Core Insights - CISO Global has been designated as a Certified Third-Party Assessment Organization (C3PAO) under the Cybersecurity Maturity Model Certification (CMMC) program, enhancing its commitment to compliance and risk management services [1][2][3] Company Overview - CISO Global, headquartered in Scottsdale, Arizona, specializes in AI-powered cybersecurity software and compliance services, aiming to protect organizations from emerging cyber threats [4] - The company’s subsidiary, TalaTek, has held FedRAMP 3PAO status since 2014, providing independent assessments to help organizations comply with federal security standards [2] Strategic Importance - The C3PAO status enables CISO Global to assist defense contractors and suppliers in meeting the Department of Defense's stringent CMMC requirements, which are critical for safeguarding the Defense Industrial Base (DIB) and national security [2][3] - The company emphasizes its expertise in advisory services and continuous monitoring to help clients achieve and maintain compliance in a dynamic threat landscape [3] Service Offerings - CISO Global provides a comprehensive range of Governance, Risk, and Compliance (GRC) services, including CMMC assessments, FedRAMP advisory, continuous monitoring, and compliance strategy development [6]

Revenue Performance - Total revenue for Q3 2025 was $6,461,798, a decrease of $1,049,499 or 14% compared to Q3 2024 revenue of $7,511,297[116] - Security managed services revenue decreased by $1,129,609, or 16%, for Q3 2025 compared to Q3 2024, primarily due to lower annual contract values among newly acquired customers[118] - Cybersecurity software revenue increased by $36,968, or 34%, for Q3 2025 compared to Q3 2024, driven by an increase in subscriptions for Checklight cybersecurity software[119] - Professional services revenue increased by $43,142, or 10%, for Q3 2025 compared to Q3 2024, attributed to more customer projects[118] Profit and Loss - Total gross profit for the nine months ended September 30, 2025 was $5,025,756, an increase of $2,351,557 compared to $2,674,199 for the same period in 2024[128] - Loss from operations for the nine months ended September 30, 2025 was reduced to $6,673,139, compared to $12,657,510 for the same period in 2024, reflecting an improvement of $5,984,371[128] - For the nine months ended September 30, 2025, the company incurred a net loss of $5,857,097 and reported cash used in operations of $6,180,042, with an expectation of further losses through the end of 2025[141] Cash Flow and Financing - Net cash used in operating activities for the nine months ended September 30, 2025, was $6,180,042, compared to $3,582,726 for the same period in 2024[153] - Net cash provided by financing activities for the nine months ended September 30, 2025, was $6,299,182, primarily from the sale of Common Stock and the exercise of warrants[156] - The company has $100,000,000 available from its shelf registration statement on Form S-3 to fund current and future operations, subject to certain limitations due to its public float[145] Debt and Liabilities - Total current liabilities decreased by $16,585,255 to $8,370,392 compared to $24,955,647 as of December 31, 2024[117] - As of September 30, 2025, the carrying value of outstanding debt obligations was $2,053,884, with substantial maturities scheduled for the remainder of 2025 and 2026[148] - Cumulative dividends in arrears on the Series A Preferred Stock totaled $145,200 as of September 30, 2025, with no dividends declared during the period[142] Future Outlook - The company expects to incur further losses through the end of 2025 and has substantial doubt about its ability to continue as a going concern without raising additional capital[147] - The company’s current cash on hand is insufficient to satisfy its operating cash needs for the next 12 months from the filing of the Quarterly Report[150] Other Financial Metrics - Stock-based compensation expenses decreased by $735,631, or 69%, for Q3 2025 compared to Q3 2024, due to the forfeiture of options by terminated employees[122] - Interest expense decreased by $1,110,088 for Q3 2025 compared to Q3 2024, primarily due to the extinguishment of convertible notes payable[127] - The gain on extinguishment of convertible notes increased by $5,296,103 for Q3 2025, as a result of the conversion of certain convertible notes into shares of Series A Preferred Stock[126] - The company recognized a gain on troubled debt restructuring of $5,296,103 during the three and nine months ended September 30, 2025, reflecting the difference between the carrying value of the Exchange Notes and the estimated fair value of the Series A Preferred Stock issued[143] - As of September 30, 2025, the company had a working capital deficit of $5,376,502, a significant decrease from a deficit of $21,474,576 as of December 31, 2024[151]

