST” the Warrant Amendment Proposal.
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Q.
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How does the SEPA Board recommend that I vote on the Warrant Holder Proposals?
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A.
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The SEPA Board has unanimously approved and unanimously recommends that the SEPA Public Warrant Holders entitled to vote on the
Warrant Holder Proposals, vote as follows:
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“FOR” approval of the Warrant Amendment Proposal; and
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“FOR” approval of the Warrant Holders Adjournment Proposal, if presented.
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Q.
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Will the Sponsor vote on the Warrant Holder Proposals?
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A.
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As of the Record Date, the Sponsor owns 100% of the outstanding SEPA Private Placement Warrants and none of the SEPA Public
Warrants. Because the Warrant Holder Proposals do not adversely affect the SEPA Private Placement Warrants in a different manner than the SEPA Public Warrants, or vice versa, the Sponsor is not entitled to vote on the Warrant Holder
Proposals.
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Q.
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When and where will the Warrant Holders Meeting be held?
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A.
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The Warrant Holders Meeting will be held in person or by proxy, on , 2023, in virtual format via live webcast at
https://www.cstproxy.com/sep-acquis/whm2023.
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Q.
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How many votes do I have?
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A.
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SEPA Public Warrant Holders have one vote per each SEPA Public Warrant held by them on , 2023.
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Q.
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How do I vote?
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A.
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If you are a record owner of your SEPA Public Warrants, there are three ways to vote your SEPA Public Warrants at the Warrant
Holders Meeting:
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Q.
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What if I do not vote my SEPA Public Warrants or if I abstain from voting?
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A.
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At the Warrant Holders Meeting, SEPA will count a properly executed proxy marked “ABSTAIN” with respect to a particular Warrant
Holder Proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention will have the same effect as a vote “AGAINST” the Warrant Amendment Proposal, but will have no effect on the
Warrant Holders Adjournment Proposal (if presented). However, if you do not submit a proxy or voting instruction, do not attend the Warrant Holders Meeting virtually or by proxy and your warrants are not otherwise voted at the Warrant
Holders Meeting, your failure to do so will have the same effect as a vote “AGAINST” the Warrant Amendment Proposal, but will have no effect on the Warrant Holders Adjournment Proposal (if presented).
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If my warrants are held in “street name,” will my broker automatically vote them for me?
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A.
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No. Under the rules governing banks and brokers who submit a proxy card with respect to SEPA Public Warrants held in street
name, such banks and brokers have the discretion to vote on routine matters, but not on non-routine matters. The approval of the Warrant Amendment Proposal and Warrant Holders Adjournment Proposal (if presented) are non-routine matters.
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NTA Proposal: The approval of the NTA Proposal will require the affirmative vote of a
majority of the outstanding shares of Common Stock as of the Record Date. Failure to vote by proxy or to vote virtually at the Stockholder Meeting or an abstention from voting will have the same effect as a vote “AGAINST” the NTA
Proposal. In addition, because they are cross-conditioned on each other, the NTA Proposal will be approved and adopted only if the Business Combination Proposal is approved at the Stockholder Meeting by the affirmative vote of a
majority of the outstanding shares of SEPA Common Stock as of the Record Date.
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Business Combination Proposal: The approval of the Business Combination Proposal will
require the affirmative vote of a majority of the outstanding shares of Common Stock as of the Record Date. Failure to vote by proxy or to vote virtually at the Stockholder Meeting or an abstention from voting will have the same effect
as a vote “AGAINST” the Business Combination Proposal. If any of the NTA Proposal, the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, or the Incentive Plan Proposal fails to receive the required SEPA
Stockholder approval, the Business Combination will not be completed. Therefore, if any of the aforementioned Proposals are not approved, the Business Combination Proposal will have no effect, even if approved by the SEPA Stockholders.
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Charter Proposal: The approval of the Charter Proposal will require the affirmative
vote of a majority of the outstanding shares of Common Stock as of the Record Date. In addition, because the Charter Proposal will result in an increase in the number of authorized shares of Class A Common Stock, the Charter Proposal
will also require an affirmative vote by a majority of the outstanding shares of Class A Common Stock then outstanding as of the Record Date and voting separately as a single class. Failure to vote by proxy or to vote virtually at the
Stockholder Meeting or an abstention from voting will have the same effect as a vote “AGAINST” the Charter Proposal. Also, because they are cross-conditioned on each other, the Charter Proposal will be approved and adopted only if the
Business Combination Proposal is approved at the Stockholder Meeting by the affirmative vote of a majority of the outstanding shares of Common Stock as of the Record Date.
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Organizational Documents Proposal: The approval of the Organizational Documents
Proposal will require the affirmative vote of a majority of the votes cast by SEPA Stockholders, present in person or
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Nasdaq Proposal: The approval of the Nasdaq Proposal will require the affirmative
vote of a majority of the votes cast by SEPA Stockholders, present in person or represented by proxy, at the Stockholder Meeting and entitled to vote thereon. Failure to vote by proxy or to vote virtually at the Stockholder Meeting or
an abstention from voting will have no effect on the Nasdaq Proposal. In addition, because they are cross-conditioned on each other, the Nasdaq Proposal will be approved and adopted only if the Business Combination Proposal is approved
at the Stockholder Meeting by the affirmative vote of a majority of the outstanding shares of Common Stock as of the Record Date.
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Incentive Plan Proposal: The approval of the Incentive Plan Proposal will require the
affirmative vote of a majority of the votes cast by SEPA Stockholders, present in person or represented by proxy, at the Stockholder Meeting and entitled to vote thereon. Failure to vote by proxy or to vote virtually at the Stockholder
Meeting or an abstention from voting will have no effect on the Incentive Plan Proposal. In addition, because they are cross-conditioned on each other, the Incentive Plan Proposal will be approved and adopted only if the Business
Combination Proposal is approved at the Stockholder Meeting by the affirmative vote of a majority of the outstanding shares of Common Stock as of the Record Date.
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Adjournment Proposal: The approval of the Adjournment Proposal will require the
affirmative vote of a majority of the votes cast by SEPA Stockholders, present in person or represented by proxy, at the Stockholder Meeting and entitled to vote thereon. Failure to vote by proxy or to vote virtually at the Stockholder
Meeting or an abstention from voting will have no effect on the Adjournment Proposal. In addition, because they are cross-conditioned on each other, the Adjournment Proposal will be approved and adopted only if the Business Combination
Proposal is approved at the Stockholder Meeting by the affirmative vote of a majority of the outstanding shares of Common Stock as of the Record Date.
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pursuant to the Letter Agreement, 5,031,250 Founder Shares owned by the Sponsor and other insiders became subject to a
lock-up whereby, subject to certain limited exceptions, they agreed not to transfer, assign or sell the Founder Shares until the earlier of (A) one year after the completion of SEPA’s initial business combination or (B) subsequent to
the Business Combination, (x) if the last sale price of SEPA’s Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and other similar transactions) for any 20
trading days within any 30-trading day period commencing at least 150 days after SEPA’s initial business combination or (y) the date on which SEPA completes a liquidation, merger, capital stock exchange, reorganization or other similar
transaction that results in all of SEPA Stockholders having the right to exchange their shares of Common Stock for cash, securities or other property; provided, however, upon approval of the Letter Agreement Amendment, this period will
be amended to until the earlier of (i) 180 days after the completion of the Business Combination or (ii) subsequent to the Business Combination, the date on which SEPA completes a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all SEPA Stockholders having the right to exchange their shares of Common Stock for cash, securities or other property;
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the Sponsor and SEPA’s officers and directors own 3,645,375 Founder Shares. On March 4, 2021, SEPA’s founder acquired
5,031,250 Founder Shares for an aggregate purchase price of $25,000, or approximately
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the Sponsor and SEPA’s directors and officers may be incentivized to complete the Business Combination, or an alternative
initial business combination with a less favorable company or on terms less favorable to shareholders, rather than to liquidate, in which case the Sponsor would lose its entire investment. As a result, the Sponsor may have a conflict of
interest in determining whether SANUWAVE is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination;
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simultaneously with the closing of the IPO, the Sponsor purchased 7,850,000 SEPA Private Placement Warrants at a price of
$1.00 per warrant. Each private placement warrant is exercisable to purchase one share of Class A Common Stock at a price of $11.50 per share. Such SEPA Private Placement Warrants will expire worthless if SEPA fails to complete an
initial business combination by July 30, 2024;
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pursuant to the Sponsor Voting Agreement, the Sponsor has agreed to vote all of the Sponsor’s shares of SEPA in favor of the
Merger Agreement and the Business Combination and to otherwise take (or not take, as applicable) certain other actions in support of the Merger Agreement and the Business Combination and the other matters to be submitted to SEPA
Stockholders for approval in connection with the Business Combination. The Sponsor Voting Agreement also prevents transfers of SEPA shares held by the Sponsor between the date of the Sponsor Voting Agreement and the termination of such
Sponsor Voting Agreement, except for certain permitted transfers where the recipient also agrees to comply with the Sponsor Voting Agreement;
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on October 11, 2022, SEPA issued the Sponsor Note to the Sponsor, pursuant to which SEPA could borrow up to $1,000,000 at a
6% interest rate on or before October 11, 2024 to cover, among other things, expenses related to a business combination. As of September 19, 2023, SEPA has borrowed $960,000 under the Sponsor Note;
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in order to finance transaction costs in connection with the Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of SEPA’s officers and directors may, but are not obligated to, loan SEPA additional funds as may be required. If SEPA completes the Business Combination, SEPA would repay the Working Capital Loans out of the
proceeds held in the Trust Account released to SEPA. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that the Business Combination is not completed, SEPA may use a
portion of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans;
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the Sponsor has agreed that it will be liable to SEPA if and to the extent any claims by a third party (other than SEPA’s
independent auditors) for services rendered or products sold to SEPA, or a prospective target business with which SEPA has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i)
$10.10 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of
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the fact that SEPA has provisions in its Current Charter which waive the corporate opportunities doctrine, which means that
SEPA’s officers and directors have not been obligated to bring all corporate opportunities to SEPA. The potential conflict of interest relating to the waiver of the corporate opportunities doctrine in the Current Charter did not, to
SEPA’s knowledge, impact the search for an acquisition target or prevent SEPA from reviewing any opportunities as a result of such waiver.
|
•
|
“FOR” approval of the NTA Proposal;
|
•
|
“FOR” approval of the Business Combination Proposal;
|
•
|
“FOR” approval of the Charter Proposal;
|
•
|
“FOR” approval of the Organizational Documents Proposals;
|
•
|
“FOR” approval of the Nasdaq Proposal;
|
•
|
“FOR” approval of the Incentive Plan Proposal; and
|
•
|
“FOR” approval of the Adjournment Proposal, if presented.
|
•
|
“FOR” approval of the Warrant Amendment Proposal; and
|
•
|
“FOR” approval of the Warrant Holder Adjournment Proposal, if presented.
|
•
|
the Combined Company may be required to raise additional funds to finance operations concern and the Combined Company may not
be able to do so, and/or the terms of any financings may not be advantageous to the Combined Company;
|
•
|
SANUWAVE has a history of losses and the Combined Company may continue to incur losses and may not achieve or maintain
profitability;
|
•
|
the medical device/therapeutic product industries are highly competitive and subject to rapid technological change, so if the
Combined Company’s competitors are better able to develop and market products that are safer and more effective than any products the Combined Company may develop, the Combined Company’s commercial opportunities will be reduced or
eliminated;
|
•
|
the Combined Company’s products and product candidates do not gain market acceptance among physicians, patients and the
medical community, the Combined Company may be unable to generate significant revenues, if any;
|
•
|
product candidates of the Combined Company may not be developed or commercialized successfully;
|
•
|
the Combined Company may not successfully establish and maintain licensing and/or partnership arrangements for technology for
non-medical uses, which could adversely affect the Combined Company’s ability to develop and commercialize non-medical technology;
|
•
|
SANUWAVE’s product component materials are only produced by a single supplier for such product component. If the Combined
Company is unable to obtain product component materials and other products from SANUWAVE’s suppliers that the Combined Company will depend on for operations, or find suitable replacement suppliers, the Combined Company’s ability to
deliver products to market will likely be impeded, which could have a material adverse effect on the Combined Company;
|
•
|
SANUWAVE currently sells products through distributors and partners whose sales account for the majority of revenues and
accounts receivable. The Combined Company’s business and results of operations could be adversely affected by any business disruptions or credit or other financial difficulties experienced by such distributors or partners;
|
•
|
the Combined Company faces an inherent risk of liability in the event that the use or misuse of product candidates results in
personal injury or death;
|
•
|
actual or anticipated fluctuations in the Combined Company’s quarterly financial results or the quarterly financial results
of companies perceived to be similar to the Combined Company;
|
•
|
the Combined Company will be dependent on information technology and the Combined Company’s systems and infrastructure face
certain risks, including from cybersecurity breaches and data leakage;
|
•
|
the Combined Company will generate a portion of revenue internationally and the Combined Company will be subject to various
risks relating to international activities which could adversely affect operating results;
|
•
|
results of Combined Company clinical trials may be insufficient to obtain regulatory approval for product candidates;
|
•
|
the Combined Company will be subject to extensive governmental regulation, including the requirement of FDA approval or
clearance, before product candidates may be marketed;
|
•
|
patients may discontinue their participation in the Combined Company’s clinical studies, which may negatively impact the
results of these studies and extend the timeline for completion of development programs;
|
•
|
the Combined Company will rely on third parties to conduct clinical trials, and their failure to perform their obligations in
a timely or competent manner may delay development and commercialization of Combined Company devices;
|
•
|
the Combined Company may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety
risks that could preclude approval of product candidates;
|
•
|
regulatory approval of the Combined Company’s product candidates may be withdrawn at any time;
|
•
|
federal regulatory reforms may adversely affect the Combined Company’s ability to sell products profitably;
|
•
|
failure to obtain regulatory approval in foreign jurisdictions may prevent the Combined Company from marketing products
abroad;
|
•
|
if the Combined Company fails to obtain an adequate level of reimbursement for approved products by third party payers, there
may be no commercially viable markets for approved products or the markets may be much smaller than expected;
|
•
|
uncertainty surrounding and future changes to healthcare law in the United States may have a material adverse effect on the
Combined Company;
|
•
|
if the Combined Company fails to comply with the United States Federal Anti-Kickback Statute, False Claims Act and similar
state laws, the Combined Company could be subject to criminal and civil penalties and exclusion from the Medicare and Medicaid programs, which would have a material adverse effect on the business and results of operations;
|
•
|
if the Combined Company fails to comply with the HIPAA Privacy, Security and Breach Notification Regulations, as such rules
become applicable to the Combined Company’s business, it may increase operational costs;
|
•
|
the Combined Company will face periodic reviews and billing audits from governmental and private payors and these audits
could have adverse results that may negatively impact the business;
|
•
|
product quality or performance issues may be discovered through ongoing regulation by the FDA and by comparable international
agencies, as well as through the Combined Company’s internal standard quality process;
|
•
|
the use of hazardous materials in Combined Company operation may subject the Combined Company to environmental claims or
liability;
|
•
|
the protection of the Combined Company’s intellectual property will be critical to the Combined Company’s success and any
failure on the Combined Company’s part to adequately protect those rights could materially adversely affect the business;
|
•
|
patent applications owned by or licensed to the Combined Company may not result in issued patents, and competitors may
commercialize discoveries the Combined Company attempts to patent;
|
•
|
the Combined Company’s patents may not be valid or enforceable and may be challenged by third parties;
|
•
|
issued patents and patent licenses may not provide the Combined Company with any competitive advantage or provide meaningful
protection against competitors;
|
•
|
the ability to market the products the Combined Company develops is subject to the intellectual property rights of third
parties;
|
•
|
changes in the market’s expectations about the Combined Company’s operating results;
|
•
|
success of competitors of the Combined Company;
|
•
|
the Combined Company’s operating results failing to meet the expectation of securities analysts or investors in a particular
period;
|
•
|
changes in financial estimates and recommendations by any securities analysts that may cover the Combined Company or the
industries in which the Combined Company operates in general;
|
•
|
operating and stock price performance of other companies that investors deem comparable to the Combined Company;
|
•
|
changes in laws and regulations affecting the Combined Company’s business;
|
•
|
commencement of, or involvement in, litigation involving the Combined Company;
|
•
|
changes in the Combined Company’s capital structure, such as future issuances of securities or the incurrence of additional
debt;
|
•
|
the volume of shares of Common Stock available for public sale by the Combined Company;
|
•
|
any major change in the post-Closing board of directors or management of the Combined Company;
|
•
|
sales of substantial amounts of Common Stock by directors, executive officers or significant stockholders of the Combined
Company, or the perception that such sales could occur; and
|
•
|
general economic and political conditions such as recessions, pandemics, interest rates, fuel prices, international currency
fluctuations and acts of war or terrorism.
|
|
| |
For the Six Months
Ended June 30,
|
| |
For the Year Ended
December 31,
|
| |
For the Period from
March 1, 2021
(inception) through
December 31,
|
|||
(in thousands)
|
| |
2023
|
| |
2022
|
| |
2022
|
| |
2021
|
Statement of Operations Data:
|
| |
|
| |
|
| |
|
| |
|
Total Revenue
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
Cost of Revenues
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Gross Margin
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Loss from operations
|
| |
(545)
|
| |
(534)
|
| |
(1,174)
|
| |
(838)
|
Interest expense on promissory note — related party
|
| |
(29)
|
| |
—
|
| |
(2)
|
| |
—
|
Expensed offering costs
|
| |
—
|
| |
—
|
| |
—
|
| |
(763)
|
Earnings on trading securities
|
| |
11
|
| |
—
|
| |
—
|
| |
—
|
Realized gain on investments held in Trust Account
|
| |
—
|
| |
111
|
| |
2,753
|
| |
—
|
Unrealized gain on investments held in Trust Account
|
| |
302
|
| |
191
|
| |
—
|
| |
30
|
Gain on waiver of deferred underwriting commissions by
underwriter
|
| |
300
|
| |
—
|
| |
—
|
| |
—
|
Gain from change in fair value of warrant liabilities
|
| |
170
|
| |
4,429
|
| |
6,643
|
| |
8,687
|
Income tax expense
|
| |
—
|
| |
—
|
| |
(507)
|
| |
—
|
Net income
|
| |
209
|
| |
4,197
|
| |
7,713
|
| |
7,116
|
(in thousands)
|
| |
As of
June 30,
2023
|
| |
As of
December 31,
2022
|
Balance Sheet Data:
|
| |
|
| |
|
Total Current Assets
|
| |
$906
|
| |
$1,509
|
Total Assets
|
| |
14,540
|
| |
23,978
|
Total Liabilities
|
| |
2,235
|
| |
17,897
|
Class A common stock, $0.0001 par value, subject to
possible redemption; 1,304,259 shares at redemption value at June 30, 2023
|
| |
13,634
|
| |
13,333
|
Total stockholders’ deficit
|
| |
(1,330)
|
| |
(7,251)
|
|
| |
For the Six Months Ended
June 30,
|
| |
For the Years Ended
December 31,
|
||||||
(in thousands)
|
| |
2023
|
| |
2022
|
| |
2022
|
| |
2021
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
Total Revenue
|
| |
$8,450
|
| |
$7,077
|
| |
$16,742
|
| |
$13,010
|
Cost of Revenues
|
| |
2,464
|
| |
1,986
|
| |
4,331
|
| |
4,986
|
Gross Margin
|
| |
5,986
|
| |
5,091
|
| |
12,411
|
| |
8,024
|
Operating Expenses:
|
| |
|
| |
|
| |
|
| |
|
General and administrative
|
| |
3,997
|
| |
5,986
|
| |
12,556
|
| |
11,690
|
Selling and marketing
|
| |
2,390
|
| |
3,387
|
| |
7,474
|
| |
8,591
|
Research and development
|
| |
270
|
| |
337
|
| |
567
|
| |
1,101
|
Depreciation and Amortization
|
| |
376
|
| |
386
|
| |
766
|
| |
784
|
Operating Loss
|
| |
(1,047)
|
| |
(5,005)
|
| |
(8,952)
|
| |
(14,142)
|
Other (Expense) Income, net
|
| |
(19,295)
|
| |
1,548
|
| |
(1,339)
|
| |
(13,089)
|
Income Tax Expense
|
| |
—
|
| |
—
|
| |
2
|
| |
28
|
Net Loss
|
| |
$(20,342)
|
| |
$(3,457)
|
| |
$(10,293)
|
| |
$(27,259)
|
(in thousands)
|
| |
As of
June 30,
2023
|
| |
As of
December 31,
2022
|
Total Current Assets
|
| |
$6,101
|
| |
$6,620
|
Total Assets
|
| |
19,197
|
| |
19,873
|
Total Liabilities
|
| |
80,035
|
| |
60,883
|
Total Stockholders’ Deficit
|
| |
(60,838)
|
| |
(41,010)
|
Total Liabilities and Stockholders’ Deficit
|
| |
19,197
|
| |
19,873
|
•
|
Assuming No Additional Redemptions: This pro forma presentation assumes that no
additional SEPA Stockholders exercise Redemption Rights with respect to their Class A Common Stock, subsequent to the redemptions that occurred on December 20, 2022.
|
•
|
Assuming Maximum Redemptions: This pro forma presentation assumes that 622,747 shares
of Class A Common Stock subject to redemption are redeemed for an aggregate payment of approximately $6,510,043 (based on an estimated per share redemption price of approximately $10.45 that was calculated using the $13,634,402 in the
Trust Account as of June 30, 2023 divided by 1,304,259 shares of Class A Common Stock subject to redemption assuming the pro forma maximum redemption scenario pursuant to the Merger Agreement). It is noted that 681,512 shares of Class A
Common Stock are not being redeemed, pursuant to the Voting and Non-Redemption Agreements.
|
|
| |
Pro Forma Combined
|
|||
(in thousands, except share and per share amounts)
|
| |
Assuming No
Additional
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
Summary Unaudited Pro Forma Condensed Combined Statement of
Operations Data For the Six Months Ended June 30, 2023
|
| |
|
| |
|
Net loss
|
| |
$(6,403)
|
| |
$(6,403)
|
Net loss per share — basic and diluted
|
| |
$(0.54)
|
| |
$(0.57)
|
Weighted average shares outstanding of common stock - basic and diluted
|
| |
11,815,457
|
| |
11,192,710
|
|
| |
|
| |
|
Summary Unaudited Pro Forma Condensed Combined Statement of
Operations Data For the Year Ended December 31, 2022
|
| |
|
| |
|
Net loss
|
| |
$(12,414)
|
| |
$(12,414)
|
Net loss per share — basic and diluted
|
| |
$(1.05)
|
| |
$(1.11)
|
Weighted average shares outstanding of common stock - basic and diluted
|
| |
11,815,457
|
| |
11,192,710
|
|
| |
|
| |
|
Summary Unaudited Pro Forma Condensed Combined Balance Sheet
Data As of June 30, 2023
|
| |
|
| |
|
Total assets
|
| |
$38,013
|
| |
$31,503
|
Total liabilities
|
| |
$46,917
|
| |
$46,917
|
Total stockholders' deficit
|
| |
$(8,904)
|
| |
$(15,414)
|
Trading Date
|
| |
SNWV
Common
Stock (SNWV)
|
| |
SEPA Class A
Common
Stock (SEPA)
|
August 22, 2023
|
| |
$0.0185
|
| |
$10.62
|
September 19, 2023
|
| |
$0.0199
|
| |
$11.03
|
•
|
Prior to SEPA’s IPO, the Sponsor purchased 5,031,250 shares of Class B Common Stock for an aggregate purchase price of $25,000,
or approximately $0.005 per share. As a result of the significantly lower investment per share of the Sponsor as compared with the investment per share of SEPA Stockholders, a transaction which results in an increase in the value of the
investment of the Sponsor may result in a decrease in the value of the investment of SEPA Stockholders. In addition, if SEPA does not consummate a business combination by July 27, 2024, it would cease all operations except for the purpose
of winding up, redeeming all of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and its board of directors, liquidating and dissolving, subject in each case to its obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law. In such event, the 5,031,250 shares of Class B Common Stock owned by the Sponsor would be worthless because following the redemption of the
Public Shares, SEPA would likely have few, if any, net assets if SEPA fails to complete a business combination within the required period. Additionally, in such event, the 7,850,000 SEPA Private Placement Warrants purchased by the Sponsor
simultaneously with the consummation of SEPA’s IPO for an aggregate purchase price of $7,850,000 and the Sponsor warrants (if issued at Closing at the option of the Sponsor) will also expire and be worthless. SEPA’s directors and officers
also have a direct or indirect economic interest in such SEPA Private Placement Warrants and in the 3,465,375 Class B Common Stock owned by the Sponsor.
|
•
|
SEPA’s existing directors and officers will be eligible for continued indemnification and continued coverage under SEPA’s
directors’ and officers’ liability insurance after the Business Combination and pursuant to the Merger Agreement.
|
•
|
The Sponsor and SEPA’s directors and officers may be incentivized to complete the Business Combination, or an alternative
initial business combination with a less favorable company or on terms less favorable to shareholders, rather than to liquidate, in which case the Sponsor would lose its entire investment. As a result, the Sponsor may have a conflict of
interest in determining whether SANUWAVE is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business
|
•
|
The fact that SEPA has provisions in its Current Charter which waive the corporate opportunities doctrine, which means that
SEPA’s officers and directors have not been obligated to bring all corporate opportunities to SEPA.
|
(i)
|
the date that is 180 days after the Closing; and
|
(ii)
|
the date on which the Combined Company completes a liquidation, merger, amalgamation, capital stock exchange, reorganization or
other similar transaction that results in all of the SEPA Stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property.
|
•
|
its employees may experience uncertainty about their future roles, which might adversely affect the Combined Company’s ability
to retain and hire key personnel and other employees;
|
•
|
customers, suppliers, business partners and other parties with which SANUWAVE maintains business relationships may experience
uncertainty about its future and seek alternative relationships with third parties, seek to alter their business relationships with SANUWAVE or fail to extend an existing relationship with SANUWAVE; and
|
•
|
SANUWAVE continues to expand and will continue to expend significant costs, fees and expenses for professional services and
transaction costs in connection with the proposed Business Combination.
|
•
|
the Combined Company may be required to raise additional funds to finance operations concern and the Combined Company may not
be able to do so, and/or the terms of any financings may not be advantageous to the Combined Company;
|
•
|
SANUWAVE has a history of losses and the Combined Company may continue to incur losses and may not achieve or maintain
profitability;
|
•
|
the medical device/therapeutic product industries are highly competitive and subject to rapid technological change, so if the
Combined Company’s competitors are better able to develop and market products that are safer and more effective than any products the Combined Company may develop, the Combined Company’s commercial opportunities will be reduced or
eliminated;
|
•
|
the Combined Company’s products and product candidates do not gain market acceptance among physicians, patients and the medical
community, the Combined Company may be unable to generate significant revenues, if any;
|
•
|
product candidates of the Combined Company may not be developed or commercialized successfully;
|
•
|
the Combined Company may not successfully establish and maintain licensing and/or partnership arrangements for technology for
non-medical uses, which could adversely affect the Combined Company’s ability to develop and commercialize non-medical technology;
|
•
|
SANUWAVE’s product component materials are only produced by a single supplier for such product component. If the Combined
Company is unable to obtain product component materials and other products from SANUWAVE’s suppliers that the Combined Company will depend on for operations, or find suitable replacement suppliers, the Combined Company’s ability to
deliver products to market will likely be impeded, which could have a material adverse effect on the Combined Company;
|
•
|
SANUWAVE currently sells products through distributors and partners whose sales account for the majority of revenues and
accounts receivable. The Combined Company’s business and results of operations could be adversely affected by any business disruptions or credit or other financial difficulties experienced by such distributors or partners;
|
•
|
the Combined Company faces an inherent risk of liability in the event that the use or misuse of product candidates results in
personal injury or death;
|
•
|
actual or anticipated fluctuations in the Combined Company’s quarterly financial results or the quarterly financial results of
companies perceived to be similar to the Combined Company;
|
•
|
the Combined Company will be dependent on information technology and the Combined Company’s systems and infrastructure face
certain risks, including from cybersecurity breaches and data leakage;
|
•
|
the Combined Company will generate a portion of revenue internationally and the Combined Company will be subject to various
risks relating to international activities which could adversely affect operating results;
|
•
|
results of Combined Company clinical trials may be insufficient to obtain regulatory approval for product candidates;
|
•
|
the Combined Company will be subject to extensive governmental regulation, including the requirement of FDA approval or
clearance, before product candidates may be marketed;
|
•
|
patients may discontinue their participation in the Combined Company’s clinical studies, which may negatively impact the
results of these studies and extend the timeline for completion of development programs;
|
•
|
the Combined Company will rely on third parties to conduct clinical trials, and their failure to perform their obligations in a
timely or competent manner may delay development and commercialization of Combined Company devices;
|
•
|
the Combined Company may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety
risks that could preclude approval of product candidates;
|
•
|
regulatory approval of the Combined Company’s product candidates may be withdrawn at any time;
|
•
|
federal regulatory reforms may adversely affect the Combined Company’s ability to sell products profitably;
|
•
|
failure to obtain regulatory approval in foreign jurisdictions may prevent the Combined Company from marketing products abroad;
|
•
|
if the Combined Company fails to obtain an adequate level of reimbursement for approved products by third party payers, there
may be no commercially viable markets for approved products or the markets may be much smaller than expected;
|
•
|
uncertainty surrounding and future changes to healthcare law in the United States may have a material adverse effect on the
Combined Company;
|
•
|
if the Combined Company fails to comply with the United States Federal Anti-Kickback Statute, False Claims Act and similar
state laws, the Combined Company could be subject to criminal and civil penalties and exclusion from the Medicare and Medicaid programs, which would have a material adverse effect on the business and results of operations;
|
•
|
if the Combined Company fails to comply with the HIPAA Privacy, Security and Breach Notification Regulations, as such rules
become applicable to the Combined Company’s business, it may increase operational costs;
|
•
|
the Combined Company will face periodic reviews and billing audits from governmental and private payors and these audits could
have adverse results that may negatively impact the business;
|
•
|
product quality or performance issues may be discovered through ongoing regulation by the FDA and by comparable international
agencies, as well as through the Combined Company’s internal standard quality process;
|
•
|
the use of hazardous materials in Combined Company operation may subject the Combined Company to environmental claims or
liability;
|
•
|
the protection of the Combined Company’s intellectual property will be critical to the Combined Company’s success and any
failure on the Combined Company’s part to adequately protect those rights could materially adversely affect the business;
|
•
|
patent applications owned by or licensed to the Combined Company may not result in issued patents, and competitors may
commercialize discoveries the Combined Company attempts to patent;
|
•
|
the Combined Company’s patents may not be valid or enforceable and may be challenged by third parties;
|
•
|
issued patents and patent licenses may not provide the Combined Company with any competitive advantage or provide meaningful
protection against competitors;
|
•
|
the ability to market the products the Combined Company develops is subject to the intellectual property rights of third
parties;
|
•
|
changes in the market’s expectations about the Combined Company’s operating results;
|
•
|
success of competitors of the Combined Company;
|
•
|
the Combined Company’s operating results failing to meet the expectation of securities analysts or investors in a particular
period;
|
•
|
changes in financial estimates and recommendations by any securities analysts that may cover the Combined Company or the
industries in which the Combined Company operates in general;
|
•
|
operating and stock price performance of other companies that investors deem comparable to the Combined Company;
|
•
|
changes in laws and regulations affecting the Combined Company’s business;
|
•
|
commencement of, or involvement in, litigation involving the Combined Company;
|
•
|
changes in the Combined Company’s capital structure, such as future issuances of securities or the incurrence of additional
debt;
|
•
|
the volume of shares of Common Stock available for public sale by the Combined Company;
|
•
|
any major change in the post-Closing board of directors or management of the Combined Company;
|
•
|
sales of substantial amounts of Common Stock by directors, executive officers or significant stockholders of the Combined
Company, or the perception that such sales could occur; and
|
•
|
general economic and political conditions such as recessions, pandemics, interest rates, fuel prices, international currency
fluctuations and acts of war or terrorism.
|
•
|
a requirement that the removal of directors for cause requires the affirmative vote of holders of at least two-thirds (2/3) of
the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in the election of directors;
|
•
|
certain SEPA Stockholders will no longer be able to take action by written consent, which would require all SEPA Stockholder
actions to be taken at a meeting of SEPA Stockholders; and
|
•
|
a requirement that to amend, alter, change or repeal certain provisions in the SEPA Bylaws requires the affirmative vote of
holders of at least two-thirds (2∕3) of the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in the election of directors, which could preclude
SEPA
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Expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex
financial instruments and derivatives and complex sales distributing agreements with select vendors.
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A lack of internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in
service agreements with select vendors.
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SANUWAVE has failed to design and implement controls around all accounting and IT processes and procedures and, as such,
SANUWAVE believes that all its accounting and IT processes and procedures need to be re-designed and tested for operating effectiveness.
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unanticipated expenditures in research and development or manufacturing activities;
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delayed market acceptance of any approved product;
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unanticipated expenditures in the acquisition and defense of intellectual property rights;
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the failure to develop strategic alliances for the marketing of some of SANUWAVE’s product candidates;
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unforeseen changes in healthcare reimbursement for procedures using any of SANUWAVE’s approved products;
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inability to train a sufficient number of physicians to create a demand for any of SANUWAVE’s approved products;
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lack of financial resources to adequately support SANUWAVE’s operations;
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difficulties in maintaining commercial scale manufacturing capacity and capability;
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unforeseen problems with SANUWAVE’s third-party manufacturers, service providers or specialty suppliers of certain raw
materials;
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unanticipated difficulties in operating in international markets;
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unanticipated financial resources needed to respond to technological changes and increased competition;
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unforeseen problems in attracting and retaining qualified personnel;
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the impact of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability
Reconciliation Act on SANUWAVE’s operations;
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the impact of changes in U.S. health care law and policy on SANUWAVE’s operations;
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enactment of new legislation or administrative regulations;
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the application to SANUWAVE’s business of new court decisions and regulatory interpretations;
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claims that might be brought in excess of SANUWAVE’s insurance coverage;
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delays in timing of receipt of required regulatory approvals;
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the failure to comply with regulatory guidelines; and
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the uncertainty in industry demand and patient wellness behavior.
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the reimbursement for its products is difficult to obtain or is too low, which can hinder the introduction and acceptance of
its products in the market;
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it is unable to get its product candidates in commercial quantities at reasonable costs; and
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the patient and physician community does not accept its product candidates.
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required compliance with existing and changing foreign healthcare and other regulatory requirements and laws, such as those
relating to patient privacy or handling of bio-hazardous waste;
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required compliance with anti-bribery laws, data privacy requirements, labor laws and anti-competition regulations;
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export or import restrictions;
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political and economic instability;
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foreign exchange controls; and
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difficulties protecting or procuring intellectual property rights.
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advance notice of business to be brought is required for a meeting of SANUWAVE Stockholders;
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no cumulative voting rights for the holders of SANUWAVE Common Stock in the election of directors; and
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vacancies in the board of directors may be filled by the affirmative vote of a majority of directors then in office, even if
less than a quorum.
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warning letters;
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fines and other monetary penalties;
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unanticipated expenditures;
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product recall or seizure;
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interruption of manufacturing;
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operating restrictions;
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injunctions; and
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criminal prosecutions.
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testing;
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manufacturing;
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quality control;
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labeling;
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advertising;
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promotion;
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distribution;
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export;
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reporting to the FDA certain adverse experiences associated with the use of the products; and
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obtaining additional approvals or clearances for certain modifications to the products or their labeling or claims.
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required refunding or retroactive adjustment of amounts SANUWAVE has been paid by governmental or private payors;
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state or Federal agencies imposing fines, penalties and other sanctions on SANUWAVE;
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loss of SANUWAVE’s right to participate in the Medicare program, state programs, or one or more private payor networks; or
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damage to SANUWAVE’s business and reputation in various markets.
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obtain and/or maintain protection for its products under the patent laws of the United States and other countries;
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defend and enforce its patents once obtained;
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obtain and/or maintain appropriate licenses to patents, patent applications or other proprietary rights held by others with
respect to its technology, both in the United States and other countries;
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maintain trade secrets and other intellectual property rights relating to its products; and
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operate without infringing upon the patents, trademarks, copyrights, and proprietary rights of third parties.
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Within the U.S. and Canada: +1 800-450-7155 (toll-free)
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Outside of the U.S. and Canada: +1 857-999-9155 (standard rates apply)
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1.
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A proposal to approve the NTA Amendment, which amendment shall be effective, if adopted and implemented by SEPA, prior to the
consummation of the proposed Business Combination, to remove from the Current Charter the redemption limitation contained under Section 9.2(a) of the Current Charter preventing SEPA from redeeming shares of Class A Common Stock, if it
would have less than $5,000,001 of net tangible assets. Please see the section entitled “Proposal 1: The NTA Proposal”;
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2.
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A proposal to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination,
pursuant to which Merger Sub will merge with and into SANUWAVE, with SANUWAVE continuing as the surviving entity of the Business Combination and becoming a subsidiary of SEPA as described in more detail in this proxy statement/prospectus.
Please see the section entitled “Proposal 2: The Business Combination Proposal”;
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3.
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A proposal to approve, in connection with the Merger, the replacement of the Current Charter with the Proposed Charter, in the
form appended to this proxy statement/prospectus as Annex D, to be effective upon the filing with and acceptance by the Delaware Secretary of State. Please see the section entitled “Proposal 3:
The Charter Proposal”;
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4.
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Proposals to vote upon, on a non-binding advisory basis, eight separate proposals with respect to certain governance provisions
in the Proposed Charter presented separately in accordance with SEC requirements. See the section entitled “Proposals 4 – 11: The Organizational Documents Proposals”;
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5.
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A proposal to approve, for purposes of complying with Nasdaq Listing Rules 5635(a), (b) and (d), the issuance of more than 20%
of the issued and outstanding shares of Class A Common Stock and the resulting change in control in connection with the Business Combination, PIPE, and transactions contemplated thereby. Please see the section entitled “Proposal 12: The Nasdaq Proposal”;
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6.
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A proposal to approve the Incentive Plan, in the form appended to this proxy statement/prospectus as Annex E. Please
see the section entitled “Proposal 13: The Incentive Plan Proposal”; and
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7.
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A proposal to adjourn the Stockholder Meeting to a later date or dates, if necessary, to permit further solicitation and vote
of proxies if it is determined by the SEPA Board that more time is necessary or appropriate to approve one or more Proposals at the Stockholder Meeting. Please see the section entitled “Proposal 14: The
Adjournment Proposal”.
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“FOR” approval of the NTA Proposal;
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“FOR” approval of the Business Combination Proposal;
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“FOR” approval of the Charter Proposal;
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“FOR” approval of the Organizational Documents Proposals;
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“FOR” approval of the Nasdaq Proposal;
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“FOR” approval of the Incentive Plan Proposal; and
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“FOR” approval of the Adjournment Proposal, if presented.
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You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy
card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted
as recommended by the SEPA Board “FOR” the NTA Proposal, the Business Combination Proposal, the Charter Proposal, the Organizational Documents Proposals, the Nasdaq Proposal, the Incentive Plan Proposal and the Adjournment Proposal (if
presented). Votes received after a matter has been voted upon at the Stockholder Meeting will not be counted.
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You Can Vote Electronically. You can submit your proxy over the Internet in accordance
with the instructions on the enclosed proxy card.
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You Can Attend the Stockholder Meeting and Vote in Person Virtually. You can attend by
logging into the website meeting portal with your control number. Once logged in you will be able to ask a question and or vote.
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you may send another proxy card with a later date;
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you may notify SEPA’s Secretary in writing before the Stockholder Meeting that you have revoked your proxy; or
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you may attend the Stockholder Meeting and vote electronically by entering the control number found on your proxy card you
previously received. Attendance at the Stockholder Meeting will not, in and of itself, revoke a proxy.
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(a)
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Prior to the consummation of the initial Business Combination, the Corporation shall provide all holders of Offering Shares
with the opportunity to have their Offering Shares redeemed, out of the funds legally available therefor, upon the consummation of the initial Business Combination pursuant to, and subject to the limitations of, Section 9.2(b) and
Section 9.2(c) (such rights of such holders to have their Offering Shares redeemed pursuant to such Sections, the “Redemption Rights”) for cash equal to the applicable
redemption price per share determined in accordance with Section 9.2(b) (the “Redemption Price”) ; provided,
that the Corporation shall not redeem or repurchase Offering Shares to the extent that such redemption
would result in the Corporation’s failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or any successor rule)) in excess of $5,000,000 or any greater net tangible asset or cash
requirement upon consummation of the Corporation’s initial Business Combination which may be contained in the agreement relating to the initial Business Combination (such limitation hereinafter
called the “Redemption Limitation”). Notwithstanding anything to the contrary contained in this Amended and Restated Certificate, there shall be no Redemption Rights or liquidating distributions with respect to any warrant issued
pursuant to the Offering.
