UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Quarterly Period Ended
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from _________ to _________
Commission
file number:
(Exact name of registrant as specified in its charter)
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(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
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☒ | Smaller reporting company |
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| Emerging growth company |
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 12, 2025, there were shares of the registrant’s Common Stock outstanding.
CISO GLOBAL, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 (unaudited)
TABLE OF CONTENTS
| 2 |
FORWARD-LOOKING STATEMENTS
The information contained in this report should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this report are “forward-looking statements” 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”). These statements are based upon beliefs of, and information currently available to, us as of the date hereof, as well as estimates and assumptions made by us. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to our business, industry, and our operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Forward-looking statements made in this Quarterly Report on Form 10-Q include statements about:
| ● | our belief that culture is the foundation of every successful cybersecurity and compliance program; |
| ● | our ability to differentiate ourselves from the majority of cybersecurity firms that are focused on a specific technology or service by remaining technology agnostic, focusing on accumulating highly sought-after topic experts; |
| ● | that we will continually seek to identify and acquire cybersecurity talent to expand our service scope and geographical coverage to provide the best possible service for our clients; |
| ● | our belief that bringing together a world-class team of technological experts with multi-faceted expertise in critical aspects of cybersecurity is key to providing technology-agnostic solutions to our clients in a business environment that has suffered from a chronic lack of highly skilled professionals, thereby setting us apart from competitors and in-house security teams; |
| ● | our ability to achieve our goal of creating a culture of security and to help quantify, define, and capture a return on investment from information technology and cybersecurity spending; |
| ● | the substantial doubt about our ability to continue as a going concern; |
| ● | our ability fund ongoing operations upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles; |
| ● | that we may be unable to access further equity or debt financing when needed; |
| ● | our belief that we maintain adequate indirect tax accruals; |
| ● | our belief that our indirect tax estimates and associated liabilities are reasonable; and |
| ● | our expectation that we will incur further losses through the end of 2025. |
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks detailed from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, any of which may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time they are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results.
| 3 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ |
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$ |
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Accounts receivable, net of allowance for credit losses of $
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| Prepaid cost of revenue |
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| Prepaid expenses and other current assets |
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| Contract assets |
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| Total Current Assets |
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| Property and equipment, net |
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| Operating lease right-of-use assets, net |
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| Intangible assets, net |
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| Goodwill |
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| Prepaid cost of revenue, net of current portion |
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| Other assets |
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| Total Assets | $ |
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$ |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ |
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$ |
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| Deferred revenue |
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| Lease liabilities |
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| Loans payable |
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| Line of credit |
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| Derivative liability |
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| Convertible notes payable |
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| Convertible note payable, related party |
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| Total Current Liabilities |
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| Deferred revenue, net of current portion |
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| Loans payable, net of current portion |
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| Lease liabilities, net of current portion |
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| Total Liabilities |
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| Commitments and Contingencies (Note 10) | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $ par value; shares authorized; and shares issued at September 30, 2025 and December 31, 2024, respectively; and outstanding at September 30, 2025 and December 31, 2024, respectively |
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| Preferred stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively |
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| Additional paid-in capital |
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| Treasury stock, at cost (502,137 shares) |
(
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) |
(
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| Accumulated other comprehensive income (loss) |
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(
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| Accumulated deficit |
(
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(
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) | ||||
| Total Stockholders’ Equity |
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| Total Liabilities and Stockholders’ Equity | $ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue: | ||||||||||||||||
| Security managed services | $ |
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$ |
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$ |
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$ |
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| Professional services |
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| Cybersecurity software |
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| Total revenue |
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| Cost of revenue: | ||||||||||||||||
| Security managed services |
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| Professional services |
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| Cybersecurity software |
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| Cost of payroll |
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| Stock-based compensation |
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| Total cost of revenue |
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| Total gross profit |
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| Operating expenses: | ||||||||||||||||
| Professional fees |
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| Advertising and marketing |
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| Selling, general and administrative |
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| Stock-based compensation |
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| Total operating expenses |
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| Loss from operations |
(
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(
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(
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(
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) | ||||||||
| Gain on extinguishment of convertible notes, net |
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| Change in fair value of derivative liability |
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| Interest expense |
(
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(
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(
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(
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| Other (expense) income, net |
(
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(
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| Total other income (expense) |
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(
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(
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| Income (loss) from continuing operations before income taxes |
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(
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(
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| Benefit from income taxes | ||||||||||||||||
| Income (loss) from continuing operations |
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(
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(
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(
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| Gain (loss) from discontinued operations, net of income taxes (1) |
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(
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| Net income (loss) | $ |
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$ |
(
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) | $ |
(
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) | $ |
(
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| Basic income (loss) per common share: | ||||||||||||||||
| Continuing operations | $ | $ | ) | $ | ) | $ | ) | |||||||||
| Discontinued operations | ) | |||||||||||||||
| Net income (loss) per share | $ | $ | ) | $ | ) | $ | ) | |||||||||
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Diluted income (loss) per common share: |
||||||||||||||||
| Continuing operations | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Discontinued operations | ) | |||||||||||||||
| Net loss per share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted-average shares used in computing net income (loss) per share: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted |
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| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | $ |
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$ |
(
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) | $ |
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$ |
(
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) | ||||||
| Other comprehensive income (loss): |
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(
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) |
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(
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) | ||||||||||
| Comprehensive income (loss) | $ |
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$ |
(
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) | $ |
(
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) | $ |
(
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) | |||||
| (1) |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Treasury Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at June 30, 2025 |
|
$ |
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$ |
(
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) | $ |
(
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) | $ |
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$ |
(
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) | $ |
(
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) | $ |
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| Stock-based compensation - stock options | - | - | - |
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| Issuance of common stock for services |
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- | - |
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| Issuance of common stock |
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- | - |
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||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into preferred stock | - |
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- |
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| Exercise of warrants |
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- | - |
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(
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) |
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| Exercise of stock options |
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- | - |
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| Other comprehensive income | - | - | - |
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| Net income | - | - | - |
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|||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 |
|
$ |
|
|
$ |
|
(
|
) | $ |
(
|
) | $ |
|
$ |
|
$ |
(
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) | $ |
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||||||||||||||||||||
| Three Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Treasury Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at June 30, 2024 |
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$ |
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$ | $ | $ |
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$ |
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$ |
(
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) | $ |
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| Stock-based compensation - stock options | - | - | - |
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| Issuance of common stock for services |
