SINGULAR HEALTH GROUP LTD — Capital/Financing Update 2021

Mar 21, 2021

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ASX Release: SHG

50 LICENCE SALES - SOFTWARE ACQUISITION - 3D PRINTING

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Figure 1 3D Surface Model for Maxillofacial Surgical Planning

Highlights

• Proposed acquisition of Strategic Virtual Surgical Planning software for integration into existing MedVR software

• Leading medical computer aided design company, Lyka Smith Pty Ltd ( Lyka Smith ) to purchase fifty (50) licenses of integrated software for maxillofacial planning at $300 per month per license

• Singular Health to invest AUD $300,000 for 25% equity stake in Australian Additive Engineering Pty Ltd ( AAE )

• AAE to lease polymer and titanium 3D printers for capital efficient manufacturing of craniofacial surgical guides and personalised fixment plates

Singular Health Group Ltd ( ASX: SHG ) ( Singular Health , or the Company ) has entered into binding agreements to further enhance its capabilities in surgical planning, 3D visualisation, and the vertical integration of medical computer aided design and additive manufacturing.

The transactions will strengthen Singular Health’s mission to develop technologies to provide patients and practitioners with access to personalised, enhanced medical data, and form part of a long-term vision by all parties to deliver a personalised end-to-end surgical planning platform in the maxillofacial sector from scan through to surgery.

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Given the proximity of the transactions to the Company’s admission to ASX, the Company is required to seek shareholder approval under ASX Listing Rule 11.1.2 (change of nature and scale) before proceeding with the transaction. A notice of meeting will shortly be dispatched to shareholders convening the meeting.

Acquisition of Virtual Surgical Planning Software

The design of bespoke surgical cutting and drill guides and personalised medical implants, including total hip arthroplasties, spinal cages and cranio-facial fixment plates, relies upon the conversion of source CT/MRI scans from DICOM format to standard computer aided design ( CAD ) files.

VR Surgical Pty Ltd ( Virtual Surgical ) has been developing a virtual software planning ( VSP ) solution to allow surgeons to manipulate CAD files to accelerate the pre-operative planning of maxillofacial surgery in virtual reality. Following this planning process, patient-specific guides and implants are generated in 3D printable file formats and sent to a medical-grade 3D printing facility for manufacture.

Singular Health’s Volumetric Rendering Platform and the MedVR product have been developed to visualise and manipulate CT/MRI data. Further development of MedVR in late 2020 has added functions to import and manipulate CAD files. Consequently, the acquisition of the VSP software is a logical step to expand the functionality of the MedVR product toward our objective to build an endto-end scan to surgery software solution.

Singular Health has entered into an Asset Sale Agreement to acquire all the software and intellectual property owned and developed by Virtual Surgical for $250,000 in cash and the issue of $250,000 worth of Singular Health shares (which will be subject to 12 months escrow).

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Figure 2 Segmented surface model with proposed mandibular cut & placement guide design

Commitment to purchase fifty (50) MedVR Licenses

Lyka Smith, owned 100% by Benjamin Baxter, is an established medical computer aided design company, which primarily operates in the maxillofacial market. Since 2017, Lyka Smith has produced more than 5,000 custom patient specific components for surgeries across Australia.

Lyka Smith has entered into a binding agreement to purchase 50 licenses of the MedVR, upon its integration with the VSP software (anticipated to occur within 3 months of completion of the acquisition by the Company of the VSP software). The initial licence terms will have a minimum period of two (2) years and a license fee of $300 per month per license.

Lyka Smith intends to use the integrated MedVR product to support its existing, and to grow its, client base of surgeons in Australia and New Zealand.

ASX: SHG | www.singular.health

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Investment in Australian Additive Engineering Pty Ltd

Singular Health will invest AUD$300,000 into Australian Additive Engineering Pty Ltd ( AAE ) in return for 25% of the issued capital of AAE.

AAE, established by Hugh Tevelein (the former General Manager of Production at Titomic) and which includes Benjamin Baxter as a significant shareholder, is a Melbourne-based additive manufacturing company specialising in the production of medical grade surgical guides and implants focusing on, but not limited to, servicing the maxillofacial sector.

