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What changed in CISO Global, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CISO Global, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+248 added−197 removedSource: 10-K (2026-03-30) vs 10-K (2025-03-31)

Top changes in CISO Global, Inc.'s 2025 10-K

248 paragraphs added · 197 removed · 149 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

49 edited+4 added−7 removed54 unchanged
Biggest changeCHECKLIGHT ® Endpoint Security Monitoring – A powerful, proactive security monitoring software that detects potential threats to networks and provides advance alerts so attacks can’t take hold. Relying on the same cybersecurity software engine used by several federal agencies, it identifies unauthorized processes associated with fraudulent phishing attacks, hacking, imposter scams, malware, ransomware, and viruses.
Biggest changeRelying on the same cybersecurity software engine used by several federal agencies, it identifies unauthorized processes associated with fraudulent phishing attacks, hacking, imposter scams, malware, ransomware, and viruses, and provides a financial warranty DISC Next Gen VPN – A token exchange-protected remote access solution that replaces traditional VPN connections with enhanced security and access verification.
Phase III: Scaling Through Product-Led Growth and Scalable Technology Solutions In Phase III, our primary focus will shift toward fueling organic growth through the commercialization and scaling of our proprietary intellectual property. We plan to accelerate growth through product-led strategies, optimizing the user experience and enabling hands-free purchasing via digital interfaces.
Phase III: Scaling Through Product-Led Growth and Scalable Technology Solutions In Phase III, in 2026, our primary focus will shift toward fueling organic growth through the commercialization and scaling of our proprietary intellectual property. We plan to accelerate growth through product-led strategies, optimizing the user experience and enabling hands-free purchasing via digital interfaces.
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 .
Secured Managed Services Our integrated Secured Managed Services 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.
We are steadfast in our commitment to fostering a healthy, safe, and supportive work environment. Our people are our greatest asset. By cultivating an environment where talent thrives, supported by competitive rewards, opportunities for growth, and a commitment to well-being, we ensure our continued leadership in cybersecurity and incident response.
We are steadfast in our commitment to fostering a healthy, safe, and supportive work environment. Our people are our greatest asset. By cultivating an environment where talent thrives, supported by competitive rewards, opportunities for growth, and a commitment to well-being, we help ensure our continued leadership in cybersecurity and incident response.
Our strategy is built upon strategic acquisitions, development of proprietary intellectual property (“IP”), and a focus on scalable growth. We aim to leverage our expertise and advanced technology offerings to drive both organic growth and market expansion, thereby creating value for our investors.
Our strategy is built upon strategic acquisitions, development of proprietary intellectual property, and a focus on scalable growth. We aim to leverage our expertise and advanced technology offerings to drive both organic growth and market expansion, thereby creating value for our investors.
This approach will allow us to expand our client base while reducing the demand on our services team, driving efficiency and scalability. As we expand our technology offerings, we anticipate increasing revenue and operating margins concurrently.
We believe this approach will allow us to expand our client base while reducing the demand on our services team, driving efficiency and scalability. As we expand our technology offerings, we anticipate increasing revenue and operating margins concurrently.
However, there can be no assurance that we will succeed in these efforts or that our intellectual property protections will be sufficient to prevent competitors from developing similar technologies or services that may diminish our market share or revenue potential. -11- Government Regulation We are not aware of any specific regulations that govern cybersecurity firms or the areas in which we operate.
However, there can be no assurance that we will succeed in these efforts or that our intellectual property protections will be sufficient to prevent competitors from developing similar technologies or services that may diminish our market share or revenue potential. -13- Government Regulation We are not aware of any specific regulations that govern cybersecurity firms or the areas in which we operate.
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.
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 437 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 ● 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.
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.
Our technology-agnostic stance allows us to work compatibly with almost 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.
The scalability of our intellectual property-driven solutions positions us to capture a larger share of the cybersecurity market while maintaining high levels of profitability. -8- Intellectual Property Suite and Future Growth At the heart of our strategy is the development of a comprehensive suite of proprietary software solutions, incorporating AI, neural networks, and the latest algorithms.
The scalability of our intellectual property-driven solutions positions us to capture a larger share of the cybersecurity market while maintaining high levels of profitability. -10- Intellectual Property Suite and Future Growth At the heart of our strategy is a comprehensive suite of proprietary software solutions, incorporating AI, neural networks, and the latest algorithms.
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.
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. We believe this fosters long-term client partnerships. -6- We aim to further differentiate ourselves through our staffing model: our employees are dedicated partners, not consultants, available under recurring monthly contracts.
The three regulations mandate that healthcare organizations, financial institutions, and federal agencies, respectively, should protect their systems and information. FISMA, which applies to every government agency, requires the development and implementation of mandatory policies, principles, standards, and guidelines on information security. However, the regulations do not address numerous computer related industries, such as Internet Service Providers and software companies.
These regulations mandate that healthcare organizations, financial institutions, federal contractors, and federal agencies, should protect their systems and information. FISMA, which applies to every government agency, requires the development and implementation of mandatory policies, principles, standards, and guidelines on information security. However, the regulations do not address numerous computer related industries, such as Internet Service Providers and software companies.
This knowledge directly informs and enhances our solutions, providing customers with proactive, resilient cybersecurity strategies. ● Comprehensive, Integrated Solutions: Our platform integrates a broad suite of SaaS offerings, enabling clients to seamlessly unify threat detection, incident response, and cybersecurity validation.
This knowledge directly informs and enhances our solutions, providing customers with proactive, resilient cybersecurity strategies. ● Comprehensive, Integrated Solutions : Our platform integrates a broad suite of SaaS offerings, helping enable clients to seamlessly unify threat detection, incident response, and cybersecurity validation.
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.
In addition to competitive salaries, our offerings include performance-based incentive plans, pensions, healthcare and insurance coverage, paid time off, and family leave. These benefits are tailored to meet regional requirements and employment classifications, ensuring flexibility and relevance.
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.
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, CompTIA, and ISC2, driving measurable improvements in cybersecurity posture and regulatory readiness.
By leveraging insights derived from high-profile incident response engagements, we continuously refine our services, delivering superior outcomes for customers. ● Strategic Acquisition Strategy: As a cybersecurity consolidator, we prioritize identifying and acquiring strategic targets that align with our commitment to service quality, technological innovation, and geographical expansion.
By leveraging insights derived from high-profile incident response engagements, we continuously refine our services, positioning us to deliver superior outcomes for customers. ● Strategic Acquisition Strategy : As a cybersecurity consolidator, we prioritize identifying and acquiring strategic targets that align with our commitment to service quality, technological innovation, and geographical expansion.
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.
Our offerings fall into three main categories: Security Managed Services, Professional Services, and Cybersecurity Software. -7- Security Managed Services Our Security Managed Services aims to deliver proactive, scalable, and resilient cybersecurity solutions tailored to meet evolving threat landscapes and regulatory requirements.
This streamlined approach reduces complexity and operational overhead compared to competitors that rely on disjointed point solutions. ● Ease of Deployment and Versatility: Our solutions are designed to integrate effortlessly into diverse IT environments, supporting hybrid, on-premises, and cloud architectures.
This streamlined approach helps reduce complexity and operational overhead compared to competitors that rely on disjointed point solutions. ● Ease of Deployment and Versatility : Our solutions are designed to integrate into diverse IT environments, supporting hybrid, on-premises, and cloud architectures.
