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InvestorPresentationNovember2017NYSEAMERICAN:CTEK
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SafeHarborStatementsThispresentationcontains,andourofficersandrepresentativesmayfromtimetotimemake,“forward-lookingstatements”withinthemeaningofthesafeharborprovisionsoftheU.S.PrivateSecuritiesLitigationReformActof1995.Forward-lookingstatementscanbeidentifiedbywordssuchas:“anticipate,”“intend,”“plan,”“goal,”“seek,”“believe,”“project,”“estimate,”“expect,”“strategy,”“future,”“likely,”“may,”“should,”“will”andsimilarreferencestofutureperiods.Examplesofforward-lookingstatementsinclude,amongothers,statementswemake(hereinorotherwise)regardingthesizeofthepotentialmarketforourservices;thenumberofpotentialcustomers/clientsforourservices;plansandstrategiesofCynergisTekanditssubsidiariesforfuturegrowthandperformance;marketacceptanceofourbusinessmodel;ourabilitytointegrateacquisitionsandmergedcompanies;andtimelinesrelatingtogrowth,milestones,andstrategicfocus.Forward-lookingstatementsareneitherhistoricalfactsnorassurancesoffutureperformance.Instead,theyarebasedonlyonmanagement’scurrentbeliefs,expectationsandassumptionsregardingthefutureofourbusiness,futureplansandstrategies,projections,anticipatedeventsandtrends,theeconomyandotherfutureconditions.Becauseforward-lookingstatementsrelatetothefuture,theyaresubjecttoinherentuncertainties,risksandchangesincircumstancesthataredifficulttopredictandmanyofwhichareoutsideofourcontrol.Ouractualresultsandfinancialconditionmaydiffermateriallyfromthoseindicatedintheforward-lookingstatements.Therefore,youshouldnotrelyonanyoftheseforward-lookingstatements. Importantfactorsthatcouldcauseouractualresultsandfinancialconditiontodiffermateriallyfromthoseindicatedintheforward-lookingstatementsinclude,amongothers,theriskfactorsdiscussedthroughoutPartII,Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,andinPartI,Item1A.RiskFactorsofourAnnualReportonForm10-KfortheyearendedDecember31,2016;andthroughoutPartI,Item2.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperationsofourQuarterlyReportsonForm10-QforthequartersendingMarch31,June30andSeptember30,2017,Anyforward-lookingstatementmadebyusinthispresentationisbasedonlyoninformationcurrentlyavailabletousandspeaksonlyasofthedateonwhichitismade.Weexpresslydisclaimanyobligationtopubliclyupdateanyforward-lookingstatement,whetherwrittenororal,thatmaybemadefromtimetotime,whetherasaresultofnewinformation,futuredevelopments,orotherwise.
Introduction
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CynergisTekCybersecurity&InformationManagementforHealthcare
NationwidePresenceConsultantsaverage15yearsofexperience
intheirdomainexpertise
Revenue$60Min2016
CoveredEntities1,000healthcare
providerlocationsandbusinessassociates
Contracts3-5YearService
Contracts
AuxilioacquiresCynergisTekin2017
MarketOpportunity
5
PrinthasIncreased11%SignificantrisktoPHIandcostsavingsopportunityforhospital.
6
CostofaBreachBreachescostthehealthcareindustry$6.2B/yr1,90%ofall
hospitalshadabreachinthepasttwoyears.2
HealthcareITDynamics3.5MillionCoveredEntitiesand35MillionBusinessAssociates
ITSpendonSecurity3Healthcare4-6%Financial10-12%Government7-9%
InternetofThings(IoT)Estimated30billiondevicesby
2020.Biomedicaldevicerisk.
IncreasedRegulationOCRenforcementofHIPAAamongCoveredEntitiesandBusiness
Associates.
LackofResourcesShortageofestimated1.5M
Cybersecurityresources.Leadingtomanagedservicesandprogram
delivery.