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due incorporation, good standing, and that it has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted;
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authorization, validity and enforceability of the Merger Agreement and power and authority to enter into the Merger Agreement
and to complete the transactions contemplated thereby;
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capitalization, and in pertinent part, (i) the authorized amount of its equity interest and the amount issued and outstanding,
(ii) all outstanding equity interests have been duly authorized, are fully paid and non-assessable and not in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any
provision of the BCA, any other applicable law, its organizational documents or any contract to which SANUWAVE is a party or by which it or its securities are bound, (iii) all of its securities have been granted, offered, sold and issued
in compliance with all applicable securities laws, (iv) the reservation of SANUWAVE Stock for issuance pursuant to the Prior Plan, (v) except as described in certain disclosure schedules to the Merger Agreement, there are no options,
warrants, puts, calls, convertible securities, rights of first refusal, preemptive or similar rights, (vi) except as described in certain disclosure schedules to the Merger Agreement, there are no outstanding or authorized bonds,
debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights, (vii) except as described in certain disclosure schedules to the Merger Agreement, there are
no outstanding contractual obligations to repurchase, redeem or otherwise acquire any equity interests or securities, (viii) as a result of the consummation of the transactions, none of its equity interests are issuable and no rights in
connection with any interests, warrants, rights, options or other securities accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise), (ix) except as disclosed in its financials, since
January 1, 2023, it has not declared or paid any distribution or dividend in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any of its equity interests, and its board of directors has not
authorized any of the foregoing;
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subsidiaries, and more specifically, each subsidiary’s jurisdiction of organization and capitalization;
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except as described in certain disclosure schedules to the Merger Agreement, no conflict with any provision of its
organizational documents and no additional governmental approvals or filings or, except as has not been and would not reasonably be expected to have a Material Adverse Effect on SANUWAVE and its subsidiaries, any third-party consents are
required;
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the filing of all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to
be filed or furnished by the Combined Company with the SEC under the Securities Act and/or the Exchange Act, the compliance of such filings with the requirements of the Securities Act and the Exchange Act, as the case may be, and the
rules and regulations thereunder, and the failure, at the time such filing was made, of such filing to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which they were made, not misleading;
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financial statements, indebtedness and the absence of undisclosed liabilities, and in pertinent part, (i) its financials (A)
were prepared in accordance with the books and records of SANUWAVE and its subsidiaries as of the times and for the periods referred to therein, (B) were prepared in accordance with GAAP, consistently applied throughout and among the
periods involved, (C) comply in all material respects with applicable accounting requirements under the Securities Act and the rules and regulations of the SEC thereunder, and (D) fairly present in all material respects the consolidated
financial position of SANUWAVE and its subsidiaries as of the respective dates thereof and the consolidated results of the operations and cash flows of SANUWAVE and its subsidiaries for the periods indicated; (ii) SANUWAVE and its
subsidiaries maintain accurate books and records reflecting their respective assets and liabilities and maintains proper and adequate internal accounting controls; (iii) all of the financial books and records of SANUWAVE and its
subsidiaries are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable laws, (iv) the absence of fraud or any written complaint,
allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods, or internal accounting controls of SANUWAVE and its subsidiaries, (v) except as described in certain disclosure schedules
to the Merger Agreement, SANUWAVE and its subsidiaries do not have any indebtedness; and (vi) except as described in certain disclosure schedules to the Merger Agreement, adequately reflected or reserved in SANUWAVE’s balance sheet,
incurred in the ordinary course of business or as would not, individually or in the aggregate, be expected to have a Material Adverse Effect, neither SANUWAVE nor any of its subsidiaries is subject to any liabilities or obligations
required to be reflected on a balance sheet prepared in accordance with GAAP;
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the absence of a certain changes or events since December 31, 2022, and in pertinent part, each of SANUWAVE and its
subsidiaries, since December 31, 2022, has (i) conducted its business only in the ordinary course of business consistent with past practice, (ii) not been subject to a Material Adverse Effect, and (iii) not taken any action that would be
prohibited by the Merger Agreement if such action were taken on or after the date of the Merger Agreement without the consent of SEPA;
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SANUWAVE’s and its subsidiaries’ compliance with laws, except for such non-compliance that would not reasonably be expected to
have a Material Adverse Effect;
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permits, and in pertinent part, that each of SANUWAVE and its subsidiaries (and its employees who are legally required to be
licensed by a governmental authority in order to perform his or her duties with respect to his or her employment with any of SANUWAVE and its subsidiaries) holds all material permits necessary to lawfully conduct its business in all
material respects as presently conducted, and to own, lease and operate its assets and properties and all such material permits are in full force and effect, and no suspension or cancellation of any of such material permits is pending or,
to SANUWAVE’s knowledge, threatened, and none of SANUWAVE and its subsidiaries is in violation in any material respect of the terms of any such material permit, and none of SANUWAVE and its subsidiaries has received any written or, to
SANUWAVE’s knowledge, written notice of any actions relating to the revocation or material modification of any such material permit;
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litigation, and in pertinent part, except as described in certain disclosure schedules to the Merger Agreement, (i) there is no
(a) action of any nature currently pending or, to SANUWAVE’s knowledge, threatened (and no such action has been brought or, to SANUWAVE’s knowledge, threatened in the past
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material contracts, and in pertinent part, (i) any contracts that (a) contain covenants that materially limit the ability of
any of SANUWAVE or its subsidiaries (I) to compete in any line of business or with any person or in any geographic area or to sell, or provide any service or product, including any non-competition covenants, exclusivity restrictions,
rights of first refusal or most-favored pricing clauses or (II) to purchase or acquire an interest in any other person, (b) involves any joint venture, profit-sharing, partnership, limited liability company or other similar agreement or
arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture, (c) involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward
contract, option or other derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest
rates, foreign currency and indices, (d) evidences indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of any of SANUWAVE or its subsidiaries having an outstanding principal amount in excess of $500,000, (e)
involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $500,000 (other than in the ordinary course of business consistent with past practice) or shares or
other equity interests of any of SANUWAVE or its subsidiaries or another person, (f) relates to any merger, consolidation or other business combination, with any other person or the acquisition or disposition of any other entity or its
business or material assets or the sale of any of SANUWAVE or its subsidiaries, its business or material assets, (g) by its terms, individually or with all related contracts, calls for aggregate payments or receipts by of SANUWAVE and its
subsidiaries under such contract or contracts of at least $500,000 in the 12-month period ended December 31, 2022, or during the 12-month period ending December 31, 2023, (h) is with any top customer or supplier, (i) is between any of
SANUWAVE or its subsidiaries and any present or former directors, officers, contractors or employees of SANUWAVE or its subsidiaries (other than at-will employment or consulting arrangements, confidentiality, non-solicitation,
non-competition, or intellectual property assignment agreements with employees and contractors entered into in the ordinary course of business consistent with past practice), including all non-competition, severance and indemnification
agreements, or any such related person, (j) obligates SANUWAVE or its subsidiaries to make any capital commitment or expenditure in excess of $500,000 (including pursuant to any joint venture), (k) relates to a material settlement in
excess of $500,000 entered into within two years prior to the date of Merger Agreement under which any of SANUWAVE or its subsidiaries has outstanding obligations other than customary confidentiality obligations, (l) provides another
person (other than another of SANUWAVE or its subsidiaries or any manager, director or officer of any of SANUWAVE or its subsidiaries) with a power of attorney, (m) relates to the development, ownership, licensing or use of any
intellectual property by, to or from any of SANUWAVE or its subsidiaries, other than off-the-shelf software, employee or consultant invention assignment agreements entered into on a SANUWAVE’s standard form of such agreement,
confidentiality agreements entered into in the ordinary course of business, non-exclusive licenses from customers or distributors to SANUWAVE or any of its subsidiaries entered into in the ordinary course of business or feedback and
ordinary course trade name or logo rights that are not material to SANUWAVE or its subsidiary; and (n) that will be required to be filed with this proxy statement/consent solicitation statement/prospectus under applicable SEC requirements
or would otherwise be required to be filed by SANUWAVE as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities Act as if SANUWAVE was the registrant, and (ii) except as
described in certain disclosure schedules to the Merger Agreement, all of the foregoing material contracts are valid, binding, and enforceable in all respects, the consummation of the Merger Agreement will not affect the validity or
enforceability of such material contracts, no event has occurred that with the passage of time or giving of notice or both would constitute a breach or default by any SANUWAVE or any of its subsidiaries, or permit termination or
acceleration by the other party thereto, under such material contracts, none of SANUWAVE
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intellectual property, and in pertinent part, (i) each of SANUWAVE and its subsidiaries owns, free and clear of all liens
(other than permitted liens), has valid and enforceable rights to use pursuant to valid contracts or licenses, or otherwise has the right to use all intellectual property currently used, licensed or held for use by such entity, except as
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (ii) the transactions do not and will not impair any of SANUWAVE’s and its subsidiaries’ intellectual property, except as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (iii) none of SANUWAVE and its subsidiaries intellectual property has been found to be unenforceable or is the subject of any cancellation or
reexamination proceeding, and all registered intellectual property is valid and enforceable, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (iv) as of the date of the
Merger Agreement, no action is pending or, to SANUWAVE’s knowledge, threatened against SANUWAVE or its subsidiaries infringes upon or misappropriates or otherwise violates the intellectual property rights of any third party, except as
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (v) SANUWAVE and its subsidiaries taken reasonable steps in accordance with normal industry practice to maintain and protect the
confidentiality of all material intellectual property, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (vi) all persons who have contributed to the creation of any
intellectual property of SANUWAVE and its subsidiaries has assigned its rights to such intellectual property to SANUWAVE and its subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; (vii) the absence of any data breach; (viii) the compliance in all material respects, with all data privacy and security laws and contract requirements; and (ix) the absence of any indemnification obligations
relating to infringement;
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taxes and tax returns;
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real property;
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personal property;
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title to and sufficiency of SANUWAVE’s assets;
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employee matters, and in pertinent part, (i) none of SANUWAVE or its subsidiaries is a party to any collective bargaining
agreement or other contract covering any group of employees, labor organization or other representative of any of the employees of any of SANUWAVE or its subsidiaries, and SANUWAVE has no knowledge of any activities or proceedings of any
labor union or other party to organize or represent such employees; (ii) there has not occurred or, to the knowledge of SANUWAVE, been threatened any strike, slow-down, picketing, work-stoppage, or other similar labor activity with
respect to any such employees; (iii) no current officer of SANUWAVE or its subsidiaries has provided any of SANUWAVE or its subsidiaries written notice of his or her plan to terminate his or her employment with any of SANUWAVE or its
subsidiaries; (iv) each of SANUWAVE or its subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (A) is and has been in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other laws relating to discrimination, disability, labor relations, hours of work, payment of
wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, (B) has not incurred any liability that
remains unsatisfied for past due arrears of wages or penalty for failure to comply with any of the foregoing, and (C) has not incurred any liability that remains unsatisfied for failure to comply with payment of wages; and (v) as of the
date of the Merger Agreement, there are no actions pending or, to the knowledge of SANUWAVE, threatened against SANUWAVE or its subsidiaries brought by or on behalf of any applicant for employment, any current or former employee, any
person alleging to
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benefits plans, and in pertinent part, (i) with respect to each SANUWAVE benefit plan, there are no funded benefit obligations
for which contributions have not been made, or properly accrued and there are no unfunded benefit obligations that have not been accounted for by reserves, or otherwise properly footnoted in accordance with GAAP on the company financials,
except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (ii) each company benefit plan is and has been operated at all times in compliance with all applicable laws, including ERISA
and the Code, except for any non-compliance that would not be reasonably expected to have a Material Adverse Effect; (iii) with respect to each SANUWAVE benefit plan: (A) to the knowledge of SANUWAVE, no breach of fiduciary duty that
could reasonably be expected to result in liability to SANUWAVE or any of its subsidiaries has occurred; (B) no action is pending, or to SANUWAVE’s knowledge, threatened; and (C) no prohibited transaction, as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (iv) for the six-year period preceding the Effective Time, no company
benefit plan is a “defined benefit plan” (as defined in Section 414(j) of the Code), a “multiemployer plan” (as defined in Section 3(37) of ERISA) or a “multiple employer plan” (as described in Section 413(c) of the Code) or is otherwise
subject to Title IV of ERISA or Section 412 of the Code, and none of SANUWAVE or its subsidiaries has any outstanding liability under Title IV of ERISA and, to the knowledge of SANUWAVE, no condition presently exists that is expected to
cause such liability to be incurred; (v) the consummation of the transactions contemplated by the Merger Agreement and the ancillary documents will not: (A) entitle any individual to severance pay, unemployment compensation or other
benefits or compensation; or (B) accelerate the time of payment or vesting, or increase the amount of any compensation due, or in respect of, any individual; (vi) compliance with Section 409A of the Code in all material respects; and
(vii) the due qualification of Company Options intended to qualify as “incentive stock options”;
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environmental matters;
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transactions with related parties;
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insurance;
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books and records;
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top customers and suppliers;
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certain business practices;
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none of SANUWAVE or its subsidiaries is an “investment company” or a person directly or indirectly “controlled” by or acting on
behalf of an “investment company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended;
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except as described in certain disclosure schedules to the Merger Agreement, none of SANUWAVE or its subsidiaries has incurred
or will incur any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by the Merger Agreement;
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healthcare industry matters;
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product liability matters;
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SANUWAVE’s Board taking action to ensure that the restrictions on business combinations contained in Section 203 of the DGCL or
contained in Section 78.411 through Section 78.444 of the BCA will not apply to the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and the absence of a stockholder rights plan, “poison pill”
anti-takeover plan or other similar plan, device or arrangement;
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independent investigation, and in pertinent part, SANUWAVE conducted its own independent investigation, review and analysis of
the business, results of operations, prospects, condition (financial or otherwise) or assets of SEPA;
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none of the information supplied or to be supplied by SANUWAVE expressly for inclusion in any filing made with any governmental
authority or stock exchange with respect to the transactions contemplated by the Merger Agreement, this proxy statement/consent solicitation statement/prospectus or in the mailings or other distributions to SEPA Stockholders and/or
prospective investors with respect to the consummation of the transactions contemplated by the Merger Agreement, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading; and
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no representations other than those specifically provided in the Merger Agreement.
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due incorporation, good standing, and that it has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted;
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authorization, validity and enforceability of the Merger Agreement, and power and authority to enter into the Merger Agreement
and to complete the transactions contemplated thereby;
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except as described in certain disclosure schedules to the Merger Agreement, no conflict with any provision of its
organizational documents and no additional governmental approvals or filings or, except as has not been and would not reasonably be expected to have a Material Adverse Effect on SEPA, third-party consents required;
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capitalization, and in pertinent part, (i) the authorized amount of its equity interest and the amount issued and outstanding,
(ii) all outstanding equity interests have been duly authorized, validly issued, fully paid and non-assessable and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, its organizational documents or any contract to which it is a party, (iii) except as set forth in certain disclosure schedules, there are no (a) equity appreciation, phantom
equity or similar rights, (b) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights other than the Redemption, (c) bonds, debentures, notes or other indebtedness having general voting rights or
that are convertible or exchangeable into securities having such rights or (d) subscriptions or other rights, agreements, arrangements, contracts or commitments of any character (other than the Merger Agreement and the ancillary
documents), (I) relating to the issued or unissued shares of SEPA or (II) obligating SEPA to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities
convertible into or exchangeable for such shares, (III) obligating SEPA to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares, or (IV)
other than the Redemption or as expressly set forth in the Merger Agreement, obligating SEPA to redeem, repurchase or otherwise acquire any such shares or other equity interests, or provide an amount of funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in SEPA or any other person, (iv) except as set forth in certain disclosure schedules, there are no stockholders agreements, voting trusts or other agreements or understandings to
which SEPA is a party with respect to the voting of any shares of SEPA, (v) all Indebtedness (as defined in the Merger Agreement) of SEPA is disclosed on certain disclosure schedules, (vii) no Indebtedness (as defined in the Merger
Agreement) of SEPA contains any restriction upon (a) the prepayment of any of such indebtedness, (b) the incurrence of Indebtedness by SEPA or (c) the ability of SEPA to grant any lien on its properties or assets, and (viii) since the
date of SEPA’s formation, and except as contemplated by the Merger Agreement, SEPA has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares,
and the SEPA Board has not authorized any of the foregoing;
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SEC filings and SEPA financials, and in pertinent part, (i) since SEPA’s IPO, it has filed all forms, reports, schedules,
statements, registration statements, prospectuses and other documents required to be filed or furnished by SEPA with the SEC under the Securities Act of 1933, as amended, and/or the Exchange Act of 1934, as amended, together with any
amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of the Merger Agreement, (ii) except for any changes to SEPA’s
historical accounting of the SEPA’s warrants as equity rather than as liabilities that may be required as a result of the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies that was issued by the SEC on
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absence of certain changes, and in pertinent part, SEPA has (i) since its formation, conducted no business other than its
formation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in SEPA’s IPO prospectus (including the investigation of SANUWAVE and
its subsidiaries and the negotiation and execution of the Merger Agreement) and related activities, (ii) since December 31, 2022, has not been subject to a Material Adverse Effect on SEPA;
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compliance with laws;
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actions; orders and permits, and in pertinent part, (i) there is no pending or, to the knowledge of SEPA, threatened action to
which SEPA is subject which would reasonably be expected to have a Material Adverse Effect on SEPA (and no such action has been brought in the past three (3) years, or to the knowledge of SEPA, threatened in the past three (3) years),
(ii) SEPA is not subject to any material orders of any governmental authority, nor are any such orders pending, (iii) SEPA holds all material permits necessary to lawfully conduct its business as presently conducted, and to own, lease and
operate its assets and properties, all of which are in full force and effect, except where the failure to hold such permit or for such permit to be in full force and effect would not reasonably be expected to have a Material Adverse
Effect on SEPA, and (iv) none of the current or former officers, senior management or directors of SEPA have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud;
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taxes and tax returns;
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SEPA does not have any paid employees or maintain, sponsor, contribute to or otherwise have any liability under any benefit
plans;
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SEPA does not own, license or otherwise have any right, title or interest in any material intellectual property and does not
own or lease any material real or personal property;
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material contracts, and in pertinent part, (i) except as set forth on certain disclosure schedules, other than the Merger
Agreement and the ancillary documents, there are no contracts to which SEPA is a party or by which any of its properties or assets may be bound, subject or affected, which (a) creates or imposes a liability greater than $200,000, (b) may
not be cancelled by SEPA on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (c) prohibits, prevents, restricts or impairs in any material respect any business practice of SEPA as its
business is currently conducted, any acquisition of material property by SEPA, or restricts in any material respect the ability of SEPA to engage in business as currently conducted by it or compete with any other person (each, a “SEPA
Material Contract”), (ii) all SEPA Material Contracts have been made available to SANUWAVE other than those that are exhibits to SEPA’s SEC reports, (iii) with respect to each SEPA Material Contract (a) the SEPA Material Contract was
entered into at arms’ length and in the ordinary course of business, (b) the SEPA Material Contract is legal, valid, binding and enforceable in all material respects against SEPA and, to the Knowledge of SEPA, the other parties thereto,
and is in full force and effect (except, in each case, as such enforcement may be limited by certain exceptions to enforceability), (c) SEPA is not in breach or default in any material respect, and no event has occurred that with the
passage of time or giving of notice or both would constitute such a breach or default in any material respect by SEPA, or permit termination or acceleration by the other
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transactions with affiliates;
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Merger Sub activities, and in pertinent part, Merger Sub has not engaged in any business activities other than as contemplated
by the Merger Agreement, does not own directly or indirectly any ownership, equity, profits or voting interest in any person and has no assets or liabilities except those incurred in connection with the Merger Agreement and the ancillary
documents to which it is a party, and is not a party to or bound by any contract;
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SEPA is not an “investment company” or a person directly or indirectly “controlled” by or acting on behalf of an “investment
company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended;
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No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from SEPA, SANUWAVE or
any of their respective affiliates in connection with the transactions contemplated by the Merger Agreement except as set forth on the disclosure schedules;
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All Common Stock to be issued and delivered to SANUWAVE Stockholders shall be full paid and non-assessable, free and clear of
all liens, other than restrictions arising from applicable laws, applicable lock-up agreement, and any liens incurred by SANUWAVE Stockholders, and the issuance and transfer of such Common Stock pursuant to the Merger Agreement will not
be subject to or give rise to any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL or any other applicable Law, SEPA’s organizational documents or any
contract to which SEPA is a party;
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certain business practices;
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insurance;
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SEPA Trust Account, and in pertinent part as of June 30, 2023, the SEPA Trust Account has a specified balance and such monies
are invested solely in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, or money market funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940, as amended, and held in trust by the Transfer Agent pursuant to the Trust Agreement, which is valid and in full force and effect and enforceable in accordance with its terms (subject to certain exceptions
to enforceability) and has not been amended or modified;
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The SEPA Board taking action to ensure that the restrictions on business combinations contained in Section 203 of the DGCL or
contained in Section 78.411 through Section 78.444 of the BCA will not apply to the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and the absence of a stockholder rights plan, “poison pill”
anti-takeover plan or other similar plan, device or arrangement;
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the delivery of an opinion of ValueScope to the effect that, as of the date of such opinion, and based on and subject to the
assumptions, limitations, qualifications and other matters set forth therein, the Merger is fair, from a financial point of view, to holders of Class A and Class B Common Stock;
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independent investigation, and in pertinent part, SEPA conducted its own independent investigation, review and analysis of the
business, results of operations, prospects, condition (financial or otherwise) or assets of SANUWAVE and its subsidiaries;
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none of the information supplied or to be supplied by SEPA expressly for inclusion in any filing made with any governmental
authority or stock exchange with respect to the transactions contemplated by the Merger Agreement, this Registration Statement or in the mailings or other distributions to SEPA Stockholders and/or prospective investors with respect to the
consummation of the transactions contemplated by the
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no other representations.
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amend, waive or otherwise change, in any respect, its organizational documents, except as required by applicable law;
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authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of
its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of
its shares or other equity securities or securities of any class and any other equity-based awards, except for certain exceptions as contemplated by the Merger Agreement, or engage in any hedging transaction with a third Person with
respect to such securities;
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split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect
thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer
to acquire any of its securities;
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incur, create, assume, prepay or otherwise become liable for any indebtedness (directly, contingently or otherwise) in excess
of $500,000 individually or $1,000,000 in the aggregate, make a loan or advance to or investment in any third party (other than advancement of expenses to employees in the ordinary course of business), or guarantee or endorse any
indebtedness, liability or obligation of any person in excess of $500,000 individually or $1,000,000 in the aggregate;
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other than as required by applicable law or pursuant to the terms of any SANUWAVE benefit plans (A) increase the wages,
salaries or compensation of its senior vice presidents and above other than in the ordinary course of business, consistent with past practice, (B) make or commit to make any bonus payment (whether in cash, property or securities) other
than in the ordinary course of business consistent with past practice, (C) materially increase other benefits of employees generally other than in the ordinary course of business, or (D) enter into, establish, materially amend or
terminate any SANUWAVE benefit plan with, for or in respect of any current consultant, officer, manager director or other employee, other than in the ordinary course of business consistent with past practice;
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make or rescind any material election relating to taxes, settle any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to material taxes, file any amended tax return or claim for refund, or make any material change in its method of tax accounting, in each case except as required by applicable law or in
compliance with GAAP;
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take any action, or knowingly fail to take any action, which action or failure to act would reasonably be expected to prevent
or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code (and the Treasury Regulations) or, except as contemplated by the Merger Agreement, take any action, which action would reasonably
be expected to prevent or impede any other aspect of the intended tax treatment of the Merger;
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transfer or license to any person or otherwise extend, materially amend or modify, permit to lapse or fail to preserve any
material SANUWAVE owned intellectual property (excluding lapses or terminations of contracts pursuant to the terms thereof), or disclose to any Person who has not entered into a confidentiality agreement any trade secrets;
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terminate, waive or assign any material right under any SANUWAVE material contract or enter into any contract that would be a
SANUWAVE material contract, in any case outside of the ordinary course of business consistent with past practice;
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fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with
past practice;
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establish any subsidiary or enter into any new line of business;
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fail to use commercially reasonable efforts to keep in force material insurance policies or replacement or revised policies
providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;
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revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the
extent required to comply with GAAP and after consulting with the SANUWAVE’s outside auditors;
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waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or
investigation relating to the Merger Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of
equitable relief on, or the admission of wrongdoing by SANUWAVE, its subsidiaries or its Affiliates) not in excess of $500,000 individually or $1,000,000 in the aggregate;
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close or materially reduce its activities, or effect any layoff or other personnel reduction or change, at any of its
facilities;
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acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business
combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business consistent with past practice;
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make capital expenditures in excess of $500,000 individually for any project (or set of related projects) or $1,000,000 in the
aggregate;
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voluntarily incur any liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $1,000,000
individually or $2,000,000 in the aggregate (excluding the incurrence of any expenses) other than pursuant to the terms of a SANUWAVE material contract or SANUWAVE benefit in existence at the date of the Merger Agreement or entered into
in the ordinary course of business;
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adopt a plan of complete or partial liquidation, dissolution, Business Combination, consolidation, restructuring,
recapitalization or other reorganization;
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enter into any agreement, understanding or arrangement with respect to the voting of equity securities of SANUWAVE;
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take any action that would reasonably be expected to significantly delay or impair the obtaining of any consents of any
governmental authority to be obtained in connection with the Merger Agreement;
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except as otherwise required by the Merger Agreement, enter into, amend, waive or terminate (other than terminations in
accordance with their terms) any transaction with any related person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business consistent with past practice); or
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authorize or agree to do any of the foregoing actions.
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amend, waive or otherwise change, in any respect, its organizational documents except as required by applicable law;
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authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of
its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of
its equity securities or other security interests of any class and any other equity-based awards, other than certain issuances of securities of SEPA in accordance with the terms of such securities, in connection with a PIPE Investment, or
undertaken with the consent of SANUWAVE, or engage in any hedging transaction with a third Person with respect to such securities;
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split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect
thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise
acquire or offer to acquire any of its securities;
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incur, create, assume, prepay or otherwise become liable for any indebtedness (directly, contingently or otherwise) in excess
of $500,000 individually or $1,000,000 in the aggregate, make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, Liability or obligation of any Person;
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make or rescind any material election relating to material taxes, settle any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, file any amended tax return or claim for refund, or make any material change in its method of tax accounting, in each case except as required by applicable law or in
compliance with GAAP;
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take any action, or knowingly fail to take any action, which action or failure to act would reasonably be expected to prevent
or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code (and the Treasury Regulations) or, except as contemplated by the Merger Agreement, take any action, which action would reasonably
be expected to prevent or impede any other aspect of the intended tax treatment of the Merger;
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amend, waive or otherwise change the Trust Agreement in any manner adverse to SEPA;
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terminate, waive or assign any material right under any SEPA material contract;
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fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with
past practice;
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establish any subsidiary or enter into any new line of business;
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fail to use commercially reasonable efforts to keep in force material insurance policies or replacement or revised policies
providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;
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revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the
extent required to comply with GAAP and after consulting SEPA’s outside auditors;
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waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or
investigation relating to the Merger Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of
equitable relief on, or the admission of wrongdoing by, SEPA or its subsidiary) not in excess of $500,000 individually or $1,000,000 in the aggregate;
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acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business
combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;
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make capital expenditures in excess of $500,000 individually for any project (or set of related projects) or $1,000,000 in the
aggregate (excluding for the avoidance of doubt, incurring any expenses);
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adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization (other than with respect to the Merger);
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voluntarily incur any liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $500,000
individually or $1,000,000 in the aggregate (excluding the incurrence of any expenses) other than pursuant to the terms of a contract in existence as of the date of the Merger Agreement or entered into in the ordinary course of business;
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enter into any agreement, understanding or arrangement with respect to the voting of SEPA securities;
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take any action that would reasonably be expected to significantly delay or impair the obtaining of any consents of any
governmental authority to be obtained in connection with the Merger Agreement; or
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authorize or agree to do any of the foregoing actions.
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SEPA will file with the Delaware Secretary of State the Class B Charter Amendment, upon approval of the SEPA Class B
Stockholders, and the Net Tangible Assets Charter Amendment, upon approval by the SEPA
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SEPA and certain SANUWAVE Stockholders who will be Affiliates of SEPA immediately after the Closing will enter into a
registration rights agreement in a form to be reasonably acceptable to SEPA and SANUWAVE;
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SEPA will use its commercially reasonable efforts to enter into voting and non-redemption agreements with such SEPA
Stockholders as mutually agreed by SEPA and SANUWAVE;
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SEPA shall use its commercially reasonable efforts to obtain the approval of the Warrant Agreement Amendment from the requisite
holders of the SEPA Public Warrants;
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SANUWAVE will use its commercially reasonable efforts to negotiate with the holders of the SANUWAVE Warrants and the SANUWAVE
Convertible Notes to cause such SANUWAVE Warrants and SANUWAVE Convertible Notes to be amended, exercised, converted or exchanged, as applicable, into shares of SANUWAVE Common Stock; and
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SANUWAVE will pay off and satisfy in full certain indebtedness at or promptly following the Closing.
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the Merger Agreement is terminated by SANUWAVE prior to the receipt of the required stockholder approval, if prior to or
substantially concurrent with such termination, SANUWAVE substantially concurrently with such termination enters into a definitive agreement with respect to a Superior Proposal that did not result from a material breach of Section 5.6 of
the Merger Agreement, in which case payment shall be made before or concurrently with such termination;
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the Merger Agreement is terminated by SEPA if SANUWAVE’s board effects a Company Adverse Recommendation Change, SANUWAVE’s
board approves, endorses or recommends a Superior Proposal, a tender offer or exchange offer for any outstanding shares of SANUWAVE capital stock is commenced before obtaining the required stockholder approval and the SANUWAVE board fails
to recommend against acceptance of such tender offer or exchange offer within 10 business days after commencement, or if there shall have been a material breach of Section 5.6 of the Merger Agreement, in which case payment shall be made
within two business days following such termination; or
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after the date of the Merger Agreement, first, a Takeover Proposal is made, proposed or communicated to the SANUWAVE board or
management, or is publicly made, proposed or communicated or otherwise becomes publicly known; (B) second, the Merger Agreement is terminated by either SANUWAVE or SEPA pursuant to Section 7.1(b) or 7.1(i) of the Merger Agreement, or by
SEPA pursuant to Section 7.1(e) of the Merger Agreement; and (C) third, within twelve (12) months of such termination (1) any transaction included within the definition of a Takeover Proposal with respect to SANUWAVE is consummated or
(2) SANUWAVE enters into a definitive agreement providing for the consummation of any transaction within the definition of Takeover Proposal, in each case whether or not involving the same Takeover Proposal or the person or group making
the Takeover Proposal referred to in clause (A); provided, that for
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pursuant to the Letter Agreement, 5,031,250 Founder Shares owned by the Sponsor and other insiders became subject to a lock-up
whereby, subject to certain limited exceptions, agreed not to transfer, assign or sell the Founder Shares until the earlier of (A) one year after the completion of SEPA’s initial business combination or (B) subsequent to the Business
Combination, (x) if the last sale price of SEPA’s Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and other similar transactions) for any 20 trading days
within any 30-trading day period commencing at least 150 days after SEPA’s initial business combination or (y) the date on which SEPA completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction
that results in all of SEPA Stockholders having the right to exchange their shares of Common Stock for cash, securities or other property; provided, however, upon approval of the Letter Agreement Amendment, this period will be amended to
until the earlier of (i) 180 days after the completion of the Business Combination or (ii) subsequent to the Business Combination, the date on which SEPA completes a liquidation, merger, capital stock exchange, reorganization or other
similar transaction that results in all of SEPA Stockholders having the right to exchange their shares of common stock for cash, securities or other property;
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the Sponsor and SEPA’s officers and directors own 3,645,375 Founder Shares. On March 4, 2021, SEPA’s founder acquired 5,031,250
Founder Shares for an aggregate purchase price of $25,000, or approximately $0.005 per share. Also on March 24, 2021, SEPA’s founder assigned 160,000 Founder Shares (40,000 Founder Shares each) to SEPA’s independent directors at their
original purchase price, 35,000 Founder Shares (5,000 Founder Shares each) to SEPA’s advisors and 20,000 Founder Shares (10,000 Founder Shares each) to SEPA’s Chief Financial Officer and Chief Strategy Officer. SEPA’s directors and
officers also have a pecuniary interest in such Founder Shares through their ownership interest in the Sponsor. Upon conversion to Class A Common Stock, the Founder Shares would have an aggregate market value of approximately
$11.1 million, based on the conversion ratio set forth in the Class B Charter Amendment and the last sale price of $11.03 per share of Class A Common Stock on Nasdaq on September 19, 2023. If SEPA does not consummate the Business
Combination or another initial business combination by July 30, 2024, and SEPA is therefore required to be liquidated, these shares would be worthless, as Founder Shares are not entitled to participate in any redemption or liquidation of
the Trust Account. Given the differential in the purchase price that the Sponsor paid for the Founder Shares as compared to the price of the Units sold in SEPA’s IPO, the Sponsor and SEPA’s directors and officers may earn a positive rate
of return on their investment even if SEPA’s Class A Common Stock trades below the price initially paid for the Units in SEPA’s IPO and the public SEPA Stockholders experience a negative rate of return following the completion of the
Business Combination;
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the Sponsor and SEPA’s directors and officers may be incentivized to complete the Business Combination, or an alternative
initial business combination with a less favorable company or on terms less favorable to
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simultaneously with the closing of the IPO, the Sponsor purchased 7,850,000 warrants at a price of $1.00 per warrant. Such
private placement warrant is exercisable to purchase one share of Class A Common Stock at a price of $11.50 per share. Such warrants will expire worthless if SEPA fails to complete an initial business combination by July 30, 2024;
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pursuant to the Sponsor Voting Agreement, the Sponsor has agreed to vote all of the Sponsor’s shares of SEPA in favor of the
Merger Agreement and the Business Combination and to otherwise take (or not take, as applicable) certain other actions in support of the Merger Agreement and the Business Combination and the other matters to be submitted to SEPA
Stockholders for approval in connection with the Business Combination. The Sponsor Voting Agreement also prevents transfers of SEPA shares held by the Sponsor between the date of the Sponsor Voting Agreement and the termination of such
Sponsor Voting Agreement, except for certain permitted transfers where the recipient also agrees to comply with the Sponsor Voting Agreement;
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on October 11, 2022, SEPA issued the Sponsor Note to the Sponsor, pursuant to which SEPA could borrow up to $1,000,000 at a 6%
interest rate on or before October 11, 2024 to cover, among other things, expenses related to a business combination. As of September 19, 2023, SEPA has borrowed $960,000 under the Sponsor Note;
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in order to finance transaction costs in connection with the Business Combination, the Sponsor or an affiliate of the Sponsor,
or certain of SEPA’s officers and directors may, but are not obligated to, loan SEPA additional funds as may be required. If SEPA completes the Business Combination, SEPA would repay the Working Capital Loans out of the proceeds held in
the Trust Account released to SEPA. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that the Business Combination is not completed, SEPA may use a portion of the proceeds
held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans;
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the Sponsor has agreed that it will be liable to SEPA if and to the extent any claims by a third party (other than SEPA’s
independent auditors) for services rendered or products sold to SEPA, or a prospective target business with which SEPA has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i)
$10.10 per Public Share or (ii) such lesser amount per Public Share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of
interest which may be withdrawn to pay taxes as well as expenses relating to the administration of the trust account, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust
account; and
|
•
|
The fact that SEPA has provisions in its Current Charter which waive the corporate opportunities doctrine, which means that
SEPA’s officers and directors have not been obligated to bring all corporate opportunities to SEPA. The potential conflict of interest relating to the waiver of the corporate opportunities doctrine in the Current Charter did not, to
SEPA’s knowledge, impact the search for an acquisition target or prevent SEPA from reviewing any opportunities as a result of such waiver.
|
•
|
Identified and evaluated over 100 potential acquisition target companies;
|
•
|
Participated in in-person or telephonic discussions with representatives of more than 50 potential acquisition targets; and
|
•
|
Signed 19 non-disclosure agreements and provided initial non-binding indications of interest to representatives of four
potential acquisition targets (other than SANUWAVE).
|
•
|
Large and Expanding Growth Industry. SANUWAVE is focused on the development of
regenerative medicine products that have the potential to address substantial unmet clinical needs across broad market indications. Based upon the commercial due diligence by SEPA, there are limited therapeutic treatments currently
available that directly and reproducibly activate healing processes in the areas in which SANUWAVE is focusing, particularly for wound care and repair of certain types of musculoskeletal conditions;
|
•
|
Platform Supports Further Growth Initiatives. SANUWAVE’s ultrasound and shock wave
technology uses patented systems of noninvasive, high-energy, acoustic shock waves or low intensity and non-contact ultrasound for regenerative medicine and other applications, and its two primary systems, UltraMIST® and PACE®,
are the only two FDA approved directed energy systems for wound healing;
|
•
|
Due Diligence. Due diligence examinations of SANUWAVE and discussions with SANUWAVE’s
management team and SEPA’s legal advisors concerning SEPA’s due diligence examination of SANUWAVE;
|
•
|
Stockholder Liquidity. The obligation in the Merger Agreement to have Class A Common
Stock issued as Merger Consideration listed on the Nasdaq, a major U.S. stock exchange, which the SEPA Board believes has the potential to offer SEPA Stockholders enhanced liquidity as a result of increased trading volume;
|
•
|
Financial Condition. The SEPA Board also considered factors such as SANUWAVE’s
historical financial results, outlook, financial plan, debt structure and unit economics as well as mergers and acquisitions activity for companies in the medical technology industry. In considering these factors, the SEPA Board reviewed
SANUWAVE’s historical growth and its current prospects for growth if SANUWAVE achieves its business plan and various historical and current balance sheet items of SANUWAVE. In reviewing these factors, the SEPA Board noted that SANUWAVE
will be well positioned to gain market share and expand its manufacturing capabilities while continuing to improve its margins;
|
•
|
Experienced Management Team. SANUWAVE has a strong management team with significant
operating experience. Morgan Frank, CEO, has over 25 years of experience advising and leading MedTech and other companies, and 30 years in capital markets with numerous successful exits. Andrew Walko, President of SANUWAVE, has deep roots
in the MedTech contract manufacturing industry and has several years of operational experience. He has scaled and launched several products at various companies in the Minnesota region. In addition, he has held leadership roles for nearly
20 years in the MedTech space as well as the US Army. Tim Hendricks, Executive V.P. of Sales, brings 20 years of industry experience in building sales leadership teams in medical device, biologics, specialty pharmaceuticals and durable
medical equipment. Over a dozen of his years in the industry have been spent in the chronic wound space with start-ups and Fortune 500 companies such as Smith & Nephew (formerly Osiris Therapeutics) and Byram Healthcare. The senior
management of SANUWAVE intends to remain with SANUWAVE in the capacity of officers and/or directors, providing helpful continuity in advancing SANUWAVE’s strategic and growth goals;
|
•
|
Lock-Up. Certain SANUWAVE Stockholders (including Mr. Frank) have agreed to be subject
to a 180-day lockup in respect of their SEPA Class A Common Stock subject to certain customary exceptions, which will provide important stability to the leadership and governance of SANUWAVE;
|
•
|
Other Alternatives. The SEPA Board believes, after a thorough review of other business
combination opportunities reasonably available to SEPA, that the proposed Business Combination represents the best potential business combination for SEPA and the most attractive opportunity based upon the process utilized to evaluate and
assess other potential acquisition targets;
|
•
|
Negotiated Transaction. The financial and other terms of the Merger Agreement and the
fact that such terms and conditions are reasonable and were the product of arm’s length negotiations between SEPA and SANUWAVE; and
|
•
|
Fairness Opinion. The SEPA Board considered ValueScope’s fairness opinion, in which
ValueScope opined that the Business Combination is “fair” to the SEPA Stockholders from a financial perspective.
|
•
|
Business Plan and Projections May Not Be Achieved. The risk that SANUWAVE may not be
able to execute on the business plan, and realize the financial performance as set forth in the financial projections, in each case, presented to SEPA’s management team and SEPA Board;
|
•
|
Redemption Risk. The potential that a significant number of SEPA Stockholders elect to
redeem their shares prior to the consummation of the Business Combination and pursuant to the SEPA’s Current Charter, which would potentially make the Business Combination more difficult to complete;
|
•
|
Stockholder and Warrantholder Vote. The risk that SEPA Stockholders and SEPA Public
Warrant Holders may fail to provide the respective votes necessary to effect the Business Combination;
|
•
|
Closing Conditions. The fact that the completion of the Business Combination is
conditioned on the satisfaction of certain closing conditions that are not within SEPA’s control;
|
•
|
Litigation. The possibility of litigation challenging the Business Combination or that
an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination;
|
•
|
Listing Risks. The challenges associated with preparing SANUWAVE for the applicable
disclosure and listing requirements to which SANUWAVE will be subject as a publicly traded company on Nasdaq;
|
•
|
Benefits May Not Be Achieved. The risks that the potential benefits of the Business
Combination may not be fully achieved or may not be achieved within the expected timeframe;
|
•
|
Liquidation of SEPA. The risks and costs to SEPA if the Business Combination is not
completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in SEPA being unable to effect a business combination by July 30, 2024;
|
•
|
Growth Initiatives May Not be Achieved. The risk that SANUWAVE’s growth initiatives
may not be fully achieved or may not be achieved within the expected timeframe;
|
•
|
Board and Independent Committees. The risk that the post-Closing Combined Company
Board and independent committees do not possess adequate skill set within the context of SANUWAVE operating as a public company;
|
•
|
SEPA Stockholders Receiving a Minority Position in SANUWAVE. The risk that SEPA
Stockholders will hold a minority position in SANUWAVE;
|
•
|
Fees and Expenses. The fees and expenses associated with completing the Business
Combination; and
|
•
|
Other Risks Factors. Various other risk factors associated with the business of
SANUWAVE, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.
|
•
|
NanoVibronix, Inc.
|
•
|
EDAP TMS S.A.
|
•
|
Organogenesis Holdings Inc.
|
•
|
MiMedx Group, Inc.
|
•
|
Integra LifeSciences Holdings Corporation
|
•
|
3M Company
|
•
|
Coloplast A/S
|
•
|
ConvaTec Group PLC
|
•
|
Smith & Nephew plc
|
•
|
Stryker Corporation
|
•
|
SEPA’s Sponsor or founder (or an officer, director, employee or affiliate thereof);
|
•
|
a government or agency or instrumentality thereof;
|
•
|
a tax-exempt entity;
|
•
|
a tax-qualified retirement plan or pension plan;
|
•
|
an S corporation, partnership, or other entity or arrangement treated as a partnership or other flow-through entity for U.S.
federal income tax purposes (and investors therein);
|
•
|
a dealer or trader in securities that uses a mark-to-market method of tax accounting with respect to the securities;
|
•
|
a regulated investment company;
|
•
|
a real estate investment trust;
|
•
|
a financial institution;
|
•
|
an insurance company;
|
•
|
a controlled foreign corporation or passive foreign investment company;
|
•
|
an expatriate or former long-term resident of the United States;
|
•
|
a person that actually or constructively owns 5% or more of our voting shares or 5% or more of the total value of our shares;
|
•
|
a person that acquired our shares pursuant to an exercise of employee share options, in connection with employee share
incentive plans or otherwise as compensation or in connection with services;
|
•
|
a person holding the shares as part of a hedge, straddle, constructive sale, or other risk reduction strategy or as part of a
conversion transaction or other integrated investment transaction;
|
•
|
a person subject to special tax accounting rules as a result of any item of gross income with respect to Public Shares being
taken into account in an applicable financial statement;
|
•
|
a person who elects to apply the provisions of Section 1400Z-2 of the Code to any gain realized;
|
•
|
a person holding our securities in connection with a trade or business outside the United States; or
|
•
|
a U.S. person whose functional currency is not the U.S. dollar.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (or other entity taxable as a corporation) organized in or under the laws of the United States, any state thereof
or the District of Columbia;
|
•
|
an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source;
|
•
|
a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S.
persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (ii) that has in effect a valid election under applicable Treasury regulations to be treated as a U.S. person.
|
•
|
a non-resident alien individual;
|
•
|
a foreign corporation; or
|
•
|
an estate or trust that is not a U.S. Holder.
|
•
|
the gain is effectively connected with the conduct of a trade or business by you within the United States (and, if required by
an applicable income tax treaty, is attributable to a U.S. permanent establishment or fixed base maintained by you);
|
•
|
you are a nonresident alien individual present in the United States for 183 days or more during the taxable year of the
disposition and certain other requirements are met; or
|
•
|
the Public Shares constitute a U.S. real property interest (“USRPI”) by reason of SEPA’s status as a “U.S. real property
holding corporation” (a “USRPHC”) for U.S. federal income tax purposes and, as a result, such gain is treated as effectively connected with a trade or business conducted by you in the United States.
|
•
|
Former SANUWAVE Securityholders are expected to own approximately 66.0% to 69.6% (assuming no additional Redemptions and
assuming maximum Redemptions, respectively) of the Common Stock outstanding immediately following the Closing (subject to adjustment in accordance with the Merger Agreement);
|
•
|
After the Closing, the Combined Company Board shall consistent of seven directors: (i) six directors designated by SANUWAVE,
and (ii) one director designated by SEPA;
|
•
|
The executive officers of SANUWAVE will become the initial executive officers of the Combined Company;
|
•
|
The assets of SANUWAVE will represent a significant majority of the assets of the Combined Company (excluding cash formerly
held in the Trust Account); and
|
•
|
After the Closing, the business of the Combined Company will be the continued business of SANUWAVE. The business of the Company
will continue to focus on SANUWAVE’s core offerings.
|
Provision
|
| |
Current Charter
|
| |
Proposed Charter
|
Name of SEPA
|
| |
SEP ACQUISITION CORP.
