Apteryx Imaging Inc. to be Acquired by Planet DDS, a Portfolio Company of Level Equity Vancouver

Vancouver, BC – June 15, 2020 – Apteryx Imaging Inc. (“Apteryx” or the “Company“) is pleased to announce that it has entered into an arrangement agreement (the “Arrangement Agreement“) with PDDS Buyer, LLC (“Planet DDS“), a portfolio company of Level Equity Management, LLC (“Level Equity“), pursuant to which a Planet DDS subsidiary will acquire 100% of the Company’s outstanding common and preferred shares (collectively, the “Shares“) for CAD$0.65 per Share (the “Consideration“) in an all-cash transaction (the “Transaction“). The price per share implies an aggregate equity value for Apteryx of approximately CAD$39.0 million.

“We believe this transaction represents an excellent outcome for Company shareholders,” said Avi Naider, Apteryx Executive Chairman of the board of directors. He added, “Planet DDS has been a growing and valuable distribution partner for the Company’s XVWeb software platform for several years. After a thorough review by an independent special committee of our board of directors, whose mandate was to review our strategic options, capital needs, capital structure and future strategic direction of the Company, we concluded that the combination with Planet DDS would provide the capital, management, and clarity of focus to optimize the growth and performance of Apteryx and offers compelling value for our shareholders.”

“Planet DDS has been our most productive cloud partner and instrumental in our overall growth,” stated Apteryx CEO Dr. David Gane. “Our combined cloud software offerings are highly synergistic with proven market appeal and acceptance, especially among Dental Support Organization practices. I look forward to working with Eric and the Planet DDS team and participating in their future success.”

“We’ve built a very special relationship with Apteryx over the past decade,” commented Planet DDS CEO Eric Giesecke. “One of our first and most important partners, Apteryx is the gold standard in dental imaging. Their value proposition to the growing DSO market mirrors that of our best-in-class cloud-based practice management software, Denticon. We’re excited to welcome the team at Apteryx to the Planet DDS family, and to further enhance the unique value proposition for our customers.”

Transaction Value Highlights for Apteryx Shareholders

The Company believes this is a highly attractive transaction for Apteryx shareholders:

• Premium valuation: The Consideration represents premia of 105.6% and 89.5%, respectively, to the volume-weighted average price of Apteryx common shares on the TSX Venture Exchange (“TSXV“) for the ten trading days and twelve months prior to the date of this announcement.
• All-Cash Transaction delivers immediate liquidity and value certainty: The Consideration is all-cash, resulting in immediate liquidity and value certainty to Apteryx shareholders.
• Superior Alternative: The Consideration offered to shareholders under the Transaction is more favorable than the value that might be realized through pursuing the Company’s current business plan in light of the inherent risks and uncertainties associated with the business operations, assets, financial condition and prospects of the Company should it continue as a stand-alone publicly-traded entity.
• Significant Cash Obligations: The maturity of the outstanding preferred shares in September 2023, as well as the ongoing cumulative quarterly dividend payment obligations of the preferred shares, combined with the requirements to prudently invest in systems, security, infrastructure, research & development and technology, including artificial intelligence applications, may represent a significant use of cash over the next 40 months. These and other working capital obligations constrain the Company’s ability to otherwise provide an attractive return to shareholders.

Transaction Details

The Transaction will be carried out by means of a court-approved statutory plan of arrangement (the “Arrangement“) governed by the Business Corporations Act (British Columbia), pursuant to which a Planet DDS subsidiary will acquire all of the issued and outstanding Shares of Apteryx.

A special committee of independent directors (the “Special Committee“) was established by Apteryx’s board of directors (the “Apteryx Board“) in order to review and consider the terms and conditions of the Transaction. The Special Committee and the Apteryx Board obtained a fairness opinion from Canaccord Genuity Corp. (“Canaccord“) (the “Fairness Opinion“) to the effect that, subject to the assumptions, qualifications, and limitations contained therein, as at June 12, 2020, the Consideration to be received by Apteryx common shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view to the Apteryx common shareholders. The Apteryx Board has unanimously determined, based on among other things, the unanimous recommendation of the Special Committee and the Fairness Opinion, that the Arrangement is in the best interests of the Company and is fair to Apteryx security holders and will unanimously recommend that Apteryx security holders vote in favor of the Arrangement at a meeting of security holders (the “Meeting”).

The Transaction is subject to the approval of (i) 662/3% of the votes cast by the holders of Apteryx’s common shares present in person or represented by proxy; and (ii) 662/3% of the votes cast by the holders of Apteryx’s common shares, preferred shares and other securities present in person or represented by proxy, voting together as a single class. Directors, executive officers and other shareholders of Apteryx holding in aggregate approximately 41.45% of the issued and outstanding Shares of Apteryx have entered into voting and support agreements (the “Voting Agreements“) pursuant to which they have agreed to vote their shares in favor of the Arrangement.

The Transaction is expected to close shortly following the Meeting, subject to receipt of required security holder, court and other approvals and satisfaction of other closing conditions.