Our continued investment in intellectual property and innovative technologies will be key drivers of value creation for our investors as we scale our business and expand our market presence.
Our continued investment in intellectual property and innovative technologies are key drivers of value creation for our investors as we scale our business and expand our market presence.
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”) .
Compliance Services We assist clients in implementing and maintaining appropriate security controls, prioritizing risk mitigation strategies, and help ensure continuous compliance with key industry frameworks and regulations, including the following: ● Cybersecurity Maturity Model Certification (“CMMC”); ● Federal Risk and Authorization Management Program; ● Federal Information Security Modernization Act (“FISMA”); ● Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); ● Health Information Trust Alliance; ● Import Export Code; ● International Organization for Standardization; and ● National Institute of Standards and Technology.
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.
We invested heavily in the development of software-first technologies, leveraging cutting-edge advancements such as machine learning (“ML”), AI, deep learning, neural networks, and proprietary DarkNet threat intelligence. These technologies are foundational to our offerings, providing differentiated solutions that drive effectiveness, resilience, and advanced threat mitigation for our clients.
We believe our competitive positioning is strengthened by several key differentiators, including: ● Frontline Intelligence and Expertise: Our extensive experience in investigating and remediating complex cyber incidents, often where other providers have failed, equips us with real-time threat intelligence and practical insights.
We believe our competitive positioning is strengthened by several key differentiators, including: ● Frontline Intelligence and Expertise : Our extensive experience in investigating and remediating complex cyber incidents, equips us with real-time threat intelligence and practical insights.
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.
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 strive to deliver unparalleled value to clients.
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.
Through these innovative software solutions, we aim to empower organizations to enhance their cybersecurity measures, protect critical assets, and maintain compliance in an ever-evolving threat landscape. -9- Growth Strategy We are executing a phased growth strategy designed to position our company as a leading provider of end-to-end cybersecurity solutions.
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.
Our experienced engineers and cybersecurity architects support clients with secure cloud migrations, infrastructure modernization, and tailored risk mitigation strategies — helping enable operational resilience and business continuity. -8- Professional Services Our Professional Services division helps deliver comprehensive cybersecurity solutions designed to mitigate risk, enhance resilience, and protect organizational value.
(2) At the time of the VCAB Merger, VCAB was subject to a bankruptcy proceeding and had minimal assets, no equity owners, and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and a holder of allowed administrative expenses (collectively the “Claim Holders”).
Due to the companies being under common control, we accounted for the acquisition as a reorganization. -12- (2) At the time of the VCAB Merger, VCAB was subject to a bankruptcy proceeding and had minimal assets, no equity owners, and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and a holder of allowed administrative expenses (collectively the “Claim Holders”).
Our growing network of partnerships enhances our ability to acquire new clients while fostering long-term relationships with existing ones. Intellectual Property Development and Innovation A key element of Phase II is the development of proprietary intellectual property that addresses the evolving cybersecurity challenges facing enterprises.
This ecosystem provides value-added training, support, and partner marketing content. Our growing network of partnerships enhances our ability to acquire new clients while fostering long-term relationships with existing ones. Intellectual Property Development and Innovation A key element of Phase II was the development of proprietary intellectual property that addresses the evolving cybersecurity challenges facing enterprises.
On October 2, 2019, we filed a registration statement on Form 10-12G with the Securities and Exchange Commission (“SEC”) to effect registration of our common stock, par value $0.00001 per share, under the Exchange Act. The registration statement became effective on December 1, 2019.
Our principal offices are located at 6900 East Camelback Road, Suite 900, Scottsdale, Arizona 85251. On October 2, 2019, we filed a registration statement on Form 10-12G with the Securities and Exchange Commission (“SEC”) to effect registration of our common stock, par value $0.00001 per share, under the Exchange Act. The registration statement became effective on December 1, 2019.
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.
This ecosystem is designed to foster cross-pollination of solutions, promote additional revenue opportunities and enhance recurring revenue. 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.
Our success is the direct result of the dedication and strength of our team and promotes equity, diversity, integrity, inclusion, reliability, and accountability. We believe that a combination of diverse team members and an inclusive culture contributes to our success.
Our success is the direct result of the dedication and strength of our team and promotes diversity, integrity, inclusion, reliability, and accountability. We believe that a combination of diverse team members and an inclusive culture contributes to our success. Each member is a valued part of our team bringing a diverse perspective to help grow business and achieve our goals.
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.
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 projected global damages from cybercrime will propel global spending on cybersecurity products and services to $1 trillion (USD) annually by 2031.
While there are a few federal cybersecurity regulations, they govern industries that we serve and exist to focus on specific industries. Three of the main cybersecurity regulations are HIPAA, the 1999 Gramm-Leach-Bliley Act, and the 2002 Homeland Security Act, which included the Federal Information Security Management Act (“FISMA”).
While there are a few federal cybersecurity regulations, they govern industries that we serve and exist to focus on specific industries. Three of the main cybersecurity regulations are HIPAA, the Cybersecurity Maturity Model Certification (CMMC) program, and the 2002 Homeland Security Act, which included FISMA.
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.
This strategy aims to drive scalable growth, strengthen recurring revenue streams, and position us as a leader in a market facing a critical cybersecurity talent shortage. Our integrated service model enhances our ability for revenue capture and operational efficiency, which has the ability to result in improved profitability and stronger client retention.
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.
Reflecting this urgency, global cybersecurity spending is forecasted to surpass $520 billion annually (USD) by 2026, up from $260 billion in 2021. 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 have persisted through 2025.
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.
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 help ensure enterprise security and compliance.
See Note 4 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. -10- Customers Our past acquisitions have resulted in expansion of our customer base and increased usage within existing customers.
See Note 4 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. While acquisitions have contributed to our growth in prior years, we did not complete any acquisitions during the years ended December 31, 2025 and 2024. Customers Our past acquisitions have resulted in expansion of our customer base and increased usage within existing customers.
The following table sets forth certain information regarding such acquisitions: Acquired Company, Location Type of Acquisition Date Services Provided by Acquired Company GenResults, LLC (“GenResults”) Arizona (1) Stock April 12, 2019 Cybersecurity services.
We have substantially expanded our business in recent years through a number of acquisitions that enhanced our product offerings. -11- The following table sets forth certain information regarding such acquisitions: Acquired Company, Location Type of Acquisition Date Services Provided by Acquired Company GenResults, LLC (“GenResults”) Arizona (1) Stock April 12, 2019 Cybersecurity services.
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.
Our tradition of serving employees, customers, and investors is at the core of our culture. 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. -14- Employees As of December 31, 2025, we had approximately 125 full-time-equivalent employees.
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.
Cybersecurity Market Analysis The cybersecurity market is highly fragmented, characterized by a diverse landscape of established industry leaders and emerging security product vendors. 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.
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.
Common stock underlying our outstanding warrants, convertible notes, and options have also been adjusted, and the conversion and exercise prices have also been adjusted.
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.
We remain steadfast in our commitment to innovation and operational excellence — empowering organizations to stay resilient and secure in an increasingly complex digital ecosystem. Cybersecurity Offerings We offer a comprehensive suite of cybersecurity services designed to safeguard our clients’ digital assets and ensure compliance with applicable industry standards and regulations.
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.
