CISO Global swings to $3.14M net loss in Q3 2026
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
CISO Global, Inc. (CISO) reported third-quarter revenue of $5,620,456, down from $6,461,798 a year earlier, and a net loss of $3,135,401 versus net income of $2,532,428. Security managed services revenue fell 15%, primarily after losing several higher-revenue customers; cybersecurity software revenue rose 37%.
For the first nine months, revenue was $17,632,269 versus $20,337,707, and net loss was $6,337,012 versus $5,857,097. Operating loss narrowed to $5,902,099 from $6,673,139, while operating cash use was $1,112,921 compared with $6,180,042. CISO recorded a $1,650,006 goodwill impairment charge after concluding its reporting unit’s fair value was below its carrying amount.
At September 30, 2026, cash was $451,776 and the working-capital deficit was $9,637,252. CISO said substantial doubt exists about its ability to continue as a going concern and that it expects further losses through 2027. After quarter-end, on November 3, 2026, it borrowed $1,000,000 under a 15% SNB Bank note payable on demand; if no demand is made, principal and unpaid interest are due April 30, 2027.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointOperating loss narrowed to $5,902,099 from $6,673,139 in the first nine months.
- Moderate pointOperating cash used was $1,112,921, versus $6,180,042 in the first nine months.
Negative
- Major pointSubstantial going-concern doubt; working-capital deficit was $9,637,252 at September 30, 2026.
- Major pointCISO recorded a $1,650,006 goodwill impairment charge. 20% of market cap
- Moderate pointNine-month revenue fell to $17,632,269 from $20,337,707.
- Moderate pointNine-month net loss increased to $6,337,012 from $5,857,097.
Filing Explained
The redemption balance is payable on demand even though all Series B shares remain outstanding.
This Form 10-Q is an unaudited quarterly report; CISO Global says a conversion notice on its remaining Series B preferred stock instead triggered a cash-redemption obligation, not conversion into common shares. At
The obligation followed a conversion notice when the stock’s volume-weighted average price was below the
Separately, two Aion term loans each began at
Nasdaq gave the company until
Key Figures
Key Terms
going concern financial
goodwill impairment charge financial
working capital deficit financial
volume-weighted average price financial
beneficial ownership limitation regulatory
At-the-Market financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were CISO’s third-quarter revenue and net result in 2026?
What drove CISO’s third-quarter revenue decline?
What are the terms of CISO’s November 2026 SNB Bank note?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Quarterly Period Ended
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:
(Exact name of registrant as specified in its charter)
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(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 | ||
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.
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).
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 | ☐ |
| ☒ | 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 November 12, 2026, there were
CISO GLOBAL, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026 (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 | 8 | |
| Notes to Condensed Consolidated Financial Statements | 9 | |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 28 |
| ITEM 4. | Controls and Procedures | 28 |
| PART II. OTHER INFORMATION | 29 | |
| ITEM 1. | Legal Proceedings | 29 |
| ITEM 1A. | Risk Factors | 29 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |
| ITEM 3. | Defaults Upon Senior Securities | 29 |
| ITEM 4. | Mine Safety Disclosures | 29 |
| ITEM 5. | Other Information | 29 |
| ITEM 6. | Exhibits | 29 |
| SIGNATURES | 30 | |
| 2 |
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 belief that culture is the foundation of every successful cybersecurity and compliance program; |
| ● | our ability to differentiate ourselves from the majority of cybersecurity firms that are focused on a specific technology or service by remaining technology agnostic, focusing on accumulating highly sought-after topic experts; |
| ● | 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 bringing together a world-class team of technological experts with multi-faceted expertise in critical aspects of cybersecurity is key to providing technology-agnostic solutions to our clients in a business environment that has suffered from a chronic lack of highly skilled professionals, thereby setting us apart from competitors and in-house security teams; |
| ● | our ability to achieve our goal of creating a culture of security and to help quantify, define, and capture a return on investment from information technology and cybersecurity spending; |
| ● | the substantial doubt about our ability to continue as a going concern; |
| ● | our intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split, if necessary ; |
| ● | our belief that we maintain adequate indirect tax accruals; |
| ● | our intention to satisfy the Series B Preferred Stock redemption through a combination of operating cash flows and additional financing; |
| ● | our expectation to incur further losses through the end of 2027; |
| ● | our ability to fund ongoing operations upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles; |
| ● | that we may be unable to access further equity or debt financing when needed; |
| ● | that any future impairment charges could adversely impact our financial condition and results of operations and; |
| ● | our expectations regarding the impact of recently issued accounting standards that we have not yet adopted. |
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, 2025, as amended, 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.
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 they 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.
| 3 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (UNAUDITED)
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts
receivable, net of allowance for credit losses of $ | ||||||||
| Prepaid cost of revenue | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Contract assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Prepaid cost of revenue, net of current portion | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Lease liabilities | ||||||||
| Loans payable | ||||||||
| Line of credit | ||||||||
| Total Current Liabilities | ||||||||
| Deferred revenue, net of current portion | ||||||||
| Loans payable, net of current portion | - | |||||||
| Lease liabilities, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||
| Temporary
Equity: Series B Preferred Stock, | - | |||||||
| Stockholders’ Equity: | ||||||||
| Common
Stock, $ | ||||||||
| Series
A Preferred Stock, $ | - | - | ||||||
| Additional paid-in capital | ||||||||
| Treasury
stock, at cost ( | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three
Months Ended September 30, | Nine
Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Security managed services | $ | $ | $ | $ | ||||||||||||
| Professional services | ||||||||||||||||
| Cybersecurity software | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of revenue: | ||||||||||||||||
| Security managed services | ||||||||||||||||
| Professional services | ||||||||||||||||
| Cybersecurity software | ||||||||||||||||
| Cost of payroll | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Total cost of revenue | ||||||||||||||||
| Total gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Advertising and marketing | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Impairment of goodwill | - | - | ||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Change in fair value of derivative liability | - | - | - | |||||||||||||
| Gain on extinguishment of convertible notes, net | - | - | ||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other (expense) income | ( | ) | ( | ) | ||||||||||||
| (Loss) income from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Benefit from income taxes | - | - | - | - | ||||||||||||
| (Loss) income from continuing operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Net (loss) income per common share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average shares used in computing net loss (income) per share: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation adjustments | $ | $ | $ | $ | ||||||||||||
| Other comprehensive income: | ||||||||||||||||
| Comprehensive (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY
(Unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Temporary Equity | Permanent Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Series
B Preferred Stock | Common Stock | Series
A Preferred Stock | Treasury Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | - | $ | - | $ | - | $ | - | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | - | - | - | - | - | - | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | - | $ | - | $ | - | $ | - | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||
| Temporary Equity | Permanent Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Series
B Preferred Stock | Common Stock | Series