See Article I.
|
| |
SANUWAVE Health, Inc.
See Article I.
|
|
| |
|
| |
|
Provisions Specific to a Blank Check Company and Variation
of Rights of Shares Prior to a Business Combination
|
| |
SEPA’s Current Charter contains language in Article II relating to the purpose
of SEPA as a blank check company.
SEPA’s Current Charter contains provisions in connection with the mechanics
and logistics relating to a business combination, including provisions relating to deposits to and distributions from the Trust Account, the Redemption Rights of holders of Common Stock included as part of the Units sold in the IPO, share
issuances, transactions with affiliates, transactions with other blank check companies, additional redemption rights, the minimum value of the target of the business combination, the appointment and removal of directors, and approval of
the business combination; and such provisions in Article IX cannot be amended prior to the consummation of the initial business combination unless approved by the affirmative vote of the holders of at least 65% of all then outstanding
shares of the Common Stock.
See Article II; Article IX.
|
| |
The Proposed Charter does not include blank check company provisions or other
provisions applicable prior to a business combination, because, upon consummation of the Business Combination, SEPA will cease to be a blank check company.
No corresponding provisions in the Proposed
Charter.
|
|
| |
|
| |
|
Provision
|
| |
Current Charter
|
| |
Proposed Charter
|
Common Stock; Preferred Stock
|
| |
SEPA’s authorized share capital consists of 171,000,000 shares of capital
stock, par value of $0.0001, consisting of (a) 170,000,000 shares of Common Stock, of which (i) 150,000,000 shares are Class A Common Stock and (ii) 20,000,000 shares are Class B Common Stock, and (b) 1,000,000 shares of preferred stock,
par value $0.0001 per share.
See Article IV, Section 4.1.
|
| |
The Proposed Charter will provide for, upon completion of the Business
Combination, the total number of shares of all classes of capital stock that SEPA is authorized to issue is 171,000,000 shares, consisting of (i) 170,000,000 shares of Class A Common Stock, par value $0.0001 per share, and (ii) 1,000,000
shares of preferred stock, par value $0.0001 per share.
See Article IV, Section 4.1.
|
|
| |
|
| |
|
Number, Election, and Term of Directors
|
| |
The SEPA Board is divided into three classes, as nearly equal in number as
possible and designated Class I, Class II and Class III. The Board is authorized to assign members of the Board already in office to Class I, Class II or Class III.
See Article V, Section 5.2.
|
| |
The Proposed Charter will have one class of directors who will be elected at
each annual meeting of stockholders for a term of one year. The number of directors will be fixed solely and exclusively by resolution duly adopted from time to time by the Board.
See Article V, Section 5.2.
|
|
| |
|
| |
|
Removal of Directors
|
| |
Any or all of the directors may be removed from office at any time, but only
for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in the election of directors, voting together as a single class.
See Article V, Section 5.4.
|
| |
Any or all of the directors may be removed from office at any time, but only
for cause and only by the affirmative vote of holders of at least two-thirds (2∕3) of the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in
the election of directors.
See Article V, Section 5.4.
|
|
| |
|
| |
|
Amendment of the Bylaws
|
| |
The Bylaws also may be adopted, amended, altered or repealed by the SEPA
Stockholders; provided, however, that in addition to any vote of the holders of any class or series of capital stock of SEPA required by law or by the Current Charter (including any Preferred
Stock Designation), the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in the election of directors, voting together as a single class,
shall be required for the SEPA Stockholders to adopt, amend, alter or repeal the Bylaws; and provided
|
| |
The Bylaws also may be adopted, amended, altered or repealed by the SEPA
Stockholders; provided, however, that in addition to any vote of the holders of any class or series of capital stock of SEPA required by law or by the Proposed Charter (including any Preferred
Stock Designation), the affirmative vote of the holders of at least two-thirds (2∕3) of the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in
the election of directors, shall be required for the
|
Provision
|
| |
Current Charter
|
| |
Proposed Charter
|
|
| |
further, however, that
no Bylaws hereafter adopted by the stockholders of SEPA shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.
See Article VI.
|
| |
SEPA Stockholders to adopt, amend, alter or repeal the Bylaws; and provided further, however, that no Bylaws hereafter adopted by the SEPA Stockholders shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.
See Article VI.
|
|
| |
|
| |
|
Stockholder Action by Written Consent
|
| |
Except as may be otherwise provided for or fixed pursuant to the Current
Charter (including any Preferred Stock Designation) relating to the rights of the holders of any outstanding series of preferred stock, subsequent to the consummation of SEPA’s IPO, any action required or permitted to be taken by the SEPA
Stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the SEPA Stockholders other than with respect to its Class B Common Stock with respect to which
action may be taken by written consent.
See Article VII, Section 7.3.
|
| |
The Proposed Charter does not include a provision for stockholder action by
written consent for any class of SEPA Stockholders.
No corresponding provisions in the Proposed
Charter.
|
|
| |
|
| |
|
Corporate Opportunity Doctrine
|
| |
To the extent allowed by law, the doctrine of “corporate opportunity,” or any
other analogous doctrine, shall not apply with respect to SEPA or any of its officers or directors, and SEPA renounces any expectancy that any of the directors or officers of SEPA will offer any such corporate opportunity of which he or
she may become aware to SEPA, unless such opportunity was expressly offered to such person solely in his or her capacity as a director or officer of SEPA and such opportunity is one SEPA is legally and contractually permitted to undertake
and would otherwise be reasonable for SEPA to pursue.
See Article X.
|
| |
The Proposed Charter does not include a provision waiving the doctrine of
“corporate opportunity.”
No corresponding provisions in the Proposed
Charter.
|
•
|
a limited availability of market quotations for its Class A Common Stock;
|
•
|
reduced liquidity with respect to its Class A Common Stock;
|
•
|
determination that its shares are a “penny stock,” which will require brokers trading in its Class A Common Stock to adhere to
more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for its securities;
|
•
|
a limited amount of news and analyst coverage for the Combined Company; and
|
•
|
a decreased ability to issue additional securities or obtain additional financing in the future.
|
•
|
A “corporate transaction” generally means (i) a sale or other disposition of all or substantially all of the assets of the
Combined Company, or (ii) a merger, consolidation, share exchange or similar transaction involving the Combined Company.
|
•
|
A “change in control” generally refers to a corporate transaction (as defined above), the acquisition by a person or group of
beneficial ownership of 30% or more of the voting power of the Company’s stock, or stock equaling 50% or more of the Combined Company’s fair market value, a sale of 40% or more of the assets of the Combined Company, or the Combined
Company’s “continuing directors” ceasing to constitute a majority of its board.
|
Plan category
|
| |
Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights
|
| |
Weighted
average
exercise price
of outstanding
options,
warrants and
rights
|
| |
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans
|
Equity compensation plans approved by security holders
|
| |
—
|
| |
—
|
| |
—
|
Equity compensation plans not approved by security holders
|
| |
21,246,085
|
| |
0.28
|
| |
3,240,615
|
Total
|
| |
21,246,085
|
| |
0.28
|
| |
3,240,615
|
•
|
Within the U.S. and Canada: +1 800-450-7155 (toll-free)
|
•
|
Outside of the U.S. and Canada: +1 857-999-9155 (standard rates apply)
|
•
|
consider and vote upon an amendment to the Warrant Agreement, dated as of July 21, 2021 (the “Warrant Agreement Amendment”), a
copy of which is attached as Annex B to this proxy statement/prospectus, to provide that, upon Closing of the Business Combination, the then outstanding SEPA Public Warrants will be canceled and exchanged for the right to receive
450,336 shares of Class A Common Stock (i.e., approximately 0.0499 shares of Class A Common Stock for each public warrant) and the then outstanding SEPA Private Placement Warrants will be canceled
and exchanged for the right to receive 400,000 shares of Class A Common Stock (i.e., approximately 0.0499 shares of Class A Common Stock for each private placement warrant) (the “Warrant Amendment
Proposal”); and
|
•
|
consider and vote upon a proposal to approve the adjournment of the Warrant Holders Meeting to a later date or dates, if
necessary, (a) to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of the Warrant Amendment Proposal at the Warrant Holders Meeting or (b) if the SEPA Board determines before
the Warrant Holders Meeting that it is not necessary or no longer desirable to proceed with the proposals (the “Warrant Holders Adjournment Proposal” and, together with the Warrant Amendment Proposal, the “Warrant Holder Proposals”).
|
•
|
sending another proxy card with a later date;
|
•
|
notifying SEPA’s Secretary in writing before the Warrant Holders Meeting that a SEPA Public Warrant Holder has revoked their
proxy; or
|
•
|
attending the Warrant Holders Meeting and voting electronically by entering the control number found on the proxy card they
previously received. Attendance at the Warrant Holders Meeting will not, in and of itself, revoke a proxy.
|
•
|
Former SANUWAVE Securityholders are expected to own approximately 66.0%% to 69.6%% (assuming no additional redemptions and
assuming maximum redemptions, respectively) of the Common Stock outstanding immediately following the Closing (subject to adjustment in accordance with the Merger Agreement);
|
•
|
After the Closing, the Combined Company Board shall consistent of seven directors: (i) six directors designated by SANUWAVE,
and (ii) one director designated by SEPA;
|
•
|
The executive officers of SANUWAVE will become the initial executive officers of the Combined Company;
|
•
|
The assets of SANUWAVE will represent a significant majority of the assets of the Company (excluding cash formerly held in the
Trust Account); and
|
•
|
After the Closing, the business of the Company will be the continued business of SANUWAVE. The business of the Company will
continue to focus on SANUWAVE’s core offerings.
|
a.
|
each SANUWAVE Stockholder shall receive for each share of SANUWAVE Common Stock held (excluding any Treasury Stock), a number
of shares of Class A Common Stock equal to the Conversion Ratio (the aggregate portion of the Merger Consideration amount payable to all SANUWAVE Stockholders in respect of shares of SANUWAVE Common Stock (but excluding Merger
Consideration payable in respect of SANUWAVE Options, Assumed Warrants, and Assumed Convertible Notes) in accordance with the Merger Agreement is also referred to herein as the “Stockholder Merger Consideration”).
|
b.
|
the holders of in-the-money SANUWAVE Options shall receive, from the Merger Consideration, such number of SEPA Options as at
the Effective Time, such that each outstanding SANUWAVE Option (whether vested or unvested, exercisable or unexercisable) that is outstanding as of immediately prior to the Effective Time shall, without any further action on the part of
the holder thereof, be assumed by the SEPA and automatically converted into the right to receive an option (each, a “SEPA Option”) that corresponds to an in-the-money SANUWAVE Option that was originally granted pursuant to the Prior Plan
will continue to be subject to the same terms and conditions set forth in the Prior Plan and the applicable award agreement as in effect immediately prior to the Effective Time (including, without limitation, the vesting and acceleration
provisions therein), to acquire shares of Class A Common Stock reserved for issuance from the Merger Consideration. Out-of-the-money SANUWAVE Options issued pursuant to the Prior Plan that are not exercised prior to the Effective Time
will be assumed by SEPA and converted, subject to certain adjustments that are described in the Merger Agreement, into SEPA Options exercisable for shares of Class A Common Stock; however, such out-of-the-money SANUWAVE Options shall not
be reserved for issuance from the Merger Consideration.
|
c.
|
the holders of each in-the-money SANUWAVE Warrant that is outstanding and unexercised, and has not been exchanged for shares of
SANUWAVE Common Stock, as of immediately prior to the Effective Time shall to the extent permitted by the terms of such in-the-money SANUWAVE Warrant, automatically, without any action on the part of the holder thereof and without the
issuance of a new warrant with respect thereto, be assumed by SEPA and converted into a warrant (each such warrant, an “Assumed Warrant”) to purchase that number of shares of Class A Common Stock reserved for issuance from the Merger
Consideration equal to the product of (1) the number of shares of SANUWAVE Stock subject to such in-the-money SANUWAVE Warrant multiplied by (2) the Conversion Ratio. Each Assumed Warrant shall be subject to the same terms and conditions
(including as to vesting and exercisability) as were applicable under the respective in-the-money SANUWAVE Warrant immediately prior to the Effective Time. Out-of-the-money SANUWAVE Warrants that are not exercised prior to the Effective
Time will be assumed by SEPA and converted into Assumed Warrants exercisable for shares of Class A Common Stock; however, such out-of-the-money SANUWAVE Warrants shall not be reserved for issuance from the Merger Consideration.
|
d.
|
the holders of each SANUWAVE Convertible Note that is outstanding and unexercised, and has not been exchanged for shares of
SANUWAVE Common Stock, as of immediately prior to the Effective Time shall, to the extent permitted by the terms of such SANUWAVE Convertible Note, automatically, without any action on the part of the holder thereof and without the
issuance of a new convertible note with respect thereto, be assumed by the SEPA and converted into a convertible note (each such assumed SANUWAVE Convertible Note, an “Assumed Convertible Note”) to purchase that number of shares of
Class A Common Stock reserved for issuance from the Merger Consideration equal to the product of (i) the number of shares of SANUWAVE Stock subject to such SANUWAVE Convertible Note as of immediately prior to the Effective Time multiplied
by (ii) the Conversion Ratio. Each Assumed Convertible Note shall be subject to the same terms and conditions as were applicable under the respective SANUWAVE Convertible Note immediately prior to the Effective Time.
|
•
|
Assuming No Additional Redemptions: This pro forma presentation assumes that no
additional SEPA Stockholders exercise Redemption Rights with respect to their Class A Common Stock, subsequent to the redemptions that occurred on December 20, 2022.
|
•
|
Assuming Maximum Redemptions: This pro forma presentation assumes that 622,747 shares
of Class A Common Stock subject to redemption are redeemed for an aggregate payment of approximately $6,510,043 (based on an estimated per share redemption price of approximately $10.45 that was calculated using the $13,634,402 in the
Trust Account as of June 30, 2023 divided by 1,304,259 shares of Class A Common Stock subject to redemption assuming the pro forma maximum redemption scenario pursuant to the Merger Agreement). It is noted that 681,512 shares of Class A
Common Stock are not being redeemed, pursuant to the Voting and Non-Redemption Agreements.
|
|
| |
Assuming No
Additional
Redemptions
(Shares)
|
| |
%
|
| |
Assuming
Maximum
Redemptions
(Shares)
|
| |
%
|
Sanuwave Stockholders(1)
|
| |
7,793,000
|
| |
66.0%
|
| |
7,793,000
|
| |
69.6%
|
SEPA Class A Stockholders(2)
|
| |
1,304,259
|
| |
11.0%
|
| |
681,512
|
| |
6.1%
|
SEPA Class B Stockholders(3)
|
| |
1,249,374
|
| |
10.6%
|
| |
1,249,374
|
| |
11.2%
|
SEPA Public Warrant Holders(4)
|
| |
450,336
|
| |
3.8%
|
| |
450,336
|
| |
4.0%
|
SEPA Private Placement Warrant Holders(5)
|
| |
400,000
|
| |
3.4%
|
| |
400,000
|
| |
3.6%
|
Sponsor Debt Conversion(6)
|
| |
100,000
|
| |
0.8%
|
| |
100,000
|
| |
0.9%
|
PIPE Investors(7)
|
| |
518,488
|
| |
4.4%
|
| |
518,488
|
| |
4.6%
|
Pro forma Combined Company Common Stock
at June 30, 2023
|
| |
11,815,457
|
| |
100.0%
|
| |
11,192,710
|
| |
100.0%
|
(1)
|
Includes shares of Class A Common Stock issuable upon conversion of the warrant liabilities and convertible
promissory notes.
|
(2)
|
Assumes redemption of 622,747 shares of Class A Common Stock because 681,512 shares of Class A Common Stock
are not being redeemed, pursuant to the Voting and Non-Redemption Agreements.
|
(3)
|
Reflects the conversion of Class B Common Stock to Class A Common Stock, pursuant to the Class B Charter
Amendment to be entered into prior to Closing, amending the Class B Common Stock conversion ratio to 0.277 shares of Class A Common Stock. As of June 30, 2023, there were 4,510,375 shares of Class B Common Stock which will convert to
1,249,374 shares of Class A Common Stock pursuant to the Class B Charter Amendment.
|
(4)
|
Reflects the conversion of SEPA Public Warrants into 450,336 shares of Class A Common Stock, pursuant to the
Warrant Agreement Amendment.
|
(5)
|
Reflects and includes the conversion of SEPA Private Placement Warrants into 400,000 shares of Class A
Common Stock, pursuant to the Warrant Agreement Amendment.
|
(6)
|
Assumes (i) issuance of 100,000 shares of Class A Common Stock in connection with the conversion of SEPA's
Sponsor promissory note principal and accrued interest into an investment in the PIPE Investment, pursuant to the Sponsor Debt Conversion Agreement. The Sponsor Debt Conversion Agreement is contingent and effective upon Closing.
|
(7)
|
Assumes (i) issuance of 518,488 shares of Class A Common Stock at a purchase price of $10.00 per share,
pursuant to the PIPE Investment and Purchaser Non-Redemption in the Merger Agreement, such that upon the Closing, SEPA shall have at least $12,000,000 resulting from (i) proceeds from the Trust Account for the 681,512 shares of Class A
Common Stock that has not been redeemed described in Footnote (2) above resulting in approximately $7.1 million available from the Trust Account, and (ii) proceeds of the PIPE investment.
|
|
| |
SEPA
(Historical)
|
| |
SANUWAVE
(Historical)
|
| |
Asset-Backed
Secured
Promissory
Notes
(Note 3)
|
| |
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Additional
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Additional
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
ASSETS
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$849
|
| |
$332
|
| |
$2,441
|
| |
A
|
| |
$13,634
|
| |
B
|
| |
$19,942
|
| |
$(6,510)
|
| |
J
|
| |
$13,432
|
|
| |
|
| |
|
| |
|
| |
|
| |
5,185
|
| |
C
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
(2,500)
|
| |
D
|
| |
|
| |
|
| |
|
| |
|
Restricted cash
|
| |
—
|
| |
850
|
| |
(850)
|
| |
A
|
| |
—
|
| |
|
| |
|
| |
—
|
| |
|
| |
|
Accounts receivable
|
| |
—
|
| |
2,818
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
2,818
|
| |
—
|
| |
|
| |
2,818
|
Inventory
|
| |
—
|
| |
900
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
900
|
| |
—
|
| |
|
| |
900
|
Prepaid expenses and other current assets
|
| |
56
|
| |
1,201
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,257
|
| |
—
|
| |
|
| |
1,257
|
Total current assets
|
| |
906
|
| |
6,101
|
| |
1,591
|
| |
|
| |
16,319
|
| |
|
| |
24,917
|
| |
(6,510)
|
| |
|
| |
18,407
|
Cash and marketable securities held in Trust Account
|
| |
13,634
|
| |
—
|
| |
|
| |
|
| |
(13,634)
|
| |
B
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Property and equipment, net
|
| |
—
|
| |
1,050
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,050
|
| |
—
|
| |
|
| |
1,050
|
Right-of-use assets, net
|
| |
—
|
| |
4,786
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
4,786
|
| |
—
|
| |
|
| |
4,786
|
Goodwill
|
| |
—
|
| |
7,260
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
7,260
|
| |
—
|
| |
|
| |
7,260
|
Total assets
|
| |
$14,540
|
| |
$19,197
|
| |
$1,591
|
| |
|
| |
$2,685
|
| |
|
| |
$38,013
|
| |
$(6,510)
|
| |
|
| |
$31,503
|
LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accounts payable and accrued expenses
|
| |
$56
|
| |
$11,210
|
| |
$—
|
| |
|
| |
$—
|
| |
|
| |
$11,266
|
| |
$—
|
| |
|
| |
$11,266
|
Senior secured debt, in default
|
| |
—
|
| |
16,123
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
16,123
|
| |
—
|
| |
|
| |
16,123
|
Convertible promissory notes payable
|
| |
—
|
| |
17,712
|
| |
—
|
| |
|
| |
(13,712)
|
| |
E
|
| |
4,000
|
| |
—
|
| |
|
| |
4,000
|
Convertible promissory notes payable, related parties
|
| |
—
|
| |
8,346
|
| |
—
|
| |
|
| |
(6,973)
|
| |
E
|
| |
1,373
|
| |
—
|
| |
|
| |
1,373
|
Bridge notes advance
|
| |
—
|
| |
1,476
|
| |
(1,476)
|
| |
A
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Income tax payable
|
| |
507
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
507
|
| |
—
|
| |
|
| |
507
|
Asset-Backed Secured Promissory Note
|
| |
—
|
| |
—
|
| |
5,000
|
| |
A
|
| |
—
|
| |
|
| |
5,000
|
| |
—
|
| |
|
| |
5,000
|
Convertible Note Discount
|
| |
—
|
| |
—
|
| |
(3,400)
|
| |
A
|
| |
—
|
| |
|
| |
(3,400)
|
| |
—
|
| |
|
| |
(3,400)
|
Convertible promissory note - related party
|
| |
960
|
| |
—
|
| |
—
|
| |
|
| |
(960)
|
| |
C
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Accrued interest
|
| |
—
|
| |
6,174
|
| |
—
|
| |
|
| |
(1,604)
|
| |
E
|
| |
4,570
|
| |
—
|
| |
|
| |
4,570
|
Accrued interest on promissory note - related party
|
| |
31
|
| |
—
|
| |
—
|
| |
|
| |
(31)
|
| |
C
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Accrued interest, related parties
|
| |
—
|
| |
1,438
|
| |
—
|
| |
|
| |
(962)
|
| |
E
|
| |
476
|
| |
—
|
| |
|
| |
476
|
Factoring liabilities
|
| |
—
|
| |
1,213
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,213
|
| |
—
|
| |
|
| |
1,213
|
Warrant liability
|
| |
—
|
| |
14,410
|
| |
3,000
|
| |
A
|
| |
(13,554)
|
| |
E
|
| |
3,856
|
| |
—
|
| |
|
| |
3,856
|
Current portion of contract liabilities
|
| |
—
|
| |
67
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
67
|
| |
—
|
| |
|
| |
67
|
Other
|
| |
—
|
| |
1,108
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,108
|
| |
—
|
| |
|
| |
1,108
|
Total current liabilities
|
| |
1,554
|
| |
79,277
|
| |
3,124
|
| |
|
| |
(37,796)
|
| |
|
| |
46,159
|
| |
—
|
| |
|
| |
46,159
|
Warrant liabilities – long term
|
| |
681
|
| |
—
|
| |
—
|
| |
|
| |
(681)
|
| |
F
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Lease Liabilities
|
| |
—
|
| |
515
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
515
|
| |
—
|
| |
|
| |
515
|
Contract liabilities
|
| |
—
|
| |
215
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
215
|
| |
—
|
| |
|
| |
215
|
Deferred tax liability
|
| |
—
|
| |
28
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
28
|
| |
—
|
| |
|
| |
28
|
|
| |
SEPA
(Historical)
|
| |
SANUWAVE
(Historical)
|
| |
Asset-Backed
Secured
Promissory
Notes
(Note 3)
|
| |
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Additional
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Additional
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
Total liabilities
|
| |
2,235
|
| |
80,035
|
| |
3,124
|
| |
|
| |
(38,477)
|
| |
|
| |
46,917
|
| |
—
|
| |
|
| |
46,917
|
Temporary Equity
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Class A common stock, $0.0001 par value, subject to possible
redemption; 1,304,259 shares at redemption value at June 30, 2023
|
| |
13,634
|
| |
—
|
| |
—
|
| |
|
| |
(13,634)
|
| |
G
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Stockholders' Equity (Deficit)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Preferred stock, $0.0001 par value; 1,000,000 shares
authorized; none issued and outstanding
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Preferred Stock, par value $0.001, 5,000,000 shares
authorized; 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D no shares issued and outstanding at June 30, 2023
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Class A Common stock, $0.0001 par value; 150,000,000 shares
authorized; no shares issued and outstanding (excluding 1,304,259 shares subject to possible redemption at June 30, 2023)
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Class B Common stock, $0.0001 par value; 20,000,000 shares
authorized; 4,510,375 shares issued and outstanding at June 30, 2023
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
G
|
| |
—
|
| |
—
|
| |
|
| |
—
|
Common Stock, par value $0.001, 2,500,000,000 shares
authorized; 561,637,651 issued and outstanding at June 30, 2023
|
| |
—
|
| |
562
|
| |
—
|
| |
|
| |
—
|
| |
E
|
| |
1
|
| |
—
|
| |
J
|
| |
1
|
|
| |
|
| |
|
| |
|
| |
|
| |
(561)
|
| |
H
|
| |
|
| |
|
| |
|
| |
|
Additional paid-in capital
|
| |
—
|
| |
153,264
|
| |
—
|
| |
|
| |
6,176
|
| |
C
|
| |
210,064
|
| |
(6,510)
|
| |
J
|
| |
203,554
|
|
| |
|
| |
|
| |
|
| |
|
| |
(1,150)
|
| |
D
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
38,228
|
| |
E
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
681
|
| |
F
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
13,634
|
| |
G
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
561
|
| |
H
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
(1,330)
|
| |
I
|
| |
|
| |
|
| |
|
| |
|
Accumulated deficit
|
| |
(1,330)
|
| |
(214,584)
|
| |
—
|
| |
|
| |
(1,350)
|
| |
D
|
| |
(218,890)
|
| |
—
|
| |
|
| |
(218,890)
|
|
| |
|
| |
|
| |
|
| |
|
| |
(1,423)
|
| |
E
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
1,330
|
| |
I
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
(1,533)
|
| |
A
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accumulated other comprehensive loss
|
| |
—
|
| |
(80)
|
| | | |
|
| |
—
|
| |
|
| |
(80)
|
| |
—
|
| |
|
| |
(80)
|
|
Total stockholders' deficit
|
| |
(1,330)
|
| |
(60,838)
|
| |
(1,533)
|
| |
|
| |
54,797
|
| |
|
| |
(8,904)
|
| |
(6,510)
|
| |
|
| |
(15,514)
|
Total liabilities, temporary equity and
stockholders' equity (deficit)
|
| |
$14,540
|
| |
$19,197
|
| |
$1,591
|
| |
|
| |
$2,685
|
| |
|
| |
$38,013
|
| |
$(6,510)
|
| |
|
| |
$31,503
|
|
| |
SEPA
(Historical)
|
| |
SANUWAVE
(Historical)
|
| |
Asset-Backed
Secured
Promissory
Notes
(Note 3)
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Additional
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Additional
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
Revenue, net
|
| |
$—
|
| |
$8,450
|
| |
$—
|
| |
$—
|
| |
|
| |
$8,450
|
| |
$—
|
| |
$8,450
|
Cost of revenue
|
| |
—
|
| |
2,464
|
| |
—
|
| |
—
|
| |
|
| |
2,464
|
| |
—
|
| |
2,464
|
Gross profit
|
| |
—
|
| |
5,986
|
| |
—
|
| |
—
|
| |
|
| |
5,986
|
| |
—
|
| |
5,986
|
Operating expenses
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Formation and operating costs
|
| |
461
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
461
|
| |
—
|
| |
461
|
Franchise tax
|
| |
84
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
84
|
| |
—
|
| |
84
|
General and administrative
|
| |
—
|
| |
3,997
|
| |
—
|
| |
—
|
| |
|
| |
3,997
|
| |
—
|
| |
3,997
|
Selling and marketing
|
| |
—
|
| |
2,390
|
| |
—
|
| |
—
|
| |
|
| |
2,390
|
| |
—
|
| |
2,390
|
Research and development
|
| |
—
|
| |
270
|
| |
—
|
| |
—
|
| |
|
| |
270
|
| |
—
|
| |
270
|
Depreciation and amortization
|
| |
—
|
| |
376
|
| |
—
|
| |
—
|
| |
|
| |
376
|
| |
—
|
| |
376
|
Total operating expenses
|
| |
545
|
| |
7,033
|
| |
—
|
| |
—
|
| |
|
| |
7,578
|
| |
—
|
| |
7,578
|
Loss from operations
|
| |
(545)
|
| |
(1,047)
|
| |
—
|
| |
—
|
| |
|
| |
(1,592)
|
| |
—
|
| |
(1,592)
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
—
|
| |
(7,218)
|
| |
—
|
| |
3,277
|
| |
FF
|
| |
(3,941)
|
| |
—
|
| |
(3,941)
|
Interest expense on promissory note - related party
|
| |
(29)
|
| |
(1,441)
|
| |
—
|
| |
1,374
|
| |
FF
|
| |
(96)
|
| |
—
|
| |
(96)
|
Earnings on trading securities
|
| |
11
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
11
|
| |
—
|
| |
11
|
Unrealized gain on investments held in Trust Account
|
| |
302
|
| |
—
|
| |
—
|
| |
(302)
|
| |
BB
|
| |
—
|
| |
—
|
| |
—
|
Gain on waiver of deferred underwriting commissions by
underwriter
|
| |
300
|
| |
—
|
| |
—
|
| |
(300)
|
| |
DD
|
| |
—
|
| |
—
|
| |
—
|
Change in fair value of derivative liabilities
|
| |
170
|
| |
(10,618)
|
| |
—
|
| |
9,682
|
| |
EE
|
| |
(766)
|
| |
—
|
| |
(766)
|
Other (expense) income
|
| |
—
|
| |
(18)
|
| |
—
|
| |
—
|
| |
|
| |
(18)
|
| |
—
|
| |
(18)
|
Total other income (expense), net
|
| |
754
|
| |
(19,295)
|
| |
—
|
| |
13,730
|
| | | |
(4,810)
|
| |
—
|
| |
(4,810)
|
|
Income (loss) before income taxes
|
| |
209
|
| |
(20,342)
|
| |
—
|
| |
13,730
|
| |
|
| |
(6,403)
|
| |
—
|
| |
(6,403)
|
Provision for income taxes
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
—
|
| |
—
|
Net income (loss)
|
| |
$209
|
| |
$(20,342)
|
| |
$—
|
| |
$13,730
|
| |
|
| |
$(6,403)
|
| |
$—
|
| |
$(6,403)
|
Other Comprehensive Loss
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
—
|
| |
(13)
|
| |
—
|
| |
—
|
| |
|
| |
(13)
|
| |
—
|
| |
(13)
|
Total Comprehensive (Loss)/Income
|
| |
$209
|
| |
$(20,355)
|
| |
$—
|
| |
$13,730
|
| |
|
| |
$(6,416)
|
| |
$—
|
| |
$(6,416)
|
Net income (loss) per share (Note 4):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding, Class A common stock
subject to possible redemption
|
| |
1,304,259
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net loss per share, Class A common stock
subject to possible redemption
|
| |
$(3.36)
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding, Class B common stock
|
| |
4,510,375
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net income per share, Class B common stock
|
| |
$1.02
|
| |
$—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding
|
| |
—
|
| |
579,178,811
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net loss per share
|
| |
—
|
| |
$(0.04)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding - basic and diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
11,815,457
|
| |
|
| |
11,192,710
|
Pro forma net loss per share - basic and diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$(0.54)
|
| |
|
| |
$(0.57)
|
|
| |
SEPA
(Historical)
|
| |
SANUWAVE
(Historical)
|
| |
Asset-Backed
Secured
Promissory
Notes
(Note 3)
|
| |
|
| |
Transaction
Accounting
Adjustments
(Assuming No
Additional
Redemptions)
|
| |
|
| |
Pro Forma
Combined
(Assuming No
Additional
Redemptions)
|
| |
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
|
| |
Pro Forma
Combined
(Assuming
Maximum
Redemptions)
|
Revenue, net
|
| |
$—
|
| |
$16,742
|
| |
$—
|
| |
|
| |
$—
|
| |
|
| |
$16,742
|
| |
$—
|
| |
$16,742
|
Cost of revenue
|
| |
—
|
| |
4,331
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
4,331
|
| |
—
|
| |
4,331
|
Gross profit
|
| |
—
|
| |
12,411
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
12,411
|
| |
—
|
| |
12,411
|
Operating expenses
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Formation and operating costs
|
| |
974
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
974
|
| |
—
|
| |
974
|
Franchise tax
|
| |
201
|
| |
—
|
| |
—
|
| |
|
| |
|
| |
|
| |
201
|
| |
—
|
| |
201
|
General and administrative
|
| |
—
|
| |
12,556
|
| |
—
|
| |
|
| |
1,350
|
| |
CC
|
| |
13,906
|
| |
—
|
| |
13,906
|
Selling and marketing
|
| |
—
|
| |
7,474
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
7,474
|
| |
—
|
| |
7,474
|
Research and development
|
| |
—
|
| |
567
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
567
|
| |
—
|
| |
567
|
Depreciation and amortization
|
| |
—
|
| |
766
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
766
|
| |
—
|
| |
766
|
Total operating expenses
|
| |
1,174
|
| |
21,363
|
| |
—
|
| |
|
| |
1,350
|
| |
|
| |
23,887
|
| |
—
|
| |
23,887
|
Loss from operations
|
| |
(1,174)
|
| |
(8,952)
|
| |
—
|
| |
|
| |
(1,350)
|
| |
|
| |
(11,476)
|
| |
—
|
| |
(11,476)
|
Other income (expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
—
|
| |
(12,771)
|
| |
(1,533)
|
| |
AA
|
| |
2,098
|
| |
FF
|
| |
(12,206)
|
| |
—
|
| |
(12,206)
|
Interest expense on promissory note - related party
|
| |
(2)
|
| |
(1,361)
|
| |
—
|
| |
|
| |
1,150
|
| |
FF
|
| |
(213)
|
| |
—
|
| |
(213)
|
Realized gain on investments held in Trust Account
|
| |
2,753
|
| |
—
|
| |
—
|
| |
|
| |
(2,753)
|
| |
BB
|
| |
—
|
| |
—
|
| |
—
|
Loss on issuance of debt
|
| |
—
|
| |
(3,434)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
(3,434)
|
| |
—
|
| |
(3,434)
|
Gain/(loss) on extinguishment of debt
|
| |
—
|
| |
(418)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
(418)
|
| |
—
|
| |
(418)
|
Change in fair value of derivative liabilities
|
| |
6,643
|
| |
16,654
|
| |
—
|
| |
|
| |
(7,446)
|
| |
EE
|
| |
15,851
|
| |
—
|
| |
15,851
|
Loss on foreign currency exchange
|
| |
—
|
| |
(9)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
(9)
|
| |
—
|
| |
(9)
|
Total other income (expense), net
|
| |
9,393
|
| |
(1,339)
|
| |
(1,533)
|
| |
|
| |
(6,950)
|
| |
|
| |
(429)
|
| |
—
|
| |
(429)
|
Income (loss) before income taxes
|
| |
8,219
|
| |
(10,291)
|
| |
(1,533)
|
| |
|
| |
(8,300)
|
| |
|
| |
(11,905)
|
| |
—
|
| |
(11,905)
|
Provision for income taxes
|
| |
(507)
|
| |
(2)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
(509)
|
| |
—
|
| |
(509)
|
Net income (loss)
|
| |
$7,713
|
| |
$(10,293)
|
| |
$(1,533)
|
| |
|
| |
$(8,300)
|
| |
|
| |
$(12,414)
|
| |
$—
|
| |
$(12,414)
|
Other Comprehensive Loss
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
—
|
| |
6
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
6
|
| |
—
|
| |
6
|
Total Comprehensive (Loss)/Income
|
| |
$7,713
|
| |
$(10,287)
|
| |
$(1,533)
|
| |
|
| |
$(8,300)
|
| |
|
| |
$(12,408)
|
| |
$—
|
| |
$(12,408)
|
Net loss per share (Note 4):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding, Class A common stock
subject to possible redemption
|
| |
17,537,090
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net income per share, Class A common
stock subject to possible redemption
|
| |
$0.38
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding, Class B common stock
|
| |
4,510,375
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
| |
|
| |
—
|
Basic and diluted net income per share, Class B common
stock
|
| |
$0.25
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
$—
|
| |
|
| |
$—
|
Weighted average shares outstanding
|
| |
—
|
| |
549,470,787
|
| |
|
| |
|
| |
|
| |
|
| |
11,815,457
|
| |
|
| |
11,192,710
|
Basic and diluted net loss per share
|
| |
$—
|
| |
$(0.02)
|
| |
|
| |
|
| |
|
| |
|
| |
$(1.05)
|
| |
|
| |
$(1.11)
|
A.
|
Represents total net proceeds of approximately $3 million, reflecting the principal of $5.0 million, inclusive of the
convertible note discount associated with the warrant liability pursuant to the Side Letter of approximately $0.4 million, against the Asset-Backed Secured Promissory note referenced above, of which $1.5 million was received by SANUWAVE
as of June 30, 2023, including $0.85 million in restricted cash, and $1.5 million was received in July 2023. The adjustment also reflects (i) the conversion of SANUWAVE’s June 30, 2023 Bridge Notes Advance balance into the Asset-Backed
Secured Promissory Notes, (ii) the full amortization of the original issue discount noted above, into the accumulated deficit of SANUWAVE, and (iii) the recognition of the warrant liability pursuant to the Side Letter.
