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CISO Global, Inc.

CISO Global, Inc.CISOEarnings & Financial Report

Nasdaq · Information Technology · Services-Management Consulting Services

CISO Global, Inc. is a specialized cybersecurity services provider. It offers managed security monitoring, risk assessment, compliance advisory and incident response, serving North American SMEs, government and commercial clients across healthcare, retail and finance to help safeguard digital assets and mitigate cyber risks.

What changed in CISO Global, Inc.'s 10-K — 2023 vs 2024

Top changes in CISO Global, Inc.'s 2024 10-K

322 paragraphs added · 270 removed · 155 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

27 edited+55 added−39 removed28 unchanged
NLT Networks, S.P.A., NLT Technologias, Limitada, NLT Servicios Profesionales, S.P.A., and White and Blue Solutions, LLC Providencia, Chile Florida Stock September 1, 2022 Security solutions and managed services. SB Cyber Technologies, LLC Virginia Stock July 14, 2023 Managed services and compliance. (1) Prior to our acquisition of GenResults, GenResults was wholly owned by an entity affiliated with David G.
NLT Networks, S.P.A., NLT Technologias, Limitada, NLT Servicios Profesionales, S.P.A., and White and Blue Solutions, LLC Providencia, Chile Florida (3) Stock September 1, 2022 Security solutions and managed services. SB Cyber Technologies, LLC Virginia Stock July 14, 2023 Managed services and compliance. (1) Prior to our acquisition of GenResults, GenResults was wholly owned by an entity affiliated with David G.
Ocean Point Equities, Inc. (“Arkavia”) Santiago, Chile Stock December 1, 2021 Cybersecurity services. True Digital Security, Inc. (“True Digital”) New York Florida Oklahoma Stock January 19, 2022 Cybersecurity and compliance. Creatrix, Inc. Tennessee Maryland Stock June 1, 2022 Identity management, systems integration and software engineering, biometrics, vetting, credentialing, and case management.
Ocean Point Equities, Inc. (“Arkavia”) Santiago, Chile (3) Stock December 1, 2021 Cybersecurity services. True Digital Security, Inc. (“True Digital”) New York Florida Oklahoma Stock January 19, 2022 Cybersecurity and compliance. Creatrix, Inc. Tennessee Maryland Stock June 1, 2022 Identity management, systems integration and software engineering, biometrics, vetting, credentialing, and case management.
CyberViking, LLC Georgia Oregon Stock July 1, 2022 Application security services, incident response, threat hunting, and creation and management of security operation centers. Servicios Informaticos CUATROi, S.P.A., Comercializadora CUATROi S.P.A., CUATROi Peru, S.A.C., and CUATROi S.A.S. Santiago, Chile Bogota, Columbia, and Lima, Peru Stock August 25, 2022 Managed services and cybersecurity.
CyberViking, LLC Georgia Oregon Stock July 1, 2022 Application security services, incident response, threat hunting, and creation and management of security operation centers. Servicios Informaticos CUATROi, S.P.A., Comercializadora CUATROi S.P.A., CUATROi Peru, S.A.C., and CUATROi S.A.S. Santiago, Chile Bogota, Columbia, and Lima, Peru (3) Stock August 25, 2022 Managed services and cybersecurity.
Common stock underlying our outstanding warrants, convertible notes, and options have also been adjusted, and the conversion and exercise prices have also been adjusted. -7- We have substantially expanded our business in recent years through a number of acquisitions.
Common stock underlying our outstanding warrants, convertible notes, and options have also been adjusted, and the conversion and exercise prices have also been adjusted. -9- We have substantially expanded our business in recent years through a number of acquisitions.
Our portfolio includes the following software-first solutions: ARGO Security Management – A security management platform which is able to aggregate, then curate security data in real time from a client’s entire environment, including network asset information, currently deployed cyber tools, SOC, vulnerability management, secure managed IT and penetration testing data.
Our Intellectual Property suite includes the following: ARGO Security Management – A security management platform that is able to aggregate, then curate security data in real time from a client’s entire environment, including network asset information, currently deployed cyber tools, SOC, vulnerability management, secure managed IT and penetration testing data.
For third-party vendor selection and oversight, we have standard operating procedures that apply to employees and subcontractors who, on our behalf, oversee and conduct technical protocols. -10- Employees As of December 31, 2023, we had 402 employees, of which 397 were full-time.
For third-party vendor selection and oversight, we have standard operating procedures that apply to employees and subcontractors who, on our behalf, oversee and conduct technical protocols. -12- Employees As of December 31, 2024, we had 143 employees, of which 141 were full-time.
We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company.
We may take advantage of these provisions for up to five years after our first public equity sale or such earlier time that we are no longer an emerging growth company.
Cybersecurity Service Offerings We offer a comprehensive range of cybersecurity services to protect our clients’ digital assets and ensure compliance with industry standards and regulations.
Cybersecurity Offerings We offer a comprehensive suite of cybersecurity services to safeguard our clients’ digital assets and ensure compliance with applicable industry standards and regulations.
None of our customers individually accounted for more than 10.0% of our consolidated revenue for the years ended December 31, 2023 and 2022, nor are we dependent upon a few major customers. Competition The cybersecurity market is highly fragmented. We primarily compete with established and emerging security product vendors.
None of our customers individually accounted for more than 10.0% of our consolidated revenue for the years ended December 31, 2024 and 2023, nor are we dependent upon a few major customers. Cybersecurity Market Analysis The cybersecurity market is highly fragmented, characterized by a diverse landscape of established industry leaders and emerging security product vendors.
Intellectual Property We believe that our intellectual property rights are valuable and important to our business. We rely on trademarks, patents, copyrights, trade secrets, license agreements, intellectual property assignment agreements, confidentiality procedures, non-disclosure agreements, and employee non-disclosure and invention assignment agreements to establish and protect our proprietary rights.
We rely on a combination of trademarks, patents, copyrights, trade secrets, license agreements, intellectual property assignment agreements, confidentiality procedures, non-disclosure agreements, and employee non-disclosure and invention assignment agreements to secure and enforce our proprietary rights.
Our services fall into two main categories: Security Managed Services and Professional Services. -5- Security Managed Services Our Security Managed Services include the following offerings: ● Compliance Services: We help clients implement appropriate controls, prioritize risks, and ensure adherence to industry standards and regulations, such as Cybersecurity Maturity Model Certification (“CMMC”), Federal Risk and Authorization Management Program (“FedRAMP”), Federal Information Security Modernization Act (“FISMA”), Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Health Information Trust Alliance (“HITRUST”), Import Export Code (“IEC”), Internal Organization for Standardization (“ISO”), National Institute of Standards and Technology (“NIST”), and more.
Compliance Services We assist clients in implementing and maintaining appropriate security controls, prioritizing risk mitigation strategies, and ensuring continuous compliance with key industry frameworks and regulations, including the following: ● Cybersecurity Maturity Model Certification (“CMMC”); ● Federal Risk and Authorization Management Program (“FedRAMP”) ; ● Federal Information Security Modernization Act (“FISMA”) ; ● Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) ; ● Health Information Trust Alliance (“HITRUST”) ; ● Import Export Code (“IEC”) ; ● International Organization for Standardization (“ISO”); and ● National Institute of Standards and Technology (“NIST”) .
We provide a full range of cybersecurity consulting and related services, encompassing all three pillars of compliance, cybersecurity, and culture. Our services include compliance services, secured managed services, security operations center (“SOC”) services, virtual Chief Information Security Officer (“vCISO”) services, incident response, certified forensics, technical assessments, and cybersecurity training.
These services include compliance consulting, secured managed services, Security Operations Center (SOC) services, virtual Chief Information Security Officer (vCISO) services, incident response, certified forensics, technical assessments, and cybersecurity training. We believe culture forms the foundation of successful cybersecurity programs.
Our Business General We are a cybersecurity and compliance company comprised of highly trained and seasoned security professionals who work with clients to enhance or create a better cyber posture in their organization.
Our Business General Our company is a leading cybersecurity, compliance, and software firm composed of highly trained and seasoned security professionals. We collaborate with clients to enhance or establish a stronger cybersecurity posture within their organizations.
In Phase I, we established a foundation of end-to-end cybersecurity experts through acquiring niche companies with unparalleled expertise and talent.
Phase I: Foundation of Expertise through Strategic Acquisitions In Phase I, we established a solid foundation of cybersecurity expertise by acquiring niche companies with unparalleled capabilities in various cybersecurity domains. These acquisitions have significantly expanded our talent pool and technical expertise, positioning us as a leading cybersecurity provider.
While the market for traditional endpoint and IT operations solutions has historically been competitive, we believe as we look to enter into adjacent markets and expand our total addressable market, we may face new competitors.
While competition within traditional endpoint and IT operations markets remains significant, we anticipate encountering new competitors as we strategically expand into adjacent markets, thereby increasing our total addressable market.
We entered into the VCAB Merger to increase our stockholder base to, among other things, assist us in satisfying the listing standards of a national securities exchange. -8- Customers Our recent acquisitions have resulted in expansion of our customer base and increased usage within existing customers.
As provided in the bankruptcy plan, the Plan Shares were issued pursuant to Section 1145 of the United States Bankruptcy Code. We entered into the VCAB Merger to increase our stockholder base to, among other things, assist us in satisfying the listing standards of a national securities exchange. (3) Entities were disposed of on July 1, 2024.
We have invested in enterprise solutions and executive talent to integrate our different organizations into an ecosystem that works together to provide complete and holistic cybersecurity through cross pollination of solutions. The ecosystem is intended to provide additional revenue opportunities and drive overall recurring revenue.
We have invested in enterprise solutions, executive leadership, and our proprietary software to integrate our acquisitions into a unified ecosystem. This ecosystem fosters cross-pollination of solutions, promoting additional revenue opportunities and enhancing recurring revenue.
We provide competitive compensation and benefits programs to help meet the needs of our employees. In addition to salaries, these programs (which vary by country/region and employment classification) include incentive compensation plan, pension, healthcare and insurance benefits, paid time off, family leave, and on-site services, among others.
In addition to competitive salaries, our offerings include performance-based incentive plans, pensions, healthcare and insurance coverage, paid time off, family leave, and on-site services. These benefits are tailored to meet regional requirements and employment classifications, ensuring flexibility and relevance.
We accomplish this through acquisitions, direct hiring, and incentivizing employees with stock options to help retain them. On an ongoing basis, we seek to identify cyber talent that is culturally aligned and that offers operating leverage through both existing customer revenue and relationships.
To address this, we prioritize identifying, attracting, and retaining top cybersecurity and compliance talent. Our strategy includes acquisitions, direct hiring, and employee incentivization through stock options to ensure retention. We continuously seek culturally aligned cyber talent that offers operational leverage through existing revenue streams and customer relationships.
However, many of our competitors have substantially greater financial, technical and other resources, greater name recognition, larger sales and marketing budgets, deeper customer relationships, broader distribution, and larger and more mature intellectual property portfolios. We face direct competition from all small-to-medium-sized cybersecurity service providers nationwide given the broad service scope we currently provide.
Despite these advantages, many of our competitors maintain substantially greater financial, technical, and operational resources, along with broader brand recognition, larger sales and marketing infrastructures, deeper customer relationships, more extensive distribution channels, and mature intellectual property portfolios. Additionally, cloud-based service providers introduce increased competition, transcending geographic limitations.
In particular, large and established companies in the cybersecurity industry have extensive patent portfolios and are regularly involved in both offensive and defensive litigation.
Additionally, large and established companies within the cybersecurity sector maintain extensive patent portfolios and are frequently involved in both offensive and defensive intellectual property litigation. From time to time, we may face allegations of intellectual property infringement from such companies or from non-practicing entities.
We offer Managed Detection and Response (“MDR”), Extended Detection and Response (“XDR”), Security Information and Event Management (“SIEM”), and Patch and Vulnerability Management services, ensuring a unified solution for cyber resiliency. ● Secured Managed Services: We offer fully managed Security Managed Services (“SMS”), combining secure network architecture, our portfolio of internally developed cybersecurity software, SOC services, compliance support, remediation teams, and advanced firewall management.