A Preferred Stock | Treasury Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | - | $ | - | $ | - | $ | - | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation - stock options | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Common Stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into Series A Preferred Stock | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
| 6 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY
(Unaudited)
| Temporary Equity | Permanent Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Series
B Preferred Stock | Common Stock | Series
A Preferred Stock | Treasury Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | - | $ | - | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of Series B Preferred Stock to Common Stock | ( | ) | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Adjustment of Series B Preferred Stock to redemption value | - | ( | ) | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Conversion of Series B Preferred Stock to loan payable | ( | ) | ( | ) | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | - | - | - | - | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | - | $ | - | $ | - | $ | - | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||
| Temporary Equity | Permanent Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Series
B Preferred Stock | Common Stock | Series
A Preferred Stock | Treasury Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | - | $ | - | $ | - | $ | - | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation - stock options | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of Common Stock for services | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Common Stock | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes into Common Stock | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A Preferred Stock to Common Stock | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of warrants | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
CISO GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2026 | 2025 | |||||||
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Stock-based compensation - stock issued for services | - | |||||||
| Non-cash interest expense | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash operating lease costs | ||||||||
| Bad debt expense | ( | ) | ||||||
| Impairment of goodwill | - | |||||||
| Change in fair value of derivative liability | - | ( | ) | |||||
| Gain on extinguishment of convertible notes, net | - | ( | ) | |||||
| Other | ||||||||
| Changes in operating assets and liabilities: | - | |||||||
| Accounts receivable | ||||||||
| Contract assets | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | - | |||||
| Net cash used in investing activities | ( | ) | - | |||||
| Cash flows from financing activities: | ||||||||
| Tax withholding related to the vesting of restricted stock units | ( | ) | - | |||||
| Proceeds from sales of Common Stock, net of offering costs | - | |||||||
| Proceeds from stock option exercises | - | |||||||
| Proceeds from exercises of warrants | - | |||||||
| Proceeds from loans payable | - | |||||||
| Proceeds from convertible notes payable | - | |||||||
| Proceeds from line of credit | ||||||||
| Payments on line of credit | ( | ) | ( | ) | ||||
| Payments on loans payable | ( | ) | ( | ) | ||||
| Payments of debt issuance costs | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents - beginning of the period | ||||||||
| Cash and cash equivalents - end of the period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | - | $ | - | ||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Common Stock issued in exchange for services | $ | - | $ | |||||
| Conversion of convertible notes - Common Stock | $ | - | $ | |||||
| Conversion of convertible notes - Series A Preferred Stock | $ | - | $ | |||||
| Conversion of Series B Preferred Stock to Common Stock | $ | $ | - | |||||
| Adjustment to redemption value of Series B Preferred Stock | $ | $ | - | |||||
| Conversion of Series B Preferred Stock to loan payable | $ | $ | - | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 8 |
CISO GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Unless otherwise indicated or the context requires otherwise, the terms “we,” “us,” “our,” and “our company” refer to CISO Global, Inc., a Delaware corporation and its wholly owned subsidiaries. Unless otherwise specified, all dollar amounts are expressed in United States dollars.
NOTE 1 – ORGANIZATION OF BUSINESS AND GOING CONCERN
Description of the Business
We are a leading cybersecurity, compliance, and software company comprised of highly trained and seasoned security professionals who work with clients to enhance or create a better cyber posture in their organization. We provide a full range of cybersecurity consulting, related services, and cybersecurity software – spanning all four pillars of security: proprietary software stack, compliance, cybersecurity, and organizational culture. Our comprehensive cybersecurity services include managed security, compliance services, security operations center (“SOC”) services, virtual Chief Information Security Officer (“vCISO”) services, incident response, certified forensics, technical assessments, and cybersecurity training. We believe that culture is the foundation of every successful cybersecurity and compliance program. To deliver that outcome, we developed our unique offering of MCCP+ (“Managed Compliance & Cybersecurity Provider + Culture”), which is a holistic solution that provides all four of these pillars under one roof from a dedicated team of subject matter experts. In contrast to the majority of cybersecurity firms that are focused on a specific technology or service, we seek to differentiate ourselves by remaining technology agnostic, focusing on accumulating highly sought-after topic experts. We 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. We believe that bringing together a world-class team of technological experts with multi-faceted expertise in the critical aspects of cybersecurity is key to providing technology-agnostic solutions to our clients in a business environment that has suffered from a chronic lack of highly skilled professionals, thereby setting us apart from competitors and in-house security teams. Our goal is to create a culture of security and to help quantify, define, and capture a return on investment from information technology and cybersecurity spending.
Basis of Presentation
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q pursuant to rules and regulations of the SEC and include our accounts and the accounts of our subsidiaries. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. All material intercompany accounts and transactions have been eliminated.
Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2026. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended (“2025 Form 10-K”). The December 31, 2025 condensed consolidated balance sheet included herein is derived from the audited consolidated financial statements included in the 2025 Form 10-K but does not include all disclosures required by GAAP.
Reclassifications
Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation. The reclassifications had no impact on the reported results of operations.
| 9 |
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, due to losses incurred, historical cash used in operations and the existence of a working capital deficit, substantial doubt about our ability to continue as a going concern exists within one year after the date the financial statements are issued. Our company’s ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles. Management’s plans to address these concerns include obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring operations to grow revenues and decrease expenses. However, we may be unable to access further equity or debt financing when needed. As such, there can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all.
On
September 24, 2025, we entered into a Preferred Equity Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal
Capital I (“B. Riley”) pursuant to which we may sell up to $
On
April 1, 2026, B. Riley delivered a conversion notice for the remaining
On June 26, 2025, we renewed our expiring shelf registration statement on Form S-3 (that was declared effective on July 7, 2025) (“July 2025 Prospectus”) that contains two prospectuses:
| 1) | a
base prospectus that covers the potential offering, issuance, and sale from time to time of our Common Stock, preferred stock, warrants,
debt securities, and units in one or more offerings with total proceeds of up to $ | |
| 2) | a
sales agreement prospectus covering the potential offering, issuance, and sale from time to time of shares of our Common Stock having
aggregate gross sales proceeds of up to $ |
If
our public float remains below $
There can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all. As such, we may be unable to access further equity or debt financing when needed. The ability for us to continue as a going concern is dependent upon our ability to successfully implement our strategies and eventually attain profitable operations. The accompanying consolidated financial statements do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary if we are unable to continue as a going concern.