|
B.
|
Reflects the reclassification of marketable securities held in the Trust Account to cash and cash equivalents.
|
C.
|
Represents (i) estimated cash proceeds of $5,184,880 in connection with the assumed purchase of 518,488 shares of Class A
Common Stock at a purchase price of $10.00 per share, pursuant to the PIPE
|
D.
|
Represents estimated total transaction costs of $2,500,000 in relation to the Merger. Certain estimated transaction costs of
$1,350,000 comprising $700,000 of legal services, $200,000 of accounting and auditing services, and $450,000 of advisory, printer fees and other services related to the Merger incurred by SEPA are recorded to SEPA’s accumulated deficit as
of June 30, 2023. SANUWAVE expects to incur transaction costs of approximately $1,150,000, comprising $600,000 of legal, $100,000 of accounting and auditing services, and $450,000 of advisory, printer fees and other services and relate to
the equity issuance which are recognized in additional paid-in capital due to the treatment of the accounting for a reverse recapitalization. SEPA and SANUWAVE continue to evaluate eligible costs that may need to be assumed pursuant to
the Merger.
|
E.
|
Reflects (i) the elimination of the SANUWAVE derivative warrant liabilities in the amount of $13.6 million and convertible
promissory notes and accrued interest assumed by SEPA in the amount of $23.3 million and converted at Closing into 7,793,000 shares of Class A Common Stock pursuant to the Merger Agreement.
|
F.
|
Reflects (i) the elimination of the SEPA Public Warrant and SEPA Private Placement Warrant liabilities in the amount of $0.68
million, each of which are not exercisable to purchase shares of Class A Common Stock and instead, effective as of immediately prior to the Effective Time of the Merger, are assumed to be automatically converted solely into the right to
receive 450,336 and 400,000 shares of Class A Common Stock, respectively, pursuant to the Merger Agreement.
|
G.
|
Reflects (i) the reclassification to permanent equity of approximately $13.6 million of Class A Common Stock subject to
possible redemption pursuant to the Merger Agreement, and (ii) conversion of Class B Common Stock to Class A Common Stock, pursuant to the Class B Charter Amendment to be entered into prior to Closing, amending the Class B Common Stock
conversion ratio to 0.277 shares of Class A Common Stock.
|
H.
|
Represents recapitalization of SANUWAVE’s outstanding equity as a result of the reverse recapitalization and the issuance of
SANUWAVE Common Stock to SANUWAVE equity as consideration for the reverse recapitalization.
|
I.
|
Reflects the reclassification of SEPA’s historical accumulated deficit into additional paid-in capital as part of the reverse
recapitalization.
|
J.
|
Reflects pro forma presentation in which 622,747 shares of Class A Common Stock are redeemed in connection with the Merger, as
SEPA stockholders have agreed not to redeem an aggregate of 681,512 outstanding Public Shares of Class A Common Stock pursuant to the Voting and Non-Redemption Agreements. The aggregate payments to the redeeming public stockholders will
be approximately $6.5 million (assuming a redemption price of $10.45 per share), reducing Class A Common Stock and additional paid-in capital. Pursuant to the Voting and Non-Redemption Agreements, the SEPA Stockholders party thereto are
entitled to receive shares of Class A Common Stock in accordance with the formula set forth in the Voting and Non-Redemption Agreements if the price of the shares of Class A Common Stock
|
AA.
|
Reflects interest expense on the SANUWAVE Asset-Backed Secured Promissory Note financing as discussed above.
|
BB.
|
Reflects elimination of investment income on the Trust Account.
|
CC.
|
Reflects the estimated transaction costs of SEPA of $1,350,000 as if incurred on January 1, 2022, the date the Merger occurred
for the purposes of the unaudited pro forma condensed combined statement of operations. This is a non-recurring item.
|
DD.
|
On June 30, 2023, SEPA’s underwriter agreed to waive its rights to its portion of the fee payable by SEPA for deferred
underwriting commissions, with respect to any potential business combination of SEPA. This adjustment eliminates the gain recognized upon forgiveness and is a non-recurring item.
|
EE.
|
Reflects (i) the elimination of the change in fair value of the SANUWAVE derivative warrant liabilities assumed by SEPA and
converted into SEPA warrants at Closing pursuant to the Merger Agreement, and (ii) the elimination of the change in fair value of the SEPA Public Warrants and SEPA Private Placement Warrants, each of which are not exercisable to purchase
shares of Class A Common Stock and instead, effective as of immediately prior to the Effective Time of the Merger, are assumed to be automatically converted solely into the right to receive 450,336 and 400,000 shares of Class A Common
Stock, respectively, pursuant to the Merger Agreement.
|
FF.
|
Reflects (i) the elimination of interest expense on SEPA’s Sponsor promissory note, pursuant to the Sponsor Debt Conversion
Agreement effective upon the Closing, and (ii) the elimination of SANUWAVE’s convertible promissory note interest, assumed by SEPA and converted at the Closing, pursuant to the Merger Agreement.
|
|
| |
For the Six Months Ended
June 30, 2023
|
| |
For the Year Ended
December 31, 2022
|
||||||
|
| |
Assuming No
Additional
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
| |
Assuming No
Additional
Redemptions
|
| |
Assuming
Maximum
Redemptions
|
Pro forma net loss
|
| |
$(6,403)
|
| |
$(6,403)
|
| |
$(12,414)
|
| |
$(12,414)
|
Weighted average shares outstanding of common stock(1)
|
| |
11,815,457
|
| |
11,192,710
|
| |
11,815,457
|
| |
11,192,710
|
Net loss per share - basic and diluted
|
| |
$(0.54)
|
| |
$(0.57)
|
| |
$(1.05)
|
| |
$(1.11)
|
Excluded securities:(2)
|
| |
|
| |
|
| |
|
| |
|
SANUWAVE Options
|
| |
19,136
|
| |
19,136
|
| |
21,246
|
| |
21,246
|
Public Warrants(3)
|
| |
450,336
|
| |
450,336
|
| |
450,336
|
| |
450,336
|
Private Warrants(3)
|
| |
400,000
|
| |
400,000
|
| |
400,000
|
| |
400,000
|
(1)
|
Note that the maximum redemption scenario results in the reduction of 622,747 shares due to assumed
redemption of 622,747 shares of Class A Common Stock because 681,512 shares of Class A Common Stock are not being redeemed, pursuant to the Voting and Non-Redemption Agreements.
|
(2)
|
The potentially dilutive outstanding securities were excluded from the computation of pro
forma net loss per share, basic and diluted, because their effect would have been anti-dilutive, issuance or vesting of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the
periods presented.
|
(3)
|
Includes 450,336 SEPA Public Warrants and 400,000 SEPA Private Placement Warrants to be issued
upon conversion pursuant to the Amendment Number One to the Warrant Agreement, at Closing.
|
Name
|
| |
Age
|
| |
Position
|
M. Blair Garrou
|
| |
51
|
| |
Chairman
|
R. Andrew White
|
| |
51
|
| |
President and Chief Executive Officer, and Director
|
Winston Gilpin
|
| |
66
|
| |
Chief Financial Officer and Secretary
|
Christy Cardenas
|
| |
37
|
| |
Vice President and Chief Strategy Officer
|
Jay Gardner
|
| |
67
|
| |
Director
|
Mia Mends
|
| |
48
|
| |
Director
|
Carolyn Rodz
|
| |
43
|
| |
Director
|
•
|
the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other
independent registered public accounting firm engaged by SEPA;
|
•
|
pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered
public accounting firm engaged by SEPA, and establishing pre-approval policies and procedures;
|
•
|
reviewing and discussing with the independent auditors all relationships the auditors have with SEPA in order to evaluate their
continued independence;
|
•
|
setting clear hiring policies for employees or former employees of the independent auditors;
|
•
|
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
•
|
obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s
internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities
within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
|
•
|
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated by the SEC prior to SEPA entering into such transaction; and
|
•
|
reviewing with management, the independent auditors, and SEPA’s legal advisors, as appropriate, any legal, regulatory or
compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding SEPA’s financial statements or accounting policies and any
significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
|
•
|
reviewing and approving on an annual basis the corporate goals and objectives relevant to SEPA’s Chief Executive Officer’s
compensation, evaluating SEPA’s Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of SEPA’s Chief Executive Officer based on such evaluation;
|
•
|
reviewing and approving on an annual basis the compensation of all of SEPA’s other officers;
|
•
|
reviewing on an annual basis SEPA’s executive compensation policies and plans;
|
•
|
implementing and administering SEPA’s incentive compensation equity-based remuneration plans;
|
•
|
assisting management in complying with SEPA’s proxy statement and annual report disclosure requirements;
|
•
|
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for SEPA’s
officers and employees;
|
•
|
if required, producing a report on executive compensation to be included in SEPA’s annual proxy statement; and
|
•
|
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
•
|
dermaPACE®: Used to treat Diabetic Foot Ulcers and other chronic wounds
|
•
|
orthoPACE®: Used to treat acute musculoskeletal conditions
|
•
|
Profile: Used to provide therapeutic treatment of musculoskeletal conditions
|
•
|
Growth and expansion of sales across the United States;
|
•
|
Improvement of the functionality and ease-of-use for both medical personnel and patients;
|
•
|
Finding antibacterial and anti-biofilm solutions to replace the saline solution used to produce the mist used by this system to
conduct the ultrasound toward its target, which we believe could make the system more effective in treating bacterial infections associated with skin conditions; and
|
•
|
Design of new applicators capable of treating large skin conditions, for improved efficiency in such cases.
|
•
|
Acute and chronic wound conditions, including diabetic foot ulcers, venous and arterial ulcers, pressure sores, burns and other
skin eruption conditions;
|
•
|
Orthopedic applications, such as eliminating chronic pain in joints from trauma, arthritis or tendons/ligaments inflammation or
tendinopathies, speeding the healing of fractures (including nonunion or delayed-union conditions), improving bone density in osteoporosis, fusing bones in the extremities and spine, and other potential sports injury applications;
|
•
|
Plastic/cosmetic applications such as cellulite smoothing, graft and transplant acceptance, skin tightening, scarring and other
potential aesthetic uses; and
|
•
|
Cardiovascular applications for removing plaque due to atherosclerosis, eliminating occlusions and blood clots, and improving
heart muscle and cardiac valves performance.
|
•
|
Commercialize and support the domestic distribution of our UltraMIST and PACE systems to treat wounds;
|
•
|
Reduce and normalize operating costs to support growth;
|
•
|
Develop and commercialize our noninvasive biological response activating devices in the regenerative medicine area for the
treatment of skin, musculoskeletal tissue, and vascular structures; and
|
•
|
Support the global distribution of our products.
|
•
|
Class I: general controls, such as labeling and adherence to quality system regulations;
|
•
|
Class II: special controls, pre-market notification (510(k)), specific controls such as performance standards, patient
registries, and post market surveillance, and additional controls such as labeling and adherence to quality system regulations; and
|
•
|
Class III: special controls and approval of a pre-market approval (“PMA”) application.
|
•
|
the FDA quality systems regulation, which governs, among other things, how manufacturers design, test, manufacture, exercise
quality control over, and document manufacturing of their products;
|
•
|
labeling and claims regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other
restrictions on labeling;
|
•
|
the Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experiences associated with use
of the product; and
|
•
|
post market surveillance, including documentation of clinical experience and follow-on, confirmatory studies.
|
•
|
Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.
|
•
|
Do not reflect all changes in working capital needs.
|
•
|
Do not reflect the interest expense, or the amount necessary to service outstanding debt.
|
|
| |
Three months ended
June 30,
|
| |
Six months ended
June 30,
|
||||||
(in thousands)
|
| |
2023
|
| |
2022
|
| |
2023
|
| |
2022
|
Net (Loss)/Income
|
| |
$(7,262)
|
| |
$1,644
|
| |
$(20,342)
|
| |
$(3,457)
|
Non-GAAP Adjustments:
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
4,381
|
| |
2,959
|
| |
8,659
|
| |
6,152
|
Depreciation and amortization
|
| |
257
|
| |
255
|
| |
515
|
| |
446
|
EBITDA
|
| |
(2,624)
|
| |
4,858
|
| |
(11,168)
|
| |
3,141
|
Non-GAAP Adjustments for Adjusted EBITDA:
|
| |
|
| |
|
| |
|
| |
|
Change in fair value of derivative liabilities
|
| |
3,821
|
| |
(7,861)
|
| |
10,618
|
| |
(11,343)
|
Other non-cash or one-time charges:
|
| |
|
| |
|
| |
|
| |
|
Release of historical accrued expenses
|
| |
(1,250)
|
| |
—
|
| |
(1,250)
|
| |
—
|
Shares for Services
|
| |
224
|
| |
888
|
| |
224
|
| |
888
|
Loss on issuance of debt
|
| |
—
|
| |
—
|
| |
—
|
| |
3,434
|
Loss on extinguishment of debt
|
| |
—
|
| |
211
|
| |
—
|
| |
211
|
Adjusted EBITDA
|
| |
$171
|
| |
$(1,904)
|
| |
$(1,576)
|
| |
$(3,669)
|
|
| |
For the Three Months Ended
|
| |
For the Six Months Ended
|
||||||||||||||||||
|
| |
June 30,
|
| |
Change
|
| |
June 30,
|
| |
Change
|
||||||||||||
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total Revenue
|
| |
$4,675
|
| |
$3,882
|
| |
$793
|
| |
20%
|
| |
$8,450
|
| |
$7,077
|
| |
$1,373
|
| |
19%
|
Cost of Revenues
|
| |
1,202
|
| |
1,096
|
| |
106
|
| |
10%
|
| |
2,464
|
| |
1,986
|
| |
478
|
| |
24%
|
Gross Margin
|
| |
3,473
|
| |
2,786
|
| |
687
|
| |
25%
|
| |
5,986
|
| |
5,091
|
| |
895
|
| |
18%
|
Operating Expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
General and administrative
|
| |
1,238
|
| |
3,781
|
| |
(2,543)
|
| |
-67%
|
| |
3,997
|
| |
5,986
|
| |
(1,989)
|
| |
-33%
|
Selling and marketing
|
| |
978
|
| |
1,672
|
| |
(694)
|
| |
-42%
|
| |
2,390
|
| |
3,387
|
| |
(997)
|
| |
-29%
|
Research and development
|
| |
139
|
| |
171
|
| |
(32)
|
| |
-19%
|
| |
270
|
| |
337
|
| |
(67)
|
| |
-20%
|
|
| |
For the Three Months Ended
|
| |
For the Six Months Ended
|
||||||||||||||||||
|
| |
June 30,
|
| |
Change
|
| |
June 30,
|
| |
Change
|
||||||||||||
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
Operating Income (loss)
|
| |
187
|
| |
210
|
| |
(23)
|
| |
-11%
|
| |
376
|
| |
386
|
| |
(10)
|
| |
-3%
|
Operating Loss
|
| |
931
|
| |
(3,048)
|
| |
3,979
|
| |
-131%
|
| |
(1,047)
|
| |
(5,005)
|
| |
3,958
|
| |
-79%
|
Other Income (Expense), net
|
| |
(8,193)
|
| |
4,692
|
| |
(12,885)
|
| |
-275%
|
| |
(19,295)
|
| |
1,548
|
| |
(20,843)
|
| |
-1,346%
|
Net (Loss) Income
|
| |
$(7,262)
|
| |
$1,644
|
| |
(8,906)
|
| |
-542%
|
| |
$(20,342)
|
| |
$(3,457)
|
| |
(16,885)
|
| |
488%
|
|
| |
For the
Three Months Ended
June 30,
|
| |
Change
|
| |
For the
Six Months Ended
June 30,
|
| |
Change
|
||||||||||||
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
Interest expense
|
| |
$(4,381)
|
| |
$(2,959)
|
| |
$(1,422)
|
| |
48%
|
| |
$(8,659)
|
| |
$(6,152)
|
| |
$(2,507)
|
| |
41%
|
Change in fair value of derivatives
|
| |
(3,821)
|
| |
7,861
|
| |
(11,682)
|
| |
-149%
|
| |
(10,618)
|
| |
11,343
|
| |
(21,961)
|
| |
-194%
|
Loss on issuance of debt
|
| |
—
|
| |
—
|
| |
—
|
| |
nm
|
| |
—
|
| |
(3,434)
|
| |
3,434
|
| |
nm
|
|
| |
For the
Three Months Ended
June 30,
|
| |
Change
|
| |
For the
Six Months Ended
June 30,
|
| |
Change
|
||||||||||||
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
| |
2023
|
| |
2022
|
| |
$
|
| |
%
|
Loss on extinguishment of debt
|
| |
—
|
| |
(211)
|
| |
211
|
| |
nm
|
| |
—
|
| |
(211)
|
| |
211
|
| |
nm
|
Other expense
|
| |
9
|
| |
1
|
| |
8
|
| |
nm
|
| |
(18)
|
| |
2
|
| |
(20)
|
| |
nm
|
Other (expense)/income, net
|
| |
$(8,193)
|
| |
$4,692
|
| |
$(12,885)
|
| |
-275%
|
| |
$(19,295)
|
| |
$1,548
|
| |
$(20,843)
|
| |
-1,346%
|
|
| |
For the Years Ended
December 31,
|
| |
Change
|
||||||
(in thousands)
|
| |
2022
|
| |
2021
|
| |
$
|
| |
%
|
Revenue
|
| |
16,742
|
| |
$13,010
|
| |
$3,732
|
| |
29%
|
Cost of revenue
|
| |
4,331
|
| |
4,986
|
| |
(655)
|
| |
-13%
|
Gross margin
|
| |
12,411
|
| |
8,024
|
| |
4,387
|
| |
55%
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
General and administrative
|
| |
12,556
|
| |
11,690
|
| |
866
|
| |
7%
|
Selling and marketing
|
| |
7,474
|
| |
8,591
|
| |
(1,117)
|
| |
-13%
|
Research and development
|
| |
567
|
| |
1,101
|
| |
(534)
|
| |
-49%
|
Depreciation and amortization
|
| |
766
|
| |
784
|
| |
(18)
|
| |
-2%
|
Operating loss
|
| |
(8,952)
|
| |
(14,142)
|
| |
5,190
|
| |
-37%
|
Other income (expense), net
|
| |
(1,339)
|
| |
(13,089)
|
| |
11,750
|
| |
-90%
|
Income tax expense
|
| |
2
|
| |
28
|
| |
(26)
|
| |
-93%
|
Net loss
|
| |
$(10,293)
|
| |
$(27,259)
|
| |
$16,966
|
| |
-62%
|
|
| |
2022
|
| |
2021
|
| |
$
|
| |
%
|
Interest expense
|
| |
$(14,132)
|
| |
$(7,095)
|
| |
$(7,037)
|
| |
99%
|
Change in fair value of derivatives
|
| |
16,654
|
| |
(2,622)
|
| |
19,276
|
| |
nm
|
Loss on issuance of debt
|
| |
(3,434)
|
| |
(3,572)
|
| |
138
|
| |
-4%
|
Gain/(loss) on extinguishment of debt
|
| |
(418)
|
| |
204
|
| |
(622)
|
| |
nm
|
Loss on foreign currency exchange
|
| |
(9)
|
| |
(4)
|
| |
(5)
|
| |
125%
|
Other expense, net
|
| |
$(1,339)
|
| |
$(13,089)
|
| |
$11,750
|
| |
-90%
|
|
| |
For the six months ended
June 30,
|
| |
For the years ended
December 31,
|
||||||
(in thousands)
|
| |
2023
|
| |
2022
|
| |
2022
|
| |
2021
|
Cash flows used by operating activities
|
| |
$(1,215)
|
| |
$(5,201)
|
| |
$(17,169)
|
| |
$(6,409)
|
Cash flows (used by) provided by investing activities
|
| |
$(169)
|
| |
$948
|
| |
$332
|
| |
$(529)
|
Cash flows provided by financing activities
|
| |
$1,426
|
| |
$5,104
|
| |
$17,384
|
| |
$5,121
|
Name
|
| |
Age
|
| |
Position Held
|
Morgan Frank
|
| |
51
|
| |
Director, Chairman of the Board, Chief Executive Officer
|
Toni Rinow
|
| |
58
|
| |
Chief Financial Officer
|
Andrew Walko
|
| |
39
|
| |
President
|
Kevin A. Richardson, II
|
| |
54
|
| |
Director, Chief Strategy Officer
|
Peter Stegagno
|
| |
63
|
| |
Chief Operating Officer
|
Iulian Cioanta, PhD
|
| |
60
|
| |
Chief Science and Technology Officer
|
Jeff Blizard
|
| |
54
|
| |
Director
|
Ian Miller
|
| |
47
|
| |
Director
|
Chantell Preston
|
| |
49
|
| |
Director
|
A. Michael Stolarski
|
| |
52
|
| |
Director
|
James Tyler
|
| |
65
|
| |
Director
|
•
|
appointing, compensating, retaining, evaluating, terminating and overseeing the Company’s independent registered public
accounting firm;
|
•
|
discussing with the Company’s independent registered public accounting firm their independence from management;
|
•
|
reviewing, with the Company’s independent registered public accounting firm, the scope and results of their audit;
|
•
|
approving all audit and permissible non-audit services to be performed by the Company’s independent registered public
accounting firm;
|
•
|
overseeing the financial reporting process and discussing with management and the Company’s independent registered public
accounting firm the quarterly and annual financial statements that the Combined Company files with the SEC;
|
•
|
overseeing the Company’s financial and accounting controls and compliance with legal and regulatory requirements;
|
•
|
reviewing the Company’s policies on risk assessment and risk management;
|
•
|
reviewing related person transactions; and
|
•
|
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal
controls or auditing matters.
|
•
|
reviewing and approving the corporate goals and objectives, evaluating the performance of and reviewing and approving the
compensation of the Combined Company’s Chief Executive Officer, and the Chief Executive Officer may not be present during voting or deliberations on his or her compensation;
|
•
|
overseeing an evaluation of the performance of and reviewing and setting or making recommendations to the Combined Company
Board regarding the compensation of the Combined Company’s other executive officers;
|
•
|
reviewing and approving or making recommendations to the Combined Company Board regarding the Combined Company’s incentive
compensation and equity-based plans, policies and programs;
|
•
|
reviewing and approving all employment agreement and severance arrangements for the Combined Company’s executive officers;
|
•
|
making recommendations to the Combined Company Board regarding the compensation of the Combined Company’s directors; and
|
•
|
retaining and overseeing any compensation consultants.
|
•
|
identifying individuals qualified to become members of the Combined Company Board, consistent with criteria approved by the
Combined Company Board;
|
•
|
overseeing succession planning for the Combined Company’s Chief Executive Officer and other executive officers;
|
•
|
periodically reviewing the Combined Company Board’s leadership structure and recommending any proposed changes to the Combined
Company Board;
|
•
|
overseeing an annual evaluation of the effectiveness of the Combined Company Board and its committees; and
|
•
|
developing and recommending to the Combined Company Board a set of corporate governance guidelines.
|
•
|
Kevin A. Richardson, II, former Chief Executive Officer;
|
•
|
John Schlechtweg, former Chief Revenue Officer; and
|
•
|
Lisa Sundstrom, Chief Talent Officer and former Chief Financial Officer.
|
Name and Position
|
| |
Year
|
| |
Salary(1)
|
| |
All other
compensation(2)
|
| |
Total
|
Kevin A. Richardson, II,
former Chief Executive Officer(3)
|
| |
2022
|
| |
430,583
|
| |
175,000
|
| |
605,583
|
|
2021
|
| |
350,000
|
| |
49,310
|
| |
399,310
|
||
John Schlechtweg,
former Chief Revenue Officer
|
| |
2022
|
| |
317,500
|
| |
90,483
|
| |
407,983
|
|
2021
|
| |
—
|
| |
—
|
| |
—
|
||
Lisa Sundstrom,
Chief Talent Officer
|
| |
2022
|
| |
208,333
|
| |
82,735
|
| |
291,068
|
|
2021
|
| |
200,000
|
| |
52,023
|
| |
252,023
|
(1)
|
Amounts reflect the following:
|
(i)
|
the salary guaranteed by Mr. Richardson’s employment agreement with SANUWAVE and
|
(ii)
|
an aggregate amount of $60,000 for fees earned or paid in cash for Mr. Richardson’s service as a director in fiscal 2022.
|
(2)
|
Includes bonus, health, dental, life and disability insurance premiums and 401(k) matching contributions.
|
(3)
|
Mr. Richardson stepped down as Chief Executive Officer on May 23, 2023 to serve as SANUWAVE’s Chief Strategy Officer.
|
Name
|
| |
Number of
securities
underlying
unexercised
options
exercisable
|
| |
Number of
securities
underlying
options
unexercisable
|
| |
Equity incentive
plan awards
number of
securities
underlying
unexercised
unearned
options
|
| |
Exercise
price
($)
|
| |
Expiration
Date
|
Kevin A. Richardson, former Chief Executive Officer
|
| |
115,000
|
| |
—
|
| |
—
|
| |
$0.35
|
| |
2/21/2023
|
|
| |
452,381
|
| |
—
|
| |
—
|
| |
$0.11
|
| |
10/1/2025
|
|
| |
297,619
|
| |
—
|
| |
—
|
| |
$0.06
|
| |
10/1/2025
|
|
| |
700,000
|
| |
—
|
| |
—
|
| |
$0.04
|
| |
6/16/2026
|
|
| |
594,300
|
| |
—
|
| |
—
|
| |
$0.18
|
| |
11/9/2026
|
|
| |
900,000
|
| |
—
|
| |
—
|
| |
$0.11
|
| |
6/14/2027
|
|
| |
1,100,000
|
| |
—
|
| |
—
|
| |
$0.21
|
| |
9/20/2028
|
|
| |
50,000
|
| |
—
|
| |
—
|
| |
$0.15
|
| |
8/26/2029
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lisa E. Sundstrom, Chief Talent Officer
|
| |
65,000
|
| |
—
|
| |
—
|
| |
$0.35
|
| |
2/21/2023
|
|
| |
25,000
|
| |
—
|
| |
—
|
| |
$0.55
|
| |
5/7/2024
|
|
| |
301,587
|
| |
—
|
| |
—
|
| |
$0.11
|
| |
10/1/2025
|
|
| |
198,413
|
| |
—
|
| |
—
|
| |
$0.06
|
| |
10/1/2025
|
|
| |
500,000
|
| |
—
|
| |
—
|
| |
$0.04
|
| |
6/16/2026
|
|
| |
424,500
|
| |
—
|
| |
—
|
| |
$0.18
|
| |
11/9/2026
|
|
| |
60,000
|
| |
—
|
| |
—
|
| |
$0.11
|
| |
6/14/2027
|
|
| |
750,000
|
| |
—
|
| |
—
|
| |
$0.21
|
| |
9/20/2028
|
|
| |
50,000
|
| |
—
|
| |
—
|
| |
$0.15
|
| |
8/26/2029
|
Director
|
| |
Fee Earned or
paid in cash
(in thousands)
|
Morgan Frank
|
| |
$43
|
A. Michael Stolarski
|
| |
$70
|
Jeff Blizzard
|
| |
$63
|
Ian Miller
|
| |
$63
|
James Tyler
|
| |
$63
|
•
|
SANUWAVE has been or is to be a participant;
|
•
|
the amount involved exceeded or exceeds the lesser of (a) $120,000 or (b) one percent of the average of SANUWAVE’s total assets
at year-end for the fiscal years ended December 31, 2022 and 2021; and
|
•
|
any of SANUWAVE’s directors, executive officers or holders of more than 5% of its capital stock prior to the Business
Combination, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
|
•
|
any person who is, or at any time during the applicable period was, one of the Combined Company’s officers or one of the
Combined Company’s directors;
|
•
|
any person who is known by the Combined Company to be the beneficial owner of more than five percent (5%) of its voting stock;
|
•
|
any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse,
sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer or a beneficial owner of more than five percent (5%) of its voting stock, and any person (other than a tenant or employee)
sharing the household of such director, officer or beneficial owner of more than five percent (5%) of its voting stock; and
|
•
|
any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position
or in which such person has a ten percent (10%) or greater beneficial ownership interest.
|
•
|
any person who is, or at any time during the applicable period was, one of the Company’s executive officers or one of the
Company’s directors;
|
•
|
any person who is known by the Combined Company to be the beneficial owner of more than 5% of the Company’s voting shares;
|
•
|
any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of the Company’s voting shares, and any person (other than a tenant
or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of the Company’s voting shares; and
|
•
|
any firm, corporation or other entity in which any of the foregoing persons is a partner or principal, or in a similar
position, or in which such person has a 10% or greater beneficial ownership interest.
|
•
|
each person who is known to be the beneficial owner of more than 5% of SEPA’s Common Stock and is expected to be the beneficial
owner of more than 5% of shares of the Common Stock of the Combined Company;
|
•
|
each of SEPA’s current executive officers and directors;
|
•
|
each person who is expected to become an executive officer or director of the Combined Company; and
|
•
|
all executive officers and directors of SEPA as a group pre-Business Combination, and all executive officers and directors of
the Combined Company as a group post-Business Combination.
|
1.
|
a “No Redemption” scenario where (i) no public SEPA Stockholders exercise their Redemption Rights in connection with the
Business Combination, (ii) SEPA issues 7,793,000 shares of Class A Common Stock as the Merger Consideration pursuant to the Merger Agreement, (iii) the outstanding Class B Common Stock converts into Class A Common Stock at a ratio of
0.277, (iv) the outstanding SEPA Public Warrants convert into 450,336 shares of Class A Common Stock, (v) the outstanding SEPA Private Placement Warrants convert into 400,000 shares of Class A Common Stock, (vi) no SANUWAVE Warrants or
SANUWAVE Convertible Notes are assumed by SEPA at the Closing, (vii) SEPA issues 100,000 shares of Class A Common Stock to the Sponsor pursuant to the Sponsor Debt Conversion Agreement, (viii) SEPA issues 518,488 shares of Class A Common
Stock in the PIPE Investment at $10.00 per share and (ix) no shares of Class A Common Stock are issued pursuant to the Voting and Non-Redemption Agreements; and
|
2.
|
a “Maximum Redemption” scenario where (i) 622,747 of SEPA’s outstanding Public Shares are redeemed in connection with the
Business Combination, (ii) SEPA issues 7,793,000 shares of Class A Common Stock as the Merger Consideration pursuant to the Merger Agreement, (iii) the outstanding Class B Common Stock converts into Class A Common Stock at a ratio of
0.277, (iv) the outstanding SEPA Public Warrants convert into 450,336 shares of Class A Common Stock, (v) the outstanding SEPA Private Placement Warrants convert into 400,000 shares of Class A Common Stock, (vi) no SANUWAVE Warrants or
SANUWAVE Convertible Notes are assumed by SEPA at the Closing, (vii) SEPA issues 100,000 shares of Class A Common Stock to the Sponsor pursuant to the Sponsor Debt Conversion Agreement, (viii) SEPA issues 518,488 shares of Class A Common
Stock in the PIPE Investment at $10.00 per share and (ix) no shares of Class A Common Stock are issued pursuant to the Voting and Non-Redemption Agreements.
|
|
| |
|
| |
|
| |
Post-Business Combination
|
|||||||||
|
| |
Prior to the
Transactions
|
| |
Assuming
No Redemption
|
| |
Assuming
Maximum Redemption
|
|||||||||
Name and Address of
Beneficial Owners(1)
|
| |
Number of
Shares
(All Classes
(#))(2)
|
| |
Percentage of
Outstanding
Common
Stock
(%)
|
| |
Number of
Shares
(#)
|
| |
Percentage
(%)
|
| |
Number of
Shares
(#)
|
| |
Percentage
(%)
|
Executive Officers and Directors Prior
to the Transactions:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
M. Blair Garrou
|
| |
4,260,375(3)(4)
|
| |
73.3%
|
| |
2,254,909(7)
|
| |
19.1%
|
| |
2,081,421(8)
|
| |
18.6%
|
R. Andrew White
|
| |
3,465,375(4)
|
| |
59.6%
|
| |
1,059,909(8)
|
| |
9.0%
|
| |
1,059,909(8)
|
| |
9.5%
|
Winston Gilpin(5)
|
| |
10,000(6)
|
| |
*%
|
| |
2,770
|
| |
*%
|
| |
2,770
|
| |
—%
|
Christy Cardenas
|
| |
10,000(6)
|
| |
*%
|
| |
2,770
|
| |
*%
|
| |
2,770
|
| |
—%
|
Jay Gardner
|
| |
40,000(6)
|
| |
*%
|
| |
11,080
|
| |
*%
|
| |
11,080
|
| |
—%
|
Mia Mends
|
| |
40,000(6)
|
| |
*%
|
| |
11,080
|
| |
*%
|
| |
11,080
|
| |
—%
|
Carolyn Rodz
|
| |
40,000(6)
|
| |
*%
|
| |
11,080
|
| |
*%
|
| |
11,080
|
| |
—%
|
All Directors and Executive Officers as a group
(7 Individuals)
|
| |
4,440,375
|
| |
76.4%
|
| |
2,293,689
|
| |
19.4%
|
| |
2,120,201
|
| |
18.9%
|
Executive Officers and Directors After
the Transactions:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Morgan Frank(9)
|
| |
—
|
| |
—%
|
| |
1,201,248
|
| |
10.0%
|
| |
1,201,248
|
| |
10.5%
|
Kevin A. Richardson, II(10)
|
| |
—
|
| |
—%
|
| |
122,580
|
| |
1.0%
|
| |
122,580
|
| |
1.1%
|
Michael Stolarski
|
| |
—
|
| |
—%
|
| |
469,703
|
| |
4.0%
|
| |
469,703
|
| |
4.2%
|
Jeff Blizard
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
Ian Miller
|
| |
—
|
| |
—%
|
| |
60,501
|
| |
*%
|
| |
60,501
|
| |
*%
|
James Tyler
|
| |
—
|
| |
—%
|
| |
11,694
|
| |
*%
|
| |
11,694
|
| |
*%
|
Chantell Preston
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
Toni Rinow
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
Andrew Walko
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
Peter Stegagno
|
| |
—
|
| |
—%
|
| |
11,993
|
| |
*%
|
| |
11,993
|
| |
*%
|
Iulian Cioanta, PhD
|
| |
—
|
| |
—%
|
| |
9,537
|
| |
*%
|
| |
9,537
|
| |
*%
|
Tim Hendricks
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
| |
—
|
| |
—%
|
All Directors and Executive Officers as a group
(12 Individuals)
|
| |
—
|
| |
—%
|
| |
1,887,256
|
| |
15.6%
|
| |
1,887,256
|
| |
16.4%
|
Greater than 5% Holders:
|
| |
|
| |
|
| |
|
| |
|
| |
—
|
| |
—
|
Mercury Sponsor Group I LLC
|
| |
3,465,375(4)
|
| |
59.6%
|
| |
1,059,909
|
| |
9.0%
|
| |
1,059,909
|
| |
9.5%
|
(1)
|
Unless otherwise noted, the business address of the Sponsor and each executive officer and director prior to the transactions is
3737 Buffalo Speedway, Suite 1750, Houston, TX 77098. Unless otherwise noted, the business address of each executive officer and director after the transactions is 11495 Valley View Road Eden Prairie, MN 55344.
|
(2)
|
Interests shown consist of Class A Common Stock and Founder Shares, classified as shares of Class B Common Stock.
|
(3)
|
Mercury Houston Partners, LLC is the record holder of 130,023 shares of Class A Common Stock reported herein and Mercury
Affiliates XI, LLC is the record holder of 664,977 shares of Class A Common Stock reported herein. M. Blair Garrou is the sole manager of Mercury Houston Partners, LLC and Mercury Affiliates XI, LLC. As such, M. Blair Garrou may be deemed
to have beneficial ownership of the Class A Common Stock held directly by each of Mercury Houston Partners, LLC and Mercury Affiliates XI, LLC. M. Blair Garrou disclaims beneficial ownership over any securities owned by Mercury Houston
Partners, LLC and Mercury Affiliates XI, LLC in which he does not have any pecuniary interest.
|
(4)
|
Mercury Sponsor Group I LLC is the record holder of 3,465,375 Founder Shares. Each of M. Blair Garrou and R. Andrew White are
the managers of Mercury Sponsor Group I LLC. Affiliates of M. Blair Garrou and R. Andrew White each own 50% of the economic interest
|
(5)
|
GSqr Consulting, LLC is the record holder of the shares reported herein. Mr. Gilpin is the manager of GSqr Consulting, LLC. As
such, Mr. Gilpin may be deemed to have beneficial ownership of the Class B Common Stock held directly by GSqr Consulting, LLC to the extent of his pecuniary interest.
|
(6)
|
Interests shown consists solely of Founder Shares, classified as shares of Class B Common Stock.
|
(7)
|
Represents shares of Class A Common Stock to be held by Mercury Houston Partners, LLC, Mercury Affiliates XI, LLC, and Mercury
Sponsor Group I LLC. Pursuant to the Voting and Non-Redemption Agreements, Mercury Houston Partners, LLC agreed not to redeem all of its 130,023 shares of Class A Common Stock, and Mercury Affiliates XI, LLC agreed not to redeem 491,489
shares out of its 664,977 shares of Class A Common Stock.
|
(8)
|
Represents shares of Class A Common Stock to be held by Mercury Sponsor Group I LLC.
|
(9)
|
Mr. James Besser is the managing member of Manchester Management PR, LLC (“Manchester”) and Manchester Management Company, LLC
(“GP”) and Morgan Frank serves as a portfolio manager and as a consultant for Manchester Explorer, L.P. (“Explorer”). Manchester is the investment manager of Explorer and GP is the general partner of Explorer. The parties together are
expected to own 1,263,661 shares in the Combined Company. The principal business address for each of Manchester, GP, Explorer and Messrs. Besser and Frank is 2 Calle Candina, #1701, San Juan, Puerto Rico, 00907.
|
(10)
|
Includes shares owned directly by Prides Capital Fund I, L.P. Prides Capital Partners LLC is the general partner of Prides
Capital Fund I, L.P. and Mr. Richardson is the controlling shareholder of Prides Capital Partners LLC. Mr. Richardson has also been deputized by Prides Capital Partners LLC to serve on the board of directors of the Company.
|
•
|
1,304,259 shares of SEPA’s Class A Common Stock; and
|
•
|
4,510,375 shares of Class B Common Stock.
|
•
|
in whole and not in part;
|
•
|
at a price of $0.01 per warrant;
|
•
|
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each SEPA Public Warrant
holder; and
|
•
|
if, and only if, the last reported sale price of SEPA’s Class A Common Stock for any 20 trading days within a 30-trading day
period ending on the third trading day prior to the date on which SEPA sends the notice of redemption to the SEPA Public Warrant Holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for adjustments to the number
of shares issuable upon exercise or the exercise price of a warrant).
|
•
|
in whole and not in part;
|
•
|
at a price equal to a number of shares of Class A Common Stock to be determined by reference to the table below, based on the
redemption date and the “fair market value” of SEPA’s Class A Common Stock (as defined below) except as otherwise described below;
|
•
|
upon a minimum of 30 days’ prior written notice of redemption;
|
•
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant) on the trading day prior to the date on which SEPA sends the notice of redemption to the warrant holders; and
|
•
|
if, and only if, the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant), the SEPA Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding SEPA Public Warrants, as described above.
|
Redemption Date
(period to expiration of warrants)
|
| |
Fair Market Value of SEPA’s Class A Common Stock
|
||||||||||||||||||||||||
|
$10.00
|
| |
$11.00
|
| |
$12.00
|
| |
$13.00
|
| |
$14.00
|
| |
$15.00
|
| |
$16.00
|
| |
$17.00
|
| |
$18.00
|
||
60 months
|
| |
0.261
|
| |
0.281
|
| |
0.297
|
| |
0.311
|
| |
0.324
|
| |
0.337
|
| |
0.348
|
| |
0.358
|
| |
0.361
|
57 months
|
| |
0.257
|
| |
0.277
|
| |
0.294
|
| |
0.310
|
| |
0.324
|
| |
0.337
|
| |
0.348
|
| |
0.358
|
| |
0.361
|
54 months
|
| |
0.252
|
| |
0.272
|
| |
0.291
|
| |
0.307
|
| |
0.322
|
| |
0.335
|
| |
0.347
|
| |
0.357
|
| |
0.361
|
51 months
|
| |
0.246
|
| |
0.268
|
| |
0.287
|
| |
0.304
|
| |
0.320
|
| |
0.333
|
| |
0.346
|
| |
0.357
|
| |
0.361
|
48 months
|
| |
0.241
|
| |
0.263
|
| |
0.283
|
| |
0.301
|
| |
0.317
|
| |
0.332
|
| |
0.344
|
| |
0.356
|
| |
0.361
|
45 months
|
| |
0.235
|
| |
0.258
|
| |
0.279
|
| |
0.298
|
| |
0.315
|
| |
0.330
|
| |
0.343
|
| |
0.356
|
| |
0.361
|
42 months
|
| |
0.228
|
| |
0.252
|
| |
0.274
|
| |
0.294
|
| |
0.312
|
| |
0.328
|
| |
0.342
|
| |
0.355
|
| |
0.361
|
39 months
|
| |
0.221
|
| |
0.246
|
| |
0.269
|
| |
0.290
|
| |
0.309
|
| |
0.325
|
| |
0.340
|
| |
0.354
|
| |
0.361
|
36 months
|
| |
0.213
|
| |
0.239
|
| |
0.263
|
| |
0.285
|
| |
0.305
|
| |
0.323
|
| |
0.339
|
| |
0.353
|
| |
0.361
|
33 months
|
| |
0.205
|
| |
0.232
|
| |
0.257
|
| |
0.280
|
| |
0.301
|
| |
0.320
|
| |
0.337
|
| |
0.352
|
| |
0.361
|
30 months
|
| |
0.196
|
| |
0.224
|
| |
0.250
|
| |
0.274
|
| |
0.297
|
| |
0.316
|
| |
0.335
|
| |
0.351
|
| |
0.361
|
27 months
|
| |
0.184
|
| |
0.214
|
| |
0.242
|
| |
0.268
|
| |
0.291
|
| |
0.313
|
| |
0.332
|
| |
0.350
|
| |
0.361
|
24 months
|
| |
0.173
|
| |
0.204
|
| |
0.233
|
| |
0.260
|
| |
0.285
|
| |
0.308
|
| |
0.329
|
| |
0.348
|
| |
0.361
|
21 months
|
| |
0.161
|
| |
0.193
|
| |
0.223
|
| |
0.252
|
| |
0.279
|
| |
0.304
|
| |
0.329
|
| |
0.347
|
| |
0.361
|
18 months
|
| |
0.146
|
| |
0.179
|
| |
0.211
|
| |
0.242
|
| |
0.271
|
| |
0.298
|
| |
0.322
|
| |
0.345
|
| |
0.361
|
15 months
|
| |
0.130
|
| |
0.164
|
| |
0.197
|
| |
0.230
|
| |
0.262
|
| |
0.291
|
| |
0.317
|
| |
0.342
|
| |
0.361
|
12 months
|
| |
0.111
|
| |
0.146
|
| |
0.181
|
| |
0.216
|
| |
0.250
|
| |
0.282
|
| |
0.312
|
| |
0.339
|
| |
0.361
|
9 months
|
| |
0.090
|
| |
0.125
|
| |
0.162
|
| |
0.199
|
| |
0.237
|
| |
0.272
|
| |
0.305
|
| |
0.336
|
| |
0.361
|
6 months
|
| |
0.065
|
| |
0.099
|
| |
0.137
|
| |
0.178
|
| |
0.219
|
| |
0.259
|
| |
0.296
|
| |
0.331
|
| |
0.361
|
3 months
|
| |
0.034
|
| |
0.065
|
| |
0.104
|
| |
0.150
|
| |
0.197
|
| |
0.243
|
| |
0.286
|
| |
0.326
|
| |
0.361
|
0 months
|
| |
—
|
| |
—
|
| |
0.042
|
| |
0.115
|
| |
0.176
|
| |
0.233
|
| |
0.281
|
| |
0.323
|
| |
0.361
|
•
|
If SEPA is unable to complete its initial business combination within 36 months from July 30, 2021, SEPA will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible
|
•
|
Prior to SEPA’s initial business combination, SEPA may not issue additional shares of capital stock that would entitle the
holders thereof to (i) receive funds from the Trust Account or (ii) vote on any initial business combination;
|
•
|
Although SEPA does not intend to enter into a business combination with a target business that is affiliated with SEPA’s
Sponsor, SEPA’s directors or SEPA’s officers, SEPA is not prohibited from doing so. In the event SEPA enters into such a transaction, SEPA, or a committee of independent directors, will obtain an opinion from an independent investment
banking firm that is a member of FINRA or an independent accounting firm that such a business combination is fair to SEPA’s company from a financial point of view;
|
•
|
If a SEPA Stockholder vote on SEPA’s initial business combination is not required by law and SEPA does not decide to hold a
SEPA Stockholder vote for business or other legal reasons, SEPA will offer to redeem SEPA’s Public Shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing
SEPA’s initial business combination which contain substantially the same financial and other information about SEPA’s initial business combination and the Redemption Rights as is required under Regulation 14A of the Exchange Act;
|
•
|
SEPA’s initial business combination must occur with one or more target businesses that together have an aggregate fair market
value of at least 80% of SEPA’s net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding the deferred underwriting commissions held in the Trust Account) at the time of the
agreement to enter into the initial business combination;
|
•
|
If SEPA Stockholders approve an amendment to SEPA’s Current Charter (A) to modify the substance or timing of SEPA’s obligation
to allow redemption in connection with SEPA’s initial business combination or redeem 100% of SEPA’s Public Shares if SEPA does not complete SEPA’s initial business combination within 18 months, or 24 months if SEPA has signed a definitive
agreement with respect to an initial business combination within such 18-month period (or up to 24 months if SEPA extends the period of time to consummate a business combination) from July 30, 2021 or (B) with respect to any other
provision relating to SEPA Stockholders’ rights or pre-initial business combination activity, SEPA will provide public SEPA Stockholders with the opportunity to redeem all or a portion of their shares of Class A Common Stock upon such
approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to SEPA to pay SEPA’s
franchise and income taxes as well as expenses relating to the administration of the Trust Account, divided by the number of then issued and outstanding Public Shares; and
|
•
|
SEPA will not complete SEPA’s initial business combination with another blank check company or a similar company with nominal
operations.
|
•
|
a stockholder who owns 15% or more of SEPA’s outstanding voting stock (otherwise known as an “interested stockholder”);
|
•
|
an affiliate of an interested stockholder; or
|
•
|
an associate of an interested stockholder, for three years following the date that the stockholder became an interested
stockholder.
|
•
|
the SEPA Board approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the
transaction;
|
•
|
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder
owned at least 85% of SEPA’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
|
•
|
on or subsequent to the date of the transaction, the business combination is approved by the SEPA Board and authorized at a
meeting of SEPA Stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
|
•
|
prior to the time of the transaction, the board of directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (i) shares owned by persons who are directors and also officers
and (ii) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; and
|
•
|
on or subsequent to the time of the transaction, the business combination is approved by the board and authorized at an annual
meeting stockholders, and not by written consent, by the affirmative vote of at least 662∕3% of the outstanding voting stock which is not owned by the interested stockholder.
