What changed in this filing

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Item 9A. Controls and Procedures

2023-03-31 compared with 2022-04-15 · 1219 added, 1102 removed, 1018 unchanged (70% of the section changed)

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

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 ensure 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 Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding

required disclosures.

In designing disclosure controls and procedures, our management necessarily was required to apply its judgment

in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and

procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any

design will succeed in achieving its stated goals under all potential future conditions.

Any controls and procedures, no matter how well

designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

management, with the participation of our Chief Executive Officer and Chief 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

and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures

were not effective due to the material weaknesses in internal control over financial reporting described below.

Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control over

financial reporting is a process designed under the supervision of its principal executive and principal financial officers and effected

by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of its consolidated financial statements for external reporting purposes in accordance with U.S.

generally accepted

accounting principles.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

In addition, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions or that the degree of compliance with the policies or procedures may deteriorate.

Weakness in Internal Control over Financial Reporting

management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the framework

established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Based on this assessment, management has determined that our internal control over financial reporting as of December 31,

2021 was not effective.

material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),

is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility

that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which are indicative of

many small companies with small number of staff:

of risk assessment procedures on internal controls to detect financial reporting risks in

a timely manner;

of documentation on policies and procedures that are critical to the accomplishment of financial

reporting objectives.

Plan to Remediate the Material Weakness

management plans to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated,

such that these controls are designed, implemented, and operating effectively.

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 ensure 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 Chief

Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship

of possible disclosure controls and procedures.

The design of any disclosure controls and procedures also is based in part upon certain

assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated

goals under all potential future conditions.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable,

not absolute, assurance of achieving the desired control objectives.

Our management, with the participation

of our Chief Executive Officer and Chief 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 and subject to the foregoing, our

Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures were not effective due to the

material weaknesses in internal control over financial reporting described below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting.

Our internal control over financial reporting is

a process designed under the supervision of its principal executive and principal financial officers and effected by our Board of Directors,

management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

its consolidated financial statements for external reporting purposes in accordance with U.S.

generally accepted accounting principles.

Because of its inherent limitations,

internal control over financial reporting may not prevent or detect misstatements.

In addition, projections of any evaluation of effectiveness

to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance

with the policies or procedures may deteriorate.

Material Weakness in Internal Control over Financial

Our management assessed the effectiveness

of our internal control over financial reporting as of December 31, 2022 based on the framework established in Internal Control—Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management

has determined that our internal control over financial reporting as of December 31, 2022 was not effective.

A material weakness, as defined

in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), is a deficiency, or a combination

of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

The ineffectiveness of our internal

control over financial reporting was due to the following material weaknesses which are indicative of many small companies with small

number of staff:

lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely

lack of documentation on policies and procedures that are critical to the accomplishment of financial reporting

We will continue to monitor and

evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting

on an ongoing basis, and we are committed to taking further action and implementing additional enhancements or improvements, as necessary

and in accordance with financial and budgetary considerations.

Management’s Plan to Remediate the Material

Our management plans to implement

measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are

designed, implemented, and operating effectively.

The remediation actions planned include:

gaps in our skills base and the expertise of our staff required to meet the financial reporting

identify gaps in our skills base and the expertise of our staff required to meet the financial reporting

requirements of a public company;

policies and procedures on internal control over financial reporting and monitor the effectiveness

develop policies and procedures on internal control over financial reporting and monitor the effectiveness

of operations on existing controls and procedures.

management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls

and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements

or improvements, as necessary and as funds allow.

annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial

Our management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of

the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K, which may increase the risk that

weaknesses or deficiencies in our internal control over financial reporting go undetected.

in Internal Control Over Financial Reporting

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 December 31, 2021 that have materially affected, or that are reasonably likely to materially affect, our

internal control over financial reporting.

During the year ended December 31, 2021, report, we have hired additional finance and accounting

staff that we expect will positively impact our segregation of duties in the coming quarters.

In addition, we have established an audit

committee in the first quarter of 2021.

Our management will continue to

monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial

reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary

and as funds allow.

This Annual Report on Form 10-K does not include

an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Our management’s

report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide

only management’s report in this Annual Report on Form 10-K, which may increase the risk that weaknesses or deficiencies in our

internal control over financial reporting go undetected.

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

December 31, 2022 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial

During the year ended December 31, 2022, we have hired additional finance and accounting staff that we expect will

positively impact our segregation of duties in the coming periods.

OTHER INFORMATION

Letter Agreement with Neil Stinchcombe

March 27, 2023, we entered into a letter agreement with Neil Stinchcombe to resolve a dispute about certain payment terms of a convertible

note previously issued to Mr.

Stinchcombe, with an outstanding principal amount of $1,500,000.

Pursuant to the terms of this agreement,

we agreed to repay the principal amount of the note in three equal installment payments of $500,000, on each of March 31, April 28, and

May 31, 2023, with accrued interest to be paid on May 31, 2023 at the note’s reflected interest rate of 5.0% per annum.

to timely make any of the foregoing payments, the applicable interest rate will be increased to a default rate of 24% per annum.

of Failure to Satisfy a Continued Listing Rule

March 29, 2023, we received a letter from the listing qualifications staff (the “Staff”) of Nasdaq providing notification

that the bid price for our common stock had closed below $1.00 per share for the previous 30 consecutive business days and our common

stock no longer meets 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 have an initial period of 180 calendar days, or until September 25, 2023, to regain compliance.

To regain compliance, the closing bid price of our common stock must be $1.00 per share or more for a minimum of 10 consecutive business

days at any time before September 25, 2023.

we do not regain compliance with Rule 5550(a)(2) by September 25, 2023, we may be eligible for an additional 180 calendar day compliance

To qualify, we would need to meet the continued listing requirement for market value of publicly held shares and all other initial

listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and would need to provide written

notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq would

notify us that our securities would be subject to delisting.

In the event of such notification, we may appeal the Staff’s determination

to delist our securities, but there can be no assurance the Staff would grant our request for continued listing.

Nasdaq notification has no immediate effect on the listing of our common stock on the Nasdaq Capital Market.

We intend to actively monitor

the bid price of our common stock and our minimum market value of listed securities and will consider options available to us to achieve

compliance with the Nasdaq listing rules.

There can be no assurance that we will be able to regain compliance with the minimum bid price

requirement or will otherwise be in compliance with the other listing standards for the Nasdaq Capital Market.

March 30, 2023, David A.

Bennett, our Chief Operating Officer, separated from our company.

March 30, 2023, our Board of Directors appointed Kyle J.

Young as Interim Chief Operating Officer of our company.

Young, age 40,

has served as our Executive Vice President, Operations since January 2022 and previously served as our Vice President, Operations

from February 2021 to January 2022.

Young served in various roles at BeyondTrust Software, a U.S.-based cybersecurity vendor,

from December 2007 to February 2022, most recently serving as its Vice President, Business and Sales Operations.

Young holds a

bachelor’s degree in Speech Communications & Rhetoric from the University of Illinois Urbana-Champaign.

March 30, 2023, we entered into the Young Employment Agreement with Mr.

The Young Employment Agreement is evergreen and can

be terminated by either party.

Pursuant to the Young Employment Agreement, Mr.

Young will receive an annual base salary of $200,000,

which will be subject to review and adjustment in accordance with our policies.

Young will be eligible to receive an annual

bonus between 20% and 100% of his base salary, in the sole discretion of our Board of Directors.

Young is also eligible to

participate in our standard benefit plans.

are no family relationships between Mr.

Young and any of our directors or executive officers.

There have been no transactions since the

beginning of our last fiscal year, and no transactions are currently proposed, in which we were or are to be a participant and in which

Young or any member of his immediate family had or will have any interest, that are required to be disclosed pursuant to Item 404(a)

of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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The age of each Director and Executive

Officer listed below is given as of April 13, 2022.

Executive Officer and Director

Operating Officer

Financial Officer

Information Security Officer and Director

Officer listed below is given as of March 31, 2023.

Chief Executive Officer and Director

Interim Chief Operating Officer

Chief Financial Officer

President, Chief Information Security Officer and Director

General Robert C.

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internet technologies in 1998.

Jemmett is qualified to serve as a director of our company due to his extensive business background, his experience in the

cybersecurity industry, and his significant equity ownership in our company.

Sanchez - President

Sanchez has served as our President since February 2022.

Since March 2018, he has served as Chief Executive Officer of True Digital,

an entity which we acquired in January 2022.

Prior to that, from March 2000 to February 2018, Mr.

Sanchez was Chief Executive Officer

and President of SLPowers, the predecessor company to True Digital, a managed cybersecurity and compliance provider that helps organizations

manage risk and compliance.

Bennett – Chief Operating Officer

Bennett has served as our Chief Operating Officer since February 2022.

From August 2021 to February 2022, he served as Chief Product

Officer at Experian Health, a leader in healthcare revenue cycle solutions and digital health.

From October 2020 to August 2021, Mr.

Bennett served as Senior Vice President, Product at Gainwell Technologies, a leader in Medicaid management systems and payer analytics.

From March 2018 to October 2020, Mr.

Bennett served as Vice President, Global Build Healthcare & Life Sciences at DXC Technologies,

which is an information technology services and consulting company.

From November 2013 to March 2018, Mr.

Bennett served as Executive

Vice President, Product & Strategy for Orion Health, a software company that is a leader in health information exchanges, digital

health, and healthcare analytics.

He also serves on the Grand Canyon University President’s STEM Advisory Board.

Bennett received

a degree in Computer Information Science from DeVry University in 1985.

We believe Mr.

Jemmett is qualified

to serve as a director of our company due to his extensive business background, his experience in the cybersecurity industry, and his

significant equity ownership in our company.

Young – Interim Chief Operating

Young has served as our

Interim Chief Operating Officer since March 2023.

Previously Mr.

Young served as our Executive Vice President, Operations from

January 2022 to March 2023 and as our Vice President, Operations from February 2021 to January 2022.

Young served in various

roles at BeyondTrust Software, a U.S.-based cybersecurity vendor, from December 2007 to February 2022, most recently serving as its

Vice President, Business and Sales Operations.

Young holds a bachelor’s degree in Speech Communications & Rhetoric

from the University of Illinois Urbana-Champaign.

Smith – Chief Financial Officer

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in Counseling with Honors from Argosy University.

Devoto – Chief Information Security Officer and Director

Devoto has served as our Chief Information Security Officer and a director of our company since March 2022.

Devoto has served in

various roles at Booz Allen Hamilton, a U.S.-based government contractor, from June 2018 to March 2022, most recently serving as its

Chief Information Security Officer.

Devoto – President and Director

Devoto has served as our President since July 2022 and as our Chief Information Security Officer and as a director of our company

since March 2022.

Devoto has served in various roles at Booz Allen Hamilton, a U.S.-based government contractor, from June 2018

to March 2022, most recently serving as its Chief Information Security Officer.

From April 2017 to June 2018, Ms.

Devoto served as Business Information Security officer for Bank

of America, a financial services company.

Devoto served as

Business Information Security officer for Bank of America, a financial services company.

Devoto has served in the U.S.

Air Force Cyberspace Operations since March 2010, and she

served as defensive cyber operations planner at 24th Air Force and NORAD/USNORTHCOM.

Devoto continues to serve in a reserve capacity

by leading strategic cyber force development initiatives in her current assignment at the Pentagon.

Devoto holds a bachelor’s

degree in Computer Engineering from Vanderbilt University and a master’s degree in Engineering Management from Southern Methodist

Cyberspace Operations since March 2010, and she served as defensive cyber operations planner at 24th Air Force and NORAD/USNORTHCOM.

Devoto continues to serve in a reserve capacity by leading strategic cyber force development initiatives in her current

assignment at the Pentagon.

Devoto holds a bachelor’s degree in Computer Engineering from Vanderbilt University and a

master’s degree in Engineering Management from Southern Methodist University.

Devoto is qualified for service as a director of our company due to her cybersecurity experience, as well as her extensive

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Scott has founded and managed several investment partnerships focused on both private and public investment strategies since

Scott holds a Bachelor of Science in 1991 from the University of Florida.

Scott holds a Bachelor of Science from the University of Florida.

Scott is qualified for service as a director of our company due to his background in both the financial services and technology industries.

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Morgan served on our Board of Directors in fiscal 2021 and resigned in March 2022.

Morgan was independent director.

Morgan was an independent director.

Board of Directors has three standing committees:

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McCain serving as the chair.

Morgan served on

the Audit Committee during fiscal 2021 but resigned from our Board of Directors in March 2022.

VanDeWeghe was appointed to the Audit

Committee in March 2022 following Ms.

Morgan served

on the Audit Committee during fiscal 2021 but resigned from our Board of Directors in March 2022.

VanDeWeghe was appointed to the

Audit Committee in March 2022 following Ms.

Morgan’s resignation.

Each member of the Audit Committee meets the independence and other

requirements to serve on our Audit Committee under The Nasdaq Stock Market Rules and the rules of the SEC.

In addition, our Board of

Directors determined that each of Messrs.

McCain and Holbrook and Ms.

Morgan is considered an “audit committee financial expert”

as defined in the rules of the SEC.

Each member of the Audit Committee meets the independence and

other requirements to serve on our Audit Committee under The Nasdaq Stock Market Rules and the rules of the SEC.

In addition, our Board

of Directors determined that each of Messrs.

McCain and Holbrook is considered an “audit committee financial expert” as defined

in the rules of the SEC.

Audit Committee was formed in 2021.

Our Board of Directors has adopted a written charter for the Audit Committee, a copy of which is

posted in the Investor Resources and Corporate Governance section of our website at www.cerberussentinel.com/charter-of- the-audit-committee.

posted in the Investor Resources and Corporate Governance section of our website at https://www.ciso.inc/investor-relations/charter-of-the-audit-committee .

The principal functions of the Audit Committee are to oversee our accounting and financial reporting processes and the audits of our

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Our Board of Directors has adopted a written charter for the Compensation Committee, a copy

of which is posted in the Investor Resources and Corporate Governance section of our website at www.cerberussentinel.com/charter-of-the-compensation-committee.

of which is posted in the Investor Resources and Corporate Governance section of our website at www.ciso.inc/investor-relations/charter-of-the-compensation-committee .

The Compensation Committee has responsibilities relating to the performance evaluation and the compensation of our Chief Executive Officer;

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Each of Messrs.

Oaks, Holbrook, VanDeWeghe and Ms.

meets the independence and other requirements to serve on our Governance and Nominating Committee under The Nasdaq Stock Market Rules

and the rules of the SEC.

Oaks, Holbrook and VanDeWeghe meets the

independence and other requirements to serve on our Governance and Nominating Committee under The Nasdaq Stock Market Rules and the rules

Governance and Nominating Committee was formed in 2021.

Our Board of Directors has adopted a written charter for the Governance and Nominating

Committee, a copy of which is posted in the Investor Resources and Corporate Governance section of our website at https://www.cerberussentinel.com/investor-relations/charter-of-the-nominating-and-corporate-governance-committee .

Committee, a copy of which is posted in the Investor Resources and Corporate Governance section of our website at https://www.ciso.inc/investor-relations/charter-of-the-nominating-and-corporate-governance-committee .

The Governance and Nominating Committee considers the performance of the members of our Board of Directors and nominees for director

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The Code of Ethics is publicly available on our

website at www.cerberussentinel.com.

Amendments to the Code of Ethics and any grant of a waiver from a provision of the Code of Ethics

requiring disclosure under applicable SEC rules will be disclosed on our website.

Section 16(a) Reports

website at www.ciso.inc.

Amendments to the Code of Ethics and any grant of a waiver from a provision of the Code of Ethics requiring

disclosure under applicable SEC rules will be disclosed on our website.