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. We have invested in enterprise solutions, executive leadership, and our proprietary software to integrate our acquisitions into a unified ecosystem.
This diverse expertise, coupled with leadership from seasoned industry executives, has enabled us to effectively address the complex and rapidly evolving cybersecurity needs of organizations across various sectors.
This diverse expertise, coupled with leadership from seasoned industry executives, has enabled us to address the complex and rapidly evolving cybersecurity needs of organizations across various sectors. Phase II: Expanding Service Offerings and Capitalizing on Cross-Selling Opportunities Phase II of our growth strategy focused on leveraging the synergies from our numerous historical acquisitions to expand service offerings to existing clients.
DISC Next Gen VPN – A token exchange-protected remote access solution that replaces traditional VPN connections with enhanced security and access verification. Skanda Breach Assessment Tool – A next-generation, analysis tool that applies AI-based automation and ML technologies, which looks beyond vulnerabilities identified by most other technology to deliver continuous security assessments.
Skanda Breach Assessment Tool – A next-generation, analysis tool that applies AI-based automation and ML technologies, which looks beyond vulnerabilities identified by most other technology to deliver continuous security assessments. Our Corporate and Acquisition History We were formed on March 5, 2019, as a Delaware corporation.
This centralized approach enhances the effectiveness of security teams by providing environment-wide cybersecurity visibility through a customizable dashboard, enabling better-informed decisions.
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. This centralized approach is designed to enhance the effectiveness of security teams by providing environment-wide cybersecurity visibility through a customizable dashboard, enabling better-informed decisions.
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.
Purpose-built for large enterprises, government entities, and high-value networks, CISO Edge is designed to defend against sophisticated cyber threats, including ransomware and AI-powered exploits CHECKLIGHT ® Security Monitoring CHECKLIGHT ® is a proactive security monitoring software that is designed to detect potential threats to endpoints and alerts users before attacks can take hold, thereby reducing the impact of breaches.
This presents a substantial revenue growth opportunity as we expand our service offerings across our client base. Additionally, we have been building and expanding a strong channel and partnership ecosystem. This ecosystem provides value-added training, support, and partner marketing content, establishing a reliable stream of new revenue.
Despite having only penetrated approximately 20% of our 437 clients for multiple services, we saw significant opportunities for cross-selling and upselling. This presented a substantial revenue growth opportunity as we expanded our service offerings across our client base. Additionally, we have been building and expanding a strong channel and partnership ecosystem.
Jemmett, our Chief Executive Officer and a director of our company. Due to the companies being under common control, we accounted for the acquisition as a reorganization.
Jemmett, our Chief Executive Officer and a director of our company.
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.
It identifies malicious software such as phishing attacks, malware, ransomware, and viruses. Since its inception, CHECKLIGHT ® has maintained a record of detecting all breaches, providing organizations with confidence in their endpoint security, and is backed by a financial warranty.
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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.
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CISO Edge CISO Edge is an artificial intelligence (“AI”)-driven cloud security solution that provides comprehensive protection across cloud-first, hybrid, and remote environments.
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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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CHECKLIGHT ® Security Monitoring – A powerful, proactive security monitoring software that detects potential threats to networks and provides advance alerts so attacks can’t take hold.
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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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For the year ended December 31, 2025, one customer represented approximately 10% of our total revenue as presented in the consolidated statements of operations and comprehensive loss. For the year ended December 31, 2024, there were no customers that represented 10% or more of our total revenue as presented in the consolidated statements of operations and comprehensive loss.
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Phase II: Expanding Service Offerings and Capitalizing on Cross-Selling Opportunities Phase II of our growth strategy focuses on leveraging the synergies from our numerous historical acquisitions to expand service offerings to existing clients. Despite having only penetrated approximately 20% of our 475 clients for multiple services, we see significant opportunities for cross-selling and upselling.
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As of December 31, 2025, the same customer that represented approximately 10% of total revenue accounted for approximately 17% of our accounts receivable balance. As of December 31, 2024, two customers represented approximately 13% and 11%, respectively, of our accounts receivable balance.
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Our Corporate and Acquisition History We were formed on March 5, 2019 as a Delaware corporation. Our principal offices are located at 6900 East Camelback Road, Suite 900, Scottsdale, Arizona 85251.
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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.
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Each member is a valued part of our team bringing a diverse perspective to help grow business and achieve our goals. Our tradition of serving employees, customers, and investors is at the core of our culture.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

56 edited+43 added−18 removed176 unchanged
Biggest changeRisks 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.
Biggest changeRiley is not guaranteed, and our broad discretion over the use of any proceeds we receive may not result in improved financial performance or stockholder value. ● The issuance and potential conversion of Series B Preferred Stock may adversely affect our common stockholders and the market price of our common stock, and our obligation to redeem shares of Series B Preferred Stock upon certain triggering events could materially harm our liquidity and financial condition. ● 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, a consultant, and an executive officer 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. ● 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.
Moreover, these transactions could involve: (a) substantial investment of funds or financings by issuance of debt or equity securities; (b) substantial investment with respect to technology transfers and operational integration; and (c) the acquisition or disposition of lines of businesses.
Moreover, these transactions could involve: (a) substantial investment of funds or financings by issuance of debt or equity securities; (b) substantial investment with respect to technology transfers and operational integration; or (c) the acquisition or disposition of lines of businesses.
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.
We may also face increased costs related to crediting or refunding customers or managing customer contract terminations. 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.
Our ability to achieve future growth will depend on the following factors: ● Attracting, integrating, developing, and retaining skilled personnel across all functions, with a particular focus on building a strong, high-performing salesforce and expanding our cybersecurity expertise. ● Executing efficient post-acquisition integration processes where applicable, while maintaining cost discipline and optimizing operational performance. ● Strengthening our operational, financial, and management systems to support scalability, ensure transparency, and improve overall business performance. -15- We anticipate that these growth initiatives will place increasing demands on our management team, including the need to balance day-to-day operational responsibilities with the strategic oversight required to guide expansion.
Our ability to achieve future growth will depend on the following factors: ● Attracting, integrating, developing, and retaining skilled personnel across all functions, with a particular focus on building a strong, high-performing salesforce and expanding our cybersecurity expertise. ● Executing efficient post-acquisition integration processes where applicable, while maintaining cost discipline and optimizing operational performance. ● Strengthening our operational, financial, and management systems to support scalability, ensure transparency, and improve overall business performance. -17- We anticipate that these growth initiatives will place increasing demands on our management team, including the need to balance day-to-day operational responsibilities with the strategic oversight required to guide expansion.
We may also be exposed to product liability claims, especially if our solutions are found to be defective or cause harm to customers. ● Indemnification and Legal Risks: We provide indemnification to customers, partners, and other third parties for losses arising from third-party intellectual property claims related to our solutions.
We may also be exposed to product liability claims, especially if our solutions are found to be defective or cause harm to customers. ● Indemnification and Legal Risks: We provide limited indemnification to customers, partners, and other third parties for losses arising from third-party intellectual property claims related to our solutions.
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.
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. -21- 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.
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.
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. -29- If we issue additional shares in the future, it will result in a dilution of our existing stockholders.
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.
We may also face claims from other parties alleging infringement on their intellectual property or technology, which could adversely affect our business. -26- 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.
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.
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. -31- Our share price may be volatile, and you may be unable to sell your shares.