Secured Managed Services Our integrated Security Managed Services (“SMS”) offering combines a robust portfolio of cybersecurity capabilities, including the following: ● Secure network architecture design and management; ● Proprietary cybersecurity software solutions ; ● SOC-driven monitoring and response services ; ● Regulatory compliance support ; ● Incident remediation and recovery teams; and ● Advanced firewall and perimeter security management .
Today, our experts span the United States and Latin America and each have their own special expertise, industry specific knowledge, familiarity with regulatory frameworks and focal areas that fall into four key pillars of cybersecurity: risk and compliance, cyber defense operations, security testing and training, and secure IT and architecture.
The acquired talent spans across the United States, with deep domain knowledge in key cybersecurity areas including the following: ● Risk and Compliance; ● Cyber Defense Operations ; ● Security Testing and Training; and ● Secure IT and Architecture.
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 the only holistic solution that provides all three of these pillars under one roof from a dedicated team of subject matter experts.
To support this, we have developed MCCP+ (“Managed Compliance & Cybersecurity Provider + Culture”), a holistic solution combining all four pillars under one roof, delivered by a dedicated team of subject matter experts. Our proprietary software further enhances this offering by streamlining compliance management, threat detection, and response capabilities, ensuring a faster and more effective security posture for our clients.
Due to the numerous challenges in hiring experienced cybersecurity and compliance professionals, assimilating our team of industry and subject matter experts into our clients’ teams is the ideal solution. We are technology agnostic. Whereas, most cybersecurity firms are locked into working with a single technology, we seek to differentiate ourselves by remaining technology agnostic.
This structure helps mitigate the challenges associated with hiring experienced cybersecurity professionals. By integrating our team of industry and subject matter experts into clients’ operations — supported by our proprietary software — we offer a robust, embedded cybersecurity solution that continuously adapts to evolving threats.
Leveraging machine learning (“ML”), artificial intelligence (“AI”), deep learning, and neural net technologies, as well as proprietary DarkNet threat intelligence, we are developing multi-layered cybersecurity technologies to help drive the cyber effectiveness leading to resiliency. Equipped with a comprehensive team, our focus in Phase III will be fueling organic growth with our intellectual property.
We are investing heavily in the development of software-first technologies, leveraging cutting-edge advancements such as machine learning (“ML”), artificial intelligence (“AI”), deep learning, neural networks, and proprietary DarkNet threat intelligence. These technologies will be foundational to our offerings, providing differentiated solutions that drive effectiveness, resilience, and advanced threat mitigation for our clients.
Cybersecurity, also known as computer security or information technology security, is the protection of computer systems and networks from information disclosure, theft of or damage to their hardware, software, or electronic data, as well as from the disruption or misdirection of the services they provide.
Cybersecurity, also referred to as computer or information technology security, protects computer systems and networks from data breaches, hardware damage, software compromise, and service disruptions. The cybersecurity industry faces a significant supply and demand imbalance, with greater demand for services than the market can supply in terms of expert, seasoned compliance and cybersecurity professionals.
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The cybersecurity industry has a supply and demand issue wherein there is more demand for cybersecurity services than there are expert and seasoned compliance and cybersecurity professionals available in the market. We seek to identify, attract, and retain highly skilled cyber and compliance teams and bring them together to provide holistic cyber services.
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By emphasizing a security-aware workforce culture, we aim to become trusted advisors, providing tailored, product-agnostic cybersecurity solutions that align with our clients’ security needs, financial realities, and strategic goals. Our comprehensive cybersecurity services span compliance, cybersecurity, and culture.
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We emphasize to clients the critical nature of having their work force create a continuously aware security culture. Once engaged, we strive to become the trusted advisors for customers’ cybersecurity and compliance needs by providing tailored security solutions based upon their organizational needs.
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We differentiate ourselves through a technology-agnostic approach and a relentless focus on acquiring high-demand cybersecurity talent, expanding both service capabilities and global reach. Paired with our proprietary CISO software, which enhances threat visibility and accelerates incident response, we deliver unparalleled value to clients — surpassing competitors and traditional in-house security models.
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We do not focus on selling cybersecurity products; we are product-agnostic so that we can provide solutions that fit the customer’s security needs, financial realities, and future strategy. Our approach is to evaluate the client’s organization holistically, identify compliance requirements, and secure the infrastructure while helping to create a culture of security.
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This strategy drives scalable growth, strengthens recurring revenue streams, and positions us as a leader in a market facing a critical cybersecurity talent shortage. Our integrated service model enhances revenue capture and operational efficiency, resulting in improved profitability and stronger client retention.
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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.
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Clients benefit from streamlined engagements with a single provider addressing a broad range of needs, leading to faster problem resolution and superior outcomes compared to multi-vendor approaches. This fosters long-term client partnerships. -4- We further differentiate ourselves through our staffing model: our employees are dedicated partners, not consultants, available under recurring monthly contracts.
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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.
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Our technology-agnostic stance allows us to work seamlessly with any business, regardless of existing systems or tools. Clients retain the flexibility to select the best technologies for their needs without impacting their relationship with us. Building a world-class technology team with industry-specific expertise remains a cornerstone of our strategy.
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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. Offering this set of cybersecurity services allows us to capture more revenue with greater efficiency, facilitating greater profitability and stronger customer retention.
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We will continue acquiring top cybersecurity talent to expand our services and geographical footprint, reinforcing our ability to deliver exceptional results for clients. Our goal remains to stay ahead of emerging threats and regulatory changes, ensuring our clients’ safety, compliance, and success — with our proprietary software serving as a vital tool to support ongoing security, compliance, and operational excellence.
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The benefit to our customers is that they receive an efficient engagement from a single provider that covers a wide range of their needs. This means their challenges are addressed more thoroughly and problems are resolved more rapidly when compared to working with multiple vendors.
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Cybersecurity Landscape: A Market Poised for Growth As global connectivity accelerates, cyberattacks have emerged as one of the most pressing threats to enterprise and personal data, driving unprecedented economic losses. Cybersecurity Ventures projects global damages from cybercrime to reach $10.5 trillion annually by 2025.
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This leads to the best possible outcome, which enables our customers to commit to us for the long term. -4- We believe that our business model is differentiated from other companies in the industry in that our employees are not consultants; they are dedicated partners available on a recurring monthly contract.
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Ransomware remains one of the fastest-growing attack types, with incidents expected to occur every two seconds, inflicting an estimated $265 billion in annual damages by 2031 — a dramatic rise from $20 billion and an attack every 11 seconds in 2021. In parallel, an Accenture survey reports that 68% of business leaders perceive increasing cybersecurity risks.
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This approach enables us to work with any business, no matter what systems or tools they use. For our customers, the benefit is equally valuable as they are able to choose the best tools and technology for their business needs without affecting their relationship with us.
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Reflecting this urgency, global cybersecurity spending is forecasted to surpass $1.75 trillion cumulatively between 2021 and 2025, with $459 billion allocated in 2025 alone. Despite this investment surge, the talent gap remains a critical constraint. According to The New York Times and Cybersecurity Ventures, 3.5 million cybersecurity roles remain unfilled — a disparity expected to persist through 2025.
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We believe that building a world-class technology team with industry-specific and subject-matter expertise is the key to providing cutting-edge solutions to our clients. We will continue to identify and acquire cybersecurity talent to expand our scope of services and geographical footprint to fortify our capability to deliver excellence to our customers.
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Market Drivers: Regulation and Cyber Insurance Heightened cyber risks have triggered a wave of regulatory reforms and tighter cyber insurance standards. Governments worldwide are enforcing more rigorous cybersecurity mandates, while insurers have raised premium costs and minimum underwriting criteria. This evolving landscape compels organizations to prioritize cybersecurity investments to maintain compliance, secure coverage, and safeguard their operations.
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Furthermore, our goal is to stay a step ahead of threat actors and regulatory obligations to keep our customers safe and compliant.
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Strategic Market Leadership and Growth Potential We are uniquely positioned to capitalize on this rapidly expanding market, offering end-to-end cybersecurity services with substantial opportunities for sustained growth and value creation.
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The Cybersecurity Challenge As the world has become increasingly connected through the Internet, cyberattacks have prevailed and evolved, in different forms, causing uncontainable threats to the integrity and privacy of enterprise and personal data and resulted in significant economic losses globally.
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Key differentiators include: ● Proven Acquisition Strategy: Through numerous strategic acquisitions, we have integrated top-tier talent and broadened our capabilities, creating a comprehensive service portfolio aligned with market demands. ● Expansive Client Portfolio: Serving more than 475 clients across diverse sectors, we are strategically positioned to drive revenue growth through cross-selling and upselling high-value services. ● Robust Channel and Partnership Ecosystem: We have cultivated an extensive network of partners, supported by comprehensive training, enablement resources, and marketing content — ensuring reliable new client acquisition and recurring revenue streams. ● Innovation and Intellectual Property Development: Our proprietary technologies and intellectual property provide a competitive edge, enabling deeper penetration into existing accounts, expansion into new markets, and enhanced partner collaboration opportunities.
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A report published by Cybersecurity Ventures stated that damages from global cybercrime is predicted to hit $10.5 trillion annually by 2025. Cybersecurity Ventures estimated that consumers and organizations will fall victim to a ransomware attack every two seconds at an approximate cost of $265 billion annually in 2031. This is up from $20 billion and every 11 seconds in 2021.
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Investor Value Proposition: Positioned for Scalable, Long-Term Success The evolving cybersecurity landscape presents a dynamic, high-growth market ripe with opportunity. As threats intensify and regulatory pressures mount, businesses require an agile, trusted cybersecurity partner. Our proven mergers and acquisitions track record, expansive client base, channel-first approach, and intellectual property-driven innovation uniquely position us for scalable growth and market leadership.
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As a result, ransomware is one of the fastest growing types of cybercrime. Moreover, an Accenture survey reported that 68% of business leaders feel their cybersecurity risks are increasing.
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We remain steadfast in our commitment to innovation and operational excellence — empowering organizations to stay resilient and secure in an increasingly complex digital ecosystem. This strategic approach ensures sustained value creation for our stockholders, partners, and investors alike.
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Cybersecurity Ventures has also estimated that worldwide global cybersecurity spending will exceed $1.75 trillion cumulatively from the fiscal years 2021 to 2025, with $459 billion expected to be spent on an annual basis in 2025. The New York Times reported that in 2021 there would be 3.5 million unfilled job openings in the cybersecurity field.
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Our offerings fall into three main categories: Security Managed Services, Professional Services, and Cybersecurity Software. -5- Security Managed Services Our Security Managed Services deliver proactive, scalable, and resilient cybersecurity solutions tailored to meet evolving threat landscapes and regulatory requirements.
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Three years later, despite widespread university and government investments into education programs and recruitment efforts, the rates are roughly the same, based upon a report from Cybersecurity Ventures, and that disparity between supply and demand will remain through at least 2025.
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Our team of certified experts provides ongoing monitoring, assessment, and advisory services to help clients navigate the complexities of regulatory compliance and mitigate operational risks. Cyber Defense Operation Our U.S.-based, 24/7 SOC leverages advanced technology and expert analysis to provide real-time threat detection, response, and mitigation.
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In response to the increasing economic damage caused by heightened cybersecurity risks, regulatory bodies have pushed the implementation of new cybersecurity legislations, and cyber insurance companies have increased minimum cybersecurity underwriting requirements, as well as premium costs.
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Core capabilities include the following: ● Managed Detection and Response (“MDR”); ● Extended Detection and Response (“XDR”) ; ● Security Information and Event Management (“SIEM”); and ● Patch and Vulnerability Management . These services support comprehensive threat visibility, rapid incident response, and continuous improvement of clients’ security postures, helping to minimize downtime and reduce the potential impact of cyberattacks.
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We believe that we are well positioned in a fast-growing industry to provide businesses with a wide scope of cybersecurity services and with significant opportunities for growth. We support clients from 17 historical acquisitions with expanded service offerings. With 1,100 clients, this represents a tremendous opportunity for cross-selling and upselling.
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Our experienced engineers and cybersecurity architects support clients with secure cloud migrations, infrastructure modernization, and tailored risk mitigation strategies — ensuring operational resilience and business continuity. -6- Professional Services Our Professional Services division delivers comprehensive cybersecurity solutions designed to mitigate risk, enhance resilience, and protect organizational value.
