UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 001-41227 CERBERUS CYBER SENTINEL CORPORATION (Exact name of registrant as specified in its charter) | --- | --- | --- | | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.00001 par value CISO The Nasdaq Stock Market LLC FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 000-56059 | --- | --- | --- | |-------------------------------------------------------------------------------------|- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ | --- | --- | |-------------------------------------------------------------------------|-----------------------| | | | | Commission file number: 0 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2021 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ | --- | --- | |-----------------------------------------------------------------------------------------------|------------------------------- ...

Part I [Item 1. Business](index=6&type=section&id=ITEM%201.%20BUSINESS) Cerberus Cyber Sentinel provides technology-agnostic cybersecurity services, expanding through strategic acquisitions and offering managed and consulting solutions - The company's business model focuses on providing cybersecurity services and fostering a security culture, explicitly stating it does not sell cybersecurity products[26](index=26&type=chunk) - The growth strategy involves acquiring engineer-owned cybersecurity firms with revenues of **$2M-$15M** and profit margins of **15%-25%**, aiming to create synergies by centralizing administrative functions and cross-selling services[39](index=39&type=chunk)[40](index=40&type=chunk) - In 2020, the company completed three key acquisitions to expand its capabilities and geographic presence: **Techville, Inc. (May), Clear Skies Security, LLC (August), and Alpine Security, LLC (December)**[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - Service offerings are categorized into two main types: **Managed Services** (e.g., CISO-as-a-service and SOC services) and **Consulting Services** (e.g., compliance auditing, penetration testing, and risk assessments)[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) - As of December 31, 2020, the company had **61 employees** and utilized independent contractors for specialized projects[58](index=58&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from its acquisition-driven growth, capital needs, integration challenges, and high insider control - The company requires additional capital to execute its growth strategy, having incurred a net loss of **$3,413,262** for the year ended December 31, 2020, and an accumulated deficit of **$4,866,772**[62](index=62&type=chunk)[63](index=63&type=chunk) - The acquisition-based growth strategy presents risks such as difficulties in integrating new businesses, managing personnel, and potential failure to identify or consummate acquisitions[66](index=66&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) - The company operates in a highly competitive industry and faces a shortage of qualified cybersecurity engineers, which could impact its ability to attract and retain talent[72](index=72&type=chunk)[73](index=73&type=chunk) - A breach of the company's own IT infrastructure could severely harm its brand and reputation, leading to lawsuits and loss of customers[92](index=92&type=chunk)[93](index=93&type=chunk) - Directors and executive officers beneficially own over **70%** of the company's outstanding common stock, giving them effective control over company affairs[122](index=122&type=chunk) [Item 1B. Unresolved Staff Comments](index=20&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments, rendering this section not applicable - Not Applicable[130](index=130&type=chunk) [Item 2. Properties](index=20&type=section&id=ITEM%202.%20PROPERTIES) The company leases its Scottsdale, Arizona headquarters, with monthly costs of **$6,558** through 2021 and **$6,695** in 2022 - The company leases its principal office at **6900 E. Camelback Road, Suite 240, Scottsdale, Arizona 85251**[131](index=131&type=chunk) - The monthly lease cost is **$6,558** through December 31, 2021, and will increase to **$6,695** per month through December 31, 2022[131](index=131&type=chunk) [Item 3. Legal Proceedings](index=21&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not involved in any material pending legal proceedings that would adversely affect its business or operations - The company is not involved in any material pending legal proceedings[133](index=133&type=chunk) [Item 4. Mine Safety Disclosures](index=21&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable to the company's business operations - Not applicable[134](index=134&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=21&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock, quoted on OTC Markets under **CISO** since June 2020, has **700** record holders and no dividend policy - The company's common stock is quoted on the OTC Markets under the symbol **"CISO"** since June 26, 