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Authorized Capital Stock
|
||||||
SEPA’s authorized shares consist of 171,000,000 shares of capital stock par
value of $0.0001, consisting of (a) 170,000,000 shares of common stock, including (i) 150,000,000 shares of Class A Common Stock and (ii) 20,000,000 shares of Class B Common Stock, and (b) 1,000,000 shares of preferred stock, par value
$0.0001 per share.
|
| |
SANUWAVE’s authorized shares consist of 2,505,000,000 shares of capital stock
par value of $0.001, consisting of (a) 2,500,000,000 shares of common stock and (b) 5,000,000 shares of preferred stock, including (i) 6,175 shares of Series A Preferred Stock, (ii) 293 shares of Series B Preferred Stock, (iii) 90 shares
of Series C Preferred Stock, and (iv) 8 shares of Series D Preferred Stock.
|
| |
The Proposed Charter will authorize the Combined Company to issue 171,000,000
shares, consisting of (i) 170,000,000 shares of Class A Common Stock, par value $0.0001 per share, and (ii) 1,000,000 shares of preferred stock, par value $0.0001 per share.
|
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Conversion
|
||||||
Class B Common Stock.
Shares of Class B Common Stock shall be convertible into shares of Class A Common Stock on a 1:0.277 basis, such that 1 share of Class B Common Stock is convertible to 0.277 shares of Class A Common Stock (as amended by the Class B
Charter Amendment), and shall be convertible (A) at any time and from time to time at the option of the holder thereof and (B) automatically on the closing of the Business Combination.
Common Stock. In the
event that a Business Combination is consummated by SEPA or SEPA holds a vote of its stockholders to amend its Certificate of Incorporation prior to the consummation of a Business Combination, any Stockholder who (i) followed the
procedures contained in the proxy materials to perfect the holder’s right to convert the holder’s Common Stock into cash, if any, or (ii) tendered the holder’s Common Stock as specified in the tender offer materials therefore, shall be
entitled to receive cash for the holder’s Common Stock.
SEPA shall, promptly
after the consummation of the Business Combination or the filing of the amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware, covert such shares into cash.
|
| |
Common Stock. The
holders of common stock do not have any conversion rights by virtue of their ownership of the common stock.
Series A Preferred Stock.
Each share of preferred stock shall be convertible into that number of shares of common stock determined by dividing the stated value of $1,000.00 by the conversion price of $0.50 and shall be convertible at any time at the option of
the holder thereof.
Series B Preferred Stock.
Each share of preferred stock shall be convertible into that number of shares of common stock determined by dividing the stated value of $1,000.00 by the conversion price of $0.50 and shall be convertible at any time at the option of
the holder thereof.
Series C Preferred Stock.
Each share of preferred stock shall be convertible into that number of whole shares of common stock determined by dividing the stated value of $25,000.00 by the conversion price of $0.14 and shall be convertible at the option of the
holder thereof after the date that SANUWAVE shall have amended its charter to increase the number of shares of common stock authorized for issuance thereunder or effect a reverse stock split of the outstanding shares of common stock by
a sufficient amount to permit the conversion of all Series C Preferred Stock into shares of common stock.
Series D Preferred Stock.
Each share of preferred stock shall be convertible into that number of whole shares of common stock determined by dividing the stated value of $25,000.00 by the conversion price of $0.14 and shall be convertible at the option of the
holder thereof after the date that
|
| |
There are no conversion provisions in the Proposed Charter or the SEPA Bylaws.
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
|
| |
SANUWAVE shall have amended its charter to increase the number of shares of
common stock authorized for issuance thereunder or effect a reverse stock split of the outstanding shares of common stock by a sufficient amount to permit the conversion of all Series D Preferred Stock into shares of common stock.
|
| |
|
|
||||||
Number and Qualification of Directors
|
||||||
The board of directors shall consist of one or more members. The number of
directors shall be fixed by the board of directors and may thereafter be changed from time to time by resolution of the board of directors.
|
| |
The entire board of directors shall not consist of less than one director or
more than nine directors. The number of directors constituting the entire board of directors shall be three until otherwise fixed by a majority of the entire board or directors.
|
| |
The number of directors which shall constitute the board of directors shall be
fixed exclusively by one or more resolutions adopted from time to time by the board of directors.
|
|
||||||
Structure of Board; Election of Directors
|
||||||
The Board is divided into three classes designated as Class I, Class II and
Class III, respectively. Each class consists, as nearly as may be possible, of one-third of the total number of directors constituting the whole board of directors. The bylaws provide that directors will be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
|
| |
The bylaws provide that directors will be elected at a meeting of the
stockholders and the directors to be elected at such meeting shall be elected by a plurality of votes given at such election.
|
| |
The Proposed Charter provides that, beginning with the Combined Company’s
first annual meeting of stockholders, the directors, including any of those elected by the holders of any series of Preferred Stock, shall be elected to hold office for a term expiring at the next annual meeting of the stockholders of the
Combined Company and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal from office.
|
|
||||||
Removal of Directors
|
||||||
Any or all of the directors may be removed from office at any time, but only
for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of SEPA capital stock entitled to vote generally in the election of directors, voting together as a single class.
|
| |
Under the NRS, any director may be removed only by the vote of stockholders
representing not less than two-thirds (2∕3) of the voting power of the issued and outstanding stock entitled to vote.
|
| |
Subject to the special rights of the holders of one or more series of
preferred stock to elect directors, any director may be removed from office at any time by the affirmative vote of the holders of at least two-thirds (2∕3) of the voting power of all then
outstanding shares of capital stock of the Combined Company entitled to vote on the election of such director.
|
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Voting
|
||||||
Common Stock. The
holders of the Common Stock shall exclusively possess all voting power and each share of Common Stock shall have one vote.
Class A Common Stock.
Unless provided under Delaware Law, the holders of Class A Common Stock do not hold separate voting rights from the holders of Class B Common Stock under the terms of the Current Charter and the SEPA Bylaws.
Class B Common Stock.
For so long as any shares of Class B Common Stock shall remain outstanding, SEPA shall not, without the prior vote or written consent of the holders of a majority of the shares of Class B Common Stock then outstanding, voting separately
as a single class, amend, alter or repeal any provision of the Current Charter, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative,
participating, optional or other or special rights of the Class B Common Stock.
|
| |
Each holder of shares of common stock is entitled to one vote per share on all
matters submitted to a vote of the common stockholders.
|
| |
The holders of the Class A Common Stock shall exclusively possess all voting
power and each share of Class A Common Stock shall have one vote.
|
|
||||||
Supermajority Voting Provisions
|
||||||
No amendment to Article IX of the Current Charter is effective prior to the
consummation of the initial business combination unless approved by the affirmative vote of the holders of at least 65% of all then outstanding shares of the Common Stock.
|
| |
The bylaws of SANUWAVE may be adopted, amended, altered, changed, rescinded or
repealed in whole or in part at any annual or special meeting of the stockholders by the affirmative vote of two-thirds (2∕3) of the shares of SANUWAVE outstanding and entitled to vote
thereon.
Under the NRS, any director may be removed only by the vote of stockholders
representing not less than two-thirds (2∕3) of the voting power of the issued and outstanding stock entitled to vote.
|
| |
The Proposed Charter requires the approval by an affirmative vote of the
holders of at least two-thirds (2∕3) of the voting power of all then outstanding shares of capital stock of the Combined Company entitled to vote generally in the election of directors to
adopt, amend, alter or repeal the bylaws.
The Proposed Charter provides that directors may be removed from office at any
time, but only for cause and only by the affirmative vote of the holders of at least two-thirds (2∕3) of the voting power of the outstanding shares of stock of the Combined Company entitled
to vote on the election of such director.
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
|
||||||
Vacancies on the Board of Directors
|
||||||
Subject to the rights, if any, of the holders of any outstanding series of the
Preferred Stock, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely
and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director (and not by SEPA Stockholders), and any director so chosen shall hold office for the remainder of
the full term of the class of directors to which the new directorship was added or in which the vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death,
resignation, retirement, disqualification or removal.
|
| |
Any vacancy occurring in the board of directors for any cause other than by
reason of an increase in the number of directors may be filled by a majority of the remaining members of the board of directors , although such majority is less than a quorum, or by the SANUWAVE Stockholders. Any vacancy occurring by
reason of an increase in the number of directors may be filled by action of a majority of the entire board of directors or by the SANUWAVE Stockholders. A director elected by the board of directors to fill a vacancy shall be elected to
hold office until the expiration of the term for which they were elected and until his successor shall have been elected and shall have qualified.
|
| |
Subject to the rights, if any, of the holders of any outstanding series of the
Preferred Stock, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely
and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director (and not by Combined Company stockholders), and any director so chosen shall hold office for the
remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier
death, resignation, retirement, disqualification or removal.
|
|
||||||
Special Meeting of the Board of Directors
|
||||||
Subject to the rights, if any, of the holders of any outstanding series of the
preferred stock, and to the requirements of applicable law, special meetings of SEPA Stockholders may be called only by the Chairman of the Board, Chief Executive Officer, or the Board pursuant to a resolution adopted by a majority of the
Board, and the ability of SEPA Stockholders to call a special meeting is specifically denied. Except as provided in the foregoing sentence, special meetings of SEPA Stockholders may not be called by another person or persons.
|
| |
Special meetings of the board of directors for any purpose or purposes shall
be called at any time by the Chairperson of the board, the Chief Executive Officer, the President or, if the Chief Executive Officer and the President are absent or unable or refuse to act, by any Vice President or by any three directors.
|
| |
Subject to the rights, if any, of the holders of any outstanding series of the
preferred stock, and to the requirements of applicable law, special meetings of Combined Company stockholders may be called only by the Chairman of the Board, Chief Executive Officer, or the Board pursuant to a resolution adopted by a
majority of the Board, and the ability of Combined Company stockholders to call a special meeting is specifically denied. Except as provided in the foregoing sentence, special meetings of Combined Company stockholders may not be called by
another person or persons.
|
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Amendment to Certificate/Articles of Incorporation
|
||||||
SEPA reserves the right at any time and from time to time to amend, alter,
change or repeal any provision contained in the Current Charter (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in force that may be added or inserted, in the
manner now or hereafter prescribed by the Current Charter and the DGCL.
|
| |
Under the NRS, SANUWAVE’s articles of incorporation can be amended upon the
approval of SANUWAVE’s board of directors and SANUWAVE Stockholders holding shares representing at least a majority of the voting power of SANUWAVE.
|
| |
The Combined Company reserves the right at any time and from time to time to
amend, alter, change or repeal any provision contained in the Proposed Charter (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in force that may be added or
inserted, in the manner now or hereafter prescribed by the Proposed Charter and the DGCL.
|
|
||||||
Amendment of Bylaws
|
||||||
The Current Charter requires the approval by an affirmative vote of the
holders of a majority of the voting power of all then outstanding shares of capital stock of SEPA entitled to vote generally in the election of directors to adopt, amend, alter or repeal the bylaws.
|
| |
The bylaws provide that the board of directors reserves the power to amend the
bylaws. The bylaws may also be adopted, amended, altered, changed, rescinded or repealed in whole or in part at any annual or special meeting of the stockholders by the affirmative vote of two-thirds (2∕3) of the shares of SANUWAVE outstanding and entitled to vote thereon.
|
| |
The Proposed Charter requires the approval by an affirmative vote of the
holders of at least two-thirds (2∕3) of the voting power of all then outstanding shares of capital stock of the Combined Company entitled to vote generally in the election of directors to
adopt, amend, alter or repeal the bylaws.
|
|
||||||
Quorum
|
||||||
Board of Directors. The
bylaws provide that a majority of the directors then in office shall constitute a quorum for the transaction of business unless a greater number is required by law, by the Current Charter or the bylaws. If a quorum shall not be present
at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Stockholders. The
presence, in person or by proxy, at a stockholders meeting of the holders of shares of outstanding capital stock of SEPA representing a majority of the voting power of all outstanding shares of capital stock of SEPA entitled to vote at
such meeting shall constitute a quorum for the transaction of business at such meeting, except that when specified business is to be
|
| |
Board of Directors.
One-half of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the board of directors, unless a greater number be required by law or by SANUWAVE’s articles of incorporation.
Stockholders. The
presence in person or by proxy of persons entitled to vote a majority of the votes entitled to be cast by each separate class or voting group specified in SANUWAVE’s articles of incorporation, as the same may be amended or supplemented
from time to time, at any meeting shall constitute a quorum for the transaction of business.
|
| |
Board of Directors. The
bylaws provide that a majority of the directors then in office shall constitute a quorum for the transaction of business unless a greater number is required by law, by the Proposed Charter or the bylaws. If a quorum shall not be present
at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Stockholders. The
presence, in person or by proxy, at a stockholders meeting of the holders of shares of outstanding capital stock of the Combined Company representing a majority of the voting power of all outstanding shares of capital stock of the
Combined Company entitled to vote at such meeting shall constitute a quorum for the transaction of business at such meeting, except that
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
voted on by a class or series of stock voting as a class, the holders of
shares representing a majority of the voting power of the outstanding shares of such class or series shall constitute a quorum of such class or series for the transaction of such business.
|
| |
|
| |
when specified business is to be voted on by a class or series of stock voting
as a class, the holders of shares representing a majority of the voting power of the outstanding shares of such class or series shall constitute a quorum of such class or series for the transaction of such business.
|
|
||||||
Stockholder Action by Written Consent
|
||||||
Except as may be otherwise provided for or fixed pursuant to the Current
Charter (including any Preferred Stock Designation) relating to the rights of the holders of any outstanding series of preferred stock, subsequent to the consummation of the IPO, any action required or permitted to be taken by SEPA
Stockholders must be effected by a duly called annual or special meeting of such SEPA Stockholders and may not be effected by written consent of the SEPA Stockholders other than with respect to the Class B Common Stock with respect to
which action may be taken by written consent.
|
| |
Pursuant to SANUWAVE’s bylaws, except where otherwise required by Nevada law,
action without a meeting is permitted to be taken by the SANUWAVE Stockholders.
|
| |
No action may be taken by written consent of the stockholders of the Combined
Company.
|
|
||||||
Special Stockholder Meetings
|
||||||
Subject to the rights, if any, of the holders of any outstanding series of the
preferred stock, and to the requirements of applicable law, special meetings of SEPA Stockholders may be called only by the Chairman of the Board, Chief Executive Officer, or the Board pursuant to a resolution adopted by a majority of the
Board, and the ability of SEPA Stockholders to call a special meeting is hereby specifically denied. Except as provided in the foregoing sentence, special meetings of SEPA Stockholders may not be called by another person or persons.
|
| |
Special meetings of the stockholders, for any purpose or purposes whatsoever,
may be called by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or the Board of Directors. Special meetings of SANUWAVE Stockholders may only be called by any other person or persons as required by
applicable law.
|
| |
Subject to the rights, if any, of the holders of any outstanding series of the
preferred stock, and to the requirements of applicable law, special meetings of stockholders of the Combined Company may be called only by the Chairman of the Board, Chief Executive Officer, or the Board pursuant to a resolution adopted
by a majority of the Board, and the ability of Combined Company stockholders to call a special meeting is hereby specifically denied. Except as provided in the foregoing sentence, special meetings of stockholders of the Combined Company
may not be called by another person or persons.
|
|
||||||
Notice of Stockholder Meetings
|
||||||
Written notice of the meeting stating the place, day and hour of the meeting
and, in the case of a special
|
| |
Written notice of each annual meeting shall be given to each SANUWAWE
Stockholder entitled
|
| |
Written or printed notice of the meeting stating the place, day and hour of
the meeting and, in the case
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
meeting, stating the purpose or purposes for which the meeting is called, and
in case of a meeting held by remote communication stating such means, shall be delivered not less than 10 nor more than 60 days before the date of the meeting, either by hand delivery, mail, or overnight delivery service, or if prior
consent has been given by a stockholder by electronic transmission to each stockholder of record entitled to vote at such meeting.
|
| |
to vote, either personally or by mail or other means of written communication,
charges prepaid, addressed to such stockholder at stockholder’s address appearing on the books of SANUWAVE or given by a SANUWAVE Stockholder to SANUWAVE for the purpose of notice. All such notices shall be sent to each SANUWAVE
Stockholder entitled thereto not less than 10 nor more than 60 days before each annual meeting.
|
| |
of a special meeting, stating the purpose or purposes for which the meeting is
called, and in the case of a meeting held by remote communication stating such means, shall be delivered not less than 10 nor more than 60 days before the date of the meeting, either by hand delivery, mail or overnight delivery service,
or if prior consent has been given by a stockholder, by electronic transmission to each stockholder of record entitled to vote at such meeting.
|
|
||||||
Stockholder Proposals (Other than Nomination of Persons for Election as
Directors)
|
||||||
In addition to any other applicable requirements, for business (other than
nominations) to be properly brought before an annual meeting by a SEPA Stockholder, such SEPA Stockholder must have given timely notice thereof in proper written form to the Secretary and such business must otherwise be a proper matter
for SEPA Stockholder action. A SEPA Stockholder’s notice to the Secretary with respect to such business, to be timely, must be received by the Secretary at the principal executive offices of SEPA not later than the close of business on
the 90th day nor earlier than the opening of business on the 120th day before the anniversary date of the immediately preceding annual meeting of SEPA Stockholders; provided, however, that in the event that the annual meeting is more than
30 days before or more than 60 days after such anniversary date, notice by the SEPA Stockholder to be timely must be so delivered not earlier than the close of business on the 120th day before the meeting and not later than the later of
(x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by SEPA.
|
| |
Stockholders must properly bring a proposal before any meeting of SANUWAVE
Stockholders by such SANUWAVE Stockholder giving timely notice thereof in writing to the Secretary of SANUWAVE by delivering such notice to the principal executive offices of SANUWAVE not less than 50 days nor more than 75 days prior to
the meeting; provided, however, that in the event less than 60 days’ notice or prior public disclosure of the date of the meeting is given or made to SANUWAVE Stockholders, notice by the SANUWAVE Stockholder to be timely must be so
received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.
|
| |
In addition to any other applicable requirements, for business (other than
nominations) to be properly brought before an annual meeting by a Combined Company stockholder, such Combined Company stockholder must have given timely notice thereof in proper written form to the Secretary and such business must
otherwise be a proper matter for Combined Company stockholder action. A Combined Company stockholder’s notice to the Secretary with respect to such business, to be timely, must be received by the Secretary at the principal executive
offices of the Combined Company not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the Combined Company stockholder to be timely must be so delivered not earlier than the
close of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement
of the date of the annual meeting is first made by the Combined Company.
|
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Stockholder Nominations of Persons for Election as Directors
|
||||||
Nominations of persons for election to the Board at any annual meeting of SEPA
Stockholders, or at any special meeting of SEPA Stockholders called for the purpose of electing directors as set forth in SEPA’s notice of such special meeting, may be made (i) by or at the direction of the Board or (ii) by any SEPA
Stockholder (x) who is a SEPA Stockholder of record entitled to vote in the election of directors on the date of the giving of the notice provided for in the SEPA Bylaws and on the record date for the determination of SEPA Stockholders
entitled to vote at such meeting and (y) who complies with the notice procedures set forth in the SEPA Bylaws.
|
| |
SANUWAVE’s articles of incorporation and bylaws do not have specific
provisions addressing the nomination of persons for election as directors.
|
| |
Nominations of persons for election to the Board at any annual meeting of
Combined Company stockholders, or at any special meeting of Combined Company stockholders called for the purpose of electing directors as set forth in the Combined Company’s notice of such special meeting, may be made (i) by or at the
direction of the Board or (ii) by any Combined Company stockholder (x) who is a Combined Company stockholder of record entitled to vote in the election of directors on the date of the giving of the notice provided for in the Combined
Company’s bylaws and on the record date for the determination of Combined Company stockholders entitled to vote at such meeting and (y) who complies with the notice procedures set forth in the Combined Company’s bylaws.
|
|
||||||
Exclusive Forum
|
||||||
Unless SEPA consents in writing to the selection of an alternative forum, the
Court of Chancery of the State of Delaware shall to the fullest extent permitted by law be the sole and exclusive forum for any SEPA Stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on
behalf of SEPA, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of SEPA to SEPA or SEPA Stockholders, (iii) any action asserting a claim against SEPA, its directors, officers
or employees arising pursuant to any provision of the DGCL or the Current Charter or (iv) any action asserting a claim against SEPA, its directors, officers or employees governed by the internal affairs doctrine.
|
| |
SANUWAVE’s articles of incorporation and bylaws do not have exclusive forum
provisions.
|
| |
Unless the Combined Company consents in writing to the selection of an
alternative forum, the Court of Chancery of the State of Delaware shall to the fullest extent permitted by law be the sole and exclusive forum for any Combined Company stockholder (including a beneficial owner) to bring (i) any derivative
action or proceeding brought on behalf of the Combined Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Combined Company to the Combined Company or
stockholders, (iii) any action asserting a claim against the Combined Company, its directors, officers or employees arising pursuant to any provision of the DGCL or the Proposed Charter or (iv) any action asserting a claim against SEPA,
its directors, officers or employees governed by the internal affairs doctrine.
|
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Limitation of Liability of Directors and Officers
|
||||||
A director of SEPA shall not be personally liable to SEPA or SEPA Stockholders
for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph by the SEPA Stockholders
shall not adversely affect any right or protection of a director of SEPA with respect to events occurring prior to the time of such repeal or modification.
|
| |
Under the NRS, a director or officer is not individually liable for damages as
a result of an act or failure to act in their capacity as a director or officer unless (a) the presumption of good faith is rebutted or (b) such officer or director breached their fiduciary duty and such breach involved intentional
misconduct, fraud, or violation of law.
|
| |
A director of the Combined Company shall not be personally liable to the
Combined Company or stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter
be amended.
Any repeal or modification of the foregoing paragraph by the Combined Company
stockholders shall not adversely affect any right or protection of a director of the Combined Company with respect to events occurring prior to the time of such repeal or modification.
|
|
||||||
Indemnification of Directors, Officers, Employees and Agents
|
||||||
SEPA, to the fullest extent permitted by applicable law, shall indemnify all
persons whom it may indemnify pursuant thereto. Expenses (including attorney’s fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer
or director may be entitled to indemnification hereunder shall be paid by SEPA in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be indemnified by SEPA as authorized hereby.
|
| |
SANUWAVE, to the fullest extent authorized by Nevada law, shall indemnify
directors, officers, employees or agents against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith. The right to indemnification shall be a contract right and shall include the right to be paid by SANUWAVE the expenses incurred in defending any such proceeding in advance of its final disposition:
provided, however, that, if Nevada law requires, the payment of such expenses incurred by a director or officer in their capacity as such in advance of the final disposition of a proceeding, shall be made only upon delivery to SANUWAVE of
an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified.
|
| |
The Combined Company, to the fullest extent permitted by applicable law, shall
indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorney’s fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which
such officer or director may be entitled to indemnification hereunder shall be paid by the Combined Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Combined Company as authorized hereby.
|
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
Dividends, Distributions and Stock Repurchases
|
||||||
Distributions. A holder
of Offering Shares shall be entitled to receive distributions only as provided by Section 9.2(a), Section 9.2(b), Section 9.2(d) or Section 9.7 of the Current Charter. In no other circumstances shall a holder of Offering Shares have any
right or interest of any kind in or to the Trust Account.
Dividends. Subject to
applicable law, the rights, if any, of the holders of any outstanding series of the preferred stock and the provisions of Article IX of the Current Charter, the holders of shares of Common Stock shall be entitled to receive such
dividends and other distributions (payable in cash, property or capital stock of SEPA) when, as and if declared thereon by the Board from time to time out of any assets or funds of SEPA legally available therefor and shall share equally
on a per share basis in such dividends and distributions.
|
| |
Distributions. During
such time as the preferred stock is outstanding, if SANUWAVE declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of SANUWAVE Common Stock, by way of return of capital
or otherwise at any time after the issuance of the preferred stock, then, in each such case, the holder shall be entitled to participate in such distribution to the same extent that the holder would have participated therein if the
holder had held the number of shares of SANUWAVE Common Stock acquirable upon complete conversion of such holder’s preferred stock
Dividends. Holders of
preferred stock shall be entitled to receive dividends on shares of preferred stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of SANUWAVE Common Stock)
actually paid on shares of SANUWAVE Common Stock when, as and if such dividends (other than dividends in the form of SANUWAVE Common Stock) are paid on shares of SANUWAVE Common Stock. Other than as set forth in the previous sentence,
no other dividends shall be paid on shares of preferred stock.
SANUWAVE’s Board of
Directors reserves to itself alone the power to declare dividends.
|
| |
Dividends. Subject to
applicable law, the rights, if any, of the holders of any outstanding series of the preferred stock, the holders of shares of Class A Common Stock shall be entitled to receive such dividends and other distributions (payable in cash,
property or capital stock of the Combined Company) when, as and if declared thereon by the Board from time to time out of any assets or funds of the Combined Company legally available therefor and shall share equally on a per share
basis in such dividends and distributions.
|
|
||||||
Liquidation
|
||||||
Subject to applicable law, the rights, if any, of the holders of any
outstanding series of the preferred stock and the provisions of Article IX of the Current Charter, in the event of any voluntary or involuntary liquidation, dissolution or winding up of SEPA, after payment or provision for payment of the
debts and other liabilities of
|
| |
Upon any liquidation, dissolution or winding-up of SANUWAVE, whether voluntary
or involuntary, after the satisfaction in full of the debts of SANUWAVE and the payment of any liquidation preference owed to the holders of shares of capital stock of SANUWAVE ranking prior to the preferred stock upon liquidation, the
|
| |
Subject to applicable law, the rights, if any, of the holders of any
outstanding series of the preferred stock, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Combined Company, after payment or provision for payment of the debts and other liabilities of the
Combined Company, the holders of shares of
|
SEPA
|
| |
SANUWAVE
|
| |
Combined Company
|
SEPA, the holders of shares of SEPA Common Stock shall be entitled to receive
all the remaining assets of SEPA available for distribution to SEPA Stockholders, ratably in proportion to the number of shares of Class A Common Stock (on an as converted basis with respect to the Class B Common Stock) held by them.
|
| |
holders of the preferred stock shall participate pari passu with the holders
of SANUWAVE Common Stock (on an as-if-converted-to-common-stock basis without regard to any limitation on the conversion of the preferred stock) in the net assets of SANUWAVE.
|
| |
Class A Common Stock shall be entitled to receive all the remaining assets of
the Combined Company available for distribution to stockholders, ratably in proportion to the number of shares of Class A Common Stock held by them.
|
|
||||||
Choice of Law
|
||||||
If any action, the subject matter of which is within the scope of Section 12.1
of the Current Charter, is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any SEPA Stockholder, such SEPA Stockholder shall be deemed to have consented to (i) the personal
jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 12.1 of the Current Charter (an “FSC Enforcement Action”) and (ii) having service
of process made upon such SEPA Stockholder in any such FSC Enforcement Action by service upon such SEPA Stockholder’s counsel in the Foreign Action as agent for such SEPA Stockholder. Any person or entity purchasing or otherwise acquiring
any interest in any security of SEPA shall be deemed to have notice of and consented to Article XII of the Current Charter.
|
| |
There are no choice of law provisions in SANUWAVE’s articles of incorporation
or bylaws.
|
| |
If any action, the subject matter of which is within the scope of Section 10.1
of the Proposed Charter, is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any Combined Company stockholder, such Combined Company stockholder shall be deemed to have consented
to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 10.1 of the Proposed Charter (an “FSC Enforcement Action”)
and (ii) having service of process made upon such Combined Company stockholder in any such FSC Enforcement Action by service upon such Combined Company stockholder’s counsel in the Foreign Action as agent for such Combined Company
stockholder. Any person or entity purchasing or otherwise acquiring any interest in any security of the Combined Company shall be deemed to have notice of and consented to Article X of the Proposed Charter.