Delinquent Section 16(a)

16(a) of the Exchange Act, requires officers and directors of our company and persons who beneficially own more than 10% of a registered

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are required by SEC regulations to furnish us with copies of all such forms they file.

fiscal 2021, each of Ms.

Smith and Messrs.

Jemmett, Scott, Oaks, Holbrook, McCain and VanDeWeghe failed to file all reports which were

required to be filed pursuant to Section 16(a) of the Exchange Act.

During fiscal 2022 and years prior,

Smith and Devoto, and Messers.

Jemmett, Bennett, Scott, Oaks, Holbrook, McCain, and VanDeWeghe failed to file all reports

which were required to be filed pursuant to Section 16(a) of the Exchange Act.

EXECUTIVE COMPENSATION

following table shows the total compensation paid or accrued during the years ended December 31, 2022 and 2021 to our Chief Executive

Officer, our next two most highly compensated executive officers who were serving as executive officers on December 31, 2021 and one

Officer, our next three most highly compensated executive officers who were serving as executive officers on December 31, 2022 and one

additional individual who served as an executive officer during the year ended December 31, 2022 but was not serving as an executive

officer on December 31, 2021 (our “named executive officers”).

officer on December 31, 2022 (collectively our “named executive officers”).

Compensation Table

Non-qualified

Chief Executive Officer

William Santos

Former President (2)

Bryce Hancock

Executive Officer

Financial Officer (2)

President (3)

Chief Operating Officer (4)

Bryce P.Hancock

Former President and Chief Operating Officer (5)

Chief Financial Officer (4)

amounts in this column reflect the fair value on the grant date of the option awards granted to the named executive officer, calculated

in accordance with ASC Topic 718.

The amounts in this column reflect the fair value on the grant date of the option awards granted to the named executive officer, calculated in accordance with ASC Topic 718.

Stock options were valued using the Black-Scholes model.

The grant-date fair value does not necessarily

reflect the value of shares which may be received in the future with respect to these awards.

The grant-date fair value of the stock

options in this column is a non-cash expense that reflects the fair value of the stock options on the grant date and therefore does

not affect our cash balance.

The fair value of the stock options will likely vary from the actual value the holder receives because

the actual value depends on the number of options exercised and the market price of our common stock on the date of exercise.

a discussion of the assumptions made in the valuation of the stock options, see Note 10 to our consolidated financial statements

included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2021.

Santos resigned on July 16, 2021.

In connection with his resignation, he received a portion of his guaranteed bonus, or $7,500, and

a severance payment of $28,125.

Hancock resigned on February 15, 2022.

The grant-date fair value does not necessarily reflect the value of shares which may be received in the future with respect to these awards.

The grant-date fair value of the stock options in this column is a non-cash expense that reflects the fair value of the stock options on the grant date and therefore does not affect our cash balance.

The fair value of the stock options will likely vary from the actual value the holder receives because the actual value depends on the number of options exercised and the market price of our common stock on the date of exercise.

For a discussion of the assumptions made in the valuation of the stock options, see Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2022.

Smith was appointed to serve as our Vice President of Finance on February 1, 2021 and as our Chief Financial Officer on June 18, 2021.

Devoto was appointed to serve as our Chief Information Security Officer on January 17, 2022 and as our President on August 8, 2022.

Bennett was appointed to serve as our Chief Operating Officer on February 22, 2022.

Bennett separated from our company on March 30, 2023.

Hancock resigned on February 15, 2022.

Equity Awards as of December 31, 2022

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Unexercisable

William Santos

15, 2019 (1) (3)

July 15, 2024

Expiration Date

February 1, 2021 (1)

February 1, 2026

December 31, 2021 (2)

December 31, 2031

January 14, 2022 (1)(5)

January 14, 2032

17, 2022 (2)(5)

January 17, 2032

Bryce Hancock

28, 2022 (2)(5)

December 15, 2025

February 28, 2032

of the shares underlying this option vested on the one year anniversary from the grant date, with the remainder vesting in 24 equal

28, 2022 (3)(5)

February 28, 2032

February 28, 2022 (4)(5)

February 28, 2032

January 14, 2022

February 28, 2022

December 15, 2020

December 15, 2025

of the shares underlying this option vested at the one-year anniversary from the grant date with the remainder vesting in 24 equal

installments on the last day of each month thereafter.

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the subsequent 36-month period.

July 16, 2021, Mr.

Santos resigned and, as of such date, 3,302,083 of Mr.

Santos’ aggregate options to purchase 4,000,000 shares

of our common stock had vested and the remainder of unvested options, or 697,917, were forfeited.

of the shares underlying this option vested on the one year anniversary from the grant date of December 15, 2020, with the remainder

vesting in 24 equal installments on the last day of each month thereafter.

February 15, 2022, Mr.

Hancock resigned and, as of such date, 1,075,000 of Mr.

Hancock’s aggregate options to purchase 3,000,000

shares of our common stock had vested and remainder of unvested options of Mr.

Hancock’s 1,925,000 shares were forfeited.

of the shares underlying this option vested at the one year anniversary from the grant date of February 1, 2021, with the remainder

vesting in 24 equal installments on the last day of each month thereafter.

of the shares underlying this option vested on the eighteen-month anniversary of the grant date with the remainder vesting monthly

over the subsequent 36-month period.

of the shares underlying this option vested on the two-year anniversary of the grant date with the remainder vesting monthly over

the subsequent 36-month period.

August 22, 2022, we repriced these option grants to reflect an exercise price equal to the fair value of our common stock.

provisions of these option grant remained on the same terms as the original option grant.

Agreements with our Named Executive Officers

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Subject to approval by our Board of Directors,

Jemmett is entitled to additional stock options under our 2019 Equity Incentive Plan.

The stock options will vest at 33% on the one-year

anniversary of the Jemmett Employment Agreement and the remaining 66% of the options will vest monthly over the next 12 months.

December 31, 2021, our Board of Directors had not approved or granted any stock options to Mr.

On July 31, 2021, a bonus of

$90,213 was accrued for Mr.

Jemmett is entitled to stock options under our 2019 Equity Incentive Plan.

The stock options will vest at 33% on the one-year anniversary

of the Jemmett Employment Agreement and the remaining 66% of the options will vest monthly over the next 12 months.

As of December 31,

2021, our Board of Directors had not approved or granted any stock options to Mr.

On July 31, 2021, a bonus of $90,213 was accrued

Jemmett and subsequently paid on February 15, 2022.

Jemmett is also eligible to participate in our standard

benefit plans.

May 15, 2019, we entered into an employment agreement with Mr.

Santos to serve as our Chief Operating Officer (the “Santos Employment

The Santos Employment Agreement is evergreen and could be terminated by either party.

Pursuant to the Santos Employment

Agreement, as amended, Mr.

Santos earned an initial base annual salary of $225,000, with an annual guaranteed bonus of $15,000, which

could be increased to an annual base salary of $245,000 upon our company achieving gross annual revenue of $20,000,000 in any calendar

year and an increase to an annual base salary of $300,000 upon our company achieving gross annual revenue of $40,000,000 in any calendar

Santos was entitled to receive a discretionary annual bonus of up to 100% of his annual base salary, at the discretion of our

Board of Directors, based on performance and company objectives.

Subject to approval by our Board of Directors, Mr.

Santos was entitled

to stock options to purchase 3,000,000 shares of our common stock under our 2019 Equity Incentive Plan.

Santos was also eligible

to participate in our standard benefit plans.

Santos resigned on July 16, 2021 in connection with his resignation, he received a

portion of his guaranteed bonus, or $7,500, and a severance payment of $28,125.

Jemmett is also eligible to participate in our standard benefit plans.

December 31, 2020, we entered into an employment agreement with Ms.

Smith to serve as our Executive Vice President of Finance, effective

as of February 1, 2021 (the “Smith Employment Agreement”).

Pursuant to the Smith Employment Agreement, Ms.

Smith earns an

initial base annual salary of $200,000, with an increase upon our listing to a national exchange, subject to approval by our Board of

Directors, a guaranteed bonus of $60,000 to be paid quarterly, and an additional $60,000 at the end of each fiscal year at the discretion

of our Board of Directors.

Smith is also eligible to participate in our standard benefit plans.

On June 18, 2021, we appointed Ms.

Smith to serve as Chief Financial Officer.

The terms of the original Smith Employment Agreement remained in force.

December 23, 2021, we entered into an employment agreement with Ms.

Devoto to serve as our Chief Information Security Officer (the “Devoto

Employment Agreement”).

The Devoto Employment Agreement is evergreen and can be terminated by either party.

Pursuant to the Devoto

Employment Agreement, Ms.

Devoto earned an initial base annual salary of $225,000, with an increase upon our listing to a national exchange,

subject to approval of our Board of Directors, a guaranteed bonus of equal to 20% of base annual salary, an annual bonus up to 100% of

base annual salary at the discretion of our Board of Directors, and a sign-on bonus of $100,000.

Devoto is also eligible to participate

in our standard benefit plans.

On August 8, 2022, we appointed Ms.

Devoto to serve as President.

The terms of the Devoto Employment Agreement

remained in force.

February 28, 2022, we entered into an employment agreement with Mr.

Bennett to serve as our Chief Operating Officer (the

“Bennett Employment Agreement”).

The Bennett Employment Agreement was evergreen and could be terminated by either party.

Pursuant to the Bennett Employment Agreement, Mr.

Bennett received an initial base annual salary of $250,000, which could be increased at

the discretion of our Board of Directors, an annual bonus up to 100% of base annual salary at the discretion of our Board of

Directors, and a sign-on bonus of $150,000.

Bennett was also eligible to participate in our standard benefit plans.

Bennett separated from our company on March 30, 2023.

Bryce Hancock

December 14, 2020, we entered into an employment agreement with Mr.

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Hancock resigned on February

December 31, 2020, we entered into an employment agreement with Ms.

Smith to serve as our Executive Vice President of Finance, effective

as of February 1, 2021 (the “Smith Employment Agreement”).

Pursuant to the Smith Employment Agreement, Ms.

Smith earns an

initial base annual salary of $200,000, with an increase upon our listing to a national exchange, subject to approval by the Company’s

Board of Directors, a guaranteed bonus of $60,000 to be paid quarterly, and an additional $60,000 at the end of each fiscal year at the

discretion of our Board of Directors.

Smith is also eligible to participate in our standard benefit plans.

On June 18, 2021, we appointed

Smith to serve as Chief Financial Officer.

The terms of the original Smith Employment Agreement remained in force.

Compensation [2]

following table sets forth for each director certain information concerning their compensation for the year ended December 31, 2021:

following table sets forth for each non-employee director certain information concerning their compensation for the year ended

December 31, 2022:

Stephen Scott (3)

Scott Holbrook

Sandra Morgan (4)

Kiki VanDeWeghe

amounts in this column reflect the fair value on the grant date of the option awards granted to the named executive, calculated in

11 unchanged sentences

directors receive reimbursement for reasonable out-of-pocket expenses in attending Board meetings and for participating in our business.

Note to CISO:

An introductory paragraph should be added summarizing director compensation (e.g., whether they receive, options, cash,

or whether they receive an initial grant upon appointment and then yearly thereafter).

Issuer confirmed that there is no commitment

or expectation, so no policy in place and is essentially random.

Scott receives payment of $11,500 per month under the terms of an independent consulting agreement to provide services relating to

our strategic and business development, and sales and marketing.

Morgan resigned on March 15, 2022.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 13, 2022

for (a) the named executive officers, (b) each of our directors, (c) all of our current directors and executive officers as a group and

(d) each stockholder known by us to own beneficially more than 5% of our common stock.

Beneficial ownership is determined in accordance

with the rules of the SEC and includes voting or investment power with respect to the securities.

We deem shares of common stock that

may be acquired by an individual or group within 60 days of April 13, 2022 pursuant to the exercise of options or warrants to

be outstanding for the purpose of computing the percentage ownership of such individual or group but are not deemed to be outstanding

for the purpose of computing the percentage ownership of any other person shown in the table.

Except as indicated in footnotes to this

table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common

stock shown to be beneficially owned by them based on information provided to us by these stockholders.

Percentage of ownership is based

on 136,719,649 shares of common stock outstanding on April 13, 2022.

following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 27, 2023 for

(a) the named executive officers, (b) each of our directors, (c) all of our current directors and executive officers as a group and (d)

each stockholder known by us to own beneficially more than 5% of our common stock.

Beneficial ownership is determined in accordance with

the rules of the SEC and includes voting or investment power with respect to the securities.

We deem shares of common stock that may

be acquired by an individual or group within 60 days of March 27, 2023 pursuant to the exercise of options or warrants to be outstanding

for the purpose of computing the percentage ownership of such individual or group but are not deemed to be outstanding for the purpose

of computing the percentage ownership of any other person shown in the table.

Except as indicated in footnotes to this table, we believe

that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be

beneficially owned by them based on information provided to us by these stockholders.

Percentage of ownership is based on 154,176,477 shares of

common stock outstanding on March 27, 2023.

Ownership of Certain Beneficial Holders

7 unchanged sentences

Name and Address of

Beneficial Owner (1)

Amount and Nature of

66,435,000 (2)

Beneficial Ownership

69,435,000 (3)

3 unchanged sentences

Kiki VanDeWeghe

Directors & Executive Officers

as a Group (10 persons)

Bryce Hancock

& Executive Officers as a Group (9 persons)

than 1% of the outstanding shares of common stock.

2 unchanged sentences

Arizona 85251.

of 66,435,000 shares, Mr.

Jemmett is the managing member of Jemmett Enterprises, LLC and has voting and dispositive power over such

of 193,750 shares issuable upon exercise of options exercisable within 60 days after April

shares held directly by Ms.

of 12,900,000 shares held directly by Mr.

Scott, 5,000,000 shares beneficially held by TVMT LLC, 500,000 shares beneficially held

by Scott Revocable Trust and 250,000 shares beneficially held by JLS 401k Trust.

of 400,000 shares

issuable upon the exercise of options exercisable within 60 days after April 13, 2022 .

of (i) 375,000 shares held indirectly as executor of the Andrew and Lucy McCain Family Trust, for which Mr.

McCain has voting and

dispositive power;

Jemmett is the managing member of Jemmett Enterprises, LLC and has voting and dispositive power over such shares.

of (i) 66,435,000 shares held by Jemmett Enterprises, LLC, of which Mr.

Jemmett is the managing member and has voting and dispositive

power over such shares;

(ii) 2,000,000 shares held by Xander LLC, of which Mr.

Jemmett and his wife are the sole members and have

voting and dispositive power over such shares;

and (iii) 1,000,000 shares held by Dana Borgman Trust.

of 549,582 shares issuable upon exercise of options exercisable within 60 days after March 27, 2023.

of (i) 62,500 shares held directly by Ms.

Devoto and (ii) 312,500 issuable upon exercise of options exercisable within 60 days after

March 27, 2023.

of (i) 12,800,000 shares held directly by Mr.

(ii) 5,000,000 shares beneficially held by TVMT LLC;

and (iii) 250,000 shares beneficially held by JLS 401k Trust.

of 400,000 shares issuable upon the exercise of options exercisable within 60 days after March 27, 2023.

Consists of (i) 375,000 shares held indirectly as executor of the Andrew and Lucy McCain Family Trust, for which Mr.

McCain has voting and dispositive power;

(ii) 3,000,000 shares held by Hensley & Company, for which Mr.

McCain has voting and dispositive power;

(iii) 400,000 shares issuable upon the exercise of options exercisable within 60 days after

April 13, 2022 .

of 100,000 shares

issuable upon the exercise of options exercisable within 60 days after April 13, 2022.

(iii) 400,000 shares issuable upon the exercise of options exercisable within 60 days after March 27, 2023;

and (iv) 4,166,667 shares issuable upon the conversion of a note payable held by Hensley & Company.