AAE is currently in the process of procuring and commissioning two polymer-based 3D printers for manufacturing surgical guides and personalised bio-models, and three titanium 3D printers for the manufacture of bespoke surgical implants.

Singular Health believes that AAE is well positioned to establish and grow its business offering in the medical additive manufacturing market with its experienced team, established sales networks and marketing strategies.

Reflecting on the transactions, Singular Health Chief Executive Officer, Thomas Hanly, said:

“ Following our listing in mid-February, Singular Health was presented the opportunity to engage with Benjamin from Lyka Smith and Virtual Surgical, and Hugh from AAE. It has been a considerable amount of effort by all parties and we at Singular Health are excited to be working with Lyka Smith to integrate the Virtual Surgical Planning software into MedVR and optimise their existing processes for maxillofacial surgery preparation.

The commitment by Lyka Smith to purchase 50 MedVR licences (following integration with the VSP software) for their clients, reinforces Singular Health’s position as a leader in the development of world leading medical visualisation and planning software.

Furthermore, we are very pleased to invest in and work with Hugh and his team, with his extensive experience in metallic 3D printing and presents us with the opportunity to accelerate our commercialisation strategy in the healthcare 3D printing industry that, according to Frost and Sullivan, is estimated at US$1.63 billion and is forecast to grow to US$3.78 billion by 2025 at a CAGR of 20.4% between 2015 and 2025. ”

Lyka Smith’s Managing Director, Benjamin Baxter, said:

“Lyka Smith is looking forward to working with Singular Health and the opportunities provided by integrating VSP into MedVR/3Dicom. We have demonstrated MedVR to a number of clients and the interest received led to our commitment to purchase 50 licenses.”

Australian Additive Engineering’s Managing Director, Hugh Tevelein, said:

“AAE will aim to become one of Australia’s largest titanium specific medical 3D printing companies. We are looking forward to working with Singular Health and their team to build solutions for a range of medical 3D printing applications.”

Timetable

The Company has commenced preparation of a notice of meeting seeking shareholder approval for the transactions detailed in this announcement. The notice of meeting will shortly be dispatched to shareholders, with the proposed timetable for implementation as follows:

Week commencing 22 March 2021	Submit Notice of Meeting to ASX for review
Week commencing 29 March 2021	Dispatch Notice of Meeting to shareholders
Week commencing 3 May 2021	General Meeting to approve transactions
Week commencing 3 May 2021	Completion of proposed transactions

The above timetable is indicative only and subject to change.

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Summary of Key Transaction Terms

Acquisition of Virtual Surgical Planning Software:

Key Acquisition Terms	Singular Health Group Limited(SHG)to acquire all virtual software planning assets and intellectual property owned and developed by VR Surgical Pty Ltd(Virtual Surgical).
Price	SHG to pay Virtual Surgical $250,000 cash at completion. SHG to issue Virtual Surgical $250,000 worth of SHG consideration shares based on the 30 trading day VWAP prior to the share issue. The shares will be subject to escrow for 12 months from the date of issue.
Conditions Precedent	SHG shareholder approval for the purpose of Listing Rule 11.1.2. SHG being satisfied with its due diligence enquiries (noting these enquiries are materially advanced).
Restraint	Virtual Surgical and Benjamin Baxter(Baxter)will not engage in activities that compete with SHG’s development and promotion of the integrated MedVR software products what will be developed as a result of the acquisition.
Timing	Completion of acquisition to occur the first business day after SHG shareholder approval.
Guarantee	Baxter guarantees the performance by Virtual Surgical of its obligations.

Investment into Australian Additive Engineering Pty Ltd:

Key Investment Terms	Singular Health Group Limited(SHG)to invest $300,000 into Australian Additive Engineering Pty Ltd (AAE), following which it will have a 25% shareholding in AAE.
Business	AAE to focus on three-dimensional printing of guides and implants for maxillofacial, cranial, dental and spinal surgery, and, the re-sale of three- dimensional metal based printers.
Shareholders	Following the investment by SHG, AAE will have four 25% shareholders, comprising: • SHG; • Benjamin Baxter (Baxter); • Hugh Tevelein (the Managing Director) (Tevelein); and • West Venture Holdings Pty Ltd ATF the WV Trust (West Venture).
Conditions Precedent	SHG shareholder approval for the purpose of Listing Rule 11.1.2.

