What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-31 · 198 added, 186 removed, 165 unchanged (70% of the section changed)

41 unchanged sentences

posture and return on cybersecurity investments.

a comprehensive portfolio of scalable intellectual property solutions, proprietary software stack, and an end-to-end team of

experts, we are well-positioned for organic growth.

By optimizing the user experience and leveraging digital interfaces, we can

expand our client base without overburdening our service team.

This scalability will enable us to drive increased revenue and profit

margins concurrently.

a comprehensive portfolio of scalable intellectual property solutions, proprietary software stack, and an end-to-end team of experts,

we are well-positioned for organic growth.

By optimizing the user experience and leveraging digital interfaces, we can expand our client

base without overburdening our service team.

This scalability will enable us to drive increased revenue and profit margins concurrently.

operating results for the year ended December 31, 2025 included the following:

revenue decreased by $3.2 million to $30.8 million for the year ended December 31, 2024, as compared to the year ended December 31,

gross profit increased by $1.9 million to $4.5 million for the year ended December 31, 2024, as compared to the year ended December

current liabilities reduced by $17,217,158 to $7,738,489 as compared to December 31, 2024 of $24,955,647.

gross profit increased to $6,819,977 for the year ended December 31, 2025 as compared to $4,507,645 for the year ended December 31,

our loss from operations to $8,785,052 for the year ended December 31, 2025, as compared to $14,589,635 for the year ended December

of Operations

1 unchanged sentence

financial results for the year ended December 31, 2025 are summarized as follows in comparison to the year ended December 31, 2024:

For the Year Ended

December 31, 2024

December 31, 2023

Security managed services

the Year Ended

Security managed

$ (3,986,159 )

Professional services

Cybersecurity software

Total revenue

Cybersecurity

Cost of revenue:

3 unchanged sentences

Cost of payroll

Stock based compensation

Total cost of revenue

cost of revenue

Total gross profit

3 unchanged sentences

Selling, general and administrative

Stock-based compensation

Impairment of goodwill

(35,933,364 )

Total operating expenses

(46,446,407 )

Loss from operations

(14,589,635 )

(62,963,845 )

Other income (expense):

Other income (expense)

Loss on issuance of convertible notes

Change in fair value of derivative liability

Gain on extinguishment

of convertible notes, net

Loss on issuance of convertible

Change in fair value of

derivative liability

Interest expense, net

income (expense)

Total other income (expense)

3 unchanged sentences

managed services revenue decreased by $3,986,159, or 14%, for the year ended December 31, 2025, as compared to the year ended December

31, 2024, primarily due to lower hardware and software sales.

31, 2025, primarily due to loss of several higher-revenue customers, partially offset by newly acquired customers.

services revenue decreased by $309,958, or 12%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024,

primarily due to lower customer projects.

primarily due to fewer customer projects.

Cybersecurity

software revenue increased by $151,420, or 34%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024,

primarily due to our initial launch of our suite of internally developed cybersecurity software products.

managed services cost of revenue decreased by $654,975, or 7%, for the year ended December 31, 2024, as compared to the year ended December

31, 2023, due primarily to lower hardware and software sales.

primarily due to the initial launch of our suite of internally developed cybersecurity software products.

managed services cost of revenue decreased by $1,973,745, or 21%, for the year ended December 31, 2025, as compared to the year ended

December 31, 2024, primarily due to lower personnel related costs resulting from a reduction in headcount, as well as reduced costs related

to the management of service vendors associated with our existing client base.

services cost of revenue decreased by $234,798, or 50%, for the year ended December 31, 2025, as compared to the year ended December

2 unchanged sentences

software cost of revenue increased by $82,820, or 69%, for the year ended December 31, 2025, as compared to the year ended December 31,

31, 2023, primarily due to our initial launch of our suite of internally developed cybersecurity software products.

2024, primarily due to the initial launch of our suite of internally developed cybersecurity software products.

of payroll decreased by $1,590,759, or 13%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due

to headcount reduction.

compensation decreased by $486,022, or 10%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due

to the timing of recognition of the reversal of expense for options forfeited by former employees, a decrease in the number of options

granted in 2024 and certain option grants that had fully vested.

fees decreased by $1,871,615, or 58%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, due to

a decrease in accounting, legal and other professional fees incurred related to our periodic SEC filings and our efforts to raise

additional capital.

and marketing expenses decreased by $449,231, or 100%, for the year ended December 31, 2024, as compared to December 31, 2023, due to

utilizing internal resources for advertising and marketing activities.

to headcount reductions.

compensation decreased by $2,740,547, or 63%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024,

primarily due to significantly lower grant date fair values on equity awards issued during the year, despite a higher number of grants.