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.
We incurred significant operating losses during the years ended December 31, 2025 and December 31, 2024, 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.
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.
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. -22- Our operations in certain emerging markets expose us to political, economic, and regulatory risks.
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.
The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2025 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.
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.
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. -27- 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.
Provisions of our amended and restated certificate of incorporation, our amended and restated by-laws, and Delaware law may have the effect of deterring unsolicited takeovers or delaying or preventing a change in control of our company or changes in our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices.
Provisions of our certificate of incorporation, our by-laws, and Delaware law may have the effect of deterring unsolicited takeovers or delaying or preventing a change in control of our company or changes in our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices.
Any compromise in the service quality may delay our business processes and cause economic loss. ● We have recently acquired multiple businesses.
Any compromise in the service quality may delay our business processes and cause economic loss. ● We have acquired multiple businesses.
We cannot guarantee that our efforts will result in sustainable revenue growth, improved profitability, or the achievement of long-term financial objectives. -17- Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense. Our sales cycles are often long and unpredictable, and our sales efforts require significant time, resources, and investment.
We cannot guarantee that our efforts will result in sustainable revenue growth, improved profitability, or the achievement of long-term financial objectives. -19- Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense. Our sales cycles are often long and unpredictable, and our sales efforts require significant time, resources, and investment.
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.
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 span one to three years.
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.
The auditor’s opinion on our audited consolidated financial statements for the year ended December 31, 2025, included in this annual report on Form 10-K, contain an explanatory paragraph relating to our ability to continue as a going concern.
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.
Furthermore, the associated reputational risks and management distraction could hinder our ability to maintain growth and profitability. -25- We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs.
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.
We also offer limited liability for certain breaches of confidentiality and limited liability for breaches of our master service 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.
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.
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. -18- We have acquired multiple businesses.
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.
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. ● We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results. ● The use of AI technology in our IT infrastructure could improve internal process but poses security and privacy risks. ● 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, 2025, included in this annual report on Form 10-K, contain an explanatory paragraph relating to our ability to continue as a going concern.
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.
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. -15- ● We incurred significant operating losses during the years ended December 31, 2025 and December 31, 2024, and we have limited cash flow.
To qualify, we needed to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and we were required to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
To qualify, we would need to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and would need to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
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.
We maintain insurance to protect against claims associated with our products and services, 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.
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.
Since shares of our common stock were sold in our initial public offering 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 20, 2026.
On March 29, 2023, we received a letter from the listing qualifications staff of Nasdaq providing notification that the bid price for our common stock had closed below $1.00 per share for the previous 30 consecutive business days and our common stock no longer met the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2).
On December 30, 2025, we received a letter from the listing qualifications staff of Nasdaq providing notification that the bid price of our common stock had closed below $1.00 per share for the previous 33 consecutive business days and our common stock no longer meets the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2).
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.
Approximately 29,099,985 shares were held 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.
We have offered some of our customers a limited warranty, subject to certain conditions.
We have offered our customers of CHECKLIGHT ® a limited financial warranty, subject to certain conditions.
Our growth strategy includes expanding operations in emerging markets, particularly in regions such as South America and Europe. While these markets present significant growth opportunities, they also introduce a variety of risks that could adversely affect our business and financial results.
Our growth strategy includes expanding operations in emerging markets. While these markets present significant growth opportunities, they also introduce a variety of risks that could adversely affect our business and financial results.
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.
Any compromise in the service quality may delay our business processes and cause economic loss. While we are not dependent on any one contractor, we currently rely, and for the foreseeable future will continue to rely, on certain independent organizations, advisors, and consultants to provide certain services.
Further, such issuance may result in a change of control of our company. 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.
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. We are an “emerging growth company,” as defined in the JOBS Act.
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 of December 31, 2025, 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 27, 2026, we maintained cash resources of approximately $1,013,225.
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.
Failure to meet these commitments could have a material adverse effect on our business. 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 accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had an initial period of 180 calendar days to regain compliance. To regain compliance, the closing bid price of our common stock had to be $1.00 per share or more for a minimum of 10 consecutive business days at any time before the expiration of the initial compliance period.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days or until June 29, 2026, to regain compliance. To regain compliance, the closing bid price of our common stock must be $1.00 per share or more for a minimum of 10 consecutive business days at any time before June 29, 2026.
Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services. ● Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results. ● Our sales cycles can be long and unpredictable, and our sale efforts require considerable time and expense. ● 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 provide service level commitments under some of our customer contracts.
Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services. ● Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results. ● Our sales cycles can be long and unpredictable, and our sale efforts require considerable time and expense. ● 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. ● Our dependence on a significant customer for a material portion of our revenue and accounts receivable exposes us to risks that could have a material adverse effect on our business, financial condition, and results of operations. ● We provide service level commitments under some of our customer contracts.
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.
These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance. -28- 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 44,671,637 issued and outstanding shares of common stock as of December 31, 2025.
Payment of cash dividends, if any, will depend, among other factors, on our earnings, capital requirements, and the general operating and financial condition, and will be subject to legal limitations on the payment of dividends out of paid-in capital.
We intend to retain any future earnings to the extent necessary to develop and expand our business. Payment of cash dividends, if any, will depend, among other factors, on our earnings, capital requirements, and the general operating and financial condition, and will be subject to legal limitations on the payment of dividends out of paid-in capital.
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.
Our directors, a former director, a consultant and an executive officer beneficially own a substantial majority of our outstanding capital stock and will have the ability to control our affairs. Our directors, a former director, a consultant, and an executive officer, beneficially own approximately 34.47% of our outstanding capital stock.
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.
The following risks are associated with the 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.
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.
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 include service level commitments, which specify the availability and performance of our solutions and support services.
A security breach, failure to protect sensitive information, or liability arising from a breach could have a material adverse effect on our business, operating results, financial condition, and prospects. We may incur significant legal, remediation, and security costs, and any reputational damage could undermine our business relationships and market position.
A security breach, failure to protect sensitive information, or liability arising from a breach could have a material adverse effect on our business, operating results, financial condition, and prospects.
As a result of these factors, our ability to manage and adjust our operations in response to changes in sales or renewals may be hindered, potentially leading to variability in our financial results from period to period. We may also face challenges in maintaining profitability if revenue trends do not align with our cost structure adjustments.
As a result of these factors, our ability to manage and adjust our operations in response to changes in sales or renewals may be hindered, potentially leading to variability in our financial results from period to period.
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.
Breaches of network or information technology security could have an adverse effect on our business. 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 issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current stockholders.
If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current stockholders. Further, such issuance may result in a change of control of our company.
(“FINRA”) has adopted rules that require that, in recommending an investment to a client, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information.
Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for certain customers.
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.
There can be no assurance that we will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with the other listing standards for the Nasdaq Capital Market. -30- In the event that we again become non-compliant with Rule 5550(a)(2) and cannot re-establish compliance within the required timeframe, or we otherwise cannot comply with the continued listing standards of Nasdaq, 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.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and cause us to take other corporate actions they desire. FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. The Financial Industry Regulatory Authority, Inc.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and cause us to take other corporate actions they desire. Our ability to access the full amount available under the purchase agreement with B.
Our amended and restated certificate of incorporation authorizes the issuance of up to 300,000,000 shares of our common stock and up to 50,000,000 shares of preferred stock. Our Board of Directors may choose to issue some or all of such shares to acquire one or more companies and to fund our overhead and general operating requirements.