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- | - |
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| Repurchase of treasury stock related to disposition of assets | - | - |
(
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) |
(
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) |
(
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) | ||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - |
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| Reclassification of foreign currency translation to net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
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$ |
(
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) | $ |
(
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) | $ |
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| 6 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Treasury Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
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$ |
(
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) | $ |
(
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) | $ |
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| Stock-based compensation - stock options | - | - | - |
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| Issuance of common stock for services |
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- | - |
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| Issuance of common stock |
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- | - |
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| Conversion of convertible notes into common stock |
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- | - |
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| Conversion of convertible notes into preferred stock | - |
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- |
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| Issuance of warrants | - | - | - |
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| Exercise of warrants |
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- | - |
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(
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) |
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| Exercise of stock options |
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- | - |
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| Other comprehensive income | - | - | - |
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| Net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 |
|
$ |
|
|
$ |
|
(
|
) | $ |
(
|
) | $ |
|
$ |
|
$ |
(
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) | $ |
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| Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Treasury Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at December 31, 2023 |
|
$ |
|
$ | $ | $ |
|
$ |
|
$ |
(
|
) | $ |
|
||||||||||||||||||||||||||
| Stock based compensation - stock options | - | - | - |
|
|
|||||||||||||||||||||||||||||||||||
| Issuance of common stock for services |
|
|
- | - |
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||||||||||||||||||||||||||||||||||
| Issuance of common stock |
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|
- | - |
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||||||||||||||||||||||||||||||||||
| Stock issued as lending discount |
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|
- | - |
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||||||||||||||||||||||||||||||||||
| Stock adjustment after reverse stock split |
|
- | - | |||||||||||||||||||||||||||||||||||||
| Repurchase of treasury stock related to disposition of assets | - | - |
(
|
) |
(
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) |
(
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) | ||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - |
(
|
) |
(
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) | |||||||||||||||||||||||||||||||||
| Reclassification of foreign currency translation to net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
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) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation - stock options |
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| Stock-based compensation - stock issued for services |
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| Non-cash interest expense |
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| Depreciation and amortization |
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| Non-cash operating lease costs |
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| Bad debt expense |
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| Loss on assets held for sale |
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| Gain on sale of vCISO |
(
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) | ||||||
| Change in fair value of derivative liability |
(
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) | ||||||
| Gain on extinguishment of convertible notes, net |
(
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) | ||||||
| Other |
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| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable |
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| Inventory |
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| Contract assets |
(
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) |
(
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) | ||||
| Prepaid expenses and other assets |
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| Accounts payable and accrued expenses |
(
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) |
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| Lease liabilities |
(
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) |
(
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) | ||||
| Deferred revenue |
(
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) |
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| Net cash used in operating activities |
(
|
) |
(
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) | ||||
| Cash flows from investing activities: | ||||||||
| Cash received from sale of vCISO |
|
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| Purchases of property and equipment |
(
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) | ||||||
| Net cash provided by investing activities |
|
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| Cash flows from financing activities: | ||||||||
| Proceeds from sales of common stock, net of offering costs |
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|
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| Proceeds from stock option exercises |
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| Proceeds from exercises of warrants |
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| Proceeds from loans payable |
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| Proceeds from convertible notes payable |
|
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| Proceeds from line of credit |
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| Payments on line of credit |
(
|
) |
(
|
) | ||||
| Payments on loans payable |
(
|
) |
(
|
) | ||||
| Payments of debt issuance costs |
(
|
) |
(
|
) | ||||
| Net cash provided by financing activities |
|
|
||||||
| Effect of exchange rates on cash and cash equivalents |
(
|
) | ||||||
| Net increase (decrease) in cash and cash equivalents |
|
(
|
) | |||||
| Cash and cash equivalents - beginning of the period |
|
|
||||||
| Cash and cash equivalents - end of the period | $ |
|
$ |
|
||||
| Reconciliation of cash and cash equivalents: | ||||||||
| Cash and cash equivalents from continuing operations | $ |
|
$ |
|
||||
| Cash and cash equivalents included in assets of business held for sale | ||||||||
| Total cash and cash equivalents, end of period | $ |
|
$ |
|
||||
| Supplemental cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ |
|
$ |
|
||||
| Income taxes | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Common stock issued in exchange for services | $ |
|
$ | |||||
| Common stock issued as a lending discount | $ | $ |
|
|||||
| Conversion of convertible notes - common stock | $ |
|
$ | |||||
| Conversion of convertible notes - preferred stock | $ |
|
$ | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 8 |
CISO GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Unless otherwise indicated or the context requires otherwise, the terms “we,” “us,” “our,” and “our company” refer to CISO Global, Inc., a Delaware corporation and its wholly owned subsidiaries. Unless otherwise specified, all dollar amounts are expressed in United States dollars.
NOTE 1 – ORGANIZATION OF BUSINESS AND GOING CONCERN
Description of the Business
We are a leading cybersecurity, compliance, and software company comprised of highly trained and seasoned security professionals who work with clients to enhance or create a better cyber posture in their organization. We provide a full range of cybersecurity consulting, related services, and cybersecurity software, encompassing all four pillars of proprietary software stack, compliance, cybersecurity, and organizational culture. Our comprehensive cybersecurity services include managed security, compliance services, security operations center (“SOC”) services, virtual Chief Information Security Officer (“vCISO”) services, incident response, certified forensics, technical assessments, and cybersecurity training. We believe that culture is the foundation of every successful cybersecurity and compliance program. To deliver that outcome, we developed our unique offering of MCCP+ (“Managed Compliance & Cybersecurity Provider + Culture”), which is a holistic solution that provides all four of these pillars under one roof from a dedicated team of subject matter experts. In contrast to the majority of cybersecurity firms that are focused on a specific technology or service, we seek to differentiate ourselves by remaining technology agnostic, focusing on accumulating highly sought-after topic experts. We continually seek to identify and acquire cybersecurity talent to expand our service scope and geographical coverage to provide the best possible service for our clients. We believe that bringing together a world-class team of technological experts with multi-faceted expertise in the critical aspects of cybersecurity is key to providing technology-agnostic solutions to our clients in a business environment that has suffered from a chronic lack of highly skilled professionals, thereby setting us apart from competitors and in-house security teams. Our goal is to create a culture of security and to help quantify, define, and capture a return on investment from information technology and cybersecurity spending.
Basis of Presentation
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q pursuant to rules and regulations of the SEC and include our accounts and the accounts of our subsidiaries. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations, although, we believe that the disclosures made are adequate to make the information not misleading. All material intercompany accounts and transactions have been eliminated.
Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2025. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”). The December 31, 2024 condensed consolidated balance sheet included herein is derived from the audited consolidated financial statements included in the 2024 Form 10-K but does not include all disclosures required by GAAP.
Reclassifications
Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation. The reclassifications had no impact on the reported results of operations.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, due to losses incurred, historical cash used in operations and the existence of a working capital deficit, substantial doubt about our ability to continue as a going concern exists. The Company’s ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles. We are evaluating strategies to obtain the required additional funding for future operations. These strategies may include obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring operations to grow revenues and decrease expenses.
| 9 |
On August 4, 2025, we entered
into Exchange Agreements (each, an “Exchange Agreement,” and collectively, the “Exchange Agreements”) with each
of Hensley & Company, d/b/a Hensley Beverage Company (“Hensley”), an entity affiliated with Andrew K. McCain, a director
of our company, and JC Associates, Inc. (“J C Associates,” and collectively with Hensley, the “Holders”). Pursuant to the Exchange Agreements, the Holders exchange certain outstanding convertible
notes payable with aggregate principal and accrued interest of approximately $
On September 24, 2025, we
entered into a Preferred Equity Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital I
(“B. Riley”), an affiliate of B. Riley Securities, Inc. (“BRS”), pursuant to which we will have the right to
issue and sell to B. Riley, and B. Riley must purchase from us, up to $
million of shares of our newly authorized Series B Convertible Preferred Stock, par value $
per share (the “Series B Preferred Stock”). Such sales of Series B Preferred Stock by us to B. Riley, if any, will be
subject to certain limitations and conditions set forth in the Purchase Agreement, and may occur from time to time, at our sole
discretion, over the 18-month period commencing September 24, 2025 and terminating on the earliest of
On June 26, 2025, we renewed our expiring shelf registration statement on Form S-3 (that was deemed effective on July 7, 2025) (“July 2025 Prospectus”) that contains two prospectuses:
| 1) |
a
base prospectus that covers the potential offering, issuance, and sale from time to time
of our Common Stock, preferred stock, warrants, debt securities, and units in one or more
offerings with total proceeds of up to $
|
|
| 2) |
a
sales agreement prospectus covering the potential offering, issuance, and sale from time
to time of shares of our Common Stock having aggregate gross sales proceeds of up to $
|
In no event will we sell securities under this registration statement with a value exceeding more than one-third of our “public float” (the aggregate market value of our Common Stock and any other equity securities that we may issue in the future that are held by non-affiliates) in any 12-calendar month period so long as our public float remains below $75 million.
