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, 2024

☐	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

CISO GLOBAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

83-4210278

(State or other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

6900 E. Camelback Road, Suite 900, Scottsdale, Arizona		85251
(Address of Principal Executive Offices)		(Zip Code)

(480) 389-3444

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 14, 2024, there were 11,821,866 shares of the registrant’s common stock outstanding.

CISO GLOBAL, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024 (unaudited)

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION		4

ITEM 1.	Financial Statements (unaudited)	4

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Operations and Comprehensive Loss	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	29

ITEM 4.	Controls and Procedures	29

PART II. OTHER INFORMATION		30

ITEM 1.	Legal Proceedings	30

ITEM 1A.	Risk Factors	30

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

ITEM 3.	Defaults Upon Senior Securities	30

ITEM 4.	Mine Safety Disclosures	30

ITEM 5.	Other Information	30

ITEM 6.	Exhibits	30

SIGNATURES		31

FORWARD-LOOKING STATEMENTS

The information contained in this report should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based upon beliefs of, and information currently available to, us as of the date hereof, as well as estimates and assumptions made by us. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to our business, industry, and our operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Forward-looking statements made in this Quarterly Report on Form 10-Q include statements about:

●	our ability to maintain an effective system of internal controls and accurately report our financial results;
●	that we will continually seek to identify and acquire cybersecurity talent to expand our service scope and geographical coverage to provide the best possible service for our clients;
●	our belief that our cash balance as of the date of this filing, together with anticipated revenues, will be sufficient to meet our anticipated cash requirement for the near term;
●	the doubt about our ability to continue as a going concern;
●	our efforts to developing our business, reducing overhead cost, and capital raising;
●	our plan to improve our liquidity by a planned reduction in overhead costs and actively pursuing additional debt and /or equity financing through discussions with investment bankers and private investors;
●	our estimate for indirect tax liabilities; and
●	our expectation that we will incur further losses through the end of 2024.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks detailed from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, any of which may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. These risks may cause our or our industry’s actual results, levels of activity, or performance to be materially different from any future results, levels of activity, or performance expressed or implied by these forward-looking statements.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CISO GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2024			December 31, 2023

ASSETS

Current Assets:
Cash and cash equivalents	$	1,118,282		$	241,643
Accounts receivable, net		2,163,140			2,800,209
Prepaid cost of revenue		214,129			244,698
Prepaid expenses and other current assets		288,517			205,919
Contract asset		154,714			197,656
Assets of business held for sale		15,127,618			22,600,715
Total Current Assets		19,066,400			26,290,840

Property and equipment, net		889,343			1,052,637
Right of use asset, net		640,630			762,228
Intangible assets, net		2,594,861			3,546,580
Goodwill		19,900,550			19,900,550
Prepaid cost of revenue, net of current portion		33,787			32,375
Other assets		70,173			70,173

Total Assets	$	43,195,744		$	51,655,383

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	8,508,360		$	7,597,469
Deferred revenue		1,543,844			1,371,637
Lease liability		226,169			219,342
Loans payable		3,431,948			1,856,245
Line of credit		2,226,168			-
Convertible notes payable		2,050,000			2,050,000
Convertible notes payable, related party		5,000,000			-
Convertible notes payable		5,000,000			-
Liabilities of business held for sale		13,995,591			16,666,096
Total Current Liabilities		36,982,080			29,760,789

Long-term Liabilities:
Deferred revenue, net of current portion		53,839			84,294
Loans payable, net of current portion		56,158			74,542
Convertible notes payable, related party		-			5,000,000
Lease liability, net of current portion		479,965			596,307

Total Liabilities		37,572,042			35,515,932

Commitments and Contingencies		-			-

Stockholders’ Equity:
Common stock, $.00001 par value; 300,000,000 shares authorized; 12,224,003 and 11,949,959 issued outstanding at June 30, 2024 and December 31, 2023, respectively		122			119
Preferred stock, $.00001 par value; 50,000,000 shares authorized; 0 shares issued and outstanding on June 30, 2024 and December 31, 2023, respectively		-			-
Additional paid-in capital		177,771,925			172,837,842
Accumulated translation adjustment		916,417			1,320,177
Accumulated deficit		(173,064,762	)		(158,018,687	)
Total Stockholders’ Equity		5,623,702			16,139,451