|
| | ||
| | ||
| | ||
| | ||
| | ||
| |
| | ||
| | ||
| | ||
| | ||
| |
| | ||
| | ||
| | ||
| | ||
| | ||
| |
| | ||
| | ||
| | ||
| | ||
| |
|
| |
December 31,
2022
|
| |
December 31,
2021
|
ASSETS
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
Cash
|
| |
$
|
| |
$
|
Prepaid expenses
|
| |
|
| |
|
Total current assets
|
| |
|
| |
|
Investments held in Trust Account
|
| |
|
| |
|
Restricted cash held with Trustee
|
| |
|
| |
|
Total Assets
|
| |
$
|
| |
$
|
|
| |
|
| |
|
LIABILITIES, REDEEMABLE CLASS A COMMON
STOCK AND STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
Accounts payable and accrued expenses
|
| |
$
|
| |
$
|
Franchise tax payable
|
| |
|
| |
|
Income tax payable
|
| |
|
| |
|
Promissory note - related party
|
| |
|
| |
|
Accrued interest on promissory note - related party
|
| |
|
| |
|
Stockholder redemption payable
|
| |
|
| |
|
Total current liabilities
|
| |
|
| |
|
Warrant liabilities
|
| |
|
| |
|
Deferred underwriting fee payable
|
| |
|
| |
|
Total Liabilities
|
| |
|
| |
|
|
| |
|
| |
|
Commitments and Contingencies (Note 6)
|
| |
|
| |
|
Class A common stock, $
|
| |
|
| |
|
|
| |
|
| |
|
Stockholders’ Deficit
|
| |
|
| |
|
Preferred stock, $
|
| |
|
| |
|
Class A common stock, $
|
| |
|
| |
|
Class B common stock, $
|
| |
|
| |
|
Additional paid-in capital
|
| |
|
| |
|
Accumulated deficit
|
| |
(
|
| |
(
|
Total Stockholders’ Deficit
|
| |
(
|
| |
(
|
TOTAL LIABILITIES, REDEEMABLE CLASS A
COMMON STOCK AND STOCKHOLDERS’ DEFICIT
|
| |
$
|
| |
$
|
|
| |
For the year ended
December 31,
2022
|
| |
For the Period from
March 1, 2021
(inception)
Through
December 31,
2021
|
Formation and operating costs
|
| |
$
|
| |
$
|
Franchise tax
|
| |
|
| |
|
Loss from operations
|
| |
(
|
| |
(
|
|
| |
|
| |
|
Other income (expense)
|
| |
|
| |
|
Interest expense on promissory note - related party
|
| |
(
|
| |
|
Expensed offering costs
|
| |
|
| |
(
|
Realized gain on investments held in Trust Account
|
| |
|
| |
|
Unrealized gain on investments held in Trust Account
|
| |
|
| |
|
Gain from change in fair value of warrant liabilities
|
| |
|
| |
|
Total other income, net
|
| |
|
| |
|
Net income before income taxes
|
| |
$
|
| |
$
|
Income tax expense
|
| |
(
|
| |
|
Net income
|
| |
$
|
| |
$
|
Weighted average shares outstanding, Class A common stock
subject to possible redemption
|
| |
|
| |
|
Basic and diluted net income per share,
Class A common stock subject to possible redemption
|
| |
$
|
| |
$
|
Weighted average shares outstanding, Class B common stock(1)
|
| |
|
| |
|
Basic and diluted net income (loss) per
share, Class B common stock
|
| |
$
|
| |
$(
|
(1)
|
|
|
| |
Class A
Common Stock
|
| |
Class B
Common Stock
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Stockholders’
Deficit
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance as of January 1, 2022
|
| |
—
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of December 31, 2022
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(
|
| |
(
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Balance as of December 31, 2022
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
|
| |
Class A
Common Stock
|
| |
Class B
Common Stock
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Stockholders’
Deficit
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance as of March 1, 2021 (inception)
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Issuance of Class B common stock to Sponsor
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Excess of cash received over the fair value of the private
placement warrants
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Excess of fair value of Founder Shares sold over the
purchase price
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Excess of cash received over the fair value of the
over-allotment private placement warrants
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Forfeiture of Class B common stock
|
| |
—
|
| |
|
| |
(
|
| |
(
|
| |
|
| |
|
| |
|
Initial accretion of Class A common stock to redemption
amount
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
(
|
| |
(
|
| |
(
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of December 31, 2021
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(
|
| |
(
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Balance as of December 31, 2021
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
|
| |
$(
|
| |
$(
|
|
| |
For the year ended
December 31,
2022
|
| |
For the Period from
March 1, 2021
(inception)
Through
December 31,
2021
|
Cash Flows from Operating Activities:
|
| |
|
| |
|
Net income
|
| |
$
|
| |
$
|
Adjustments to reconcile net income to net cash used in
operating activities:
|
| |
|
| |
|
Realized gain on investments held in Trust Account
|
| |
(
|
| |
|
Unrealized gain on investments held in Trust Account
|
| |
|
| |
(
|
Expensed offering costs
|
| |
|
| |
|
Change in fair value of warrant liabilities
|
| |
(
|
| |
(
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Prepaid expenses
|
| |
|
| |
(
|
Accounts payable and accrued expenses
|
| |
(
|
| |
|
Franchise tax payable
|
| |
(
|
| |
|
Income tax payable
|
| |
|
| |
|
Net cash used in operating activities
|
| |
(
|
| |
(
|
|
| |
|
| |
|
Cash Flows from Investing Activities:
|
| |
|
| |
|
Investment of cash into Trust Account
|
| |
|
| |
(
|
Proceeds from redemption of U.S. government treasury obligations
|
| |
|
| |
|
Purchase of U.S. government treasury obligations
|
| |
(
|
| |
|
Net cash provided by (used in) investing activities
|
| |
|
| |
(
|
|
| |
|
| |
|
Cash Flows from Financing Activities:
|
| |
|
| |
|
Proceeds from promissory note - related party
|
| |
|
| |
|
Repayment of promissory note - related party
|
| |
|
| |
(
|
Interest expense on promissory note - related party
|
| |
|
| |
|
Payment to redeeming stockholders
|
| |
(
|
| |
|
Proceeds from initial public offering, net of underwriting fees
|
| |
|
| |
|
Proceeds from sale of Private Placement Warrants
|
| |
|
| |
|
Payment of offering costs
|
| |
|
| |
(
|
Proceeds from sale of Class B common stock to Sponsor
|
| |
|
| |
|
Net cash (used by) provided by financing activities
|
| |
(
|
| |
|
|
| |
|
| |
|
Net Change in Cash and Restricted Cash
|
| |
|
| |
|
Cash and Restricted Cash - Beginning of period
|
| |
|
| |
|
Cash and Restricted Cash- End of period
|
| |
$
|
| |
$
|
|
| |
|
| |
|
Non-cash investing and financing activities:
|
| |
|
| |
|
Deferred underwriting fee payable
|
| |
$
|
| |
$
|
Excess of the fair value of Founder Shares sold over the
purchase price
|
| |
$
|
| |
$
|
Forfeiture of Class B common stock
|
| |
$
|
| |
$
|
Initial accretion of Class A common stock subject to
redemption to redemption value
|
| |
$
|
| |
$
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of December 31, 2022 and December 31, 2021
|
| |
$
|
| |
$
|
Cash paid for income taxes
|
| |
$
|
| |
$
|
Gross proceeds
|
| |
$
|
Less:
|
| |
|
Proceeds allocated to Public Warrants
|
| |
(
|
Issuance costs allocated to Class A common stock
|
| |
(
|
Plus:
|
| |
|
Initial accretion of carrying value to redemption value
|
| |
|
Subsequent accretion of carrying value to redemption value as of December 31,
2021
|
| |
|
Class A common stock subject to possible redemption as of
December 31, 2021
|
| |
|
Subsequent accretion of carrying value to redemption value as of December 31,
2022
|
| |
|
Stockholder redemption of
|
| |
(
|
Class A common stock subject to possible redemption as of
December 31, 2022
|
| |
$
|
|
| |
For the year ended
December 31,
2022
|
| |
For the Period from
March 1, 2021
(inception)
Through
December 31,
2021
|
Net income
|
| |
$
|
| |
$
|
Less: Accretion of Class A common stock to redemption amount
|
| |
(
|
| |
(
|
Net income (loss) including accretion of temporary equity
to redemption value
|
| |
$
|
| |
$(
|
|
| |
For the year ended
December 31, 2022
|
| |
For the Period from
March 1, 2021
(inception) Through
December 31, 2021
|
||||||
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
Basic and diluted net income per share:
|
| |
|
| |
|
| |
|
| |
|
Numerator:
|
| |
|
| |
|
| |
|
| |
|
Net income (loss) including accretion of temporary equity
to redemption value
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
Accretion of Class A common stock to redemption amount
|
| |
|
| |
|
| |
|
| |
|
Net income (loss)
|
| |
$
|
| |
$
|
| |
$
|
| |
$(
|
Denominator:
|
| |
|
| |
|
| |
|
| |
|
Weighted Average Common Shares
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net income (loss) per common share
|
| |
$
|
| |
$
|
| |
$
|
| |
$(
|
•
|
in whole and not in part;
|
•
|
at a price of $
|
•
|
upon not less than
|
•
|
if, and only if, the last reported sale price of the Class A common stock for any
|
•
|
in whole and not in part;
|
•
|
at $
|
•
|
if, and only if, the Reference Value equals or exceeds $
|
•
|
if the Reference Value is less than $
|
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Deferred tax assets:
|
| |
|
| |
|
Start-up costs
|
| |
$
|
| |
$
|
Net operating loss carryforwards
|
| |
|
| |
|
Total deferred tax assets
|
| |
|
| |
|
Valuation allowance
|
| |
(
|
| |
(
|
Deferred tax liabilities:
|
| |
|
| |
|
Unrealized gain on investments
|
| |
|
| |
(
|
Total deferred tax liabilities
|
| |
|
| |
(
|
Deferred tax assets, net of allowance
|
| |
$
|
| |
$
|
|
| |
For the year ended
December 31,
2022
|
| |
For the Period from
March 1, 2021
(inception)
Through
December 31,
2021
|
Federal
|
| |
|
| |
|
Current
|
| |
$
|
| |
$
|
Deferred
|
| |
(
|
| |
(
|
State
|
| |
|
| |
|
Current
|
| |
|
| |
|
Deferred
|
| |
|
| |
|
Change in valuation allowance
|
| |
|
| |
|
Income tax provision
|
| |
$
|
| |
$
|
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Statutory federal income tax rate
|
| |
|
| |
|
State taxes, net of federal tax benefit
|
| |
|
| |
|
Change in fair value of derivative warrant liabilities
|
| |
(
|
| |
(
|
Non-deductible transaction costs
|
| |
|
| |
|
Change in valuation allowance
|
| |
|
| |
|
Income tax provision
|
| |
|
| |
|
Description
|
| |
Amount at
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
December 31, 2022
|
| |
|
| |
|
| |
|
| |
|
Liabilities
|
| |
|
| |
|
| |
|
| |
|
Warrant liability – Public Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Warrant liability – Private Placement Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Description
|
| |
Amount at
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
December 31, 2021
|
| |
|
| |
|
| |
|
| |
|
Assets
|
| |
|
| |
|
| |
|
| |
|
Investments held in Trust Account:
|
| |
|
| |
|
| |
|
| |
|
U.S. government treasury obligations
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Liabilities
|
| |
|
| |
|
| |
|
| |
|
Warrant liability – Public Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Warrant liability – Private Placement Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
As of July 30,
2021
(Initial
Measurement)
|
Stock price
|
| |
$
|
Exercise price
|
| |
$
|
Dividend yield
|
| |
—%
|
Expected term (in years)
|
| |
|
Volatility
|
| |
|
Risk-free rate
|
| |
|
Fair value
|
| |
$
|
Fair value as of March 1, 2021
|
| |
$—
|
Initial measurement of Public Warrants and Private Placement Warrants as of
July 30, 2021
|
| |
|
Initial measurement of Public Warrants and Private Placement Warrants upon
exercise of
over-allotment on August 20, 2021
|
| |
|
Transfer of Public Warrants to Level 1 measurement
|
| |
(
|
Transfer of Private Placement Warrants to Level 2 measurement
|
| |
(
|
Change in fair value
|
| |
(
|
Fair value as of December 31, 2021
|
| |
—
|
Fair value as of December 31, 2022
|
| |
$—
|
|
| |
June 30,
2023
|
| |
December 31,
2022
|
|
| |
(Unaudited)
|
| |
|
ASSETS
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$
|
| |
$
|
Prepaid expenses and other current assets
|
| |
|
| |
|
Total current assets
|
| |
|
| |
|
Investments held in Trust Account
|
| |
|
| |
|
Restricted cash held with Trustee
|
| |
|
| |
|
Total Assets
|
| |
$
|
| |
$
|
|
| |
|
| |
|
LIABILITIES, REDEEMABLE CLASS A COMMON
STOCK AND STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
Accounts payable and accrued expenses
|
| |
$
|
| |
$
|
Franchise tax payable
|
| |
|
| |
|
Income tax payable
|
| |
|
| |
|
Promissory note - related party
|
| |
|
| |
|
Accrued interest on promissory note - related party
|
| |
|
| |
|
Stockholder redemption payable
|
| |
|
| |
|
Total current liabilities
|
| |
|
| |
|
Warrant liabilities
|
| |
|
| |
|
Deferred underwriting fee payable
|
| |
|
| |
|
Total Liabilities
|
| |
|
| |
|
|
| |
|
| |
|
Commitments and Contingencies (Note 6)
|
| |
|
| |
|
Class A common stock, $
|
| |
|
| |
|
|
| |
|
| |
|
Stockholders’ Deficit
|
| |
|
| |
|
Preferred stock, $
|
| |
|
| |
|
Class A common stock, $
|
| |
|
| |
|
Class B common stock, $
|
| |
|
| |
|
Additional paid-in capital
|
| |
|
| |
|
Accumulated deficit
|
| |
(
|
| |
(
|
Total Stockholders’ Deficit
|
| |
(
|
| |
(
|
TOTAL LIABILITIES, REDEEMABLE CLASS A
COMMON STOCK AND STOCKHOLDERS’ DEFICIT
|
| |
$
|
| |
$
|
|
| |
Three months ended
June 30,
|
| |
Six months ended
June 30,
|
||||||
|
| |
2023
|
| |
2022
|
| |
2023
|
| |
2022
|
Formation and operating costs
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Franchise tax
|
| |
|
| |
|
| |
|
| |
|
Loss from operations
|
| |
(
|
| |
(
|
| |
(
|
| |
(
|
|
| |
|
| |
|
| |
|
| |
|
Other income (expense)
|
| |
|
| |
|
| |
|
| |
|
Interest expense on promissory note - related party
|
| |
(
|
| |
|
| |
(
|
| |
|
Earnings on trading securities
|
| |
|
| |
|
| |
|
| |
|
Realized gain on investments held in Trust Account
|
| |
|
| |
|
| |
|
| |
|
Unrealized gain on investments held in Trust Account
|
| |
|
| |
|
| |
|
| |
|
Unrealized gain from change in fair value of warrant
liabilities
|
| |
|
| |
|
| |
|
| |
|
Gain on waiver of deferred underwriting commissions by
underwriter
|
| |
|
| |
|
| |
|
| |
|
Total other income, net
|
| |
|
| |
|
| |
|
| |
|
Net income
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Weighted average shares outstanding, Class A common stock
subject to possible redemption
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net income (loss) per
share, Class A common stock subject to possible redemption
|
| |
$(
|
| |
$
|
| |
$(
|
| |
$
|
Weighted average shares outstanding, Class B common stock
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net income per share,
Class B common stock
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Class A
Common Stock
|
| |
Class B
Common Stock
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Stockholders’
Deficit
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance as of December 31, 2022
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of March 31, 2023
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(
|
| |
(
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Balance as of March 31, 2023
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
Waiver of deferred underwriting commissions by underwriter
(see Note 6)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of June 30, 2023
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(
|
| |
(
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Balance as of June 30, 2023
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
|
| |
Class A
Common Stock
|
| |
Class B
Common Stock
|
| |
Additional
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
Stockholders’
Deficit
|
||||||
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance as of December 31, 2021
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of March 31, 2022
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(
|
| |
(
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Balance as of March 31, 2022
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of June 30, 2022
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
(
|
| |
(
|
Net income
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
|
| |
|
| |
|
Balance as of June 30, 2022
|
| |
|
| |
$
|
| |
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
|
| |
For the six
months ended
June 30,
2023
|
| |
For the six
months ended
June 30,
2022
|
Cash Flows from Operating Activities:
|
| |
|
| |
|
Net income
|
| |
$
|
| |
$
|
Adjustments to reconcile net income to net cash used in
operating activities:
|
| |
|
| |
|
Realized gain on investments held in Trust Account
|
| |
|
| |
(
|
Unrealized gain on investments held in Trust Account
|
| |
(
|
| |
(
|
Accrued interest expense on promissory note - related party
|
| |
|
| |
|
Unrealized gain from change in fair value of warrant liabilities
|
| |
(
|
| |
(
|
Gain on waiver of deferred underwriting commissions by
underwriter
|
| |
(
|
| |
|
|
| |
|
| |
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Prepaid expenses
|
| |
|
| |
|
Accounts payable and accrued expenses
|
| |
(
|
| |
(
|
Franchise tax payable
|
| |
(
|
| |
(
|
Net cash used in operating activities
|
| |
(
|
| |
(
|
|
| |
|
| |
|
Cash Flows from Investing Activities:
|
| |
|
| |
|
Purchase of U.S. government treasury obligations
|
| |
(
|
| |
(
|
Proceeds from redemption of U.S. government treasury obligations
|
| |
|
| |
|
Net cash used in investing activities
|
| |
(
|
| |
|
|
| |
|
| |
|
Cash Flows from Financing Activities:
|
| |
|
| |
|
Payment to redeeming stockholders
|
| |
(
|
| |
|
Net cash used in financing activities
|
| |
(
|
| |
|
|
| |
|
| |
|
Net Change in Cash, Cash Equivalents and Restricted Cash
|
| |
(
|
| |
(
|
Cash, Cash Equivalents and Restricted Cash- Beginning of period
|
| |
|
| |
|
Cash, Cash Equivalents and Restricted Cash- End of period
|
| |
$
|
| |
$
|
|
| |
|
| |
|
Non-cash investing and financing activities:
|
| |
|
| |
|
Waiver of deferred underwriting commissions by underwriter
(see Note 6)
|
| |
$
|
| |
$
|
Subsequent accretion of Class A common stock subject to
redemption to redemption amount as of June 30, 2023 and 2022
|
| |
$
|
| |
$
|
|
| |
June 30,
2023
|
| |
December 31,
2022
|
|
| |
(Unaudited)
|
| |
|
Cash
|
| |
$
|
| |
$
|
Cash equivalents
|
| |
|
| |
|
Restricted cash
|
| |
|
| |
|
Total Cash
|
| |
$
|
| |
$
|
Gross proceeds
|
| |
$
|
Less:
|
| |
|
Proceeds allocated to Public Warrants
|
| |
(
|
Issuance costs allocated to Class A common stock
|
| |
(
|
Plus:
|
| |
|
Initial accretion of carrying value to redemption value
|
| |
|
Subsequent accretion of carrying value to redemption value as of December 31,
2021
|
| |
|
Class A common stock subject to possible redemption as of
December 31, 2021
|
| |
|
Subsequent accretion of carrying value to redemption value as of December 31,
2022
|
| |
|
Stockholder redemption of 16,737,241 shares at $10.10 per share plus realized
gains
|
| |
(
|
Class A common stock subject to possible redemption as of
December 31, 2022
|
| |
|
Subsequent accretion of carrying value to redemption value as of March 31, 2023
|
| |
|
Class A common stock subject to possible redemption as of
March 31, 2023
|
| |
|
Subsequent accretion of carrying value to redemption value as of June 30, 2023
|
| |
|
Class A common stock subject to possible redemption as of
June 30, 2023
|
| |
$
|
|
| |
For the three
months ended
June 30,
2023
|
| |
For the three
months ended
June 30,
2022
|
| |
For the six
months ended
June 30,
2023
|
| |
For the six
months ended
June 30,
2022
|
Net income
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Accretion of Class A common stock to redemption amount
|
| |
(
|
| |
(
|
| |
(
|
| |
(
|
Gain on waiver of deferred underwriting commissions by
underwriter
|
| |
|
| |
|
| |
|
| |
|
Net income (loss) including accretion of temporary equity to
redemption value and gain on waiver of deferred underwriting commissions by underwriter
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
For the Three Months Ended June 30,
|
| |
For the Six Months Ended June 30,
|
||||||||||||||||||
|
| |
2023
|
| |
2022
|
| |
2023
|
| |
2022
|
||||||||||||
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
Basic and diluted net income (loss) per share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Numerator:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net income (loss) including accretion of temporary equity to
redemption value and gain on waiver of deferred underwriting commissions by underwriter
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Accretion of Class A common stock to redemption amount
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Gain on waiver of deferred underwriting commissions by
underwriter
|
| |
(
|
| |
—
|
| |
—
|
| |
—
|
| |
(
|
| |
—
|
| |
—
|
| |
—
|
Net income (loss)
|
| |
$(
|
| |
$
|
| |
$
|
| |
$
|
| |
$(
|
| |
|
| |
$
|
| |
$
|
|
| |
For the Three Months Ended June 30,
|
| |
For the Six Months Ended June 30,
|
||||||||||||||||||
|
| |
2023
|
| |
2022
|
| |
2023
|
| |
2022
|
||||||||||||
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
| |
Class A
|
| |
Class B
|
Denominator:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted Average Common Stock
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic and diluted net income (loss) per
common share
|
| |
$(
|
| |
$
|
| |
$
|
| |
$
|
| |
$(
|
| |
$
|
| |
$
|
| |
$
|
•
|
in whole and not in part;
|
•
|
at a price of $
|
•
|
upon not less than
|
•
|
if, and only if, the last reported sale price of the Class A common stock for any
|
•
|
in whole and not in part;
|
•
|
at $
|
•
|
if, and only if, the Reference Value equals or exceeds $
|
•
|
if the Reference Value is less than $
|
Description
|
| |
Amount at
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
June 30, 2023 (Unaudited)
|
| |
|
| |
|
| |
|
| |
|
Assets
|
| |
|
| |
|
| |
|
| |
|
Investments held in Trust Account:
|
| |
|
| |
|
| |
|
| |
|
U.S. government treasury obligations
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Investments held in Brokerage Account
|
| |
|
| |
|
| |
|
| |
|
U.S. government treasury obligations
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Liabilities
|
| |
|
| |
|
| |
|
| |
|
Warrant liability – Public Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Warrant liability – Private Placement Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Description
|
| |
Amount at
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
December 31, 2022
|
| |
|
| |
|
| |
|
| |
|
Liabilities
|
| |
|
| |
|
| |
|
| |
|
Warrant liability – Public Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
Warrant liability – Private Placement Warrants
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
•
|
We obtained an understanding of the design of the Company's controls over the valuation of the 2022 Convertible Promissory
Notes and Warrant Liability, including controls over management's review of the valuation model and the significant assumptions used in determining the fair value of the embedded conversion option of the 2022 Convertible Promissory Notes
and Warrant Liability.
|
•
|
With assistance of our valuation specialists, we audited the fair value of the embedded conversion option and warrant
liability, valuation methodology, and key assumptions used in determining the fair value of the embedded conversion option of the 2022 Convertible Promissory Notes and Warrant Liability by:
|
a.
|
Evaluating the appropriateness of the valuation model and techniques used in determining the fair value;
|
b.
|
Assessing the significant valuation assumption inputs of discounted stock price and implied volatility are consistent with
those that would be used by market participants through the testing of source information, checking the mathematical accuracy of the calculation, and developing independent estimates and comparing to those selected by management, where
applicable; and
|
c.
|
Recalculating the fair value that management arrived to verify it was reasonable.
|
•
|
We audited the completeness and accuracy of the underlying data supporting the significant valuation assumption inputs.
|
(In thousands, except share data)
|
| |
2022
|
| |
2021
|
ASSETS
|
| |
|
| |
|
Current Assets:
|
| |
|
| |
|
Cash
|
| |
$1,153
|
| |
$619
|
Accounts receivable, net of allowance of $1,037 in 2022 and $785 in 2021
|
| |
4,029
|
| |
2,415
|
Inventory
|
| |
868
|
| |
1,040
|
Prepaid expenses and other current assets
|
| |
570
|
| |
326
|
Total Current Assets
|
| |
6,620
|
| |
4,400
|
Non-Current Assets:
|
| |
|
| |
|
Property, equipment and right of use assets, net
|
| |
750
|
| |
1,012
|
Intangible assets, net
|
| |
5,137
|
| |
5,841
|
Goodwill
|
| |
7,260
|
| |
7,260
|
Other assets
|
| |
106
|
| |
106
|
Total Non-Current Assets
|
| |
13,253
|
| |
14,219
|
Total Assets
|
| |
$19,873
|
| |
$18,619
|
|
| |
|
| |
|
LIABILITIES
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
Senior secured debt, in default
|
| |
$14,416
|
| |
$11,586
|
Convertible promissory notes
|
| |
16,713
|
| |
11,601
|
Convertible promissory note, related parties
|
| |
7,409
|
| |
1,596
|
Factoring liabilities
|
| |
2,130
|
| |
2,183
|
Accounts payable
|
| |
4,400
|
| |
7,644
|
Accrued expenses
|
| |
8,512
|
| |
8,641
|
Warrant liability
|
| |
1,416
|
| |
9,614
|
Current portion of SBA loans
|
| |
—
|
| |
158
|
Accrued interest
|
| |
4,052
|
| |
2,521
|
Accrued interest, related parties
|
| |
788
|
| |
289
|
Current portion of contract liabilities
|
| |
60
|
| |
48
|
Other
|
| |
291
|
| |
382
|
Total Current Liabilities
|
| |
60,187
|
| |
56,263
|
Non-Current Liabilities:
|
| |
|
| |
|
SBA loans
|
| |
—
|
| |
875
|
Contract liabilities
|
| |
230
|
| |
293
|
Lease liabilities
|
| |
438
|
| |
118
|
Deferred tax liability
|
| |
28
|
| |
28
|
Total Non-Current Liabilities
|
| |
696
|
| |
1,314
|
Total Liabilities
|
| |
$60,883
|
| |
$57,577
|
|
| |
|
| |
|
Commitments and Contingencies (Footnote 21)
|
| |
|
| |
|
|
| |
|
| |
|
STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
Preferred stock, par value $0.001, 5,000,000 shares
authorized, 6,175 Series A, 293 Series B, 90 Series C, and 8 Series D designated shares, respectively; no shares issues and outstanding at 2022 and 2021
|
| |
$—
|
| |
$—
|
Common stock, par value $0.001, 2,500,000,000 shares
authorized, 548,737,651 and 481,619,621 issued and outstanding at 2022 and 2021, respectively
|
| |
549
|
| |
482
|
Additional paid-in capital
|
| |
152,750
|
| |
144,582
|
Accumulated deficit
|
| |
(194,242)
|
| |
(183,949)
|
Accumulated other comprehensive loss
|
| |
(67)
|
| |
(73)
|
Total Stockholders’ Deficit
|
| |
(41,010)
|
| |
(38,958)
|
Total Liabilities and Stockholders’ Deficit
|
| |
$19,873
|
| |
$18,619
|
(In thousands, except share and per share data)
|
| |
2022
|
| |
2021
|
Revenue
|
| |
$16,742
|
| |
$13,010
|
Cost of revenues
|
| |
4,331
|
| |
4,986
|
Gross Margin
|
| |
12,411
|
| |
8,024
|
|
| |
|
| |
|
Operating Expenses:
|
| |
|
| |
|
General and administrative
|
| |
12,556
|
| |
11,690
|
Selling and marketing
|
| |
7,474
|
| |
8,591
|
Research and development
|
| |
567
|
| |
1,101
|
Depreciation and amortization
|
| |
766
|
| |
784
|
Total Operating Expenses
|
| |
21,363
|
| |
22,166
|
|
| |
|
| |
|
Operating Loss
|
| |
(8,952)
|
| |
(14,142)
|
|
| |
|
| |
|
Other Income (Expense)
|
| |
|
| |
|
Interest expense
|
| |
(12,771)
|
| |
(6,883)
|
Interest expense, related party
|
| |
(1,361)
|
| |
(212)
|
Change in fair value of derivative liabilities
|
| |
16,654
|
| |
(2,622)
|
Loss on issuance of debt
|
| |
(3,434)
|
| |
(3,572)
|
Gain/(loss) on extinguishment of debt
|
| |
(418)
|
| |
204
|
Loss on foreign currency exchange
|
| |
(9)
|
| |
(4)
|
Total Other Expense
|
| |
(1,339)
|
| |
(13,089)
|
|
| |
|
| |
|
Net Loss Before Income Taxes
|
| |
(10,291)
|
| |
(27,231)
|
|
| |
|
| |
|
Income tax expense
|
| |
2
|
| |
28
|
|
| |
|
| |
|
Net Loss
|
| |
$(10,293)
|
| |
$(27,259)
|
|
| |
|
| |
|
Other Comprehensive Loss
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
6
|
| |
(11)
|
Total Comprehensive Loss
|
| |
$(10,287)
|
| |
$(27,270)
|
|
| |
|
| |
|
Loss per Share:
|
| |
|
| |
|
Net loss per share, basic and diluted
|
| |
$(0.02)
|
| |
$(0.05)
|
Weighted average shares outstanding, basic and diluted
|
| |
549,470,787
|
| |
518,355,642
|
|
| |
Common Stock
|
| |
|
| |
|
| |
|
| |
|
|||
(In thousands except share data)
|
| |
Shares Issued and
Outstanding
|
| |
Par Value
|
| |
Additional
Paid-in Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Loss
|
| |
Total
|
Balances as of December 31, 2020
|
| |
470,694,621
|
| |
$471
|
| |
$142,563
|
| |
$(156,690)
|
| |
$(62)
|
| |
$(13,718)
|
Cashless warrant exercise
|
| |
10,925,000
|
| |
11
|
| |
(11)
|
| |
—
|
| |
—
|
| |
—
|
Reclassification of warrant liability due to cashless
warrant exercise
|
| |
—
|
| |
—
|
| |
2,030
|
| |
—
|
| |
—
|
| |
2,030
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(27,259)
|
| |
—
|
| |
(27,259)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(11)
|
| |
(11)
|
Balances as of December 31, 2021
|
| |
481,619,621
|
| |
$482
|
| |
$144,582
|
| |
$(183,949)
|
| |
$(73)
|
| |
$(38,958)
|
Cashless warrant exercise
|
| |
14,000,000
|
| |
$14
|
| |
$2,152
|
| |
$—
|
| |
$—
|
| |
$2,166
|
Warrant exercise
|
| |
909,091
|
| |
1
|
| |
99
|
| |
—
|
| |
—
|
| |
100
|
Shares issued in conjunction with senior note
|
| |
20,666,993
|
| |
20
|
| |
3,700
|
| |
—
|
| |
—
|
| |
3,720
|
Shares issued for settlement of debt and warrants
|
| |
19,444,446
|
| |
20
|
| |
1,341
|
| |
—
|
| |
—
|
| |
1,361
|
Shares issued for services
|
| |
12,097,500
|
| |
12
|
| |
876
|
| |
—
|
| |
—
|
| |
888
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(10,293)
|
| |
—
|
| |
(10,293)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
6
|
| |
6
|
Balance as of December 31, 2022
|
| |
548,737,651
|
| |
$549
|
| |
$152,750
|
| |
$(194,242)
|
| |
$(67)
|
| |
$(41,010)
|
(In thousands)
|
| |
2022
|
| |
2021
|
Cash Flows - Operating Activities:
|
| |
|
| |
|
Net loss
|
| |
$(10,293)
|
| |
$(27,259)
|
Adjustments to reconcile net loss to net cash used by operating activities
|
| |
|
| |
|
Depreciation and amortization
|
| |
952
|
| |
1,236
|
Bad debt expense
|
| |
253
|
| |
442
|
Shares issued for services
|
| |
888
|
| |
—
|
Gain/loss on extinguishment of debt
|
| |
418
|
| |
(204)
|
Income tax expense
|
| |
2
|
| |
28
|
Change in fair value of derivative liabilities
|
| |
(16,654)
|
| |
2,622
|
Loss on issuance of debt
|
| |
3,434
|
| |
3,572
|
Amortization of debt issuance and debt discounts
|
| |
4,950
|
| |
3,226
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
Accounts receivable
|
| |
(1,748)
|
| |
(395)
|
Inventory, prepaid expenses and other assets
|
| |
(72)
|
| |
1,687
|
Accounts payable
|
| |
(2,550)
|
| |
3,181
|
Accrued interest and accrued interest, related parties
|
| |
3,182
|
| |
1,718
|
Accrued expenses and contract liabilities
|
| |
69
|
| |
3,737
|
Net Cash Used by Operating Activities
|
| |
(17,169)
|
| |
(6,409)
|
|
| |
|
| |
|
Cash Flows - Investing Activities
|
| |
|
| |
|
Purchase (proceeds from sale) of property and equipment
|
| |
332
|
| |
(529)
|
Net Cash Flows Used by Investing Activities
|
| |
332
|
| |
(529)
|
|
| |
|
| |
|
Cash Flows - Financing Activities
|
| |
|
| |
|
Proceeds from convertible promissory notes
|
| |
16,227
|
| |
1,928
|
Proceeds from SBA loans
|
| |
—
|
| |
1,033
|
Proceeds from senior secured promissory note
|
| |
2,940
|
| |
940
|
Proceeds from factoring
|
| |
695
|
| |
1,737
|
Proceeds from warrant exercises
|
| |
100
|
| |
—
|
Proceeds from short term borrowings
|
| |
640
|
| |
175
|
Repayments of debt principal
|
| |
(2,981)
|
| |
(493)
|
Principal payments on finance leases
|
| |
(237)
|
| |
(199)
|
Net Cash Flows Provided by Financing Activities
|
| |
17,384
|
| |
5,121
|
|
| |
|
| |
|
Effect of Exchange Rates on Cash
|
| |
(13)
|
| |
(1)
|
|
| |
|
| |
|
Net Change in Cash During Period
|
| |
534
|
| |
(1,818)
|
|
| |
|
| |
|
Cash at Beginning of Period
|
| |
619
|
| |
2,437
|
Cash at End of Period
|
| |
$1,153
|
| |
$619
|
|
| |
|
| |
|
Supplemental Information:
|
| |
|
| |
|
Cash paid for interest
|
| |
$3,712
|
| |
$2,580
|
Non-Cash Investing and Financing Activities:
|
| |
|
| |
|
Reclassification of warrant liabilities to equity due to cashless warrant
exercise
|
| |
$2,166
|
| |
$2,030
|
Settlement of debt and warrants with stock
|
| |
1,361
|
| |
—
|
Working capital balances refinanced into convertible promissory notes
|
| |
2,363
|
| |
—
|
Embedded conversion feature on convertible debt
|
| |
2,760
|
| |
4,138
|
Common shares issued in conjunction with senior secured debt
|
| |
3,720
|
| |
—
|
Warrant issuance in conjunction with advances on future cash receipts
|
| |
—
|
| |
1,227
|
Warrant issuance in conjunction with convertible notes
|
| |
1,708
|
| |
1,055
|
(in thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Common shares
|
| |
526,530
|
| |
481,620
|
Common shares issuable assuming exercise of nominally priced warrants
|
| |
22,941
|
| |
36,736
|
Weighted Average Shares Outstanding
|
| |
549,471
|
| |
518,356
|
(in thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Common stock options
|
| |
21,246
|
| |
31,760
|
Common stock purchase warrants
|
| |
1,186,522
|
| |
168,192
|
Convertible notes payable, including interest
|
| |
603,425
|
| |
90,380
|
|
| |
1,811,193
|
| |
290,332
|
(in thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Finished goods
|
| |
$570
|
| |
$343
|
Parts and accessories
|
| |
641
|
| |
931
|
Reserve for slow moving inventory
|
| |
(343)
|
| |
(234)
|
Total Inventory
|
| |
$868
|
| |
$1,040
|
|
| |
December 31, 2022
|
| |
December 31, 2021
|
| |
Weighted-Average
Useful Life
(in years)
|
||||||
(in thousands)
|
| |
Gross
|
| |
Accumulated
Amortization
|
| |
Gross
|
| |
Accumulated
Amortization
|
| ||
Definite-lived Intangibles
|
| |
|
| |
|
| |
|
| |
|
| |
|
Customer relationships
|
| |
$3,820
|
| |
$(1,308)
|
| |
$3,820
|
| |
$(763)
|
| |
2.9
|
Patent
|
| |
2,312
|
| |
(292)
|
| |
2,312
|
| |
(171)
|
| |
6.4
|
Tradenames
|
| |
693
|
| |
(88)
|
| |
693
|
| |
(50)
|
| |
1.9
|
Intangible Assets
|
| |
$6,825
|
| |
$(1,688)
|
| |
$6,825
|
| |
$(984)
|
| |
3.8
|
Year ended December 31,
|
| |
Amortization
|
2023
|
| |
704
|
2024
|
| |
704
|
2025
|
| |
704
|
2026
|
| |
704
|
2027
|
| |
487
|
(in thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Registration penalties
|
| |
$1,583
|
| |
$1,950
|
License fees
|
| |
892
|
| |
893
|
Board of directors fees
|
| |
415
|
| |
507
|
Employee compensation
|
| |
4,585
|
| |
4,247
|
Other
|
| |
1,037
|
| |
1,044
|
Total Accrued Expenses
|
| |
$8,512
|
| |
$8,641
|
(In thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Receivables transferred
|
| |
$2,564
|
| |
$2,026
|
Reserve amount held
|
| |
(434)
|
| |
(289)
|
Traditional factoring liability
|
| |
2,130
|
| |
1,737
|
Advances on future cash receipts
|
| |
—
|
| |
446
|
Factoring liability
|
| |
$2,130
|
| |
$2,183
|
|
| |
December 31, 2022
|
| |
December 31, 2021
|
||||||||||||
(In thousands)
|
| |
Principal
|
| |
Debt
Discount
|
| |
Carrying
Value
|
| |
Principal
|
| |
Debt
Discount
|
| |
Carrying
Value
|
Senior secured debt
|
| |
$19,211
|
| |
$(4,795)
|
| |
$14,416
|
| |
$15,000
|
| |
$(3,414)
|
| |
$11,586
|
|
| |
December 31, 2022
|
||||||||||||
(In thousands, except conversion price)
|
| |
Conversion
Price
|
| |
Principal
|
| |
Debt
Discount
|
| |
Conversion
Option
|
| |
Carrying
Value
|
Acquisition convertible promissory note, in default
|
| |
$0.10
|
| |
$4,000
|
| |
$—
|
| |
$—
|
| |
$4,000
|
Convertible promissory note, related party, in default
|
| |
$0.10
|
| |
1,373
|
| |
—
|
| |
—
|
| |
1,373
|
2022 Convertible notes payable
|
| |
$0.04
|
| |
13,660
|
| |
(2,532)
|
| |
1,585
|
| |
12,713
|
2022 Convertible notes payable, related parties
|
| |
$0.04
|
| |
6,515
|
| |
(1,234)
|
| |
755
|
| |
6,036
|
Total Convertible promissory notes
|
| |
|
| |
$25,548
|
| |
$(3,766)
|
| |
$2,340
|
| |
$24,122
|
|
| |
December 31, 2021
|
||||||||||||
(In thousands, except conversion price)
|
| |
Conversion
Price
|
| |
Principal
|
| |
Debt
Discount
|
| |
Conversion
Option
|
| |
Carrying
Value
|
2021 Convertible promissory notes payable
|
| |
$0.10
|
| |
$2,446
|
| |
$(1,100)
|
| |
$6,255
|
| |
$7,601
|
Acquisition convertible promissory note, in default
|
| |
$0.10
|
| |
4,000
|
| |
—
|
| |
—
|
| |
4,000
|
Convertible promissory note payable, related parties, in
default
|
| |
$0.10
|
| |
1,596
|
| |
—
|
| |
—
|
| |
1,596
|
Total Convertible Promissory Notes
|
| |
|
| |
$8,042
|
| |
$(1,100)
|
| |
$6,255
|
| |
$13,197
|
|
| |
Fair value measurement at December 31, 2022
|
|||||||||
(in thousands)
|
| |
Fair value
|
| |
Quoted
prices in
active
markets
(Level 1)
|
| |
Significant
other
observable
inputs
(Level 2)
|
| |
Significant
unobservable
inputs
(Level 3)
|
Warrant liability
|
| |
$1,416
|
| |
—
|
| |
—
|
| |
$1,416
|
Conversion option
|
| |
2,340
|
| |
—
|
| |
—
|
| |
2,340
|
Total Fair Value
|
| |
$3,756
|
| |
$—
|
| |
$—
|
| |
$3,756
|
|
| |
Fair value measurement at December 31, 2021
|
|||||||||
(in thousands)
|
| |
Fair value
|
| |
Quoted
prices in
active
markets
(Level 1)
|
| |
Significant
other
observable
inputs
(Level 2)
|
| |
Significant
unobservable
inputs
(Level 3)
|
Warrant liability
|
| |
$9,614
|
| |
—
|
| |
—
|
| |
$9,614
|
Conversion option
|
| |
6,255
|
| |
—
|
| |
—
|
| |
6,255
|
Total Fair Value
|
| |
$15,869
|
| |
$—
|
| |
$—
|
| |
$15,869
|
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Weighted average expected life in years
|
| |
4.68
|
| |
4.67
|
Weighted average volatility
|
| |
92%
|
| |
116%
|
Value of underlying shares
|
| |
$0.005
|
| |
$0.17
|
Weighted average risk free interest rate
|
| |
4.00%
|
| |
1.20%
|
Expected dividend yield
|
| |
—
|
| |
—
|
(in thousands, except per share data)
|
| |
Warrants
Outstanding
|
| |
Fair Value
per Share
|
| |
Warrant Liability
Fair Value
|
Balance December 31, 2020
|
| |
48,091
|
| |
$0.18
|
| |
$8,856
|
Cashless exercise
|
| |
(11,400)
|
| |
0.18
|
| |
(2,030)
|
Issuance of warrants classified as liabilities
|
| |
25,926
|
| |
0.10
|
| |
2,282
|
Change in fair value
|
| |
—
|
| | | |
506
|
|
Balance December 31, 2021
|
| |
62,617
|
| |
$0.15
|
| |
$9,614
|
Warrants exercised
|
| |
(27,037)
|
| |
0.09
|
| |
(3,130)
|
Issuance of warrants classified as liabilities
|
| |
1,031,277
|
| |
0.06
|
| |
4,873
|
Change in fair value
|
| |
—
|
| | | |
(9,941)
|
|
Balance December 31, 2022
|
| |
1,066,857
|
| |
$0.06
|
| |
$1,416
|
|
| |
Initial Valuation Assumptions
|
| |
Year End Valuation Assumptions
|
||||||
|
| |
August 2022
Convertible Notes
|
| |
November 2022
Convertible Notes
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Conversion price(1)
|
| |
$0.04
|
| |
$0.04
|
| |
$0.04
|
| |
$0.11
|
Value of underlying shares
|
| |
$0.006
|
| |
$0.005
|
| |
$0.005
|
| |
$0.17
|
Interest Rate (annual)(2)
|
| |
3.24%
|
| |
4.48%
|
| |
4.64%
|
| |
0.18%
|
Volatility (annual)(3)
|
| |
349%
|
| |
438%
|
| |
503%
|
| |
290%
|
Time to maturity
|
| |
1.00
|
| |
0.73
|
| |
0.60
|
| |
0.50
|
(1)
|
Based on the terms provided in the convertible promissory note agreements to convert to common stock of the Company.
|
(2)
|
Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.
|
(3)
|
Based on the historical daily volatility of the Company as of each presented period ending date. As of December 31, 2022, the
Company applied a discount rate to the historical volatility.