However, there can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all. As such, we may be unable to access further equity or debt financing when needed. The ability for us to continue as a going concern is dependent upon our ability to successfully implement our strategies and eventually attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary if we are unable to continue as a going concern.
Segment Information
We have a single reportable segment. Our chief operating decision maker (“CODM”) is our Chief Executive Officer. The CODM is regularly provided with financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Our CODM uses consolidated net loss, as reported in our condensed consolidated statements of operations and comprehensive loss, to measure segment profit or loss. Net loss is used by the CODM to facilitate analysis of our financial trends, review budgeted versus actual results and for planning purposes. Significant segment expenses are presented in our condensed consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.
Geographic Information
All of our revenue and property and equipment is located within the United States.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Material estimates include the allowance for credit losses, the carrying value of intangible assets and goodwill, our deferred tax assets and valuation allowance, the valuation of our convertible notes payable, Series A Preferred Stock and derivative liability, the adequacy of insurance reserves, and assumptions used in the Black-Scholes option pricing model, such as expected term, stock price volatility and risk-free interest rate.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no significant changes to our accounting policies disclosed in our 2024 Form 10-K.
| 10 |
Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of Common Stock and potentially dilutive shares of Common Stock outstanding during the period.
For dilutive securities, all outstanding stock options, restricted stock units, warrants, convertible notes payable, and Series A Preferred Stock are considered potentially outstanding Common Stock. The dilutive effect, if any, of stock options, restricted stock units, and warrants is calculated using the treasury stock method. All outstanding convertible notes payable and Series A Preferred Stock are considered Common Stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Income (loss) from continuing operations | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
| Less: Series A Preferred Stock dividend |
(
|
) |
(
|
) | ||||||||||||
| Income (loss) from discontinued operations |
|
(
|
) | |||||||||||||
| Net income (loss) attributable to common stockholders | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding - basic |
|
|
|
|
||||||||||||
| Basic income (loss) per share: | ||||||||||||||||
| Income (loss) from continuing operations | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
| Gain (loss) from discontinued operations |
|
(
|
) | |||||||||||||
| Net income (loss) | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
The following is a reconciliation of the numerators and denominators of the diluted net income (loss) per share computations for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) attributable to common stockholders | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||
| Less: Gain on extinguishment of convertible notes |
(
|
) |
(
|
) | ||||||||||||
| Add: Convertible notes – interest expense |
|
|
||||||||||||||
| Income (loss) from discontinued operations |
|
(
|
) | |||||||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding - basic |
|
|
|
|
||||||||||||
| Dilutive effect of equity awards: | ||||||||||||||||
| Convertible notes payable |
|
|
||||||||||||||
| Weighted-average shares outstanding - diluted |
|
|
|
|
||||||||||||
| Dilutive income (loss) per share: | ||||||||||||||||
| Loss from continuing operations | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Gain (loss) from discontinued operations |
|
(
|
) | |||||||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Stock options |
|
|
|
|
||||||||||||
| Restricted stock units |
|
|
||||||||||||||
| Warrants |
|
|
|
|
||||||||||||
| Series A Preferred Stock |
|
|
||||||||||||||
| Convertible notes payable |
|
|
||||||||||||||
| Total |
|
|
|
|
||||||||||||
Deferred Revenue
Deferred revenue primarily consists of billings or payments received from customers in advance of revenue recognized for the services provided to our customers or annual licenses and is recognized as services are performed or ratably over the life of the license. We generally invoice customers in advance or in milestone-based installments.
D eferred revenue consisted of the following:
|
September 30, 2025 |
December 31, 2024 |
|||||||
| Current: | ||||||||
| Security managed services | $ |
|
$ |
|
||||
| Professional services |
|
|
||||||
| Cybersecurity software |
|
|
||||||
| Total deferred revenue - current | $ |
|
$ |
|
||||
| Long-term: | ||||||||
| Security managed services | $ |
|
$ |
|
||||
| Total deferred revenue – long term | $ |
|
$ |
|
||||
| 11 |
The
Company recognized revenue of $
| Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Total | |||||||||||||||||||
| Security managed services | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
| Professional services |
|
|
||||||||||||||||||||||
| Cybersecurity software |
|
|
|
|||||||||||||||||||||
| Total deferred revenue | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities, including tax loss and credit carry forwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We utilize Accounting Standards Codification Topic 740 (ASC 740), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. We account for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. At September 30, 2025 and December 31, 2024, our net deferred tax asset has been fully reserved.
For uncertain tax positions that meet a “more likely than not” threshold, we recognize the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. Our practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when a determination is made that such expense is likely.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires additional disaggregated disclosures on an entity’s effective tax rate reconciliation and additional details on income taxes paid. ASU 2023-09 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted. The adoption of ASU 2023-09 is expected to result in additional tax-related disclosures in the notes to our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public entities to provide disaggregated disclosure of expenses included within relevant income statement expense captions, as well as additional disclosures about selling expenses. This update is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The adoption of ASU 2024-03 is expected to result in additional disclosures in our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-04, “Debt (Subtopic 470-20): Debt with Conversion and Other Options.” ASU 2024-04 clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06. We adopted ASU 2024-04 during the three months ended September 30, 2025 (with an effective date of January 1, 2025), which did not have a material impact on our consolidated financial statements.
| 12 |
NOTE 3 – DISCONTINUED OPERATIONS
Latin America
The operating results of our former Latin America subsidiaries, which we disposed of to focus on our US-based operations and the development and marketing of our internally developed cybersecurity software, are reported within discontinued operations on our condensed consolidated statements of operations and comprehensive loss through July 1, 2024. Our loss from discontinued operations, net of tax, and our loss on assets held for sale, net of tax, which are presented in total as discontinued operations, net of income tax, on our condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024, were as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
| 2024 | 2024 | |||||||
| Revenue | $ | $ |
|
|||||
| - | ||||||||
| Cost of revenue |
|
|||||||
| Operating expenses |
|
|||||||
| Other expense |
|
|||||||
| Loss from discontinued operations before income taxes |
(
|
) | ||||||
| Benefit from income taxes | ||||||||
| Gain (loss) from assets held for sale, net of tax |
|
(
|
) | |||||
| Gain (loss) from discontinued operations | $ |
|
$ |
(
|
) | |||
Net
cash provided by operating activities of discontinued operations was $
vCISO
In
September 2024, we entered into an Intellectual Property Purchase Agreement in which we sold our wholly-owned subsidiary vCISO, LLC.(“vCISO”),
for cash proceeds of $
vCISO
did not hold any assets or liabilities reported in our condensed consolidated financial statements, as a result, we recorded a $
NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
|
September 30, 2025 |
December 31, 2024 |
|||||||
| Prepaid expenses | $ |
|
$ |
|
||||
| Prepaid insurance |
|
|
||||||
| Total prepaid expenses and other current assets | $ |
|
$ |
|