Consists of 183,333 shares issuable upon the exercise of options exercisable within 60 days after March 27, 2023.

Consists of 291,666 shares issuable upon exercise of options exercisable within 60 days after March 27, 2023.

Consist of 1,075,000 shares issuable upon exercise of options exercisable within 60 days after March 27, 2023.

Includes 2,801,780 shares issuable upon the exercise of options

exercisable within 60 days after March 27, 2023 and 4,166,667 shares issuable upon conversion of a note payable.

Authorized for Issuance Under Existing Equity Compensation Plan

3 unchanged sentences

to be Issued Upon

Outstanding Options

Weighted-Average

Exercise Price of

Outstanding Options

Number of Securities

20 unchanged sentences

director or executive officer of our company;

person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding

shares of common stock;

person who beneficially owns, directly or indirectly, shares carrying more than 5% of the

voting rights attached to our outstanding shares of common stock;

promoters and control persons;

member of the immediate family (including spouse, parents, children, siblings and in laws) of any of the foregoing persons.

Payable with Jemmett Enterprises, LLC

December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC, an entity affiliated with Mr.

Chief Executive Officer and Director, and majority stockholder of our company, for a principal amount of $200,000.

The note had an original

maturity date of June 30, 2020 and had an interest rate of 6% per annum.

On June 29, 2020, the note payable was extended to July 30,

During the year ended December 31, 2021 and 2020, we made cash payments of $59,787 and $50,000, respectively, under the note.

outstanding principal balance of this loan was zero and $59,787 as of December 31, 2021 and 2020, respectively.

Payable with Hensley & Company

December 23, 2020, we issued a 6% unsecured convertible note to Hensley & Company (the “Lender”), in consideration of

the Lender lending us $3,000,000 (the “Principal Amount”).

The Principal Amount, together with accrued and unpaid interest,

was due on December 31, 2021 (the “Maturity Date”), with no prepayment option.

Interest was calculated at 6% per annum (based

on a 360-day year) and was payable monthly.

The Maturity Date was extendable at our election to December 31, 2022.

At any time prior

to or on the Maturity Date, the Lender was permitted to convert all or any portion of the outstanding Principal Amount and all accrued

but unpaid interest thereon into shares of our common stock at a conversion price of $2.00 per share.

During the years ended December

31, 2021 and 2020, we paid the Lender interest payments of $182,500 and zero, respectively.

On December 31, 2021, the Lender

converted the total Principal Amount under the note into 1,500,000 shares of common stock of our company.

McCain, a Director of our

company, is President and Chief Operating Officer of the Lender.

of Common Stock to Hensley & Company

September 22, 2020, we issued 250,000 shares of common stock to Hensley & Company, an entity affiliated with Mr.

McCain, a Director

of our company, for a purchase price of $2.00 per share, or aggregate cash proceeds of $500,000.

member of the immediate family (including spouse, parents, children, siblings and in laws)

of any of the foregoing persons.

Consulting Agreement with Stephen Scott

August 2020, we entered into an Independent Consulting Agreement with Stephen Scott, a director of our company, with respect to advisory

and consulting services relating to our strategic and business development, and sales and marketing.

Scott receives a consulting

fee of $11,500 per month for such services.

During the years ended December 31, 2022 and 2021, we paid consulting fees to Mr.

the amount of $138,000.

Services Agreement with Hensley Beverage Company

July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company, an entity affiliated with Mr.

director of our 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 a term through December

31, 2021, the agreement will continue until terminated by either party.

For the years ended December 31, 2022 and 2021, and, we received

$850,445 and $466,597, respectively from Hensley Beverage Company for contracted services and had an outstanding receivable balance of

$15,737 and $11,508 as of December 31, 2022 and 2021, respectively.

Note Payable with Hensley Beverage Company

March 20, 2023, we entered into a Purchase Agreement (the “Purchase Agreement”) with Hensley & Company dba Hensley

Beverage Company (the “Purchaser”), an entity affiliated with Mr.

McCain, a director of our company, pursuant to which

we issued and sold to the Purchaser a $5,000,000 10 Percent (10%) Unsecured Convertible Note (the “Note”) for gross

proceeds of $5,000,000 in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as

amended (the “Securities Act”), and Regulation D promulgated thereunder (the “Note Offering”).

together with accrued and unpaid interest thereon, is due on March 20, 2025 (the “Maturity Date”).

We may not prepay the

Note prior to the Maturity Date without the consent of the Purchaser.

The Note will bear interest at a rate of 10% per annum (based

on a 360-day year), payable monthly.

At any time prior to or on the Maturity Date and subject to certain beneficial ownership

limitations, the Purchaser may convert all or any portion of the outstanding principal amount of the Note and all accrued and unpaid

interest thereon into shares (the “Conversion Shares”) of our common stock, par value $0.00001 per share, at a conversion price of $1.20 per share (the “Conversion Price”).

The Conversion Price is adjustable in the event of

any stock split, reverse stock split, recapitalization, reorganization, or similar event.

Upon the occurrence of an “Event of

Default” (as defined in the Note and including the failure to make required payments when due after specified grace periods,

certain breaches of the Purchase Agreement and certain specified insolvency events), the Purchaser would have the right to

accelerate payments due under the Note, which from and after such acceleration would bear interest at a default rate of 24% per

“Directors, Executive Officers and Corporate Governance – Director Independence” and “Directors, Executive Officers

1 unchanged sentence

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Committee has appointed Semple, Marchal & Cooper, LLP (“SMC”) as our independent registered public accounting firm

(the “Independent Auditor”) for the year ended December 31, 2021.

Audit Committee has appointed Semple, Marchal & Cooper, LLP (“SMC”) as our independent registered public accounting firm for the year ended December 31, 2022.

The following table sets forth the fees billed to our company

12 unchanged sentences

fees consisted primarily of tax related advisory and preparation services.

Other Fees consist of fees billed for products and services provided by our independent registered

public accountants, other than those disclosed above.

Policies and Procedures

8 unchanged sentences

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as a part of the report:

For a list of the financial statements included herein, see the index to the financial statements beginning on page F-1 of this

Annual Report on Form 10-K, incorporated into this Item by reference.

Financial statement schedules have been omitted because they are either not required or not applicable or the information is

included in the consolidated financial statements or the notes thereto.

The following documents are filed as a part of the

For a list of the financial statements included

herein, see the index to the financial statements beginning on page F-1 of this Annual Report on Form 10-K, incorporated into this

Item by reference.

Financial statement schedules have been omitted

because they are either not required or not applicable or the information is included in the consolidated financial statements or

the notes thereto.

Agreement for the Purchase and Sale of Limited Liability Company Interests of GenResults, LLC dated April 12, 2019

3 unchanged sentences

Share Purchase Agreement among the Registrant, Clear Skies Security, LLC and all of its Members dated July 31, 2020

Agreement and Plan of Merger by and among Cerberus Cyber Sentinel Corporation, Alpine Merger Sub, LLC, Alpine Security, LLC and Christian Espinosa dated December 16, 2020

Agreement and Plan of Merger by and among the Registrant, Alpine Merger Sub, LLC, Alpine Security, LLC and Christian Espinosa dated December 16, 2020

Amended and Restated Agreement and Plan of Merger by and among the Registrant, Catapult Acquisition Merger Sub, LLC, Catapult Acquisition Corporation, the shareholders of Catapult Acquisition Corporation and Darek Hahn dated July 26, 2021

7 unchanged sentences

dated January 5, 2022

Note to CISO:

To be discussed if any agreements are completed with no further obligations.

leases for real property should as also be filed as exhibits.

[Note to CISO/Eventus:

Can you please confirm if there are material leases

for real property that should be included as exhibits?]

Certificate of Incorporation of the Registrant dated March 4, 2019

Certificate of Amendment of Certificate of Incorporation of the Registrant dated April 12, 2019

Certificate of Amendment of Certificate of Incorporation of the Registrant dated September 25, 2019

Amended and Restated Certificate of Incorporation of the Registrant

By-laws of the Registrant

1 unchanged sentence

Description of Securities Registered under Section 12 of the Exchange Act

Unsecured Note Agreement between the Registrant and Jemmett Enterprises, LLC dated December 31, 2018

Form of Underwriter Warrant

Stock Repurchase Agreement between the Registrant and Alan Kierman dated September 1, 2019

2019 Equity Incentive Plan

2019 Equity Incentive Plan, as amended

Form of Stock Option Agreement

1 unchanged sentence

Jemmett dated September 30, 2019

Employment Agreement between the Registrant and William Santos dated August 13, 2019

Engagement for Financial Services between the Registrant and Eventus Consulting, P.C.

dated November 8, 2019

6% Unsecured Convertible Note by the Registrant payable to Hensley & Company, dated December 23, 2020

Employment Agreement by and between Bryce Hancock and the Registrant dated December 14, 2020

Purchase Agreement and 5% Unsecured Convertible Note by the Registrant payable to Neil Stinchcombe dated October 27, 2021

Letter Agreement between the Registrant and Neil Stinchcombe dated March 27, 2023

Employment Agreement by and between Debra L.

Smith and the Registrant dated December 31, 2020

Employment Agreement by and between David A.

Bennett and the Registrant dated February 12, 2022

Agreement by and between Ashley N.

Devoto and the Registrant dated December 23, 2021

Form of Lockup Agreement

Purchase Agreement, dated March 20, 2023, by and between the Registrant and Hensley & Company dba Hensley Beverage Company

10% Unsecured Convertible Note by the Registrant payable to Hensley & Company, dated March 20, 2023

Employment Agreement by and between Kyle J.

Young and the Registrant dated March 30, 2023

Subsidiaries of the Registrant

Consent of Semple, Marchal & Cooper LLP

Consent of Baker Tilly Chile Ltda.

Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer

3 unchanged sentences

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

exhibits, annexes, and/or s chedules have been omitted from this filing pursuant to Item 601(b)(2)

of Regulation S-K.

We agree to furnish supplementally a copy of any omitted exhibit, annex, or schedule to the Securities and Exchange

Commission upon request.

XBRL Schema Document

XBRL Calculation Linkbase Document

XBRL Definition Linkbase Document

XBRL Label Linkbase Document

XBRL Presentation Linkbase Document

Page Interactive Data File (Embedded within the Inline XBRL document)

exhibits, annexes, and/or schedules have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.

We agree to furnish

supplementally a copy of any omitted exhibit, annex, or schedule to the Securities and Exchange Commission upon request.

Management contracts and compensatory plans and arrangements.

8 unchanged sentences

Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Information Security Officer and Director

, Chief Information Security Officer and Director

General Robert C.

1 unchanged sentence

Scott Holbrook

/s/ Ernest M.

(Kiki) VanDeWeghe, III

2 unchanged sentences

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2022 AND 2021

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # 178 )

REPORT OF THE INDEPENDENT AUDITORS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # 178 )

FINANCIAL STATEMENTS:

12 unchanged sentences

In our opinion, based on our

audits and the report of the other auditor, the consolidated financial statements present fairly, in all material respects, the consolidated

financial position of the Company at December 31, 2021 and 2020, and the results of its consolidated operations and its cash flows for

the years then ended , in conformity with accounting principles generally accepted in the United States of America.

did not audit the financial statements of Arkavia Networks, SpA, a wholly-owned subsidiary, which statements reflect total assets of

$12.1 million at December 31, 2021, and total revenues of $1.3 million for the month then ended.

Those statements were audited by another

auditor whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Arkavia Networks, SpA,

is based solely on the report of the other auditor.

audits and the report of the other auditors, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company at December 31, 2022 and 2021, and the results of its consolidated operations and its cash flows for the years

then ended , in conformity with accounting principles generally accepted in the United States of America.

did not audit the combined financial statements of the Company’s wholly-owned “South American Subsidiaries,” which

include the consolidated balance sheets of Arkavia Networks SpA.

and its wholly-owned subsidiaries Arkavia Networks Limitada and Arkavia

Networks, as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ equity, and cash

flows for the year ended December 31, 2022, and for the period from December 1, 2021 (Acquisition) to December 31, 2021;

balance sheets of Servicios Informaticos CUATROi, S.P.A., Comercializadora CUATROi S.P.A., CUATROi Peru S.A.C., and CUATROi S.A.S.

under common ownership and management) as of December 31, 2022 and the related combined statements of operations, stockholders’

equity, and cash flows for the period ended August 26, 2022 (Acquisition) to December 31, 2022;

and the combined balance sheets of NLT

Networks, S.P.A., NLT Tecnologias, Limitada, NLT Servicios Profesionales, S.P.A.

and White and Blue Solutions, LLC (entities under common

ownership and management) as of December 31, 2022 and the related combined statements of operations, stockholders’ equity, and

cash flows for the period ended September 1, 2022 (Acquisition) to December 31, 2022;

and the related notes (collectively “combined

financial statements”).

The combined financial statements of the South American Subsidiaries reflect total assets of $39.5 million

and $12.1 million at December 31, 2022 and 2021, respectively, and total revenues of $10.0 and $1.3 million for the periods then ended.

Those statements were audited by another auditor whose report has been furnished to us, and our opinion, insofar as it relates to the

amounts included for the South American Subsidiaries, is based solely on the report of the other auditors.

Concern Uncertainty

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, negative cash flows from

operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern.

plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

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used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

We believe that our audits provide a reasonable basis for our opinion.

Semple, Marchal & Cooper, LLP

1 unchanged sentence

have served as the Company’s auditor since 2019.

OF THE INDEPENDENT AUDITORS

of Directors and Stockholders of

Cyber Sentinel Corporation and Subsidiaries Scottsdale, Arizona

on the financial statements

have audited the consolidated balance sheets of Arkavia Networks SpA.

and its wholly-owned subsidiaries Arkavia Networks Limitada and

Arkavia Networks (collectively “Arkavia”), as of December 31, 2022 and 2021, and the related consolidated statements of operations,

stockholders’ equity, and cash flows for the year ended December 31, 2022, and for the period from December 1, 2021 (Acquisition)

to December 31, 2021;

the combined balance sheets of Servicios Informaticos CUATROi, S.P.A., Comercializadora CUATROi S.P.A., CUATROi

Peru S.A.C., and CUATROi S.A.S.

(entities under common ownership and management, collectively “CUATROi”) as of December 31,

2022 and the related combined statements of operations, stockholders’ equity, and cash flows for the period ended August 26, 2022

(Acquisition) to December 31, 2022;

and the combined balance sheets of NLT Networks, S.P.A., NLT Tecnologias, Limitada, NLT Servicios

Profesionales, S.P.A.

and White and Blue Solutions, LLC (entities under common ownership and management, collectively “NLT”)

as of December 31, 2022 and the related combined statements of operations, stockholders’ equity, and cash flows for the period

ended September 1, 2022 (Acquisition) to December 31, 2022;

and the related notes (collectively “combined financial statements”)

(Arkavia, together with CUATROi and NLT, the “Company” ).

In our opinion, such combined financial statements present fairly,

in all material respects the combined financial position as December 31, 2022 and 2021, and the results of its combined operations and

its cash flows for the periods then ended, in conformity with accounting principles generally accepted in the United States of America.

combined financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the combined financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company with respect to

the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the combined financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Board of Directors and Stockholders of

Cyber Sentinel Corporation and Subsidiaries Scottsdale, Arizona

audits include performing procedures to assess the risks of material misstatement of the combined financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding

the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

SILVA MORALES

TILLY CHILE LTDA.

Chile , March 31, 2023

have served as auditors since 2021.

Tilly Chile Auditores Consultores Ltda., trading as Baker Tilly Chile is a member of the global network of Baker Tilly International

Ltd., the members of which are separate and independent legal entities.