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Timing	Completion to occur the first business day after SHG shareholder approval.
Cash Position	AAE to have cash reserves of approximately $900,000 upon completion of the SHG investment.
Shareholders Agreement	Shareholders Agreement in relation to AAE to be entered into by SHG, Baxter, Tevelein and West Venture at completion, providing the following key terms: • each AAE shareholder has a Board nominee right for such time as it maintains a 15% shareholding; • material decisions require unanimous Board approval; • SHG has a pre-emptive right and first right of refusal, to all share issues or share transfers; and • shareholders (and entities they control) will not engage in activities that compete with AAE’s business. However, such restriction does not apply to SHG in connection with the joint venture it is to establish with Global3D Pty Ltd.

Distribution and Priority Arrangements with Lyka Smith Pty Ltd:

Distribution Arrangements	Lyka Smith Pty Ltd (Lyka Smith) to be appointed as exclusive reseller of integrated MedVR software in Australia and New Zealand to providers of maxillofacial, cranial, dental and spinal surgery services. Exclusivity will lapse if confidential performance milestones are not satisfied. Lyka Smith has entered into a binding agreement to purchase 50 licenses of the MedVR, upon its integration with the virtual software planning (VSP) software (anticipated to occur within 3 months of completion of the acquisition by Singular Health Group Limited (SHG) of the VSP software). The initial licence terms will have a minimum period of 2 years and license fee of $300 per month per license.
Integrated Software Promotion	Lyka Smith has undertaken to use its best endeavours to promote the integrated MedVR software products, which will be developed as a result of SHG’s acquisition of the virtual surgical software, and will use the software in relation to its own operations and activities, so long as the software meets the operational needs and the specifications of the client Lyka Smith is undertaking works for.
AAE Printing Priority	Lyka Smith has undertaken to utilise the printing services offered by Australian Additive Engineering Pty Ltd (AAE) where such services will meet the needs of Lyka Smith and the client it is undertaking works for.
Sub-Lease	Lyka Smith will sub-lease office space to SHG in Victoria, so that SHG may expand its physical footprint.
Conditions Precedent	SHG shareholder approval for the purpose of Listing Rule 11.1.2.

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ASX: SHG | www.singular.health

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ENDS

This announcement has been authorised for release by the Singular Health Board of Directors.

Contacts

Corporate Investor Media Steven Wood James Hill Jane Morgan Company Secretary +61 413 825 646 +61 405 555 618 sw@grangeconsulting.com.au jhill@singular.health jm@janemorganmanagement.com.au

Follow the Company developments through our website and social media channels

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Website https://singular.health/ Twitter https://twitter.com/Singular_Health LinkedIn https://www.linkedin.com/company/singularhealth/

About Australian Additive Engineering:

Based in Melbourne, Australian Additive Engineering Pty Ltd ( AAE ) provides advanced additive manufacturing services for the medical sector, with a focus on supporting maxillofacial surgery. Founded by Hugh Tevelein (former General Manager of Operations at Titomic), AAE is currently in the process of procuring polymer-and-metals based 3D printers to scale its operations on Australia’s East Coast.

About Lyka Smith:

With the aim of providing Australian surgeons with a local and specialised custom solution for complex surgeries, Lyka Smith Pty Ltd, based in Melbourne, has a highly skilled in-house team that have produced more than 5,000 custom patient specific components for surgeries across Australia.

With the ability to produce bespoke patient specific solutions for a variety of surgical options ranging from orthognathic and trauma, to mandibular cancer reconstruction and guided dental surgery, Lyka Smith combines industry leading technology with local based manufacturing facilities to deliver expedited lead times and closer involvement with practitioners.

About Singular Health:

Founded in 2017, Singular Health Group Limited is a medical technology company that has developed and commercialised the proprietary Volumetric Rendering Platform ( VRP ) for the 3D & VR visualisation of anatomy using standard radiological imagery.

Singular Health is developing technologies that provide patients and practitioners with access to personalised, enhanced medical data to inform better health decisions and is currently developing and deploying software products that are built upon the proprietary VRP on a global scale through a direct-to-consumer Software-as-a-Service ( SaaS ) model.

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