|
(in thousands)
|
| |
Conversion
Liability
|
Balance December 31, 2020
|
| |
$—
|
Convertible feature
|
| |
4,139
|
Change in fair value
|
| |
2,116
|
Balance December 31, 2021
|
| |
$6,255
|
(in thousands)
|
| |
Conversion
Liability
|
Issuance of Convertible Notes
|
| |
2,760
|
Settlement of convertible notes
|
| |
(218)
|
Change in fair value
|
| |
(6,457)
|
Balance December 31, 2022
|
| |
$2,340
|
|
| |
Year Ended
December 31,
|
|||
(in thousands)
|
| |
2022
|
| |
2021
|
Beginning balance
|
| |
$341
|
| |
$69
|
New service agreements
|
| |
202
|
| |
100
|
Deposit on future equipment purchases
|
| |
—
|
| |
204
|
Revenue recognized
|
| |
(253)
|
| |
(32)
|
Total Contract Liabilities
|
| |
$290
|
| |
$341
|
(in thousands, except per share data)
|
| |
Warrants
|
| |
Weighted
Average
Exercise
Price
|
| |
Weighted
Average
Remaining
Life (years)
|
Warrants at December 31, 2020
|
| |
190,357
|
| |
$0.19
|
| |
3.43
|
Issuances
|
| |
25,926
|
| |
0.18
|
| |
|
Exercised
|
| |
(11,400)
|
| |
0.01
|
| |
|
Forfeited or expired
|
| |
—
|
| |
—
|
| |
|
Outstanding at December 31, 2021
|
| |
204,883
|
| |
$0.20
|
| |
2.54
|
Issuances
|
| |
1,031,276
|
| |
0.06
|
| |
|
Exercised
|
| |
(27,943)
|
| |
0.09
|
| |
|
Forfeited or expired
|
| |
—
|
| |
—
|
| |
|
Outstanding at December 31, 2022
|
| |
1,208,216
|
| |
$0.07
|
| |
3.55
|
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Accounts Receivable:
|
| |
|
| |
|
Customer A
|
| |
—
|
| |
24%
|
Customer B
|
| |
—
|
| |
16%
|
|
| |
Year ended December 31,
|
|||
|
| |
2022
|
| |
2021
|
Purchases:
|
| |
|
| |
|
Vendor A
|
| |
19%
|
| |
50%
|
Vendor B
|
| |
—
|
| |
21%
|
|
| |
Year ended December 31, 2022
|
| |
Year ended December 31, 2021
|
||||||||||||
|
| |
United States
|
| |
International
|
| |
Total
|
| |
United States
|
| |
International
|
| |
Total
|
Accessory and parts revenue
|
| |
$9,790
|
| |
$72
|
| |
$9,862
|
| |
$7,770
|
| |
$302
|
| |
$8,072
|
System revenue
|
| |
5,179
|
| |
149
|
| |
5,328
|
| |
2,766
|
| |
350
|
| |
3,116
|
License fees and other
|
| |
283
|
| |
38
|
| |
321
|
| |
135
|
| |
60
|
| |
195
|
Product Revenue
|
| |
$15,252
|
| |
$259
|
| |
$15,511
|
| |
$10,671
|
| |
$712
|
| |
$11,383
|
Rental Income
|
| |
1,231
|
| |
—
|
| |
1,231
|
| |
1,627
|
| |
—
|
| |
1,627
|
Total Revenue
|
| |
$16,483
|
| |
$259
|
| |
$16,742
|
| |
$12,298
|
| |
$712
|
| |
$13,010
|
|
| |
Year ended
December 31,
|
|||
(In thousands)
|
| |
2022
|
| |
2021
|
Domestic
|
| |
$(10,279)
|
| |
$(27,208)
|
Foreign
|
| |
(12)
|
| |
(23)
|
Net loss before income taxes
|
| |
$(10,291)
|
| |
$(27,231)
|
(In thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Current:
|
| |
|
| |
|
Federal
|
| |
$—
|
| |
$—
|
State
|
| |
2
|
| |
28
|
Foreign
|
| |
—
|
| |
—
|
Current Tax Provision
|
| |
$2
|
| |
$28
|
Deferred:
|
| |
|
| |
|
Federal
|
| |
$(5,657)
|
| |
$(5,038)
|
State
|
| |
753
|
| |
(869)
|
Foreign
|
| |
(1)
|
| |
4
|
Change in valuation allowance
|
| |
4,905
|
| |
5,903
|
Deferred Tax Provision
|
| |
$—
|
| |
$—
|
(In thousands)
|
| |
Years ended
December 31,
|
|||
|
| |
2022
|
| |
2021
|
Tax benefit at statutory rate
|
| |
$(2,161)
|
| |
$(5,718)
|
Increase (reduction) in income taxes resulting from:
|
| |
|
| |
|
State incomes tax benefits, net of federal benefit
|
| |
(473)
|
| |
(837)
|
Non-deductible gain on warrant adjustment valuation
|
| |
(3,270)
|
| |
417
|
Change in valuation allowance
|
| |
4,905
|
| |
5,903
|
(In thousands)
|
| |
Years ended
December 31,
|
|||
|
| |
2022
|
| |
2021
|
Registration penalites
|
| |
67
|
| |
354
|
Other
|
| |
934
|
| |
(91)
|
Income Tax Expense
|
| |
$2
|
| |
$28
|
(In thousands)
|
| |
December 31,
2022
|
| |
December 31,
2021
|
Deferred Tax Assets
|
| |
|
| |
|
Net operating loss carryforwards
|
| |
$38,323
|
| |
$33,238
|
Net operating loss carryforwards - foreign
|
| |
24
|
| |
23
|
Excess of tax basis over book value of property and equipment
|
| |
9
|
| |
14
|
Excess of tax basis over book value of intangible assets
|
| |
1,325
|
| |
1,622
|
Lease liability
|
| |
150
|
| |
96
|
Stock-based compensation
|
| |
1,487
|
| |
1,613
|
Accrued employee compensation
|
| |
750
|
| |
698
|
Capitalized equity costs
|
| |
—
|
| |
49
|
Capitalized research and development
|
| |
116
|
| |
—
|
Net change in reserve accounts
|
| |
1,031
|
| |
898
|
Gross deferred tax asset
|
| |
43,215
|
| |
38,251
|
Valuation Allowance
|
| |
(43,070)
|
| |
(38,165)
|
Net Deferred Tax Asset
|
| |
145
|
| |
86
|
Deferred Tax Liabilities
|
| |
|
| |
|
Right-of-use asset
|
| |
(145)
|
| |
(86)
|
Gross deferred tax liability
|
| |
(145)
|
| |
(86)
|
TOTAL
|
| |
$—
|
| |
$—
|
(In thousands)
|
| |
Operating
Leases
|
| |
Finance
Leases
|
Year ended December 31,
|
| |
|
| |
|
2023
|
| |
$143
|
| |
$128
|
2024
|
| |
85
|
| |
128
|
2025
|
| |
82
|
| |
78
|
2026
|
| |
82
|
| |
—
|
2027
|
| |
55
|
| |
—
|
Total Lease Payments
|
| |
447
|
| |
334
|
(In thousands, except share data)
|
| |
Previously
Reported
|
| |
Adjustments
|
| |
Restated
|
ASSETS
|
| |
|
| |
|
| |
|
Current Assets:
|
| |
|
| |
|
| |
|
Cash
|
| |
$313
|
| |
$—
|
| |
$313
|
Accounts receivable, net of allowance of $785
|
| |
1,730
|
| |
—
|
| |
1,730
|
Inventory
|
| |
1,001
|
| |
—
|
| |
1,001
|
Prepaid expenses and other current assets
|
| |
365
|
| |
—
|
| |
365
|
Total Current Assets
|
| |
$3,409
|
| |
$—
|
| |
$3,409
|
Property, Equipment, net
|
| |
315
|
| |
—
|
| |
315
|
Right of use assets, net
|
| |
259
|
| |
—
|
| |
259
|
Other Intangible Assets, net
|
| |
5,665
|
| |
—
|
| |
5,665
|
Goodwill
|
| |
7,260
|
| |
—
|
| |
7,260
|
Other assets
|
| |
106
|
| |
—
|
| |
106
|
Total Assets
|
| |
$17,014
|
| |
$—
|
| |
$17,014
|
LIABILITIES
|
| |
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
| |
|
Senior secured promissory note payable, in default
|
| |
$11,894
|
| |
$—
|
| |
$11,894
|
Convertible promissory notes payable, in default
|
| |
10,532
|
| |
—
|
| |
10,532
|
Convertible promissory notes, related parties, in default
|
| |
1,596
|
| |
—
|
| |
1,596
|
Advances on future cash receipts
|
| |
416
|
| |
—
|
| |
416
|
Accounts payable
|
| |
6,696
|
| |
64
|
| |
6,760
|
Accrued expenses
|
| |
4,916
|
| |
554
|
| |
5,470
|
Accrued employee compensation
|
| |
3,623
|
| |
—
|
| |
3,623
|
Due under factoring agreement
|
| |
1,231
|
| |
—
|
| |
1,231
|
Warrant liability
|
| |
8,300
|
| |
—
|
| |
8,300
|
Current portion of SBA loans
|
| |
226
|
| |
—
|
| |
226
|
Accrued interest
|
| |
3,072
|
| |
60
|
| |
3,132
|
Accrued interest, related parties
|
| |
345
|
| |
—
|
| |
345
|
Current portion of lease liabilities
|
| |
268
|
| |
—
|
| |
268
|
Current portion of contract liabilities
|
| |
58
|
| |
—
|
| |
58
|
Other
|
| |
58
|
| |
—
|
| |
58
|
Total Current Liabilities
|
| |
$53,231
|
| |
$678
|
| |
$53,909
|
Non-current Liabilities
|
| |
|
| |
|
| |
|
SBA loans
|
| |
$807
|
| |
$—
|
| |
$807
|
Lease liabilities
|
| |
34
|
| |
—
|
| |
34
|
Contract liabilities
|
| |
303
|
| |
—
|
| |
303
|
Deferred tax liability
|
| |
28
|
| |
—
|
| |
28
|
Total Non-current Liabilities
|
| |
$1,172
|
| |
$—
|
| |
$1,172
|
Total Liabilities
|
| |
$54,403
|
| |
$678
|
| |
$55,081
|
STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
| |
|
Preferred Stock
|
| |
$—
|
| |
$—
|
| |
$—
|
Common Stock
|
| |
517
|
| |
—
|
| |
517
|
Additional Paid-in Capital
|
| |
150,533
|
| |
—
|
| |
150,533
|
Accumulated Deficit
|
| |
(188,372)
|
| |
(678)
|
| |
(189,050)
|
Accumulated Other Comprehensive Loss
|
| |
(67)
|
| |
—
|
| |
(67)
|
Total Stockholders’ Deficit
|
| |
$(37,389)
|
| |
$(678)
|
| |
$(38,067)
|
Total Liabilities and Stockholders’ Deficit
|
| |
$17,014
|
| |
$—
|
| |
$17,014
|
|
| |
Three Months Ended March 31, 2022
|
||||||
(In thousands except share data)
|
| |
Previously
Reported
|
| |
Adjustments
|
| |
Restated
|
Revenues:
|
| |
|
| |
|
| |
|
Accessory and parts revenue
|
| |
$2,192
|
| |
$—
|
| |
$2,192
|
Product
|
| |
645
|
| |
—
|
| |
645
|
Rental Income
|
| |
343
|
| |
—
|
| |
343
|
License fees and other
|
| |
15
|
| |
—
|
| |
15
|
Total Revenue
|
| |
3,195
|
| |
—
|
| |
3,195
|
|
| |
|
| |
|
| |
|
Cost of Revenues
|
| |
889
|
| |
—
|
| |
889
|
|
| |
|
| |
|
| |
|
Gross Margin
|
| |
$2,306
|
| |
$—
|
| |
$2,306
|
|
| |
|
| |
|
| |
|
Operating Expenses:
|
| |
|
| |
|
| |
|
General and administrative
|
| |
2,141
|
| |
64
|
| |
2,205
|
Selling and marketing
|
| |
1,715
|
| |
—
|
| |
1,715
|
Research and development
|
| |
166
|
| |
—
|
| |
166
|
Gain on disposal of assets
|
| |
(554)
|
| |
554
|
| |
—
|
Depreciation and amortization
|
| |
176
|
| |
—
|
| |
176
|
Total Operating Expenses
|
| |
3,644
|
| |
618
|
| |
4,262
|
|
| |
|
| |
|
| |
|
Operating Loss
|
| |
$(1,338)
|
| |
$(618)
|
| |
$(1,956)
|
|
| |
|
| |
|
| |
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(3,076)
|
| |
(60)
|
| |
(3,136)
|
Interest expense, related party
|
| |
(56)
|
| |
—
|
| |
(56)
|
Change in fair value of derivative liabilities
|
| |
3,482
|
| |
—
|
| |
3,482
|
Loss on issuance of debt
|
| |
(3,434)
|
| |
—
|
| |
(3,434)
|
Gain / (loss) on foreign currency exchange
|
| |
(1)
|
| |
—
|
| |
(1)
|
Other Expense, net
|
| |
(3,085)
|
| |
(60)
|
| |
(3,145)
|
Net Loss before Income Taxes
|
| |
$(4,423)
|
| |
$(678)
|
| |
$(5,101)
|
|
| |
|
| |
|
| |
|
Provision for Income Taxes
|
| |
—
|
| |
—
|
| |
—
|
Net Loss
|
| |
$(4,423)
|
| |
$(678)
|
| |
$(5,101)
|
Other Comprehensive Loss
|
| |
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
—
|
| |
—
|
| |
—
|
Total Comprehensive Loss
|
| |
$(4,423)
|
| |
$(678)
|
| |
$(5,101)
|
|
| |
|
| |
|
| |
|
Loss per Share:
|
| |
|
| |
|
| |
|
Net loss per share, basic and diluted
|
| |
$(0.01)
|
| |
$—
|
| |
$(0.01)
|
|
| |
|
| |
|
| |
|
Weighted average shares outstanding, basic and diluted
|
| |
525,414,534
|
| |
—
|
| |
525,414,534
|
|
| |
Three Months Ended March 31, 2022
|
||||||
(In thousands)
|
| |
Previously
Reported
|
| |
Adjustment
|
| |
Restated
|
Cash Flows - Operating Activities:
|
| |
|
| |
|
| |
|
Net loss
|
| |
$(4,423)
|
| |
$(678)
|
| |
$(5,101)
|
Adjustments to reconcile net loss to net cash used by operating activities
|
| |
|
| |
|
| |
|
Amortization of intangibles
|
| |
176
|
| |
—
|
| |
176
|
Depreciation
|
| |
15
|
| |
—
|
| |
15
|
Change in fair value of derivative liabilities
|
| |
(3,482)
|
| |
—
|
| |
(3,482)
|
Loss on issuance of debt
|
| |
3,434
|
| |
—
|
| |
3,434
|
Amortization of debt issuance costs and original issue discount
|
| |
889
|
| |
—
|
| |
889
|
Accrued interest
|
| |
551
|
| |
60
|
| |
611
|
Interest payable, related parties
|
| |
56
|
| |
—
|
| |
56
|
Changes in operating assets and liabilities
|
| |
|
| |
|
| |
|
Accounts receivable - trade
|
| |
804
|
| |
—
|
| |
804
|
Inventory
|
| |
39
|
| |
—
|
| |
39
|
Prepaid expenses
|
| |
(39)
|
| |
—
|
| |
(39)
|
Other assets
|
| |
43
|
| |
—
|
| |
43
|
Operating leases
|
| |
—
|
| |
—
|
| |
—
|
Accounts payable
|
| |
(930)
|
| |
64
|
| |
(866)
|
Accrued expenses
|
| |
439
|
| |
554
|
| |
993
|
Accrued employee compensation
|
| |
(549)
|
| |
—
|
| |
(549)
|
Contract liabilities
|
| |
(155)
|
| |
—
|
| |
(155)
|
Net Cash Used by Operating Activities
|
| |
(3,132)
|
| |
—
|
| |
(3,132)
|
|
| |
|
| |
|
| |
|
Cash Flows - Investing Activities
|
| |
|
| |
|
| |
|
Disposition of property and equipment
|
| |
360
|
| |
—
|
| |
360
|
Net Cash Flows Provided by (Used in) Investing Activities
|
| |
360
|
| |
—
|
| |
360
|
|
| |
|
| |
|
| |
|
Cash Flows - Financing Activities
|
| |
|
| |
|
| |
|
Proceeds from senior promissory notes
|
| |
2,940
|
| |
—
|
| |
2,940
|
Payments for factoring
|
| |
(505)
|
| |
—
|
| |
(505)
|
Proceeds from warrant exercises
|
| |
100
|
| |
—
|
| |
100
|
Payments of principal on finance leases
|
| |
(65)
|
| |
—
|
| |
(65)
|
Net Cash Flows Provided by Financing Activities
|
| |
2,470
|
| |
—
|
| |
2,470
|
Effect of Exchange Rates on Cash
|
| |
(4)
|
| |
—
|
| |
(4)
|
Net Change in Cash During Period
|
| |
(306)
|
| |
—
|
| |
(306)
|
Cash at Beginning of Period
|
| |
619
|
| |
—
|
| |
619
|
Cash at End of Period
|
| |
$313
|
| |
$—
|
| |
$313
|
|
| |
|
| |
|
| |
|
Supplemental Information:
|
| |
|
| |
|
| |
|
Cash paid for interest
|
| |
$574
|
| |
$—
|
| |
$574
|
Non-cash Investing and Financing Activities:
|
| |
|
| |
|
| |
|
Reclassification of warrant liability due to cashless warrant exercise
|
| |
$2,167
|
| |
$—
|
| |
$2,167
|
Warrants issued in conjunction with senior secured promissory note payable
|
| |
2,654
|
| |
—
|
| |
2,654
|
Common shares issued in conjunction with senior secured
promissory note payable
|
| |
3,720
|
| |
—
|
| |
3,720
|
(In thousands, except share data)
|
| |
Previously
Reported
|
| |
Adjustments
|
| |
Restated
|
ASSETS
|
| |
|
| |
|
| |
|
Current Assets:
|
| |
|
| |
|
| |
|
Cash
|
| |
$1,484
|
| |
$—
|
| |
$1,484
|
Accounts receivable, net of allowance for doubtful accounts
of $0.8 million, respectively
|
| |
1,749
|
| |
—
|
| |
1,749
|
Inventory
|
| |
925
|
| |
—
|
| |
925
|
Prepaid expenses and other current assets
|
| |
1,181
|
| |
(781)
|
| |
400
|
Total Current Assets
|
| |
$5,339
|
| |
$(781)
|
| |
$4,558
|
Property, Equipment and Other, net
|
| |
535
|
| |
—
|
| |
535
|
Other Intangible Assets, net
|
| |
5,489
|
| |
—
|
| |
5,489
|
Goodwill
|
| |
7,260
|
| |
—
|
| |
7,260
|
Total Assets
|
| |
$18,623
|
| |
$(781)
|
| |
$17,842
|
LIABILITIES
|
| |
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
| |
|
Senior secured promissory note payable, in default
|
| |
$12,334
|
| |
$—
|
| |
$12,334
|
Convertible promissory notes payable, in default
|
| |
6,523
|
| |
—
|
| |
6,523
|
Convertible promissory notes, related parties, in default
|
| |
1,596
|
| |
—
|
| |
1,596
|
Short-term loans
|
| |
1,484
|
| |
—
|
| |
1,484
|
Advances on future cash receipts
|
| |
398
|
| |
—
|
| |
398
|
Accounts payable
|
| |
7,083
|
| |
76
|
| |
7,159
|
Accrued expenses
|
| |
5,900
|
| |
741
|
| |
6,641
|
Accrued employee compensation
|
| |
4,264
|
| |
—
|
| |
4,264
|
Due under factoring agreement
|
| |
1,792
|
| |
—
|
| |
1,792
|
Warrant liability
|
| |
5,295
|
| |
—
|
| |
5,295
|
Current portion of SBA loans
|
| |
272
|
| |
—
|
| |
272
|
Accrued interest
|
| |
3,600
|
| |
137
|
| |
3,737
|
Accrued interest, related parties
|
| |
402
|
| |
—
|
| |
402
|
Current portion of lease liabilities
|
| |
185
|
| |
—
|
| |
185
|
Current portion of contract liabilities
|
| |
64
|
| |
—
|
| |
64
|
Other
|
| |
107
|
| |
—
|
| |
107
|
Total Current Liabilities
|
| |
$51,299
|
| |
$954
|
| |
$52,253
|
Non-current Liabilities
|
| |
|
| |
|
| |
|
SBA loans
|
| |
$761
|
| |
$—
|
| |
$761
|
Lease liabilities
|
| |
40
|
| |
—
|
| |
40
|
Contract liabilities
|
| |
295
|
| |
—
|
| |
295
|
Deferred tax liability
|
| |
28
|
| |
—
|
| |
28
|
Total Non-current Liabilities
|
| |
$1,124
|
| |
$—
|
| |
$1,124
|
Total Liabilities
|
| |
$52,423
|
| |
$954
|
| |
$53,377
|
STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
Preferred Stock
|
| |
$—
|
| |
$—
|
| |
$—
|
Common Stock
|
| |
529
|
| |
—
|
| |
529
|
Additional Paid-in Capital
|
| |
151,409
|
| |
—
|
| |
151,409
|
Accumulated Deficit
|
| |
(185,671)
|
| |
(1,735)
|
| |
(187,406)
|
Accumulated Other Comprehensive Loss
|
| |
(67)
|
| | | |
(67)
|
|
Total Stockholders’ Deficit
|
| |
$(33,800)
|
| |
$(1,735)
|
| |
$(35,535)
|
Total Liabilities and Stockholders’ Deficit
|
| |
$18,623
|
| |
$(781)
|
| |
$17,842
|
|
| |
Three Months Ended June 30, 2022
|
| |
Six Months Ended June 30, 2022
|
||||||||||||
(In thousands except share data)
|
| |
Previously
Reported
|
| |
Adj.
|
| |
Restated
|
| |
Previously
Reported
|
| |
Adj.
|
| |
Restated
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accessory and parts revenue
|
| |
$2,663
|
| |
$—
|
| |
$2,663
|
| |
$4,854
|
| |
$—
|
| |
$4,854
|
Product
|
| |
862
|
| |
—
|
| |
862
|
| |
1,507
|
| |
—
|
| |
1,507
|
Rental Income
|
| |
344
|
| |
—
|
| |
344
|
| |
688
|
| |
—
|
| |
688
|
License fees and other
|
| |
13
|
| |
—
|
| |
13
|
| |
28
|
| |
—
|
| |
28
|
Total Revenue
|
| |
3,882
|
| |
—
|
| |
3,882
|
| |
7,077
|
| |
—
|
| |
7,077
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cost of Revenues
|
| |
1,096
|
| |
—
|
| |
1,096
|
| |
1,986
|
| |
—
|
| |
1,986
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Gross Margin
|
| |
$2,786
|
| |
$—
|
| |
$2,786
|
| |
$5,091
|
| |
$—
|
| |
$5,091
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating Expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
General and administrative
|
| |
2,937
|
| |
793
|
| |
3,730
|
| |
5,078
|
| |
857
|
| |
5,935
|
Selling and marketing
|
| |
1,672
|
| |
—
|
| |
1,672
|
| |
3,387
|
| |
—
|
| |
3,387
|
Research and development
|
| |
171
|
| |
—
|
| |
171
|
| |
337
|
| |
—
|
| |
337
|
Gain on disposal of assets
|
| |
(136)
|
| |
187
|
| |
51
|
| |
(690)
|
| |
741
|
| |
51
|
Depreciation and amortization
|
| |
210
|
| |
—
|
| |
210
|
| |
386
|
| |
—
|
| |
386
|
Total Operating Expenses
|
| |
4,854
|
| |
980
|
| |
5,834
|
| |
8,498
|
| |
1,598
|
| |
10,096
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating Loss
|
| |
$(2,068)
|
| |
$(980)
|
| |
$(3,048)
|
| |
$(3,407)
|
| |
$(1,598)
|
| |
$(5,005)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(2,826)
|
| |
(77)
|
| |
(2,903)
|
| |
(5,903)
|
| |
(137)
|
| |
(6,040)
|
Interest expense, related party
|
| |
(56)
|
| |
—
|
| |
(56)
|
| |
(112)
|
| |
—
|
| |
(112)
|
Change in fair value of derivative liabilities
|
| |
7,861
|
| |
—
|
| |
7,861
|
| |
11,343
|
| |
—
|
| |
11,343
|
Loss on issuance of debt
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,434)
|
| |
—
|
| |
(3,434)
|
Loss on extinguishment of debt
|
| |
(211)
|
| |
—
|
| |
(211)
|
| |
(211)
|
| |
—
|
| |
(211)
|
Gain / (loss) on foreign currency exchange
|
| |
2
|
| |
—
|
| |
2
|
| |
2
|
| |
—
|
| |
2
|
Other Income (Expense), net
|
| |
4,770
|
| |
(77)
|
| |
4,693
|
| |
1,685
|
| |
(137)
|
| |
1,548
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net Income (loss) before Income Taxes
|
| |
$2,702
|
| |
$(1,057)
|
| |
$1,645
|
| |
$(1,722)
|
| |
$(1,735)
|
| |
$(3,457)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Provision for Income Taxes
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net Income (loss)
|
| |
$2,702
|
| |
$(1,057)
|
| |
$1,645
|
| |
$(1,722)
|
| |
$(1,735)
|
| |
$(3,457)
|
Other Comprehensive Income (Loss)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total Comprehensive Income (Loss)
|
| |
$2,702
|
| |
$(1,057)
|
| |
$1,645
|
| |
$(1,722)
|
| |
$(1,735)
|
| |
$(3,457)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Gain (loss) per Share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$0.01
|
| |
$(0.01)
|
| |
$—
|
| |
$—
|
| |
$(0.01)
|
| |
$(0.01)
|
Diluted
|
| |
$—
|
| | | |
$—
|
| |
$—
|
| |
(0.01)
|
| |
$(0.01)
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding; Basic and Diluted
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
538,560,051
|
| |
—
|
| |
538,560,051
|
| |
532,589,825
|
| |
—
|
| |
532,589,825
|
Diluted
|
| |
871,984,091
|
| |
—
|
| |
871,984,091
|
| |
532,589,825
|
| |
—
|
| |
532,589,825
|
|
| |
Six Months Ended June 30, 2022
|
||||||
(In thousands)
|
| |
Previously
Reported
|
| |
Adjustment
|
| |
Restated
|
Cash Flows - Operating Activities:
|
| |
|
| |
|
| |
|
Net loss
|
| |
$(1,722)
|
| |
$(1,735)
|
| |
$(3,457)
|
Adjustments to reconcile net loss to net cash used by operating activities
|
| |
|
| |
|
| |
|
Amortization of intangibles
|
| |
352
|
| |
—
|
| |
352
|
Depreciation
|
| |
94
|
| |
—
|
| |
94
|
Bad debt expense
|
| |
52
|
| |
—
|
| |
52
|
Income tax expense
|
| |
—
|
| |
—
|
| |
—
|
Shares issued for service
|
| |
888
|
| |
—
|
| |
888
|
Loss in extinguishment of debt
|
| |
211
|
| |
—
|
| |
211
|
Gain on sale of property and equipment, net
|
| |
(541)
|
| |
541
|
| |
—
|
Change in fair value of derivative liabilities
|
| |
(11,343)
|
| |
—
|
| |
(11,343)
|
Loss on issuance of debt
|
| |
3,434
|
| |
—
|
| |
3,434
|
Amortization of debt issuance costs and original issue discount
|
| |
1,304
|
| |
—
|
| |
1,304
|
Accrued interest
|
| |
1,078
|
| |
137
|
| |
1,215
|
Interest payable, related parties
|
| |
112
|
| |
—
|
| |
112
|
Changes in operating assets and liabilities
|
| |
|
| |
|
| |
|
Accounts receivable - trade
|
| |
733
|
| |
—
|
| |
733
|
Inventory
|
| |
115
|
| |
—
|
| |
115
|
Prepaid expenses
|
| |
(855)
|
| |
781
|
| |
(74)
|
Other assets
|
| |
47
|
| |
—
|
| |
47
|
Accounts payable
|
| |
(562)
|
| |
76
|
| |
(486)
|
Accrued expenses
|
| |
1,407
|
| |
200
|
| |
1,607
|
Accrued employee compensation
|
| |
103
|
| |
—
|
| |
103
|
Contract liabilities
|
| |
(108)
|
| |
—
|
| |
(108)
|
Net Cash Used by Operating Activities
|
| |
(5,201)
|
| |
—
|
| |
(5,201)
|
|
| |
|
| |
|
| |
|
Cash Flows - Investing Activities
|
| |
|
| |
|
| |
|
Proceeds from sale of property and equipment
|
| |
948
|
| |
—
|
| |
948
|
Net Cash Flows Used in Investing Activities
|
| |
948
|
| |
—
|
| |
948
|
|
| |
|
| |
|
| |
|
Cash Flows - Financing Activities
|
| |
|
| |
|
| |
|
Proceeds from senior promissory notes
|
| |
2,940
|
| |
—
|
| |
2,940
|
Proceeds from short term notes
|
| |
2,130
|
| |
—
|
| |
2,130
|
Proceeds from factoring
|
| |
55
|
| |
—
|
| |
55
|
Proceeds from warrant exercises
|
| |
100
|
| |
—
|
| |
100
|
Payments of principal on finance leases
|
| |
(121)
|
| |
—
|
| |
(121)
|
Proceeds from related party advances
|
| |
—
|
| |
—
|
| |
—
|
Net Cash Flows Provided by Financing Activities
|
| |
5,104
|
| |
—
|
| |
5,104
|
|
| |
|
| |
|
| |
|
Effect of Exchange Rates on Cash
|
| |
14
|
| |
—
|
| |
14
|
|
| |
|
| |
|
| |
|
Net Change in Cash During Period
|
| |
865
|
| |
—
|
| |
865
|
|
| |
|
| |
|
| |
|
Cash at Beginning of Period
|
| |
619
|
| |
—
|
| |
619
|
Cash at End of Period
|
| |
$1,484
|
| |
$—
|
| |
$1,484
|
|
| |
|
| |
|
| |
|
Supplemental Information:
|
| |
|
| |
|
| |
|
Cash paid for interest
|
| |
$2,045
|
| |
$—
|
| |
$2,045
|
Non-cash Investing and Financing Activities:
|
| |
|
| |
|
| |
|
Reclassification of warrant liability due to cashless warrant exercise
|
| |
2,167
|
| |
—
|
| |
2,167
|
Warrants issued in conjunction with senior secured promissory note payable
|
| |
2,654
|
| |
—
|
| |
2,654
|
Common shares issued in conjunction with senior secured
promissory note payable
|
| |
3,720
|
| |
—
|
| |
3,720
|
(In thousands, except share data)
|
| |
Previously
Reported
|
| |
Adjustments
|
| |
Restated
|
ASSETS
|
| |
|
| |
|
| |
|
Cash
|
| |
$1,112
|
| |
$—
|
| |
$1,112
|
Accounts receivable, net of allowance of $0.8 million, respectively
|
| |
2,403
|
| |
—
|
| |
2,403
|
Inventory
|
| |
1,413
|
| |
(551)
|
| |
862
|
Prepaid expenses and other current assets
|
| |
1,935
|
| |
(781)
|
| |
1,154
|
Total Current Assets
|
| |
$6,863
|
| |
$(1,332)
|
| |
$5,531
|
Property and Equipment and Other, net
|
| |
673
|
| |
—
|
| |
673
|
Other Intangible Assets, net
|
| |
5,313
|
| |
—
|
| |
5,313
|
Goodwill
|
| |
7,260
|
| |
—
|
| |
7,260
|
Total Assets
|
| |
$20,109
|
| |
$(1,332)
|
| |
$18,777
|
LIABILITIES
|
| |
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
| |
|
Senior secured promissory note payable, in default
|
| |
$12,773
|
| |
$—
|
| |
$12,773
|
Convertible promissory notes payable, in default
|
| |
13,174
|
| |
—
|
| |
13,174
|
Convertible promissory notes, related parties, in default
|
| |
5,858
|
| |
—
|
| |
5,858
|
Advances on future cash receipts
|
| |
194
|
| |
—
|
| |
194
|
Accounts payable
|
| |
5,055
|
| |
170
|
| |
5,225
|
Accrued expenses
|
| |
4,100
|
| |
741
|
| |
4,841
|
Accrued employee compensation
|
| |
3,792
|
| |
—
|
| |
3,792
|
Due under factoring agreement
|
| |
1,510
|
| |
—
|
| |
1,510
|
Warrant liability
|
| |
1,196
|
| |
—
|
| |
1,196
|
Accrued interest
|
| |
3,988
|
| |
218
|
| |
4,206
|
Accrued interest, related parties
|
| |
546
|
| |
—
|
| |
546
|
Current portion of lease and contract liabilities
|
| |
249
|
| |
—
|
| |
249
|
Other
|
| |
30
|
| |
—
|
| |
30
|
Total Current Liabilities
|
| |
$52,465
|
| |
$1,129
|
| |
$53,594
|
Non-current Liabilities
|
| |
|
| |
|
| |
|
SBA loans
|
| |
$—
|
| |
$—
|
| |
$—
|
Lease liabilities
|
| |
263
|
| |
—
|
| |
263
|
Contract liabilities
|
| |
205
|
| |
—
|
| |
205
|
Deferred tax liability
|
| |
28
|
| |
—
|
| |
28
|
Total Non-current Liabilities
|
| |
$496
|
| |
$—
|
| |
$496
|
Total Liabilities
|
| |
$52,961
|
| |
$1,129
|
| |
$54,090
|
STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
| |
|
Preferred Stock
|
| |
$—
|
| |
$—
|
| |
$—
|
Common Stock
|
| |
549
|
| |
—
|
| |
549
|
Additional Paid-in Capital
|
| |
152,750
|
| |
—
|
| |
152,750
|
Accumulated Deficit
|
| |
(186,084)
|
| |
(2,461)
|
| |
(188,545)
|
Accumulated Other Comprehensive Loss
|
| |
(67)
|
| |
—
|
| |
(67)
|
Total Stockholders’ Deficit
|
| |
$(32,852)
|
| |
$(2,461)
|
| |
$(35,313)
|
Total Liabilities and Stockholders’ Deficit
|
| |
$20,109
|
| |
$(1,332)
|
| |
$18,777
|
|
| |
Three Months Ended September 30, 2022
|
| |
Nine Months Ended September 30, 2022
|
||||||||||||
(In thousands except share data)
|
| |
Previously
Reported
|
| |
Adj.
|
| |
Restated
|
| |
Previously
Reported
|
| |
Adj.