CYBER SENTINEL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowances for doubtful accounts of $ 77,811 and $ 40,000 , respectively

Accounts receivable, net

Notes receivable, related party

Prepaid cost of revenue

Prepaid expenses and other current assets

Contract asset

Total Current Assets

Notes receivable, related party

Property and equipment, net of accumulated depreciation of $ 102,000

and $ 14,000 ,

Property and equipment, net

Right of use asset, net

Intangible assets, net of accumulated amortization of $ 323,000 and $ 116,000 , respectively

Intangible assets, net

$ 104,496,815

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Deferred revenue

Stock payable

Settlement liability

Lease liability, current portion

Loans payable, current portion

Line of credit

Convertible note payable, net of debt discount, related party

Note payable, related party

Lease liability

Loans payable

Convertible notes payable

Total Current Liabilities

2 unchanged sentences

Lease liability, net of current portion

Deferred tax liability

Total Liabilities

1 unchanged sentence

Stockholders’ Equity:

Common stock, $ .00001 par value;

Common stock, $ .00001

shares authorized;

125,852,971 and 116,104,971 shares issued and outstanding on December 31, 2021 and 2020, respectively

and 125,852,971

issued and outstanding at December 31, 2022 and 2021

Preferred stock, $ .00001 par value;

50,000,000 shares authorized;

0 shares issued and outstanding on December 31, 2022 and December 31, 2021

Additional paid-in capital

Accumulated translation adjustment

Accumulated deficit

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Total Liabilities and Stockholders’ Equity

accompanying notes are an integral part of these consolidated financial statements.

$ 104,496,815

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

CYBER SENTINEL CORPORATION AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

For the Years Ended

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

December 31, 2022

December 31, 2021

December 31, 2022

December 31, 2021

Security managed services

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Cost of payroll

Stock based compensation

Total cost of revenue

5 unchanged sentences

Stock based compensation

Impairment of goodwill (Note 6)

Impairment of goodwill

Total operating expenses

3 unchanged sentences

Other income (expense):

Other income (expense)

Interest expense, net

1 unchanged sentence

Total other income (expense)

Loss before income taxes

Benefit from income taxes

( 33,775,182 )

( 39,145,650 )

Net loss per common share - basic

Net loss per common share - diluted

Foreign currency translation adjustment

Comprehensive loss

$ ( 32,712,935 )

$ ( 39,145,650 )

Net loss per common share - basic and diluted

Weighted average shares outstanding - basic

Weighted average shares outstanding - diluted

accompanying notes are an integral part of these consolidated financial statements.

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

CYBER SENTINEL CORPORATION AND SUBSIDIARIES

STATEMENTS OF STOCKHOLDERS’ EQUITY

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Preferred Stock

Comprehensive

Balance at January 1, 2022

$ ( 44,012,422 )

$ ( 2,400,000 )

Stock based compensation - stock options

1 unchanged sentence

Stock issued for cash

Stock issued for Technologyville acquisition

Stock issued for Clear Skies acquisition

Stock issued for Alpine Security acquisition

Return of treasury stock to authorized capital

Exercise of options

Stock issued for cash in public offering

Stock issued for True Digital acquisition

Stock issued for VelocIT acquisition

Stock issued for Red74 acquisition

Stock issued for Creatrix acquisition

Stock issued for CyberViking acquisition

Stock issued for CUATROi acquisition

Stock issued for NLT acquisition

Foreign currency translation

( 33,775,182 )

Beneficial conversion feature related to convertible note

( 33,775,182 )

Balance at December 31, 2022

$ 153,168,984

Balance as of December 31, 2020

$ ( 77,787,604 )

Balance at January 1, 2021

$ ( 4,866,772 )

Stock based compensation - stock options

1 unchanged sentence

Exercise of stock options

Exercise of options

Stock issued for conversion of convertible debt

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( 39,145,650 )

Balance as of December 31, 2021

Balance at December 31, 2021

$ ( 44,012,422 )

accompanying notes are an integral part of these consolidated financial statements.

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

CYBER SENTINEL CORPORATION AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

December 31, 2021

December 31, 2020

Cash flows from operating activities:

Cash flows from operating

$ ( 33,775,182 )

$ ( 39,145,650 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation - stock options

Stock based compensation - common stock

Issuance of common stock for services

Depreciation and amortization

Right of use amortization

Amortization of debt discount

Settlement liability

Forgiveness of PPP Loan

Loss on write-off of accounts receivable

Adjustments to reconcile net

loss to net cash used in operating activities:

based compensation - stock options

based compensation - common stock

and amortization

of use amortization

interest expense

Impairment of goodwill

Changes in operating assets and liabilities:

Accounts receivable, net

Changes in operating assets

and liabilities:

receivable, net

( 2,358,896 )

Other current assets

Accounts payable and accrued expenses

Lease liability

Deferred revenue

Settlement liability

Net cash used in operating activities

and other current assets

( 2,625,108 )

payable and accrued expenses

cash used in operating activities

( 10,681,007 )

Cash flows from investing activities:

Purchases of property and equipment

Cash acquired in acquisitions, net

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from sale of common stock

Proceeds from stock option exercise

Proceeds from PPP loans

Proceeds from loan payable

Proceeds from notes payable, related party

Proceeds from convertible note payable, related party

Proceeds from line of credit

Payment on line of credit

Payment on loans payable

( 7,385,129 )

Payment on notes payable, related party

Distributions to member

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash flows from investing

of property and equipment

(paid)/acquired in acquisitions, net

( 5,536,697 )

Cash and cash equivalents - beginning of the period

Cash and cash equivalents - end of the period

cash (used in)/provided by investing activities

( 6,048,944 )

Cash flows from financing

from sale of common stock

from stock option exercise

from loan payable

from notes payable, related party

from convertible note payable

from line of credit

on line of credit

on loans payable

( 2,083,076 )

( 1,859,820 )

on notes payable, related party

of debt issuance cost

cash provided by financing activities

Effect of exchange rates on

cash and cash equivalents

Net increase in cash and cash

( 2,471,995 )

and cash equivalents - beginning of the period

and cash equivalents - end of the period

Supplemental cash flow information:

Cash paid for:

Non-cash investing and financing activities:

Right of use asset and lease liability

Forgiveness of PPP Loan

Beneficial conversion feature

Common stock issued in Technologyville acquisition

Common stock issued in Clear Skies acquisition

Common stock issued in Alpine Security acquisition

Common stock issued in VelocIT acquisition

Common stock issued in Atlantic acquisition

Common stock issued in RED 74 acquisition

Common stock issued in Arkavia acquisition

Options issued for VelocIT acquistion

accompanying notes are an integral part of these consolidated financial statements.

Non-cash investing and financing

of use asset and lease liability recorded upon adoption of ASC 842

stock issued in VelocIT acquisition

stock issued in Atlantic acquisition

stock issued in RED 74 acquisition

stock issued in Arkavia acquisition

Options issued for VelocIT acquisition

stock issued in True Digital acquisition

stock issued in Creatrix acquisition

stock issued in CyberViking acquisition

stock issued in CUATROi acquisition

stock issued in NLT Secure acquisition

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

CYBER SENTINEL CORPORATION AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

otherwise indicated or the context requires otherwise, the terms “we,” “us,” “our,” and “our

company” refer to Cerberus Cyber Sentinel Corporation, a Delaware corporation (“Cerberus”), and its wholly owned subsidiaries,

including GenResults, LLC, an Arizona limited liability company (“GenResults”), TalaTek, LLC, a Virginia limited liability

company (“TalaTek”), Technologyville, Inc., an Illinois corporation (“Techville”), Clear Skies Security, LLC,

a Georgia limited liability company (“Clear Skies”), Alpine Security, LLC, an Illinois limited liability company (“Alpine”),

Catapult Acquisition Corporation, a New Jersey corporation (“VelocIT”), Southford Equities, Inc., a British Virgin Islands

company (“Arkavia”), True Digital Security, Inc., a Delaware corporation (“True Digital”), RED74 LLC, a New Jersey

limited liability company (“RED74”), Atlantic Technology Systems, Inc., a New Jersey corporation (“ATS”), and

Atlantic Technology Enterprises, Inc., a New Jersey corporation (“ATE” and together with ATS, “Atlantic”).

otherwise specified, all dollar amounts are expressed in United States dollars.

1 – NATURE OF THE ORGANIZATION AND BUSINESS

otherwise indicated or the context requires otherwise, the terms ““we,” “us,” “our,” and “our

company” refer to Cerberus Cyber Sentinel Corporation, a Delaware corporation (“Cerberus”), and our wholly owned subsidiaries.

Unless otherwise specified, all dollar amounts are expressed in United States dollars.

of the Business

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Our brand rallies around the battle cry:

“Cybersecurity is a Culture, not a Product.”

and Acquisition History

were formed on March 5, 2019 as a Delaware corporation.

Our principal offices are located at 6900 East Camelback Road, Suite 240, Scottsdale,

Arizona 85251.

April 1, 2019, we acquired GenResults.

GenResults was established on June 22, 2015.

Prior to our acquisition of GenResults, GenResults

was wholly owned by an entity affiliated with David G.

Jemmett, our Chief Executive Officer and a director of our company.

companies being under common control, we accounted for the acquisition as a reorganization.

April 12, 2019, we consummated a transaction whereby VCAB Six Corporation, a Texas corporation, (“VCAB”) merged with and

into us (the “VCAB Merger”).

At the time of the VCAB Merger, VCAB was subject to a bankruptcy proceeding and had minimal

assets, no equity owners, and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and

a holder of allowed administrative expenses (collectively the “Claim Holders”).

Pursuant to the terms of the VCAB Merger,

and in accordance with the bankruptcy plan, we issued an aggregate of 2,000,000 shares of our common stock (the “Plan Shares”)

to the Claim Holders as full settlement and satisfaction of their respective claims.

As provided in the bankruptcy plan, the Plan Shares

were issued pursuant to Section 1145 of the United States Bankruptcy Code.

As a result of the VCAB Merger, the separate corporate existence

of VCAB was terminated.

We entered into the VCAB Merger to increase our stockholder base to, among other things, assist us in satisfying

the listing standards of a national securities exchange.

October 1, 2019, we entered into an agreement and plan of merger with TalaTek (the “TalaTek Merger”) pursuant to which TalaTek

became our wholly owned subsidiary.

Under the TalaTek Merger, all issued and outstanding units representing membership interests in TalaTek

were converted into an aggregate of 6,200,000 shares of our common stock.

October 2, 2019, we filed a registration statement on Form 10-12G with the SEC to effect registration of our common stock, par value

$ 0.00001 per share, under the Exchange Act.

The registration statement became effective on December 1, 2019.

May 25, 2020, we entered into a stock purchase agreement with Techville and its sole shareholder, pursuant to which we acquired all of

the issued and outstanding common stock of Techville (the “Techville Acquisition”) (see Note 3).

August 1, 2020, we entered into a stock purchase agreement with Clear Skies and its equity holders, pursuant to which we acquired all

of the issued and outstanding equity securities of Clear Skies (the “Clear Skies Acquisition”) (see Note 3).

December 16, 2020, we entered into an agreement and plan of merger with Alpine and its sole member, pursuant to which Alpine became our

wholly owned subsidiary (the “Alpine Acquisition”) (see Note 3).

October 1, 2021, we entered into a stock purchase agreement with ATS, ATE, James Montagne as the sole shareholder of ATS, and James Montagne

and Miriam Montagne, as the sole shareholders of ATE (the “Shareholders”) (see Note 3).

October 8, 2021, we entered into a merger agreement with RED74 and Ticato Holdings, Inc., a New Jersey corporation (“Ticato”),

and Tim Coleman, as sole shareholder of Ticato.

Tim Coleman and Ticato were the sole shareholders of RED74 (see Note 3).

July 26, 2021, we entered into an agreement and plan of merger with VelocIT, pursuant to which VelocIT became a wholly owned subsidiary

of our company (see Note 3).

December 1, 2021, we entered into a stock purchase agreement with Arkavia and all of the owners of Arkavia, pursuant to which we acquired

all of the issued and outstanding equity securities of Arkavia (the “Arkavia Acquisition”) (see Note 3).

January 5, 2022, we entered into a stock purchase agreement (the “True Digital Stock Purchase Agreement”) with certain stockholders

of True Digital and an agreement and plan of merger (the “True Digital Merger Agreement”) with True Digital and certain of

its other stockholders.

On January 19, 2022, the transactions contemplated by the True Digital Stock Purchase Agreement and the True

Digital Merger Agreement were consummated, with True Digital becoming a wholly owned subsidiary of our company.

“Cyber security is a Culture, not a Product.”

2 – LIQUIDITY AND GOING CONCERN CONSIDERATIONS

accompanying 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 year ended December 31, 2022, we incurred a net loss of $ 33,775,182 ,

had negative cash flows from operations of $ 10,681,007 , and working capital deficit of $ 8,814,244 .

These matters raise substantial doubt

as to our ability to continue as a going concern.

Our existence is dependent upon our ability to develop profitable operations.

We are devoting substantially all of our efforts to developing our business, reducing overhead costs, and raising capital, although there

can be no assurance that the our efforts will be successful.

No assurance can be given that our actions will result in profitable operations

or the resolution of liquidity problems.

The accompanying consolidated financial statements do not include any adjustments that might

result should we be unable to continue as a going concern.

order to improve our liquidity, in addition to a planned reduction in overhead costs, we are actively pursuing additional debt and/or equity financing through discussions with investment bankers and private investors.

can be no assurance that we will be successful in our efforts to secure additional financing.

financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities

that might be necessary should we be unable to continue as a going concern.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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of our management, who is responsible for their integrity and objectivity.

We operate in one business segment, which is cybersecurity.

Consolidation

2 unchanged sentences

accounts and transactions have been eliminated in consolidation.

Reclassifications

reclassifications have been made to the financial statements for the year ended December 31, 2020 to conform to the financial statement

presentation for the year ended December 31, 2021.

These reclassifications had no effect on net loss or cash flows as previously reported.

Period Reclassifications

Reclassification

of certain immaterial prior period amounts have been made to conform to the current period presentation.

financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of

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risk-free interest rate, share price, and expected dividend rate.

revenue is derived from two major types of services to clients:

revenues are derived from two major types of services to clients:

security managed services and professional services.

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assessment and penetration testing, and disaster recovery and data backup solutions.

managed services offerings typically are paid in advance of providing services.

We have determined that our contracts do not include

a significant financing component.

Payments received in advance of our performance are initially recorded as deferred revenue and then

recognized as revenue on a straight-line basis over the term of the contract.

Revenue is recognized net of allowances for applicable

transaction-based taxes collected from customers.

revenue is categorized and disaggregated as reflected in our consolidated statements of operations and comprehensive loss, as follows:

Managed Services

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parts are not viewed as being distinct, but rather a collection of interrelated parts that are combined to fill a functional need over

a period of time (annual managed IT service).

a period of time (managed IT service).

As such, the parts are not viewed as distinct as the parts are not separable in the contract.

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Revenue is recognized as earned ratably over the contract

We have determined that SOC managed services is viewed by our company as one performance obligation, although it may include various

We have determined that vCISO managed services is viewed by our company as one performance obligation, although it may include various

parts (e.g., strategy, advisory, and oversight (referred to generally as the “parts”)).

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sales and contains a single performance obligation.

We recognize revenue on delivery of equipment to the client.

We recognize revenue upon delivery of equipment to the client.

The staffing services

offered contains a single performance obligation based on time and materials and revenue is recognized as invoices are approved and generated.