||||
| 13 |
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following:
|
September 30, 2025 |
December 31, 2024 |
|||||||
| Computer equipment | $ |
|
$ |
|
||||
| Leasehold improvements |
|
|
||||||
| Furniture and fixtures |
|
|
||||||
| Software |
|
|
||||||
|
|
|
|||||||
| Less: accumulated depreciation |
(
|
) |
(
|
) | ||||
| Total property and equipment, net | $ |
|
$ |
|
||||
Depreciation
expense was $
NOTE 6 – INTANGIBLE ASSETS AND GOODWILL
Goodwill
The following table summarizes the goodwill balances as of September 30, 2025 and December 31, 2024:
| Balance at September 30, 2025 and December 31, 2024 | ||||
| Goodwill | $ |
|
||
| Accumulated impairment losses |
(
|
) | ||
| Total goodwill | $ |
|
Intangible Assets
Intangible assets, net are summarized as follows:
| September 30, 2025 | ||||||||||||
|
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
||||||||||
| Tradenames – trademarks | $ |
|
$ |
(
|
) | $ |
|
|||||
| Customer base |
|
(
|
) |
|
||||||||
| Non-compete agreements |
|
(
|
) | |||||||||
| Intellectual property/technology |
|
(
|
) |
|
||||||||
| Total intangible assets | $ |
|
$ |
(
|
) | $ |
|
|||||
| December 31, 2024 | ||||||||||||
|
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
||||||||||
| Tradenames – trademarks | $ |
|
$ |
(
|
) | $ |
|
|||||
| Customer base |
|
(
|
) |
|
||||||||
| Non-compete agreements |
|
(
|
) |
|
||||||||
| Intellectual property/technology |
|
(
|
) |
|
||||||||
| Total intangible assets | $ |
|
$ |
(
|
) | $ |
|
|||||
| 14 |
The
weighted average remaining useful life of finite-lived intangible assets is
Amortization
expense for the three months ended September 30, 2025 and 2024 was $
Based on the balance of intangible assets at September 30, 2025, expected future amortization expense is as follows:
| 2025 (remainder of) | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Total | $ |
|
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
|
September 30, 2025 |
December 31, 2024 |
|||||||
| Accounts payable | $ |
|
$ |
|
||||
| Accrued expenses |
|
|
||||||
| Accrued payroll and bonuses |
|
|
||||||
| Accrued commissions |
|
|
||||||
| Indirect taxes payable |
|
|
||||||
| Accrued interest |
|
|
||||||
| Total accounts payable and accrued expenses | $ |
|
$ |
|
||||
Note 8 – RELATED PARTY TRANSACTIONS
Managed Services Agreement with Hensley Beverage Company – Related Party
In
July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company to provide secured managed services. We
also may be engaged by Hensley Beverage Company from time to time to provide other related services outside the scope of the Managed
Services Agreement. While the agreement provided for an original term through December 31, 2021, the agreement will continue until terminated
by either party. For the three months ended September 30, 2025 and 2024, we received $
Convertible Note Payable with Hensley & Company
In
March 2023, we issued an unsecured convertible note payable to Hensley & Company in the principal amount of $
| 15 |
Note 9 – STOCKHOLDERS’ EQUITY
For
the three and nine months ended September 30, 2025, we sold
shares of our Common Stock for proceeds of $
For
the three and nine months ended September 30, 2025, we sold
and
shares, respectively, of our Common Stock for proceeds of
$
For
the three and nine months ended September 30, 2024, we sold
and
shares, respectively, of our Common Stock for proceeds of $
Series A Preferred Stock
On August 4, 2025, we filed a Certificate of Designations, Preferences and Rights of Series A Preferred Stock of CISO Global, Inc. (the “Series A Certificate of Designations”). A summary of the Series A Certificate of Designations of Series A Preferred Stock is as follows:
| ● | Number of Shares – shares of preferred stock are designated as Series A Preferred Stock. | |
| ● | Voting – No voting rights. | |
| ● |
Dividends
– Cumulative dividends will accrue, whether or not declared by our Board of Directors
and whether or not there are funds legally available for the payment of dividends, on a daily
basis in arrears at the rate of
|
| ○ | All accrued dividends will be paid in cash or our capital stock (as determined in our sole discretion) when, and if declared by our Board of Directors or upon liquidation, conversion or redemption of the Series A Preferred Stock | |
| ○ | Not entitled to participate in dividends or distributions of any nature paid on or in respect of the Common Stock (i.e., non-participating). |
| ● | Liquidation Rights – In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, each holder will be entitled to receive liquidating distributions out of our assets legally available for distribution to our stockholders, before any payment or distribution is made to holders of any junior securities (including our Comon Stock), in an amount equal to the issuance price of $ per share. | |
| ● | Optional Redemption – The Company has the right, at any time or from time to time, to redeem any or all of the issued and outstanding shares of Series A Preferred Stock for cash at the issuance price of $ per share. | |
| ● | Conversion Rights – As determined in the sole discretion of our Board of Directors, and at our option, the Company may convert the Series A Preferred Stock into shares of Common Stock. Conversion is determined by (i) multiplying the number of shares of Series A Preferred Stock to be converted by the issuance price of $ per share, (ii) adding to the result all accrued and accumulated and unpaid dividends on such shares of Series A Preferred Stock to be converted, and then (iii) dividing the result by the issuance price of $ per share. |
On
August 4, 2025, we entered into the Exchange Agreements with Hensley, an entity affiliated with Andrew K. McCain, a director of our company,
and JC Associates. Pursuant to the Exchange Agreements, the Holders exchange certain outstanding convertible notes, as amended from time
to time, with aggregate principal and accrued interest of approximately $
As
a result of this transaction, during the three and nine months ended September 30, 2025, the Company recognized a gain on troubled debt
restructuring of $
| 16 |
Series B Preferred Stock
On September 25, 2025, we filed with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences and Rights of Series B Preferred Stock of CISO Global, Inc. (the “Series B Certificate of Designations”). The Series B Certificate of Designations sets forth the rights, preferences, privileges, and restrictions of the shares of Series B Preferred Stock. Following is a summary of the terms of the Series B Preferred Stock.
| ● | Number of Shares – shares of preferred stock are designated as Series B Preferred Stock. | |
| ● | Voting – No voting rights. | |
| ● | Rank – The Series B Preferred Stock rank senior and prior to the Common Stock and junior to the Series A Preferred Stock. | |
| ● | Dividend Rights – The holders of Series B Preferred Stock are entitled to receive, concurrently with any dividends or distributions, such dividends or distributions paid to the holders of Common Stock to the same extent as if such holders had converted the Series B Preferred Stock into Common Stock (without regard to any limitations on conversion) and had held such shares of Common Stock on such record date. | |
| ● | Liquidation Rights – In the event of any Liquidation (as defined in the Certificate of Designations), each holder will be entitled to receive liquidating distributions out of our assets legally available for distribution to our stockholders, before any payment or distribution of any of our assets shall be made or set apart for holders of any junior securities, including, without limitation, the Common Stock in an amount equal to the greater of (i) $ per share and (ii) the amount that would have been received had such Series B Preferred Stock and accrued and unpaid dividends thereon, if any, been converted immediately prior to such Liquidation at the Conversion Price then in effect. | |
| ● | Redemption Right – The Series B Preferred Stock is subject to redemption by us in certain circumstances where our Common Stock is not listed on or is otherwise suspended from Nasdaq, the holder becomes prohibited from converting any portion of the Series B Preferred Stock for eighteen (18) months following the issuance of such Series B Preferred Stock due to the Exchange Cap, or the market price of our Common Stock falls and remains below the Minimum Conversion Price for ten (10) consecutive trading days (each as described in the Series B Certificate of Designations). | |
| ● |
Conversion
Rights
– Each share of Series B Preferred Stock will be convertible at the option
of the holder into the number of shares of Common Stock determined by dividing the initial
stated value of $
per share (the “Stated Value”) by the applicable conversion
price for the Series B Preferred Stock then being converted as of each conversion date (the
“Conversion Price”). The Conversion Price equals (a) with respect to the first
$
|
|
| ● |
Subsequent
Rights Offerings.