Our Board of Directors may choose to issue some or all of such shares to acquire one or more companies and to fund our overhead and general operating requirements. The issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock.
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.
We have entered into service level agreements (“SLAs”) with many of our managed services clients, under which we guarantee specified levels of service availability. These arrangements require us to estimate and meet service delivery standards, including uptime and system performance, to ensure client satisfaction.
In addition, it may be difficult for us to raise additional capital if we are not listed on a national securities exchange. 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.
In addition, it may be difficult for us to raise additional capital if we are not listed on a national securities exchange. We do not intend to pay dividends on our common stock. We have never paid any cash dividends, and currently do not intend to pay any dividends on our common stock for the foreseeable future.
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock.
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.
We were unable to regain compliance with Rule 5550(a)(2) during the initial compliance period, but pursuant to Nasdaq rules we were eligible for an additional 180 calendar day compliance period.
If we do not regain compliance with Rule 5550(a)(2) by June 29, 2026, we may be eligible for an additional 180 calendar day compliance period.
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.
In the event of future economic slowdowns or disruptions, we may face challenges in sustaining growth or expanding our business in the manner anticipated. -23- We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results. AI presents new risks and challenges that may affect our business.
We are unable to predict if and when we will be able to generate significant positive cash flow or achieve profitability. Our plan regarding these matters is to strengthen our revenue and continue improving operational efficiencies across the business.
We cannot predict with certainty when, or whether, we will achieve sustained positive cash flow from operations or profitability. Our strategy to address these losses includes strengthening revenue and improving operational efficiencies across the business, but there can be no assurance these measures will be sufficient or successful.
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.
Our constrained liquidity position could also prevent us from pursuing strategic opportunities or retaining key personnel critical to executing our business plan. We will need to improve the size and capabilities of our organization, and we may experience difficulties in managing this growth.
Removed
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.
Added
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. -16- ● Provisions in our amended and restated certificate of incorporation, as amended (our ‘certificate of incorporation”), our second amended and restated by-laws (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. ● Our ability to access the full amount available under the purchase agreement with B.
Removed
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.
Added
We incurred losses from operations of $8,785,052 and $14,589,635 for the years ended December 31, 2025 and December 31, 2024, respectively, and net losses of $8,073,930 and $24,243,919 for those same periods.
Removed
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.
Added
As of December 31, 2025, we had cash and cash equivalents of $1,695,994, current assets of $3,264,224, and current liabilities of $7,738,489, resulting in a working capital deficit of $4,474,265. Our limited cash position and working capital deficit present meaningful constraints on our ability to fund operations, pursue strategic opportunities, or respond to unanticipated adverse business developments.
Removed
Certain of our customer agreements include service level commitments, which specify the availability and performance of our solutions and support services. Failure to meet these commitments could have a material adverse effect on our business.
Added
Our cash balance of $1,695,994 may be insufficient to fund operations for an extended period, particularly if revenue growth does not materialize as anticipated or if unexpected expenses arise. Any future financing may involve significant dilution to existing stockholders or impose restrictive covenants that limit our operational flexibility.
Removed
Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for certain customers.
Added
Our dependence on a significant customer for a material portion of our revenue and accounts receivable exposes us to risks that could have a material adverse effect on our business, financial condition, and results of operations.
Removed
We are an “emerging growth company,” as defined in the JOBS Act.
Added
For the year ended December 31, 2025, one customer accounted for approximately 10% of our total revenue as reflected in our consolidated statements of operations and comprehensive loss, and that same customer represented approximately 17% of our accounts receivable balance as of December 31, 2025.
Removed
Subsequently, on December 28, 2023, we received a letter from the listing qualifications staff of Nasdaq providing notification that the bid price for our common stock had closed below $0.10 per share for the previous 10 consecutive trading days and our common stock no longer met the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2).
Added
We may be unable to retain a significant customer if it determines to switch to a competitor offering lower prices or more favorable terms, elects to bring in-house the products or services we currently provide, or experiences a deterioration in its own financial condition or business operations that reduces its demand for our offerings.
Removed
Accordingly we were subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii), and as a result, Nasdaq determined to delist our securities. We were granted an appeal with Nasdaq’s Hearings Panel on March 28, 2024. On March 8, 2024, our 1-for-15 reverse split became effective, increasing the bid price for our common stock above $1.00 per share.
Added
A significant customer may also seek to renegotiate its contractual arrangements with us on terms less favorable to us, including seeking price reductions or extended payment terms, which could adversely affect our revenue and margins.
Removed
On March 22, 2024, we received notification from Nasdaq that we had regained compliance with the bid price requirements as set forth under Nasdaq Listing Rule 550(a)(2). As a result of regaining compliance, our appeal with Nasdaq’s Hearing Panel was cancelled.
Added
If a significant customer were acquired by, or merged with, another company, the acquiring entity may have existing vendor relationships that displace ours, further reducing or eliminating revenue from that customer.
Removed
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.
Added
A loss of or significant reduction in business from a significant customer would likely cause an immediate and material decline in our revenue and operating results, and we may be unable to replace that revenue in a timely manner or at all given the lead time typically required to onboard new customers of comparable size.
Removed
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.
Added
The concentration of accounts receivable from a single customer further increases our exposure to credit risk, as any failure by that customer to pay amounts owed to us could materially adversely affect our cash flow and liquidity.
Removed
In addition, reverse stock splits may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.
Added
We may also face challenges in maintaining profitability if revenue trends do not align with our cost structure adjustments. -20- We provide service level commitments under some of our customer contracts.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed13 unchanged
Biggest changeOur 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.
Biggest changeOur 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. -32- 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.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeAlthough 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
Biggest changeAlthough 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+23 added−1 removed2 unchanged
Biggest changeITEM 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”.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed for trading on The Nasdaq Stock Market LLC under the symbol “CISO”.
A significant number of shares of our common stock are held in either nominee name or street name brokerage accounts, and consequently, we are unable to determine the total number of beneficial owners of our common stock.
A significant number of shares of our common stock are held in either nominee name or street name brokerage accounts, and consequently, we are unable to determine the total number of beneficial owners of our common stock. As of March 20, 2025, there was one holder of our Series B Preferred Stock.
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.
As of March 20, 2025, there were 750 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 20, 2026 was $0.39.
Removed
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]
Added
Series A Preferred Stock On August 4, 2025, we filed with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences and Rights of Series A Preferred Stock of CISO Global, Inc. (the “Series A Certificate of Designations”).
Added
The Series A Certificate of Designations sets forth the rights, preferences, privileges, and restrictions of the shares of Series A Preferred Stock. On August 4, 2025, we entered into Exchange Agreements (each, an “Exchange Agreement,” and collectively, the “Exchange Agreements”) with each of Hensley & Company, d/b/a Hensley Beverage Company (“Hensley”), an entity affiliated with Andrew K.
Added
McCain, a director of our company, and JC Associates, Inc. (“J C Associates,” and collectively with Hensley, the “Holders”).
Added
Pursuant to the Exchange Agreements, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act and Rule 506(b) of Regulation D as promulgated by the SEC, the Holders exchanged certain outstanding convertible notes, as amended from time to time, with aggregate principal and accrued interest of approximately $9,297,894.54 for an aggregate of 9,297,894 newly authorized shares of Series A Preferred Stock.