|
| |
Restated
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accessory and parts revenue
|
| |
$3,012
|
| |
$—
|
| |
$3,012
|
| |
$7,866
|
| |
$—
|
| |
$7,866
|
Product
|
| |
902
|
| |
—
|
| |
902
|
| |
2,408
|
| |
—
|
| |
2,408
|
Rental Income
|
| |
247
|
| |
—
|
| |
247
|
| |
935
|
| |
—
|
| |
935
|
License fees and other
|
| |
5
|
| |
—
|
| |
5
|
| |
33
|
| |
—
|
| |
33
|
Total Revenue
|
| |
4,166
|
| |
—
|
| |
4,166
|
| |
11,242
|
| |
—
|
| |
11,242
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cost of Revenues
|
| |
606
|
| |
551
|
| |
1,157
|
| |
2,590
|
| |
551
|
| |
3,141
|
Gross Margin
|
| |
$3,560
|
| |
$(551)
|
| |
$3,009
|
| |
$8,652
|
| |
$(551)
|
| |
$8,101
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Operating Expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
General and administrative
|
| |
3,404
|
| |
94
|
| |
3,498
|
| |
8,482
|
| |
951
|
| |
9,433
|
Selling and marketing
|
| |
1,650
|
| |
—
|
| |
1,650
|
| |
5,037
|
| |
—
|
| |
5,037
|
Research and development
|
| |
157
|
| |
—
|
| |
157
|
| |
494
|
| |
—
|
| |
494
|
Gain on disposal of assets
|
| |
—
|
| |
—
|
| |
—
|
| |
(690)
|
| |
741
|
| |
51
|
Depreciation and amortization
|
| |
189
|
| |
—
|
| |
189
|
| |
575
|
| |
—
|
| |
575
|
Total Operating Expenses
|
| |
5,400
|
| |
94
|
| |
5,494
|
| |
13,898
|
| |
1,692
|
| |
15,590
|
Operating Loss
|
| |
$(1,840)
|
| |
$(645)
|
| |
$(2,485)
|
| |
$(5,246)
|
| |
$(2,243)
|
| |
$(7,489)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(3,301)
|
| |
(81)
|
| |
(3,382)
|
| |
(9,203)
|
| |
(218)
|
| |
(9,421)
|
Interest expense, related party
|
| |
(439)
|
| |
—
|
| |
(439)
|
| |
(551)
|
| |
—
|
| |
(551)
|
Change in fair value of derivative liabilities
|
| |
5,252
|
| |
—
|
| |
5,252
|
| |
16,597
|
| |
—
|
| |
16,597
|
Loss on issuance of debt
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,434)
|
| |
—
|
| |
(3,434)
|
Loss on extinguishment of debt
|
| |
(86)
|
| |
—
|
| |
(86)
|
| |
(297)
|
| |
—
|
| |
(297)
|
Gain / (loss) on foreign currency exchange
|
| |
1
|
| |
—
|
| |
1
|
| |
(1)
|
| |
—
|
| |
(1)
|
Other Income (Expense), net
|
| |
1,427
|
| |
(81)
|
| |
1,346
|
| |
3,111
|
| |
(218)
|
| |
2,893
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net Loss before Income Taxes
|
| |
$(413)
|
| |
$(726)
|
| |
$(1,139)
|
| |
$(2,135)
|
| |
$(2,461)
|
| |
$(4,596)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Provision for Income Taxes
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net Income (loss)
|
| |
$(413)
|
| |
$(726)
|
| |
$(1,139)
|
| |
$(2,135)
|
| |
$(2,461)
|
| |
$(4,596)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Other Comprehensive Income (Loss)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total Comprehensive Income (Loss)
|
| |
$(413)
|
| |
$(726)
|
| |
$(1,139)
|
| |
$(2,135)
|
| |
$(2,461)
|
| |
$(4,596)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Loss per Share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic and Diluted
|
| |
$(0.00)
|
| |
$—
|
| |
$(0.00)
|
| |
$(0.00)
|
| |
$(0.01)
|
| |
$(0.01)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares outstanding, basic and diluted
|
| |
561,069,625
|
| |
—
|
| |
561,069,625
|
| |
542,484,779
|
| |
—
|
| |
542,484,779
|
|
| |
Nine Months Ended September 30, 2022
|
||||||
(In thousands)
|
| |
Previously
Reported
|
| |
Adjustment
|
| |
Restated
|
Cash Flows - Operating Activities:
|
| |
|
| |
|
| |
|
Net loss
|
| |
$(2,135)
|
| |
$(2,461)
|
| |
$(4,596)
|
Adjustments to reconcile net loss to net cash used by operating activities
|
| |
|
| |
|
| |
|
Depreciation and Amortization
|
| |
681
|
| |
—
|
| |
681
|
Bad debt expense
|
| |
62
|
| |
—
|
| |
62
|
Shares issued for service
|
| |
888
|
| |
—
|
| |
888
|
Loss on extinguishment of debt
|
| |
297
|
| |
—
|
| |
297
|
Gain on sale of property and equipment, net
|
| |
(690)
|
| |
741
|
| |
51
|
Change in fair value of derivative liabilities
|
| |
(16,597)
|
| |
—
|
| |
(16,597)
|
Loss on issuance of debt
|
| |
3,434
|
| |
—
|
| |
3,434
|
Amortization of debt issuance costs and original issue discount
|
| |
2,998
|
| |
—
|
| |
2,998
|
Accrued interest
|
| |
1,618
|
| |
218
|
| |
1,836
|
Interest payable, related parties
|
| |
168
|
| |
—
|
| |
168
|
Changes in operating assets and liabilities
|
| |
|
| |
|
| |
|
Accounts receivable - trade
|
| |
69
|
| |
—
|
| |
69
|
Inventory
|
| |
(373)
|
| |
551
|
| |
178
|
Prepaid expenses and other assets
|
| |
(1,437)
|
| |
781
|
| |
(656)
|
Accounts payable
|
| |
(1,863)
|
| |
170
|
| |
(1,693)
|
Accrued expenses
|
| |
271
|
| |
—
|
| |
271
|
Accrued employee compensation
|
| |
(473)
|
| |
—
|
| |
(473)
|
Contract liabilities
|
| |
(94)
|
| |
—
|
| |
(94)
|
Net Cash Used by Operating Activities
|
| |
(13,176)
|
| |
—
|
| |
(13,176)
|
Cash Flows - Investing Activities
|
| |
|
| |
|
| |
|
Disposition of property and equipment
|
| |
1,022
|
| |
—
|
| |
1,022
|
Net Cash Flows Provided by (Used in) Investing Activities
|
| |
1,022
|
| |
—
|
| |
1,022
|
|
| |
|
| |
|
| |
|
Cash Flows - Financing Activities
|
| |
|
| |
|
| |
|
Proceeds from senior promissory notes
|
| |
2,940
|
| |
—
|
| |
2,940
|
Proceeds from convertible promissory notes
|
| |
12,366
|
| |
—
|
| |
12,366
|
Proceeds from short term notes
|
| |
640
|
| |
—
|
| |
640
|
Payments for factoring
|
| |
(227)
|
| |
—
|
| |
(227)
|
Proceeds from warrant exercises
|
| |
100
|
| |
—
|
| |
100
|
Payments of principal on finance leases
|
| |
(174)
|
| |
—
|
| |
(174)
|
Payments of principal on convertible promissory notes and SBA loans
|
| |
(2,981)
|
| |
—
|
| |
(2,981)
|
Net Cash Flows Provided by Financing Activities
|
| |
12,664
|
| |
—
|
| |
12,664
|
|
| |
|
| |
|
| |
|
Effect of Exchange Rates on Cash
|
| |
(17)
|
| |
—
|
| |
(17)
|
|
| |
|
| |
|
| |
|
Net Change in Cash During Period
|
| |
493
|
| |
—
|
| |
493
|
Cash at Beginning of Period
|
| |
619
|
| |
—
|
| |
619
|
Cash at End of Period
|
| |
$1,112
|
| |
$—
|
| |
$1,112
|
|
| |
|
| |
|
| |
|
Supplemental Information:
|
| |
|
| |
|
| |
|
Cash paid for interest
|
| |
$3,345
|
| |
$—
|
| |
$3,345
|
Non-cash Investing and Financing Activities:
|
| |
|
| |
|
| |
|
Reclassification of warrant liability due to cashless warrant exercise
|
| |
$2,166
|
| |
$—
|
| |
$2,166
|
Settlement of debt and warrants with stock
|
| |
1,361
|
| |
—
|
| |
1,361
|
Warrants issued in conjunction with senior secured promissory note payable
|
| |
2,654
|
| |
—
|
| |
2,654
|
Common shares issued in conjunction with senior secured
promissory note payable
|
| |
3,720
|
| |
—
|
| |
3,720
|
Embedded conversion option with issuances of convertible debt
|
| |
2,309
|
| |
—
|
| |
2,309
|
Working capital balances refinanced into Convertible notes payable
|
| |
2,273
|
| |
—
|
| |
2,273
|
Warrant issuance in conjunction with convertible debt
|
| |
1,463
|
| |
—
|
| |
1,463
|
|
| |
June 30,
2023
|
| |
December 31,
2022
|
ASSETS
|
| |
|
| |
|
Current Assets:
|
| |
|
| |
|
Cash
|
| |
$332
|
| |
$1,153
|
Restricted Cash
|
| |
850
|
| |
—
|
Accounts receivable, net of allowance of $1,214 and $1,037, respectively
|
| |
2,818
|
| |
4,029
|
Inventory
|
| |
900
|
| |
868
|
Prepaid expenses and other current assets
|
| |
1,201
|
| |
570
|
Total Current Assets
|
| |
6,101
|
| |
6,620
|
Property, equipment and other, net
|
| |
1,050
|
| |
856
|
Intangible assets, net
|
| |
4,786
|
| |
5,137
|
Goodwill
|
| |
7,260
|
| |
7,260
|
Total Non-current Assets
|
| |
13,096
|
| |
13,253
|
Total Assets
|
| |
$19,197
|
| |
$19,873
|
|
| |
|
| |
|
LIABILITIES
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
Senior secured debt, in default
|
| |
$16,123
|
| |
$14,416
|
Convertible promissory notes payable
|
| |
17,712
|
| |
16,713
|
Convertible promissory notes payable, related parties
|
| |
8,346
|
| |
7,409
|
Bridge notes advance
|
| |
1,476
|
| |
—
|
Accounts payable
|
| |
4,859
|
| |
4,400
|
Accrued expenses
|
| |
6,351
|
| |
8,512
|
Factoring liabilities
|
| |
1,213
|
| |
2,130
|
Warrant liability
|
| |
14,410
|
| |
1,416
|
Accrued interest
|
| |
6,174
|
| |
4,052
|
Accrued interest, related parties
|
| |
1,438
|
| |
788
|
Current portion of contract liabilities
|
| |
67
|
| |
60
|
Other
|
| |
1,108
|
| |
291
|
Total Current Liabilities
|
| |
79,277
|
| |
60,187
|
Non-current Liabilities
|
| |
|
| |
|
Lease liabilities
|
| |
515
|
| |
438
|
Contract liabilities
|
| |
215
|
| |
230
|
Deferred tax liability
|
| |
28
|
| |
28
|
Total Non-currrent Liabilities
|
| |
758
|
| |
696
|
Total Liabilities
|
| |
$80,035
|
| |
$60,883
|
|
| |
|
| |
|
Commitments and Contingencies (Footnote 13)
|
| |
|
| |
|
|
| |
|
| |
|
STOCKHOLDERS’ DEFICIT
|
| |
|
| |
|
|
| |
|
| |
|
Preferred Stock, par value $0.001, 5,000,000 shares
authorized; 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D no shares issued and outstanding at June 30, 2023 and December 31, 2022
|
| |
$—
|
| |
$—
|
Common Stock, par value $0.001, 2,500,000,000 shares
authorized; 561,637,651 and 548,737,651 issued and outstanding at June 30, 2023 December 31, 2022, respectively
|
| |
562
|
| |
549
|
Additional paid-in capital
|
| |
153,264
|
| |
152,750
|
Accumulated deficit
|
| |
(214,584)
|
| |
(194,242)
|
Accumulated other comprehensive loss
|
| |
(80)
|
| |
(67)
|
Total Stockholders’ Deficit
|
| |
(60,838)
|
| |
(41,010)
|
Total Liabilities and Stockholders’ Deficit
|
| |
$19,197
|
| |
$19,873
|
|
| |
Three Months Ended
June 30,
|
| |
Six Months Ended
June 30,
|
||||||
|
| |
2023
|
| |
2022
|
| |
2023
|
| |
2022
|
Revenue
|
| |
$4,675
|
| |
$3,882
|
| |
$8,450
|
| |
$7,077
|
Cost of Revenues
|
| |
1,202
|
| |
1,096
|
| |
2,464
|
| |
1,986
|
Gross Margin
|
| |
3,473
|
| |
2,786
|
| |
5,986
|
| |
5,091
|
|
| |
|
| |
|
| |
|
| |
|
Operating Expenses:
|
| |
|
| |
|
| |
|
| |
|
General and administrative
|
| |
1,238
|
| |
3,781
|
| |
3,997
|
| |
5,986
|
Selling and marketing
|
| |
978
|
| |
1,672
|
| |
2,390
|
| |
3,387
|
Research and development
|
| |
139
|
| |
171
|
| |
270
|
| |
337
|
Depreciation and amortization
|
| |
187
|
| |
210
|
| |
376
|
| |
386
|
Total Operating Expenses
|
| |
2,542
|
| |
5,834
|
| |
7,033
|
| |
10,096
|
Operating Income/(Loss)
|
| |
931
|
| |
(3,048)
|
| |
(1,047)
|
| |
(5,005)
|
|
| |
|
| |
|
| |
|
| |
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(3,706)
|
| |
(2,903)
|
| |
(7,218)
|
| |
(6,040)
|
Interest expense, related party
|
| |
(675)
|
| |
(56)
|
| |
(1,441)
|
| |
(112)
|
Change in fair value of derivative liabilities
|
| |
(3,821)
|
| |
7,861
|
| |
(10,618)
|
| |
11,343
|
Loss on issuance of debt
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,434)
|
Loss on extinguishment of debt
|
| |
—
|
| |
(211)
|
| |
—
|
| |
(211)
|
Other (expense) income
|
| |
9
|
| |
1
|
| |
(18)
|
| |
2
|
Total Other (Expense)/Inocme
|
| |
(8,193)
|
| |
4,692
|
| |
(19,295)
|
| |
1,548
|
Net (Loss)/Income before Income Taxes
|
| |
(7,262)
|
| |
1,644
|
| |
(20,342)
|
| |
(3,457)
|
Provision for Income Taxes
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net (Loss)/Income
|
| |
(7,262)
|
| |
1,644
|
| |
(20,342)
|
| |
(3,457)
|
Other Comprehensive Loss
|
| |
|
| |
|
| |
|
| |
|
Foreign currency translation adjustments
|
| |
(9)
|
| |
—
|
| |
(13)
|
| |
—
|
Total Comprehensive (Loss)/Income
|
| |
$(7,271)
|
| |
$1,644
|
| |
$(20,355)
|
| |
$(3,457)
|
|
| |
|
| |
|
| |
|
| |
|
(Loss) income per Share:
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$(0.01)
|
| |
$—
|
| |
$(0.04)
|
| |
$(0.01)
|
Diluted
|
| |
$(0.01)
|
| |
$—
|
| |
$(0.04)
|
| |
$(0.01)
|
Weighted average shares outstanding
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
582,328,811
|
| |
538,560,051
|
| |
579,178,811
|
| |
532,589,825
|
Diluted
|
| |
582,328,811
|
| |
871,984,091
|
| |
579,178,811
|
| |
532,589,825
|
|
| |
Three Months Ended June 30, 2023
|
|||||||||||||||
|
| |
Common Stock
|
| |
|
| |
|
| |
|
| |
|
|||
|
| |
Number of
Shares
Issued and
Outstanding
|
| |
Par Value
|
| |
Additional
Paid-in Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Loss
|
| |
Total
|
Balances as of March 31, 2023
|
| |
555,637,651
|
| |
$556
|
| |
$153,046
|
| |
$(207,322)
|
| |
$(71)
|
| |
$(53,791)
|
Shares issued for services
|
| |
6,000,000
|
| |
6
|
| |
218
|
| |
—
|
| |
|
| |
224
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(7,262)
|
| |
—
|
| |
(7,262)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(9)
|
| |
(9)
|
Balances as of June 30, 2023
|
| |
561,637,651
|
| |
$562
|
| |
$153,264
|
| |
$(214,584)
|
| |
$(80)
|
| |
$(60,838)
|
|
| |
Three Months Ended June 30, 2022
|
|||||||||||||||
|
| |
Common Stock
|
| |
|
| |
|
| |
|
| |
|
|||
|
| |
Number of
Shares
Issued and
Outstanding
|
| |
Par Value
|
| |
Additional
Paid-in Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Loss
|
| |
Total
|
Balances as of March 31, 2022
|
| |
517,195,705
|
| |
$517
|
| |
$150,533
|
| |
$(189,050)
|
| |
$(67)
|
| |
$(38,067)
|
Shares issued for services
|
| |
12,097,500
|
| |
12
|
| |
876
|
| |
—
|
| |
—
|
| |
888
|
Net Income
|
| |
—
|
| |
—
|
| |
—
|
| |
1,644
|
| |
—
|
| |
1,644
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Balances as of June 30, 2022
|
| |
529,293,205
|
| |
$529
|
| |
$151,409
|
| |
$(187,406)
|
| |
$(67)
|
| |
$(35,535)
|
|
| |
Six Months Ended June 30, 2023
|
|||||||||||||||
|
| |
Common Stock
|
| |
|
| |
|
| |
|
| |
|
|||
|
| |
Number of
Shares
Issued and
Outstanding
|
| |
Par Value
|
| |
Additional
Paid-in Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Loss
|
| |
Total
|
Balances as of December 31, 2022
|
| |
548,737,651
|
| |
$549
|
| |
$152,750
|
| |
$(194,242)
|
| |
$(67)
|
| |
$(41,010)
|
Shares issued for services
|
| |
12,900,000
|
| |
13
|
| |
514
|
| |
—
|
| |
—
|
| |
527
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(20,342)
|
| |
—
|
| |
(20,342)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(13)
|
| |
(13)
|
Balances as of June 30, 2023
|
| |
561,637,651
|
| |
$562
|
| |
$153,264
|
| |
$(214,584)
|
| |
$(80)
|
| |
$(60,838)
|
|
| |
Six Months Ended June 30, 2022
|
|||||||||||||||
|
| |
Common Stock
|
| |
|
| |
|
| |
|
| |
|
|||
|
| |
Number of
Shares
Issued and
Outstanding
|
| |
Par Value
|
| |
Additional
Paid-in Capital
|
| |
Accumulated
Deficit
|
| |
Accumulated
Other
Comprehensive
Loss
|
| |
Total
|
Balances as of December 31, 2021
|
| |
481,619,621
|
| |
$482
|
| |
$144,582
|
| |
$(183,949)
|
| |
$(73)
|
| |
$(38,958)
|
Cashless warrant exercise
|
| |
14,000,000
|
| |
14
|
| |
2,152
|
| |
—
|
| |
—
|
| |
2,166
|
Warrant exercise
|
| |
909,091
|
| |
1
|
| |
99
|
| |
—
|
| |
—
|
| |
100
|
Shares issued in conjunction with Note Payable
|
| |
20,666,993
|
| |
20
|
| |
3,700
|
| |
—
|
| |
—
|
| |
3,720
|
Shares issued for services
|
| |
12,097,500
|
| |
12
|
| |
876
|
| |
—
|
| |
—
|
| |
888
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,457)
|
| |
—
|
| |
(3,457)
|
Foreign currency translation adjustment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
6
|
| |
6
|
Balances as of June 30, 2022
|
| |
529,293,205
|
| |
$529
|
| |
$151,409
|
| |
$(187,406)
|
| |
$(67)
|
| |
$(35,535)
|
|
| |
Six Months Ended
June 30,
|
|||
|
| |
2023
|
| |
2022
|
Cash Flows - Operating Acivities:
|
| |
|
| |
|
Net loss
|
| |
$(20,342)
|
| |
$(3,457)
|
Adjustments to reconcile net loss to net cash used by operating activities
|
| |
|
| |
|
Depreciation and amortization
|
| |
515
|
| |
446
|
Bad debt expense
|
| |
313
|
| |
52
|
Shares issued for services
|
| |
224
|
| |
888
|
Change in fair value of derivative liabilities
|
| |
10,618
|
| |
(11,343)
|
Loss on extinguishment of debt
|
| |
—
|
| |
211
|
Loss on issuance of debt
|
| |
—
|
| |
3,434
|
Amortization of debt issuance costs and original issue discount
|
| |
3,955
|
| |
1,304
|
Accrued interest
|
| |
3,606
|
| |
1,327
|
Changes in operating assets and liabilities
|
| |
|
| |
|
Accounts receivable - trade
|
| |
898
|
| |
733
|
Inventory
|
| |
(31)
|
| |
115
|
Prepaid expenses and other assets
|
| |
(336)
|
| |
(27)
|
Accounts payable
|
| |
718
|
| |
(486)
|
Accrued expenses
|
| |
(1,337)
|
| |
1,710
|
Contract liabilties
|
| |
(16)
|
| |
(108)
|
Net Cash Used in Operating Activities
|
| |
(1,215)
|
| |
(5,201)
|
|
| |
|
| |
|
Cash Flows - Investing Activities
|
| |
|
| |
|
Proceeds from sale of property and equipment
|
| |
—
|
| |
948
|
Purchase of property and equipment
|
| |
(169)
|
| |
—
|
Net Cash Flows (Used in)/Provided by Investing Activities
|
| |
(169)
|
| |
948
|
|
| |
|
| |
|
Cash Flows - Financing Activities
|
| |
|
| |
|
Proceeds from senior promissory notes
|
| |
—
|
| |
2,940
|
Proceeds from convertible promissory notes payable
|
| |
1,202
|
| |
—
|
Proceeds from bridge notes advance
|
| |
1,476
|
| |
2,130
|
Payments to factoring agent, net
|
| |
(1,167)
|
| |
55
|
Proceeds from warrant exercises
|
| |
—
|
| |
100
|
Payments of principal on finance leases
|
| |
(85)
|
| |
(121)
|
Net Cash Flows Provided by Financing Activities
|
| |
1,426
|
| |
5,104
|
Effect of Exchange Rates on Cash
|
| |
(13)
|
| |
14
|
Net Change in Cash and Restricted Cash During Period
|
| |
29
|
| |
865
|
Cash and Restricted Cash at Beginning of Period
|
| |
1,153
|
| |
619
|
Cash and Restricted Cash at End of Period
|
| |
$1,182
|
| |
$1,484
|
|
| |
|
| |
|
Supplemental Information:
|
| |
|
| |
|
Cash paid for interest
|
| |
$908
|
| |
$2,045
|
|
| |
|
| |
|
Non-cash Investing and Financing Activities:
|
| |
|
| |
|
Warrants issued in conjunction with senior secured
promissory note payable and convertible promissory notes payable
|
| |
$570
|
| |
$2,654
|
Common shares issued for advisory shares
|
| |
302
|
| |
—
|
Embedded conversion feature on convertible promissory notes payable
|
| |
157
|
| |
—
|
Reclassification of warrant liability due to cashless warrant exercise
|
| |
—
|
| |
2,167
|
Common shares issued in conjunction with senior secured
promissory note payable
|
| |
—
|
| |
3,720
|
|
| |
Three Months Ended
|
| |
Six Months Ended
|
||||||
(in Thousands)
|
| |
June 30,
2023
|
| |
June 30,
2022
|
| |
June 30,
2023
|
| |
June 30,
2022
|
Weighted average shares outstanding
|
| |
|
| |
|
| |
|
| |
|
Common shares
|
| |
560,638
|
| |
518,074
|
| |
557,488
|
| |
508,399
|
Common shares issuable assuming exercise of nominally priced
warrants
|
| |
21,691
|
| |
20,486
|
| |
21,691
|
| |
24,191
|
Weighted average shares outstanding
|
| |
582,329
|
| |
538,560
|
| |
579,179
|
| |
532,590
|
|
| |
Six Months Ended
|
|||
(in thousands)
|
| |
June 30,
2023
|
| |
June 30,
2022
|
Common stock options
|
| |
19,136
|
| |
22,046
|
Common stock purchase warrants
|
| |
1,247,911
|
| |
189,157
|
Convertible notes payable
|
| |
677,050
|
| |
122,271
|
|
| |
1,944,097
|
| |
333,474
|
(in thousands)
|
| |
June 30,
2023
|
Cash
|
| |
$332
|
Restricted Cash
|
| |
850
|
Total Cash and Restricted Cash
|
| |
$1,182
|
(in thousands)
|
| |
June 30,
2023
|
| |
December 31,
2022
|
Registration penalties
|
| |
$1,583
|
| |
$1,583
|
License fees
|
| |
892
|
| |
892
|
Director and professional fees
|
| |
877
|
| |
586
|
Employee compensation
|
| |
2,665
|
| |
4,585
|
Other
|
| |
334
|
| |
866
|
|
| |
$6,351
|
| |
$8,512
|
|
| |
June 30, 2023
|
| |
December 31, 2022
|
||||||||||||||||||
(in thousands)
|
| |
Principal
|
| |
Debt
Discount
|
| |
Carrying
Value
|
| |
Accrued
Interest
|
| |
Principal
|
| |
Debt
Discount
|
| |
Carrying
Value
|
| |
Accrued
Interest
|
Senior secured debt
|
| |
$20,346
|
| |
$(4,223)
|
| |
$16,123
|
| |
$2,676
|
| |
$19,211
|
| |
$(4,795)
|
| |
$14,416
|
| |
$1,890
|
|
| |
As of June 30, 2023
|
||||||||||||
(In thousands, except conversion price)
|
| |
Conversion
Price
|
| |
Principal
|
| |
Remaining
Debt
Discount
|
| |
Remaining
Embedded
Conversion
Option
|
| |
Carrying
Value
|
Acquisition convertible promissory note, in default
|
| |
$0.10
|
| |
4,000
|
| |
—
|
| |
—
|
| |
4,000
|
Convertible promissory notes payable, related parties, in
default
|
| |
$0.10
|
| |
1,373
|
| |
—
|
| |
—
|
| |
1,373
|
2022 convertible notes payable
|
| |
$0.04
|
| |
14,193
|
| |
(991)
|
| |
510
|
| |
13,712
|
2022 convertible notes payable, related parties
|
| |
$0.04
|
| |
7,210
|
| |
(420)
|
| |
183
|
| |
6,973
|
Total Convertible Promissory Notes Payable
|
| |
|
| |
$26,776
|
| |
$(1,411)
|
| |
$693
|
| |
$26,058
|
|
| |
As of December 31, 2022
|
||||||||||||
(In thousands, except conversion price)
|
| |
Conversion
Price
|
| |
Principal
|
| |
Remaining
Debt
Discount
|
| |
Remaining
Embedded
Conversion
Option
|
| |
Carrying
Value
|
Acquisition convertible promissory note, in default
|
| |
$0.10
|
| |
4,000
|
| |
—
|
| |
—
|
| |
4,000
|
Convertible promissory note, related party, in default
|
| |
$0.10
|
| |
1,373
|
| |
—
|
| |
—
|
| |
1,373
|
2022 convertible notes payable
|
| |
$0.04
|
| |
13,660
|
| |
(2,532)
|
| |
1,585
|
| |
12,713
|
2022 convertible notes payable, related parties
|
| |
$0.04
|
| |
6,515
|
| |
(1,234)
|
| |
755
|
| |
6,036
|
Total Convertible Promissory Notes
|
| |
|
| |
$25,548
|
| |
$(3,766)
|
| |
$2,340
|
| |
$24,122
|
|
| |
Fair value measured at June 30, 2023
|
|||||||||
(in thousands)
|
| |
Fair value at
June 30,
2023
|
| |
Quoted prices in
active markets
(Level 1)
|
| |
Significant other
observable inputs
(Level 2)
|
| |
Significant
unobservable inputs
(Level 3)
|
Warrant liability
|
| |
$14,410
|
| |
$—
|
| |
$—
|
| |
$14,410
|
Embedded conversion option
|
| |
693
|
| |
—
|
| |
—
|
| |
693
|
Total fair value
|
| |
$15,103
|
| |
$—
|
| |
$—
|
| |
$15,103
|
|
| |
Fair value measured at December 31, 2022
|
|||||||||
(in thousands)
|
| |
Fair value at
December 31,
2022
|
| |
Quoted prices in
active markets
(Level 1)
|
| |
Significant other
observable inputs
(Level 2)
|
| |
Significant
unobservable inputs
(Level 3)
|
Warrant liability
|
| |
$1,416
|
| |
$—
|
| |
$—
|
| |
$1,416
|
Embedded conversion option
|
| |
2,340
|
| |
—
|
| |
—
|
| |
2,340
|
Total fair value
|
| |
$3,756
|
| |
$—
|
| |
$—
|
| |
$3,756
|
|
| |
June 30,
2023
|
| |
Initial Valuation
May 2023
|
| |
December 31,
2022
|
Weighted average remaining life in years
|
| |
4.22
|
| |
5.00
|
| |
4.68
|
Weighted average volatility
|
| |
103%
|
| |
84%
|
| |
92%
|
Value of underlying shares
|
| |
$0.022
|
| |
$0.019
|
| |
$0.005
|
Weighted average risk free interest rate
|
| |
4.0%
|
| |
3.5%
|
| |
4.0%
|
Expected dividend yield
|
| |
0.00%
|
| |
0.00%
|
| |
0.00%
|
(in thousands, except per share data)
|
| |
Warrants
Outstanding
|
| |
Fair Value
per Share
|
| |
Fair Value
(in thousands)
|
Balance at December 31, 2022
|
| |
1,066,857
|
| |
$0.06
|
| |
$1,416
|
Issuance
|
| |
61,389
|
| |
0.01
|
| |
570
|
Loss on remeasurement of warrant liability
|
| |
—
|
| |
|
| |
12,424
|
Balance at June 30, 2023
|
| |
1,128,246
|
| |
$0.01
|
| |
$14,410
|
|
| |
June 30,
2023
|
| |
Initial valuation
May 2023
|
| |
December 31,
2022
|
Conversion Price(1)
|
| |
$0.04
|
| |
$0.04
|
| |
$0.04
|
Value of underlying shares
|
| |
$0.022
|
| |
$0.019
|
| |
$0.005
|
Interest Rate (annual)(2)
|
| |
5.28%
|
| |
4.70%
|
| |
4.64%
|
Volatility (annual)(3)
|
| |
141.3%
|
| |
114.1%
|
| |
503.0%
|
Time to Maturity (Years)
|
| |
0.39
|
| |
1.00
|
| |
0.60
|
(1)
|
Based on the terms provided in the convertible promissory note agreements to convert to common stock of the Company
|
(2)
|
Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.
|
(3)
|
Based on a discounted historical daily volatility of the Company as of each presented period ending date.
|
(in thousands)
|
| |
Conversion
Liability
|
Balance December 31, 2022
|
| |
$2,340
|
Initial value of new issuance
|
| |
157
|
Change in fair value
|
| |
(1,804)
|
Balance June 30, 2023
|
| |
$693
|
|
| |
Three Months Ended June 30, 2023
|
| |
Three Months Ended June 30, 2022
|
||||||||||||
|
| |
United States
|
| |
International
|
| |
Total
|
| |
United States
|
| |
International
|
| |
Total
|
Consumables and parts revenue
|
| |
$2,913
|
| |
$18
|
| |
$2,931
|
| |
$2,629
|
| |
$34
|
| |
$2,663
|
System revenue
|
| |
1,323
|
| |
79
|
| |
1,402
|
| |
862
|
| |
—
|
| |
862
|
License fees and other
|
| |
75
|
| |
5
|
| |
80
|
| |
8
|
| |
5
|
| |
13
|
Product Revenue
|
| |
$4,311
|
| |
$102
|
| |
$4,413
|
| |
$3,499
|
| |
$39
|
| |
$3,538
|
Rental Income
|
| |
262
|
| |
—
|
| |
262
|
| |
344
|
| |
—
|
| |
344
|
Total Revenue
|
| |
$4,573
|
| |
$102
|
| |
$4,675
|
| |
$3,843
|
| |
$39
|
| |
$3,882
|
|
| |
Six Months Ended June 30, 2023
|
| |
Six Months Ended June 30, 2022
|
||||||||||||
|
| |
United States
|
| |
International
|
| |
Total
|
| |
United States
|
| |
International
|
| |
Total
|
Consumables and parts revenue
|
| |
$5,487
|
| |
$50
|
| |
$5,537
|
| |
$4,824
|
| |
$30
|
| |
$4,854
|
System revenue
|
| |
2,157
|
| |
115
|
| |
2,272
|
| |
1,491
|
| |
16
|
| |
1,507
|
License fees and other
|
| |
81
|
| |
15
|
| |
96
|
| |
14
|
| |
14
|
| |
28
|
Product Revenue
|
| |
$7,725
|
| |
$180
|
| |
$7,905
|
| |
$6,329
|
| |
$60
|
| |
$6,389
|
Rental Income
|
| |
545
|
| |
—
|
| |
545
|
| |
688
|
| |
—
|
| |
688
|
Total Revenue
|
| |
$8,270
|
| |
$180
|
| |
$8,450
|
| |
$7,017
|
| |
$60
|
| |
$7,077
|
|
| |
Three Months Ended
|
| |
Six Months Ended
|
||||||
|
| |
June 30,
2023
|
| |
June 30,
2022
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June 30,
2023
|
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June 30,
2022
|
Purchases:
|
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Vendor A
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13%
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17%
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17%
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18%
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Vendor B
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16%
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n/a
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11%
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n/a
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| | | | | |
Exhibit
|
| |
Description
|
Exhibit A
|
| |
Form of Company Voting Agreement
|
Exhibit B
|
| |
Form of Sponsor Voting Agreement
|
Exhibit C
|
| |
Form of Company Lock-Up Agreement
|
Exhibit D
|
| |
Form of Sponsor Debt Conversion Agreement
|
Exhibit E-1
|
| |
Form of Class B Charter Amendment
|
Exhibit E-2
|
| |
Form of Net Tangible Assets Charter Amendment
|
Exhibit E-3
|
| |
Form of Closing Date Purchaser Charter Amendment
|
Exhibit F
|
| |
Purchaser Equity Plan
|
Exhibit G
|
| |
Form of Purchaser Voting and Non-Redemption Agreement
|
Exhibit H
|
| |
Form of Purchaser Letter Agreement Amendment
|
Exhibit I
|
| |
Form of Purchaser Amendment to Warrant Agreement
|
Annex
|
| |
Description
|
Annex A
|
| |
Company Convertible Notes
|
If to the Purchaser or Merger Sub at or prior to the Closing,
to:
SEP Acquisition Corp.
3737 Buffalo Speedway
Suite 1750
Houston, TX 77098
Attn: Andrew White
Telephone No.: 713-715-6820
Email: info@seplp.com
|
| |
with a copy (which will not constitute notice) to:
Baker Donelson, Bearman,
Caldwell & Berkowitz, PC
1600 West End Avenue
Suite 2000
Nashville, TN 37203
Attn: Tonya Mitchem Grindon
Attn: Nathan Kibler
Attn: Andrew Yonchak
Telephone No.: 615-726-5600
Email:
tgrindon@bakerdonelson.com
Email:
nkibler@bakerdonelson.com
Email:
dyonchak@bakerdonelson.com
|
|
| |
|
If to the Company, to:
SANUWAVE Health, Inc.
11495 Valley View Road
Eden Prairie, Minnesota
55344
Attn: Morgan C. Frank,
Chief Executive Officer
Email:
|
| |
with a copy (which will not constitute notice) to:
Faegre Drinker Biddle &
Reath LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota
55402
Attn: Ben A. Stacke
Attn: Jonathan Nygren
Email:
ben.stacke@faegredrinker.com
Email:
jon.nygren@faegredrinker.com
|
|
| |
|
If to the Purchaser after the Closing, to:
SANUWAVE Health, Inc.
11495 Valley View Road
Eden Prairie, Minnesota
55344
Attn: Morgan C. Frank,
Chief Executive Officer
Email:
|
| |
with a copy (which will not constitute notice) to:
Faegre Drinker Biddle &
Reath LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota
55402
Attn: Ben A. Stacke
Attn: Jonathan Nygren
Email:
ben.stacke@faegredrinker.com
Email:
jon.nygren@faegredrinker.com
|
Term
|
| |
Section
|
Agreement
|
| |
Preamble
|
Alternative Acquisition Agreement
|
| |
5.6(c)(vi)
|
Articles of Merger
|
| |
1.2
|
Assumed Convertible Note
|
| |
1.7
|
Assumed Warrant
|
| |
1.9(e)
|
BCA
|
| |
Recitals
|
Term
|
| |
Section
|
Business Combination
|
| |
8.1
|
Closing Date
|
| |
2.1
|
Closing
|
| |
2.1
|
Class B Charter Amendment
|
| |
5.20(a)
|
Company
|
| |
Preamble
|
Company Adverse Recommendation Change
|
| |
5.6(c)(v)
|
Company Benefit Plan
|
| |
4.19(a)
|
Company Board
|
| |
Recitals
|
Company Board Recommendation
|
| |
Recitals
|
Company Book-Entry Shares
|
| |
1.10(a)
|
Company Certificates
|
| |
1.10(a)
|
Company D&O Tail Insurance
|
| |
5.15(b)
|
Company Disclosure Schedules
|
| |
Article IV
|
Company Financials
|
| |
4.7(b)
|
Company Intellectual Property
|
| |
4.13(a)
|
Company IP License
|
| |
4.12(a)(xiii)
|
Company Lock-Up Agreement
|
| |
Recitals
|
Company Material Contracts
|
| |
4.12(a)
|
Company Owned Intellectual Property
|
| |
4.13(b)
|
Company Permits
|
| |
4.10
|
Company Personal Property Leases
|
| |
4.16
|
Company Public Certifications
|
| |
4.7(a)
|
Company Real Property Leases
|
| |
4.15
|
Company SEC Reports
|
| |
4.7(a)
|
Company Special Meeting
|
| |
5.12(a)
|
Company Stockholder Approval Matters
|
| |
5.12(a)(ii)
|
Company Voting Agreements
|
| |
Recitals
|
D&O Indemnified Persons
|
| |
5.15(a)
|
Dissenting Shares
|
| |
1.13
|
Dissenting Stockholders
|
| |
1.13
|
Effective Time
|
| |
1.2
|
Employment Laws
|
| |
4.18(b)
|
Enforceability Exceptions
|
| |
3.2(a)
|
Environmental Permits
|
| |
4.20(a)
|
Exchange Agent
|
| |
1.10(a)
|
Exchange Fund
|
| |
1.10(a)
|
Expenses
|
| |
7.3(a)
|
Extension
|
| |
5.4(a)
|
Healthcare Laws
|
| |
4.28(a)
|
HIPAA
|
| |
4.28(a)
|
Intended Tax Treatment
|
| |
Recitals
|
Interim Balance Sheet Date
|
| |
4.7(b)
|
Interim Period
|
| |
5.1(a)
|
IT Systems
|
| |
4.13(h)
|
Joint Proxy Statement
|
| |
5.12(a)
|
Leased Real Property
|
| |
4.15
|
Letter of Transmittal
|
| |
1.10(b)
|
Merger Consideration
|
| |
1.8
|
Merger Sub
|
| |
Preamble
|
Merger
|
| |
Recitals
|
Term
|
| |
Section
|
Net Tangible Assets Charter Amendment
|
| |
5.20(a)
|
OFAC
|
| |
3.20(c)
|
Outside Date
|
| |
7.1(b)
|
Party(ies)
|
| |
Preamble
|
PIPE Investment
|
| |
Recitals
|
PIPE Investors
|
| |
Recitals
|
Post-Closing Purchaser Board
|
| |
5.14(a)
|
Public Certifications
|
| |
3.6(a)
|
Public Stockholders
|
| |
8.1
|
Purchaser Amendment to Warrant Agreement
|
| |
6.2(f)(v)
|
Purchaser Charter Amendments
|
| |
5.20(a)
|
Purchaser Closing Date Charter Amendment
|
| |
5.20(a)
|
Purchaser D&O Tail Insurance
|
| |
5.15(b)
|
Purchaser Disclosure Schedules
|
| |
Article III
|
Purchaser Financial Advisor
|
| |
3.24
|
Purchaser Financials
|
| |
3.6(b)
|
Purchaser Letter Agreement Amendment
|
| |
6.2(f)(iv)
|
Purchaser Material Contract
|
| |
3.14(a)
|
Purchaser Option
|
| |
1.9(d)(i)
|
Purchaser SEC Reports
|
| |
3.6(a)
|
Purchaser Special Meeting
|
| |
5.12(a)(i)
|
Purchaser Stockholder Approval Matters
|
| |
5.12(a)(i)
|
Purchaser
|
| |
Preamble
|
Redemption
|
| |
5.12(a)
|
Registered IP
|
| |
4.13(a)
|
Registration Rights Agreement
|
| |
5.20(b)
|
Registration Statement
|
| |
5.12(a)
|
Related Person
|
| |
4.21
|
Released Claims
|
| |
8.1
|
Required Company Stockholder Approval
|
| |
6.1(b)
|
Required Purchaser Shareholder Approval
|
| |
6.1(a)
|
SEC April Warrant Statement
|
| |
3.6(a)
|
Specified Courts
|
| |
9.5
|
Sponsor Debt Conversion Agreement
|
| |
Recitals
|
Sponsor Voting Agreement
|
| |
Recitals
|
Stockholder Merger Consideration
|
| |
1.8
|
Subscription Agreements
|
| |
Recitals
|
Termination Fee
|
| |
7.3(b)
|
Surviving Corporation
|
| |
1.1
|
Top Customers
|
| |
4.24
|
Top Suppliers
|
| |
4.24
|
Transmittal Documents
|
| |
1.10(d)
|
|
| |
The Purchaser:
|
|||
|
| |
|
| |
|
|
| |
SEP ACQUISITION CORP.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ R. Andrew White
|
|
| |
|
| |
Name: R. Andrew White
|
|
| |
|
| |
Title: Chief Executive Officer
|
|
| |
|
| |
|
|
| |
Merger Sub:
|
|||
|
| |
|
| |
|
|
| |
SEP ACQUISITION HOLDINGS INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ R. Andrew White
|
|
| |
|
| |
Name: R. Andrew White
|
|
| |
|
| |
Title: Chief Executive Officer
|
|
| |
The Company:
|
|||
|
| |
|
| |
|
|
| |
SANUWAVE HEALTH, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Morgan Frank
|
|
| |
|
| |
Name: Morgan Frank
|
|
| |
|
| |
Title: Chairman, Chief Executive Officer
|
|
| |
SEP Acquisition Corp.
|
||||||
|
| |
|
| |
|
| |
|
|
| |
By:
|
| |
|
|||
|
| |
|
| |
Name:
|
| |
R. Andrew White
|
|
| |
|
| |
Title:
|
| |
President and Chief Executive Officer
|
|
| |
Continental Stock Transfer & Trust Company, as Warrant
Agent
|
||||||
|
| |
|
| |
|
|||
|
| |
By:
|
| |
|
|||
|
| |
|
| |
Name:
|
| |
|
|
| |
|
| |
Title:
|
| |
|
|
| |
|
|
| |
R. Andrew White
|
|
| |
Chief Executive Officer, President and Director
|
|
| |
SEP ACQUISITION CORP.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
R. Andrew White
|
|
| |
|
| |
President and Chief Executive Officer
|
1
|
Our Analysis considers a contingent asset related to a patent infringement that Management does
believe may translate into additional cash flow. Our Opinion is not dependent on the additional fair market value of the contingent asset.
|
Item 20.
|
Indemnification of Directors and Officers.
|
Item 21.
|
Exhibits and Financial Statement Schedules.
|
No.
|
| |
Description of Exhibit
|
2.1+
|
| |
Agreement and Plan of Merger, dated as of August 23, 2023, by and among SEP
Acquisition Corp., SEP Acquisition Holdings Inc., and SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 2.1 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23, 2023)
|
| |
Amended and Restated Certificate of Incorporation (Incorporated by reference to
Exhibit 3.1 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Certificate of Amendment to the Amended and Restated Certificate of Incorporation
(Incorporated by reference to Exhibit 3.1 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on December 21, 2022)
|
|
| |
Certificate of Amendment to the Amended and Restated Certificate of Incorporation
(Incorporated by reference to Exhibit 3.2 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on December 21, 2022)
|
|
| |
Form of Certificate of Amendment to the Amended and Restated Certificate of
Incorporation (included as Annex C to the proxy statement/prospectus)
|
|
| |
Form of Certificate of Amendment to the Amended and Restated Certificate of
Incorporation
|
|
| |
Form of Second Amended and Restated Certificate of Incorporation (included as Annex D
to the proxy statement/prospectus)
|
|
| |
Bylaws (incorporated by reference to Exhibit 3.3 to Mercury Ecommerce Acquisition
Corp.’s Registration Statement on Form S-1, filed on March 25, 2021 (File No. 333-254726))
|
|
| |
First Amendment to the Bylaws (Incorporated by reference to Exhibit 3.3 to SEP
Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on December 21, 2022)
|
|
| |
Warrant Agreement, dated July 27, 2021, between Mercury Ecommerce Acquisition
Corp. and Continental Stock Transfer & Trust Company, as warrant agent (Incorporated by reference to Exhibit 4.1 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Specimen Unit Certificate (incorporated by reference to Exhibit 4.2 to Mercury
Ecommerce Acquisition Corp.’s amended Form S-1, filed on June 3, 2021 (File No. 333-254726))
|
|
| |
Specimen Class A Common Stock Certificate (incorporated by reference to
Exhibit 4.3 to Mercury Ecommerce Acquisition Corp.’s amended Form S-1, filed on June 3, 2021 (File No. 333-254726))
|
|
| |
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.4 to Mercury
Ecommerce Acquisition Corp.’s amended Form S-1, filed on July 12, 2021 (File No. 333-254726))
|
|
| |
Description of Registrant’s Securities (incorporated by reference to Exhibit 4.5
to Mercury Ecommerce Acquisition Corp.’s Annual Report on Form 10-K (File No. 001-40679) filed on March 8, 2022)
|
|
5.1**
|
| |
Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
|
8.1**
|
| |
Tax Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
|
| |
Letter Agreement, dated July 27, 2021, among Mercury Ecommerce Acquisition Corp.,
Mercury Sponsor Group I LLC and certain security holders (Incorporated by reference to Exhibit 10.1 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Investment Management Trust Agreement, dated July 27, 2021, between Mercury
Ecommerce Acquisition Corp. and Continental Stock Transfer & Trust Company, as trustee (Incorporated by reference to Exhibit 10.2 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on
August 2, 2021)
|
No.
|
| |
Description of Exhibit
|
| |
Registration Rights Agreement, dated July 27, 2021, among Mercury Ecommerce
Acquisition Corp., Mercury Sponsor Group I LLC and certain security holders (Incorporated by reference to Exhibit 10.3 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Warrants Purchase Agreement, dated July 27, 2021, between Mercury Ecommerce
Acquisition Corp. and Mercury Sponsor Group I LLC (Incorporated by reference to Exhibit 10.4 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Administrative Support Agreement, dated July 27, 2021, between Mercury Ecommerce
Acquisition Corp. and Mercury Sponsor Group I LLC (Incorporated by reference to Exhibit 10.5 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Revolving Promissory Note, dated October 11, 2022, between Mercury Ecommerce
Acquisition Corp. and Mercury Sponsor Group I LLC (Incorporated by reference to Exhibit 10.1 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on October 12, 2022)
|
|
| |
Form of Indemnity Agreement, dated July 27, 2021, between Mercury Ecommerce
Acquisition Corp and each of its directors and executive officers (Incorporated by reference to Exhibit 10.6 to Mercury Ecommerce Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 2, 2021)
|
|
| |
Form of Voting Agreement, dated as of August 23, 2023, by and among SEP
Acquisition Corp., SANUWAVE Health, Inc., and the stockholder of SANUWAVE Health, Inc. party thereto (Incorporated by reference to Exhibit 10.1 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23,
2023)
|
|
| |
Sponsor Voting Agreement, dated as of August 23, 2023, by and among Mercury
Sponsor Group I LLC, SEP Acquisition Corp., and SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 10.2 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23, 2023)
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Form of Voting and Non-Redemption Agreement, dated as of August 23, 2023, by and
among SEP Acquisition Corp., SANUWAVE Health, Inc., and the stockholder of SEPA party thereto (Incorporated by reference to Exhibit 10.3 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23, 2023)
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Form of Lock-Up Agreement, dated as of August 23, 2023, by and between SEP
Acquisition Corp. and the stockholder of SANUWAVE Health, Inc. party thereto (Incorporated by reference to Exhibit 10.4 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23, 2023)
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Form of Amendment Number One to Letter Agreement by and among SEP Acquisition
Corp., Mercury Sponsor Group I LLC, and the stockholders of SEPA party thereto (Incorporated by reference to Exhibit 10.5 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23, 2023)
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Form of Amendment Number One to Warrant Agreement by and between SEP Acquisition
Corp. and Continental Stock Transfer & Trust Company (Incorporated by reference to Exhibit 10.6 to SEP Acquisition Corp.’s Current Report on Form 8-K (File No. 001-40679) filed on August 23, 2023)
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Sponsor Debt Conversion Agreement by and between SEP Acquisition Corp. and
Mercury Sponsor Group I LLC
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SANUWAVE Health, Inc. 2023 Equity Incentive Plan (included as Annex E to
the proxy statement/prospectus)
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List of Subsidiaries
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Consent of BDO USA, P.C.
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Consent of Marcum LLP
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23.3**
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Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC (included as
part of Exhibit 5.1)
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23.4**
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Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC (included as
part of Exhibit 8.1)
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Power of Attorney (contained on the signature page of this Registration
Statement)
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Opinion of ValueScope, Inc. (included as Annex F to the proxy
statement/prospectus)
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No.
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Description of Exhibit
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Consent of ValueScope, Inc.
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Consent of Morgan Frank to be named as a Director
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Consent of Kevin A. Richardson, II to be named as a Director
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Consent of A. Michael Stolarski to be named as a Director
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Consent of Jeff Blizard to be named as a Director
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Consent of Ian Miller to be named as a Director
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Consent of James Tyler to be named as a Director
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Consent of Chantell Preston to be named as a Director
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Form of SEPA Stockholder Proxy Card
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Form of SEPA Public Warrant Holder Proxy Card
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101.INS*
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Inline XBRL Instance Document - the Inline XBRL Instance Document does not appear
in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document
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101.SCH*
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Inline XBRL Taxonomy Extension Schema Document
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101.CAL*
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF*
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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Inline XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101)
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Calculation of Filing Fees Table
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*
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Filed herewith
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**
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To be filed by amendment
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+
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The exhibits and schedules to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby
agrees to furnish a copy of any omitted schedules to the Commission upon request.
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Item 22.
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Undertakings.
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(a)
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The undersigned registrant hereby undertakes as follows:
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(1)
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To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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i.
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To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
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ii.
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To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration statement;
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iii.
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To include any material information with respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration statement.
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(2)
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That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof.
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(3)
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To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
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(4)
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That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each
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(5)
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That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the
initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to
sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
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i.
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Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
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ii.
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Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
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iii.
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The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
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iv.
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Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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(6)
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That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
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(7)
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That every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(8)
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Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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(b)
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The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, within one business
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(c)
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The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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SEP ACQUISITION CORP.
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By:
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/s/ R. Andrew White
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Name:
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R. Andrew White
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Title:
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Chief Executive Officer
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Name
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Position
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Date
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/s/ M. Blair Garrou
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Chairman
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September 22, 2023
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M. Blair Garrou
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/s/ R. Andrew White
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President, Chief Executive Officer and Director (Principal Executive Officer)
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September 22, 2023
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R. Andrew White
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/s/ Winston Gilpin
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Chief Financial Officer and Secretary
(Principal Finance and Accounting Officer)
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September 22, 2023
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Winston Gilpin
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/s/ Jay Gardner
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Director
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September 22, 2023
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Jay Gardner
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/s/ Mia Mends
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Director
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September 22, 2023
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Mia Mends
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/s/ Carolyn Rodz
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Director
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September 22, 2023
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Carolyn Rodz
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