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Additionally, we have built and continue to expand an extensive channel and partnership ecosystem, providing training, support, and partner marketing content to establish reliable streams of new revenue with new clients. In addition, our strategy around IP allows us to further penetrate our existing customers, new markets, and opens up additional partnership opportunities.
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Incident Response and Digital Forensics Leveraging advanced threat intelligence and real-world adversarial techniques, our elite cybersecurity team specializes in swiftly identifying, containing, and eradicating cyberattacks. We conduct discreet, environment-wide investigations to assess breach scope, minimize operational disruption, and remediate persistent threats — positioning us as the trusted partner when others fail.
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Our experienced experts possess relevant certifications and provide continuous monitoring and support. ● Cyber Defense Operations: Our U.S.-based SOC provides 24/7 threat monitoring, alerting, validation, and proactive threat hunting.
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Security Testing and Training We empower organizations to proactively strengthen their cyber defenses through rigorous security assessments, including red team and purple team penetration testing, simulated attack exercises, and specialized cybersecurity training. Our programs include industry-recognized certifications such as CMMC (Certified Cyber Professional and Cybersecurity Capability Assessment), CompTIA, and ISC2, driving measurable improvements in cybersecurity posture and regulatory readiness.
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Our engineers and architects can manage secure cloud migrations, design new systems, and implement solutions to minimize security risks efficiently.
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Cybersecurity Software We offer a comprehensive suite of proactive cybersecurity software solutions designed to protect organizations from evolving cyber threats. Our offerings encompass advanced threat detection, proactive monitoring, and robust risk management to ensure enterprise security and compliance. CISO Edge CISO Edge is an AI-driven cloud security solution that provides comprehensive protection across cloud-first, hybrid, and remote environments.
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Cybersecurity Professional Services Our Professional Services include the following offerings: ● Incident Response and Digital Forensics: Our experienced team specializes in identifying and remediating cyber attacks, using real-world hacking techniques to investigate the entire environment discreetly, assess the scope of the attack, and effectively remediate any damages or persistent threats. ● Security Testing and Training: We provide security testing services, including penetration testing (red team and purple team), attack simulation exercises, and training programs, including CMMC (Certified Cyber Profession (“CCP”) and Cybersecurity Capability Assessment (“CCA”)), Computing Technology Industry Association (“CompTIA”), International Information System Security Certification Consortium (“ISC 2 ”), to increase clients’ cybersecurity readiness and resiliency. -6- Growth Strategy We are following a phased growth strategy.
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Purpose-built for large enterprises, government entities, and high-value networks, CISO Edge defends against sophisticated cyber threats, including ransomware and AI-powered exploits. Notably, during testing at the 2024 Black Hat USA and DEF CON 32 conferences, CISO Edge blocked over 87,000 cyberattacks in just six hours without a single breach.
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These practice areas, led by a seasoned executive team of industry thought leaders, are enabling us to effectively tackle a rapidly expanding market. In Phase II of our growth strategy, we are supporting clients from 17 historical acquisitions with expanded service offerings.
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CHECKLIGHT® Security Monitoring CHECKLIGHT is a proactive security monitoring software that detects potential threats to endpoints and alerts users before attacks can take hold, thereby reducing the impact of breaches. It identifies malicious software such as phishing attacks, malware, ransomware, and viruses.
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With only a 9% penetration into 1,100 clients for multiple services consumed, this represents a tremendous opportunity for cross-selling and upselling. Additionally, we have built and continue to expand an extensive channel and partnership ecosystem, providing training, support, and partner marketing content to establish reliable streams of new revenue with new clients.
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Since its inception, CHECKLIGHT has maintained a record of detecting all breaches, providing organizations with confidence in their endpoint security. Argo Security Management Argo is a security management platform that aggregates and curates all security data across various services, including SIEM, MDR, XDR, governance, risk, compliance, and more.
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Phase II also includes the development and launch of key software-first intellectual property (“IP”) technologies that can effectively address many of the cybersecurity challenges facing enterprises today.
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This centralized approach enhances the effectiveness of security teams by providing environment-wide cybersecurity visibility through a customizable dashboard, enabling better-informed decisions.
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With a complete portfolio of scalable solutions that are underpinned by an end-to-end team of cybersecurity and compliance experts, we can expand our technology offerings through product led growth strategies. Optimizing user experience and hands-free purchasing through digital interfaces, the company can grow its clients without adding demand to its services team.
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Through these innovative software solutions, we empower organizations to enhance their cybersecurity measures, protect critical assets, and maintain compliance in an ever-evolving threat landscape. -7- Growth Strategy We have begun to execute a phased growth strategy designed to position our company as a leading provider of end-to-end cybersecurity solutions.
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Such scalability will serve to increase revenue and margins concurrently. We are focused on the development of our own Intellectual Property suite which incorporates AI, Neural Nets and the latest generation of algorithms.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+88 added−62 removed79 unchanged
Consequently, the trading liquidity of our common stock may not improve. Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that a reverse stock split will result in a share price that will attract new investors, including institutional investors.
Consequently, the trading liquidity of our common stock may not improve. Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that our reverse stock split will result in a share price that will attract new investors, including institutional investors.
Risks Related to Our Common Stock ● The market price of our common stock is volatile and may fluctuate in a way that is disproportionate to our operating performance. ● Future sales of shares of our common stock by existing stockholders could depress the market price of our common stock. -12- ● Provisions in our certificate of incorporation, our by-laws and Delaware law might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock. ● FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. ● If we issue additional shares in the future, it will result in the dilution of our existing stockholders. ● We are eligible to be treated as an “emerging growth company,” as defined in the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. ● Our directors, a former director and executive officers beneficially own a substantial majority of our outstanding capital stock and will have the ability to control our affairs. ● Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. ● Following a reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors.
Risks Related to Our Common Stock ● The market price of our common stock is volatile and may fluctuate in a way that is disproportionate to our operating performance. ● Future sales of shares of our common stock by existing stockholders could depress the market price of our common stock. -14- ● Provisions in our certificate of incorporation, our by-laws and Delaware law might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock. ● FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. ● If we issue additional shares in the future, it will result in a dilution of our existing stockholders. ● We are eligible to be treated as an “emerging growth company,” as defined in the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. ● Our directors, a former director and executive officers beneficially own a substantial majority of our outstanding capital stock and will have the ability to control our affairs. ● Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. ● Following a reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors.
Unless we increase revenue and cash flow or raise additional capital, we may be unable to take advantage of any acquisition opportunities that arise or expand our business, all of which could adversely impact us. ● We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth. ● We depend on key personnel who would be difficult to replace, and our business plans will likely be harmed if we lose their services or cannot hire additional qualified personnel. ● We operate in an industry that is experiencing a shortage of qualified compliance and cybersecurity professionals.
Unless we increase revenue and cash flow or raise additional capital, we may be unable to take advantage of any acquisition opportunities that arise or expand our business, all of which could adversely impact us. ● We will need to improve the size and capabilities of our organization, and we may experience difficulties in managing this growth. ● We depend on key personnel who would be difficult to replace, and our business plans will likely be harmed if we lose their services or cannot hire additional qualified personnel. ● We operate in an industry that is experiencing a shortage of qualified compliance and cybersecurity professionals.
Foreign Corrupt Practices Act, and other anti-bribery, anti-corruption, or other matters. ● We are subject to risks from operating internationally. ● Our operations in certain emerging markets expose us to political, economic and regulatory risks. ● Adverse economic conditions in the United States and international economies may adversely impact our business operating units. ● Breaches of network or information technology security could have an adverse effect on our business. ● If we fail to meet our service level obligations under our service level agreements, we may be subject to certain penalties and could lose clients. ● The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnification. ● We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs. ● Our industry is highly competitive, and there is no assurance that we will compete successfully. ● Our success depends on our ability to protect our intellectual property and our proprietary technologies. ● Increasingly complex cybersecurity regulations and standards may have significant impact on our business, and it may require us to substantially invest in our development capabilities to meet compliance requirements and may negatively impact our ability to offer certain services and remain profitable. ● We may become subject to disputes, including litigation, that could negatively impact our business, profitability, and financial condition. ● If we incur additional debt, we will be subject to restrictive covenants and debt service obligations that could negatively impact our operations. ● The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and Nasdaq, may strain our resources, increase our costs and divert management’s attention, and we may be unable to comply with these requirements in a timely or cost-effective manner. ● The preparation of our financial statements involves use of estimates, judgments, and assumptions, and our financial statements may be materially affected if our estimates prove to be inaccurate. ● The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2023, included in this annual report on Form 10-K, contain an explanatory paragraph relating to our ability to continue as a going concern.
Foreign Corrupt Practices Act, and other anti-bribery, anti-corruption, or other matters. ● We may be subject to risks from operating internationally. ● Our operations in certain emerging markets expose us to political, economic and regulatory risks. ● Adverse economic conditions in the United States may adversely impact our business and operating results. ● Breaches of network or information technology security could have an adverse effect on our business. ● If we fail to meet our service level obligations under our service level agreements, we may be subject to certain penalties and could lose clients. ● The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnification. ● We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs. ● Our industry is highly competitive, and there is no assurance that we will compete successfully. ● Our success depends on our ability to protect our intellectual property and our proprietary technologies. ● Increasingly complex cybersecurity regulations and standards may have significant impact on our business, and it may require us to substantially invest in our development capabilities to meet compliance requirements and may negatively impact our ability to offer certain services and remain profitable. ● We may become subject to disputes, including litigation, that could negatively impact our business, profitability, and financial condition. ● If we incur additional debt, we will be subject to restrictive covenants and debt service obligations that could negatively impact our operations. ● The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and Nasdaq, may strain our resources, increase our costs and divert management’s attention, and we may be unable to comply with these requirements in a timely or cost-effective manner. ● The preparation of our financial statements involves use of estimates, judgments, and assumptions, and our financial statements may be materially affected if our estimates prove to be inaccurate. ● The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2024, included in this annual report on Form 10-K, contain an explanatory paragraph relating to our ability to continue as a going concern.
FINRA requirements will likely make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in the shares, resulting in fewer broker-dealers may be willing to make a market in our shares, potentially reducing a stockholder’s ability to resell shares of our common stock. -23- If we issue additional shares in the future, it will result in the dilution of our existing stockholders.
FINRA requirements will likely make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in the shares, resulting in fewer broker-dealers may be willing to make a market in our shares, potentially reducing a stockholder’s ability to resell shares of our common stock. -26- If we issue additional shares in the future, it will result in a dilution of our existing stockholders.
Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock price. This may never happen, and investors may lose all of their investment. Our business could be negatively impacted by shareholder activism. In recent years, shareholder activists have become involved in numerous public companies.
Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock price. This may never happen, and investors may lose all of their investment. Our business could be negatively impacted by stockholder activism. In recent years, stockholder activists have become involved in numerous public companies.
The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2023 includes an explanatory paragraph stating that our losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet our operating obligations raise substantial doubt about our ability to continue as a going concern.
The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2024 includes an explanatory paragraph stating that our losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet our operating obligations raise substantial doubt about our ability to continue as a going concern.
Factors that may cause the market price of our common stock to fluctuate include: ● price and volume fluctuations in the overall stock market from time to time; ● significant volatility in the market price and trading volume of technology companies in general, and of companies in our industry; ● actual or anticipated changes in our results of operations or fluctuations in our operating results; ● whether our operating results meet the expectations of securities analysts or investors; ● failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; ● announcements of new products or technologies, commercial relationships, acquisitions, or other events by us or our competitors; ● actual or anticipated developments in our competitors’ businesses or the competitive landscape generally; ● actual or perceived privacy or data security incidents; ● litigation involving us, our industry or both; ● regulatory developments in the U.S., foreign countries, or both; ● general economic conditions and trends; ● the commencement or termination of any share repurchase program; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● the availability of our services, security breaches or perceived security breaches, and vulnerabilities; ● changes in accounting standards, policies, guidelines, interpretations, or principles; ● actions instituted by activist shareholders or others; ● major catastrophic events, including those resulting from war, incidents of terrorism, outbreaks of pandemic diseases, such as COVID-19, or responses to these events; ● sales of large blocks of our stock; or ● departures of key personnel.