The decrease also reflects the impact of forfeitures of options by terminated employees, which reduced recognized expense.

fees increased by $311,611, or 23%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to an

increase in legal and accounting fees.

and marketing expenses increased by $1,012,140, or 100%, for the year ended December 31, 2025, as compared to December 31, 2024, due

to marketing efforts initiated in 2025.

general, and administrative expenses decreased $2,488,649, or 19%, for the year ended December 31, 2025, as compared to the year ended

December 31, 2023, due to our analysis of our carrying amount of intangible assets being impaired for the year ended December 31, 2023, reductions

in head count, and lower costs for insurance and lease expenses for the year ended December 31, 2024.

December 31, 2024, primarily due to reductions in headcount during 2024 resulting in lower costs for compensation and leases in 2025.

compensation expenses decreased by $2,327,353, or 50%, for the year ended December 31, 2025, as compared to the year ended December 31,

2023, due to the timing of recognition of the reversal of expense for options forfeited by former employees, a decrease in the number

of options granted in 2024 and certain option grants that had fully vested.

of goodwill decreased by $35,933,364, or 100%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023,

due to our analysis of our carrying amount of goodwill being impaired in 2023.

2024, primarily due to significantly lower grant date fair values on equity awards issued during the year, despite a higher number of

The decrease also reflects the impact of forfeitures of options by terminated employees, which reduced recognized expense.

Income (Expense)

expense, net increased by $1,317,599, or 58%, during the year ended December 31, 2024, as compared to the year ended December 31,

2023, due to an increase in our debt assumed and the effective interest rate on such debt.

on issuance of convertible notes increased by $1,022,650, or 100%, during the year ended December 31, 2024, as compared to the year ended

December 31, 2023, due to our costs associated with issuing convertible notes exceeding the fair value of convertible notes.

in fair value of derivative liability increased by $593,083, or 100%, during the year ended December 31, 2024, as compared to the year

ended December 31, 2023, due to an increase in the share price of our common stock to $3.47 per share on December 31, 2024, providing

more value as of December 31, 2024 to the holders of the convertible note if they were converted at such time.

gain on extinguishment of convertible notes was $4,432,434 for the year ended December 31, 2025 due to the conversion of certain convertible

notes into shares of our common stock and Series A Preferred Stock during 2025.

loss on issuance of convertible notes was $1,022,650 during the year ended December 31, 2024 due to our costs associated with issuing

the convertible notes exceeding the fair value of such convertible notes.

change in fair value of derivative liability increased by $6,060,693 during the year ended December 31, 2025, as compared to the year

ended December 31, 2024.

This increase was primarily due to changes in significant valuation inputs—such as the market price of

CISO common stock—used in estimating the fair value of the derivative liability following the issuance of the related convertible

notes payable in December 2024 and January 2025, as well as the subsequent conversion of certain convertible notes into shares of our

common stock in 2025.

The estimated fair value of the conversion feature of the derivative liability is based on Monte Carlo simulations,

a valuation model.

expense increased by $5,616,622 for the year ended December 31, 2025, as compared to the year December 31, 2024, primarily due to the

accretion of convertible notes payable and the amortization of debt issuance costs associated with the issuance of certain convertible

notes payable during December 2024 and January 2025.

working capital as of December 31, 2025, as compared to our working capital as of December 31, 2024, is summarized as follows:

December 31, 2024

December 31, 2023

Current assets

Current liabilities

Working capital (deficit)/surplus

Working capital deficit

$ (4,474,265 )

$ (21,474,576 )

decrease in current assets is primarily due to an increase in cash and cash equivalents and prepaid cost of revenues of $750,946 and

$89,445, respectively, offset by decreases to accounts receivable and prepaid expenses and other current assets of $962,688 and $68,194

respectively.

The increase in current liabilities is primarily due to the increase in accounts payable and accrued expenses, loans payable,

line of credit, derivative liability, and convertible notes payable of $2,037,617, $817,845, $1,957,938, $2,102,927, and $5,000,002, respectively.

decrease in current assets is primarily due to the $67,272 increase in prepaid expenses and other current assets being more than offset

by decreases in accounts receivable and prepaid cost of revenue of $636,460 and $263,927, respectively.