Referencesonslide25
7
$12B+DomesticMarketOpportunity
EHRproduces60%ofprintvolume1-Paperrepresents30%ofallbreaches
Healthcare$12BMarket
MarketCapcombinedHealthcareCybersecurityandMDSbusiness
40%of2016breacheswereunauthorized
disclosure2
64%increaseinbreachesrelatedtohackingin2016vs.
20153
41%ofdatabreachesin2017weretiedtoinsidererrororwrongdoing,whichcompromisednearly1.2millionpatientrecords.
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IntheNews
EnterpriseAttacksareGrowingandImpactingConsumers
1
2
3
Ransomware64%ofvictimsintheUSpayransom
Threats1in131EmailsareMalicious
WeaponizedIoTdevicesTakedowncriticalcloudservices
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DisruptiveAttacksShutting downhospitals
IdentityTheftEvery2secondssomeoneisavictimofidentitytheft
6Global689millionpeoplegloballywerevictimsofcybercrimein2016
Cybersecuritylaborcrunchtohit3.5millionunfilledjobsby2021
Solutions
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TheServicesWeProvide
ConsultingServices
• RiskAssessments• TechnicalSecurityAssessment
• PrintSecurityAssessment• ArchitectureAssessment• SocialEngineeringandPhishing
• PrivacyProgramAssessment
• PolicyandProcedureDevelopment
• ComplianceProgramEffectivenessAssessment
• HIPAAResearchProgramAssessment
• MeaningfulUseAudits• ITGeneralControlsAudits
ManagedServices
• ComplianceAssistPartnerProgram
• VendorSecurityManagement
• PrivacyMonitoring• VulnerabilityManagement
• ManagedPrintService• IncidentResponseManagement
ProfessionalServices
• Remediation• ProgramDevelopment• StrategicStaffing• VirtualCISO
Security/Privacy/Compliance/Cost
ThoughtLeader
UniqueleadgenerationeffortsofeducationaleventsandPRtogainshareofvoiceinthemarket.
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Ourdepthandbreadthintheindustrymakeusatrustedpartnertohealthcareleadership,providingtheservicestheyneed.
AccountManagersembeddedintoclienttoupsellservicesacrosstheorganization.
Buildinglongtermpartnershipsandbecomingthetrustedadvisorwithourclients.
Go-to-MarketStrategy
MarketApproach
Upsell
Longevity
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CompetitiveAdvantageUnmatchedHealthcareCybersecurityExperts
CynergisTekwonthe2017BestinKLASAwardforCyberSecurityAdvisory
Services
EffectiveLeadership
CustomerDriven
StrongRelationshipsandTrackRecord
WellKnownIndustryPlayer
ActionableInsight
TailoredSolutions
FinancialPerformance
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SnapshotNYSE AMERICAN 11/28/2017
Shareprice $4.06
Marketcap $41M
FDSharesOutstanding 10M
SharesOwnedbyMgmt.andBoard
25%
IncomeStatement 2016 YTDQ32017
Revenue1 $60M $53M
AdjustedEBITDA1 $3.4M $5.3M
AdjustedEarnings $3.3M $3.9M
Cash $6.1M $2.7M2
Debt $1.3M $21.4M1 Pleaseseeourannualandquarterlyfinancialresultsforcompletedetails.2Companymaintainsa$5Mreceivablebasedlineofcreditwith$0balanceoutstanding.
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RevenueFinancialHighlights
$44
$61 $60
$53
19% 17%
20%
29%
$44 Q3YTD
2014 2015 2016 YTD3Q17
Revenue GrossMargin YTD
$INM
ILLIONS
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AdjustedEBITDAFinancialHighlights
1 AdjustedEarnings:adjustingforestimatedcashtaxadjustment,interestexpense,amortizationofintangibles,stockbasedcompensationanddepreciation
$2.1$1.8
$3.4
$5.3
$1.8 $1.7
$3.3
$3.9
2014 2015 2016 YTD3Q17
AdjustedEBITDA AdjustedEarnings
$INM
ILLIONS
AboutUs
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SnapshotofClients
Samplerepresentationmorethan1,000healthcareproviderlocationsandbusinessassociates.
1
3
2
4
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Create$150MRecurringRevenueHealthcareIT
ServicesBusiness5yeargoalwith>15%AdjustedEBITDA.
