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
Excluded Party “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.
As previously announced, prior to the expiration of the initial
“go-shop” period under the Merger Agreement, CynergisTek received
an Acquisition Proposal from a potential strategic buyer who had
been contacted by CynergisTek’s financial advisors (the “Go-Shop
Proposal”), and thereafter CynergisTek has been engaged in
negotiations with the potential strategic buyer regarding the terms
and conditions of the Go-Shop Proposal.
As previously announced, on June 22, 2022, the CynergisTek Board
of Directors (the “Board”) determined, in good faith after
consultation with its outside financial advisor and legal counsel,
that the Go-Shop Proposal would reasonably be expected to lead to a
Superior Proposal, thereby making the potential strategic buyer an
Excluded Party under the terms of the Merger Agreement. After
continued negotiation with the potential strategic buyer prior to
the expiration of the Excluded Party “go-shop” period under 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.
Following the expiration of the “go-shop” period under the
Merger Agreement, CynergisTek became subject to customary “no-shop”
restrictions that limit its and its representatives’ ability to
solicit alternative acquisition proposals from third parties,
subject to customary “fiduciary out” provisions.
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 proposed merger and the Merger Agreement will be submitted
to CynergisTek’s stockholders for their consideration at a special
meeting of its stockholders. In connection therewith, CynergisTek
intends to file relevant materials with the SEC, including a
definitive proxy statement on Schedule 14A, which will be mailed or
otherwise disseminated to CynergisTek’s stockholders when it
becomes available.
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.
Advisors
American Growth Capital is acting as financial advisor to
CynergisTek, with Kirton McConkie PC acting as CynergisTek’s legal
counsel.
About CynergisTek, Inc.
CynergisTek is a top-ranked cybersecurity consulting firm
helping organizations in highly-regulated industries, including
those in healthcare, government, and finance navigate emerging
security and privacy issues. CynergisTek combines intelligence,
expertise, and a distinct methodology to validate a company's
security posture and ensure the team is rehearsed, prepared, and
resilient against threats. Since 2004, CynergisTek has been
dedicated to hiring and retaining experts who bring real-life
experience and hold advanced certifications to support and educate
the industry by contributing to relevant industry associations. For
more information, visit www.cynergistek.com or follow us on Twitter
or LinkedIn.
Cautionary Note Regarding Forward Looking Statements
This release contains certain forward-looking statements
relating to the business of CynergisTek. These forward-looking
statements are within the meaning of Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”) and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and can be identified by the use of forward-looking
terminology such as “believes,” “expects,” “anticipates,” “would,”
“could,” “intends,” “may,” “will,” or similar expressions. Such
forward-looking statements involve known and unknown risks and
uncertainties, including but not limited to uncertainties relating
to the Merger Agreement and transactions contemplated thereunder;
failure to obtain the required votes of CynergisTek’s stockholders;
the timing to consummate the proposed merger; the conditions to
closing of the proposed merger not being satisfied or the closing
of the proposed merger otherwise not occurring; the occurrence of
any event, change or other circumstance that could give rise to the
termination of the merger agreement, including in circumstances
that would require CynergisTek to pay a termination fee;
unanticipated difficulties or expenditures relating to the proposed
merger; the diversion of management time on merger-related issues;
results of litigation, settlements and investigations; actions by
third parties, including governmental agencies and including the
response of customers, service providers and business partners to
the announcement of the proposed merger; product/services
development; long and uncertain sales cycles; the ability to obtain
or maintain proprietary intellectual property protection; future
capital requirements; competition from other providers; the ability
of CynergisTek’s vendors to continue supplying CynergisTek with
supplies and services at comparable terms and prices; CynergisTek’s
ability to successfully compete and introduce enhancements and new
features that achieve market acceptance and that keep pace with
technological developments; CynergisTek’s ability to maintain its
brand and reputation and retain or replace its significant
customers; cybersecurity risks and risks of damage and
interruptions of information technology systems; CynergisTek’s
ability to retain key members of management and successfully
integrate new executives; CynergisTek’s ability to complete
acquisitions, strategic investments, entry into new lines of
business, divestitures, mergers or other transactions on acceptable
terms, or at all; potential risks and uncertainties relating to the
existing and ultimate impact of the COVID-19 pandemic, including
actions that may be taken by governmental authorities to contain
the COVID-19 outbreak or to treat its impact, and the potential
negative impacts of COVID-19 on the global economy and financial
markets; the general economic impact of the ongoing war in Ukraine,
including the impact of related sanctions being imposed by the U.S.
