PENDING MERGER WITH CLEARWATER COMPLIANCE LLC	6 Months Ended
Jun. 30, 2022
PENDING MERGER WITH CLEARWATER COMPLIANCE LLC
2. PENDING MERGER WITH CLEARWATER COMPLIANCE LLC	2. PENDING MERGER WITH CLEARWATER COMPLIANCE LLC On May 23, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Clearwater Compliance LLC, a Tennessee limited liability company ( “Clearwater”), and Clearwater Compliance Acquisition Company I, a Delaware corporation and a wholly owned subsidiary of the Clearwater (the “Merger Sub”). Clearwater is a portfolio company of funds affiliated with Altaris Capital Partners, LLC. The Merger Agreement provides, subject to its terms and conditions, for the acquisition of the Company by Clearwater through the merger of Merger Sub with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Clearwater (the “Merger”). As a result of the Merger, each share of common stock of the Company (“Common Stock”) that is issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares owned by any subsidiary of the Company, the Merger Sub, Clearwater or any other subsidiary of Clearwater immediately prior to the Effective Time (all of which will be canceled) and shares held by any holder who is entitled to, and who has perfected, appraisal rights under Delaware law) will be automatically converted into the right to receive cash in an amount of $1.25 per share, without interest, subject to any required withholding of taxes (the “Merger Consideration”). Additionally, each outstanding and unexercised Company stock option at the Effective Time shall vest in full and automatically be canceled and converted into the right to receive the excess, if any, of the Merger Consideration over the exercise price per share of such stock option; provided that, in the event that the exercise price of any such stock option is equal to or greater than the Merger Consideration, such stock option will be canceled, without any consideration being payable in respect thereof and have no further force or effect; and each Company restricted stock unit that is then outstanding and unvested shall vest in full and automatically be canceled and converted into the right to receive the Merger Consideration. Also, at or prior to the Effective Time, any outstanding but unexercised warrants to purchase Common Stock shall be canceled and, in certain circumstances, payment therefor will be paid to such warrant holders in accordance with the terms of their respective warrants. In connection with the negotiation and execution of the Merger Agreement, the Company has incurred legal, consulting and accounting fees of approximately $406,000 through the quarter ended June 30, 2022. A special meeting of stockholders of the Company will be held at 3:00 p.m. Central Time on August 31, 2022, to approve and adopt the Merger Agreement and approve the Merger, among other matters.

PENDING MERGER WITH CLEARWATER COMPLIANCE LLC

6 Months Ended

Jun. 30, 2022

PENDING MERGER WITH CLEARWATER COMPLIANCE LLC

2. PENDING MERGER WITH CLEARWATER COMPLIANCE LLC

2. PENDING MERGER WITH CLEARWATER COMPLIANCE LLC

On May 23, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Clearwater Compliance LLC, a Tennessee limited liability company ( “Clearwater”), and Clearwater Compliance Acquisition Company I, a Delaware corporation and a wholly owned subsidiary of the Clearwater (the “Merger Sub”). Clearwater is a portfolio company of funds affiliated with Altaris Capital Partners, LLC. The Merger Agreement provides, subject to its terms and conditions, for the acquisition of the Company by Clearwater through the merger of Merger Sub with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Clearwater (the “Merger”).

As a result of the Merger, each share of common stock of the Company (“Common Stock”) that is issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares owned by any subsidiary of the Company, the Merger Sub, Clearwater or any other subsidiary of Clearwater immediately prior to the Effective Time (all of which will be canceled) and shares held by any holder who is entitled to, and who has perfected, appraisal rights under Delaware law) will be automatically converted into the right to receive cash in an amount of $1.25 per share, without interest, subject to any required withholding of taxes (the “Merger Consideration”). Additionally, each outstanding and unexercised Company stock option at the Effective Time shall vest in full and automatically be canceled and converted into the right to receive the excess, if any, of the Merger Consideration over the exercise price per share of such stock option; provided that, in the event that the exercise price of any such stock option is equal to or greater than the Merger Consideration, such stock option will be canceled, without any consideration being payable in respect thereof and have no further force or effect; and each Company restricted stock unit that is then outstanding and unvested shall vest in full and automatically be canceled and converted into the right to receive the Merger Consideration. Also, at or prior to the Effective Time, any outstanding but unexercised warrants to purchase Common Stock shall be canceled and, in certain circumstances, payment therefor will be paid to such warrant holders in accordance with the terms of their respective warrants.

In connection with the negotiation and execution of the Merger Agreement, the Company has incurred legal, consulting and accounting fees of approximately $406,000 through the quarter ended June 30, 2022.

A special meeting of stockholders of the Company will be held at 3:00 p.m. Central Time on August 31, 2022, to approve and adopt the Merger Agreement and approve the Merger, among other matters.