On
December 30, 2025, we received a letter from the listing qualifications staff of Nasdaq notifying us that the bid price of our Common
Stock had closed below $
| 10 |
On June 30, 2026, the staff notified us that we were eligible for an additional 180 calendar day period, or until December 28, 2026, to regain compliance. The staff’s determination was based on our meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market with the exception of the bid price requirement, and our written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
If at any time during this second 180-day compliance period, the closing bid price of our Common Stock is at least $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance. If we choose to implement a reverse stock split, we must complete the split no later than ten business days prior to the expiration date in order to timely regain compliance. If compliance cannot be demonstrated by December 28, 2026, the Staff will provide written notification that our Common Stock will be delisted. At that time, we may appeal the staff’s determination to a hearings panel.
The Nasdaq notice has no immediate impact on the listing of our Common Stock, which will continue to be listed and traded on The Nasdaq Capital Market, subject to our compliance with the other listing requirements of The Nasdaq Capital Market. Although we will use all reasonable efforts to achieve compliance with Rule 5550(a)(2), there can be no assurance that we will be able to regain compliance with that rule or will otherwise be in compliance with other listing criteria of The Nasdaq Capital Market.
Segment Information
We
have a
Geographic Information
All of our revenue and property and equipment is located within the United States.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Material estimates include the allowance for credit losses, the carrying value of intangible assets and goodwill, our deferred tax assets and valuation allowance, the adequacy of insurance reserves, and assumptions used in the Black-Scholes option pricing model, such as expected term, stock price volatility and risk-free interest rate.
| 11 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no significant changes to our accounting policies disclosed in our 2025 Form 10-K.
Contract Liabilities
Contract liabilities consist of deferred revenue and primarily include amounts billed or payments received in advance of revenue recognition. These amounts relate to services not yet performed or annual software licenses for which revenue will be recognized as the services are delivered or ratably over the license term. We generally invoice customers in advance or in milestone-based installments.
We
recognized revenue of $
Changes in deferred revenue were as follows:
SCHEDULE OF CHANGES IN DEFERRED REVENUE
| 2026 | 2025 | |||||||
Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Additions to deferred revenue | ||||||||
| Recognition of deferred revenue | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Net Loss per Common Share
Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of Common Stock and potentially dilutive shares of Common Stock outstanding during the period.
For dilutive securities, all outstanding stock options, restricted stock units, warrants, and Series B Preferred Stock are considered potentially outstanding Common Stock. The dilutive effect, if any, of stock options, restricted stock units, and warrants is calculated using the treasury stock method. All outstanding convertible notes payable and shares of Series B Preferred Stock are considered Common Stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method.
The following is a reconciliation of the numerators and denominators of the basic net (loss) income per share computations for the periods presented:
SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three
Months Ended September 30, | Nine
Months Ended | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| (Loss) income from continuing operations | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Add: Adjustment of Series B Preferred Stock to redemption value | - | - | - | |||||||||||||
| Less: Deemed dividend related to Series B Preferred Stock | - | - | ( | ) | - | |||||||||||
| Less: Series A Preferred Stock dividend | - | ( | ) | - | ( | ) | ||||||||||
| Net (loss) income attributable to common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding - basic | ||||||||||||||||
| Net (loss) income per share – basic: | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
The following is a reconciliation of the numerators and denominators of the diluted net loss per share computations for the periods presented:
| Three
Months Ended September 30, | Nine
Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| Less: Gain on extinguishment of convertible notes | - | ( | ) | - | ( | ) | ||||||||||
| Add: Convertible notes – interest expense | - | - | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding – basic | ||||||||||||||||
| Dilutive effect of equity awards: | ||||||||||||||||
| Convertible notes payable | - | - | ||||||||||||||
| Weighted-average shares outstanding - diluted | ||||||||||||||||
| Net loss per share – diluted: | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 12 |
The following potentially dilutive securities were excluded from the computation of diluted net loss per common share because their inclusion would have been anti-dilutive:
SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three
Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Stock options | ||||||||||||||||
| Restricted stock units | ||||||||||||||||
| Warrants | ||||||||||||||||
| Series A Preferred Stock | - | - | ||||||||||||||
| Total | ||||||||||||||||
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities, including tax loss and credit carry forwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We utilize Accounting Standards Codification Topic 740 (ASC 740), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. We account for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. At September 30, 2026 and December 31, 2025, our net deferred tax assets have been fully reserved.
For uncertain tax positions that meet a “more likely than not” threshold, we recognize the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. Our practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when a determination is made that such expense is likely.
Recent Accounting Pronouncements – Adopted
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient to measure credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 606, Revenue from Contracts with Customers. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. For public business entities, ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Effective January 1, 2026, our company adopted ASU 2025-05 regarding the practical expedient for expected credit loss and the adoption did not have a material impact on our company’s condensed consolidated financial statements.
Recent Accounting Pronouncements – Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires additional disaggregated disclosures on an entity’s effective tax rate reconciliation and additional details on income taxes paid. ASU 2023-09 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted. As an emerging growth company (EGC), we have elected to adopt the standard based on the effective dates applicable to non-public business entities. Accordingly, we will adopt ASU 2023-09 for annual periods beginning after December 15, 2025. We expect this to result in additional disclosures in our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public entities to provide disaggregated disclosure of expenses included within relevant income statement expense captions, as well as additional disclosures about selling expenses. This update is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The adoption of ASU 2024-03 is expected to result in additional disclosures in our condensed consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The purpose of this ASU is to modernize the accounting guidance for the costs to develop software for internal use by removing all references to prescriptive and sequential software development project stages and providing further guidance on when an entity is required to start capitalizing eligible costs. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027. Early adoption is permitted and the new guidance should be applied either on a prospective transition, a modified transition or a retrospective transition approach. Our company is currently evaluating the impact of this standard on its condensed consolidated financial statements and disclosures.