Accounts receivable and prepaid

cost of revenue decreased due to collection efforts and lower revenue in 2025.

Prepaid expenses increased due to increased prepaid marketing

decrease in current liabilities is primarily due to decreases in accounts payable, accrued expenses and other current liabilities, debt

obligations, and the derivative liability of $5,359,450, $9,425,380, and $2,102,927, respectively.

During the year ended December 31,

2025, we paid down accounts payable, accrued expenses, other current liabilities and loans payable outstanding, certain convertible notes

payable were converted into shares of our common stock and Series A Preferred Stock, and the derivative liability was derecognized as

a result of the conversion of the notes payable.

cash flows for the year ended December 31, 2025, as compared to our cash flows for the year ended December 31, 2024, can be summarized

Year Ended December 31,

Ended December 31,

Net cash used in operating activities

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Net cash provided by financing activities

Effect of exchange rates on cash and cash equivalents

Decrease in cash

cash used in operating activities was $3,841,706 for the year ended December 31, 2024 and was primarily due to cash used to fund a

net loss of $24,243,919, adjusted for non-cash expenses in the aggregate of $17,013,753 and additional cash increases from changes

in the levels of operating assets and liabilities in the aggregate of $3,388,460, primarily as a result of an increase in accounts

receivable, accounts payable and accrued expenses, and deferred revenue.

Net cash used in operating activities was $5,920,112 for

the year ended December 31, 2023 and was primarily due to cash used to fund a net loss of $80,231,083, adjusted for non-cash

expenses in the aggregate of $64,085,528 and additional cash increases from changes in the levels of operating assets and

liabilities in the aggregate of $10,225,443, primarily as a result of an increase in accounts receivable, accounts payable and

accrued expenses, and deferred revenue.

cash used in investing activities of $83,095 for the year ended December 31, 2024, was primarily due to cash paid to purchase property

and equipment.

Net cash used in investing activities of $160,158 for the year ended December 31, 2023, was primarily due to cash paid

to purchase property and equipment.

Effect of exchange

rates on cash and cash equivalents

Increase (decrease)

cash used in operating activities was $7,971,902 for the year ended December 31, 2025 and was primarily due to cash used to fund a net

loss of $8,073,930, adjusted for non-cash expenses in the aggregate of $5,070,143 and additional cash decreases from changes in the levels

of operating assets and liabilities in the aggregate of $4,968,115, primarily as a result of a decrease in accounts payable, accrued

expenses, and other current liabilities.

Net cash used in operating activities was $3,841,706 for the year ended December 31, 2024 and

was primarily due to cash used to fund a net loss of $24,243,919, adjusted for non-cash expenses in the aggregate of $17,100,898 and

additional cash increases from changes in the levels of operating assets and liabilities in the aggregate of $3,301,315, primarily as

a result of an increase in accounts receivable, accounts payable and accrued expenses, and deferred revenue.

cash used in investing activities were $7,491 and $83,095 for the years ended December 31, 2025 and 2024, respectively, which were due

to cash paid to purchase property and equipment.

cash provided by financing activities for the year ended December 31, 2025 was $8,682,798, which was primarily due to $2,816,075 cash

received from the sale of our common stock, $1,774,935 cash received from the sale of our Series B Preferred Stock, $1,949,999 from the

exercise of warrants, cash received from borrowings on our convertible loans payable and line of credit (net of debt issuance costs)

of $23,072,983, offset by $20,934,296 in repayments of our loans payable and line of credit.

cash provided by financing activities for the year ended December 31, 2024 was $3,914,162, which was primarily due to $154,947 cash received

from the sale of our common stock, net proceeds from loans and lines of credit, and convertible notes payable of $154,947,

$8,919,412, and $2,065,000, respectively, and offset by the payment of loans and convertible notes payable, and lines of credit of

$6,157,484 and $1,067,713, respectively.

Net cash provided by financing activities for the year ended December 31, 2023 was

$6,193,046, which was primarily due to cash received from the sale of our common stock, and net proceeds from loans and convertible

notes payable of $6,655,493 and $11,975,631, respectively, and offset by the payment of loans and convertible notes payable of

accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which

contemplates realization of assets and satisfying liabilities in the normal course of business.