Added
Upon the closing of the transactions contemplated by the Exchange Agreements, the Exchange Notes were cancelled, and the Holders relinquished all rights, powers, privileges, remedies, or interest under such securities.
Added
As a result of this transaction, for the year ended December 31, 2025, the Company recognized a gain on troubled debt restructuring of $5,296,103, which reflects the difference between the carrying value of the Exchange Notes and the estimated fair value of the Series A Preferred Stock issued.
Added
Shares of Series A Preferred Stock are convertible into shares of our common stock at any time by our Board of Directors in accordance with the Series A Certificate of Designations.
Added
Each share of Series A Preferred Stock convert into shares of common stock, without the payment of additional consideration by the Holder, into such whole number of fully paid and non-assessable shares of common stock, as is determined by (i) multiplying the number of shares of Series A Preferred Stock to be converted by the issuance price ($1.00), (ii) adding to the result all accrued and accumulated and unpaid dividends on such shares of Series A Preferred Stock to be converted, and then (iii) dividing the result by the liquidation value (100% of the issuance price).
Added
On November 6, 2025, we converted all 9,297,894 outstanding shares of Series A Preferred Stock, together with $222,815 in accrued and unpaid dividends to 9,520,709 shares of common stock.
Added
As a result, as of March 27, 2026, there were no shares of Series A Preferred Stock outstanding. -34- Series B Preferred Stock On September 25, 2025, we filed with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences and Rights of Series B Preferred Stock of CISO Global, Inc.
Added
(the “Series B Certificate of Designations”). The Series B Certificate of Designations sets forth the rights, preferences, privileges, and restrictions of the shares of Series B Preferred Stock. On September 24, 2025, we entered a purchase agreement with B. Riley, pursuant to which we will have the right to issue and sell to B. Riley, and B.
Added
Riley must purchase from us, up to $15.0 million of shares of our newly authorized Series B Preferred Stock. Such sales of Series B Preferred Stock by us to B.
Added
Riley, if any, will be subject to certain limitations and conditions set forth in the purchase agreement, and may occur from time to time, at our sole discretion, over the 18-month period commencing September 24, 2025 and terminating on the earliest of (i) March 24, 2027, (ii) the date on which B.
Added
Riley shall have made payment of the aggregate purchase price equal to $15.0 million. In no event may we issue or sell to B. Riley under the Purchase Agreement shares of our Series B Preferred Stock that are convertible into an aggregate number of shares of common stock exceeding a customary 9.99% beneficial ownership limitation.
Added
Shares of Series B Preferred Stock are convertible into shares of our common stock at any time by B. Riley in accordance with the Series B Certificate of Designations.
Added
The initial conversion price for the Series B Preferred Stock is determined by dividing the initial stated value of $1,000 per share (the “Stated Value”) by the applicable conversion price for the Series B Preferred Stock then being converted as of each conversion date (the “Conversion Price”).
Added
The Conversion Price equals (a) with respect to the first $500,000 of Stated Value of shares of Series B Preferred Stock being converted, the greater of (x) one hundred and five percent (105%) of the lowest volume weighted average price, as reported by Bloomberg Financial Markets, during the five (5) trading day period immediately preceding and ending on the trading day immediately preceding such conversion date and (y) the minimum conversion price (initially, $0.40), and (b) with respect to all additional shares of Series B Preferred Stock being converted thereafter, the greater of (x) ninety-five percent (95%) of the lowest volume weighted average price during the five (5) trading day period immediately preceding and ending on the trading day immediately preceding such conversion date and (y) the minimum conversion price.
Added
During the year ended December 31, 2025, the Company issued 2,396 shares of Series B Preferred Stock to B. Riley pursuant to the Purchase Agreement for cash proceeds of $1,774,935 (net of $525,065 of offering costs).
Added
As of December 31, 2025, 315 shares of Series B Preferred Stock had been converted into 624,794 shares of common stock, with 2,081 shares remaining outstanding. For the year ended December 31, 2025, the Company recognized $699,445 of accretion of the carrying value of Series B Preferred Stock to its redemption value with a corresponding decrease to additional paid-in capital.
Added
Additional Unregistered Sales of Equity Securities On March 17, 2025, we issued 100,000 shares of our common stock to TraDigital Marketing Group as compensation for investor relations services provided to our company. The shares were privately placed in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.
Added
On September 4, 2025, we issued 310,000 shares of our common stock to FMW Media Works LLC as compensation for marking services provided to our company. The shares were privately placed in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D.
Added
On September 19, 2025, we issued 72,927 shares of our common stock to the former equityholders of SB Cyber Technologies, LLC, as additional consideration pursuant to the Equity Purchase Agreement dated as of July 14, 2023.
Added
The shares were privately placed in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. -35- ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

39 edited+29 added−22 removed18 unchanged
Biggest changeResults 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.
Biggest changeResults of Operations Comparison of the Year Ended December 31, 2025, to the Year Ended December 31, 2024 Our financial results for the year ended December 31, 2025 are summarized as follows in comparison to the year ended December 31, 2024: For the Year Ended December 31, 2025 December 31, 2024 Variance Revenue: Security managed services $ 23,773,050 $ 27,759,209 $ (3,986,159 ) Professional services 2,240,719 2,550,677 (309,958 ) Cybersecurity software 592,229 440,809 151,420 Total revenue 26,605,998 30,750,695 (4,144,697 ) Cost of revenue: Security managed services 7,322,440 9,296,185 (1,973,745 ) Professional services 231,154 465,952 (234,798 ) Cybersecurity software 202,720 119,900 82,820 Cost of payroll 10,432,447 12,023,206 (1,590,759 ) Stock-based compensation 1,597,260 4,337,807 (2,740,547 ) Total cost of revenue 19,786,021 26,243,050 (6,457,029 ) Total gross profit 6,819,977 4,507,645 2,312,332 Operating expenses: Professional fees 1,650,621 1,339,010 311,611 Advertising and marketing 1,012,140 - 1,012,140 Selling, general and administrative 10,592,957 13,081,606 (2,488,649 ) Stock-based compensation 2,349,311 4,676,664 (2,327,353 ) Total operating expenses 15,605,029 19,097,280 (3,492,251 ) Loss from operations (8,785,052 ) (14,589,635 ) 5,804,583 Other income (expense): Gain on extinguishment of convertible notes, net 4,432,434 - 4,432,434 Loss on issuance of convertible notes - (1,022,650 ) 1,022,650 Change in fair value of derivative liability 5,467,610 (593,083 ) 6,060,693 Interest expense, net (9,200,794 ) (3,584,172 ) (5,616,622 ) Other income (expense) 11,872 (116,061 ) 127,933 Total other income (expense) 711,122 (5,315,966 ) 6,027,088 Loss before income taxes $ (8,073,930 ) $ (19,905,601 ) $ 11,831,671 -37- Revenue Security managed services revenue decreased by $3,986,159, or 14%, for the year ended December 31, 2025, as compared to the year ended December 31, 2025, primarily due to loss of several higher-revenue customers, partially offset by newly acquired customers.
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.
Recoverability is determined based on an estimate of undiscounted future cash flows resulting from the use of an asset group and its eventual disposition. Should an asset group not be recoverable, an impairment loss is measured by comparing the fair value of the asset group to its carrying value.