| 13 |
NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
September 30, 2026 | December 31, 2025 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
September 30, 2026 | December 31, 2025 | |||||||
| Computer equipment | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Furniture and fixtures | ||||||||
| Software | ||||||||
| Property and equipment gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense was $
NOTE 5 – INTANGIBLE ASSETS AND GOODWILL
Goodwill
The following table presents the goodwill balance and accumulated impairment losses as of September 30, 2026 and December 31, 2025:
SCHEDULE OF CHANGES IN GOODWILL
| Gross Carrying Amount |
| Accumulated Impairment Losses | Net Carrying Amount | |||||||||
| Balance at December 31, 2025 | $ | $ | ( | ) | $ | |||||||
| Impairment of goodwill | - | ( | ) | ( | ) | |||||||
| Balance at September 30, 2026 | $ | $ | ( | ) | $ | |||||||
As a result of the substantial and sustained decline in our company’s stock
price and overall market capitalization during 2026, we determined that a triggering event had occurred as of September 30, 2026, indicating
that the carrying value of goodwill may not be recoverable. Accordingly, we performed a quantitative goodwill impairment test as of September
30, 2026. Based on the results of the impairment test, we concluded that the fair value of the reporting unit, based on its quoted market
capitalization as of September 30, 2026, was less than its carrying amount. Therefore, we recorded a goodwill impairment charge of
$
| 14 |
Intangible Assets
Intangible assets, net are summarized as follows:
SCHEDULE OF INTANGIBLE ASSETS
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
| September 30, 2026 | ||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
| Tradenames – trademarks | $ | $ | ( | ) | $ | |||||||
| Customer base | ( | ) | ||||||||||
| Non-compete agreements | ( | ) | - | |||||||||
| Intellectual property/technology | ( | ) | ||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
| December 31, 2025 | ||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
| Tradenames – trademarks | $ | $ | ( | ) | $ | |||||||
| Customer base | ( | ) | ||||||||||
| Non-compete agreements | ( | ) | - | |||||||||
| Intellectual property/technology | ( | ) | ||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||
The
weighted average remaining useful life of finite-lived intangible assets is
Amortization
expense for the three months ended September 30, 2026 and 2025 was $
Based on the balance of intangible assets at September 30, 2026, expected future amortization expense for finite-lived intangible assets is as follows:
SCHEDULE OF FUTURE AMORTIZATION EXPENSE
| 2026 (remainder of) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total | $ |
NOTE 6 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
September 30, 2026 | December 31, 2025 | |||||||
| Accrued expenses | $ | $ | ||||||
| Accrued payroll and bonuses | ||||||||
| Accrued commissions | ||||||||
| Indirect taxes payable | ||||||||
| Accrued interest | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
| 15 |
NOTE 7 – RELATED PARTY TRANSACTIONS
Managed Services Agreement with Hensley Beverage Company – Related Party
In
July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company to provide secured managed services. We
also may be engaged by Hensley Beverage Company from time to time to provide other related services outside the scope of the Managed
Services Agreement. While the agreement provides for an original term through December 31, 2021, the agreement will continue until terminated
by either party. For the three months ended September 30, 2026 and 2025, we received $
Convertible Note Payable with Hensley & Company
In
March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $
Note 8 - STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY
Equity Transactions
For the three and nine months ended September 30, 2026, we did not have any sales transactions for Common Stock under our registration statement on Form S-3 that was declared effective on July 7, 2025.
For
the three and nine months ended September 30, 2025, we sold
For
the three and nine months ended September 30, 2025, we sold
Series A Preferred Stock
On
August 4, 2025, we entered into the Exchange Agreements with Hensley & Company, an entity affiliated with Andrew K. McCain, a director
of our company, and JC Associates, Inc. (the “Exchange Agreements”). Pursuant to the Exchange Agreements, the holders exchanged
certain outstanding convertible notes, as amended from time to time, with aggregate principal and accrued interest of approximately $
On
November 6, 2025, Hensley and JC Associates converted all
| 16 |
Series B Preferred Stock
On
September 24, 2025, we entered into the Purchase Agreement with B. Riley, pursuant to which we may sell up to $
During
the year ended December 31, 2025, we issued
As
of September 30, 2026, we had made one redemption payment of $
Despite
the redemption payment of $
Warrants
The following table summarizes warrant activity for the nine months ended September 30, 2026:
SCHEDULE OF STOCK WARRANT ACTIVITY
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2025 | $ | $ | - | |||||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Expired or cancelled | - | - | - | - | ||||||||||||
| Outstanding at September 30, 2026 | $ | - | ||||||||||||||
| Exercisable at September 30, 2026 | $ | - | ||||||||||||||
NOTE 9 – STOCK-BASED COMPENSATION
2023 Equity Incentive Plan
Our
2023 Equity Incentive Plan (the “2023 Plan”), which replaced our 2019 Equity Incentive Plan (the “2019 Plan”),
became effective on September 13, 2023. On December 10, 2025, our stockholders approved an amendment to our 2023 Plan to increase the
number of shares of our Common Stock, par value $
Stock Options
We
grant stock options vesting solely upon the continued service of the recipient. We recognize the accounting grant date fair value of
equity-based awards as compensation expense over the required service period of each award, which is generally
| 17 |
The following table summarizes stock option activity for the nine months ended September 30, 2026:
SCHEDULE OF STOCK OPTION ACTIVITY
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Expired or cancelled | ( | ) | - | - | ||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2026 | $ | $ | ||||||||||||||
The aggregate intrinsic value for stock options outstanding and exercisable is defined as the total positive difference between the fair market value of our Common Stock and the exercise price of the stock options.
Total
stock-based compensation expense related to the stock options was $
The
weighted-average grant-date fair value of options granted during the nine months ended September 30, 2026 and 2025 was $
Restricted Stock Units
We granted restricted stock units (“RSUs”) that only contain a service-based vesting condition that is typically satisfied over four years. We recognize the accounting grant date fair value of equity-based awards as compensation expense over the requisite service period. The fair value of RSUs is determined by the closing price of our Common Stock on the grant date.
On
June 13, 2025, we granted
Total
stock-based compensation expense related to the RSUs was $
| 18 |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Legal Claims
We
are not aware of any material pending legal proceedings in which we or any of our subsidiaries are a party or in which any of our directors,
officers or affiliates, any owner of record or
Indirect Taxes
We are subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which we conduct business. Laws and regulations attempting to subject commerce conducted over the Internet to various indirect taxes are becoming more prevalent, both in the United States and internationally, and may impose additional burdens on us in the future. Increased regulation could negatively affect our business directly, as well as the business of our customers. Taxing authorities may impose indirect taxes on the Internet-related revenue we generated based on regulations currently being applied to similar, but not directly comparable industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. In addition, domestic and international indirect taxation laws are complex and subject to change. We may be audited in the future, which could result in changes to our indirect tax estimates. We continually evaluate those jurisdictions in which nexus exists and believe we maintain adequate indirect tax accruals.
As
of September 30, 2026 and December 31, 2025, our accrual for estimated indirect tax liabilities was $
Warranties
Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances.
We offer a limited warranty to select customers, subject to various conditions, to cover certain costs incurred by the customer in case of a security breach. We have entered into an insurance policy to cover our potential liability arising from this limited warranty arrangement. We have not incurred any material costs related to such obligations and have not accrued any liabilities related to such obligations in the unaudited condensed consolidated financial statements as of September 30, 2026 and December 31, 2025.
In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid.
