CynergisTek Inc. Reveals Expiration of “Go-Shop” Period and Qualification of an “Excluded Party”

CynergisTek Inc. Reveals Expiration of Go-Shop Period and Qualification of an Excluded Party-01

CynergisTek, Inc. (NYSE American: CTEK) (“CynergisTek”), leading cybersecurity, privacy, compliance, and IT audit firm helping organizations in highly regulated industries navigate emerging security and privacy issues, announces the expiration of the initial “go-shop” period set forth in the previously announced merger agreement (“Merger Agreement”) with Clearwater Compliance LLC (collectively with its affiliates, “Clearwater”), a healthcare focused cybersecurity, compliance, and risk management solutions firm, in an all cash transaction that values CynergisTek at approximately $17.7 million. All capitalized but undefined terms used herein have the meanings given in the Merger Agreement

Consistent with the terms of the Merger Agreement, during the “go-shop” period, CynergisTek and its financial advisors contacted 88 potentially interested parties, including 63 strategic buyers and 25 financial sponsors. Eight of the contacted parties executed confidentiality agreements, all of whom received a management one page overview of CynergisTek and four of whom requested and received a virtual meeting with members of senior management. As a result of the process, CynergisTek received an Acquisition Proposal from one of the potential strategic buyers (the “Go-Shop Proposal”).

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On June 22, 2022, the CynergisTek Board of Directors (the “Board”) determined, in good faith after consultation with its outside counsel and financial advisor, that the Go-Shop Proposal would reasonably be expected to lead to a Superior Proposal, thereby making this strategic party an Excluded Party under the terms of the Merger Agreement. At this time, the Board has not determined that the Go-Shop Proposal constitutes a Superior Proposal, and there can be no assurances that a transaction will result from the Go-Shop Proposal or that any alternative transaction will be entered into or consummated.

At this time, CynergisTek remains subject to the Merger Agreement and is complying with the terms and conditions thereof, which remain in effect unless and until the Merger Agreement is terminated. Accordingly, subject to and as required by the Merger Agreement, the Board has not made a Company Board Recommendation Change, reaffirms its recommendation of the Merger Agreement and rejects all Alternative Acquisition Agreements. CynergisTek does not intend to disclose developments with respect to this process unless and until it determines it is appropriate to do so, subject to the terms of the Merger Agreement.

The foregoing description of the Merger Agreement and the transactions contemplated thereby is subject to, and is qualified in its entirety by reference to, the full terms of the Merger Agreement, which CynergisTek filed on May 23, 2022, as an exhibit to a current Report on Form 8-K.

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