Factors that may cause the market price of our common stock to fluctuate include: ● price and volume fluctuations in the overall stock market from time to time; ● significant volatility in the market price and trading volume of technology companies in general, and of companies in our industry; ● actual or anticipated changes in our results of operations or fluctuations in our operating results; ● whether our operating results meet the expectations of securities analysts or investors; ● failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; ● announcements of new products or technologies, commercial relationships, acquisitions, or other events by us or our competitors; ● actual or anticipated developments in our competitors’ businesses or the competitive landscape generally; ● actual or perceived privacy or data security incidents; ● litigation involving us, our industry or both; ● regulatory developments in the United States, foreign countries, or both; ● general economic conditions and trends; ● the commencement or termination of any share repurchase program; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● the availability of our services, security breaches or perceived security breaches, and vulnerabilities; ● changes in accounting standards, policies, guidelines, interpretations, or principles; ● actions instituted by activist stockholder or others; ● major catastrophic events, including those resulting from war, incidents of terrorism, outbreaks of pandemic diseases, such as COVID-19, or responses to these events; ● sales of large blocks of our stock; or ● departures of key personnel.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action and potentially civil litigation. -21- The preparation of our financial statements involves use of estimates, judgments, and assumptions, and our financial statements may be materially affected if our estimates prove to be inaccurate.
Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, other regulatory action, and potentially civil litigation. -24- The preparation of our financial statements involves the use of estimates, judgments, and assumptions, and our financial statements may be materially affected if our estimates prove to be inaccurate.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further expand and, accordingly, may not achieve our business goals. -14- We have recently acquired multiple businesses.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further expand and, accordingly, may not achieve our business goals. -16- We have recently acquired multiple businesses.
Responding to actions by activist shareholders, such as requests for special meetings, potential nominations of candidates for election to our Board of Directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business and divert the attention of management and employees.
Responding to actions by activist stockholder, such as requests for special meetings, potential nominations of candidates for election to our Board of Directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business and divert the attention of management and employees.
Consequently, the trading liquidity of our common stock may not improve. ● We do not intend to pay dividends on our common stock. ● Our business could be negatively impacted by shareholder activism. ● Our share price may be volatile, and you may be unable to sell your shares.
Consequently, the trading liquidity of our common stock may not improve. ● We do not intend to pay dividends on our common stock. ● Our business could be negatively impacted by stockholder activism. ● Our share price may be volatile, and you may be unable to sell your shares.
The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2023, included in this annual report on Form 10-K, contain an explanatory paragraph relating to our ability to continue as a going concern.
The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2024, included in this annual report on Form 10-K, contain an explanatory paragraph relating to our ability to continue as a going concern.
Shareholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of companies. Shareholder activists have also become increasingly concerned with companies’ efforts with respect to environmental, sustainability and governance standards.
Stockholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of companies. Stockholder activists have also become increasingly concerned with companies’ efforts with respect to environmental, sustainability and governance standards.
In the event that we are unable to generate adequate revenue to cover expenses and cannot obtain additional financing, we may need to cut back or curtail our expansion plans. -13- We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.
In the event that we are unable to generate adequate revenue to cover expenses and cannot obtain additional financing, we may need to cut back or curtail our expansion plans. We will need to improve the size and capabilities of our organization, and we may experience difficulties in managing this growth.
Approximately 4,303,871 shares were in street name. The remainder of the outstanding shares may be sold, subject to certain volume limitations, pursuant to Rule 144 or other available exemptions. Also, in the future, we may issue additional securities in connection with financings and acquisitions.
Approximately 4,838,618 shares were in street name. The remainder of the outstanding shares may be sold, subject to certain volume limitations, pursuant to Rule 144 or other available exemptions. Also, in the future, we may issue additional securities in connection with financings and acquisitions.
Shareholder activism could result in substantial costs. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business. -25- Our share price may be volatile, and you may be unable to sell your shares.
Stockholder activism could result in substantial costs. In addition, actions of activist stockholder may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business. -28- Our share price may be volatile, and you may be unable to sell your shares.
Risk Factor Summary Risks Related to Our Business and Industry ● We will need to raise capital in order to realize our business plan and growth strategy, the failure of which could adversely impact our operations. -11- ● We incurred significant operating losses during the years ended December 31, 2023 and December 31, 2022, and we have limited cash flow.
Risk Factor Summary Risks Related to Our Business and Industry ● We will need to raise capital to realize our business plan and growth strategy, the failure of which could adversely impact our operations. -13- ● We incurred significant operating losses during the years ended December 31, 2024 and December 31, 2023, and we have limited cash flow.
Because we recognize revenue from subscriptions to our solutions over the term of the subscription, downturns or upturns in new business will not be immediately reflected in our operating results. We generally recognize revenue from customers ratably over the term of their subscription, which is generally one to three years.
Because we recognize revenue from subscriptions to our solutions over the term of the subscription, downturns or upturns in new business will not be immediately reflected in our operating results. We recognize revenue from customer subscriptions ratably over the term of their agreement, which generally spans one to three years.
Primary competitive factors in our market include security, reliability and functionality; customer service and technical expertise; reputation and brand recognition; financial strength; breadth of products and services offered; price; and scalability.
Primary factors influencing competition in our market include security, reliability, and functionality; customer service and technical expertise; reputation and brand recognition; financial strength; the breadth of products and services offered; price; and scalability.
Our directors, a former director and executive officers beneficially own a substantial majority of our outstanding capital stock and will have the ability to control our affairs. Our current directors and executive officers, and a former director beneficially own approximately 51.90% of our outstanding capital stock.
Our directors, a former director and executive officers beneficially own a substantial majority of our outstanding capital stock and will have the ability to control our affairs. Our current directors and executive officers, and a former director beneficially own approximately 31.55% of our outstanding capital stock.
We operate in an industry that is experiencing a shortage of qualified compliance and cybersecurity professionals. If we are unable to recruit and retain key management and technical and sales personnel, our business would be negatively affected. To execute our growth strategy, we must continue to attract and retain highly skilled compliance and cybersecurity experts.
We operate in an industry that is experiencing a shortage of qualified compliance and cybersecurity professionals. If we are unable to recruit and retain key management and technical and sales personnel, our business would be negatively affected. To execute our growth strategy, attracting and retaining highly skilled compliance and cybersecurity experts remains critical.
Our stock price may experience substantial volatility as a result of a number of factors, including, among others: ● sales or potential sales of substantial amounts of our common stock; ● announcements about us or about our competitors or new product introductions; ● the loss or unanticipated underperformance of our global distribution channels; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● conditions in the cybersecurity and IT services industries; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; ● changes in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; ● foreign currency values and fluctuations; and ● overall political and economic conditions.
The market price of our common stock may experience significant volatility due to a variety of factors, including, but not limited to: ● sales or potential sales of substantial amounts of our common stock; ● announcements about us or about our competitors or new product introductions; ● the loss or unanticipated underperformance of our global distribution channels; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● conditions in the cybersecurity and IT services industries; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; ● changes in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; ● foreign currency values and fluctuations; and ● overall political and economic conditions, including internation developments.
We have completed the acquisition of certain complementary businesses, and we intend to consider additional potential strategic transactions, which could involve acquisitions of businesses or assets, joint ventures, or investments in businesses or technologies that expand, complement, or otherwise relate to our business.
We have completed the acquisition and integration of several complementary businesses, and we intend to consider opportune additional potential strategic transactions that enhance stockholder value, which could involve acquisitions of businesses or assets, joint ventures, or investments in businesses or technologies that expand, complement, or otherwise relate to our business.
These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance. -22- Future sales of shares of our common stock by existing stockholders could depress the market price of our common stock. We had an aggregate of 11,949,959 issued and outstanding shares of common stock as of December 31, 2023.
These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance. -25- Future sales of shares of our common stock by existing stockholders could depress the market price of our common stock. We had an aggregate of 11,821,866 issued and outstanding shares of common stock as of December 31, 2024.
We rely on trade secrets to protect intellectual property, proprietary technology, and processes, which we have or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior technology.
We rely on trade secrets to protect our intellectual property, proprietary technology, and processes, which we have developed or may develop in the future. However, there can be no assurance that confidentiality obligations will always be honored or that others will not independently develop similar or superior technology.
Since shares of our common stock were sold in our initial public offering (IPO) in January 2021 at a price of $75.00 (1) per share, the reported high and low sales prices of our common stock have ranged from $1.12 (1) to $138.15 (1) per share through March 31, 2024.
Since shares of our common stock were sold in our initial public offering (IPO) in January 2022 at a price of $75.00 per share, the reported high and low sales prices of our common stock ranged from $0.26 to $138.15 per share through March 24, 2025.
We depend on independent contractors to provide certain services for which we do not have the expertise internally. Any compromise in the service quality may delay our business processes and cause economic los s. We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors, and consultants to provide certain services.
Any compromise in the service quality may delay our business processes and cause economic loss. We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors, and consultants to provide certain services.
In the event that we again become non-compliant with Rule 5550(a)(2) and cannot re-establish compliance within the required timeframe, our common stock could be delisted from Nasdaq, which could have a material adverse effect on our financial condition and which would cause the value of our common stock to decline.
We filed a definitive proxy statement on March 5, 2025 for an annual meeting to be held on April 25, 2025 to regain compliance with the applicable Nasdaq Listing Rules. -27- In the event that we again become non-compliant with Rule 5550(a)(2) and cannot re-establish compliance within the required timeframe, our common stock could be delisted from Nasdaq, which could have a material adverse effect on our financial condition, and which would cause the value of our common stock to decline.
If we fail to meet these contractual commitments, we could be obligated to provide partial refunds or our customers could be entitled to terminate their contracts and our business would suffer. Certain of our customer agreements contain service level commitments, which contain specifications regarding the availability of our solutions and our support services.
If we fail to meet these contractual commitments, we could be obligated to provide partial refunds, or our customers could be entitled to terminate their contracts and our business would suffer. ● We provide service level commitments under some of our customer contracts.
Treasury Department’s Office of Foreign Assets Control (OFAC), list of Specially Designated Nationals and Blocked Persons or who are otherwise subject to U.S. sanctions, we cannot assure you that all of our customers will comply with our warranty terms or refrain from taking actions, in violation of our warranty and applicable law.
Treasury Department’s Office of Foreign Assets Control (OFAC), list of Specially Designated Nationals and Blocked Persons or who are otherwise subject to U.S. sanctions, we cannot assure you that all of our customers will comply with our warranty terms or refrain from taking actions, in violation of our warranty and applicable law. -19- Our future results may be affected by various legal and regulatory proceedings and legal compliance risks, including those involving intellectual property, governmental regulations, the U.S.
If our stock price is volatile, we may become the target of securities litigation, which could result in substantial costs and a diversion of management’s attention and resources. (1) Share price adjusted to reflect a 1-for-15 reverse stock split that occurred on March 8, 2024. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If our stock price is volatile, we may become the target of securities litigation, which could result in substantial costs and a diversion of management’s attention and resources. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services. Our ability to grow is limited if we fail to identify and consummate acquisitions.
Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services.
We may also be subject to claims by other parties regarding the use of intellectual property, technology information, and data, which may be deemed proprietary to others. -20- Increasingly complex cybersecurity regulations and standards may have significant impact on our business, and it may require us to substantially invest in our development capabilities to meet compliance requirements and may negatively impact our ability to offer certain services and remain profitable.
We may also face claims from other parties alleging infringement on their intellectual property or technology, which could adversely affect our business. -23- Increasingly complex cybersecurity regulations and standards may have significant impact on our business, and it may require us to substantially invest in our development capabilities to meet compliance requirements and may negatively impact our ability to offer certain services and remain profitable.
Our plan regarding these matters is to strengthen our revenue and continue improving operational efficiencies across the business. There can be no assurances that we will be successful in increasing revenue, improving operational efficiencies or that financing will be available or, if available, that such financing will be available under favorable terms.
There can be no assurances that we will be successful in increasing revenue, improving operational efficiencies or that financing will be available or, if available, that such financing will be available under favorable terms.
Liabilities or claims arising from our services in excess of any indemnity or insurance coverage (or for which indemnity or insurance coverage is not available or is not obtained) could harm our financial condition, cash flows, and operating results.
The following risks are associated with our insurance coverage: ● Liabilities in Excess of Coverage: Liabilities or claims arising from our services in excess of available indemnity or insurance coverage could materially harm our financial condition, cash flows, and operating results.
