CISO Global, Inc.: Form 10-Q for the period ended Jun 30, 2026

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.

First Half of 2026 Highlights

Our operating results for the six months ended June 30, 2026 included the following:

• Total operating expenses decreased to $6,178,007 for the six months ended June 30, 2026 as compared to $7,457,574 for the six months ended June 30, 2025.
• Reduced our loss from operations to $2,931,136 for the six months ended June 30, 2026 as compared to $4,039,132 for the six months ended June 30, 2025.

Results of Operations

Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025

Our financial results for the three months ended June 30, 2026 are summarized as follows in comparison to the three months ended June 30, 2025:

21

Revenue

Security managed services revenue decreased by $914,120, or 15%, for the three months ended June 30, 2026 as compared to the three months ended June 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 $58,279, or 11%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to fewer customer projects.

Cybersecurity software revenue increased by $50,300, or 35%, for the three months ended June 30, 2026 as compared to the three months ended June 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 $51,984, or 3%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to lower third-party costs for our existing client base.

Professional services cost of revenue decreased by $8,001, or 11%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, due to decreased use of consultants.

Cybersecurity software cost of revenue decreased by $2,186, or 4%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to additional development costs incurred in the three months ended June 30, 2025.

Cost of payroll decreased by $213,349, or 8%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to headcount reductions.

Stock-based compensation expenses decreased by $432,503, or 91%, for the three months ended June 30, 2026 as compared to the three months ended June 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 increased by $161,088, or 97%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, due to an increase in accounting fees.

Advertising and marketing expenses decreased by $523,360 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, due to transitioning marketing functions from external service providers to internal resources in 2026.

Selling, general, and administrative expenses decreased by $274,884, or 10%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to lower payroll costs, amortization expense, and credit card fees.

Stock-based compensation expenses decreased by $419,221, or 65%, for the three months ended June 30, 2026 as compared to the three months ended June 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.

Other (Expense) Income

Change in fair value of derivative liability decreased by $79,919 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 due to the conversion of certain convertible notes into shares of our Common Stock during the year ended December 31, 2025.

The loss on extinguishment of convertible notes decreased by $24,518 for the three months ended June 30, 2026 as compared to the three months ended June 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 $608,368 for the three months ended June 30, 2026 as compared to the three months ended June 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 income increased by $1,948 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to unrealized foreign exchange gains.

Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

Our financial results for the six months ended June 30, 2026 are summarized as follows in comparison to the six months ended June 30, 2025:

23

Revenue

Security managed services revenue decreased by $1,819,005, or 15%, for the six months ended June 30, 2026 as compared to the six months ended June 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 $143,131, or 13%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to fewer customer projects.

Cybersecurity software revenue increased by $98,040, or 34%, for the six months ended June 30, 2026 as compared to the six months ended June 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 $415,877, or 11%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to lower costs associated with service vendors supporting our existing client base.

Professional services cost of revenue decreased by $18,823, or 15%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to decreased use of outside consultants.

Cybersecurity software cost of revenue increased by $20,927, or 23%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to the launch of our suite of internally developed cybersecurity software products.

Cost of payroll decreased by $380,096, or 7%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to headcount reductions.

Stock-based compensation expenses decreased by $898,656, or 88%, for the six months ended June 30, 2026 as compared to the six months ended June 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 increased by $336,575, or 50%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to an increase in accounting and consultant fees.

Advertising and marketing expenses decreased by $514,528, or 97% for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to transitioning marketing functions from external service providers to internal resources in 2026.

Selling, general, and administrative expenses decreased by $583,467, or 11%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to lower payroll costs, amortization expense, and credit card fees.

Stock-based compensation expenses decreased by $518,147, or 54%, for the six months ended June 30, 2026 as compared to the six months ended June 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.

Other (Expense) Income

Change in fair value of derivative liability decreased by $5,467,610 for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 due to the conversion of certain convertible notes into shares of our Common Stock during the year ended December 31, 2025.