NOTE 11 – DEBT
Line of Credit
On
January 31, 2024, we entered into a Loan and Security Agreement (the “2024 Loan and Security Agreement”) with Aion, pursuant
to which we may borrow up to $
On
April 14, 2025, we entered into a Loan and Security Agreement (the “2025 Loan and Security Agreement”) with Aion to replace
the 2024 Loan and Security Agreement, pursuant to which we may borrow up to $
| 19 |
On
May 15, 2026, we entered into a Loan and Security Agreement (the “2026 Loan and Security Agreement”) with Aion to replace
the 2025 Loan and Security Agreement on substantially the same terms as the 2025 Loan and Security Agreement. The 2026 Loan and Security
Agreement, together with accrued and unpaid interest thereon, is due on
In
relation to the Loan and Security Agreements, we recorded interest expense of $
Loans Payable
As of September 30, 2026 and December 31, 2025, loans payable were comprised of the following:
SCHEDULE OF LOANS PAYABLE
Effective Interest Rates | Maturities | September 30, 2026 | December 31, 2025 | |||||||||||||
| B. Riley | - | % | $ | $ | - | |||||||||||
| Aion Term Loan 1 | % | - | ||||||||||||||
| Aion Term Loan 2 | % | - | ||||||||||||||
| Other | % | |||||||||||||||
| Total loans payable | ||||||||||||||||
| Less: debt discount | ( | ) | - | |||||||||||||
| Less: current portion | ( | ) | ( | ) | ||||||||||||
| Loans payable, net of current portion | $ | - | $ | |||||||||||||
On
June 5, 2026, we entered into a term loan with Aion (the “Aion Term Loan 1”) pursuant to which we borrowed $
On
July 16, 2026, we entered into a second term loan with Aion (the “Aion Term Loan 2”) pursuant to which we borrowed $
As
discussed in Note 8, on April 1, 2026, B. Riley delivered a conversion notice for the remaining
At September 30, 2026, the principal payments due under the above loans payable and line of credit were as follows:
SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT
| 2026 (remainder) | $ | |||
| 2027 | ||||
| Total future principal payments | ||||
| Less: debt discount | ( | ) | ||
| Less: current portion of debt | ( | ) | ||
| Debt, net of current portion | $ | - |
NOTE 12 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
For
each of the three and nine months ended September 30, 2026, one customer represented approximately
As
of September 30, 2026, the same customer that represented approximately
NOTE 13 – SUBSEQUENT EVENT
On
November 3, 2026, we entered into a promissory note with SNB Bank (the “SNB Note”), pursuant to which we borrowed $
| 20 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as amended.
Unless otherwise indicated or the context requires otherwise, the terms “we,” “us,” “our,” and “our company” refer to CISO Global, Inc., a Delaware corporation, and its wholly owned subsidiaries. Unless otherwise specified, all dollar amounts are expressed in U.S. dollars.
Operating Highlights for the Nine Months Ended September 30, 2026
Our operating results for the nine months ended September 30, 2026 included the following:
| ● | Total operating expenses decreased to $10,745,840 for the nine months ended September 30, 2026 as compared to $11,698,895 for the nine months ended September 30, 2025. | |
| ● | Reduced our loss from operations to $5,902,099 for the nine months ended September 30, 2026 as compared to $6,673,139 for the nine months ended September 30, 2025. |
Results of Operations
Comparison of the Three Months Ended September 30, 2026 to the Three Months Ended September 30, 2025
Our financial results for the three months ended September 30, 2026 are summarized as follows in comparison to the three months ended September 30, 2025:
Three Months Ended September 30, | ||||||||||||
| 2026 | 2025 | Variance | ||||||||||
| Revenue: | ||||||||||||
| Security managed services | $ | 4,957,151 | $ | 5,835,909 | $ | (878,758 | ) | |||||
| Professional services | 463,466 | 480,351 | (16,885 | ) | ||||||||
| Cybersecurity software | 199,839 | 145,538 | 54,301 | |||||||||
| Total revenue | 5,620,456 | 6,461,798 | (841,342 | ) | ||||||||
| Cost of revenue: | ||||||||||||
| Security managed services | 1,668,872 | 1,889,615 | (220,743 | ) | ||||||||
| Professional services | 49,622 | 45,720 | 3,902 | |||||||||
| Cybersecurity software | 55,788 | 54,716 | 1,072 | |||||||||
| Cost of payroll | 2,209,731 | 2,539,826 | (330,095 | ) | ||||||||
| Stock-based compensation | 39,573 | 324,607 | (285,034 | ) | ||||||||
| Total cost of revenue | 4,023,586 | 4,854,484 | (830,898 | ) | ||||||||
| Total gross profit | 1,596,870 | 1,607,314 | (10,444 | ) | ||||||||
| Operating expenses: | ||||||||||||
| Professional fees | 355,068 | 416,504 | (61,436 | ) | ||||||||
| Advertising and marketing | 4,366 | 311,911 | (307,545 | ) | ||||||||
| Selling, general, and administrative | 2,384,598 | 2,572,001 | (187,403 | ) | ||||||||
| Stock-based compensation | 173,795 | 940,905 | (767,110 | ) | ||||||||
| Impairment of goodwill | 1,650,006 | - | 1,650,006 | |||||||||
| Total operating expenses | 4,567,833 | 4,241,321 | 326,512 | |||||||||
| Loss from operations | (2,970,963 | ) | (2,634,007 | ) | (336,956 | ) | ||||||
| Gain on extinguishment of convertible notes, net | - | 5,296,103 | (5,296,103 | ) | ||||||||
| Interest expense | (143,505 | ) | (127,213 | ) | (16,292 | ) | ||||||
| Other expense | (20,933 | ) | (2,455 | ) | (18,478 | ) | ||||||
| Total other (expense) income | (164,438 | ) | 5,166,435 | (5,330,873 | ) | |||||||
| (Loss) income from continuing operations | $ | (3,135,401 | ) | $ | 2,532,428 | $ | (5,667,829 | ) | ||||
| 21 |
Revenue
Security managed services revenue decreased by $878,758, or 15%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to the loss of several higher-revenue customers, partially offset by new customer engagements. While we have added new customers, we cannot assure that new engagements will fully offset lost revenue in the near term or that new customer contracts will be comparable in size, duration, or profitability. We are focused on improving retention and expanding our pipeline, but continued customer attrition or delays in onboarding new customers could materially impact revenue and liquidity.
Professional services revenue decreased by $16,885, or 4%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to fewer customer projects.
Cybersecurity software revenue increased by $54,301, or 37%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to an increase in licenses for our cybersecurity software.
Expenses
Cost of Revenue
Security managed services cost of revenue decreased by $220,743, or 12%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to lower third-party costs for our existing client base.
Professional services cost of revenue increased by $3,902, or 9%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to increased cost of consultants.
Cybersecurity software cost of revenue increased by $1,072, or 2%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to an increase in licenses for our cybersecurity software.
Cost of payroll decreased by $330,095, or 13%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to headcount reductions.
Stock-based compensation expenses decreased by $285,034, or 88%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, due to fewer equity awards issued. The decrease also reflects the impact of forfeitures of awards by terminated employees, which reduced recognized expense.