At December 31, 2024, we had an

accumulated deficit of $182,262,606 and working capital deficit of $21,474,576.

For the year ended December 31, 2024, we had

negative cash flows from operations of $3,841,706.

Although our company is showing positive operating cash flows and gross profit

trends, we expect to incur further losses through the end of 2025.

date, we have funded operations primarily through the sale of equity in public offerings, private placements, loan proceeds, and revenue

generated by our services.

During the year ended December 31, 2024, we received $154,947 from public and private offerings of our common

stock and $3,759,215 in net proceeds from our loans and convertible notes payable.

On June 27, 2022, our Registration Statement on Form

S-3 was declared effective, and we may offer and sell from time to time, in one or more series, any of our securities, for total gross

proceeds up to $300,000,000.

As of December 31, 2024, we had $291,190,324 of available funding from our S-3 Registration Statement from

which we may issue our securities to fund current and future operations.

accompanying financial statements have been prepared on a going concern basis, which assumes the realization of assets and

satisfaction of liabilities in the normal course of business.

However, due to losses incurred, substantial doubt about the

Company’s ability to continue as a going concern exists.

are actively evaluating strategies to obtain the necessary additional funding for future operations.

These strategies may include,

obtaining equity financing, issuing debt or entering into other financing arrangements, and restructuring of operations to grow

revenues and decrease expenses.

However, we may be unable to access further equity or debt financing when needed.

Consequently,

there is no assurance that we will be able to obtain the necessary liquidity when needed or under acceptable terms, if at

ability to continue as a going concern depends on successfully executing the plan outlined in our Growth Strategy and

eventually achieving profitable operations.

The consolidated financial statements do not include any adjustments to the carrying

amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to

continue as a going concern.

from the sale of our common stock, cash received from borrowings on our loans, line of credit, and convertible notes payable (net of

debt issuance costs) of $10,984,412, offset by $7,225,197 in repayment of our loans payable and line of credit.

and Capital Resources

The accompanying consolidated financial statements have been prepared on

a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

For the year ended December 31, 2025, we incurred a net loss of $8,073,930, reported cash used in operations of $7,971,902, and expect

to incur further losses through the end of 2026.

Further, we have a working capital deficit of $4,474,265 as of December 31, 2025.

a result, substantial doubt about our ability to continue as a going concern exists.

The Company’s ability to fund ongoing operations

is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles.

We are evaluating strategies to obtain the required additional funding for future operations.

These strategies may include obtaining equity

financing, issuing debt or entering into other financing arrangements, and restructuring operations to grow revenues and decrease expenses.

Series A Preferred Stock

On August 4, 2025, we entered

into Exchange Agreements with each of the Holders.

Pursuant to the Exchange Agreements, the Holders exchange certain outstanding convertible

notes payable with aggregate principal and accrued interest of approximately $9,297,894 (collectively, the “Exchange Notes”)

for an aggregate of 9,297,894 newly authorized shares of Series A Preferred Stock.

Upon the closing of the transactions contemplated

by the Exchange Agreements, the Exchange Notes were cancelled, and the Holders relinquished all rights, powers, privileges, remedies,

or interest under such securities.

On November 6, 2025, we converted all 9,297,894 outstanding shares of Series A Preferred Stock, together

with $222,815 in accrued and unpaid dividends to 9,520,709

shares of common stock.

B Preferred Stock

September 24, 2025, we entered into a Preferred Equity Purchase Agreement (the “Purchase Agreement”) with B.

Riley Principal

Capital I (“B.

Riley”), an affiliate of B.Riley Securities, Inc.

(“BRS”), pursuant to which we will have the

right to issue and sell to B.

Riley, and B.

Riley must purchase from us, up to $15.0 million of shares of our newly authorized Series

B Convertible Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”).

As of the issuance of these

consolidated financial statements, B.

Riley has purchased $2.3 million of the $15.0 million of shares of Series B Preferred Stock.

sales of Series B Preferred Stock by us to B.

Riley, if any, will be subject to certain limitations and conditions set forth in the Purchase

Agreement, and may occur from time to time, at our sole discretion, over the 18-month period commencing September 24, 2025 and terminating

on the earliest of (i) March 24, 2027, (ii) the date on which B.

Riley shall have made payment of the aggregate purchase price equal

to $15.0 million.