If at any time the we grant, issue, or sell any Common Stock or Common
Stock equivalents or rights to purchase stock, warrants, securities or other property pro
rata to the record holders of any class of shares of Common Stock, then the holders of Series
B Preferred Stock will be entitled to acquire the same as if the holder had held the number
of shares of Common Stock acquirable upon complete conversion of such holder’s Series
B Preferred Stock immediately before the date on which a record is taken for the grant, issuance,
and sale, so long as such holder’s ownership would not exceed
|
|
| ● | Stockholder Approval . We may not effect a conversion of the Series B Preferred Stock and holders may not convert any shares of the Series B Preferred Stock, to the extent, after giving effect to such purchase and sale, the issuance of such Common Stock would exceed the Exchange Cap without approval from our stockholders. | |
| ● |
Beneficial
Ownership Limitation
. We will not effect any conversion of the Series B Preferred Stock
and the holder will not have the right to convert any portion of the Series B Preferred Stock,
to the extent that, after giving effect to the conversion, such holder would own in excess
of
|
On
September 24, 2025, we entered the Purchase Agreement with B. Riley, pursuant to which we will have the right to issue and sell to B.
Riley, and B. Riley must purchase from us, up to $
| 17 |
As of September 30, 2025, no shares of Series B Preferred Stock were sold to B. Riley pursuant to the Purchase Agreement.
Stock Options
We granted stock options vesting solely upon the continued service of the recipient. We recognize the accounting grant date fair value of equity-based awards as compensation expense over the required service period of each award.
| Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (in years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding at December 31, 2024 |
|
$ |
|
$ |
|
|||||||||||
| Granted |
|
|
||||||||||||||
| Exercised |
(
|
) |
|
|||||||||||||
| Expired or cancelled |
(
|
) |
|
|||||||||||||
| Outstanding at September 30, 2025 |
|
$ |
|
$ |
|
|||||||||||
| Exercisable at September 30, 2025 |
|
$ |
|
$ |
|
|||||||||||
Total
stock-based compensation expense related to the stock options was $
The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2025 and 2024 was $ and $ , respectively.
Restricted Stock Units
We granted restricted stock units (“RSUs”) that only contain a service-based vesting condition that is typically satisfied over four years. We recognize the accounting grant date fair value of equity-based awards as compensation expense over the requisite service period. The fair value of RSUs is determined by the closing price of the Company’s Common Stock on the grant date. On June 13, 2025, we granted RSUs with a weighted-average grant date fair value of $ . Total stock-based compensation expense related to the RSUs was $ and $ for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, there was unrecognized future compensation expense of $ with a weighted average recognition period of years related to the RSUs.
Warrants
The following table summarizes warrant activity for the nine months ended September 30, 2025:
| Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (in years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding at December 31, 2024 |
|
$ |
|
$ | ||||||||||||
| Granted |
|
|
||||||||||||||
| Exercised |
(
|
) |
|
|||||||||||||
| Expired or cancelled | ||||||||||||||||
| Outstanding at September 30, 2025 |
|
$ |
|
$ |
|
|||||||||||
| Exercisable at September 30, 2025 |
|
$ |
|
$ |
|
|||||||||||
| 18 |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Legal Claims
There
are no material pending legal proceedings in which we or any of our subsidiaries are a party or in which any of our directors, officers
or affiliates, any owner of record or
Indirect Taxes
We are subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which we conduct business. Laws and regulations attempting to subject commerce conducted over the Internet to various indirect taxes are becoming more prevalent, both in the United States and internationally, and may impose additional burdens on us in the future. Increased regulation could negatively affect our business directly, as well as the business of our customers. Taxing authorities may impose indirect taxes on the Internet-related revenue we generated based on regulations currently being applied to similar, but not directly comparable industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. In addition, domestic and international indirect taxation laws are complex and subject to change. We may be audited in the future, which could result in changes to our indirect tax estimates. We continually evaluate those jurisdictions in which nexus exists and believe we maintain adequate indirect tax accruals.
As
of September 30, 2025 and December 31, 2024, our accrual for estimated indirect tax liabilities was $
Warranties
Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances.
We offer a limited warranty to select customers, subject to various conditions, to cover certain costs incurred by the customer in case of a security breach. We have entered into an insurance policy to cover our potential liability arising from this limited warranty arrangement. We have not incurred any material costs related to such obligations and have not accrued any liabilities related to such obligations in the unaudited condensed consolidated financial statements.
In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid.
| 19 |
NOTE 11 – DEBT
Term Loans
In
November 2023, we entered into a business loan and security agreement, pursuant to which we obtained a loan with a principal amount of
$
In
June 2024, we entered into a Subordinated Business Loan and Security Agreement (“Subordinated Business Loan Agreement”) with
Agile Capital Funding, LLC (“Agile”), pursuant to which we obtained a loan with a principal amount of $
In
November 2024, we entered into a Note Purchase Agreement, pursuant to which we obtained a loan with a principal amount of $
In
November 2024, we entered into an Intellectual Property Buy-Back Purchase Agreement, pursuant to which we reacquired vCISO, LLC in
exchange for a Promissory Note with a face value of $
As of September 30, 2025 and December 31, 2024, term loans comprised of the following:
|
Effective Interest Rates |
Maturities |
September 30, 2025 |
December 31, 2024 |
|||||||||||||
| Term loans |
|
% |
|
$ |
|
$ |
|
|||||||||
| Less: current portion |
(
|
) |
(
|
) | ||||||||||||
| Loans payable, net of current portion | $ |
|
$ |
|
||||||||||||
Line of Credit
On
January 31, 2024, we entered into a Loan and Security Agreement (the “2024 Loan and Security Agreement”) with Aion, pursuant
to which we may borrow up to $
On
April 14, 2025, we entered into a Loan and Security Agreement (the “2025 Loan and Security Agreement”) with Aion to replace
the 2024 Loan and Security Agreement, pursuant to which we may borrow up to $
| 20 |
In
relation to the Loan and Security Agreements, we recorded interest expense of $
Convertible Notes Payable
Hensley & Company Convertible Note
In
March 2023, we issued an unsecured convertible note payable to Hensley & Company in the principal amount of $
JC Associates Convertible Notes
In
June 2023, we issued an unsecured convertible note payable in the principal amount of $
In
June 2024, we entered into Amendment #1 to extend the maturity date of the $
In
December 2024, we entered into Amendment #2 to extend the maturity date of the $
In
October 2023, we issued an unsecured convertible note payable in the principal amount of $
In
June 2024, we entered into Amendment #1 to extend the maturity date of the $
In
December 2024, we entered into Amendment #2 to extend the maturity date of the $
| 21 |
Convertible Notes Payable and Warrants
In
December 2024, we entered into a Securities Purchase Agreement (the “Agreement”) with several purchasers (the “Purchasers”).
Pursuant to the Agreement, the Purchasers agreed to purchase an aggregate of up to $
The
Agreement initially funded us with gross proceeds (prior to the
We recorded these convertible notes payable at fair value and recognized the fair value of the conversion feature as a derivative liability upon each tranche of funding. The allocation of fair value to the convertible notes and warrants was made on a relative fair value basis as the free-standing warrants are equity classified.
The conversion feature of the notes payable was determined to be an embedded derivative requiring bifurcation accounting as (1) the feature is not clearly and closely related to the debt host and (2) the feature meets the definition of a derivative under ASC 815. Changes in the fair value of the embedded derivative were recognized in the condensed consolidated statements of operations and comprehensive loss in change in fair value of derivative liability.
During
the nine months ended September 30, 2025, $
The proceeds from the Agreement were used to repay outstanding principal amounts of short-term indebtedness and for general corporate purposes, which included working capital and research and development.
At September 30, 2025, the principal payments due under the above term loans, line of credit, and convertible notes payable were as follows:
| 2025 (remainder of) | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| Total future principal payments |
|
|||
| Less: unamortized debt discount | ||||
| Carrying value of debt |
|
|||
| Less: current portion of debt |
(
|
) | ||
| Debt, net of current portion | $ |
|
NOTE 12 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
For
each of the three and nine months ended September 30, 2025, one customer represented
| 22 |
NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Reclassification adjustments out of accumulated other comprehensive income (loss) (“AOCI” or “AOCL”) and into net loss were not material for all periods presented.