Operating Expenses
Professional fees decreased by $61,436, or 15%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to a reduction in accounting and audit fees, partially offset by increased consulting costs.
Advertising and marketing expenses decreased by $307,545 for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, due to transitioning marketing functions from external service providers to internal resources in 2026.
Selling, general, and administrative expenses decreased by $187,403, or 7%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to lower payroll costs, amortization expense, and credit card fees.
Stock-based compensation expenses decreased by $767,110, or 82%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, due to fewer equity awards issued. The decrease also reflects the impact of forfeitures of awards by terminated employees, which reduced recognized expense.
As a result of the substantial and sustained decline in our company’s stock price and market capitalization during 2026, we determined that a triggering event had occurred as of September 30, 2026, indicating that the carrying value of goodwill may not be recoverable. Accordingly, we performed a quantitative goodwill impairment test as of September 30, 2026. Based on the results of the impairment test, we concluded that the fair value of our reporting unit was less than its carrying amount and recorded a goodwill impairment charge of $1,650,006 during the three months ended September 30, 2026.
Other (Expense) Income
The gain on extinguishment of convertible notes decreased by $5,296,103 for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 due to the conversion of all remaining convertible notes payable into Common Stock or Series A Preferred Stock during the year ended December 31, 2025.
Interest expense increased by $16,292, or 13%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to interest expense and amortization of debt issuance costs related to two AION term loans entered into in June and July 2026.
Other expense increased by $18,478 for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to unrealized foreign exchange losses.
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Comparison of the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025
Our financial results for the nine months ended September 30, 2026 are summarized as follows in comparison to the nine months ended September 30, 2025:
Nine
Months Ended | ||||||||||||
| 2026 | 2025 | Variance | ||||||||||
| Revenue: | ||||||||||||
| Security managed services | $ | 15,630,329 | $ | 18,328,092 | $ | (2,697,763 | ) | |||||
| Professional services | 1,412,962 | 1,572,978 | (160,016 | ) | ||||||||
| Cybersecurity software | 588,978 | 436,637 | 152,341 | |||||||||
| Total revenue | 17,632,269 | 20,337,707 | (2,705,438 | ) | ||||||||
| Cost of revenue: | ||||||||||||
| Security managed services | 5,066,170 | 5,702,790 | (636,620 | ) | ||||||||
| Professional services | 153,538 | 168,459 | (14,921 | ) | ||||||||
| Cybersecurity software | 168,760 | 146,761 | 21,999 | |||||||||
| Cost of payroll | 7,240,638 | 7,950,829 | (710,191 | ) | ||||||||
| Stock-based compensation | 159,422 | 1,343,112 | (1,183,690 | ) | ||||||||
| Total cost of revenue | 12,788,528 | 15,311,951 | (2,523,423 | ) | ||||||||
| Total gross profit | 4,843,741 | 5,025,756 | (182,015 | ) | ||||||||
| Operating expenses: | ||||||||||||
| Professional fees | 1,371,500 | 1,096,361 | 275,139 | |||||||||
| Advertising and marketing | 18,870 | 840,943 | (822,073 | ) | ||||||||
| Selling, general, and administrative | 7,088,118 | 7,858,988 | (770,870 | ) | ||||||||
| Stock-based compensation | 617,346 | 1,902,603 | (1,285,257 | ) | ||||||||
| Impairment of goodwill | 1,650,006 | - | 1,650,006 | |||||||||
| Total operating expenses | 10,745,840 | 11,698,895 | (953,055 | ) | ||||||||
| Loss from operations | (5,902,099 | ) | (6,673,139 | ) | 771,040 | |||||||
| Change in fair value of derivative liability | - | 5,467,610 | (5,467,610 | ) | ||||||||
| Gain on extinguishment of convertible notes, net | - | 4,432,434 | (4,432,434 | ) | ||||||||
| Interest expense | (398,497 | ) | (9,076,393 | ) | 8,677,896 | |||||||
| Other expense | (36,416 | ) | (7,609 | ) | (28,807 | ) | ||||||
| Total other (expense) income | (434,913 | ) | 816,042 | (1,250,955 | ) | |||||||
| Loss from continuing operations | $ | (6,337,012 | ) | $ | (5,857,097 | ) | $ | (479,915 | ) | |||
| 23 |
Revenue
Security managed services revenue decreased by $2,697,763 or 15%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to the loss of several higher-revenue customers, partially offset by new customer engagements. While we have added new customers, we cannot assure that new engagements will fully offset lost revenue in the near term or that new customer contracts will be comparable in size, duration, or profitability. We are focused on improving retention and expanding our pipeline, but continued customer attrition or delays in onboarding new customers could materially impact revenue and liquidity.
Professional services revenue decreased by $160,016 or 10%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to fewer customer projects.
Cybersecurity software revenue increased by $152,341, or 35%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to an increase in licenses for our cybersecurity software.
Expenses
Cost of Revenue
Security managed services cost of revenue decreased by $636,620, or 11%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to lower costs associated with service vendors supporting our existing client base.
Professional services cost of revenue decreased by $14,921, or 9%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to decreased use of outside consultants.
Cybersecurity software cost of revenue increased by $21,999, or 15%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to the launch of our suite of internally developed cybersecurity software products.
Cost of payroll decreased by $710,191, or 9%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to headcount reductions.
Stock-based compensation expenses decreased by $1,183,690, or 88%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, due to fewer equity awards issued and a decrease in the grant-date fair value of the awards. The decrease also reflects the impact of forfeitures of awards by terminated employees, which reduced recognized expense.
| 24 |
Operating Expenses
Professional fees increased by $275,139, or 25%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, due to an increase in accounting and consultant fees.
Advertising and marketing expenses decreased by $822,073, or 98% for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, due to transitioning marketing functions from external service providers to internal resources in 2026.
Selling, general, and administrative expenses decreased by $770,870, or 10%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to lower payroll costs, amortization expense, and credit card fees.
Stock-based compensation expenses decreased by $1,285,257, or 68%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, due to fewer equity awards issued and a decrease in the grant-date fair value of the awards. The decrease also reflects the impact of forfeitures of awards by terminated employees, which reduced recognized expense.
As a result of the substantial and sustained decline in our company’s stock price and overall market capitalization during 2026, we determined that a triggering event had occurred as of September 30, 2026, indicating that the carrying value of goodwill may not be recoverable. Accordingly, we performed a quantitative goodwill impairment test as of September 30, 2026. Based on the results of the impairment test, we concluded that the fair value of the reporting unit, based on its quoted market capitalization as of September 30, 2026, was less than its carrying amount. Therefore, we recorded a goodwill impairment charge of $1,650,006 during the three and nine months ended September 30, 2026.
