CISO (CISO) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue decreased by $1.2 million to $15.8 million for the six months ended June 30, 2024, compared to the same period in 2023[91] - Total gross profit increased to $1.6 million for the six months ended June 30, 2024, compared to a loss of $0.2 million for the same period in 2023[91] - Gross profit percentage improved to 10.4% for the six months ended June 30, 2024, compared to (1.4%) for the same period in 2023[91] - Net loss from continuing operations improved to $10.5 million for the six months ended June 30, 2024, compared to $50.4 million for the same period in 2023[91] - Total loss before income taxes improved by $39.8 million to $(10.5) million for the six months ended June 30, 2024, compared to $(50.4) million for the same period in 2023[98] Revenue Breakdown - Security managed services revenue decreased by $483,962, or 6%, for the three months ended June 30, 2024, primarily due to lower hardware and software sales[93] - Cybersecurity software revenue increased by $95,874, or 100%, for the three months ended June 30, 2024, due to the initial launch of new cybersecurity software products[93] Operating Expenses - Total operating expenses decreased by $18.6 million to $5.2 million for the three months ended June 30, 2024, compared to $23.7 million for the same period in 2023[92] - Stock-based compensation expenses decreased by $862,319, or 41%, for the three months ended June 30, 2024, due to various factors including a decline in share price[97] - Professional fees decreased by $1,249,378, or 61%, for the six months ended June 30, 2024, compared to the same period in 2023[102] - Advertising and marketing expenses decreased by $120,861, or 79%, for the six months ended June 30, 2024, compared to the same period in 2023[102] - Selling, general, and administrative expenses decreased by $1,930,736, or 20%, for the six months ended June 30, 2024, compared to the same period in 2023[102] - Stock-based compensation expenses decreased by $3,384,272, or 59%, for the six months ended June 30, 2024, compared to the same period in 2023[103] - Impairment of goodwill decreased by $31,776,820, or 100%, for the six months ended June 30, 2024, compared to the same period in 2023[103] Cash Flow and Funding - The company incurred a net loss of $15,046,075 and negative cash flows from operations of $2,679,622 for the six months ended June 30, 2024[104] - As of June 30, 2024, the company had $291,190,324 of available funding under its Shelf Registration Statement[105] - The working capital deficit increased to $(19,047,707) as of June 30, 2024, compared to $(9,404,568) as of December 31, 2023[106] - Net cash used in operating activities was $2,679,622 for the six months ended June 30, 2024, compared to $5,318,960 for the same period in 2023[109] - Net cash provided by financing activities was $3,068,338 for the six months ended June 30, 2024, compared to $5,493,207 for the same period in 2023[111] Internal Controls and Compliance - As of June 30, 2024, the company's disclosure controls and procedures were evaluated as effective by the principal executive officer and principal financial officer[129] - There have been no changes in internal control over financial reporting that materially affected the company during the quarter ended June 30, 2024[129] - The company maintains disclosure controls designed to provide reasonable assurance for timely reporting of required information[128] - Management recognizes that disclosure controls can only provide reasonable, not absolute, assurance of achieving control objectives[128] - The report includes various certifications related to the principal executive and financial officers[136] Legal and Risk Factors - The company is currently not a party to any material legal proceedings[130] - There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[131] - No directors or officers adopted or terminated any trading agreements during the quarter ended June 30, 2024[135] - The company has not reported any defaults upon senior securities[133]