Core Insights - CISO Global's CEO, David Jemmett, will present at the LD Micro Main Event XIX on October 19 and 21, 2025, in San Diego, CA [1][4] - The event will focus on unusual trading activities in small and microcap companies, with Jemmett sharing insights from CISO Global's research on its own stock [2][3] Group 1: Event Details - The LD Micro Main Event XIX will take place from October 19 to 21, 2025, at the Hotel del Coronado in San Diego, California [6] - The event will feature around 120 companies presenting in half-hour increments and will include one-on-one investor meetings [7] Group 2: Company Overview - CISO Global, Inc. is a leader in AI-powered cybersecurity software and compliance services, headquartered in Scottsdale, Arizona [8] - The company provides comprehensive solutions to protect organizations from cyber threats and ensure compliance with regulations [8]

Core Viewpoint - CISO Global is positioned to accelerate sales growth and pursue strategic opportunities following significant improvements to its balance sheet [1] Financial Restructuring - The company converted the last remaining investor debt into Preferred A shares, eliminating over $9 million in debt and converting it to equity held by two long-term supporters [2] - A financing agreement with B. Riley provides up to $15 million in potential growth capital through the sale of convertible Preferred B shares, with no associated warrants, allowing the company discretion on issuance based on growth opportunities [3] Management Insights - The CEO of CISO Global stated that the balance sheet is now strong, and the agreement with B. Riley reflects confidence in the business while minimizing shareholder dilution [4] - The COO highlighted a strong sales pipeline from business owners looking to reduce cybersecurity risks through innovative financial-backed models, emphasizing partnerships to align offerings with customer preferences [5] Business Focus - CISO Global aims to scale its cybersecurity software and services portfolio, actively marketing proprietary software solutions valued at over $50 million to a client base of over 600 services clients [4] - The company has established significant insurance partnerships to integrate its security offerings within financial assurance solutions [4]

Core Viewpoint - CISO Global has entered into a private financing arrangement with B. Riley Securities, allowing the company to sell up to $15 million of convertible preferred stock to fund its growth initiatives, particularly in the cybersecurity software sector [1][4]. Financing Arrangement - The convertible preferred stock has a stated value of $1,000 per share, sold at a 4% discount, with no preferred return or dividends [2]. - The financing facility has an 18-month term, allowing CISO to draw funds at its discretion, starting with an initial increment of $2.3 million and up to $500,000 weekly, contingent on certain conditions [2][3]. - CISO retains full control over the timing and amount of sales, with no obligation to utilize the full $15 million available [2][3]. Use of Proceeds - Proceeds from the financing will be used to fund expansion initiatives, specifically scaling the cybersecurity software business in the insurance channel through a strategic relationship with CAGI [2]. Conversion Terms - The preferred stock is convertible into common stock at a price of 105% of the lowest daily VWAP over the five trading days prior to conversion for the initial draw, and 95% for subsequent draws, with a floor price of $0.40 [3]. - There are beneficial ownership caps and blocker provisions to comply with NASDAQ Listing Rules [3]. Management Commentary - The CEO of CISO Global emphasized that this investment is a significant step forward for the company, enabling accelerated growth and execution of its strategic vision [4]. - The CFO noted that the facility strengthens the company's balance sheet and positions it for financial strength [5]. Legal and Compliance - B. Riley Securities acted as the Sole Placement Agent, and legal counsel was provided by Greenberg Traurig, LLP for CISO and Lowenstein Sandler LLP for B. Riley [5].