For the three and nine months ended September 30, 2025, changes in AOCI were not material. For the three and nine months ended September 30, 2024, changes in AOCI were as follows:
| Three Months Ended September 30, 2024 | ||||||||
|
Foreign Currency Translation Adjustments |
Total AOCI | |||||||
| Balance at June 30, 2024 | $ |
|
$ |
|
||||
| Other comprehensive income |
|
|
||||||
| Amounts reclassified from AOCI (1) |
(
|
) |
(
|
) | ||||
| Balance at September 30, 2024 | $ |
(
|
) | $ |
(
|
) | ||
| Nine months ended September 30, 2024 | ||||||||
|
Foreign Currency Translation Adjustments |
Total AOCI | |||||||
| Balance at December 31, 2023 | $ |
|
$ |
|
||||
| Other comprehensive loss |
(
|
) |
(
|
) | ||||
| Amounts reclassified from AOCI (1) |
(
|
) |
(
|
) | ||||
| Balance at September 30, 2024 | $ |
(
|
) | $ |
(
|
) | ||
| (1) |
|
NOTE 14 – FAIR VALUE MEASUREMENTS
Fair value is the exchange price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize use of unobservable inputs. The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:
| ● | Level 1 – Inputs are based on quoted prices in active markets for identical assets and liabilities. | |
| ● | Level 2 – Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. | |
| ● | Level 3 – One or more inputs are unobservable and significant. |
Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The Company did not have any financial assets or liabilities measured and recorded at fair value on a recurring basis as of September 30, 2025. The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis as of December 31, 2024:
| December 31, 2024 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Current liabilities | ||||||||||||
| Derivative liability | $ | $ | $ |
|
||||||||
| Total liabilities measured at fair value | $ | $ | $ |
|
||||||||
The estimated fair value of the derivative liability (conversion feature of our convertible notes payable) is based on Monte Carlo simulations, a traditional valuation model and represents a Level 3 fair value measurement due to significant unobservable inputs. The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of September 30, 2025 and December 31, 2024 because of the relatively short duration of these instruments.
NOTE 15 – SUBSEQUENT EVENT
On October 10, 2025, the Company filed a Registration Statement on Form S-1, registering on behalf of B. Riley for resale the shares of Common Stock underlying the Series B Preferred Stock issuable pursuant to the Purchase Agreement. On October 21, 2025, the Company filed an amendment to the Registration Statement on Form S-1, which went effective on November 10, 2025. As of the date of this Quarterly Report on Form 10-Q, no shares of Series B Preferred Stock have been sold to B. Riley under the Purchase Agreement.
On
November 6, 2025, we converted all
outstanding shares of Series A Preferred Stock,
together with
$
| 23 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Unless otherwise indicated or the context requires otherwise, the terms “we,” “us,” “our,” and “our company” refer to CISO Global, Inc., a Delaware corporation, and its wholly owned subsidiaries. Unless otherwise specified, all dollar amounts are expressed in U.S. dollars.
Third Quarter 2025 Highlights
Our operating results for the nine months ended September 30, 2025 included the following:
| ● | Total current liabilities reduced by $16,585,255 to $8,370,392 as compared to December 31, 2024 of $24,955,647. | |
| ● | Total gross profit increased to $5,025,756 for the nine months ended September 30, 2025 as compared to $2,674,199 for the nine months ended September 30, 2024. | |
| ● | Reduced our loss from operations to $6,673,139 for the nine months ended September 30, 2025, as compared to $12,657,510 for the nine months ended September 30, 2024. |
Results of Operations
Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024
Our financial results for the three months ended September 30, 2025 are summarized as follows in comparison to the three months ended September 30, 2024:
| Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Variance | ||||||||||
| Revenue: | ||||||||||||
| Security managed services | $ | 5,835,909 | $ | 6,965,518 | $ | (1,129,609 | ) | |||||
| Professional services | 480,351 | 437,209 | 43,142 | |||||||||
| Cybersecurity software | 145,538 | 108,570 | 36,968 | |||||||||
| Total revenue | 6,461,798 | 7,511,297 | (1,049,499 | ) | ||||||||
| Cost of revenue: | ||||||||||||
| Security managed services | 1,889,615 | 2,319,234 | (429,619 | ) | ||||||||
| Professional services | 45,720 | 84,947 | (39,227 | ) | ||||||||
| Cybersecurity software | 54,716 | 29,939 | 24,777 | |||||||||
| Cost of payroll | 2,539,826 | 2,982,871 | (443,045 | ) | ||||||||
| Stock-based compensation | 324,607 | 1,060,238 | (735,631 | ) | ||||||||
| Total cost of revenue | 4,854,484 | 6,477,229 | (1,622,745 | ) | ||||||||
| Total gross profit | 1,607,314 | 1,034,068 | 573,246 | |||||||||
| Operating expenses: | ||||||||||||
| Professional fees | 416,504 | 223,149 | 193,355 | |||||||||
| Advertising and marketing | 311,911 | 1,339 | 310,572 | |||||||||
| Selling, general, and administrative | 2,572,001 | 3,083,920 | (511,919 | ) | ||||||||
| Stock-based compensation | 940,905 | 1,244,664 | (303,759 | ) | ||||||||
| Total operating expenses | 4,241,321 | 4,553,072 | (311,751 | ) | ||||||||
| Loss from operations | (2,634,007 | ) | (3,519,004 | ) | 884,997 | |||||||
| Gain on extinguishment of convertible notes | 5,296,103 | - | 5,296,103 | |||||||||
| Interest expense | (127,213 | ) | (1,237,301 | ) | 1,110,088 | |||||||
| Other (expense) income, net | (2,455 | ) | 917,852 | (920,307 | ) | |||||||
| Income (loss) from continuing operations | $ | 2,532,428 | $ | (3,838,453 | ) | $ | 6,370,881 | |||||
| 24 |
Revenue
Security managed services revenue decreased by $1,129,609, or 16%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to lower annual contract values among newly acquired customers.
Professional services revenue increased by $43,142, or 10%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to more customer projects.
Cybersecurity software revenue increased by $36,968, or 34%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to an increase in subscriptions for our Checklight cybersecurity software.
Expenses
Cost of Revenue
Security managed services cost of revenue decreased by $429,619, or 19%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to lower costs associated with existing client base.
Professional services cost of revenue decreased by $39,227, or 46%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, due to decreased use of consultants.
Cybersecurity software cost of revenue increased by $24,777, or 83%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to our increase in Checklight subscriptions.
Cost of payroll decreased by $443,045, or 15%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to headcount reductions.
Stock-based compensation expenses decreased by $735,631, or 69%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, due to the forfeiture of options by terminated employees and options that contractually expired.
Operating Expenses
Professional fees increased by $193,355, or 87%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, due to an increase in legal and accounting fees.
Advertising and marketing expenses increased by $310,572 for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, due to investment into marketing efforts.
| 25 |
Selling, general, and administrative expenses decreased by $511,919, or 17%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to reductions in headcount during 2024 resulting in lower costs for compensation, insurance, and leases in 2025.
Stock-based compensation expenses decreased by $303,759, or 24%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to the forfeiture of options by terminated employees, fewer grants granted, and options that contractually expired.
Other Income (Expense)
The gain on extinguishment of convertible notes increased by $5,296,103 for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 due to the conversion of certain convertible notes into shares of Series A Preferred Stock during 2025. No such conversion occurred in 2024.
Interest expense decreased by $1,110,088 for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to the extinguishment of convertible notes payable.
Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024
Our financial results for the nine months ended September 30, 2025 are summarized as follows in comparison to the nine months ended September 30, 2024:
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Variance | ||||||||||
| Revenue: | ||||||||||||
| Security managed services | $ | 18,328,092 | $ | 21,204,477 | $ | (2,876,385 | ) | |||||
| Professional services | 1,572,978 | 1,835,932 | (262,954 | ) | ||||||||
| Cybersecurity software | 436,637 | 304,727 | 131,910 | |||||||||
| Total revenue | 20,337,707 | 23,345,136 | (3,007,429 | ) | ||||||||
| Cost of revenue: | ||||||||||||
| Security managed services | 5,702,790 | 7,207,886 | (1,505,096 | ) | ||||||||
| Professional services | 168,459 | 375,111 | (206,652 | ) | ||||||||
| Cybersecurity software | 146,761 | 88,708 | 58,053 | |||||||||
| Cost of payroll | 7,950,829 | 9,641,597 | (1,690,768 | ) | ||||||||
| Stock-based compensation | 1,343,112 | 3,357,635 | (2,014,523 | ) | ||||||||
| Total cost of revenue | 15,311,951 | 20,670,937 | (5,358,986 | ) | ||||||||
| Total gross profit | 5,025,756 | 2,674,199 | 2,351,557 | |||||||||
| Operating expenses: | ||||||||||||
| Professional fees | 1,096,361 | 1,025,410 | 70,951 | |||||||||
| Advertising and marketing | 840,943 | 34,099 | 806,844 | |||||||||
| Selling, general, and administrative | 7,858,988 | 10,667,794 | (2,808,806 | ) | ||||||||
| Stock-based compensation | 1,902,603 | 3,604,406 | (1,701,803 | ) | ||||||||
| Total operating expenses | 11,698,895 | 15,331,709 | (3,632,814 | ) | ||||||||
| Loss from operations | (6,673,139 | ) | (12,657,510 | ) | 5,984,371 | |||||||
| Gain on extinguishment of convertible notes, net | 4,432,434 | - | 4,432,434 | |||||||||
| Change in fair value of derivative liability | 5,467,610 | - | 5,467,610 | |||||||||
| Interest expense | (9,076,393 | ) | (2,611,067 | ) | (6,465,326 | ) | ||||||
| Other (expense) income, net | (7,609 | ) | 882,934 | (890,543 | ) | |||||||
| Loss from continuing operations | $ | (5,857,097 | ) | $ | (14,385,643 | ) | $ | 8,528,546 | ||||
Revenue
Security managed services revenue decreased by $2,876,385, or 14%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to lower annual contract values among newly acquired customers.
Professional services revenue decreased by $262,954, or 14%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to lower customer projects.
Cybersecurity software revenue increased by $131,910, or 43%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to the initial launch of our suite of internally developed cybersecurity software products.
Expenses
Cost of Revenue
Security managed services cost of revenue decreased by $1,505,096, or 21%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to lower costs associated with existing client base.
Professional services cost of revenue decreased by $206,652, or 55%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, due to our decreased use of consultants.
| 26 |
Cybersecurity software cost of revenue increased by $58,053, or 65%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to the initial launch of our suite of internally developed cybersecurity software products.
Cost of payroll decreased by $1,690,768, or 18%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to headcount reductions.
Stock-based compensation expenses decreased by $2,014,523, or 60%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, due to the forfeiture of options by terminated employees and options that contractually expired.
Operating Expenses
Professional fees increased by $70,951, or 7%, for the nine months ended September 30, 2025 as compared to nine months ended September 30, 2024, due to an increase in legal and accounting fees.
Advertising and marketing expenses increased by $806,844 for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, due to marketing efforts initiated in 2025.
Selling, general, and administrative expenses decreased by $2,808,806, or 26%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to reductions in headcount during 2024 resulting in lower costs for compensation, insurance, and leases in 2025.
Stock-based compensation expenses decreased by $1,701,803, or 47%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to the forfeiture of options by terminated employees, fewer grants granted, and options that contractually expired.
Other Income (Expense)
The gain on extinguishment of convertible notes increased by $4,432,434 for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 due to the conversion of certain convertible notes into shares of our Common Stock and Series A Preferred Stock during 2025. No such conversion occurred in 2024.
Change in fair value of derivative liability increased by $5,467,610 for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 due to changes in the fair value of the derivative liability since the issuance of the related convertible notes payable during December 2024 and January 2025.
Interest expense increased by $6,456,326 for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to the accretion of convertible notes payable and the amortization of debt issuance costs associated with the issuance of certain convertible notes payable during December 2024 and January 2025.
Liquidity and Capital Resources
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2025, we incurred a net loss of $5,857,097, reported cash used in operations of $6,180,042 and expect to incur further losses through the end of 2025. Further, we have a working capital deficit of $5,376,502 as of September 30, 2025. As a result, substantial doubt about our ability to continue as a going concern exists. The Company’s ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles. We are evaluating strategies to obtain the required additional funding for future operations. These strategies may include obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring operations to grow revenues and decrease expenses.
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Series A Preferred Stock
On August 4, 2025, we entered into Exchange Agreements (each, an “Exchange Agreement,” and collectively, the “Exchange Agreements”) with each of Hensley & Company, d/b/a Hensley Beverage Company (“Hensley”), an entity affiliated with Andrew K. McCain, a director of our company, and JC Associates, Inc. (“J C Associates,” an unrelated party, and collectively with Hensley, the “Holders”). Pursuant to the Exchange Agreements, the Holders exchange certain outstanding convertible notes payable with aggregate principal and accrued interest of approximately $9,297,894 (collectively, the “Exchange Notes”) for an aggregate of 9,297,894 newly authorized shares of Series A Preferred Stock, par value $0.00001 per share (“Series A Preferred Stock”). Upon the closing of the transactions contemplated by the Exchange Agreements, the Exchange Notes were cancelled, and the Holders relinquished all rights, powers, privileges, remedies, or interest under such securities. The Series A Preferred Stock is entitled to cumulative dividends at a rate of 10% per annum, accruing daily and compounding quarterly, whether or not declared by the Board of Directors, based on the original issuance price plus any previously accrued and unpaid dividends. As of September 30, 2025, cumulative dividends in arrears on the Series A Preferred Stock totaled $145,200; no dividends were declared during the period.
As a result of this transaction, during the three and nine months ended September 30, 2025, the Company recognized a gain on troubled debt restructuring of $5,296,103, which reflects the difference between the carrying value of the Exchange Notes and the estimated fair value of the Series A Preferred Stock issued.
Series B Preferred Stock
On September 24, 2025, we entered into a Preferred Equity Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital I (“B. Riley”), an affiliate of B. Riley Securities, Inc. (“BRS”), pursuant to which we will have the right to issue and sell to B. Riley, and B. Riley must purchase from us, up to $15.0 million shares of our newly authorized Series B Convertible Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”). Such sales of Series B Preferred Stock by us to B. Riley, if any, will be subject to certain limitations and conditions set forth in the Purchase Agreement, and may occur from time to time, at our sole discretion, over the 18-month period commencing September 24, 2025 and terminating on the earliest of (i) March 24, 2027, (ii) the date on which B. Riley shall have made payment of the aggregate purchase price equal to $15.0 million, (iii) if we have not obtained approval by our stockholders by September 24, 2026, such date as there ceases to be a sufficient number of authorized but unissued shares of Common Stock of the Company, par value $0.00001 (the “Common Stock”) remaining under the Exchange Cap. In no event may we issue or sell to B. Riley under the Purchase Agreement shares of our Series B Preferred Stock that are convertible into an aggregate number of shares of Common Stock exceeding a customary 9.99% beneficial ownership limitation, as well as a conversion limitation equal to 6,821,115 (representing 19.99% of the aggregate number of shares of Common Stock issued and outstanding as of September 24, 2025 and subject to adjustment for any stock splits, combinations or the like) pursuant to applicable Nasdaq Listing Rules (the “Exchange Cap”) until approval has been obtained from our stockholders. As of September 30, 2025, no shares of Series B Preferred Stock were sold to B. Riley pursuant to the Purchase Agreement.
