[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]

Core Viewpoint - CISO Global has renewed its S-3 shelf registration, reducing the total shelf from $300 million to $100 million, and significantly decreasing the At-The-Market (ATM) offering from $100 million to approximately $10 million, while reaffirming its commitment to transparency and compliance with Nasdaq requirements [1][2][3] Group 1: Shelf Registration and Compliance - The renewal of the S-3 shelf registration is a strategic move to maintain compliance with Nasdaq guidelines, following a previous period when CISO Global temporarily fell below required stockholders' equity levels [2] - The reduction in the shelf registration and ATM offering is aimed at significantly lowering associated filing fees and costs, aligning with the company's financial governance strategy [2][3] Group 2: Company Strategy and Financial Management - The company has no immediate plans to utilize the ATM facility, focusing instead on the strategic growth of its software and services business while responsibly managing financial resources [3] - CISO Global emphasizes that the shelf registration serves as a contingency measure, reflecting its commitment to strong financial governance and strategic planning [3] Group 3: Company Overview - CISO Global, headquartered in Scottsdale, Arizona, is recognized as a leader in AI-powered cybersecurity software and compliance services, providing comprehensive solutions to protect organizations from cyber threats [4] - The company aims to meet compliance obligations for demanding businesses and government organizations, ensuring robust cybersecurity measures are in place [4]

Core Insights - CISO Global has formed a strategic alliance with Financial Independence Group (FIG) and Cyber Assurance Group Incorporated (CAGI) to enhance the distribution of its cybersecurity product CHECKLIGHT through the CyberSimple solution, targeting a $2 billion market opportunity in the PEO and Financial Management sector [1][4]. Group 1: Company Overview - CISO Global is a leader in AI-powered cybersecurity software and compliance services, headquartered in Scottsdale, Arizona, focusing on protecting organizations from emerging cyber threats [5]. - Financial Independence Group (FIG) provides wealth management solutions and business acceleration tools, managing over 1.5 million clients across the United States [6]. - Cyber Assurance Group Incorporated (CAGI) specializes in cyber risk insurance, utilizing advanced technology to assess and mitigate cyber threats [7]. Group 2: Strategic Partnership Details - The integration of CyberSimple powered by CHECKLIGHT into FIG's proprietary advisor portal will include a $1.5 million warranty, enhancing the services offered to wealth advisors [2]. - The partnership aims to provide essential cyber protection for financial services firms and their retail clients, addressing the increasing threat of cyber attacks [3]. - CISO Global will support FIG with user-friendly instructional video tutorials to facilitate the installation and management of CHECKLIGHT [3].

Core Insights - CISO Global has launched specialized CHECKLIGHT packages aimed at Professional Employer Organizations (PEOs) and Financial Management companies, expanding access to advanced cybersecurity technology and financial protection coverage [1][4] - The total addressable market for CISO Global is estimated at $33 billion, with approximately 1.2 million potential clients from existing contracts and an additional 1 million families targeted [2] - The CHECKLIGHT packages offer $1.5 million in globally underwritten financial coverage, significantly enhancing cybersecurity protection for small businesses and individual families [3] Company Overview - CISO Global, headquartered in Scottsdale, Arizona, is a leader in AI-powered cybersecurity software and compliance services, focusing on protecting organizations from emerging cyber threats [5] - The company aims to democratize access to cybersecurity solutions, making them affordable for businesses of all sizes, particularly small businesses and families [4] Strategic Initiatives - The CHECKLIGHT initiative is designed to empower organizations and individuals with robust cybersecurity tools and financial peace of mind, ensuring seamless integration and enhanced security [4] - CISO Global's collaboration with Cyber Assurance Group Incorporated (CAGI) aims to address the cyber risk gap for the new market, providing tailored cyber insurance products [6][8]

Core Points - CISO Global Inc. has successfully completed its SOC 2 Type II examination, validating its data privacy practices and security controls [1][2] - This marks the third consecutive year that CISO Global has achieved this certification, reflecting its commitment to security and operational excellence [3] - The SOC 2 audit assesses organizations based on five Trust Service Criteria: security, availability, processing integrity, confidentiality, and privacy [3] - A-LIGN, the auditing firm, emphasizes the importance of this achievement as a signal of trust and security for customers [4] Company Overview - CISO Global, Inc. is an industry leader in AI-powered cybersecurity software, managed cybersecurity services, and compliance solutions [5] - The company is headquartered in Scottsdale, Arizona, and focuses on protecting organizations from emerging cyber threats while ensuring compliance with regulations [5] Auditing Firm Overview - A-LIGN is recognized as a leading provider of cybersecurity compliance programs, offering services such as SOC 2, ISO 27001, HITRUST, FedRAMP, and PCI [6] - A-LIGN is noted for its expertise in conducting efficient audits and providing high-quality final reports [4][6]

Core Insights - CISO Global Inc. has received formal notifications from NASDAQ confirming full compliance with all listing standards, highlighting the company's commitment to corporate governance and shareholder value [1][2] - The company reaffirmed its financial guidance, expecting approximately $35 million in cybersecurity services revenue and $5 million in software bookings for the current fiscal year, reflecting strong customer growth and demand for cybersecurity solutions [3][4] Company Overview - CISO Global is a premier cybersecurity firm focused on providing advanced cyber services and innovative software solutions to protect organizations from evolving cyber threats [5] - The company leverages deep industry expertise, advanced technology, and strategic partnerships to deliver comprehensive cybersecurity solutions tailored to client-specific needs [5] Leadership Statement - CEO David Jemmett expressed satisfaction with NASDAQ's confirmation, emphasizing the company's commitment to transparency and governance, as well as confidence in its market position and the demand for its cybersecurity software [4]

Core Insights - CISO Global Inc. has expanded the financial assurance component of its CHECKLIGHT product to cover up to $1 million per incident, with an annual cap of $1.5 million per customer contract, representing a 4x increase from the previous $250,000 warranty per incident [1][2] - The expansion significantly broadens CHECKLIGHT's addressable market to an estimated $11 billion, attracting larger organizations seeking enhanced financial protection integrated with their cybersecurity solutions [2][3] - The launch of CyberSimple, powered by CHECKLIGHT, aims to provide better value and accessible financial protection to SMB clients through a referral network that includes 17 insurance agencies [2][3] Company Overview - CISO Global, headquartered in Scottsdale, Arizona, is a leader in AI-powered cybersecurity software, managed cybersecurity, and compliance, offering comprehensive solutions to protect organizations from cyber threats [5] - CHECKLIGHT is part of CISO Global's next-generation software portfolio and is currently offered to over 600 security clients and through key insurance partners [4] Partnership and Product Offering - CISO Global has partnered with Cyber Assurance Group Incorporated to launch CyberSimple, which combines cybersecurity services with substantial financial protection [3][6] - The financial protection of $1 million per incident is designed to provide generous coverage without sublimits, making it a powerful warranty program for small and medium-sized businesses in the cyber market [3]