This lack of long-term experience working together may adversely impact our senior management team’s ability to effectively manage our business and growth. We depend on key personnel who would be difficult to replace, and our business plans will likely be harmed if we lose their services or cannot hire additional qualified personnel.
As our leadership team continues to evolve, limited long-term experience working together may present challenges to operational cohesion. We depend on key personnel who would be difficult to replace, and our business plans will likely be harmed if we lose their services or cannot hire additional qualified personnel.
Unless we increase revenue and cash flow or raise additional capital, we may be unable to take advantage of any acquisition opportunities that arise or expand our business, all of which could adversely impact us. We are unable to predict if and when we will be able to generate significant positive cash flow or achieve profitability.
We incurred significant operating losses during the years ended December 31, 2024 and December 31, 2023, and we have limited cash flow. Unless we increase revenue and cash flow or raise additional capital, we may be unable to take advantage of any acquisition opportunities that arise or expand our business, all of which could adversely impact us.
If we fail to meet our service level obligations under these agreements, our reputation may suffer as a result. The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnification. We provide services in circumstances where insurance or indemnification may not be available to us.
The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnification. We provide services in circumstances where insurance or indemnification may not be available or may be insufficient to cover operational risks and other uncertainties that we face.
Any compromise in the service quality may delay our business processes and cause economic loss. ● We have recently acquired multiple businesses. Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services.
Any compromise in the service quality may delay our business processes and cause economic loss. ● We have recently acquired multiple businesses.
We may become subject to disputes, including litigation, that could negatively impact our business, profitability, and financial condition. We may become subject to disputes with third parties from time to time. Any such dispute could result in litigation between us and the other parties.
We may become subject to disputes, including litigation, that could negatively impact our business, profitability, and financial condition. We may become involved in disputes with third parties, which could result in litigation. Whether or not a dispute leads to litigation, significant resources—both management time and financial—may be required to resolve the issue.
Any of these factors could have a material adverse effect on our reputation, financial condition, results of operations and stock price. Our operations in certain emerging markets expose us to political, economic and regulatory risks. Our growth strategy depends in part on our ability to expand our operations in emerging markets, including, among others, countries in South America, and Europe.
Any of these factors could have a material adverse effect on our reputation, financial condition, results of operations, and stock price. The risks associated with operating internationally are inherent and may increase as we expand into new markets. -20- Our operations in certain emerging markets expose us to political, economic, and regulatory risks.
Risks Related to Our Business and Industry We will need to raise capital in order to realize our business plan and growth strategy, the failure of which could adversely impact our operations.
Risks Related to Our Business and Industry We will need to raise capital to realize our business plan and growth strategy, the failure of which could adversely impact our operations. Our growth strategy focuses on expanding our client base and increasing consolidated revenue through strategic acquisitions and seamless integration of businesses offering complementary cybersecurity services.
Competition could result in, among other things, a substantial loss of customers, reduction in revenue, or increase in expenses, which could materially adversely affect our business, financial condition, results of operations, or prospects. Our success depends on our ability to protect our intellectual property and our proprietary technologies.
As a result, competition in our industry could lead to several adverse outcomes for our business, including a loss of customers, reduced revenue, increased expenses, or pressure on our margins. These factors could adversely affect our business, financial condition, operating results, and long-term growth prospects. Our success depends on our ability to protect our intellectual property and our proprietary technologies.
We must continue to maintain a minimum closing bid price over $1.00 per share pursuant to Nasdaq Listing Rule 5810(c)(3)(A).
We must continue to maintain a minimum closing bid price over $1.00 per share pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If our closing bid price falls below $1.00 per share for more than 30 consecutive trading days, we may again be deemed noncompliant with Nasdaq’s continued listing requirements.
Our success depends substantially on the efforts and abilities of our senior management and executive officers. We currently do not maintain key man insurance for any of our senior management or key personnel. The competition for qualified management and key personnel is intense.
At present, we do not maintain key man insurance for any members of our senior management or key personnel. The competition for qualified management and personnel, particularly those with specialized expertise in the cybersecurity industry, is intense.
Although we generally have limitation of liability provisions in our terms and conditions of sale, they may not fully or effectively protect us from claims as a result of federal, state or local laws or ordinances, or unfavorable judicial decisions in the United States or other countries.
While we generally have limitations of liability provisions in our contracts, they may not fully shield us from claims under federal, state, or local laws, or unfavorable judicial decisions.
Our future results may be affected by various legal and regulatory proceedings and legal compliance risks, including those involving intellectual property, governmental regulations, the U.S. Foreign Corrupt Practices Act, and other anti-bribery, anti-corruption, or other matters.
Foreign Corrupt Practices Act, and other anti-bribery, anti-corruption, or other matters. Our business is subject to various legal and regulatory proceedings, and we face compliance risks in multiple areas, including intellectual property, governmental regulations, and international anti-bribery and anti-corruption laws. These risks may adversely impact our business and financial results.
In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation. We have offered some of our customers a limited warranty, subject to certain conditions.
We maintain insurance to protect against certain claims associated with the use of our solutions, but our insurance coverage may not adequately cover the claims asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation.
If our closing bid price falls below $1.00 per share for more than 30 consecutive trading days, we may again be deemed noncompliant with Nasdaq’s continued listing requirements. -24- The liquidity of the shares of our common stock may be affected adversely by the reverse stock split undertaken to address such compliance failure, given the reduced number of shares that are outstanding following a reverse stock split.
The liquidity of the shares of our common stock may be affected adversely by the reverse stock split undertaken to address such compliance failure, given the reduced number of shares that are outstanding following a reverse stock split.
Our business, operating results, and financial condition would be adversely affected if we suffer performance issues or downtime that exceeds the service level commitments under our agreements with our customers. -16- Our business is subject to the risks of warranty claims from real or perceived defects in our solutions or their misused by our customers or third parties and provisions in certain agreements potentially expose us to substantial liability and other losses.
We may also face increased costs related to crediting or refunding customers or managing customer contract terminations. -18- Our business is subject to the risks of warranty claims from real or perceived defects in our solutions or their misused by our customers or third parties and provisions in certain agreements potentially expose us to substantial liability and other losses.
Failure of or disruption to our infrastructure or third-party hosting service providers could impact the performance of our solutions and the availability of services to customers.
The following outlines key risks associated with our service level commitments: ● Failure to Meet Service Level Commitments: Our infrastructure, or that of our third-party hosting service providers, could experience disruptions, impacting the performance and availability of our solutions.
In addition, any such resolution could involve our agreement with terms that restrict the operation of our business. If we incur additional debt, we will be subject to restrictive covenants and debt service obligations that could negatively impact our operations.
If we incur additional debt, we will be subject to restrictive covenants and debt service obligations that could negatively impact our operations. If we incur additional debt to fund operations or acquisitions, we will be subject to debt service obligations, including interest and principal payments.
The defense of such claims may be costly and time-consuming and could divert the attention of management. -19- We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs.
Furthermore, the associated reputational risks and management distraction could hinder our ability to maintain growth and profitability. -22- We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs.
We may be subject to various legal and regulatory proceedings, and are subject to certain legal compliance risks in the areas of intellectual property, governmental regulation, U.S. Foreign Corrupt Practices Act, and related anti-bribery and anti-corruption regulations.
Specifically: ● Legal and Compliance Risks: We may be involved in legal or regulatory proceedings related to intellectual property disputes, compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery, anti-corruption laws, and other regulatory matters. Due to the inherently unpredictable nature of litigation and regulatory actions, the outcomes of these proceedings may differ from our expectations.
Our current and potential competitors vary by size, service offerings, and geographic location. Competitors include technology companies, consulting companies, telecommunication companies, technology resellers, hardware and software companies, and others. Many of our competitors have entrenched relationships in particular industries or have gained a reputation for expertise in a specific sector of the cybersecurity market, including services, software, and hardware.
Many of these competitors have established relationships within specific industries or have developed a reputation for expertise in particular sectors of the cybersecurity market, including services, software, and hardware.
We have service level agreements with many of our managed services clients under which we guarantee specified levels of service availability. These arrangements require us to estimate the level of service we will provide.
If we fail to meet our service level obligations under our service level agreements, we may be subject to certain penalties and could lose clients. We have entered into service level agreements (“SLAs”) with many of our managed services clients, under which we guarantee specified levels of service availability.
If we fail to retain existing clients and attract new clients through acquisitions, we may never achieve profitability. ● Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results. ● Our future results may be affected by various legal and regulatory proceedings and legal compliance risks, including those involving intellectual property, governmental regulations, the U.S.
If we fail to meet these contractual commitments, we could be obligated to provide partial refunds, or our customers could be entitled to terminate their contracts and our business would suffer. ● Our future results may be affected by various legal and regulatory proceedings and legal compliance risks, including those involving intellectual property, governmental regulations, the U.S.
We may also incur difficulties in integrating new businesses with our current operations. Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results. Our operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing, and general economic trends.
Our business strategy may impose limitations on our ability to accurately forecast future revenue and operating results. Our operating results are subject to a variety of factors that could cause our financial performance to fluctuate significantly. These factors include, but are not limited to, fluctuations in client demand, competitive pricing pressures, debt servicing obligations, and general economic conditions.
Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our reputation, financial condition, results of operations and stock price. Failure to manage political, economic and regulatory risks in emerging markets could adversely affect our sales, financial condition, results of operations, cash flows and stock price.
Non-compliance with these laws could result in severe civil and criminal penalties, which could damage our reputation and adversely impact our financial condition, operating results, and stock price. ● Legal and Regulatory Risks: The legal and regulatory environments in emerging markets can be unpredictable and subject to rapid changes.
Our existing insurance coverages may not be sufficient or additional insurance may not be available to protect us against operational risks and other uncertainties that we face.
Our existing insurance coverages may not fully protect us against the risks associated with the delivery of our services, and additional insurance may not be available on favorable terms, or at all.
As a result, we may be unable to continue to grow in the event of future economic slowdowns. -18- Breaches of network or information technology security could have an adverse effect on our business. Cyber-attacks or other breaches of network or IT security may cause equipment failures or disrupt the systems and operations of us and our clients.
In the event of future economic slowdowns or disruptions, we may face challenges in sustaining growth or expanding our business in the manner anticipated. -21- Breaches of network or information technology security could have an adverse effect on our business.
As a result, a substantial portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods. Consequently, any increase or decrease in new sales or renewals in any one period will not be immediately reflected in our revenue for that period.
This model presents the following risks: ● Delayed Impact of Sales Fluctuations: Any increase or decrease in new sales or renewals in a given period will not be immediately reflected in our revenue for that period. Instead, the financial impact of these changes will be realized in future periods as the associated deferred revenue is recognized.
The protection of intellectual property and/or proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated.
The protection of intellectual property and proprietary technology through trade secret claims has become increasingly contentious, with more companies pursuing litigation to protect their rights or for competitive reasons, even when the claims may be unsubstantiated. The prosecution or defense of intellectual property claims can be costly and unpredictable, particularly given the evolving legal landscape.
A judgment creditor would have the right to foreclose on any of our assets resulting in a material adverse effect on our business, operating results, or financial condition.
The failure to close sales after investing significant resources in a lengthy sales process could have a material adverse effect on our business, operating results, and financial condition.
We also provide limited liability in the event of certain breaches of our master subscription agreement. Certain of these contractual provisions survive termination or expiration of the applicable agreement. To date, we have not incurred any material costs because of such obligations. However, as we continue to grow, indemnification claims against us for the obligations listed will increase.
We also offer unlimited liability for certain breaches of confidentiality and limited liability for breaches of our master subscription agreements. While we have not incurred any material costs due to such indemnification claims to date, as we continue to expand, the frequency and cost of indemnity claims may increase, leading to significant legal expenses, damages, or licensing fees.
The loss of services of one or more of our key employees, or the inability to hire, train, and retain key personnel, especially executive managers with cybersecurity industry knowledge, could delay the execution of new acquisitions and launch of new service programs, disrupt our business, and interfere with our ability to execute our business plan.
Our business is significantly dependent on the continued efforts and abilities of our senior management and executive officers. The loss of services of one or more of these key individuals, or our inability to attract, train, and retain key personnel, could materially disrupt our operations, delay strategic initiatives, and hinder our ability to execute our business plan.