Disaggregated

consisted of the following by service offering for the year ended December 31, 2021:

SCHEDULE OF DISAGGREGATION OF REVENUES

Security Managed

Primary Sector Markets

Not-for-profit

Major Service Lines

Secured managed services

SOC managed services

Technical assessments

Incident response and forensics

Other cybersecurity services

consisted of the following by service offering for the year ended December 31, 2020:

Security Managed

Primary Sector Markets

Not-for-profit

Major Service Lines

Secured managed services

SOC managed services

Technical assessments

Incident response and forensics

Other cybersecurity services

and Cash Equivalents

consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts.

Receivables are unsecured

and non-interest bearing.

We provide for allowances for doubtful receivables based on our estimate of uncollectible amounts considering

age, collection history, and any other factors considered appropriate.

receivable are generally unsecured and reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts.

We provide for allowances for doubtful receivables based on our estimate of uncollectible amounts considering age, collection history,

and any other factors considered appropriate.

Payments are generally due within 30 days of invoice.

off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible.

As of December

31, 2021 and 2020, our allowance for doubtful accounts was $ 77,811 and $ 40,000 , respectively.

We write off accounts receivable

against the allowance for doubtful accounts when a balance is determined to be uncollectible.

As of December 31, 2022 and 2021, our allowance

for doubtful accounts was $ 270,011 and $ 77,811 , respectively.

cost of revenue

cost of revenue represents amounts charged by our vendors for licenses that we resell to our customers.

These amounts are amortized to

cost of revenue over the same period revenue is recognized for the related contract with our customers.

and Equipment

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cash flows or appraised values, depending on the nature of the assets.

During the year ended December 31, 2021, we recognized a loss

on impairment of goodwill of $ 22,078,064 (see Note 6).

During the year ended December 31, 2020, we did not record a loss on impairment.

record its intangible assets at estimated fair value in accordance with Accounting Standards Code (“ASC”) 350, Intangibles

No impairment was recorded for the year ended December 31, 2022.

record our intangible assets at estimated fair value in accordance with Accounting Standards Code (“ASC”) 350, Intangibles

– Goodwill and Other .

2 unchanged sentences

represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired.

Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently

Goodwill is not amortized but is tested for impairment at least during the fourth quarter, at the reporting unit level or more frequently

if events or changes in circumstances indicate that the asset might be impaired.

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Failure to achieve these expected results may cause a future impairment of goodwill

at the reporting unit level (See Note 6).

at the reporting unit level.

and Marketing Costs

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values using Level 3 inputs, based on the short-term maturity of these instruments.

The carrying amount of notes payable approximate

the estimated fair value for this financial instrument as management believes that such debt and interest payable on the notes approximates

our incremental borrowing rate.

The long-lived assets (i.e., goodwill and intangible assets) were valued utilizing Level 3 inputs.

unobservable inputs used in fair value measurement of the intangible assets include projected revenue, gross profit and operating expenses,

income tax rates, discount rates, royalty rates, and attrition rates.

The carrying amount of loans and of notes payable

approximate the estimated fair value for this financial instrument as management believes that such debt and interest payable on the

notes approximates our incremental borrowing rate.

The long-lived assets (i.e., goodwill and intangible assets) were valued utilizing

Level 3 inputs.

Significant unobservable inputs used in fair value measurement of the intangible assets include projected revenue, gross

profit and operating expenses, income tax rates, discount rates, royalty rates, and attrition rates.

Loss per Common Share

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of the common shares:

SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE CALCULATION

OF SECURITIES EXCLUDED FROM DILUTED PER SHARE

December 31, 2022

3 unchanged sentences

apply the provisions of ASC 718, Compensation - Stock Compensation , which requires the measurement and recognition of compensation

expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

expense for all stock-based awards made to employees and nonemployees, in the statements of operations.

stock options issued to employees and members of our Board of Directors for their services, we estimate the grant date fair value of

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date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term.

are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

Due to our company’s limited

history and lack of public market for its common stock, we used the average of historical share prices of similar companies within its

industry to calculate volatility for use in the Black-Scholes-Merton option pricing model.

to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718):

Improvements to Non-employee

Share-Based Payment Accounting , we account for stock options issued to non-employees for their services in accordance with ASC 718.

We use valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options

are recorded as they are incurred.

Due to our company’s limited history and lack of public market for its common stock, we used

the average of historical share prices of similar companies within our industry to calculate volatility for use in the Black-Scholes-Merton

option pricing model.

awards are accounted for using the fair value method.

Grant date fair values for stock options are determined using the Black-Scholes-Merton

option pricing model and a single option award approach.

issued shares of our stock to vendors and nonemployee for services provided.

We recognize the accounting grant date fair value of the

stock award as compensation expense over the required service period of each award.

Shares issued for services are measured based on

the fair market value of the underlying common stock on their respective accounting grant dates.

functional and reporting currency is the U.S.

For certain of our foreign subsidiaries whose functional currency is other than

dollar, we translate revenue and expense transactions at average exchange rates.

We translate assets and liabilities at period-end

exchange rates and include foreign currency translation gains and losses as a component of accumulated other comprehensive income.

in which our company is the lessee are comprised of corporate offices and property and equipment.

2 unchanged sentences

We lease multiple office spaces with a remaining weighted average term of 2.34 years.

We lease a vehicle with a remaining

term of 0.5 years.

(“ROU”) assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred.

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extend or terminate the lease if it is reasonably certain that we will exercise that option.

accordance with ASC 842, Leases , we recognized a ROU asset and corresponding lease liability on its consolidated balance sheet

accordance with ASC 842, Leases , we recognized a ROU asset and corresponding lease liability on our consolidated balance sheet

for long-term office leases and a vehicle operating lease agreement.

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Issued Accounting Standards

August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2020-06, Debt – Debt with Conversion

and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) –

Accounting for Convertible Instruments and Contracts in an Entity’s Own Entity.

The ASU simplified the accounting for certain financial

instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own

The standard eliminates the liability and equity separation model for convertible instruments with a beneficial or cash

conversion feature.

As a result, after adoption, entities will no longer separately present in equity an embedded conversion feature

for such debt.

Additionally, the embedded conversion feature will no longer be amortized into income as interest expense over the instrument’s

Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features

that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued

at a substantial premium.

Additionally, the standard requires applying the if-converted method to calculate convertible instruments’

impact on diluted earnings per share (“EPS”).

The standard is effective for fiscal years beginning after December 15, 2021,

with early adoption permitted for fiscal years beginning after December 15, 2020.

It can be adopted on either a full retrospective or

modified retrospective basis.

We adopted this standard on January 1, 2021 on a modified retrospective basis.

The adoption of this standard

did not have a material effect on the consolidated financial statements.

May 2021, the FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50),

Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus

of the Emerging Issues Task Force).

The ASU requires issuers to account for modifications or exchanges of freestanding equity-classified

written call options that remain equity classified after the modification or exchange based on the economic substance of the modification

Under the ASU, an issuer determines the accounting for the modification or exchange based on whether the transaction was

done to issue equity, to issue or modify debt, or for other reasons.

The ASU is applied prospectively and is effective for us for fiscal

years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is permitted.

We are currently

evaluating the impact that adopting this standard will have on the consolidated financial statements.

May 2021, the Financial Accounting Standards Board issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt — Modifications

and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts

in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified

Written Call Options (a consensus of the Emerging Issues Task Force).

The ASU requires issuers to account for modifications or exchanges

of freestanding equity-classified written call options that remain equity classified after the modification or exchange based on the

economic substance of the modification or exchange.

Under the ASU, an issuer determines the accounting for the modification or exchange

based on whether the transaction was done to issue equity, to issue or modify debt, or for other reasons.

The ASU is applied prospectively

and is effective for us for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption

is permitted.

The adoption of this standard did not have a material impact on our consolidated financial statements.

October 2021, the FASB issued ASU No.

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is permitted.

We are currently evaluating the impact that adopting this standard will have on the consolidated financial statements.

We are currently evaluating the impact that adopting this standard will have on our consolidated financial statements.

4 – ACQUISITIONS

Technologyville,

May 25, 2020, we entered into a stock purchase agreement with Techville and its sole shareholder, pursuant to which we acquired all of

the issued and outstanding common stock of Techville (the “Techville Acquisition”).

Under the terms of the Techville Acquisition,

all issued and outstanding common stock of Techville was exchanged for an aggregate of 3,392,271 shares of our common stock.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Consideration paid

Tangible assets acquired:

Accounts receivable

Prepaid expenses

Other receivables

Property and equipment

Total tangible assets

Intangible assets acquired:

Tradename - trademarks

IP/Technology

Customer base

Total intangible assets

Assumed liabilities:

Line of credit

Accounts payable

Accrued expenses

Member distributions

SBA loan payoff

Other liabilities

Total assumed liabilities

Net assets acquired

Net liabilities acquired

Goodwill is not deductible for tax purposes.

Skies Security LLC Acquisition

August 1, 2020, we entered into a stock purchase agreement with Clear Skies and its equity holders, pursuant to which we acquired all

of the issued and outstanding equity securities of Clear Skies (the “Clear Skies Acquisition”).

Under the terms of the Clear

Skies Acquisition, all issued and outstanding equity securities in Clear Skies were exchanged for an aggregate of 2,330,000 shares of

our common stock.

Note to CISO:

We revised acquisition descriptions to be consistent with other disclosures herein, such as the Business section.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Consideration paid

Tangible assets acquired:

Accounts receivable

Total tangible assets

Intangible assets acquired:

Tradename - trademarks

IP/Technology

Total intangible assets

Assumed liabilities:

Accounts payable

Member distributions

Total assumed liabilities

Net assets acquired

Goodwill is not deductible for tax purposes.

Security, LLC Acquisition

December 16, 2020, we entered into an agreement and plan of merger with Alpine and its sole member, pursuant to which Alpine became our

wholly owned subsidiary (the “Alpine Acquisition”).

Under the terms of the Alpine Acquisition, all issued and outstanding

membership units in Alpine were exchanged for an aggregate of 900,000 shares of our common stock.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

Consideration paid

Tangible assets acquired:

Accounts receivable

Property and equipment

Total tangible assets

Intangible assets acquired:

Tradename - trademarks

IP/Technology

Customer base

Total intangible assets

Loans payable

Accrued expenses

Total assumed liabilities

Net assets acquired

Goodwill is not deductible for tax purposes.

Acquisition Corporation

3 unchanged sentences

up to 2,566,778 shares of common stock, subject to a holdback of 256,678 shares of our common stock.

In addition, the Company issued

replacement options to various VelocIT employees to purchase and aggregate of 1,542,251 shares of the Company’s common stock with

In addition, we issued

replacement options to various VelocIT employees to purchase an aggregate of 1,542,251 shares of our common stock with

a fair value of $ 6,861,203 which was included in the purchase price of the transaction.

The acquisition of VelocIT provided the Company

potential sales synergies resulting from the Company’s access to VelocIT’s current client-base to offer additional services.

The transaction closed on August 12, 2021.

1 unchanged sentence

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

15 unchanged sentences

Net liabilities acquired

Goodwill is not deductible for tax purposes.

Goodwill ( a )

is not deductible for tax purposes.

Technology Systems, Inc.

3 unchanged sentences

Shareholders all of the outstanding shares of ATE and ATS.

The aggregate purchase price for the shares was 200,000

shares of our common stock and $ 75,000

Furthermore, the Shareholders shall

receive an additional 100,000

shares of our common stock based upon Atlantic

achieving certain revenue and earnings thresholds and an additional $ 150,000

in cash upon our listing to a national exchange.

The acquisition of Atlantic provided the Company potential sales synergies resulting from the Company’s access to Atlantic’s

current client-base to offer additional services.

At December 31, 2021, the Company noted that Atlantic would not achieve the certain

revenue and earnings threshold for additional equity consideration and, therefore, was not included in the transaction price.

The aggregate purchase price for the shares was 200,000 shares of our common

stock and $ 75,000 in cash.

Furthermore, the Shareholders shall receive an additional 100,000 shares of our common stock based upon Atlantic

achieving certain revenue and earnings thresholds and an additional $ 150,000 in cash upon our listing to a national exchange.

31, 2021, we noted that Atlantic would not achieve the certain revenue and earnings threshold for additional compensation and,

therefore, was not included in the transaction price.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

13 unchanged sentences

Net assets acquired

Goodwill is the excess of the purchase price over the fair

value of the underlying net tangible and identifiable intangible assets.

Goodwill is not deductible for tax purposes.

Goodwill ( a )

is not deductible for tax purposes.

LLC Acquisition

6 unchanged sentences

All shares of RED74 issued and outstanding immediately prior to the Effective Time were converted

into the right to receive an aggregate of 340,000 shares of our common stock and $ 50,000 in cash, subject to a 10 % holdback.

that no claim is made by any Cerberus Indemnitee (as defined in the merger agreement) within one year from the closing, then we shall

pay the entire amount of the 10% holdback to Tim Coleman.

into the right to receive an aggregate of 340,000 shares of our common stock and $ 50,000 in cash..

provides secured managed services and key IT security management expertise to small-to-mid-market businesses in New Jersey.

9 unchanged sentences

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

13 unchanged sentences

Net assets acquired

Goodwill is not deductible for tax purposes.

Equities, Inc.

Goodwill ( a )

is not deductible for tax purposes.

Point Equities, Inc.

(Arkavia) Acquisition

12 unchanged sentences

as of the transaction date:

OF FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

8 unchanged sentences

Customer base

Intangible assets

Total intangible assets

5 unchanged sentences

Net assets acquired

Goodwill is not deductible for tax purposes.

Pro Forma Financial Information

following unaudited pro forma information presents the consolidated results of operations of our company, VelocIT, Atlantic, RED74, and

Arkavia as if the acquisitions consummated on August 12, 2021, October 1, 2021, November 9, 2021, and December 1, 2021, respectively,

had been consummated on January 1, 2020.

Such unaudited pro forma information is based on historical unaudited financial information

with respect to the 2021 acquisitions and does not include operational or other charges which might have been affected by us.

The unaudited

pro forma information for the years ended December 31, 2021 and 2020 presented below is for illustrative purposes only and is not necessarily

indicative of the results that would have been achieved or results that may be achieved in the future:

OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

Year Ended December 31,

$ ( 30,723,427 )

$ ( 23,040,252 )

Goodwill ( a )

is not deductible for tax purposes.

Digital Security, Inc.

January 5, 2022, we entered into the True Digital Stock Purchase Agreement with certain stockholders of True Digital and the True Digital

Merger Agreement with True Digital and certain of its other stockholders.

On January 19, 2022, the transactions contemplated by the True

Digital Stock Purchase Agreement and the True Digital Merger Agreement were consummated, with True Digital becoming a wholly owned subsidiary

of our company (the “True Digital Acquisition”).

True Digital’s outstanding common stock was exchanged for $ 6,153,000

in cash and 8,229,000 shares of our common stock.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration

Tangible assets acquired:

Accounts receivable

Contract assets

Prepaid expenses and other current assets

Property and equipment

Total tangible assets

Intangible assets acquired:

Tradename - trademarks

Intellectual property

Total intangible assets

Assumed liabilities:

Accounts payable and accrued expenses

Deferred revenue

Line of credit

Loans payable

Loans payable - shareholder

Total assumed liabilities

Net assets acquired

Goodwill ( a )

and intangibles are not deductible for tax purposes.

June 1, 2022, we entered into a stock purchase agreement with the stockholders of Creatrix, pursuant to which Creatrix became our wholly

owned subsidiary.

We anticipate that this will expand our professional services offerings and capabilities.

Creatrix offers recognized

expertise in identity management as wells as systems integration and software engineering and specializes in biometrics, vetting, credentialing,

and case management.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

Tangible assets acquired:

Accounts receivable

Contract assets

Prepaid expenses and other current assets

Total tangible assets

Assumed liabilities:

Accounts payable and accrued expenses

Loans payable

Total assumed liabilities

Net assets acquired

Goodwill ( a )

not deductible for tax purposes.