In no event may we issue or sell to B.

Riley under the Purchase Agreement shares of our Series B Preferred Stock that

are convertible into an aggregate number of shares of common stock exceeding a customary 9.99% beneficial ownership limitation.

2025 Prospectus

June 26, 2025, we filed a replacement shelf registration statement on Form S-3 (that was deemed effective on July 7, 2025) (“July

2025 Prospectus”) that contains two prospectuses:

base prospectus that covers the potential offering, issuance, and sale from time to time of our common stock, preferred stock, warrants,

debt securities, and units in one or more offerings with total proceeds of up to $100,000,000;

sales agreement prospectus covering the potential offering, issuance, and sale from time to time of shares of our common stock having

aggregate gross sales proceeds of up to $10,380,600 pursuant to our At-the-Market (“ATM”) sales agreement, dated June

14, 2022, with BRS, Stifel, Nicolaus & Company, Incorporated and Boustead Securities, LLC.

no event will we sell securities under this registration statement with a value exceeding more than one-third of our “public float”

(the aggregate market value of our common stock and any other equity securities that we may issue in the future that are held by non-affiliates)

in any 12-calendar month period so long as our public float remains below $75 million.

There can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms,

As such, we may be unable to access further equity or debt financing when needed.

The ability for us to continue as a going

concern is dependent upon our ability to successfully implement our strategies and eventually attain profitable operations.

The accompanying

consolidated financial statements do not include any adjustments to the carrying amounts or classification of assets, liabilities, and

reported expenses that may be necessary if we are unable to continue as a going concern.

December 30, 2025, we received a letter from the listing qualifications staff of Nasdaq providing notification that the bid price of

our common stock had closed below $1.00 per share for the previous 33 consecutive business days and our common stock 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 180 calendar days or until June 29, 2026, 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 June 29, 2026.

we do not regain compliance with Rule 5550(a)(2) by June 29, 2026, we may be eligible for an additional 180 calendar day compliance period.

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.

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.

Issued Accounting Pronouncements

Note 3 to our consolidated financial statements for the years ended December 31, 2025 and 2024 included elsewhere in this Annual Report.

Accounting Policies and Estimates

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported

amounts of revenue and expenses during the periods.

Our significant estimates include the allowance for credit losses, the carrying value of intangible assets and goodwill,

deferred tax asset and valuation allowance, the valuation of convertible notes, derivative liabilities, the estimated fair value of assets

acquired, liabilities assumed and stock issued in business combinations, and assumptions used in the Black-Scholes-Merton pricing model,

such as expected volatility, risk-free interest rate, share price, expected dividend rate, and the adequacy of insurance reserves, could be affected by external conditions, including those unique to

us and general economic conditions.

It is reasonably possible that these external factors could have an effect on our estimates and could

cause actual results to differ from those estimates.

Value Measurement

Accounting Estimates

Value Measurements

fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an

14 unchanged sentences

by little or no market activity).

automatic discounted share-settlement feature of our convertible notes issued in December 2024 was an embedded derivative requiring bifurcation

accounting as (1) the feature was not clearly and closely related to the debt host and (2) the feature met the definition of a derivative

under ASC 815, Derivatives and Hedging .

bifurcated embedded features were initially recorded on the balance sheet at their fair value on the date of issuance.

After the initial

recognition, the fair value of the embedded derivative liability changed over time due to changes in the share price of our common stock.

The change in fair value has been included in our statement of operations.

The embedded derivative liability and related convertible

notes payable were extinguished during the year ended December 31, 2025.

allocate the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon

13 unchanged sentences

in profit or loss.

Goodwill and Indefinite-Lived Intangible Assets

and indefinite-lived intangible assets are assessed for impairment annually, or more frequently, if events occur that would indicate

a potential reduction in the fair value of a reporting unit below its carrying value.

We perform our annual impairment review of goodwill

at the reporting unit level.

If we determine the fair value of the reporting unit’s goodwill or other indefinite-lived intangible

assets is less than their carrying value as a result of an annual or interim test, an impairment loss is recognized and reflected in

operating income or loss in the consolidated statements of operations during the period incurred.

We perform our impairment assessment

based on a quantitative analysis performed for our reporting unit.

review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying

amount of such assets may not be fully recoverable.

Recoverability is determined based on an estimate of undiscounted future cash flows

resulting from the use of an asset and its eventual disposition.