If we fail to meet our service level obligations under these agreements, we may be subject to penalties, which could result in higher than expected costs, and we may lose clients, which could lead to decreased revenue and decreased gross and operating margins.
These arrangements require us to estimate and meet service delivery standards, including uptime and system performance, to ensure client satisfaction. The following risks are associated with these SLAs: ● Penalties and Cost Overruns: If we fail to meet our service level obligations, we may be subject to financial penalties, which could result in higher-than-expected costs.
Additionally, our solutions may be used by our customers and other third parties who obtain access to our solutions for purposes other than for which our solutions was intended. We maintain insurance to protect against certain claims associated with the use of our solutions, but our insurance coverage may not adequately cover the claims asserted against us.
We continue to monitor and manage these risks, but there can be no assurance that our efforts will prevent material adverse impacts on our business. Additionally, our solutions may be used by our customers and other third parties who obtain access to our solutions for purposes other than for which our solutions was intended.
We may also be unable to timely reduce our cost structure in line with a significant deterioration in sales or renewals that would adversely affect our business, operating results, and financial condition. We provide service level commitments under some of our customer contracts.
In the event of a significant downturn in sales or renewals, we may be unable to immediately reduce costs in line with revenue reductions, which could negatively affect our profitability and financial condition.
To date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, resulted in a material adverse effect on our business, operating results, or financial condition. Security threats to our own IT infrastructure may affect our clients indirectly.
Cybersecurity threats, including cyber-attacks or breaches of our network or IT security, could have a material adverse effect on our operations, financial condition, and reputation. The nature of our business exposes us to various risks related to network security breaches, which could disrupt both our own operations and the operations of our clients.
If our customers face decreased consumer demand, increased regulatory burdens or more limited access to international markets, we may face a decline in demand for our products and services, and our operating results could be adversely impacted.
If our customers face decreased consumer demand, higher operational costs, or increased regulatory burdens, they may choose to reduce or postpone their spending on our products and services.
Without adequate funding, a significant increase in revenue, and continued successful integration of our acquired targets, we may not be able to achieve profitability in the existing lines of business and attract further capital. As of March 31, 2024, we had available cash resources of approximately $1,575,856.
As of December 31, 2024, our business has not yet achieved profitability. To reach profitability and sustain long-term growth, we require adequate funding, significant revenue growth, and continued successful integration of our acquisitions. As of March 24, 2025, we maintained cash resources of approximately $250,000.
As a result, some of these competitors may be able to: ● adapt more rapidly to new or emerging technologies and changes in customer requirements; ● develop superior products or services, thereby gaining greater market acceptance and expanding their product and service offerings more efficiently or rapidly; ● bundle products and services that we may not offer or in a manner that provides our competitors with a price advantage; ● take advantage of acquisitions and other opportunities more readily; ● maintain a lower cost basis; ● adopt more aggressive pricing policies and devote greater resources to the promotion, marketing, and sales of their products and services; and ● devote greater resources to the research and development of their products and services.
They may be able to deploy more significant resources in research and development, marketing, and sales, which could allow them to adapt more rapidly to emerging technologies or shifts in customer demands. ● Market Positioning: Competitors may have entrenched relationships within specific industries or have gained extensive reputation and brand recognition, positioning them as leaders in the market. ● Pricing and Product Bundling: Some of our competitors may be able to offer more favorable pricing or bundle products and services in ways that provide them with a competitive price advantage.
Because our services are aimed at protecting clients from, and limiting the impact of, critical business interruptions and losses related to cyber-attacks, if our client’s experience losses related to cyber-attacks that result in lost profits or other indirect or consequential damages to our clients, our clients may expose us to lawsuits.
These legal proceedings could expose us to significant financial and reputational risks. ● Potential Lawsuits and Liability: Our services are designed to protect clients from cyber-attacks and other security breaches. However, if our clients experience losses from cyber-attacks, including lost profits or other indirect damages, they may seek to hold us liable through lawsuits.
Various factors or developments can lead us to change current estimates of liabilities and related insurance requirements where applicable, or make such estimates for matters previously not susceptible of reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments, or changes in applicable law.
Developments such as significant rulings, settlements, or changes in laws may lead us to revise our estimates of liabilities and insurance requirements.
Any claim, even if fully covered or insured, could negatively affect our reputation in the marketplace and make it more difficult for us to compete effectively.
If we are unable to obtain sufficient coverage for potential claims, the financial impact could be significant. ● Reputational Damage: Even if a claim is fully covered or insured, it could still harm our reputation in the marketplace.
If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our solutions, we may be contractually obligated to provide affected customers with credit, partial refunds or termination rights.
We provide service level commitments under some of our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide partial refunds, or our customers could be entitled to terminate their contracts and our business would suffer.
If we are unable to protect sensitive information, our clients or governmental authorities could question the adequacy of our threat mitigation and detection processes and procedures.
This presents a significant challenge in maintaining the integrity of our security systems. ● Legal and Regulatory Risks: If we fail to adequately protect sensitive information, we could face legal consequences, including lawsuits, regulatory penalties, or damage claims, particularly if our clients or relevant authorities question the effectiveness of our threat detection and mitigation measures.
Our revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our solutions, particularly with respect to large organizations and government entities. For example, in light of current macroeconomic conditions, we have observed a lengthening of the sales cycle for some prospective customers that we attribute to higher cost-consciousness around IT budgets.
These customers typically require a significant amount of time to evaluate, test, and qualify our solutions before committing to a purchase or expansion of the relationship. In light of current macroeconomic conditions, we have observed an increase in the length of the sales cycle, primarily driven by heightened cost-consciousness around IT budgets.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our executive leadership team, along with input from the above teams, are responsible for our overall enterprise risk management system and processes and regularly consider cybersecurity risks in the context of other material risks to the company. -26- As part of our cybersecurity risk management system, our incident management teams track and log security incidents across our company and our customers to remediate and resolve any such incidents.
Our executive leadership team, along with input from the above teams, are responsible for our overall enterprise risk management system and processes and regularly consider cybersecurity risks in the context of other material risks to the company. -29- As part of our cybersecurity risk management system, our incident management teams track and log security incidents across our company and our customers to remediate and resolve any such incidents.
Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including because of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with the Chief Information Security Officer.
Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with the Chief Information Security Officer. Our Chief Information Security Officer is accountable for our overall cybersecurity program in partnership with other business leaders. Our Chief Information Security Officer has extensive experience leading global technology and IT organizations.
Added
Team members and outside experts supporting our program have relevant education and information, including security for larger multi-national, publicly traded companies.
Added
Our Chief Information Security Officer has leading security certifications, including Certified Information Systems Security Professional (CISSP), memberships in professional associations in the International Information System Security Certification Consortium and Information Systems Security Association, an MBA in Management of Technology, and expertise in private, public and governmental entities.
Added
Our information security team remains abreast of the latest cybersecurity advancements, staying informed about potential threats and emerging risk management strategies. This continuous learning is vital for proactively preventing, detecting, mitigating, and remediating cybersecurity incidents.
Added
Our information security team is responsible for implementing and supervising processes for ongoing monitoring of our information systems, incorporating advanced security measures and regular system audits to pinpoint vulnerabilities.
Added
In the event of a cybersecurity incident, our information security team employs a well-defined incident response plan, comprising immediate actions to minimize impact and long-term strategies for remediation and prevention of future incidents.

Item 2. Properties

Properties — owned and leased real estate

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Although we have recently closed or consolidated certain of our facilities, in the future, we may need to add new facilities or expand our existing facilities to meet our evolving business needs.
Although we have recently closed or consolidated certain of our facilities, in the future, we may need to add new facilities or expand our existing facilities to meet our evolving business needs. ITEM 3. LEGAL PROCEEDINGS We are currently not a party to any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. -30- PART II
ITEM 2. PROPERTIES Our corporate headquarters is located in Scottsdale, Arizona where we currently lease approximately 3,300 square feet of office space. We own office space in Santiago, Chile, which is primarily used for our secured managed services and administration in Latin America.
ITEM 2. PROPERTIES Our corporate headquarters is in Scottsdale, Arizona where we currently lease approximately 3,300 square feet of office space. We lease one additional office, which we believe is not material to our operations. We believe our existing facilities are sufficient for our current needs.
Removed
We lease additional offices, none of which we believe to be material to our operations, located throughout the United States and Chile for our service delivery and administrative personnel. We believe our existing facilities are sufficient for our current needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Until January 13, 2022, our common stock was traded under OTC Market Group’s OTCQB.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Until January 13, 2022, our common stock was traded under OTC Market Group’s OTCQB. Since January 13, 2022, our common stock has been listed for trading on The Nasdaq Stock Market LLC under the symbol “CISO”.
Since January 13, 2022, our common stock has been listed for trading on The Nasdaq Stock Market LLC under the symbol “CISO” As of December 31, 2023, there were 765 holders of record of our common stock, and the last reported sale price of our common stock on The Nasdaq Stock Market LLC on April 2, 2024 was $1.28.
As of December 31, 2024, there were 755 holders of record of our common stock, and the last reported sale price of our common stock on The Nasdaq Stock Market LLC on March 24, 2025 was $0.4499.
The warrant is exercisable at any time on or after November 12, 2023, and expires on May 16, 2028. In November 2023, we issued 133,334 (2,000,000 on a pre-reverse split basis) shares of our common stock to LendSpark Corporation as additional consideration to enter into a loan agreement in which we received gross proceeds of $2,200,000. ITEM 6. [RESERVED]
Unregistered Sales of Equity Securities In March 2024, we issued 100,000 shares of our common stock to LendSpark Corporation as additional consideration to enter into a loan agreement in which we received gross proceeds for $2,200,000. In July 2024, we issued 100,000 shares of our common stock to Hudson Global Ventures, LLC as consideration for consulting services. ITEM 6. [RESERVED]
Removed
Unregistered Sales of Equity Securities In May 2023, we issued 200,000 shares (3,000,000 on a pre-reverse split basis) of our common stock to Trending Equities Corp. in exchange for providing marketing and investor relations services.
Removed
In May 2023, we issued a warrant to Titan Partners Group, LLC, the Placement Agent for our registered direct offering, to purchase 40,000 shares (600,000 on a pre-reverse split basis) of our common stock at a price of $3.75 per share ($0.25 on a pre-reverse split basis).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.
Fair value is determined primarily by using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.
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 consolidated financial statements and the related notes contained elsewhere in this Annual Report and is intended to provide information necessary to understand our audited consolidated financial statements for the year ended December 31, 2023 compared to the year ended December 31, 2022 and highlight certain other information which will enhance a reader’s understanding of our financial condition, changes in financial condition, and results of operations.
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 consolidated financial statements and the related notes contained elsewhere in this Annual Report and is intended to provide information necessary to understand our audited consolidated financial statements for the year ended December 31, 2024 compared to the year ended December 31, 2023 and highlight certain other information which will enhance a reader’s understanding of our financial condition, changes in financial condition, and results of operations.
In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the year ended December 31, 2023 compared to the year ended December 31, 2022. These historical consolidated financial statements may not be indicative of our future performance.
In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the year ended December 31, 2024 compared to the year ended December 31, 2023. These historical consolidated financial statements may not be indicative of our future performance.
Reimbursed Expenses We include reimbursed expenses in revenue and costs of revenue as we are primarily responsible for fulfilling the promise to provide the specified service, including the integration of the related services into a combined output to the client, which are inseparable from the integrated service.
Reimbursed Expenses We include reimbursed expenses in revenue and cost of revenue as we are primarily responsible for fulfilling the promise to provide the specified service, including the integration of the related services into a combined output to the client, which are inseparable from the integrated service.
However, due to losses incurred, substantial doubt about the Company’s ability to continue as a going concern exists. 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 of operations to grow revenues and decrease expenses.
However, due to losses incurred, substantial doubt about the Company’s ability to continue as a going concern exists. We are actively evaluating strategies to obtain the necessary additional funding for future operations. These strategies may include, obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring of operations to grow revenues and decrease expenses.
See Note 3 to our consolidated financial statements for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report for additional information regarding revenue recognition and deferred revenue.
See Note 3 to our consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report for additional information regarding revenue recognition and deferred revenue.