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.
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, 2025 compared to the year ended December 31, 2024 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, 2024 compared to the year ended December 31, 2023. 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, 2025 compared to the year ended December 31, 2024. These historical consolidated financial statements may not be indicative of our future performance.
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.
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 liability changed over time due to changes in the share price of our common stock. The change in fair value has been included in our statement of operations.
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).
The automatic discounted share-settlement feature of our convertible notes issued in December 2024 was 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 .
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.
If we determine the fair value of the reporting unit’s goodwill 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.
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.
Goodwill Goodwill is 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.
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.
Cybersecurity software cost of revenue increased by $82,820, or 69%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to the initial launch of our suite of internally developed cybersecurity software products.
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.
Cybersecurity software revenue increased by $151,420, or 34%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to the initial launch of our suite of internally developed cybersecurity software products.
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.
There can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all. As such, we may be unable to access further equity or debt financing when needed.
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.
The loss on issuance of convertible notes was $1,022,650 during the year ended December 31, 2024 due to our costs associated with issuing the convertible notes exceeding the fair value of such convertible notes.
The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred.
Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred.
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.
Professional services cost of revenue decreased by $234,798, or 50%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to decreased use of consultants.
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.
As of December 31, 2025, we believe such assets are recoverable, however, there can be no assurance that these assets will not be impaired in future periods.
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 revenue decreased by $309,958, or 12%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to fewer customer projects.
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.
Our credit terms to clients generally average thirty days, although in some cases payments are required in 15 days. See Note 3 to our consolidated financial statements for the years ended December 31, 2025 and 2024 included elsewhere in this Annual Report for additional information regarding revenue recognition and 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.
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 $17,100,898 and additional cash increases from changes in the levels of operating assets and liabilities in the aggregate of $3,301,315, primarily as a result of an increase in accounts receivable, accounts payable and accrued expenses, and deferred revenue.
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.
Cost of payroll decreased by $1,590,759, or 13%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to headcount reductions.
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.
Cash Flows Our cash flows for the year ended December 31, 2025, as compared to our cash flows for the year ended December 31, 2024, can be summarized as follows: Year Ended December 31, 2025 2024 Net cash used in operating activities $ (7,971,902 ) $ (3,841,706 ) Net cash used in investing activities (7,491 ) (83,095 ) Net cash provided by financing activities 8,682,798 3,914,162 Effect of exchange rates on cash and cash equivalents - (59,214 ) Increase (decrease) in cash $ 703,405 $ (69,853 ) Operating Activities Net cash used in operating activities was $7,971,902 for the year ended December 31, 2025 and was primarily due to cash used to fund a net loss of $8,073,930, adjusted for non-cash expenses in the aggregate of $5,070,143 and additional cash decreases from changes in the levels of operating assets and liabilities in the aggregate of $4,968,115, primarily as a result of a decrease in accounts payable, accrued expenses, and other current liabilities.
Stock-Based Compensation We measure and recognize compensation expense for equity-based awards based on the grant date fair values of the awards. For options with service or performance-based vesting conditions, the grant date fair value is estimated using the Black-Scholes option-pricing model, which requires management to make assumptions and apply judgment in determining the grant date fair value.
For options with service or performance-based vesting conditions, the grant date fair value is estimated using the Black-Scholes option-pricing model, which requires management to make assumptions and apply judgment in determining the grant date fair value. The most significant assumptions and judgments include estimating the expected option term, the expected stock price volatility and the risk-free interest rates.
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.
The accompanying consolidated financial statements do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary if we are unable to continue as a going concern.
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.
Any future impairment charges could adversely impact our results of operations. -41- Impairment of Long-lived Assets We review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying amount of an asset group may not be fully recoverable.
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.
If we determine the fair value of an asset group 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. Stock-based Compensation We measure and recognize compensation expense for equity-based awards based on the grant date fair values of the awards.
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.
Liquidity and Capital Resources The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
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.
Advertising and marketing expenses increased by $1,012,140, or 100%, for the year ended December 31, 2025, as compared to December 31, 2024, due to marketing efforts initiated in 2025.
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.
Working Capital Our working capital as of December 31, 2025, as compared to our working capital as of December 31, 2024, is summarized as follows: As of December 31, 2025 December 31, 2024 Current assets $ 3,264,224 $ 3,481,071 Current liabilities 7,738,489 24,955,647 Working capital deficit $ (4,474,265 ) $ (21,474,576 ) The decrease in current assets is primarily due to the $67,272 increase in prepaid expenses and other current assets being more than offset by decreases in accounts receivable and prepaid cost of revenue of $636,460 and $263,927, respectively.
Fair Value Measurement The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
Recently Issued Accounting Pronouncements See Note 3 to our consolidated financial statements for the years ended December 31, 2025 and 2024 included elsewhere in this Annual Report. -40- Critical Accounting Estimates Fair Value Measurements The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
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.
Net cash provided by financing activities for the year ended December 31, 2024 was $3,914,162, which was primarily due to $154,947 cash received from the sale of our common stock, cash received from borrowings on our loans, line of credit, and convertible notes payable (net of debt issuance costs) of $10,984,412, offset by $7,225,197 in repayment of our loans payable and line of credit.
Revenue Recognition Our agreements with clients are primarily service contracts that range in duration from a few months to three years.
As we continue to accumulate additional data related to our awards, we may refine our estimates, which could materially impact our future equity-based compensation expense. Revenue Recognition Our agreements with clients are primarily service contracts that range in duration from a few months to three years.
Business Combination We allocate the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill.
The embedded derivative liability and related convertible notes payable were extinguished during the year ended December 31, 2025. Business Combinations We allocate the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date.
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.
As a result, substantial doubt about our ability to continue as a going concern exists. The Company’s ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles. We are evaluating strategies to obtain the required additional funding for future operations.
We will continue to use judgment in evaluating the assumptions related to our equity-based awards on a prospective basis. As we continue to accumulate additional data related to our awards, we may refine our estimates, which could materially impact our future equity-based compensation expense.
The assumptions used in our option pricing model represent management’s best estimates. If factors change and different assumptions are used, our equity-based compensation expense could be materially different in the future. We record forfeitures when they occur We will continue to use judgment in evaluating the assumptions related to our equity-based awards on a prospective basis.
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.
This scalability will enable us to drive increased revenue and profit margins concurrently. -36- Financial Highlights Our operating results for the year ended December 31, 2025 included the following: ● Total current liabilities reduced by $17,217,158 to $7,738,489 as compared to December 31, 2024 of $24,955,647. ● Total gross profit increased to $6,819,977 for the year ended December 31, 2025 as compared to $4,507,645 for the year ended December 31, 2024. ● Reduced our loss from operations to $8,785,052 for the year ended December 31, 2025, as compared to $14,589,635 for the year ended December 31, 2024.
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.
Selling, general, and administrative expenses decreased $2,488,649, or 19%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to reductions in headcount during 2024 resulting in lower costs for compensation and leases in 2025.
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.
Expenses Cost of Revenue Security managed services cost of revenue decreased by $1,973,745, or 21%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to lower personnel related costs resulting from a reduction in headcount, as well as reduced costs related to the management of service vendors associated with our existing client base.
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.