Should an asset not be recoverable, an impairment loss is measured by

comparing the fair value of the asset to its carrying value.

If we determine the fair value of an asset is less than the carrying value,

an impairment loss is recognized in operating income or loss in the consolidated statements of operations during the period incurred.

performed our annual impairment assessment for 2024 and concluded that no impairment of goodwill was indicated.

As of December 31,

2024, we believe such assets are recoverable, however, there can be no assurance that these assets will not be impaired in future

is assessed for impairment annually, or more frequently, if events occur that would indicate a potential reduction in the fair value

of a reporting unit below its carrying value.

We perform our annual impairment review of goodwill at the reporting unit level.

determine the fair value of the reporting unit’s goodwill is less than their carrying value as a result of an annual or interim

test, an impairment loss is recognized and reflected in operating income or loss in the consolidated statements of operations during

the period incurred.

We perform our impairment assessment based on a quantitative analysis performed for our reporting unit.

performed our annual impairment assessment of goodwill as of December 31, 2025 and concluded that no impairment of goodwill was indicated.

As of December 31, 2025, we believe such assets are recoverable, however, there can be no assurance that these assets will not be impaired

in future periods.

Any future impairment charges could adversely impact our results of operations.

Notes 3 and 7 to our financial statements for additional information regarding goodwill and indefinite-lived assets.

of Long-lived Assets

will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a

review and at least annually.

The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash

flow from such asset is separately identifiable and is less than its carrying value.

In that event, a loss is recognized based on

the amount by which the carrying value exceeds the fair value of the long-lived asset.

Fair value is determined primarily by using

the anticipated cash flows discounted at a rate commensurate with the risk involved.

Losses on long-lived assets to be disposed of

are determined in a similar manner, except that fair values are reduced for the cost to dispose.

review finite-lived intangible assets for impairment whenever an event occurs or circumstances change that indicate that the carrying

amount of an asset group may not be fully recoverable.

Recoverability is determined based on an estimate of undiscounted future cash

flows resulting from the use of an asset group and its eventual disposition.

Should an asset group not be recoverable, an impairment

loss is measured by comparing the fair value of the asset group to its carrying value.

If we determine the fair value of an asset group

is less than the carrying value, an impairment loss is recognized in operating income or loss in the consolidated statements of operations

during the period incurred.

measure and recognize compensation expense for equity-based awards based on the grant date fair values of the awards.

8 unchanged sentences

We record forfeitures when they

occur, based on our lack of historical data available to estimate an appropriate forfeiture rate.

Changes in our forfeiture rate can

have a significant impact on our equity-based compensation expense since the cumulative effect of adjusting the forfeiture rate is recognized

in the period in which the estimate is changed.

will continue to use judgment in evaluating the assumptions related to our equity-based awards on a prospective basis.

17 unchanged sentences

some cases payments are required in 15 days.

do not disclose the value of unsatisfied performance obligations for contracts with original expected duration of one year or less.

Note 3 to our consolidated financial statements for the years ended December 31, 2025 and 2024 included elsewhere in this Annual Report

for additional information regarding revenue recognition and deferred revenue.

include reimbursed expenses in revenue and cost of revenue as we are primarily responsible for fulfilling the promise to provide the

specified service, including the integration of the related services into a combined output to the client, which are inseparable from

the integrated service.

These costs include such items as consumables, transportation, and travel expenses, over which we have discretion

in establishing prices.

Cost of revenue include the following:

and benefits for billable employees and consultants directly involved in delivering service offerings and engagements;

used in the provision of services;

Other expenses directly related

to service contracts, such as professional services, meals, and travel expenses.

in Stock-Based Compensation

determine the expected stock price volatility based on the historical volatility of our common stock.

in fair value of derivative liability

automatic discounted share-settlement feature of our convertible notes issued in December 2024 is an embedded derivative requiring bifurcation

accounting as (1) the feature was not clearly and closely related to the debt host and (2) the feature met the definition of a derivative

under ASC 815 (Derivatives and Hedging).

bifurcated embedded features were initially recorded on the balance sheet at their fair value on the date of issuance.

After the initial

recognition, the fair value of the embedded derivative feature changed over time due to changes in our share price.

The change in fair

value has been included in our statement of operations.

Sheet Arrangements

7 unchanged sentences

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 7. Management’s Discussion and Analysis