2020[136](index=136&type=chunk) - As of March 30, 2021, there were approximately **700** holders of record of the common stock[137](index=137&type=chunk) - The company has never paid dividends on its common stock and does not expect to pay any in the foreseeable future[138](index=138&type=chunk) [Item 6. Selected Financial Data](index=22&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) As a smaller reporting company, the registrant is not required to provide selected financial data - Not applicable[141](index=141&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Acquisitions significantly boosted 2020 revenue to **$7.2 million** but also widened the net loss to **$3.4 million** due to increased operating expenses [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Total revenue increased **280%** to **$7.24 million** in 2020 due to acquisitions, while net loss widened to **$3.41 million** from increased operating expenses Comparison of Financial Results (2020 vs. 2019) | Metric | 2020 | 2019 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$7,240,828** | **$1,907,930** | **+$5,332,898** | **+280%** | | Gross Profit | $2,875,262 | $971,758 | +$1,903,504 | +196% | | Operating Expenses | $6,282,124 | $2,314,273 | +$3,967,851 | +171% | | **Net Loss** | **($3,413,262)** | **($1,354,368)** | **($2,058,894)** | **+152%** | - The **$5.3M** revenue increase was driven by acquisitions, with TalaTek's revenue growing by **$2.5M**, and 2020 acquisitions contributing a combined **$2.0M**[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Operating expenses rose by **$4.0M**, primarily due to a **$1.1M** increase in stock-based compensation and a **$2.6M** increase in selling, general, and administrative expenses, which included higher payroll from new employees[170](index=170&type=chunk)[171](index=171&type=chunk) [Working Capital and Cash Flows](index=28&type=section&id=Working%20Capital%20and%20Cash%20Flows) Working capital surplus increased to **$2.5 million** in 2020, with cash rising by **$3.3 million** to **$5.2 million**, primarily from **$4.7 million** in financing activities Cash Flow Summary (2020 vs. 2019) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,702,080) | ($203,358) | | Net cash provided by investing activities | $285,297 | $169,790 | | Net cash provided by financing activities | $4,737,167 | $1,830,207 | | **Net increase in cash** | **$3,320,384** | **$1,796,639** | - Financing activities in 2020 were driven by **$3.0M** from a convertible note payable, **$1.1M** from the sale of common stock, and **$0.7M** from PPP loans[181](index=181&type=chunk) - Working capital surplus increased to **$2,482,414** at year-end 2020 from **$1,900,200** at year-end 2019[176](index=176&type=chunk) [Critical Accounting Policies](index=29&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant estimates for business combinations, goodwill impairment, stock-based compensation, and revenue recognition based on service transfer - Significant estimates are required for business combination accounting, including the fair value of intangible assets and goodwill[183](index=183&type=chunk)[185](index=185&type=chunk) - Goodwill is not amortized but is tested for impairment at least annually, with no impairment recorded in 2020[188](index=188&type=chunk) Disaggregation of Revenue by Service Type (2020) | Service Type | Revenue 2020 | | :--- | :--- | | Managed Services | $1,814,869 | | Consulting Services | $5,425,959 | | **Total** | **$7,240,828** | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, the registrant is not required to provide market risk disclosures - Not applicable[203](index=203&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=32&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements for 2020 and 2019, with the auditor identifying intangible asset valuation from 2020 acquisitions as a critical audit matter [Report of Independent Registered Public Accounting Firm](index=49&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion, identifying intangible asset valuation from the Technologyville and Clear Skies acquisitions as a Critical Audit Matter due to subjective estimates - The auditor issued an unqualified opinion, stating the financial statements are presented fairly in all material respects[306](index=306&type=chunk) - The valuation of intangible assets from the Technologyville and Clear Skies acquisitions was identified as a Critical Audit Matter due to the subjective nature of the assumptions used[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) [Consolidated Financial Statements](index=51&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show significant growth from acquisitions, with 2020 total assets at **$12.6 million** and liabilities at **$4.9 million**, and a net loss of **$3.4 million** on **$7.2 million** revenue Consolidated Balance Sheet Highlights (As of Dec 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $12,646,865 | $4,497,218 | | Goodwill | $4,101,369 | $922,579 | | Total