Recently Issued Accounting Pronouncements See Note 3 to our consolidated financial statements for the years ended December 31, 2023 and 2022 included elsewhere in this Annual Report. -32- Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with U.S.
Recently Issued Accounting Pronouncements See Note 3 to our consolidated financial statements for the years ended December 31, 2024 and 2023 included elsewhere in this Annual Report. -35- Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with U.S.
As of December 31, 2023, we had $291,351,048 of available funding from our S-3 Registration Statement from which we may issue our securities to fund current and future operations. Going Concern The accompanying 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.
As of December 31, 2024, we had $291,190,324 of available funding from our S-3 Registration Statement from which we may issue our securities to fund current and future operations. Going Concern The accompanying financial statements have been prepared on a going concern basis, which assumes the realization of assets and satisfaction of liabilities in the normal course of business.
These costs include such items as consumables, transportation and travel expenses, over which we have discretion in establishing prices. -34- Costs of Revenue Costs of revenue include (i) compensation and benefits for billable employees and consultants directly involved with delivering services offerings and engagements; (ii) consumables used for the services; and (iii) other expenses directly related to service contracts such as professional services, meals and travel expenses.
These costs include such items as consumables, transportation, and travel expenses, over which we have discretion in establishing prices. -37- Cost of Revenue Cost of revenue include the following: ● Compensation and benefits for billable employees and consultants directly involved in delivering service offerings and engagements; ● Consumables used in the provision of services; and ● Other expenses directly related to service contracts, such as professional services, meals, and travel expenses.
Net cash used in investing activities of $6,048,944 for the year ended December 31, 2022, was primarily due to cash paid as part of the acquisition of True Digital. -31- Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $6,193,046, which was primarily due to cash received from the sale of our common stock, and net proceeds from loans and convertible notes payable of $6,655,493 and $11,975,631, respectively, and offset by the payment of loans and convertible notes payable of $12,929,931.
Net cash provided by financing activities for the year ended December 31, 2023 was $6,193,046, which was primarily due to cash received from the sale of our common stock, and net proceeds from loans and convertible notes payable of $6,655,493 and $11,975,631, respectively, and offset by the payment of loans and convertible notes payable of $12,929,931.
Investing Activities Net cash used in investing activities of $160,158 for the year ended December 31, 2023, was primarily due to cash paid to purchase property and equipment.
Investing Activities Net cash used in investing activities of $83,095 for the year ended December 31, 2024, was primarily due to cash paid to purchase property and equipment.
However, we may be unable to access further equity or debt financing when needed. As such, there can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all.
However, we may be unable to access further equity or debt financing when needed. Consequently, there is no assurance that we will be able to obtain the necessary liquidity when needed or under acceptable terms, if at all.
For the year ended December 31, 2023, we had negative cash flows from operations of $5,920,112. Although our company is showing positive revenue and gross profit trends, we expect to incur further losses through the end of 2024.
For the year ended December 31, 2024, we had negative cash flows from operations of $3,841,706. Although our company is showing positive operating cash flows and gross profit trends, we expect to incur further losses through the end of 2025.
Liquidity The accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business. At December 31, 2023, we had an accumulated deficit of $158,018,687 and working capital deficit of $15,113,288.
Liquidity The accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business. At December 31, 2024, we had an accumulated deficit of $182,262,606 and working capital deficit of $21,474,576.
By optimizing the user experience and leveraging digital interfaces, we can expand our client base without adding strain to our services team.
By optimizing the user experience and leveraging digital interfaces, we can expand our client base without overburdening our service team.
This scalability will enable us to drive increased revenue and margins concurrently. -28- Financial Highlights Our operating results for the year ended December 31, 2023 included the following: ● Total revenue increased by $10.5 million to $57.1 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022. ● Total gross profit increased by $3.3 million to $6.0 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
This scalability will enable us to drive increased revenue and profit margins concurrently. -31- Financial Highlights Our operating results for the year ended December 31, 2024 included the following: ● Total revenue decreased by $3.2 million to $30.8 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023. ● Total gross profit increased by $1.9 million to $4.5 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Advertising and marketing expenses decreased by $330,097, or 41%, for the year ended December 31, 2023, as compared to December 31, 2022, due to utilizing internal resources for advertising and marketing activities.
Advertising and marketing expenses decreased by $449,231, or 100%, for the year ended December 31, 2024, as compared to December 31, 2023, due to utilizing internal resources for advertising and marketing activities.
The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
Our ability to continue as a going concern depends on successfully executing the plan outlined in our Growth Strategy and eventually achieving profitable operations. The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
Risk Factors.” Our Business We provide a comprehensive suite of cybersecurity consulting and related services that encompass all three critical pillars: compliance, cybersecurity, and organizational culture. Our services include managed security, compliance assessments, SOC support, vCISO services, incident response, digital forensics, technical assessments, and cybersecurity training.
Risk Factors.” Our Business We provide a comprehensive suite of cybersecurity consulting and related services built on four critical pillars: Proprietary Software Stack, Compliance, Cybersecurity, and Organizational Culture. Our services include managed security, compliance assessments, Security Operations Center (SOC) support, virtual Chief Information Security Officer (vCISO) services, incident response, digital forensics, technical assessments, and cybersecurity training.
Operating Expenses Professional fees increased by $1,627,584, or 79%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to an increase in accounting, legal and other professional fees incurred related to our periodic SEC filings and our efforts to raise additional capital, offset by a reduction in accounting and audit fees.
Operating Expenses Professional fees decreased by $1,871,615, or 58%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to a decrease in accounting, legal and other professional fees incurred related to our periodic SEC filings and our efforts to raise additional capital.
We’ve developed a unique offering called MCCP+ that delivers all three of these pillars through a dedicated team of subject matter experts. Unlike many cybersecurity firms focused on specific technologies or services, we remain technology-agnostic. Instead, we concentrate on building a world-class team of cybersecurity and compliance experts with diverse skillsets.
We have developed a unique offering called MCCP+, which integrates all four pillars through a dedicated team of subject matter experts. Unlike many cybersecurity firms focused on specific technologies or services, we remain technology-agnostic.
Net cash used in operating activities was $10,681,007 for the year ended December 31, 2022 and was primarily due to cash used to fund a net loss of $33,775,182, adjusted for non-cash expenses in the aggregate of $20,752,668 and additional cash increases from changes in the levels of operating assets and liabilities in the aggregate of $2,341,507, primarily as a result of an increase in accounts payable and other deferred revenue.
Net cash used in operating activities was $5,920,112 for the year ended December 31, 2023 and was primarily due to cash used to fund a net loss of $80,231,083, adjusted for non-cash expenses in the aggregate of $64,085,528 and additional cash increases from changes in the levels of operating assets and liabilities in the aggregate of $10,225,443, primarily as a result of an increase in accounts receivable, accounts payable and accrued expenses, and deferred revenue.
The increase in current liabilities is primarily due to the increase in accounts payable and accrued expenses of $7,640,990, offset by a decrease in loans and convertible notes payable of $4,567,367 Cash Flows Our cash flows for the year ended December 31, 2023, as compared to our cash flows for the year ended December 31, 2022, can be summarized as follows: Year Ended December 31, 2023 2022 Net cash used in operating activities $ (5,920,112 ) $ (10,681,007 ) Net cash used in investing activities (160,158 ) (6,048,944 ) Net cash provided by financing activities 6,193,046 15,777,909 Effect of exchange rates on cash and cash equivalents (883,497 ) 60,170 Decrease in cash $ (770,721 ) $ (891,872 ) Operating Activities Net cash used in operating activities was $5,920,112 for the year ended December 31, 2023 and was primarily due to cash used to fund a net loss of $80,231,083, adjusted for non-cash expenses in the aggregate of $64,085,528 and additional cash increases from changes in the levels of operating assets and liabilities in the aggregate of $10,225,443, primarily as a result of an increase in accounts receivable, accounts payable and accrued expenses, and deferred revenue.
Cash Flows Our cash flows for the year ended December 31, 2024, as compared to our cash flows for the year ended December 31, 2023, can be summarized as follows: Year Ended December 31, 2024 2023 Net cash used in operating activities $ (3,841,706 ) $ (5,920,112 ) Net cash used in investing activities (83,095 ) (160,158 ) Net cash provided by financing activities 3,914,162 6,193,046 Effect of exchange rates on cash and cash equivalents (59,214 ) (883,497 ) Decrease in cash $ (69,853 ) $ (770,721 ) Operating Activities Net cash used in operating activities was $3,841,706 for the year ended December 31, 2024 and was primarily due to cash used to fund a net loss of $24,243,919, adjusted for non-cash expenses in the aggregate of $17,013,753 and additional cash increases from changes in the levels of operating assets and liabilities in the aggregate of $3,388,460, primarily as a result of an increase in accounts receivable, accounts payable and accrued expenses, and deferred revenue.
Stock-based compensation decreased by $2,688,475, or 36%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to the timing of recognition of the reversal of expense for options forfeited by former employees, a decrease in the number of options granted in 2023, and a decline in the fair value of new options granted resulting from the decline in our share price.
Stock-based compensation decreased by $486,022, or 10%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to the timing of recognition of the reversal of expense for options forfeited by former employees, a decrease in the number of options granted in 2024 and certain option grants that had fully vested.
To date, we have funded operations primarily through the sale of equity in public offerings, private placements, loan proceeds, and revenue generated by our services.
To date, we have funded operations primarily through the sale of equity in public offerings, private placements, loan proceeds, and revenue generated by our services. During the year ended December 31, 2024, we received $154,947 from public and private offerings of our common stock and $3,759,215 in net proceeds from our loans and convertible notes payable.
Failure to maintain a similar market value may cause a future impairment of goodwill at the reporting unit. -33- Impairment of Long-lived Assets We will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually.
See Notes 3 and 7 to our financial statements for additional information regarding goodwill and indefinite-lived assets. -36- Impairment of Long-lived Assets We will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually.
Other Income (Expense) Interest expense, net increased by $2,200,495, or 323%, during the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to an increase in our debt assumed through acquisitions during 2022 and obtaining short-term loans to fund operating capital in 2023.
Other Income (Expense) Interest expense, net increased by $1,317,599, or 58%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to an increase in our debt assumed and the effective interest rate on such debt.
Expenses Cost of Revenue Security managed services cost of revenue increased by $8,240,082, or 53%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due primarily to having a full year of ownership of CUATROi and NLT Secure compared to only four months in 2022, which increased our revenues from hardware and software sales and their related costs.
Expenses Cost of Revenue Security managed services cost of revenue decreased by $654,975, or 7%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due primarily to lower hardware and software sales.
Net cash provided by financing activities for the year ended December 31, 2022 was $15,777,909, which was primarily due to cash received from the sale of our common stock, and net proceeds from loans and notes payable of $10,689,087 and $6,061,585, respectively, and offset by the payment of loans of $2,452,905.
Net cash used in investing activities of $160,158 for the year ended December 31, 2023, was primarily due to cash paid to purchase property and equipment. -34- Financing Activities Net cash provided by financing activities for the year ended December 31, 2024 was $3,914,162, which was primarily due to cash received from the sale of our common stock, net proceeds from loans and lines of credit, and convertible notes payable of $154,947, $8,919,412, and $2,065,000, respectively, and offset by the payment of loans and convertible notes payable, and lines of credit of $6,157,484 and $1,067,713, respectively.
Stock-based compensation expenses decreased by $2,172,520, or 22%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to the timing of recognition of the reversal of expense for options forfeited by former employees, a decrease in the number of options granted in 2023, and a decline in the fair value of new options granted resulting from the decline in our share price. -30- Impairment of goodwill increased by $45,194,717, or 100%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to the fair value of our reporting units falling below their carrying value in 2023, whereas in the carrying fair value of these reporting units exceeded their carrying value in 2022.
Stock-based compensation expenses decreased by $3,036,007, or 39%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to the timing of recognition of the reversal of expense for options forfeited by former employees, a decrease in the number of options granted in 2024 and certain option grants that had fully vested. -33- Impairment of goodwill decreased by $35,933,364, or 100%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to our analysis of our carrying amount of goodwill being impaired in 2023.
Professional services revenue increased by $1,350,635, or 24%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to having a full year of ownership of CUATROi and NLT Secure.
Professional services revenue decreased by $1,080,952, or 30%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to lower customer projects.