Government and the governments of other countries, and the impact
of potential reprisals as a consequence of the war in Ukraine and
any related sanctions; and other factors that may cause actual
results to be materially different from those described herein as
anticipated, believed, estimated or expected. Certain of these
risks and uncertainties are or will be described in greater detail
in CynergisTek’s Annual Report on Form 10-K for the year ended
December 31, 2021 (as amended on Form 10-K/A) and the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2022, each
filed with the Securities and Exchange Commission (“SEC”), which
are available at http://www.sec.gov. Given the risks and
uncertainties, readers should not place undue reliance on any
forward-looking statement and should recognize that the statements
are predictions of future results which may not occur as
anticipated. Many of the risks listed above have been, and may
further be, exacerbated by the COVID-19 pandemic, including its
impact on the healthcare industry, or the ongoing war in Ukraine.
Actual results could differ materially from those anticipated in
the forward-looking statements and from historical results, due to
the risks and uncertainties described herein, as well as others not
now anticipated. The forward-looking statements are made as of the
date of this communication, and CynergisTek is under no obligation
(and expressly disclaims any such obligation) to update or alter
its forward-looking statements whether as a result of new
information, future events or otherwise.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy the securities of CynergisTek or
the solicitation of any vote or approval. The proposed merger and
the merger agreement described above will be submitted to
CynergisTek’s stockholders for their consideration at a special
meeting of the stockholders. In connection therewith, CynergisTek
intends to file relevant materials with the SEC, including a
definitive proxy statement on Schedule 14A, which will be mailed or
otherwise disseminated to CynergisTek’s stockholders when it
becomes available. CynergisTek may also file other relevant
documents with the SEC regarding the proposed merger.
STOCKHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND ANY
OTHER DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.
Stockholders may obtain a free copy of the definitive proxy
statement and any amendments or supplements thereto and other
documents filed by CynergisTek, once such documents are filed with
the SEC, at the SEC's web site at http://www.sec.gov. The proxy
statement and such other documents may also be obtained for free
from CynergisTek by directing such request to
InvestorRelations@cynergisTek.com.
Participants in the Solicitation
CynergisTek and its directors, executive officers and other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from its stockholders
in connection with the proposed merger. A list of the names of such
directors and executive officers and information concerning such
participants’ ownership of CynergisTek’s common stock is set forth
in CynergisTek’s definitive proxy statement on Schedule 14A for the
2021 annual meeting of stockholders, filed with the SEC on August
26, 2021, as modified or supplemented by any Form 3 or Form 4 filed
with the SEC since the date of such proxy statement, and by
CynergisTek’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, filed with the SEC on March 28, 2022 (as amended
on Form 10-K/A, filed with the SEC on April 29, 2022). Additional
information about the direct or indirect interests, by security
holdings or otherwise, of those participants will be included in
the definitive proxy statement and other documents filed with the
SEC regarding the proposed merger, if and when they become
available. Free copies of these materials may be obtained as
described in the preceding paragraph.
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version on businesswire.com: https://www.businesswire.com/news/home/20220629005499/en/
CynergisTek Investor Relations Contact: CynergisTek, Inc.
Bryan Flynn (512) 402-8550 x7 InvestorRelations@cynergistek.com
CynergisTek Media Contact: CynergisTek, Inc. Trinity
McPherson (443) 853-8468 trinity.mcpherson@cynergistek.com
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