CISO Global, Inc. (CISO) - Q2 2025 10-Q Summary
Business Context and Reporting Period
CISO Global, Inc. is a cybersecurity, compliance, and software company providing managed security, professional services, and proprietary software. The company operates as a single reportable segment with substantially all revenue derived from U.S. customers. This report covers the quarterly period ended June 30, 2025. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.
Key Financial Metrics (Six Months Ended June 30, 2025)
| Metric | Value |
|---|---|
| Total Revenue | $13,875,909 |
| Gross Profit | $3,418,442 |
| Gross Margin | 24.6% |
| Net Loss | $(8,389,525) |
| Net Loss Per Share (Basic & Diluted) | $(0.36) |
| Cash and Cash Equivalents | $760,754 |
| Working Capital Deficit | $(14,460,071) |
| Total Debt (Carrying Value) | $9,912,816 |
| Net Cash Used in Operating Activities | $(5,303,332) |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased by 12.4% ($1.96M) compared to the six months ended June 30, 2024. This was driven by a 12% drop in security managed services and a 22% drop in professional services, partially offset by a 48% increase in cybersecurity software revenue.
- Improved Gross Profit: Despite lower revenue, gross profit increased by 108% ($1.78M) to $3.42M. This improvement resulted from significant cost reductions in payroll (down 19%) and stock-based compensation (down 56%) within the cost of revenue.
- Reduced Operating Loss: Loss from operations improved significantly, decreasing from $9.14M in the prior year period to $4.04M. This was primarily due to a 30% reduction in Selling, General, and Administrative (SG&A) expenses.
- Debt Restructuring: The company converted $8.125M of convertible notes into common stock during the period, resulting in a loss on extinguishment of $863,669. However, this action eliminated a derivative liability of $2.1M that existed at year-end 2024.
Outlook, Risks, and Management Commentary
- Going Concern Warning: Management has expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses, negative cash flows from operations, and a significant working capital deficit. Continued operations depend on raising additional capital.
- Liquidity Strategy: The company filed a new shelf registration statement (Form S-3) effective July 7, 2025, allowing for the potential sale of up to $100M in securities. However, sales are limited to one-third of the public float in any 12-month period due to "baby shelf" rules.
- Subsequent Event: On August 4, 2025, the company entered into exchange agreements to convert approximately $9.3M of outstanding convertible notes (principal and accrued interest) into Series A Preferred Stock, reducing immediate debt obligations.
- Future Losses: Management expects to incur further losses through the end of 2025.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $760,754 cash balance against the $14.5M working capital deficit and ongoing burn rate.
- Capital Raising Success: Monitor the utilization of the new Form S-3 shelf registration and the ability to sell securities under "baby shelf" limitations.
- Debt Obligations: Review the remaining debt maturity schedule, noting that substantial principal payments are due in the remainder of 2025 and 2026.
- Revenue Concentration: Note that one customer represented 10% of total revenue for the six months ended June 30, 2025.
- Stock Dilution: Assess the impact of recent stock issuances (4.9M shares sold and 15.1M shares issued via note conversion) on existing shareholder equity.