Liabilities | $4,905,402 | $578,687 | | Total Stockholders' Equity | $7,741,463 | $3,918,531 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Total Revenue | $7,240,828 | $1,907,930 | | Gross Profit | $2,875,262 | $971,758 | | Net Loss | ($3,413,262) | ($1,354,368) | [Notes to Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies and financial activities, including 2020 acquisitions, **10.6 million** options granted, a **$3.0 million** related-party convertible note, and significant customer concentration - Note 3 (Acquisitions) details the purchase of **Technologyville, Clear Skies, and Alpine** in 2020, which were accounted for as business combinations and were the primary drivers of balance sheet growth[387](index=387&type=chunk)[397](index=397&type=chunk)[405](index=405&type=chunk) - Note 10 (Stock-Based Compensation) discloses that the company granted options to purchase **10,593,700** shares in 2020 under its 2019 Equity Incentive Plan[442](index=442&type=chunk) - Note 12 (Debt) details a **$3.0 million** convertible note issued to a related party on December 23, 2020, with a **6%** interest rate and a conversion price of **$2.00** per share[506](index=506&type=chunk) - Note 15 (Concentration of Credit Risk) shows that two clients accounted for **59%** of revenue in 2020, and three clients accounted for **80%** of revenue in 2019, indicating significant customer concentration[524](index=524&type=chunk)[525](index=525&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=32&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no disagreements with its accountants regarding accounting principles, financial disclosure, or auditing procedures - None[204](index=204&type=chunk) [Item 9A. Controls and Procedures](index=32&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective as of December 31, 2020, due to material weaknesses in risk assessment and documentation, with remediation plans underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2020[207](index=207&type=chunk) - Identified material weaknesses include a lack of risk assessment procedures and a lack of documented policies and procedures critical to financial reporting[213](index=213&type=chunk) - Remediation plans involve identifying skill gaps, developing formal policies, and monitoring control effectiveness, with additional finance staff hired and an audit committee established in Q1 2021[214](index=214&type=chunk)[217](index=217&type=chunk) [Item 9B. Other Information](index=34&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) On December 14, 2020, Bryce Hancock, with over **20 years** of C-Level experience, was appointed Chief Operating Officer - Bryce Hancock was appointed Chief Operating Officer on December 14, 2020[218](index=218&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=34&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section details the company's leadership, including CEO David G. Jemmett and COO Bryce Hancock, and the six-member Board of Directors, which established independent Audit, Compensation, and Nominating committees - The executive officers are **David G. Jemmett (CEO), William Santos (President), and Bryce Hancock (COO)**[221](index=221&type=chunk) - The Board of Directors is comprised of **six members**, a majority of whom are independent per Nasdaq standards[239](index=239&type=chunk)[242](index=242&type=chunk) - The Board established Audit, Compensation, and Nominating committees on December 10, 2020, with members appointed from the independent directors[244](index=244&type=chunk)[247](index=247&type=chunk)[252](index=252&type=chunk) [Item 11. Executive Compensation](index=38&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Executive compensation in 2020 was heavily weighted towards equity for COO Bryce Hancock, who received **$3.34 million** primarily from **3 million** stock options 2020 Summary Compensation Table | Name and Principal Position | Salary ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | David G. Jemmett, CEO | 208,958 | - | 208,958 | | William Santos, President | 247,708 | 180,744 | 428,452 | | Bryce Hancock, COO | 9,375 | 3,333,345 | 3,342,720 | - Upon his appointment on December 14, 2020, COO Bryce Hancock was granted options to purchase **3,000,000** shares of common stock at an exercise price of **$2.00** per share[267](index=267&type=chunk)[269](index=269&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=41&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of March 30, 2021, directors and executive officers beneficially owned **81.05%** of common stock, with CEO David G. Jemmett controlling **56.43%** - Directors and executive officers as a group beneficially own **81.05%** of the company's common stock[278](index=278&type=chunk) - CEO David G. Jemmett, through Jemmett Enterprises, LLC, is the largest beneficial owner with **56.43%** of the common stock[278](index=278&type=chunk)[279](index=279&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Securities to be Issued Upon Exercise of