The decrease also reflects the impact of forfeitures of options by terminated employees, which reduced recognized expense. Operating Expenses Professional fees increased by $311,611, or 23%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to an increase in legal and accounting fees.
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.
Accounts receivable and prepaid cost of revenue decreased due to collection efforts and lower revenue in 2025. Prepaid expenses increased due to increased prepaid marketing expenses. The decrease in current liabilities is primarily due to decreases in accounts payable, accrued expenses and other current liabilities, debt obligations, and the derivative liability of $5,359,450, $9,425,380, and $2,102,927, respectively.
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.
The change in fair value of derivative liability increased by $6,060,693 during the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Removed
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.
Added
Stock-based compensation decreased by $2,740,547, or 63%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to significantly lower grant date fair values on equity awards issued during the year, despite a higher number of grants.
Removed
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.
Added
Stock-based compensation expenses decreased by $2,327,353, or 50%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to significantly lower grant date fair values on equity awards issued during the year, despite a higher number of grants.
Removed
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.
Added
The decrease also reflects the impact of forfeitures of options by terminated employees, which reduced recognized expense. -38- Other Income (Expense) The gain on extinguishment of convertible notes was $4,432,434 for the year ended December 31, 2025 due to the conversion of certain convertible notes into shares of our common stock and Series A Preferred Stock during 2025.
Removed
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.
Added
This increase was primarily due to changes in significant valuation inputs—such as the market price of CISO common stock—used in estimating the fair value of the derivative liability following the issuance of the related convertible notes payable in December 2024 and January 2025, as well as the subsequent conversion of certain convertible notes into shares of our common stock in 2025.
Removed
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.
Added
The estimated fair value of the conversion feature of the derivative liability is based on Monte Carlo simulations, a valuation model.
Removed
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.
Added
Interest expense increased by $5,616,622 for the year ended December 31, 2025, as compared to the year December 31, 2024, primarily due to the accretion of convertible notes payable and the amortization of debt issuance costs associated with the issuance of certain convertible notes payable during December 2024 and January 2025.
Removed
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.
Added
During the year ended December 31, 2025, we paid down accounts payable, accrued expenses, other current liabilities and loans payable outstanding, certain convertible notes payable were converted into shares of our common stock and Series A Preferred Stock, and the derivative liability was derecognized as a result of the conversion of the notes payable.
Removed
On June 27, 2022, our Registration Statement on Form S-3 was declared effective, and we may offer and sell from time to time, in one or more series, any of our securities, for total gross proceeds up to $300,000,000.
Added
Investing Activities Net cash used in investing activities were $7,491 and $83,095 for the years ended December 31, 2025 and 2024, respectively, which were due to cash paid to purchase property and equipment. -39- Financing Activities Net cash provided by financing activities for the year ended December 31, 2025 was $8,682,798, which was primarily due to $2,816,075 cash received from the sale of our common stock, $1,774,935 cash received from the sale of our Series B Preferred Stock, $1,949,999 from the exercise of warrants, cash received from borrowings on our convertible loans payable and line of credit (net of debt issuance costs) of $23,072,983, offset by $20,934,296 in repayments of our loans payable and line of credit.
Removed
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.
Added
For the year ended December 31, 2025, we incurred a net loss of $8,073,930, reported cash used in operations of $7,971,902, and expect to incur further losses through the end of 2026. Further, we have a working capital deficit of $4,474,265 as of December 31, 2025.
Removed
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.
Added
These strategies may include obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring operations to grow revenues and decrease expenses. Series A Preferred Stock On August 4, 2025, we entered into Exchange Agreements with each of the Holders.
Removed
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods.
Added
Pursuant to the Exchange Agreements, the Holders exchange certain outstanding convertible notes payable with aggregate principal and accrued interest of approximately $9,297,894 (collectively, the “Exchange Notes”) for an aggregate of 9,297,894 newly authorized shares of Series A Preferred Stock.
Removed
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.
Added
Upon the closing of the transactions contemplated by the Exchange Agreements, the Exchange Notes were cancelled, and the Holders relinquished all rights, powers, privileges, remedies, or interest under such securities. On November 6, 2025, we converted all 9,297,894 outstanding shares of Series A Preferred Stock, together with $222,815 in accrued and unpaid dividends to 9,520,709 shares of common stock.
Removed
It is reasonably possible that these external factors could have an effect on our estimates and could cause actual results to differ from those estimates.
Added
Series B Preferred Stock On September 24, 2025, we entered into a Preferred Equity Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital I (“B. Riley”), an affiliate of B.Riley Securities, Inc. (“BRS”), pursuant to which we will have the right to issue and sell to B. Riley, and B.
Removed
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.
Added
Riley must purchase from us, up to $15.0 million of shares of our newly authorized Series B Convertible Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”). As of the issuance of these consolidated financial statements, B. Riley has purchased $2.3 million of the $15.0 million of shares of Series B Preferred Stock.
Removed
The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset.
Added
Such sales of Series B Preferred Stock by us to B.
Removed
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.
Added
Riley, if any, will be subject to certain limitations and conditions set forth in the Purchase Agreement, and may occur from time to time, at our sole discretion, over the 18-month period commencing September 24, 2025 and terminating on the earliest of (i) March 24, 2027, (ii) the date on which B.
Removed
The most significant assumptions and judgments include estimating the expected option term, the expected stock price volatility and the risk-free interest rates. The assumptions used in our option pricing model represent management’s best estimates. If factors change and different assumptions are used, our equity-based compensation expense could be materially different in the future.
Added
Riley shall have made payment of the aggregate purchase price equal to $15.0 million. In no event may we issue or sell to B. Riley under the Purchase Agreement shares of our Series B Preferred Stock that are convertible into an aggregate number of shares of common stock exceeding a customary 9.99% beneficial ownership limitation.
Removed
We record forfeitures when they occur, based on our lack of historical data available to estimate an appropriate forfeiture rate. Changes in our forfeiture rate can have a significant impact on our equity-based compensation expense since the cumulative effect of adjusting the forfeiture rate is recognized in the period in which the estimate is changed.
Added
July 2025 Prospectus On June 26, 2025, we filed a replacement shelf registration statement on Form S-3 (that was deemed effective on July 7, 2025) (“July 2025 Prospectus”) that contains two prospectuses: 1) a base prospectus that covers the potential offering, issuance, and sale from time to time of our common stock, preferred stock, warrants, debt securities, and units in one or more offerings with total proceeds of up to $100,000,000; and 2) a sales agreement prospectus covering the potential offering, issuance, and sale from time to time of shares of our common stock having aggregate gross sales proceeds of up to $10,380,600 pursuant to our At-the-Market (“ATM”) sales agreement, dated June 14, 2022, with BRS, Stifel, Nicolaus & Company, Incorporated and Boustead Securities, LLC.
Removed
Our credit terms to clients generally average thirty days, although in some cases payments are required in 15 days. We do not disclose the value of unsatisfied performance obligations for contracts with original expected duration of one year or less.
Added
In no event will we sell securities under this registration statement with a value exceeding more than one-third of our “public float” (the aggregate market value of our common stock and any other equity securities that we may issue in the future that are held by non-affiliates) in any 12-calendar month period so long as our public float remains below $75 million.
Removed
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.
Added
The ability for us to continue as a going concern is dependent upon our ability to successfully implement our strategies and eventually attain profitable operations.
Removed
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.

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