EmployeeInvestmentContinuetostrengthenandbuildonthe
teamsdepthofknowledgeincybersecurity.
IncreaseShareholderValue
CybersecurityFocusContinuegrowingserviceofferingsto
meetmarketdemand.Bethe#1trustedsourceinthemarket.
GrowthInitiatives
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ManagementTeam
MacMcMillanChiefExecutiveOfficer
PaulAnthonyChiefFinancialOfficer
Machasnearly40yearsofbothgovernmentandprivatesectorexperience.HeservedasDirectorofSecurityfortwoDefenseAgenciesandasanIntelligenceOfficerintheU.S.Marines. Hehasworkedinthehealthcareindustrysincehisretirementfromthefederalgovernmentandcontributesregularlytoindustrythoughtleadership.
PaulisaCertifiedPublicAccountantandanexpertinfinancialmanagement,investorrelations,tax,treasuryandriskmanagementwithover20yearsofprofessionalservicesexperiencewithworldwideenterprises,publiclytradedcompaniesandstart-ups.HiscareerhasincludedtimewithKPMG,PeatMarwickLLPandIBM.
AngelaRiveraEVPOperations
DavidFinnEVPStrategy
AngelaRiveraisapassionateexecutivewith24yearsofexperienceinthehealthcareindustrywithsignificantfocusservingthehealthcareproviderindustry. Ms.Riveraservedthelast17yearsinvariousrolesatComputerTaskGroup. InhermostrecentroleasVicePresident,HealthSolutionsforComputerTaskGroup,sheheldexecutiveresponsibilityforsolutionsandgrowthstrategy,qualityservicedelivery,andmanagementoftheprofessionalconsultingbasethatdeliveredinformationtechnologyservicesandsolutionstoCTG’shealthcareprovider,payer,andlifesciencesclientsinNorthAmerica.
David,comesfromSymantecandhasbeeninvolvedinleadingtheplanning,management,andcontrolofenterprise-wide,mission-criticalinformationtechnologyandbusinessprocessesformorethan30years.Hisuniqueexperienceinriskmanagementandcontrolobjectivesoftechnology(includingaudit,security,andprivacy)allowshimadistinctiveperspectiveinthedesignandimplementationofbusinessapplicationsandtheprocessesthatthetechnologymustsupport.
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BoardofDirectors
J.D.AboucharChairmanoftheBoard
DrexDeFordDirector
PrincipalatDrexioDigitalHealth,formerHealthcare
CIO
MacMcMillanDirector
CEOOFCynergisTek
JudyKrandelDirector
SnapInteractiveCFO
MarkRobersonChairmanoftheAudit
CommitteeCOOofChanticleerHolding,
Inc.
TheresaMeadowsDirectorSVP/CIO
CooksChildren’sHealthCareSystem
Dr.MichaelMathews
DirectorCOOofCynergisTek
TransitionofBoardin2016and2017
bringinginhealthcareITandcapitalmarkets
expertise
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InvestmentThesisfortheNewCTEK
FY17:Transformation
FY18:Execution
FY19&FY20:Opportunity
GrowanddeployProfessionalandPrivacyServicesofferingsthathelphealthcareorganizationsremediate,developandimplementprogramsandtechnologytofulfillshort
andlong-termsecurityandprivacyroles
Wellpositionedforsustainablemidtohighorganicrevenuegrowth
Fundamentaloperationalimprovementsexpectedtoresultinindustry-leadingoperatingmargin
Experiencedmanagementteamwithprovenoperationalsuccessanddeephealthcarecybersecurityknowledge
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Questions
MacMcMillanmac.mcmillan@cynergistek.com
Questions?
?
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References
Slide6:1 BeckersHealthcareITandCIOReview,20172 HIMSSAnalyticsHealthcareITSecurityandRiskManagementStudy,20163 SANSITSecuritySpendingReport,20164 BIIntelligentEstimates– GlobalData,2015
Slide7:1 Nuance2 BitglassBreachReport3 ModernHealthcareDecember2016
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