LLC Acquisition

July 1, 2022, we entered into a stock purchase agreement with the interest holders of CyberViking and its interest holders, pursuant

to which we acquired all of the issued and outstanding units of CyberViking, with CyberViking becoming a wholly owned subsidiary of our

We anticipate that this will expand our professional services offerings and capabilities.

CyberViking specializes in application

security services, incident response, and threat hunting as well as the creation and management of security operation centers.

did not acquire assets nor assume liabilities in our purchase of CyberViking, as a result the $ 1,836,320 of consideration paid is recognized

The goodwill is not deductible for tax purposes.

August 25, 2022, we entered into a stock purchase agreement with CUATROi and its partners, pursuant to which CUATROi became our wholly

owned subsidiary.

We anticipate that this will expand our professional services offerings and capabilities.

CUATROi is a cloud, managed

services provider and cybersecurity company with offices in South America.

aggregate purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated

fair values as of the acquisition date, with the excess recorded to goodwill.

During the measurement period, which will not exceed one

year from closing, we will continue to obtain information to assist us in finalizing the acquisition date fair values.

Any qualifying

changes to our preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts

allocated to goodwill.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

Tangible assets acquired:

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Total tangible assets

Intangible assets acquired:

Customer base

Total intangible assets

Assumed liabilities:

Accounts payable and accrued expenses

Loans payable

Total assumed liabilities

Net assets acquired

Goodwill ( a )

and intangibles are not deductible for tax purposes.

Secure Acquisition

September 1, 2022, we entered into a stock purchase agreement with NLT Secure and its interest holders, pursuant to which we acquired

all of the issued and outstanding units of NLT Secure becoming a wholly owned subsidiary of our company.

We anticipate that this will

expand our professional services offerings and capabilities.

NLT Secure provides a broad range of security solutions and managed services

to organizations throughout South America.

aggregate purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimate

fair values as of the acquisition date, with the excess recorded to goodwill.

During the measurement period, which will not exceed one

year from closing, we will continue to obtain information to assist us in finalizing the acquisition date fair values.

Any qualifying

changes to our preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts

allocated to goodwill.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

Consideration paid

Tangible assets acquired:

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Total tangible assets

Assumed liabilities:

Accounts payable and accrued expenses

Loans payable

Total assumed liabilities

Net liabilities assumed

Goodwill ( a )

is not deductible for tax purposes.

forma financial information is not presented because the acquisitions were not material to our financial statements, individually or

in the aggregate.

5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets consisted of:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

December 31, 2022

December 31, 2021

Prepaid expenses

5 unchanged sentences

and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

OF PROPERTY AND EQUIPMENT

December 31, 2022

December 31, 2021

Computer equipment

1 unchanged sentence

Furniture and fixtures

Property and equipment gross

Property and equipment

accumulated depreciation

Property and equipment, net

depreciation expense was $ 87,993

for the years ended December 31, 2021 and 2020,

respectively.

depreciation expense was $ 736,181 and $ 87,993 for the years ended December 31, 2022 and 2021, respectively.

7 – INTANGIBLE ASSETS AND GOODWILL

December 31, 2021, we engaged a third-party valuation firm to assist in performing a quantitative assessment to determine whether it

was more likely than not that the carrying value of goodwill in our reporting units was impaired as of December 31, 2021.

Company to be one reporting unit.

The fair value estimates for the reporting unit was based on a blended analysis of the present value

of future cash flows and the market value approach.

The significant estimates used in the discounted cash flows model included our weighted

average cost of capital, projected cash flows, and the long-term rate of growth.

The significant estimates used in the market approach

model included identifying public companies engaged in businesses that are considered comparable to those of the reporting unit and assessing

December 31, 2021, we determined it was more-likely-than-not that the carrying value of goodwill in our reporting units was impaired

as of December 31, 2021.

The fair value estimates for all reporting units were based on a blended analysis of the present value of future

cash flows and the market value approach.

The significant estimates used in the discounted cash flows model included our weighted average

cost of capital, projected cash flows, and the long-term rate of growth.

The significant estimates used in the market approach model

included identifying public companies engaged in businesses that are considered comparable to those of the reporting unit and assessing

comparable revenue and earnings multiples in estimating the fair value of the reporting unit.

1 unchanged sentence

carrying value over the estimate of the fair value was recorded as goodwill impairment of $ 22,078,064 .

There was no impairment recognized

as of and during the year ended December 31, 2022.

following table summarizes the changes in goodwill during the years ended December 31, 2022 and 2021, respectively:

2 unchanged sentences

Acquisition of goodwill

Balance December 31, 2020

Acquisition of goodwill

( 22,078,064 )

Reclassification based on valuation report (1)

Balance December 31, 2021

Acquisition of goodwill

Foreign currency translation adjustment

Ending balance, December 31, 2022

the year ended December 31, 2021, we obtained a third-party valuation for the December 16,

2020 acquisition of Alpine.

As such, the purchase price allocation disclosed in our Annual

Report in Form 10-K for December 31, 2020, filed on March 31, 2021, changed and, therefore,

goodwill changed.

following table summarizes the identifiable intangible assets as of December 31, 2021 and 2020:

SUMMARY OF IDENTIFIABLE INTANGIBLE ASSETS

the year ended December 31, 2022, we completed a valuation for the December 16, 2021 acquisition

As such, the purchase price allocation disclosed in our Annual Report in Form

10-K for December 31, 2021, filed on March 31, 2022, changed and, therefore, goodwill changed.

assets, net are summarized as follows:

OF IDENTIFIABLE INTANGIBLE ASSETS

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

December 31, 2022

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Tradenames – trademarks

$ ( 1,167,476 )

Customer base

1 unchanged sentence

Intellectual property/technology

Less accumulated amortization

weighted average useful life remaining of identifiable amortizable intangible assets remaining is 10.13 years as of December 31, 2021.

amortization was as follows for the years ended December 31, 2021 and 2020.

OF ACCUMULATED AMORTIZATION OF INTANGIBLE ASSETS

Intangible Asset

$ ( 2,674,297 )

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

December 31, 2021

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Tradenames – trademarks

2 unchanged sentences

Intellectual property/technology

Accumulated Amortization

Balance as of January 1, 2020

Amortization expense

Balance as of December 31, 2020

Amortization expense

Balance as of December 31, 2021

expense of identifiable intangible assets for the years ended December 31, 2021 and 2020, was $ 206,862

and $ 100,821 ,

respectively.

below table summarizes the future amortization expense as of December 31, 2021 for the next five years and thereafter:

Intangible Asset

$ ( 323,331 )

the third quarter of 2022, as the result of rebranding and expected future marketing of our products and services, we made the decision

to phase out certain indefinite-lived tradenames from acquired subsidiaries.

We believe the phase-out and integration of the rebranding

and marketing will be completed no later than June 30, 2024, and expect to recognize $ 1,211,800 of amortization expense from tradenames

previously held as indefinite-lived.

expense of identifiable intangible assets was $ 2,338,273 and $ 206,862 , for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the weighted-average remaining amortization period for intangible assets was 3.84 years.

on the balance of intangibles assets at December 31, 2022, expected future amortization expense is as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSE

8 unchanged sentences

Accrued expenses

Accrued interest – related party

Accrued commissions

Accrued interest

Total accounts payable and accrued expenses

9 - RELATED PARTY TRANSACTIONS

Payable – Related Party

December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC, an entity controlled by our majority

stockholder, in the original principal amount of $ 200,000 .

The note had an original maturity date of June 30, 2020 and had an interest

rate of 6 % per annum.

On June 29, 2020, the note payable was extended to July 30, 2021.

The outstanding principal balance of this loan

was zero and $ 59,787 as of December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, we recorded accrued interest of $ 0

and $ 23,934 , respectively, with respect to this note payable.

We recorded interest expense of $ 4,595 and $ 12,812 during the years ended

December 31, 2021 and 2020, respectively.

Consulting Agreement with Stephen Scott

August 2020, we entered into an Independent Consulting Agreement with Stephen Scott, a Director of our company, with respect to advisory

and consulting services relating to our strategic and business development, and sales and marketing.

Scott receives a consulting

fee of $ 11,500 per month for such services.

During the years ended December 31, 2022 and 2021, we paid consulting fees to Mr.

the amount of $ 138,000 each year.

Note Payable – Related Party

1 unchanged sentence

interest rate at 6.00 % per annum payable at maturity with a maturity date of December 31, 2021 , with a conversion price of $ 2.00 per share.

The outstanding principal balance of this loan was $ 3,000,000 at December 31, 2020 (see Note 12).

December 31, 2021, Hensley & Company converted the principal amount of $ 3,000,000 for 1,500,000 shares of our common stock at a conversion

price of $ 2.00 per share (see Note 9).

Note Payable, Consulting, and Stock Payable – Related Party

November 1, 2021, we entered into a two-year consulting agreement with Smile on Fridays LLP (“Smile”) pursuant to which Smile

will represent us as the Chief Marketing Officer.

Upon execution of the agreement, we were to issue a total of 432,000 shares of our

restricted common stock, valued at $ 2,311,200 .

The shares shall be deemed vested and earned to 25 % upon the execution of the agreement

and 25% at the beginning of each subsequent six-month period.

As of December 31, 2021, 108,000 shares of our restricted stock have been

issued (see Note 9).

January 16, 2020, we entered into a consulting agreement, with Eskenzi PR Limited (“Eskenzi”), whose sole owner is also the

sole owner of Smile, pursuant to which Eskenzi will provide various marketing and public relations services to us.

The initial term of

the agreement was for twelve months and automatically renews for an additional twelve months unless either we or Eskenzi provides at

least three months advance written notice of termination.

execution of the agreement, we were to issue 120,000 shares of our restricted common stock, valued at $ 48,000 to Eskenzi.

As of December

31, 2020, these shares had yet to be issued.

As such, we recorded a stock payable in the amount of $ 0 and $ 46,000 representing the fair

value of services performed during the years ended December 31, 2021 and 2020, respectively.

January 1, 2021, we entered into a two-year consulting agreement with Smile, pursuant to which Smile will provide marketing and public

relations services to us.

Upon execution of the agreement, we were to issue a total of 312,000 shares of our restricted common stock,

valued at $ 639,600 .

As of December 31, 2021, 52,000 shares of our common stock have been issued (see Note 9).

October 27, 2021, we issued to Neil Stinchcombe, the sole owner of Smile, a convertible note in the principal amount of $ 1,500,000 bearing

an interest rate of 5 % per annum payable at maturity with an original maturity date of January 27, 2022 , with a conversion price of $ 5.00

Pursuant to the note, the maturity date, at the Company’s election, was extended to April 22, 2022.

On March 10, 2022,

we entered into an amendment to the note pursuant to which the maturity date was extended to October 27, 2022.

The outstanding principal

of this note was $ 1,500,000 on December 31, 2021.

On December 31, 2021, we recorded accrued interest of $ 12,500 with respect to this

We recorded interest expense of $ 12,500 during the year ended December 31, 2021.

Note Receivable – Related Party

During the year ended December

31, 2021, Arkavia provided cash infusions to a related party to fund an intended wholly-owned subsidiary, Arkavia Peru, for start-up and operational costs.

As of December

31, 2021, the subsidiary has yet to be incorporated and as such, Arkavia has recorded the amount as a receivable.

The amount outstanding

at December 31, 2021, is $ 1,090,903 , and is considered short-term and non-interest bearing.

On December 31, 2021, Hensley & Company converted the principal amount of $ 3,000,000 for 1,500,000 shares of our common stock

at a conversion price of $ 2.00 per share.

Services Agreement with Hensley Beverage Company – Related Party

July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company to provide secured managed services.

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 a term through December 31, 2021, the agreement will continue until terminated by

either party.

For the years ended December 31, 2022 and 2021, we received $ 850,445 and $ 466,597 , respectively from Hensley Beverage Company

for contracted services and had an outstanding receivable balance of $ 15,737 and $ 11,508 as of December 31, 2022 and 2021, respectively.

Receivable – Related Party

provided cash infusions to a related party to fund a wholly owned subsidiary in Peru for start-up and operational costs.

The subsidiary

is incorporated and as such, the assets, liabilities and operation results are included in the condensed consolidated financial statements.

At December 31, 2022, no amount remains outstanding.

10 - STOCKHOLDERS’ EQUITY

the year ended December 31, 2020, we issued an aggregate of 350,000 and 495,200 shares of common stock with a fair value of $ 0.40 and

$ 2.00 per share, respectively, to investors for cash proceeds of $ 1,131,009 .

the year ended December 31, 2021, we issued 1,625,000

shares of common stock with a fair value of $ 2.00

per share to investors for cash proceeds

of $ 3,250,000 .

the year ended December 31, 2021, we issued an aggregate of 392,900 shares of common stock with a fair value of $ 2.05 per share to a

related party consultant for services rendered.

December 31, 2021, we issued an aggregate of 1,500,000 shares of common stock for the conversion of a convertible note of $ 3,000,000

(see Note 8).

amended and restated certificate of incorporation authorized the issuance of up to 300,000,000 shares of common stock and 50,000,000

shares of undesignated preferred stock, each having a par value of $ 0.00001 per share.

Shares of common stock have both economic and

voting rights.

the years ended December 31, 2022 and 2021, we issued an aggregate of 2,412,474 and 1,625,000 shares of common stock to investors for

cash proceeds of $ 10,689,087 and $ 3,250,000 , respectively.

the years ended December 31, 2022 and 2021, we issued an aggregate of 909,819 and 392,900 shares of common stock, respectively, to consultants

and vendors for services rendered.

December 31, 2021, we issued 1,500,000 shares of common stock pursuant to the conversion of a convertible note with Hensley & Company.

January 18, 2022, we issued a warrant to the underwriter of our Form S-1 to purchase an aggregate 144,200 shares of our common stock.

The warrant is exercisable for a period of 5 years from the date of issuance at an exercise price of $ 5.00 per share.

follow table summarizes warrant activity:

OF STOCK WARRANT ACTIVITY

Outstanding at January 1, 2022

Expired or cancelled

Outstanding at December 31, 2022

Exercisable at December 31, 2022

11 – STOCK-BASED COMPENSATION

account for our stock-based compensation in accordance with the fair value recognition provisions of ASC 718.

Equity Incentive Plan

Board of Directors approved our 2019 Equity Incentive Plan (the “2019 Plan”) on June 6, 2019, and our stockholders holding

a majority of the outstanding shares of our common stock approved and adopted the 2019 Plan.

The maximum number of shares of our common

stock that may be issued under our 2019 Plan is 25,000,000 shares.

The 2019 Plan has a term of ten years from the date it was adopted.

Shares issued under the 2019 Plan shall be made available from (i) authorized but unissued shares of common stock, (ii) common stock

held in our treasury, or (iii) previously issued shares of common stock reacquired by us, including shares purchased on the open market.

granted options for the purchase of 11,091,691 shares of common stock during the year ended December 31, 2021.

granted options for the purchase of 10,593,700 shares of common stock during the year ended December 31, 2020.

Board of Directors approved our 2019 Equity Incentive Plan (the “2019 Plan”) in June 2019, and our stockholders holding a

majority of the outstanding shares of our common stock approved and adopted the 2019 Plan.

On October 17, 2022, the maximum number of

shares of our common stock that may be issued under our 2019 Plan was increased to 60,000,000 shares.

As of December 31, 2022, there

were 20,213,408 shares of common stock available for issue as future awards under the 2019 Plan.

granted options for the purchase of 17,457,613 and 11,091,691 shares of common stock during the year ended December 31, 2022 and 2021,

respectively.

applying the Black-Scholes option pricing model to stock options granted, we used the following assumptions:

SCHEDULE OF BLACK-SCHOLES STOCK OPTIONS GRANTED

OF BLACK-SCHOLES STOCK OPTIONS GRANTED

For the Year Ended

9 unchanged sentences

73.43 % - 85.22

weighted average grant date fair value of options issued and vested during the year ended December 31, 2021 was $ 12,472,505

and $ 2,136,509 ,

respectively.

weighted average grant date fair value of options issued and vested during the year ended December 31, 2020 was $ 2,030,144

and $ 776,925 ,

respectively.