Professional services cost of revenue increased by $56,295, or 7%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to our increase in revenue from professional services from having a full year of ownership of CUATROi and NLT Secure compared to only four months in 2022.
Professional services cost of revenue decreased by $128,296, or 22%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to decreased use of consultants.
Cost of payroll increased by $1,577,025, or 8%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to headcount costs of CUATROi and NLT Secure having a full year of ownership compared to only four months in 2022.
Cost of payroll decreased by $3,968,854, or 25%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to headcount reduction.
Our significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, and the valuation allowance related to our deferred tax assets. Certain of our estimates, including the carrying amount of intangible assets and goodwill, could be affected by external conditions, including those unique to us and general economic conditions.
Our significant estimates include the allowance for credit losses, the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, the valuation of convertible notes, derivative liabilities, the estimated fair value of assets acquired, liabilities assumed and stock issued in business combinations, and assumptions used in the Black-Scholes-Merton pricing model, such as expected volatility, risk-free interest rate, share price, expected dividend rate, and the adequacy of insurance reserves, could be affected by external conditions, including those unique to us and general economic conditions.
We have developed innovative software-based IP powered by machine learning, AI, and dark web threat intelligence. These multilayered technologies aim to enhance cyber effectiveness and drive greater resiliency for enterprises. With a comprehensive portfolio of scalable IP solutions and an end-to-end team of experts, we are poised for organic growth.
We have developed a comprehensive suite of proprietary software solutions powered by machine learning, artificial intelligence (AI), and dark web threat intelligence. These multilayered technologies enhance our cybersecurity effectiveness, improve organizational resilience, and offer real-time insights to our clients, enabling them to stay ahead of evolving threats.
Working Capital Our working capital as of December 31, 2023, as compared to our working capital as of December 31, 2022, is summarized as follows: As of December 31, 2023 December 31, 2022 Current assets $ 10,957,814 $ 14,398,795 Current liabilities 26,071,102 23,213,039 Working capital (deficit)/surplus $ (15,113,288 ) $ (8,814,244 ) The decrease in current assets is primarily due to a decrease in cash and cash equivalents, accounts receivable and prepaid expenses and other current assets of $770,721, $2,176,570, and $524,379 respectively.
Working Capital Our working capital as of December 31, 2024, as compared to our working capital as of December 31, 2023, is summarized as follows: As of December 31, 2024 December 31, 2023 Current assets $ 3,481,071 $ 3,690,125 Current liabilities 24,955,647 13,094,693 Working capital (deficit)/surplus $ (21,474,576 ) $ (9,404,568 ) The decrease in current assets is primarily due to an increase in cash and cash equivalents and prepaid cost of revenues of $750,946 and $89,445, respectively, offset by decreases to accounts receivable and prepaid expenses and other current assets of $962,688 and $68,194 respectively.
Selling, general, and administrative expenses increased $3,638,092, or 16%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, due to the costs of CUATROi and NLT Secure having a full year of ownership compared to only four months in 2022.
Selling, general, and administrative expenses decreased $5,156,190, or 28%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to our analysis of our carrying amount of intangible assets being impaired for the year ended December 31, 2023, reductions in head count, and lower costs for insurance and lease expenses for the year ended December 31, 2024.
Removed
Our goal is to provide our clients with truly holistic solutions that address the chronic shortage of highly skilled cybersecurity professionals. Underpinning our services is a steadfast belief that establishing a strong culture of security is essential for organizational resilience. We work closely with our clients to cultivate this security-first mindset, helping them quantify the return on their cybersecurity investments.
Added
Our approach is centered around building a world-class team of cybersecurity and compliance experts with diverse skill sets, enabling us to provide truly holistic solutions that address the chronic shortage of highly skilled cybersecurity professionals. The Proprietary Software Stack is foundational to our approach.
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Results of Operations Comparison of the Year Ended December 31, 2023, to the Year Ended December 31, 2022 Our financial results for the year ended December 31, 2023 are summarized as follows in comparison to the year ended December 31, 2022: For the Year Ended December 31, 2023 December 31, 2022 Variance Revenue: Security managed services $ 50,078,925 $ 40,920,420 $ 9,158,505 Professional services 6,979,832 5,629,197 1,350,635 Total revenue 57,058,757 46,549,617 10,509,140 Cost of revenue: Security managed services 23,671,605 15,431,523 8,240,082 Professional services 900,582 844,287 56,295 Cost of payroll 21,613,207 20,036,182 1,577,025 Stock based compensation 4,823,829 7,512,304 (2,688,475 ) Total cost of revenue 51,009,223 43,824,296 7,184,927 Total gross profit 6,049,534 2,725,321 3,324,213 Operating expenses: Professional fees 3,695,187 2,067,603 1,627,584 Advertising and marketing 474,121 804,218 (330,097 ) Selling, general and administrative 26,744,543 23,106,451 3,638,092 Stock-based compensation 7,712,671 9,885,191 (2,172,520 ) Impairment of goodwill 45,194,717 - 45,194,717 Total operating expenses 83,821,239 35,863,463 47,957,776 Loss from operations (77,771,705 ) (33,138,142 ) (44,633,563 ) Other income (expense): Other income (expense) (13,640 ) 43,332 (56,972 ) Interest expense, net (2,881,416 ) (680,921 ) (2,200,495 ) Total other income (expense) (2,895,056 ) (637,589 ) (2,257,467 ) Loss before income taxes $ (80,666,761 ) $ (33,775,731 ) $ (46,891,030 ) -29- Revenue Security managed services revenue increased by $9,158,505, or 22%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to having a full year of ownership of CUATROi and NLT Secure, and new and existing customer revenue growth.
Added
We also emphasize Compliance, working with clients to ensure they meet industry regulations and standards. Compliance assessments, audits, and adherence to best practices are integrated into our services, helping organizations safeguard sensitive information and minimize risk. The Cybersecurity pillar includes advanced threat detection, incident response, and ongoing risk assessments to protect client systems, networks, and data from evolving cyber threats.
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During the year ended December 31, 2023, we received $6,655,493 from public and private offerings of our common stock, $11,975,631 in net proceeds from our loans and convertible notes payable, and $491,853 from the exercise of stock options.
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Our team applies cutting-edge tools and methodologies to proactively defend against potential breaches, minimizing downtime and mitigating damage. Finally, we focus on Organizational Culture, recognizing that a strong security-first mindset is essential for resilience.
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The ability for us to continue as a going concern is dependent upon our ability to successfully accomplish the plan described in the Growth Strategy paragraph and eventually attain profitable operations.
Added
By working with clients to cultivate a culture of security, we help them make security an integral part of their operations, improving both their overall security posture and return on cybersecurity investments. With a comprehensive portfolio of scalable intellectual property solutions, proprietary software stack, and an end-to-end team of experts, we are well-positioned for organic growth.
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Intangible Assets Intangible assets are comprised of trademarks, customer bases, non-compete agreements and intellectual property with original estimated useful lives with a range of 2 to 15 years. Once placed into service, we amortize the cost of the intangible assets over their estimated useful lives on a straight-line basis.
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Results of Operations Comparison of the Year Ended December 31, 2024, to the Year Ended December 31, 2023 Our financial results for the year ended December 31, 2024 are summarized as follows in comparison to the year ended December 31, 2023: For the Year Ended December 31, 2024 December 31, 2023 Variance Revenue: Security managed services $ 27,759,209 $ 30,309,510 $ (2,550,301 ) Professional services 2,550,677 3,631,629 (1,080,952 ) Cybersecurity software 440,809 - 440,809 Total revenue 30,750,695 33,941,139 (3,190,444 ) Cost of revenue: Security managed services 9,296,185 9,951,160 (654,975 ) Professional services 465,952 594,248 (128,296 ) Cybersecurity software 119,900 - 119,900 Cost of payroll 12,023,206 15,992,060 (3,968,854 ) Stock based compensation 4,337,807 4,823,829 (486,022 ) Total cost of revenue 26,243,050 31,361,297 (5,118,247 ) Total gross profit 4,507,645 2,579,842 1,927,803 Operating expenses: Professional fees 1,339,010 3,210,625 (1,871,615 ) Advertising and marketing - 449,231 (449,231 ) Selling, general and administrative 13,081,606 18,237,796 (5,156,190 ) Stock-based compensation 4,676,664 7,712,671 (3,036,007 ) Impairment of goodwill - 35,933,364 (35,933,364 ) Total operating expenses 19,097,280 65,543,687 (46,446,407 ) Loss from operations (14,589,635 ) (62,963,845 ) 48,374,210 Other income (expense): Other income (expense) (116,061 ) 245,920 (361,981 ) Loss on issuance of convertible notes (1,022,650 ) - (1,022,650 ) Change in fair value of derivative liability (593,083 ) - (593,083 ) Interest expense, net (3,584,172 ) (2,266,573 ) (1,317,599 ) Total other income (expense) (5,315,966 ) (2,020,653 ) (3,295,313 ) Loss before income taxes $ (19,905,601 ) $ (64,984,498 ) $ 45,078,897 -32- Revenue Security managed services revenue decreased by $2,550,301, or 8%, for the year ended December 31, 2024, as compared to the year ended December 31, 2024, primarily due to lower hardware and software sales.
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Goodwill Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Added
Cybersecurity software revenue increased by $440,809, or 100%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to our initial launch of our suite of internally developed cybersecurity software products.
Removed
Goodwill is tested for impairment at the reporting level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value.
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Cybersecurity software cost of revenue increased by $119,900, or 100%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to our initial launch of our suite of internally developed cybersecurity software products.
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The fair values of the reporting units are estimated using a market approach. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value.
Added
Loss on issuance of convertible notes increased by $1,022,650, or 100%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to our costs associated with issuing convertible notes exceeding the fair value of convertible notes.
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Volatility in Stock-Based Compensation We determine the expected stock price volatility based on the historical volatilities of our peer group, blended with our historical volatility, since there is not a sufficient trading history for our common stock. Industry peers consist of several public companies in the technology industry similar to us in size, stage of life cycle and financial leverage.
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Change in fair value of derivative liability increased by $593,083, or 100%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to an increase in the share price of our common stock to $3.47 per share on December 31, 2024, providing more value as of December 31, 2024 to the holders of the convertible note if they were converted at such time.
Removed
We intend to continue to consistently apply this process using the same or similar public companies and continue increasing the blended proportion of our historical volatility until a sufficient trading history of our common stock becomes available.
Added
The increase in current liabilities is primarily due to the increase in accounts payable and accrued expenses, loans payable, line of credit, derivative liability, and convertible notes payable of $2,037,617, $817,845, $1,957,938, $2,102,927, and $5,000,002, respectively.
Removed
If circumstances change such that the identified companies are no longer similar to us, we will revise our peer group to substitute more suitable companies in this calculation.
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Goodwill and Indefinite-Lived Intangible Assets Goodwill and indefinite-lived intangible assets are assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level.
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If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible assets is less than their carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred.
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We perform our impairment assessment based on a quantitative analysis performed for our reporting unit. We review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying amount of such assets may not be fully recoverable.
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Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset and its eventual disposition. Should an asset not be recoverable, an impairment loss is measured by comparing the fair value of the asset to its carrying value.
Added
If we determine the fair value of an asset is less than the carrying value, an impairment loss is recognized in operating income or loss in the consolidated statements of operations during the period incurred. We performed our annual impairment assessment for 2024 and concluded that no impairment of goodwill was indicated.
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As of December 31, 2024, we believe such assets are recoverable, however, there can be no assurance that these assets will not be impaired in future periods. Any future impairment charges could adversely impact our results of operations.
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Volatility in Stock-Based Compensation We determine the expected stock price volatility based on the historical volatility of our common stock.
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Change in fair value of derivative liability The automatic discounted share-settlement feature of our convertible notes issued in December 2024 is an embedded derivative requiring bifurcation accounting as (1) the feature was not clearly and closely related to the debt host and (2) the feature met the definition of a derivative under ASC 815 (Derivatives and Hedging).
Added
The bifurcated embedded features were initially recorded on the balance sheet at their fair value on the date of issuance. After the initial recognition, the fair value of the embedded derivative feature changed over time due to changes in our share price. The change in fair value has been included in our statement of operations.

Other CISO 10-K year-over-year comparisons