Core Insights - CISO Global reported a significant profit growth of approximately 108% in total gross profit for the first half of 2025 compared to the same period in 2024, with gross margin expanding by over 137% due to a stronger mix of high-margin software revenue and operational efficiencies [1][2] - The company successfully reduced total current liabilities by approximately 30% prior to a recent $9 million debt-for-preferred equity exchange, enhancing its balance sheet [2] - CISO Global anticipates at least $10 million in software bookings for 2025, supported by partnerships with Cyber Assurance Group and Financial Independent Group, alongside projected services revenue of $35 million [2] Financial Performance - The financial discipline implemented by CISO Global is yielding measurable results, with rising margins, narrowing losses, and new revenue streams emerging from partnerships and warranty-backed software [2] - The CEO emphasized that the company's strategy is effective, highlighting the combination of high-margin software, nationwide distribution, and a $1.5 million cyber warranty as key components in building a more profitable and resilient enterprise [3] Company Overview - CISO Global, headquartered in Scottsdale, Arizona, is a leader in AI-powered cybersecurity software and compliance services, providing comprehensive solutions to protect organizations from cyber threats and ensure compliance [3]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201%2E%20Financial%20Statements%20%28Unaudited%29) Unaudited Q2 2025 financials show decreased revenue and net loss, with reduced liabilities, but going concern doubt persists [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Assets slightly decreased to $25.8 million, liabilities significantly reduced to $18.2 million, improving equity to $7.6 million Condensed Consolidated Balance Sheet Highlights (in USD) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$25,789,188** | **$26,654,456** | | Cash and cash equivalents | $760,754 | $992,589 | | Goodwill | $19,900,550 | $19,900,550 | | **Total Liabilities** | **$18,236,545** | **$25,505,392** | | Total Current Liabilities | $17,802,580 | $24,955,647 | | Derivative liability | $0 | $2,102,927 | | **Total Stockholders' Equity** | **$7,552,643** | **$1,149,064** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Revenue decreased in Q2 2025, but significant cost reductions improved gross profit and reduced net loss for both the quarter and six-month period Three Months Ended June 30, (in USD) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $6,713,587 | $7,808,425 | | Total Gross Profit | $1,636,840 | $933,909 | | Loss from Operations | $(2,329,387) | $(4,241,607) | | Net Loss | $(3,009,921) | $(8,436,887) | | Net Loss per Share | $(0.09) | $(0.69) | Six Months Ended June 30, (in USD) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $13,875,909 | $15,833,839 | | Total Gross Profit | $3,418,442 | $1,640,131 | | Loss from Operations | $(4,039,132) | $(9,138,506) | | Net Loss | $(8,389,525) | $(15,046,075) | | Net Loss per Share | $(0.36) | $(1.24) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased to $5.3 million in H1 2025, partially offset by $5.1 million from financing, resulting in a net cash decrease Six Months Ended June 30, Cash Flow Summary (in USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,303,332) | $(2,679,622) | | Net cash used in investing activities | $0 | $(83,095) | | Net cash provided by financing activities | $5,071,497 | $3,068,338 | | **Net (decrease) increase in cash** | **$(231,835)** | **$246,407** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's cybersecurity business, ongoing going concern doubt, debt instruments, and a significant post-quarter debt-to-equity conversion - The company has **substantial doubt about its ability to continue as a going concern** due to recurring losses, cash used in operations, and a working capital deficit. Its continuation is highly dependent on raising additional capital[31](index=31&type=chunk) - In December 2024 and January 2025, the company issued convertible notes with an effective interest rate exceeding **100% per annum**. These notes were fully converted into common stock during the six months ended June 30, 2025, resulting in the derecognition of a related derivative liability[90](index=90&type=chunk)[94](index=94&type=chunk) - Subsequent to the quarter end, on August 4, 2025, the company exchanged approximately **$9.3 million** of outstanding convertible notes (principal and interest) for newly authorized Series A Preferred Stock, significantly altering its capital structure[100](index=100&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=ITEM%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased revenue but improved gross profit due to cost reductions, while liquidity remains a major concern with ongoing going concern doubt - For the first half of 2025, total gross profit more than doubled to **$3.4 million** from **$1.6 million** in H1 2024, despite a revenue decline. This was driven by significant cost-cutting measures[106](index=106&type=chunk)[116](index=116&type=chunk) - The company's working capital deficit improved to **$(14.5) million** from **$(21.5) million** at year-end 2024, mainly due to the reduction of debt and accounts payable[135](index=135&type=chunk) - The company is subject to "baby shelf" rules for its S-3 registration, limiting its ability to sell securities to no more than **one-third of its public float** (which is below **$75 million**) in any 12-month period, constraining its capital-raising ability[129](index=129&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2025 revenue fell 14%, but cost reductions led to a 75% increase in gross profit and a significantly smaller operating loss for the quarter and six-month period Revenue Comparison - Three Months Ended June 30 (in USD) | Revenue Stream | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Security managed services | $6,046,950 | $7,080,326 | -15% | | Professional services | $522,804 | $632,225 | -17% | | Cybersecurity software | $143,833 | $95,874 | +50% | | **Total Revenue** | **$6,713,587** | **$7,808,425** | **-14%** | - For Q2 2025, selling, general, and administrative (SG&A) expenses decreased by **27% YoY**, and stock-based compensation fell by **49%**, primarily due to headcount reductions made in 2024[114](index=114&type=chunk)[115](index=115&type=chunk) - For the six months ended June 30, 2025, interest expense increased dramatically to **$8.9 million** from **$1.4 million** in the prior year, mainly due to the accretion of convertible notes issued in late 2024 and early 2025[116](index=116&type=chunk)[127](index=127&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Significant liquidity challenges persist with a $14.5 million working capital deficit and going concern doubt, necessitating capital raises via its S-3 shelf registration - The company reported a net loss of **$8.4 million** and cash used in operations of **$5.3 million** for the first six months of 2025, highlighting the ongoing cash burn[128](index=128&type=chunk) - Financing activities provided **$5.1 million** in cash during H1 2025, primarily from stock sales (**$2.7 million**), warrant exercises (**$0.7 million**), and net borrowings, which were used to fund operations and repay other debt[141](index=141&type=chunk) - A significant portion of the company's debt as of June 30, 2025, was addressed post-quarter via an exchange agreement, converting approximately **$9.3 million** of convertible notes and accrued interest into Series A Preferred Stock[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=ITEM%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, CISO Global, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a **smaller reporting company**[143](index=143&type=chunk) [Controls and Procedures](index=37&type=section&id=ITEM%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were **effective at a reasonable assurance level**[146](index=146&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[147](index=147&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Legal Proceedings](index=38&type=section&id=ITEM%201%2E%20Legal%20Proceedings) The company reports that it is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any **material legal proceedings**[150](index=150&type=chunk) [Risk Factors](index=38&type=section&id=ITEM%201A%2E%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - The company states there have been **no material changes** from the risk factors disclosed in its 2024 Annual Report on Form 10-K[151](index=151&type=chunk) [Other Information](index=38&type=section&id=ITEM%205%2E%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading plans during Q2 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading plans during the quarter ended June 30, 2025[155](index=155&type=chunk)