Other (Expense) Income
Change in fair value of derivative liability decreased by $5,467,610 for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 due to the conversion of certain convertible notes into shares of our Common Stock during the year ended December 31, 2025.
The gain on extinguishment of convertible notes decreased by $4,432,434 for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 due to the conversion of all remaining convertible notes payable into Common Stock or Series A Preferred Stock during the year ended December 31, 2025.
Interest expense decreased by $8,677,896 for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to the accretion of convertible notes payable and the amortization of debt issuance costs associated with the issuance of certain convertible notes payable during December 2024 and January 2025, which were largely eliminated following the conversion of the remaining convertible notes payable during the year ended December 31, 2025.
Other expense increased by $28,807 for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to unrealized foreign exchange losses.
Liquidity and Capital Resources
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2026, we incurred a net loss of $6,337,012, reported cash used in operations of $1,112,921, and expect to incur further losses through the end of 2027. Further, we have a working capital deficit of $9,637,252 as of September 30, 2026. As a result, substantial doubt about our ability to continue as a going concern exists. Our ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles. We are evaluating strategies to obtain the required additional funding for future operations. These strategies may include obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring operations to grow revenues and decrease expenses.
On June 5, 2026, we entered into a term loan with Aion (the “Aion Term Loan 1”) pursuant to which we borrowed $350,000. The term loan bears interest at 16.50% per annum and is repayable in 12 monthly installments of $31,839. We incurred debt issuance costs of $5,250 in connection with the term loan. As of September 30, 2026, the outstanding principal balance was $267,802. The interest expense and amortization of debt issuance costs for the three and nine months ended September 30, 2026 was $14,630.
On July 16, 2026, we entered into a second term loan with Aion (the “Aion Term Loan 2”) pursuant to which we borrowed $350,000. The term loan bears interest at 16.50% per annum and is repayable in 12 monthly installments of $31,839. We incurred debt issuance costs of $5,250 in connection with the term loan. As of September 30, 2026, the outstanding principal balance was $295,576. The interest expense and amortization of debt issuance costs for the three and nine months ended September 30, 2026 was $10,128.
On November 3, 2026, we entered into a promissory note with SNB Bank (the “SNB Note”), pursuant to which we borrowed $1,000,000. The SNB Note bears interest at 15% per annum and is payable on demand. If no demand is made, accrued interest is payable monthly beginning November 30, 2026, and all outstanding principal and any accrued unpaid interest are due on April 30, 2027. The SNB Note is secured by a separate security instrument signed by a family member of one of the Company’s shareholders. We incurred $25,199 in debt issuance costs in connection with the SNB Note.
Series B Preferred Stock
On September 24, 2025, we entered into a Preferred Equity Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital I (“B. Riley”) pursuant to which we may sell up to $15.0 million of shares of our Series B Convertible Preferred Stock (the “Series B Preferred Stock”). As of March 31, 2026, B. Riley had purchased $2.3 million (2,396 shares) of the Series B Preferred Stock and had converted 618 of such shares into shares of our Common Stock.
On April 1, 2026, B. Riley delivered a conversion notice for the remaining 1,778 shares of Series B Preferred Stock. Because the notice was delivered at a time when the volume-weighted average price of our Common Stock was below the minimum conversion price of $0.40 per share for ten consecutive trading days, we became obligated to redeem the remaining Series B Preferred Stock and make monthly payments beginning May 1, 2026 equaling 105% of the $1,778,000 stated value, or $1,866,900. As of September 30, 2026, we had made one redemption payment of $155,575 with respect to the Series B Preferred Stock. At B. Riley’s election, B. Riley stopped requiring payment after the first installment. B. Riley may require repayment of the outstanding balance at any time, and any such repayment could materially reduce our available liquidity and our ability to fund working capital, operations and other near-term cash requirements.
| 25 |
July 2025 Prospectus
On June 26, 2025, we renewed our shelf registration statement on Form S-3 (that was deemed effective on July 7, 2025) (“July 2025 Prospectus”) that contains two prospectuses:
| 1) | a base prospectus that covers the potential offering, issuance, and sale from time to time of our Common Stock, preferred stock, warrants, debt securities, and units in one or more offerings with total proceeds of up to $100,000,000; and | |
| 2) | a sales agreement prospectus covering the potential offering, issuance, and sale from time to time of shares of our Common Stock having aggregate gross sales proceeds of up to $10,380,600 pursuant to our At-the-Market (“ATM”) sales agreement, dated June 14, 2022, with B. Riley, Stifel, Nicolaus & Company, Incorporated and Boustead Securities, LLC. |
If our public float remains below $75 million, our sales under the shelf are limited to no more than one-third of our public float in any 12-month period. Our ability to raise capital under the shelf or ATM may be limited by our public float, market conditions, and the trading price and volume of our Common Stock.
There can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all. As such, we may be unable to access further equity or debt financing when needed. The ability for us to continue as a going concern is dependent upon our ability to successfully implement our strategies and eventually attain profitable operations. The accompanying consolidated financial statements do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary if we are unable to continue as a going concern.
On December 30, 2025, we received a letter from the listing qualifications staff of Nasdaq notifying us that the bid price of our Common Stock had closed below $1.00 per share for the previous 33 consecutive business days and our Common Stock did not meet the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial 180 calendar day compliance period, or until June 29, 2026, to regain compliance. To regain compliance during that initial compliance period, the closing bid price of our Common Stock was required to be at least $1.00 per share for a minimum of 10 consecutive business days.
On June 30, 2026, the staff notified us that we were eligible for an additional 180 calendar day period, or until December 28, 2026, to regain compliance. The staff’s determination was based on our meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market with the exception of the bid price requirement, and our written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
If at any time during this second 180-day compliance period, the closing bid price of our Common Stock is at least $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance. If we choose to implement a reverse stock split, we must complete the split no later than ten business days prior to the expiration date in order to timely regain compliance. If compliance cannot be demonstrated by December 28, 2026, the staff will provide written notification that our Common Stock will be delisted. At that time, we may appeal the staff’s determination to a hearings panel.
The Nasdaq notice has no immediate impact on the listing of our Common Stock, which will continue to be listed and traded on The Nasdaq Capital Market, subject to our compliance with the other listing requirements of The Nasdaq Capital Market. Although we will use all reasonable efforts to achieve compliance with Rule 5550(a)(2), there can be no assurance that we will be able to regain compliance with that rule prior to the December 28, 2026 deadline.
Material Cash Requirements
Our material cash requirements included the following contractual obligations as of September 30, 2026:
Indebtedness
As of September 30, 2026, the carrying value of our outstanding debt obligations was $4,064,267, substantially all of which is scheduled to mature during the remainder of 2026 and the first six months of 2027.
| 26 |
Leases
As of September 30, 2026, the carrying value of our outstanding operating lease obligations was $308,289.