Outstanding Options | Remaining Available for Future Issuance | | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 21,828,700 | 3,171,300 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=44&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company engaged in significant related-party transactions, including a note payable to an entity controlled by CEO David G. Jemmett and a **$3.0 million** convertible note to Hensley & Company, where a director serves as President - The company has a note payable with Jemmett Enterprises, LLC, an entity controlled by CEO David G. Jemmett, with an outstanding balance of **$59,787** as of December 31, 2020[286](index=286&type=chunk) - On December 23, 2020, the company issued a **$3,000,000** convertible note to Hensley & Company, where Andrew McCain, a director of the company, is the President and COO[287](index=287&type=chunk) [Item 14. Principal Accountant Fees and Services](index=45&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) The company's independent auditor, Semple, Marchal & Cooper, LLP, billed total fees of **$201,487** in 2020 and **$202,681** in 2019, with significant audit-related fees Principal Accountant Fees | Service Category | 2020 Fees | 2019 Fees | | :--- | :--- | :--- | | Audit fees | $97,958 | $53,207 | | Audit-related fees | $90,821 | $142,429 | | Tax fees | $12,708 | $2,200 | | All other fees | - | $4,845 | | **Total fees** | **$201,487** | **$202,681** | - Audit-related fees were for professional services related to reviews of Form 10 filings and the acquisition audits of **Talatek, Techville, and Clear Skies**[292](index=292&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=46&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits filed with the Form 10-K, including corporate documents, material contracts, the 2019 Equity Incentive Plan, and required officer certifications - The exhibits include key corporate documents, the 2019 Equity Incentive Plan, and material contracts such as the acquisition agreements for **GenResults, TalaTek, Techville, Clear Skies, and Alpine**[299](index=299&type=chunk) [Item 16. Form 10-K Summary](index=46&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This section is not applicable as the company has not provided a Form 10-K summary - Not applicable[299](index=299&type=chunk)

Financial Performance - Total revenue for the nine months ended September 30, 2020, was $4,628,305, compared to $633,384 for the same period in 2019, representing a growth of approximately 630%[172] - Gross profit for the nine months ended September 30, 2020, was $1,683,008, compared to $310,759 for the same period in 2019, indicating a significant increase of about 442%[172] - Operating loss for the nine months ended September 30, 2020, was $(2,418,912), compared to $(989,476) for the same period in 2019, reflecting a worsening of approximately 144%[172] - Total revenue for the three months ended September 30, 2020, was $2,009,597, with significant contributions from TalaTek ($937,615) and Techville ($593,658)[194] - Total operating loss for the three months ended September 30, 2020, was $(1,030,383), reflecting increased operating expenses across all segments[194] Revenue Contributions - Cerberus revenue increased by $590,113, or 93%, due to an increase of approximately $382,000 in managed security services to a major customer[177] - TalaTek revenue increased by $2,514,693, or 100%, primarily due to an acquisition, with approximately $2,400,000 attributed to gap and risk assessment services for one major customer[178] - Techville revenue increased by $748,790, or 100%, following an acquisition, with contributions from managed services and consulting services totaling approximately $545,000[179] - Clear Skies revenue increased by $141,325, or 100%, as a result of an acquisition, with approximately $141,000 from gap and risk assessment services[180] - Cerberus reported a revenue increase of $55,747, or 20%, for the three months ended September 30, 2020, attributed to a shift towards managed services[197] - TalaTek's revenue surged by $937,614, or 100%, for the three months ended September 30, 2020, largely from gap and risk assessment services[198] - Techville's revenue increased by $593,658, or 100%, for the three months ended September 30, 2020, driven by its managed service offering Tech Connect Pro[199] - Clear Skies' revenue rose by $141,325, or 100%, for the three months ended September 30, 2020, primarily from gap and risk assessment offerings[200] Cost and Expenses - Total cost of revenue for the nine months ended September 30, 2020, was $2,945,297, up from $322,625 in 2019, marking an increase of 814%[182] - Cost of revenues for Cerberus increased by $499,417, or 155%, primarily due to payroll-related costs rising by $498,806 after reorganization[184] - Cost of revenues for TalaTek increased by $1,778,351, or 100%, mainly due to payroll and related services following its acquisition[185] - Total operating expenses for the nine months ended September 