July 2025 Prospectus
On June 26, 2025, we renewed our shelf registration statement on Form S-3 (that was deemed effective on July 7, 2025) (“July 2025 Prospectus”) that contains two prospectuses:
| 1) | a base prospectus that covers the potential offering, issuance, and sale from time to time of our Common Stock, preferred stock, warrants, debt securities, and units in one or more offerings with total proceeds of up to $100,000,000; and | |
| 2) | a sales agreement prospectus covering the potential offering, issuance, and sale from time to time of shares of our Common Stock having aggregate gross sales proceeds of up to $10,380,600 pursuant to our At-the-Market (“ATM”) sales agreement, dated June 14, 2022, with B. Riley Securities, Inc., Stifel, Nicolaus & Company, Incorporated and Boustead Securities, LLC. |
Upon the renewal of our shelf registration statement on Form S-3, we had $100,000,000 available funding from which we may issue our securities to fund current and future operations, assuming there is adequate demand for our securities. Although we have access to our shelf registration statement on Form S-3, based on our public float, as of the filing date of our Annual Report on Form 10-K for the year ended December 31, 2024, we are only permitted to utilize a “shelf” registration statement for primary offerings, and our shelf registration statement on Form S-3 is subject to Instruction I.B.6 to Form S-3, which is referred to as the “baby shelf” rules. For so long as our public float is less than $75,000,000, we may not sell more than the equivalent of one-third of our public float during any twelve consecutive months pursuant to the “baby shelf” rules. While alternative public and private transaction structures may be available, these may require additional time and costs, may result in substantial dilution to existing stockholders, in light of our current stock price, may impose operational restrictions on us, and may not be available on attractive terms or at all.
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There can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all. As such, we may be unable to access further equity or debt financing when needed. The ability for us to continue as a going concern is dependent upon our ability to successfully implement our strategies and eventually attain profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary if we are unable to continue as a going concern.
Material Cash Requirements
The Company’s material cash requirements included the following contractual obligations as of September 30, 2025:
Indebtedness
As of September 30, 2025, the carrying value of our outstanding debt obligations was $2,053,884, substantially all of which is scheduled to mature during the remainder of 2025 and during 2026.
Leases
As of September 30, 2025, the carrying value of our outstanding operating lease obligations was $483,192.
Sources of Funding to Satisfy Material Cash Requirements
Our principal sources of liquidity are our cash on hand, cash provided by operations, the Purchase Agreement discussed above, and our shelf registration statement on Form S-3 discussed above. Our current cash on hand is not sufficient to satisfy our operating cash needs for the 12 months from the filing of this Quarterly Report on Form 10-Q. We expect to incur further losses through the end of 2025, and there can be no assurance that we will be able to obtain additional liquidity from the shelf registration statement on Form S-3 when needed or under acceptable terms, if at all.
Working Capital Deficit
Our working capital deficit as of September 30, 2025 in comparison to our working capital deficit as of December 31, 2024, is summarized as follows:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Current assets | $ | 2,993,890 | $ | 3,481,071 | ||||
| Current liabilities | 8,370,392 | 24,955,647 | ||||||
| Working capital deficit | $ | (5,376,502 | ) | $ | (21,474,576 | ) | ||
The decrease in current assets is primarily due to the $176,198 increase in prepaid expenses and other current assets being more than offset by decreases in accounts receivable and prepaid cost of revenue of $539,177 and $248,355, respectively. Accounts receivable decreased due to collection efforts. Prepaid expenses increased due to increased prepaid marketing expenses.
The decrease in current liabilities is primarily due to decreases in accounts payable and accrued expenses, debt obligations, and the derivative liability of $4,128,590, $9,637,106, and $2,102,927, respectively. During the nine months ended September 30, 2025, we paid down accounts payable and loans payable outstanding, certain convertible notes payable were converted into shares of our Common Stock and preferred stock, and the derivative liability was derecognized as a result of the conversion of the notes payable.
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Cash Flows
Our cash flows for the nine months ended September 30, 2025 in comparison to our cash flows for the nine months ended September 30, 2024, are summarized as follows:
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (6,180,042 | ) | $ | (3,582,726 | ) | ||
| Net cash provided by investing activities | - | 916,905 | ||||||
| Net cash provided by financing activities | 6,299,182 | 2,105,679 | ||||||
| Effect of exchange rates on cash and cash equivalents | - | (59,214 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | $ | 119,140 | $ | (619,356 | ) | |||
Operating Activities
Net cash used in operating activities was $6,180,042 for the nine months ended September 30, 2025 and was primarily due to cash used to fund a net loss of $5,857,097 (which includes non-cash expenses in the aggregate of $4,044,057), a decrease in accounts payable and accrued expenses and a decrease in deferred revenue. Net cash used in operating activities was $3,582,726 for the nine months ended September 30, 2024 and was primarily due to cash used to fund a net loss of $18,723,961, adjusted for non-cash expenses in the aggregate of $11,704,296 and additional cash inflow by changes in the levels of operating assets and liabilities, primarily as a result of a decrease in accounts receivables, net, and an increase in deferred revenue.
Investing Activities
Net cash provided by investing activities of $916,905 for the nine months ended September 30, 2024 was primarily due to the sale of our subsidiary vCISO.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2025 was $6,299,182, which was primarily due to $2,816,075 from the sale of our Common Stock, $1,547,999 from the exercise of warrants, cash received from borrowings on our convertible loans payable and line of credit (net of debt issuance costs) of $16,276,483, offset by $14,344,167 in repayments of our loans payable and line of credit. Net cash provided by financing activities for the nine months ended September 30, 2024 was $2,105,679, which was primarily due to cash received from borrowings on our loans payable and lines of credit, net of debt issuance cost, of $6,694,412, offset by $4,743,680 in repayments of our loans payable and lines of credit.
Critical Accounting Estimates
Our critical accounting estimates are more fully described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025. There have been no material changes to our critical accounting estimates described in our 2024 Annual Report on Form 10-K.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Because we are a smaller reporting company, we are not required to provide the information called for by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as September 30, 2025, our disclosure controls and procedures were effective. This does not include an evaluation by our independent registered public accounting firm regarding our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are currently not a party to any material legal proceedings.
Item 1A. Risk Factors
We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025, risk factors that materially affect our business, financial condition, or results of operations. There have been no material changes from the risk factors previously disclosed.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On August 4, 2025, we entered into Exchange Agreements with each of the Holders. Pursuant to the Exchange Agreements, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act and Rule 506(b) of Regulation D as promulgated by the SEC, the Holders exchanged certain outstanding convertible notes, as amended from time to time, with aggregate principal and accrued interest of approximately $9,297,894.54 for an aggregate of 9,297,894 newly authorized shares of Series A Preferred Stock. Upon the closing of the transactions contemplated by the Exchange Agreements, the Exchange Notes were cancelled, and the Holders relinquished all rights, powers, privileges, remedies, or interest under such securities.
On September 4, 2025, we issued 310,000 shares of our Common Stock to FMW Media Works LLC as compensation for marking services provided to our company. The shares were privately placed in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.
On September 19, 2025, we issued 72,927 shares of our Common Stock to SB Cyber Tech as compensation for cyber security services provided to our company. The shares were privately placed in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
During
the quarter ended September 30, 2025, none of our directors or officers
Item 6. Exhibits
*Filed/ furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CISO GLOBAL, INC. | ||
| By: | /s/ David G. Jemmett | |
| David G. Jemmett | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: | November 13, 2025 | |
| By: | /s/ Debra L. Smith | |
| Debra L. Smith | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: | November 13, 2025 | |
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