Core Insights - CISO Global announced a significant financial restructuring involving the conversion of over $9 million in convertible debt into newly issued Preferred Shares by two strategic long-term investors [1][2] - The restructuring aims to enhance the company's financial profile and simplify its capital structure, eliminating all long-term debt except for a modest receivables line of credit [3][4] Financial Restructuring - The newly issued Preferred Shares carry a 10% coupon and hold seniority in the company's capital structure without the issuance of warrants [3] - The conversion of debt to equity reflects the confidence of the principal investors in CISO Global's strategic shift towards software-focused cybersecurity solutions, particularly in the insurance channel [2][4] Company Strategy and Market Position - CEO David Jemmett emphasized that the restructuring represents a strong vote of confidence in the company's strategic direction and future growth prospects [4] - CISO Global is positioned to expand its market-leading cybersecurity software solutions and enhance market penetration, driving sustainable growth [4][5]

Core Insights - CISO Global anticipates software-related bookings to reach $10 million in 2025, doubling previous estimates, following a nationwide rollout of its CHECKLIGHT software under the CyberSimple brand through a partnership with Financial Independence Group (FIG) [1][8] - The partnership with FIG allows CHECKLIGHT to tap into a $2 billion addressable market for warranty-backed cybersecurity, leveraging FIG's network of 10,000 financial advisors and a client base of approximately 1.5 million individuals [2][8] - CISO Global has successfully transitioned to a high-margin SaaS cybersecurity model, reflecting strong demand for warranty-backed protection that combines financial value with threat prevention [2][8] Company Overview - CISO Global, Inc. is a leader in AI-powered cybersecurity software and compliance services, headquartered in Scottsdale, Arizona, providing comprehensive solutions to protect organizations from cyber threats [4] - The company focuses on delivering managed cybersecurity and compliance solutions to meet the needs of demanding businesses and government organizations [4] Partner Overview - Financial Independence Group (FIG) is a prominent financial services company that offers wealth management solutions and business acceleration tools to financial advisors across the United States [5] - Cyber Assurance Group Incorporated (CAGI) specializes in cyber risk insurance, utilizing advanced technology to assess and mitigate cyber threats, providing comprehensive solutions [6]

Core Insights - The 2025 CISO Benchmark Report by RH-ISAC emphasizes the retail and hospitality sectors' increasing focus on proactive cybersecurity strategies [1][2] Industry Trends - Ransomware, third-party supply chain attacks, and phishing are identified as the top three threats facing the retail and hospitality sectors [2] - Business continuity and disaster recovery have become the top cybersecurity initiatives for 2025, indicating a shift towards proactive risk management [3] - Smaller organizations are improving their cyber maturity, narrowing the gap with larger companies [3] Financial Insights - Cybersecurity budgets are consistently increasing year-over-year, reflecting a growing commitment to security [3] - There is a reported 25% improvement in average NIST CSF maturity scores from 2024 to 2025, indicating stronger processes [5] - A 12% rise in CISOs reporting directly to senior business leadership suggests that cybersecurity is increasingly recognized as a critical business factor [5] - An 11% increase in spending on third-party security services has been noted, with penetration testing and security operations centers being the most commonly outsourced services [5] Staffing and Collaboration - Nearly 40% of organizations plan to expand their full-time cybersecurity staff, indicating growth in security staffing [5] - There is a growing emphasis on collaboration, collective intelligence, and early warning systems to enhance attack detection and prevention [5]