30, 2020, were $4,101,920, compared to $1,300,235 in 2019, reflecting a significant increase[188] - Stock-based compensation accounted for $1,062,000 of the total operating expenses for the nine months ended September 30, 2020[188] - Operating expenses for Cerberus increased by $1,282,716, or 99%, for the nine months ended September 30, 2020, compared to the same period in 2019[190] - TalaTek's operating expenses rose by $818,477, or 100%, for the nine months ended September 30, 2020, primarily due to the acquisition completed on October 1, 2019[191] - Techville's operating expenses increased by $572,240, or 100%, for the nine months ended September 30, 2020, following its acquisition on May 25, 2020[191] - Clear Skies' operating expenses grew by $128,252, or 100%, for the nine months ended September 30, 2020, due to the acquisition finalized on August 1, 2020[193] - Total operating expenses for the three months ended September 30, 2020, were $1,728,425, an increase from $661,485 in the same period of 2019[206] - Operating expenses for TalaTek increased by $257,894, or 100%, due to the acquisition completed on October 1, 2019[209] Strategic Initiatives - The company plans to continue making strategic acquisitions of small-to-medium-sized engineer-led cybersecurity service businesses to expand service scope and geographical coverage[161] - The company offers a range of cybersecurity services, including managed security services and consulting services, to cater to various organizational needs[161] - The company emphasizes a technology-agnostic approach, differentiating itself from competitors who are committed to specific technology solutions[162] - The company has a focus on attracting and retaining world-class cybersecurity talent to enhance its service offerings[172] - The company aims to achieve and sustain profitability through expansion and effective management of existing lines of business[172] - The company has faced challenges such as business interruptions from geopolitical actions and the need to navigate a complex cybersecurity regulatory environment[172] - The company has made several acquisitions, including GenResults, TalaTek, Techville, and Clear Skies, to enhance its capabilities and market presence[156][158][159][160] Cash Flow and Assets - Cash flows from operating activities for the nine months ended September 30, 2020, were $(1,157,976), compared to $31,571 in the same period of 2019[214] - Net cash provided by financing activities for the nine months ended September 30, 2020, was $1,443,158, primarily from common stock sales and loans[217] - Current assets as of September 30, 2020, were $3,541,729, an increase from $2,478,887 as of December 31, 2019[213] - Working capital surplus decreased to $1,568,634 as of September 30, 2020, from $1,900,200 as of December 31, 2019[213] Accounting Policies - Goodwill is tested for impairment at least annually, and it is considered impaired if the carrying value exceeds its fair value[224] - The Company recognizes revenue when control of services is transferred to the client, with most contracts having a duration of one year or less[227] - The Company received non-refundable upfront payments for the majority of its contracts, with average credit terms of thirty days[228] - Costs of revenue include compensation for billable employees, consumables, and other expenses directly related to service contracts[235] - The Company has adopted practical expedients under ASC 606, including not adjusting for significant financing components for contracts expected to be settled within one year[233] - The Company evaluates the carrying value of long-lived assets at least annually, recognizing impairment losses when anticipated cash flows are less than carrying value[226] - There are no off-balance sheet arrangements that materially affect the Company's financial condition[239] - The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less[229] - The volatility of stock-based compensation is based on historical volatilities of similar companies in the industry over the last two to five years[236]

Financial Performance - Total revenue for the six months ended June 30, 2020, was $2,618,708, compared to $352,131 for the same period in 2019, representing a significant increase[158]. - Gross profit for the six months ended June 30, 2020, was $984,966, up from $220,678 in 2019, indicating a growth of approximately 345%[158]. - Operating loss for the six months ended June 30, 2020, was $(1,388,529), compared to $(418,072) for the same period in 2019, reflecting an increase in losses[158]. - Total revenue for the three months ended June 30, 2020, was $1,396,169, an increase of 100% compared to the same period in 2019[180]. - Operating loss for the three months ended June 30, 2020, was $(31,437), indicating a challenging financial environment despite revenue growth[180]. Revenue Breakdown - Managed Services revenue for the six months ended June 30, 2020, was $754,257, while Consulting Services revenue was $1,864,451, indicating strong performance in both segments[218]. - Cerberus revenue increased by $534,366, or 152%, due to a full year of gap and risk assessment services and an increase of approximately $400,000 in managed security services from a major customer[163]. - TalaTek revenue increased by $1,577,079, or 100%, primarily due to the acquisition completed on October 1, 2019, with approximately $1,550,000 attributed to gap and risk assessment services from one major customer[164]. - Techville revenue increased by $155,132, or 100%, following its acquisition on May 25, 2020, with contributions from managed services and consulting offerings[165]. - Cerberus revenue increased by $384,463, or 249%, due to a full year of gap and risk assessment services and an increase of approximately $300,000 in managed security services from a major customer[184]. - TalaTek revenue increased by $856,575, or 100%, primarily from gap and risk assessment services attributable to one major customer after its acquisition on October 1, 2019[185]. - Techville revenue increased by $155,132, or 100%, due to its acquisition on May 25, 2020, with contributions from managed services and consulting offerings[186]. Costs and Expenses - The company reported a total cost of revenue of $1,633,742 for the six months ended June 30, 2020, compared to $131,453 in 2019, indicating a substantial increase in operational costs[158]. - Operating expenses for the six months ended June 30, 2020, totaled $2,373,495, up from $638,750 in 2019, indicating a rise of 271%[172]. - Operating expenses for Cerberus increased by $1,023,787, or 160%, primarily due to increased payroll and stock-based compensation following acquisitions[174]. - Operating expenses for TalaTek rose by $560,583, or 100%, attributed to administrative payroll and benefits post-acquisition[175]. - Operating expenses for Techville increased by $150,375, or 100%, mainly due to administrative payroll and benefits after its acquisition[176]. - Total cost of revenue for the three months ended June 30, 2020, was $858,501, reflecting a significant increase due to acquisitions and payroll costs[187]. - Operating expenses totaled $1,243,652 for the three months ended June 30, 2020, with significant contributions from professional fees and salaries[193]. Cash Flow and Working Capital - Net cash used in operating activities was $740,120 for the six months ended June 30, 2020, primarily due to a net loss of $1,385,247[201]. - Net cash provided by investing activities was $65,037 for the six months ended June 30, 2020, resulting from cash acquired in the Techville acquisition[203]. - Net cash provided by financing activities was $841,907 for the six months ended June 30, 2020, mainly from cash received from the sale of common stock and loans from the Payroll Protection Program[204]. - The working capital surplus as of June 30, 2020, was $1,337,215, a decrease from $1,900,200 as of December 31, 2019, driven by increases in current liabilities[199]. Strategic Focus and Compliance - The company plans to continue making strategic acquisitions of small-to-medium-sized engineer-led cybersecurity service businesses to expand service scope and geographical coverage[148]. - The company aims to attract and retain world-class cybersecurity talent to enhance its service offerings and operational capabilities[140]. - The company is focused on navigating the increasingly complex cybersecurity regulatory environment to ensure compliance and mitigate risks[140]. - The company emphasizes a technology-agnostic approach to provide tailored security solutions, differentiating itself from competitors[148]. Accounting and Reporting - The Company has adopted practical expedients under ASC 606, allowing it to recognize certain costs as expenses when incurred, which may impact future financial reporting[219]. - Costs of revenue include compensation for billable employees, consumables, and other direct expenses related to service contracts, which are critical for maintaining service delivery[222]. - The Company has no off-balance sheet arrangements that could materially affect its financial condition or results of operations[225]. - There is no requirement for the Company to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[226]. - Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired, and is tested for impairment at least annually[211]. - The company does not believe that inflation has had a material impact on its business, revenues, or operating results during the periods presented[205].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2020 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 000-56059 CERBERUS CYBER SENTINEL CORPORATION (Exact name of registrant as specified in its charter) | --- | --- | --- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading symbol(s) Name of exchange on which registered None N/A N/A FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________________ to __________________________ Commission fil ...