The loss on extinguishment of convertible notes decreased by $863,669 for the six months ended June 30, 2026 as compared to the six months ended June 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 $8,694,188 for the six months ended June 30, 2026 as compared to the six months ended June 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 $10,329 for the six months ended June 30, 2026 as compared to the six months ended June 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 six months ended June 30, 2026, we incurred a net loss of $3,201,611 reported cash used in operations of $948,415 and expect to incur further losses through the end of 2026. Further, we have a working capital deficit of $8,518,124 as of June 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 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 June 30, 2026, the outstanding principal balance was $350,000. The interest expense and amortization of debt issuance costs for the three and six months ended June 30, 2026 was immaterial.

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 June 30, 2026, we had made one redemption payment of $155,575 with respect to the Series B Preferred Stock. These required cash payments increase our near-term liquidity needs, and we intend to satisfy them through a combination of operating cash flows and additional financing; however, there can be no assurance that sufficient funds will be available on acceptable terms, if at all.

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 Securities, Inc., 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 June 30, 2026:

Indebtedness

As of June 30, 2026, the carrying value of our outstanding debt obligations was $4,132,061, substantially all of which is scheduled to mature during the remainder of 2026 and the first six months of 2027.

Leases

As of June 30, 2026, the carrying value of our outstanding operating lease obligations was $354,655.

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 2026, 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 June 30, 2026 in comparison to our working capital deficit as of December 31, 2025, is summarized as follows:

The decrease in current assets is primarily due to the increase in accounts receivable of $207,844, being more than offset by the decrease in cash and cash equivalents of $974,223. Cash and cash equivalents decreased primarily due to the use of cash in operations. Accounts receivable increased due to timing of collection.

The increase in current liabilities is primarily due to the new debt obligations to B. Riley and Aion discussed above.

Cash Flows

Our cash flows for the six months ended June 30, 2026 in comparison to our cash flows for the six months ended June 30, 2025, are summarized as follows:

Operating Activities

Net cash used in operating activities was $948,415 for the six months ended June 30, 2026 and was primarily due to cash used to fund a net loss of $3,201,611 (which includes non-cash expenses in the aggregate of $1,120,801), partially offset by an increase in accounts payable of $1,120,061. Net cash used in operating activities was $5,303,332 for the six months ended June 30, 2025 and was primarily due to cash used to fund a net loss of $8,389,525 (which includes non-cash expenses in the aggregate of $6,520,869), a decrease in accounts payable and accrued expenses and a decrease in deferred revenue.

Investing Activities

Net cash used in investing activities of $8,911 for the six months ended June 30, 2026 was due to purchases of property and equipment.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2026 was $16,897, which was primarily due to cash received from borrowings on our loans payable and line of credit (net of debt issuance costs) of $12,225,050, offset by $12,220,144 in repayments of our loans payable and line of credit. Net cash provided by financing activities for the six months ended June 30, 2025 was $5,071,497, which was primarily due to $2,684,754 from the sale of our Common Stock, $655,000 from the exercise of warrants, cash received from borrowings on our convertible loans payable and line of credit (net of debt issuance costs) of $9,861,983, offset by $8,132,411 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.

The price of our Common Stock has continued to decrease subsequent to June 30, 2026. As of June 30, 2026, a 1% decrease in our stock price and resulting market capitalization would have resulted in the fair value of our reporting unit to be less than its carrying value. As a result, there is increased risk that goodwill impairment charges could be recorded in the future. Any future impairment charges could adversely impact our financial condition and results of operations.

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 June 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 June 30, 2026, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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 June 30, 2026, we had cash and cash equivalents of $721,771 and a working capital deficit of $8,518,124, and we incurred net losses and negative operating cash flows. These conditions raise substantial doubt about our ability to continue as a going concern. In connection with the conversion of all outstanding Series B Preferred Stock on April 1, 2026, we are required to make monthly cash payments of approximately $155,575 through May 2027, for an aggregate obligation of $1,866,900. We expect to require additional capital to fund operations and meet these obligations. If we are unable to raise capital on acceptable terms, or at all, we may be forced to reduce or curtail operations, delay strategic initiatives, or pursue restructuring alternatives.