Sources of Funding to Satisfy Material Cash Requirements
Our principal sources of liquidity are our cash on hand, cash provided by operations, the Purchase Agreement discussed above, and our shelf registration statement on Form S-3 discussed above. Our current cash on hand is not sufficient to satisfy our operating cash needs for the 12 months from the filing of this Quarterly Report on Form 10-Q. We expect to incur further losses through the end of 2027, and there can be no assurance that we will be able to obtain additional liquidity from the Purchase Agreement or our shelf registration statement on Form S-3 or elsewhere when needed or under acceptable terms, if at all.
Working Capital Deficit
Our working capital deficit as of September 30, 2026 in comparison to our working capital deficit as of December 31, 2025, is summarized as follows:
September 30, 2026 | December 31, 2025 | |||||||
| Current assets | $ | 1,830,680 | $ | 3,264,224 | ||||
| Current liabilities | 11,467,932 | 7,738,489 | ||||||
| Working capital deficit | $ | (9,637,252 | ) | $ | (4,474,265 | ) | ||
The decrease in current assets is primarily due to the decrease in accounts receivable of $113,421, the decrease in prepaid expenses and other current assets of $136,872, and the decrease in cash and cash equivalents of $1,244,218. Cash and cash equivalents decreased primarily due to the use of cash in operations. Accounts receivable decreased primarily due to timing of collection, while prepaid expenses and other currents assets decreased primarily as prepaid balances were utilized during the period
The increase in current liabilities is primarily due to the new debt obligations to B. Riley and Aion discussed above, as well as an increase in accounts payable of $1,996,881.
Cash Flows
Our cash flows for the nine months ended September 30, 2026 in comparison to our cash flows for the nine months ended September 30, 2025, are summarized as follows:
Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (1,112,921 | ) | $ | (6,180,042 | ) | ||
| Net cash used in investing activities | (39,720 | ) | - | |||||
| Net cash (used in) provided by financing activities | (91,577 | ) | 6,299,182 | |||||
| Net (decrease) increase in cash and cash equivalents | $ | (1,244,218 | ) | $ | 119,140 | |||
Operating Activities
Net cash used in operating activities was $1,112,921 for the nine months ended September 30, 2026 and was primarily due to cash used to fund a net loss of $6,337,012 (which includes non-cash expenses in the aggregate of $3,247,294), partially offset by an increase in accounts payable of $2,014,165. Net cash used in operating activities was $6,180,042 for the nine months ended September 30, 2025 and was primarily due to cash used to fund a net loss of $5,857,097 (which includes non-cash expenses in the aggregate of $4,044,056), a decrease in accounts payable and accrued expenses and a decrease in deferred revenue.
| 27 |
Investing Activities
Net cash used in investing activities of $39,720 for the nine months ended September 30, 2026 was due to purchases of property and equipment.
Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2026 was $91,577, which was primarily due to cash received from borrowings on our loans payable and line of credit (net of debt issuance costs) of $18,059,600, offset by $18,124,675 in repayments of our loans payable and line of credit. Net cash provided by financing activities for the nine months ended September 30, 2025 was $6,299,182, which was primarily due to $2,816,075 from the sale of our Common Stock, $1,547,999 from the exercise of warrants, cash received from borrowings on our convertible loans payable and line of credit (net of debt issuance costs) of $16,276,483, offset by $14,344,167 in repayments of our loans payable and line of credit.
Critical Accounting Estimates
Our critical accounting estimates are more fully described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 30, 2026, and amended on April 2, 2026. There have been no material changes to our critical accounting estimates described in our 2025 Annual Report on Form 10-K, except as discussed below.
Goodwill
Goodwill is assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value of a reporting unit below its carrying value. We perform our annual impairment review of goodwill at the reporting unit level. If we determine the fair value of the reporting unit’s goodwill is less than its carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during the period incurred.
As a result of the substantial and sustained decline in our company’s stock price and overall market capitalization during 2026, we determined that a triggering event had occurred as of September 30, 2026, indicating that the carrying value of goodwill may not be recoverable. Accordingly, we performed a quantitative goodwill impairment test as of September 30, 2026. Based on the results of the impairment test, we concluded that the fair value of the reporting unit, based on its quoted market capitalization as of September 30, 2026, was less than its carrying amount. Therefore, we recorded a goodwill impairment charge of $1,650,006 during the three and nine months ended September 30, 2026. Additional decreases in our stock price and resulting market capitalization in the future may result in additional goodwill impairment charges being recognized. Any future impairment charges could adversely impact our financial condition and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Because we are a smaller reporting company, we are not required to provide the information called for by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2026, our disclosure controls and procedures were effective. This does not include an evaluation by our independent registered public accounting firm regarding our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently not a party to any material legal proceedings.
ITEM 1A. RISK FACTORS
We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026, and amended on April 2, 2026, risk factors that materially affect our business, financial condition, or results of operations. Except as disclosed below, there have been no material changes from the risk factors previously disclosed.
If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
We test goodwill for impairment at least annually, and we review goodwill and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors that could result in an impairment include, among others, declines in our stock price or market capitalization, lower-than-expected operating results, reduced future cash flow estimates, adverse changes in our business or industry, or other changes in market or economic conditions. If we determine that any of our goodwill or intangible assets are impaired, we may be required to record a significant charge to earnings in the period in which the impairment is determined, which could adversely affect our results of operations and financial condition.
As of September 30, 2026, we had cash and cash equivalents of $451,776 and a working capital deficit of $9,637,252, and we incurred net losses and negative operating cash flows. These conditions raise substantial doubt about our ability to continue as a going concern. As of September 30, 2026, we had made one redemption payment of $155,575 with respect to the Series B Preferred Stock. At B. Riley’s election, B. Riley stopped requiring payment after the first installment. B. Riley may require repayment of the outstanding balance at any time, and any such repayment could materially reduce our available liquidity and our ability to fund working capital, operations and other near-term cash requirements.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
During
the quarter ended September 30, 2026, none of our directors or officers
ITEM 6. EXHIBITS
| Exhibit | Incorporated by Reference | |||||||
| Number | Exhibit Description | Form | Exhibit | Filing Date | ||||
| 31.1* | Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer | |||||||
| 31.2* | Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer | |||||||
| 32.1* | Section 1350 Certification of Principal Executive Officer | |||||||
| 32.2* | Section 1350 Certification of Principal Financial Officer | |||||||
| 101.INS* | Inline XBRL Instance Document | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
*Filed/furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CISO GLOBAL, INC. | ||
| By: | /s/ David G. Jemmett | |
| David G. Jemmett | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: | November 13, 2026 | |
| By: | /s/ Debra L. Smith | |
| Debra L. Smith | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: | November 13, 2026 | |
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