The Arrangement Agreement includes representations, warranties, and covenants typical of a transaction of this nature, along with customary non-solicitation covenants and right to match and fiduciary-out provisions. In addition, Apteryx has agreed to pay a termination fee of CAD$2.34 million if the Arrangement Agreement is terminated in certain specific circumstances, including if Apteryx enters into an agreement with respect to a superior proposal or if the Apteryx Board or Special Committee withdraws its recommendation with respect to the Arrangement.

Further information regarding the Transaction will be included in a management information circular (the “Circular“), which will be mailed to Apteryx shareholders in advance of the Meeting. Copies of the Arrangement Agreement, a form of Voting Agreement, and Circular will be filed on Apteryx’s SEDAR profile and will be available for viewing at www.sedar.com.

Advisors and Counsel

The Special Committee of Apteryx has engaged Canaccord as its exclusive financial advisor and Farris LLP as its legal advisor in connection with the Transaction. Planet DDS has engaged Stikeman Elliott LLP as its Canadian legal advisors and Goodwin Procter LLP as its US legal advisors in connection with the Transaction. Apteryx shareholders should consult their own tax and investment advisors with respect to the Transaction.

For more information about Apteryx, its products, and services, please visit www.apteryx.com or call 877- 278-3799.

About Apteryx Imaging Inc.

Apteryx has provided dentists and oral health specialists with advanced diagnostic imaging software and device technologies for over 20 years. Apteryx’s proprietary technologies include XrayVision, XVWeb, and XrayVision DCV imaging software solutions, the VELscope Vx Enhanced Oral Assessment, and TUXEDO Intraoral Sensors.

Backed by an experienced leadership team and dedicated to a higher level of service and support, Apteryx is committed to providing dental practitioners with the best technology available by identifying and adding leading products to its growing portfolio. The Company is currently listed on the TSXV under the symbol XRAY, the OTCQB under the symbol APTEF, as well as the Frankfurt Stock Exchange under the symbol XRAY.

About Planet DDS and Level Equity

Planet DDS is the largest independent provider of cloud-native practice management software for the dental industry. The company’s flagship product, Denticon, is the only proven, time-tested software offering that was built from the ground up for multi-location groups in the cloud. Denticon has the largest footprint among emerging and established dental groups of any cloud software provider, allowing clients to break free from the constraints of desktop software with a comprehensive solution that includes the tools needed to standardize, centralize, and grow. All while reducing IT cost and enhancing security. Learn more about Denticon at www.planetdds.com. Planet DDS is a portfolio company of Level Equity.

Level Equity is a growth equity firm focused on providing capital to rapidly growing software and internet companies. The firm has raised over $1.7 billion across a series of long term committed investment partnerships with offices in New York, NY and San Francisco, CA. For more information about Level Equity, visit www.levelequity.com.

Forward-looking statements

This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information may include statements regarding the Company’s future plans, objectives, delivery performance, revenues, or the company’s underlying assumptions. The words “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “intend”, “plan”, “forecast”, “project”, “estimate” and “believe” or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions and that the Company’s actual future results or performance may be materially different. Some of the specific forward-looking information referred to in this press release includes, but is not limited to: the Transaction and the terms thereof; the expected timeline and date of completion of the Transaction; the ability of the parties to receive Apteryx shareholder approval; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Transaction. There can be no assurance that the Transaction will be completed or that it will be completed on the terms and conditions contemplated in this press release. The Transaction could be modified or terminated in accordance with its terms.

Forward-looking information is based on a number of key expectations and assumptions made by the Company including, without limitation: the Transaction will be completed on the terms currently contemplated; the Transaction will be completed in accordance with the timing currently expected without any undue or expected delay; all conditions to the completion to the Transaction will be satisfied or waived in due course and the Arrangement Agreement will not be terminated prior to the completion of the Transaction; assumptions and expectations related to premiums to the trading price of Apteryx; and other expectations and assumptions concerning the Transaction. Although the forward-looking information contained in this press release is based on what Apteryx’s management believes to be reasonable assumptions, Apteryx cannot assure investors that actual results will be consistent with such information.

Forward-looking information is provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information involves significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information. Those risks and uncertainties include, among other things: the Transaction may not be completed on the terms, or in accordance with the timing, currently contemplated, or at all; the Company has incurred expenses in connection with the Transaction and will be required to pay for those expenses regardless of whether or not the Transaction is completed; Apteryx and Planet DDS may not be successful in satisfying the conditions to the Transaction, including failing to obtain Apteryx shareholder approval; the possibility that the Apteryx Board could receive and approve a superior acquisition proposal; the possibility of litigation relating to the Transaction; significant Transaction costs or unknown liabilities; the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Transaction; the failure to realize the expected benefits of the Transaction; and other risks inherent to the Company’s business and/or factors beyond its control which could have a material adverse effect on the Company or the ability to consummate the Transaction.

Additional information about risks and uncertainties are described in the Company’s reports filed on SEDAR, including its financial report and annual information form for the year ended December 31, 2019.

All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.