Compensation-based

stock option activity for qualified and nonqualified stock options is summarized as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

Exercise Price

Expected dividend yield

follow table summarizes stock option activity:

OF STOCK OPTION ACTIVITY

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (in years)

Aggregate Intrinsic Value

Outstanding at January 1, 2021

2 unchanged sentences

Outstanding at December 31, 2021

( 2,689,071 )

Expired or cancelled

1 unchanged sentence

Outstanding at December 31, 2022

following table summarizes information about options to purchase shares of our common stock outstanding and exercisable at December 31,

SUMMARY OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK OUTSTANDING AND EXERCISABLE

Weighted-Average

Exercise Prices

Outstanding Options

Remaining Life In Years

Weighted-Average

Exercise Price

compensation expense attributed to the issuance of the options is recognized ratably over the vesting period.

granted under the 2019 Plan are exercisable for a specified period, generally five to ten years from the grant date, and generally vest

over three to four years from the grant date.

compensation expense related to the options was $ 7,802,096

and $ 1,533,777

for the years ended December 31, 2021 and 2020,

respectively.

During the year ended December 31, 2021, the Company attributed $ 2,132,554 and $ 5,669,542 of compensation expense related

to the options to cost of payroll and selling, general and administrative expenses, respectively, on the consolidated statement of operations.

As of December 31, 2021, there was future compensation expense of $ 30,481,049

with a weighted average recognition period of

years related to the options.

aggregate intrinsic value totaled $ 96,269,656 and $ 71,776,022 , for total outstanding and exercisable options, respectively, was based

on our estimated fair value of the common stock of $ 5.00 as of December 31, 2021, which is the aggregate fair value of the common stock

that would have been received by the option holders had all option holders exercised their options as of that date, net of the aggregate

exercise price.

Exercisable at December 31, 2022

aggregate intrinsic value for stock options outstanding and exercisable is defined as the positive difference between the fair market

value of our common stock and the exercise price of the stock options.

compensation expense related to the options was $ 15,464,587 and $ 7,802,096 for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, there was future compensation expense of $ 56,183,188 with a weighted average recognition period of 2.31 years

related to the options.

12 – COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

disputes arose between the parties regarding the duties and obligations pursuant to the Advisory Agreement, resulting in the parties

agreeing to enter into a settlement and release agreement on January 13, 2022 (see Note 16).

As a result, we recorded a settlement liability

at December 31, 2021 of $ 470,000

on the statement of operations.

Subsequent to

December 31, 2021, the Company issued 400,000

shares of common stock, with a fair value of

per share, pursuant to the settlement.

agreeing to enter into a settlement and release agreement on January 13, 2022.

As a result, we recorded a settlement liability at December

31, 2021 of $ 470,000 on the statement of operations and issued 400,000 shares of our common stock to Maxim pursuant to the settlement.

The settlement liability was paid in January 2022.

are no material pending legal proceedings in which we or any of our subsidiaries is a party or in which any of our directors, officers

or affiliates, any owner of record or beneficially of more than 5% of any class of its voting securities , or security holder is a party

or affiliates, any owner of record or beneficially of more than 5 % of any class of our voting securities, or security holder is a party

adverse to us or has a material interest adverse to us.

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.

of December 31, 2022 and 2021, our accrual for estimated indirect tax liabilities was $ 409,187 and $ 99,088 , respectively, reflecting

our best estimate of the potential liability based on an analysis of our business activities, revenues subject to indirect taxes, and

applicable regulations.

Although we believe our indirect tax estimates and associated liabilities are reasonable, the final determination

of indirect tax audits, litigation, or settlements could be materially different than the amounts established for indirect tax contingencies.

13 – LOANS PAYABLE, CONVERTIBLE NOTE PAYABLE AND LINES OF CREDIT

July 29, 2019, TalaTek entered into a secured line of credit with SunTrust Bank (“SunTrust”) for $ 500,000 .

The line of credit

bears interest at LIBOR plus 2.25 %.

The line of credit is an open-end revolving line of credit and may be terminated at any time by SunTrust

without notice to TalaTek.

At December 31, 2021 and 2020, no amounts were drawn on the line of credit.

Technologyville,

August 2, 2017, Techville entered into a secured revolving line of credit with Wintrust Bank (“Wintrust”) for $ 75,000 .

The line of credit was renewed on August 11, 2020.

The line of credit bears interest at Prime plus 1.75 %

with a floor rate of 6 %

and a maturity date of August

24, 2021 and as of the maturity date the line of credit was terminated.

The interest rate at December 31, 2020 was 6 %.

The line of credit is collateralized by all of Techville’s assets.

During the year ended December 31, 2021 Techville drew

against the line of credit and made payments

of $ 223,766 .

At December 31, 2021 and 2020, there was $ 0

outstanding, respectively.

Technologyville,

April 29, 2019, Techville entered into a note payable with VCI Account Services, that subsequently was assigned to U.S.

Bancorp, in the

original principal amount of $ 59,905 .

The note has a maturity date of May

12, 2025 and bears an interest rate of 5.77 %

During the years ended December 31, 2021 and 2020, we made cash payments of $ 13,629

and $ 5,567 ,

respectively, of which $ 13,407

was attributed to principal and interest, respectively.

The loan is collateralized by a vehicle.

At December 31, 2021 and 2020, $ 32,474

was outstanding, respectively.

June 22, 2020, under the U.S.

Small Business Administration’s Paycheck Protection Program, Techville entered into a note payable

with a financial institution for $ 179,600 at an interest rate of 1 % per annum and a maturity date of June 22, 2025 .

Pursuant to the note,

principal and interest payments are deferred for ten months, which, at that time Techville may apply for loan forgiveness.

31, 2020, $ 179,600 was outstanding.

Techville applied for loan forgiveness on a timely basis, and at December 31, 2021, the total amount

due of $ 179,600 had been forgiven.

Cyber Sentinel Corporation

April 17, 2020, under the U.S.

Small Business Administration’s Paycheck Protection Program, Cerberus entered into a note payable

with a financial institution for $ 530,000 at an interest rate of 1 % per annum and a maturity date of April 17, 2022 .

Pursuant to the

note, principal and interest payments are deferred for six months.

Cerberus may apply for loan forgiveness any time during the ten-month

period after October 2, 2020.

At December 31, 2020, $ 530,000 was outstanding.

Cerberus applied for loan forgiveness on a timely basis,

and at December 31, 2021, the total amount due of $ 530,000 had been forgiven.

Skies Security LLC

May 8, 2020, under the U.S.

Small Business Administration’s Paycheck Protection Program, Clear Skies entered into a loan payable

with a financial institution for $ 134,200 at an interest rate of 1 % per annum and a maturity date of May 8, 2022 .

Pursuant to the loan,

principal and interest payments are deferred for six months.

Clear Skies may apply for loan forgiveness at any time during the ten-month

period after November 5, 2020.

At December 31, 2020, $ 134,200 was outstanding.

Clear Skies applied for loan forgiveness on a timely basis,

and at December 31, 2021, the total amount due of $ 134,200 had been forgiven.

Security, LLC

April 18, 2020, under the U.S.

Small Business Administration’s Paycheck Protection Program, Alpine entered into a loan payable

with a financial institution for $ 137,000 at an interest rate of 1 % per annum and a maturity date of April 8, 2022 .

Pursuant to the loan,

principal and interest payments are deferred for six months.

Alpine may apply for loan forgiveness at any time during the ten-month period

after October 18, 2020.

At December 31, 2020, $ 137,000 was outstanding.

Alpine applied for loan forgiveness on a timely basis, and at

December 31, 2021, the total amount due of $ 137,000 had been forgiven.

August 21, 2020, Alpine entered into a Future Receipts Sale Agreement with a financial institution for $ 70,000 bearing no interest and

a maturity date of March 12, 2021.

We received net aggregate proceeds of $ 38,755 (including $ 50,000 approved amount less outstanding

amounts owed of $ 10,350 ).

We are required to make daily payments pursuant to the following schedule:

(i) $ 575 per day from August 18,

2020 through August 21, 2020, (ii) $ 500 per day from August 25, 2020 through March 10, 2021, and (iii) $ 200 per day for March 12, 2021.

At December 31, 2020, the remaining balance on the agreement was $ 19,840 .

The remaining outstanding balance was repaid during the year

ended December 31, 2021.

Acquisition Corp.

July 9, 2016, Catapult Acquisition Corp.

entered into several seller notes payable with shareholders of VelocIT.

The total borrowing

amount was $ 600,000 and each loan bears interest at 5 % per annum with a maturity date of July 31, 2023 .

Pursuant to the terms of the

loans, principal and interest payments were deferred for two years on three of the loans, making up $ 150,000 of the $ 600,000 total amount

The amount outstanding as of December 31, 2021 was $ 446,239 .

part of the VelocIT Acquisition, the Company assumed $ 1,056,960 of SBA loans previously held by VelocIT.

These loans were repaid in full

during the year ended December 31, 2021.

December 31, 2021, notes payable consist of the following amounts:

OF NOTES PAYABLE

Total notes payable

4.22 % Note payable, due March 30, 2026

4.81 % Note payable, due April 10, 2028

4.20 % Note payable, due June 3, 2024

4.20 % Note payable, due March 6, 2026

3.48 % Note payable, due May 15, 2023

4.88 % Note payable, due August 8, 2024

3.50 % Note payable, due May 26, 2021

3.50 % Note payable, due December 1, 2023

4.69 % Note payable, due April 15, 2024

6.48 % Note payable, due February 17, 2022

3.50 % Note payable, due April 15, 2024

7.14 % Note payable, due December 3, 2029

Total notes payable

Less current portion

Long term notes payable

various times during the period December 1, 2021 (date of acquisition) through December 31, 2021, Arkavia paid an aggregate of $ 137,411

in cash towards outstanding principal.

payable was as follows:

OF LOAN PAYABLE

loans (US dollar denominated)

loans (Chilean peso denominated)

current portion

term loans payable

entered into a bridge loan with Bell Bank (the “Bell Bank Note”), secured by substantially all of our assets, in the principal

amount of $ 5,000,000

bearing an interest rate of 4.00 %

per annum payable monthly with a maturity date of December

The bridge loans are guaranteed by

In December 2022, we extend the maturity of the bridge loan to March 14, 2023.

The applicable interest rate on the loan extension

the prime rate at the time of the extension.

We recorded interest expense of $ 114,167

for the year-ended December 31, 2022, and had accrued interest of $ 4,167

as of December 31, 2022.

The effective interest

of this loan was 4.22 %.

subsidiaries in the United States are borrowers under certain term loans.

These term loans require monthly principal and interest payments.

The term loans are secured by various assets owned by our subsidiaries.

We recorded aggregate interest expense of these term loans of

$ 50,754 and $ 297,487 for the years ended December 31, 2022 and 2021, respectively.

Accrued interest for the loans was $ 13,435 and zero

as of December 31, 2022 and 2021, respectively.

The aggregate effective interest rate of the terms loans was 10.80 %.

Latin America subsidiaries are the borrowers under certain term loans denominated in Chilean Pesos.

These term loans require monthly

principal and interest payments.

The loans are secured by various assets owned by our subsidiaries.

We recorded aggregate interest expense

on these term loans of $ 318,055 and $ 14,825 for the years ended December 31, 2022 and 2021, respectively.

Accrued interest for the loans

was zero as of December 31, 2022 and 2021, respectively.

The aggregate effective interest rate of these term loans was 10.90 %.

Notes Payable

December 23, 2020, we issued to Hensley & Company an unsecured convertible note payable in the principal amount of $ 3,000,000 .

The convertible note bears interest at 6 %

per annum, with an effective interest rate of 8.5 %

per annum, payable at maturity with a maturity date of December

Amounts due under the note may be converted

into shares of our common stock at any time at the option of the Holder, at a conversion price of $ 2.00

At December 31, 2020, the if converted

value of the note, at the market price of $ 2.05

per share, would be $ 3,075,000 .

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $ 75,000 .

Total straight-line amortization of this discount totaled $ 73,391

during the years ended December 31, 2021 and

2020, respectively.

Total interest expense on the note was approximately $ 182,500

for the years ended December 31, 2021 and 2020.

December 31, 2021, Hensley & Company converted the principal amount of $ 3,000,000 for 1,500,000 shares of our common stock at a conversion

price of $ 2.00 per share (see Note 9).

October 27, 2021, we issued to Neil Stinchcombe, the sole owner of Smile, a convertible note in the principal amount of $ 1,500,000 bearing

an interest rate of 5 % per annum payable at maturity with a maturity date of January 27, 2022 , with a conversion price of $ 5.00 per share.

On March 10, 2022, we entered into an amendment to the note pursuant to which the maturity date was extended to October 27, 2022 .

outstanding principal of this note was $ 1,500,000 at December 31, 2021.

At December 31, 2021, we recorded accrued interest of $ 12,500

with respect to this note.

We recorded interest expense of $ 12,500 during the year ended December 31, 2021.

minimum payments under the above notes payable following the year ended December 31, 2021, are as follows:

SCHEDULE OF FUTURE PAYMENTS UNDER NOTES PAYABLE

convertible note bore interest at 6.00 % per annum, with an effective interest rate of 8.50 % per annum, payable at maturity with a maturity

date of December 31, 2021 .

Amounts due under the note were convertible into shares of our common stock at any time at the option of the

Holder, at a conversion price of $ 2.00 per share.

The issuance of the note resulted in a discount from the beneficial conversion feature

totaling $ 75,000 .

Interest expense on the note was zero and $ 255,891 for the years ended December 31, 2022 and 2021, respectively.

December 31, 2021, Hensley & Company converted the principal amount of $ 3,000,000 for 1,500,000 shares of our common stock.

October 27, 2021, we issued to Neil Stinchcombe, a convertible note in the principal amount of $ 1,500,000 bearing an interest rate of

5.00 % per annum payable at maturity with a maturity date of January 27, 2022 , with a conversion price of $ 5.00 per share.

2022, we entered into Amendment #1 to the note pursuant to which the maturity date was extended to October 27, 2022 .

On March 27, 2023,

we entered into a letter agreement with Neil Stinchcombe to resolve certain payment terms of his convertible note.

We agreed to repay the principal amount

of the note in three equal installment payments of $500,000 on each of March 31, April 28 and May 31, 2023, with accrued interest to be

paid on May 31, 2023 at the note’s reflected interest rate of 5.00% per annum.

If we fail to make any of the foregoing payments,

the applicable interest rate will be increased to a default rate of 24.00% per annum.

The outstanding principal of this note was $ 1,500,000 at December 31, 2022 and 2021.

We recorded interest expense of $ 106,507 and $ 12,500

during the years ended December 31, 2022 and 2021, respectively.

At December 31, 2022 and 2021, we recorded accrued interest of $ 119,007

and $ 12,500 , respectively, with respect to this note.

June 2022, we issued an unsecured convertible note payable in the principal amount of $ 1,000,000 and if repaid in cash, is payable at

105% of the principal amount.

The convertible note bears interest at 5.00 % per annum, with an effective interest rate of 13.57 % per annum,

payable at maturity with a maturity date in June 2023.

Amounts due under the note could be converted into shares of our common stock

at any time at the option of the Holder, at a conversion price of $ 7.83 per share.