Total Liabilities and Stockholders’ Equity	$	43,195,744		$	51,655,383

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

CISO GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
	Three Months Ended						Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Revenue:
Security managed services	$	7,080,326		$	7,564,288		$	14,238,959		$	15,055,076
Professional services		632,225			920,306			1,398,723			2,030,382
Cybersecurity software		95,874			-			196,157			-
Total revenue		7,808,425			8,484,594			15,833,839			17,085,458

Cost of revenue:
Security managed services		2,334,703			2,717,462			4,888,652			5,182,315
Professional services		134,584			123,850			290,164			253,788
Cybersecurity software		28,264			-			58,769			-
Cost of payroll		3,176,818			3,814,030			6,658,726			8,422,386
Stock based compensation		1,200,147			1,697,181			2,297,397			3,465,265
Total cost of revenue		6,874,516			8,352,523			14,193,708			17,323,754
Total gross profit		933,909			132,071			1,640,131			(238,296	)

Operating expenses:
Professional fees		311,194			521,204			802,261			2,051,639
Advertising and marketing		6,322			47,231			32,760			153,621
Selling, general and administrative		3,605,280			4,731,090			7,583,874			9,514,610
Stock based compensation		1,252,720			2,115,039			2,359,742			5,744,014
Impairment of goodwill		-			16,330,839			-			31,776,820
Total operating expenses		5,175,516			23,745,403			10,778,637			49,240,704

Loss from operations		(4,241,607	)		(23,613,332	)		(9,138,506	)		(49,479,000	)

Other income (expense):
Other income (expense)		(73,810	)		197,147			(34,918	)		30,230
Interest expense, net		(623,941	)		(648,591	)		(1,373,766	)		(906,198	)

Total other income (expense)		(697,751	)		(451,444	)		(1,408,684	)		(875,968	)

Loss from continuing operations before income taxes		(4,939,358	)		(24,064,776	)		(10,547,190	)		(50,354,968	)
Provision/(benefit) from income taxes		-			-			-			-
Loss from continuing operations		(4,939,358	)		(24,064,776	)		(10,547,190	)		(50,354,968	)
Loss from discontinued operations, net of income taxes⁽¹⁾		(3,497,529	)		(5,263,887	)		(4,498,885	)		(13,815,384	)
Net Loss		(8,436,887	)		(29,328,663	)		(15,046,075	)		(64,170,352	)
Foreign currency translation adjustment		253,414			(416,236	)		(403,760	)		1,620,726

Comprehensive loss	$	(8,183,473	)		(29,744,899	)		(15,449,835	)	$	(62,549,626	)

Net loss per common share - basic and diluted:
Continuing operations	$	(0.40	)	$	(2.20	)	$	(0.87	)	$	(4.86	)
Discontinued operations		(0.29	)		(0.48	)		(0.37	)		(1.33	)
	$	(0.69	)	$	(2.68	)	$	(1.24	)	$	(6.19	)

Weighted average shares outstanding - basic		12,213,362			10,945,224			12,089,673			10,371,610
Weighted average shares outstanding - diluted		12,213,362			10,945,224			12,089,673			10,371,610

⁽¹⁾	Includes recognized loss on assets held for sale of $3,349,799 for the three and six months ended June 30, 2024.

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

CISO GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (NOTE 2)

(Unaudited)

	Shares		Amount		Shares		Amount		Capital		Gain/(Loss)		Deficit			Total
											Accumulated
									Additional		Other
	Common Stock				Preferred Stock				Paid-in		Comprehensive		Accumulated
	Shares		Amount		Shares		Amount		Capital		Gain/(Loss)		Deficit			Total

Balance at January 1, 2024		11,949,959	$	119		-	$	-	$	172,837,842	$	1,320,177	$	(158,018,687	)	$	16,139,451

Stock based compensation - stock options		-		-		-		-		4,657,139		-		-			4,657,139
Stock issued for cash		126,688		2		-		-		154,945		-		-			154,947
Stock issued as lending discount