We recorded interest expense on the note of $ 79,167

for the year ended December 31, 2022 and accrued interest as of December 31, 2022 was $ 29,167 .

minimum payments under the above debt instruments following the year ended December 31, 2021, are as follows:

OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT

Total future minimum payments

( 10,308,831 )

future minimum payments

the years ended December 31, 2021 and 2020, we recognized offsetting ROU assets and lease liabilities of $ 387,543 and $ 19,393 , respectively.

term debt, net of current portion

the years ended December 31, 2022 and 2021, we recognized additional ROU assets and lease liabilities of $ 226,942 and $ 387,543 , respectively.

We elected to not recognize ROU assets and lease liabilities arising from short-term office leases, leases with initial terms of twelve

months or less (deemed immaterial) on the consolidated balance sheets.

measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using our estimated incremental

borrowing rate at the recognition dates during the years ended December 31, 2021 and 2020.

The weighted average incremental borrowing

rate applied was 5.77 %.

As of December 31, 2021, our leases had a remaining weighted average term of 1.51 years.

measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using its estimated incremental

borrowing rate.

The incremental borrowing rate applied was 6.00 %.

As of December 31, 2022, our leases had a remaining weighted average

term of 2.34 years.

following table presents net lease cost and other supplemental lease information:

SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION

OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION

Year Ended December 31, 2022

10 unchanged sentences

31, 2022, are as follows:

SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES

OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES

Operating Leases

3 unchanged sentences

15 – INCOME TAXES

identified our federal and Arizona and Virginia state tax returns as our “major” tax jurisdictions.

The periods for income

tax returns that are subject to examination for these jurisdictions is 2018 through 2021.

We believe our income tax filing positions

and deductions will be sustained on audit, and we do not anticipate any adjustments that would result in a material change to our financial

Therefore, no liabilities for uncertain tax positions have been recorded.

December 31, 2021, we had approximately $ 5,500,000 in net operating loss carry-forwards for federal and state income tax reporting

As a result of the Tax Cuts Job Act 2017 (the Act), certain future carry-forwards do not expire.

We have not performed a formal

analysis, but believes our ability to use such net operating losses and tax credit carry-forwards in the future is subject to annual

limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, which will significantly impact

our ability to realize these deferred tax assets.

net deferred tax assets, liabilities and valuation allowance as of December 31, 2021 and 2020 are summarized as follows:

OF DEFERRED TAX ASSETS, LIABILITIES AND VALUATION ALLOWANCE

the years ended December 31, 2022, and 2021, the income tax benefit consisted of the following:

INCOME TAX BENEFIT

Year Ended December 31,

Total current income taxes

Total deferred income taxes

reconciliation of the statutory federal income tax benefit to actual tax benefit for the years ended December 31, 2022 and 2021 is as

SCHEDULE OF STATUTORY FEDERAL INCOME TAX BENEFIT TO ACTUAL TAX BENEFIT

Year Ended December 31,

Computed tax benefit at statutory rate

State income taxes, net of federal tax effect

Effect of rates different than statutory

Stock-based compensation

Change in valuation allowance

Return to provision adjustments

Effective tax rate

tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows

as of December 31, 2022 and 2021:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

Year Ended December 31,

Deferred tax assets:

Property and equipment

Allowance for doubtful accounts

Net operating loss carryforwards

Stock compensation expense

Accounts payable and accrued expenses

Stock-based compensation

Accounts payable and accrued liabilities

Right of use assets

Goodwill impairment

Allowance for doubtful accounts

Total deferred tax assets

2 unchanged sentences

( 8,937,487 )

Deferred tax assets after valuation allowance

Net deferred income taxes

Deferred tax liabilities

Accounts receivable

Intangible assets

$ ( 2,041,418 )

Prepaid expenses

( 1,546,113 )

Lease liability

Total deferred tax liabilities

Net deferred tax assets

recorded a valuation allowance in the full amount of our net deferred tax assets since realization of such tax benefits has been determined

by our management to be less likely than not.

The valuation allowance increased by $ 9,180,200 and $ 1,003,500

$ ( 2,299,668 )

$ ( 1,546,113 )

Net deferred tax liabilities

$ ( 435,678 )

Net deferred tax liability by jurisdiction

$ ( 435,678 )

account for deferred taxes under ASC 740, Income Taxes, which requires a reduction of the carrying amounts of deferred tax assets by

a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized.

the need to establish valuation allowances for deferred tax assets is assessed periodically based on the ASC 740 more-likely-than-not

realization threshold criterion.

This assessment considers matters such as future reversals of existing taxable temporary differences,

projected future taxable income, tax-planning strategies, legislative developments, and results of recent operations.

The evaluation

of the recoverability of the deferred tax assets requires that we weigh all positive and negative evidence to reach a conclusion that

it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The weight given to the evidence

is commensurate with the extent to which it can be objectively verified.

have provided a valuation allowance for our net deferred tax assets at December 31, 2022 and 2021, due to the uncertainty surrounding

the future realization of such assets and the cumulative losses we have generated.

Therefore, no benefit has been recognized in the financial

statements for the net operating loss carryforwards and other deferred tax assets.

During the years ended December 31, 2022 and 2021,

2020, respectively.

reconciliation of the statutory federal income tax benefit to actual tax benefit for the years ended December 31, 2021 and 2020 is as

OF RECONCILIATION OF THE STATUTORY FEDERAL INCOME TAX BENEFIT TO ACTUAL TAX BENEFIT

Federal statutory blended income tax rates

State statutory income tax rate, net of federal benefit

Change in valuation allowance

Effective tax rate

of the date of this filing, we have not filed our 2021 federal and state corporate income tax returns.

We expect to file these documents

as soon as practicable.

15 – CONCENTRATION OF CREDIT RISK

instruments that potentially subject us to concentrations of credit risk consist principally of cash deposits.

Accounts at each institution

are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 .

As of December 31, 2021 and 2020, we had

approximately $ 1,119,000 and $ 4,252,000 , respectively, in excess of the FDIC insured limit.

SCHEDULES OF CONCENTRATION OF RISK, BY RISK FACTOR

client accounted for 20 % of revenue for the year ended December 31, 2021, as set forth below:

clients accounted for 59 % of revenue for the year ended December 31, 2020, as set forth below:

were no accounts receivable concentrations as of December 31, 2021.

clients accounted for 41 % of the accounts receivable as of December 31, 2020, as set forth below:

vendors accounted for 48 % of the accounts payable as of December 31, 2021, as set forth below:

vendors accounted for 32 % of the accounts payable as of December 31, 2020, as set forth below:

respectively, the valuation allowance decreased by $ 4,555,842 and increased by $ 9,180,200 , respectively.

of December 31, 2022, we had approximately $ 21,511,055 of consolidated federal net operating loss carryforwards and $ 25,595,104 of apportioned

state net operating loss carryforwards available to offset future taxable income, respectively.

If unused, the federal and state net

operating loss carryforwards will begin to expire in 2032.

Additionally, we had $ 3,584,038 of Chile net operating loss carryforwards

and $ 916,601 of Peru net operating loss carryforwards.

An indefinite carryforward of losses is allowed in Chile.

The net operating loss

carryforward in Peru will begin to expire in 2026.

of net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change

limitations provided by the Internal Revenue Code of 1986, as amended (IRC), and similar state provisions.

We have not performed a

detailed analysis to determine whether an ownership change under Section 382 of the IRC has occurred or will occur.

We will perform

an analysis as soon as is practicable to determine the extent of limitations, especially in regard to our subsidiaries.

possible that additional limitations may arise in future years, even after an analysis is completed, due to future changes in the

ownership of our Company.

file federal and state income tax returns in jurisdictions with varying statutes of limitations.

With few exceptions, we are no longer

subject to federal or state income tax examinations by tax authorities for tax years prior to 2019 and 2018, respectively.

our income tax filing positions and deductions are more likely than not to be sustained on audit.

Therefore, no liabilities for uncertain

tax positions have been recorded.

of the date of this filing, we have not filed our 2022 federal and state income tax returns.

We expect to file these documents as soon

as practicable.

16 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents.

Although we deposit cash

with multiple banks, these deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided

on such deposits.

These deposits may generally be redeemed upon demand and bear minimal risk.

single customer represented over 10 % of our total revenue for the year ended December 31, 2022.

client accounted for 20 % of revenue for the year ended December 31, 2021.

17 – GEOGRAPHIC INFORMATION

by geography is based on the customer’s billing address and was as follows:

OF REVENUE BY GEOGRAPHY IS BASED ON CUSTOMERS BILLING ADDRESS

All other countries

other international country represented more than 10% of revenue in any period presented.

and equipment, net by geography was as follows:

OF PROPERTY AND EQUIPMENT, NET BY GEOGRAPHIC AREAS

other countries

Property and equipment

other international country represented more than 10% of property and equipment, net in any period presented.

NOTE 18 – ACCUMULATED OTHER COMPREHENSIVE

The following table presents AOCI activity in equity:

OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Foreign Currency Translation Adjustments

Balance as of December 31, 2021

Other comprehensive income

Amounts reclassified from AOCI

Balance as of December 31, 2022

19 – SUBSEQUENT EVENTS

January 5, 2022, we entered into a stock purchase agreement (the “True Digital Stock Purchase Agreement”) with certain stockholders

of True Digital and an agreement and plan of merger (the “True Digital Merger Agreement”) with True Digital and certain of

its other stockholders.

On January 19, 2022, the transactions contemplated by the True Digital Stock Purchase Agreement and the True

Digital Merger Agreement were consummated, with True Digital becoming a wholly owned subsidiary of our company.

In connection with consummation

of the transactions, we paid aggregate consideration of $ 6,153,000 in cash and 8,229,000 shares of our common stock.

and Public Offering

January 19, 2022, we completed a public offering of our common stock.

Pursuant to the public offering, we issued and sold 2,000,000 shares

of common stock at a public offering price of $ 5.00 per share and granted to the underwriter warrants for the purchase of 161,000 shares

of common stock at an exercise price of $ 5.00 per share.

We received net proceeds of approximately $ 9,471,000 from the public offering,

after deducting underwriting discounts and commissions of $ 721,000 and estimated offering costs of $ 108,000 .

January 14, 2022, we were approved to list our common stock on The Nasdaq Capital Market (“Nasdaq”) under the symbol “CISO.”

January 2022, we issued options to purchase an aggregate of 1,000,000

shares of our common stock to two employees.

The options have a ten -year

term, an exercise price of $ 2.00

per share, and vest

at 30% at the one-year anniversary of our uplist to Nasdaq and then linearly for 24 months.

and Appointments of Certain Directors or Officers

February 15, 2022, Bryce Hancock resigned as our President and Chief Operating Officer.

As a result of his resignation, Mr.

Hancock forfeited

2,156,250 stock options.

February 18, 2022, our Board of Directors appointed David Bennett as our Chief Operating Officer.

March 15, 2022, Sandra D.

Morgan resigned from her position as a member of our Board of Directors.

At the time of her resignation, Ms.

Morgan served on the Audit Committee and the Governance and Nominating Committee.

March 21, 2022, our Board of Directors appointed Ashley N.

Devoto as our Chief Information Security Officer and as a director our company.

January 13, 2022, we entered into a settlement and release agreement with Maxim regarding a dispute between the parties in connection

with our public offering, pursuant to which we will pay Maxim (i) $ 470,000 in cash upon closing of the public offering (see Note 11)

and (ii) 400,000 shares of our common stock with a fair value of $ 5.00 per share.

January 10, 2023, we entered into a definitive agreement to acquire RAN Security, a cybersecurity company with headquarters in Buenos

Aires, Argentina and officers in Chile, Peru, Bolivia, and Paraguay.

Under the terms of the agreements, RAN Security will become a wholly

owned subsidiary.

The transaction is expected to close later in the year, subject to satisfaction of customary closing conditions, including

applicable regulatory approvals.

Payable and Convertible Note

Bell Bank Note was originally due and payable on December 14, 2022, which was extended to March 14, 2023 (as so extended, the “Bell

Bank Maturity Date”).

We did not repay the Bell Bank Note on or prior to the Bell Bank Maturity Date, which resulted in an event

of default under the terms thereof.

As a result, the interest rate applicable to amounts due under the Bell Bank Note increased from

4.00 % to 7.50 % per annum.

March 15, 2023, we entered into a Cash Advance Agreement (“Cash Advance Agreement”) with Cedar Advance, LLC, pursuant to

which we received gross proceeds of $ 2,000,000 and paid $ 87,500 in upfront fees.

The terms of the Cash Advance Agreement calls for us

to remit weekly payments of $99,398 until such time as we have repaid $2,870,000.

The estimated effective interest

rate is 155.11%.

The Cash Advance Agreement is secured by the accounts

receivables of Cerberus, TalaTek, and True Digital.

intend to use the proceeds from the Cash Advance Agreement for general corporate purposes, which may include working capital, capital

expenditures, and repayment of debt.

March 20, 2023, we entered into a Purchase Agreement (the “Purchase Agreement”) with Hensley & Company dba Hensley

Beverage Company (the “Purchaser”), a related party, pursuant to which we issued and sold to the Purchaser a $ 5,000,000

10 Percent (10%) Unsecured Convertible Note (the “Note”) for gross proceeds of $ 5,000,000

in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the

“Securities Act”), and Regulation D promulgated thereunder (the “Note Offering”).

The Note, together with

accrued and unpaid interest thereon, is due on March

20, 2025 (the “Maturity Date”).

We may not prepay the Note prior to the Maturity Date without the consent of the

The Note will bear interest at a rate of 10 %

per annum (based on a 360-day year), payable monthly.

At any time prior to or on the Maturity Date and subject to certain beneficial

ownership limitations, the Purchaser may convert all or any portion of the outstanding principal amount of the Note and all accrued

and unpaid interest thereon into shares of our common stock, par value $ 0.00001

per share, at a conversion price of $ 1.20

per share (the “Conversion Price”).

The Conversion Price is adjustable in the event of any stock split, reverse stock

split, recapitalization, reorganization, or similar event.

Upon the occurrence of an “Event of Default” (as defined in

the Note and including the failure to make required payments when due after specified grace periods, certain breaches of the

Purchase Agreement and certain specified insolvency events), the Purchaser would have the right to accelerate payments due under the

Note, which from and after such acceleration would bear interest at a default rate of 24 %

used the proceeds from the Note Offering and our existing cash resources to repay in full the $ 5,000,000

4% promissory note issued and sold to Bell Bank in June 2022, plus $ 35,417

of accrued and unpaid interest.

On March 27, 2023, we entered into a letter agreement with Neil Stinchcombe to resolve a dispute about certain payment terms of a convertible

note previously issued to Mr.

Stinchcombe, with an outstanding principal amount of $ 1,500,000 .

Pursuant to the terms of this agreement,

we agreed to repay the principal amount of the note in three equal installment payments of $ 500,000 , on each of March 31, April 28 and

May 31, 2023, with accrued interest to be paid on May 31, 2023 at the note’s reflected interest rate of 5.0 % per annum.

to timely make any of the foregoing payments, the applicable interest rate will be increased to a default rate of 24 % per annum.

On March 29, 2023, we received

a letter from the listing qualifications staff of Nasdaq providing notification that the bid price for our common stock had closed below

$ 1.00 per share for the previous 30 consecutive business days and our common stock no longer met 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 have an initial period

of 180 calendar days to regain compliance.

To regain compliance, the closing bid price of our common stock has to be $ 1.00 per share or

more for a minimum of 10 consecutive business days at any time before the expiration of the initial compliance period.

In the event that

we are unable to regain compliance with Rule 5550(a)(2) during the initial compliance period, Nasdaq rules provide that we may be eligible

for an additional 180 calendar day compliance period.

To qualify, we need to meet the continued listing requirement for market value of

publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price

requirement, and to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a

reverse stock split, if necessary.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures