CISO Global, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to 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. - 38 - 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 on this evaluation, our CEO and CFO concluded that, as of December 31, 2024, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Limitations on Effectiveness of Controls and Procedures 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. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. 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 United States generally accepted accounting principles. Based on our assessment under this framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Our independent registered public accounting firm will not be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” nor a non-accelerated filer. ITEM 9B. OTHER INFORMATION During the quarter ended December 31, 2024, no director or officer of our company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. - 39 - PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth certain information regarding our Directors and Executive Officers. The age of each Director and Executive Officer listed below is given as of March 24, 2025. Name Age Position David G. Jemmett 58 Chief Executive Officer and Director Debra L. Smith 54 Chief Financial Officer Kyle J. Young 42 Interim Chief Operating Officer Andrew K. McCain (1) (2) 62 Director Phillip Balatsos (1) (3) 47 Director Mohsen (Michael) Khorassani (2)(3) 58 Director Andrew Hancox (1) (2) (3) 53 Director (1) Member of the Audit Committee (2) Member of the Compensation Committee (3) Member of the Governance and Nominating Committee Our Executive Officers David G. Jemmett – Chief Executive Officer and Director Mr. Jemmett has served as our Chief Executive Officer and a director since the company’s formation in March 2019. He founded GenResults in June 2015, which was acquired by our company in April 2019. Prior to this, he served as Chief Executive Officer of NantCloud, LLC in 2014, a provider of secure cloud-hosted applications for healthcare, and as Chief Technology Officer of NantWorks, LLC, the parent company of the “Nant” family of companies. From 2005 to 2013, Mr. Jemmett was the founder and Chief Executive Officer of ClearDATA Networks Corporation, a leading HIPAA-compliant hosting company specializing in healthcare. Mr. Jemmett has deep expertise in both technology and business, having led innovation in the cybersecurity and healthcare technology sectors. He is a recognized leader, having appeared on CBS, CNN, MSNBC, and CSPAN, and testified before the U.S. Senate Subcommittee on Telecommunications and Internet Security in 1998. Mr. Jemmett is also a published author and today sits on the Forbes technology counsel. With extensive leadership experience, a strong technical background, and significant equity ownership, Mr. Jemmett is well-positioned to lead our company and serve as a director. Debra L. Smith – Chief Financial Officer Ms. Smith has served as our Chief Financial Officer since June 2021. Ms. Smith previously served as a director on our Board of Directors from May 2023 to January 2025. Ms. Smith served as our Executive Vice President of Finance and Accounting from February 2021 to June 2021. Prior to joining our company, Ms. Smith served as Executive Vice President of Finance at Arrivia Inc. from January 2020 to February 2021 and Controller and, subsequently, Chief Accounting Officer at BeyondTrust from October 2016 to January 2020. Ms. Smith received a Bachelor of Science degree in Accounting, Summa Cum Laude, from DeVry University and a Master’s degree in Counseling with Honors from Argosy University. Kyle J. Young – Interim Chief Operating Officer Mr. 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. Mr. 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. Mr. Young holds a bachelor’s degree in Speech Communications & Rhetoric from the University of Illinois Urbana-Champaign. - 40 - Our Directors Andrew K. McCain – Director Mr. McCain has served as a director of our company since May 2019. He has served as the President and Chief Executive Officer for Hensley Beverage Company since January 2024, and previously served as President and Chief Operating Officer from 2014 through January 2024. He is Chairman of Hensley Employee Foundation and a Patrons Committee member of United Methodist Outreach Ministries’ New Day Centers. He is past Chairman of the Board of the Fiesta Bowl, past Chairman of the Anheuser-Busch National Wholesaler Advisory Panel, past Chairman of the Greater Phoenix Chamber of Commerce, past board member of the Arizona Super Bowl Host Committee, and past board member of the Arizona 2016 College Football Championship Local Organizing Committee. Mr. McCain received his Bachelor of Arts in Mathematics in 1984 and an MBA in 1986 from Vanderbilt University. We believe Mr. McCain is qualified for service as a director of our company due to his significant business experience and leadership. Phillip Balatsos – Director Mr. Balatsos has served as a director of our company since January 2025. As Vice President at XP Investments US LLC, he has significantly expanded the firm’s presence in North America and Europe, achieving a 300% increase in FX revenue. Previously, Mr. Balatsos was Director at Barclays Capital, where he managed high-value institutional relationships and led joint ventures that boosted annual revenues by millions. He began his career at Credit Suisse, rapidly advancing to Vice President supporting hedge fund sales. His entrepreneurial ventures include owning Thomas-Mackey Veterinarian Service, SeaPath Advisory LLC, and TwoMacks Properties LLC, which demonstrate his diverse expertise. He also served on the Board of Directors for Sadot Group Inc., contributing to the company’s strategic growth. Mr. Balatsos holds a Bachelor of Science in Business Administration from Skidmore College and has received leadership recognition in various roles. We believe Mr. Balatsos is qualified for service as a director of our company due to his significant experience with financial markets and his executive and board experience at other companies. - 41 - Mohsen (Michael) Khorassani – Director Mr. Khorassani has served as a director since January 2025. He has served as founder and CEO of Orion 4, a corporate advisory firm, since March of 2019 where he has served as capital markets, business development and marketing advisor for many public and private companies. Before founding Orion, he spent nineteen years at Oppenheimer Private Client Division as Director of Investments focused on building and developing a successful wealth management practice. He was responsible for advising both high net-worth and institutional clients. Prior to joining Oppenheimer, he served as a Vice President at Oscar Gruss & Son, an institutional NYSE member firm where he was responsible for helping build the firm’s retail division. His responsibilities included recruiting advisors, managing teams, and sales and trading. Prior to Oscar Gruss and Son, he spent four years at Gruntal and Co. as V.P of Investments. He started his financial services career at Lehman Brothers two years earlier. Mr. Khorassani has demonstrated extensive understanding of the capital markets over his thirty years of Wall Street experience and brings with him a wealth of knowledge and a deep bench of personal relationships. We believe Mr. Khorassani is qualified for service as a director of our company due to his significant experience in financial markets and leadership experience with publicly traded companies. Andrew Hancox – Director Mr. Hancox has served as a director since January 2025. As the Founder and Managing Member of Block 8 Ventures, he has successfully invested in over 25 blockchain projects and provided strategic consulting to high-growth companies. Previously, he co-founded Katapult (NASDAQ: KPLTW) and served as COO, raising over $250M in capital and expanding the team to 100+ members. Andrew’s experience includes a role as an analyst at Permian Investment Partners, where he evaluated and recommended equity investments, and as the Co-Founder and CEO of Anderson Audio Visual, growing the company to $40M in sales. His educational background includes studies in Law and Mathematics from Victoria University (New Zealand) and a Private Equity and Investment Banking Program from the Institute of Banking and Finance (New York). Mr. Hancox is also a lead mentor at Entrepreneurs Roundtable Accelerator and Parallel 18, an accomplished skier, marathon runner, and avid traveler, having visited 107 countries. Originally from New Zealand, he currently splits his time between New York, NY and San Juan, PR. We believe Mr. Hancox is qualified for service as a director of our company due to his significant experience in investment analysis and leadership positions with other companies. Pursuant to that certain Securities Purchase Agreement, dated December 10, 2024, by and among the company and certain investors (as defined therein), Messrs. Baltsos, Khorassani, and Hancox were appointed to the Board of Directors. Board Constitution Our Board of Directors currently consists of five members. All directors hold office until the next annual meeting of stockholders. At each annual meeting of stockholders, the successors to directors whose terms then expire are elected to serve from the time of election and qualification until the next annual meeting following election. Director Independence Our Board of Directors is comprised of a majority of independent directors, as “independence,” is defined by the listing standards of The Nasdaq Stock Market and by the SEC. Our Board of Directors has concluded that each of Messrs. McCain, Balatsos, Khorassani and Hancox are “independent”, having concluded that any relationship between such director and our company, in its opinion, does not interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Mr. Jemmett is an employee director. Board Committees Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee, and Governance and Nominating Committee. Audit Committee The Audit Committee of our Board of Directors was established in accordance with Rule 10A-3 promulgated under the Exchange Act. The current members of our Audit Committee are Messrs. McCain, Hancox, and Balatsos with Mr. McCain serving as the chair. 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, Hancox, and Balatsos is considered an “audit committee financial expert” as defined in the rules of the SEC. Former directors Reid S. Holbrook and Ernest M. (Kiki) VanDeWeghe, III, served on the Audit Committee during fiscal year 2024 until their resignation in January 2025. The 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.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 consolidated financial statements; oversee our relationship with our independent auditors, including selecting, evaluating, and setting the compensation of, and approving all audit and non-audit services to be performed by the independent auditors; and facilitate communication among our independent registered public accounting firm and our financial and senior management. Compensation Committee We have a standing Compensation Committee of our Board of Directors. The members of our Compensation Committee are Messrs. Khorassani, Hancox, and McCain, with Mr. Khorassani serving as the chair. Each member of the Compensation Committee meets the independence and other requirements to serve on our Compensation Committee under The Nasdaq Stock Market Rules and the rules of the SEC. Former directors Reid S. Holbrook and Ernest M. (Kiki) VanDeWeghe, III, served on the Compensation Committee during fiscal year 2024 until their resignation in January 2025. The Compensation Committee was formed in 2021. 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.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; the compensation of our executive officers and directors; and our significant compensation arrangements, plans, policies, and programs, including our stock compensation plans. Certain of our executive officers, our outside counsel, and consultants may occasionally attend the meetings of the Compensation Committee. However, no officer of our company is present during discussions or deliberations regarding that officer’s own compensation. - 42 - Governance and Nominating Committee We have a standing Governance and Nominating Committee of our Board of Directors. The current members of our Governance and Nominating Committee are Messrs. Balatsos, Khorassani and Hancox, with Mr. Hancox serving as the chair. Each of Messrs. Balatsos, Khorassani and Hancox 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. Former directors Reid S. Holbrook, Ret. General Robert C. Oaks, and Ernest M. (Kiki) VanDeWeghe, III, served on the Governance and Nominating Committee during fiscal year 2024 until their resignation in January 2025. The 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 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 positions and evaluates and oversees corporate governance and related issues. The goal of the Governance and Nominating Committee is to ensure that our directors possess a variety of perspectives and skills derived from high-quality business and professional experience. The Governance and Nominating Committee seeks to achieve a balance of knowledge, experience, and capability on our Board of Directors. To this end, the Governance and Nominating Committee seeks nominees with the highest professional and personal ethics and values, an understanding of our business and industry, diversity of business experience and expertise, a high level of education, broad-based business acumen, and the ability to think strategically. Although the Governance and Nominating Committee uses these and other criteria to evaluate potential nominees to our Board of Directors, it has no stated minimum criteria for such nominees. The Governance and Nominating Committee does not use different standards to evaluate nominees depending on whether they are proposed by our directors and management or by our stockholders. To date, we have not paid any third parties to assist us in this process. Code of Ethics We have adopted a Code of Ethics and Business Conduct (“Code of Ethics”) that sets forth various policies and procedures to promote ethical behavior and that applies to all our directors, officers and employees. The Code of Ethics is publicly available on our 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) Reports Section 16(a) of the Exchange Act, requires officers and directors of our company and persons who beneficially own more than 10% of a registered class of our company’s equity securities to file initial statements of beneficial ownership of common stock (Form 3) and statements of changes in beneficial ownership of common stock (Forms 4 or 5) with the SEC. Officers, directors, and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all such forms they file. Based solely on our review of such reports and certain representations from each reporting person, we believe that during 2024, all Section 16(a) filing requirements were satisfied on a timely basis. Inside Trading Policy Disclosure We have adopted an Insider Trading Policy governing the purchase, sale, and/or other disposition of our securities by our directors, officers, and employees. We believe that our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules, and regulations and the exchange listing standards applicable to us. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. - 43 - ITEM 11. EXECUTIVE COMPENSATION Fiscal 2024 Summary Compensation Table The following table shows the total compensation paid or accrued during the years ended December 31, 2024 and 2023 to our Chief Executive Officer, and our next two most highly compensated executive officers who were serving as executive officers on December 31, 2024, (collectively, our “named executive officers”). Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) (1) Non-Equity Incentive Plan Compensation ($) Non-qualified Deferred Compensation Earnings ($) All Other Compensation ($) (2) Total ($) David G. Jemmett 2024 339,295 - - - - - 825 340,120 Chief Executive Officer 2023 315,105 62,500 - - - - 14,118 391,723 Debra L. Smith 2024 295,255 - - - - - 825 296,080 Chief Financial Officer 2023 280,642 53,125 - - - - 7,576 341,343 Kyle J. Young 2024 295,255 - - - - - 825 296,080 Interim Chief Operating Officer (3) 2023 274,392 48,000 - - - - 12,168 334,560 (1) 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. For a discussion of the assumptions made in the valuation of the stock options, see Note 10 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. (2) The amounts in the “All Other Compensation” column consist of certain benefits provided to our NEOs, which are generally available to our similarly situated employees. For Mr. Jemmett, Ms. Smith, and Mr. Young the amounts in this column consist of a technology stipend ($825). (3) Mr. Young was appointed to serve as our Interim Chief Operating Officer on March 31, 2023. - 44 - Outstanding Equity Awards as of December 31, 2024 The following table summarizes the outstanding equity awards held by each named executive officer as of December 31, 2024. Name Grant Date Number of Shares Underlying Unexercised Options (#) Exercisable Number of Shares Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date David G. Jemmett - - - - - Debra L. Smith February 1, 2021 (1) 33,332 - 30.00 February 1, 2026 December 31, 2021 (2) 250 82 75.00 December 31, 2031 January 14, 2022 (1)(3) 32,361 972 45.30 January 14, 2032 Kyle J. Young February 1, 2021 (1) 33,332 - 30.00 February 1, 2026 December 31, 2021 (2) 250 82 75.00 December 31, 2031 January 14, 2022 (1)(3) 32,361 972 45.30 January 14, 2032 (1) 30% of the shares underlying this option vested on the one-year anniversary of the grant date with the remainder vesting month over the subsequent 24-month period. (2) 25% of the shares underlying this option vested on the one-year anniversary of the grant date with the remainder vesting monthly over the subsequent 36-month period. (3) On August 22, 2022, we repriced these option grants to reflect an exercise price equal to the fair value of our common stock. Vesting provisions of these option grant remained on the same terms as the original option grant. Policies and Practices Related to the Grant of Certain Equity Awards We do not have any formal policies or practices regarding the timing of awards of options in relation to the disclosure of material nonpublic information. Our Board of Directors and Compensation Committee do not take material nonpublic information into account when determining the timing and terms of such awards, and we do not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. The timing of any awards of options to executive officers in connection with new hires, promotions, or other non-routine grants is generally tied to the event giving rise to the award, such as an executive officer’s commencement of employment or promotion effective date. As a result, the timing of the award of options occurs independent of the release of any material nonpublic information. However, we have not made any grants of stock options since 2022. Retirement Plans We maintain a tax-qualified Section 401(k) retirement savings plan for our executive officers and other employees who satisfy the eligibility requirements. Under this plan, participants may elect to make pre-tax or Roth contributions of up to a certain portion of their current compensation, not to exceed the applicable statutory income tax limitation. We intend for the plan to qualify under Section 401(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), enabling contributions by participants to the plan, and income earned on plan contributions, to not be taxable to participants until withdrawn from the plan. Employment Agreements with our Named Executive Officers David G. Jemmett On September 30, 2019, we entered into an employment agreement with Mr. Jemmett to serve as our Chief Executive Officer (the “Jemmett Employment Agreement”). The Jemmett Employment Agreement is evergreen and can be terminated by either party. Pursuant to the Jemmett Employment Agreement, the Board of Directors approved an increase to Mr. Jemmett’s annual base salary from $250,000 to $375,000 and may be increased hereafter from time to time at the discretion of the Board of Directors. Mr. Jemmett’s base salary may be increased in accordance with our normal compensation and performance review policies. He is 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 our objectives. Subject to approval by our Board of Directors, 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, 2024, our Board of Directors had not approved or granted any stock options to Mr. Jemmett. On December 31, 2023, a bonus of $187,500 was accrued for Mr. Jemmett but has not yet been paid. As of December 31, 2024, $34,142 of base salary was accrued and unpaid to Mr. Jemmett. Mr. Jemmett is also eligible to participate in our standard benefit plans. - 45 - Debra L. Smith On 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, the Board of Directors approved an increase to Ms. Smith’s annual base salary from $200,000 to $350,000 and may be increased hereafter from time to time at the discretion of the Board of Directors. Ms. Smith also earns 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. On December 31, 2023, a bonus of $114,375 was accrued for Ms. Smith but has not yet been paid. As of December 31, 2024, $53,285 of base salary was accrued and unpaid to Ms. Smith. Ms. 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. Kyle J. Young On March 31, 2023, we entered into an employment agreement with Mr. Young to serve as our Chief Operating Officer (the “Young Employment Agreement”). The Young Employment Agreement is evergreen and can be terminated by either party. Pursuant to the Young Employment Agreement, the Board of Directors approved an increase to Mr. Young’s annual base salary from $200,000 to $350,000, and an annual bonus between 20% and 100% of base annual salary at the discretion of our Board of Directors. On December 31, 2023, a bonus of $142,500 was accrued for Mr. Young but has not yet been paid. As of December 31, 2024, $53,285 of base salary was accrued and unpaid to Mr. Young. Mr. Young is also eligible to participate in our standard benefit plans. Director Compensation The following table sets forth for each non-employee director certain information concerning their compensation for the year ended December 31, 2024: Name (1) Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) (2) Non-equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Reid S. Holbrook - - - - - - - Andrew K. McCain - - - - - - - Ret. General Robert C. Oaks - - - - - - - Ernest M. (Kiki) VanDeWeghe, III - - - - - - - Brett Chugg - - 44,820 - - - 44,820 Notes : (1) All directors receive reimbursement for reasonable out-of-pocket expenses in attending Board meetings and for participating in our business. (2) The amounts in this column reflect the fair value on the grant date of the option awards granted to the named executive, 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. For a discussion of the assumptions made in the valuation of the stock options, see Note 10 to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2024. - 46 - ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 24, 2025 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 24, 2025 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 16,458,933 shares of common stock outstanding on March 24, 2025. Security Ownership of Certain Beneficial Holders Name and Address of Beneficial Owner (1) Amount and Nature of Beneficial Ownership Percent Jemmett Enterprises, LLC 4,429,000 (2) 26.91 % Stephen H. Scott, Jr. 1,203,335 (3) 7.31 % Security Ownership of Directors and Executive Officers Name and Address of Beneficial Owner (1) Amount and Nature of Beneficial Ownership Percent David G. Jemmett 4,629,001 (4) 28.12 % Debra L. Smith 66,955 (5) * Kyle J. Young 66,955 (5) * Phillip Balatsos — — Mohsen (Michael) Khorassani — — Andrew Hancox — — Andrew K. McCain 585,001 (6) 3.43 % Directors & Executive Officers as a Group (7 persons) 5,347,912 (7) 31.55 % Notes : * Less than 1% of the outstanding shares of common stock. (1) Unless otherwise indicated, the address of record is c/o CISO Global, Inc., 6900 E. Camelback Road, Suite 900, Scottsdale, Arizona 85251. (2) Mr. Jemmett is the managing member of Jemmett Enterprises, LLC and has voting and dispositive power over such shares. (3) Consists of (i) 853,334 shares held directly by Mr. Scott; (ii) 333,334 shares beneficially held by TVMT LLC; and (iii) 16,667 shares beneficially held by JLS 401k Trust. (4) Consists of (i) 4,429,000 shares held by Jemmett Enterprises, LLC, of which Mr. Jemmett is the managing member and has voting and dispositive power over such shares; (ii) 133,334 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) 66,667 shares held by Dana Borgman Trust. (5) Consists of 66,955 shares issuable upon exercise of options exercisable within 60 days after March 24, 2025. (6) Consists of (i) 25,001 shares held indirectly as executor of the Andrew and Lucy McCain Family Trust, for which Mr. McCain has voting and dispositive power; (ii) 200,001 shares held by Hensley & Company, for which Mr. McCain has voting and dispositive power; (iii) 26,666 shares issuable upon the exercise of options exercisable within 60 days after March 24, 2025; and (iv) 333,333 shares issuable upon the conversion of a note payable held by Hensley & Company. (7) Includes 160,576 shares issuable upon the exercise of stock options and 333,333 shares issuable upon conversion of a note payable. - 47 - The following table sets forth information with respect to our common stock that may be issued upon the exercise of stock options under our equity compensation plans as of December 31, 2024: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options Weighted-Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,523,691 $ 37.34 4,814,330 Equity compensation plans not approved by security holders — — — Total 1,523,691 $ 37.34 4,814,330 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons Except as set out below, during the year ended December 31, 2024, there were no transactions, or currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest: ● any director or executive officer of our company; ● any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock; ● any promoters and control persons; and ● any member of the immediate family (including spouse, parents, children, siblings and in laws) of any of the foregoing persons. Independent Consulting Agreement with Stephen Scott In August 2020, we entered into an Independent Consulting Agreement with Stephen Scott, a significant stockholder due to his beneficial ownership, with respect to advisory and consulting services relating to our strategic and business development, and sales and marketing. Mr. Scott received a consulting fee of $11,500 per month for such services until July 2023. In July 2023, we entered into an Independent Consulting Agreement with Mr. Scott, as amended in June 2024, to provide, on a non-exclusive basis, advisory and consulting services relating to our strategic and business development, intellectual property development, banking relationships, and strategic mergers and acquisitions for a period of one year. Mr. Scott will receive a consulting fee of $15,000 per month for such services under the terms of this agreement. During the years ended December 31, 2024 and 2023, we paid consulting fees to Mr. Scott in the amounts of $180,000 and $159,000, respectively. Managed Services Agreement with Hensley Beverage Company In July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company, an entity affiliated with Mr. McCain, a 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, 2024 and 2023, we received $2,283,995 and $1,417,398, respectively from Hensley Beverage Company for contracted services and had an outstanding receivable balance of zero and $152,213 as of December 31, 2024 and 2023, respectively. The payments received during the year ended December 31, 2024, included a payments for future services, of which $191,633 remains outstanding. Convertible Note Payable with Hensley Beverage Company In March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $5,000,000 bearing an interest rate of 10.00% per annum. The principal amount, together with accrued and unpaid interest was due on March 20, 2025. At any time prior to or on the maturity date, Hensley & Company was permitted to convert all or any portion of the outstanding principal amount and all accrued and unpaid interest thereon into shares of our common stock at a conversion price of $18.00 per share. During the year ended December 31, 2024 and 2023, we recorded interest expense of $500,000 and $388,888, respectively, and as of December 31, 2024 and 2023, we had accrued interest of $888,888 and $388,888, respectively. Andy McCain, a director of our company, is President and Chief Executive Officer of Hensley & Company. Director Independence See “Directors, Executive Officers and Corporate Governance – Director Independence” and “Directors, Executive Officers and Corporate Governance – Board Committees” in Item 10 above. - 48 - ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Our Audit Committee has appointed Semple, Marchal & Cooper, LLP (“SMC”) to audit the consolidated financial statements of our company for the fiscal year ending December 31, 2024. The following table sets forth the fees billed to our company for professional services rendered by SMC for the years ended December 31, 2024 and 2023: Services 2024 2023 Audit fees (1) $ 506,078 $ 498,395 Audit-related fees (2) 30,571 51,863 Tax fees (3) 90,600 65,827 All other fees (4) - 17,235 Total fees $ 627,249 $ 633,320 (1) Audit fees consisted of billing for professional services normally provided in connection with statutory and regulatory filings, including (i) fees associated with the audits of our financial statements for the years ended December 31, 2024 and 2023 and, (ii) fees associated with quarterly reviews for the quarters ended March 31, 2024 and 2023, June 30, 2024 and 2023, and September 30, 2024 and 2023. (2) Audit related fees consisted of billings for professional services for reviews of our periodic filings under form 10-K and 10-Q and employee benefit plan audit for the years ended December 31, 2024 and 2023. (3) Tax fees consisted primarily of tax related advisory and preparation services. (4) Fees for permitted services other than the services reported in audit fees, audit-related fees, and tax fees. Audit Committee Pre-Approval Policies The charter of our Audit Committee provides that the authority and responsibilities of our Audit Committee include the pre-approval of all audit and permitted non-audit and tax services that may be provided by our independent auditors or other registered public accounting firms, and the establishment of policies and procedures for the Audit Committee’s pre-approval of permitted services by our independent auditors or other registered public accounting firms on an on-going basis. For audit services, each year our independent auditor provides our Audit Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the year, which must be formally accepted by our Audit Committee before the audit commences prior to engagement of an independent auditor for next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of three categories of services to our Audit Committee for approval. All of the services provided by SMC described above under the caption “Audit-Related Fees” were approved by our Audit Committee pursuant to our Audit Committee’s pre-approval policies. - 49 - PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as a part of the report: (1) 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. (2) 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. (b) Exhibits. Exhibit Incorporated by Reference Number Exhibit Description Form Exhibit Filing Date 2.1 Agreement for the Purchase and Sale of Limited Liability Company Interests of GenResults, LLC dated April 12, 2019 10-12G 10.1 10/2/2019 2.2** Agreement and Plan of Merger by and among the Registrant, TalaTek, LLC, TalaTek Merger Sub and Baan Alsinawi dated September 23, 2019 10-12G 2.2 10/2/2019 2.3 Stock Purchase Agreement by and among the Registrant, Technologyville, Inc. and Brian Yelm dated May 25, 2020 8-K 10.1 5/29/2020 2.4 Share Purchase Agreement among the Registrant, Clear Skies Security, LLC and all of its Members dated July 31, 2020 8-K 10.1 8/6/2020 2.5** Agreement and Plan of Merger by and among the Registrant, Alpine Merger Sub, LLC, Alpine Security, LLC and Christian Espinosa dated December 16, 2020 8-K 10.1 12/21/2020 2.6** 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 8-K 10.1 08/02/2021 2.7** Stock Purchase Agreement by and among the Registrant, Atlantic Technology Systems, Inc., Atlantic Technology Enterprises, Inc., and James Montagne and Miriam Montagne as sole shareholders, dated October 1, 2021 8-K 10.1 10/07/2021 2.8** Agreement and Plan of Merger by and among the Registrant, RED74 Merger Sub, LLC, RED74 LLC, Ticato Holdings, Inc. and Tim Coleman dated October 8, 2021 8-K 10.1 11/15/2021 2.9** Stock Purchase Agreement by and among the Registrant, Southford Equities, Inc., a British Virgin Islands based company and David Esteban Alfaro Medina, Roberto Andrés Arriagada Poblete and Camilo Orlando Garrido Briones dated December 1, 2021 8-K 10.1 12/06/2021 2.10 Stock Purchase Agreement among the Registrant and certain shareholders of True Digital Security Inc. dated January 5, 2022 8-K 10.1 01/06/2022 2.11** Agreement and Plan of Merger among the Registrant and certain shareholders of True Digital Security Inc. dated January 5, 2022 8-K 10.2 01/06/2022 2.12 Stock Purchase Agreement by and among the Registrant and Southford Equities, Inc., David Esteban Alfaro Medina, Roberto Andrés Arriagada Poblete, Camilo Orlando Garrido Briones, dated July 1, 2024 8-K 10.1 07/05/2024 2.13 Stock Purchase Agreement by and among the Registrant and CT Group, LP, Alejandro Torchio, Datadeck, LP, Diego Cabai, Woodface, LP, Rodrigo Astorga. VMT Technologies, LP, José Williams Torres Valenzuela, Quijote Ventures, LP, Lucio Quijano, dated July 1, 2024. 8-K 10.2 07/05/2024 2.14 Stock Purchase Agreement by and among the Registrant and Itada Equities, Inc., Lilian Andre Espinosa Villarroel, Lorenzo Espinoza Labra, dated July 1, 2024 8-K 10.3 07/05/2024 3.1 Second Amended and Restated Certificate of Incorporation of the Registrant 10-Q 3.1 08/15/2022 3.1(a) Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant 8-K 3.1 04/10/2023 3.1(b) Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant 8-K 3.1 03/07/2024 3.2 Second Amended and Restated By-laws of the Registrant 8-K 3.1 10/10/2023 4.1 Form of Common Stock Certificate of the Registrant 10-K 4.1 03/30/2020 4.2 Description of Securities Registered under Section 12 of the Exchange Act 10-K 4.2 04/16/2024 4.3 Form of Underwriter Warrant S-1 4.3 12/14/2021 4.4 Form of Placement Agent Warrant 8-K 4.1 05/17/2023 10.1# 2019 Equity Incentive Plan, as amended 10-Q 10.3 08/15/2022 10.2# Form of Stock Option Agreement 10-K 10.3 04/15/2022 10.3# Employment Agreement between the Registrant and David G. Jemmett dated September 30, 2019 10-12G 10.2 010/2/2019 10.4# Employment Agreement by and between Debra L. Smith and the Registrant dated December 31, 2020 10-K 10.10 04/15/2022 10.5# Employment Agreement by and between Kyle J. Young and the Registrant dated March 30, 2023 10-K 10.7 03/31/2023 10.6 Form of Lockup Agreement S-1/A 10.14 01/07/2022 10.7 Purchase Agreement, dated March 20, 2023, by and between the Registrant and Hensley & Company dba Hensley Beverage Company 8-K 10.1 03/20/2023 10.7(a)* Amendment Number One to Purchase Agreement and the Note dated March 20, 2023, by and between the Registrant and Hensley & Company dba Hensley Beverage Company 10.8 10% Unsecured Convertible Note by the Registrant payable to Hensley & Company, dated March 20, 2023 8-K 10.2 03/20/2023 10.9# 2023 Equity Incentive Plan S-8 10.2 10/31/2023 10.10 Placement Agency Agreement, dated May 16, 2023, by and between the Registrant and each Purchaser thereto 8-K 10.2 05/17/2023 10.11 Form of Securities Purchase Agreement, dated May 16, 2023, by and between the Registrant and each Purchasers thereto 8-K 10.1 05/17/2023 10.12 Form of Intellectual Property Buy-Back Purchase Agreement 8-K 10.1 12/04/2024 10.13 Form of Promissory Note 8-K 10.2 12/04/2024 10.14 Form of Convertible Note by the Registrant and payable to Target Capital 14, LLC. 8-K 10.2 12/16/2024 10.15 Form of Convertible Note by the Registrant and payable to Secure Net Capital, LLC. 8-K 10.3 12/16/2024 10.16 Form of Common Stock Purchase Warrant by the Registrant and Target Capital 14, LLC. 8-K 10.4 12/16/2024 10.17 Form of Common Stock Purchase Warrant by the Registrant and Secure Net Capital, LLC. 8-K 10.5 12/16/2024 10.18 Form of Registration Rights Agreement dated December 10, 2024, by and between the Registrant and Purchasers thereto 8-K 10.6 12/16/2024 10.19 Placement Agency Agreement dated December 10, 2024, by and between the Registrant and each Purchaser thereto 8-K 10.7 12/16/2024 10.20 Securities Purchase Agreement dated December 10, 2024, between Registrant and the Purchasers thereto 8-K 10.1 12/16/2024 19.1* CISO Global, Inc. Insider Trading Policy 21.1* Subsidiaries of the Registrant 23.1* Consent of Semple, Marchal & Cooper LLP 23.2* Consent of Semple, Marchal & Cooper LLP 23.3* Consent of Baker Tilly Chile Ltda. 31.1 Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer 31.2 Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer 32.1 Section 1350 Certification of Principal Executive Officer 32.2 Section 1350 Certification of Principal Financial Officer 97.1 CISO Global, Inc. Executive Officer Incentive Compensation Recovery Policy 10-K 97.1 04/16/2024 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Schema Document 101.CAL Inline XBRL Calculation Linkbase Document 101.DEF Inline XBRL Definition Linkbase Document 101.LAB Inline XBRL Label Linkbase Document 101.PRE Inline XBRL Presentation Linkbase Document 104 Cover Page Interactive Data File (Embedded within the Inline XBRL document) *Filed herewith. **Certain 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. ITEM 16. FORM 10-K SUMMARY Not applicable. - 50 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CISO GLOBAL, INC. By: /s/ David G. Jemmett Name: David G. Jemmett Title: Chief Executive Officer (Principal Executive Officer) Date: March 31, 2025 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ David G. Jemmett Name: David G. Jemmett Title: Chief Executive Officer and Director (Principal Executive Officer) Date: March 31, 2025 By: /s/ Debra L. Smith Name: Debra L. Smith Title: Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: March 31, 2025 By: /s/ Andrew K. McCain Name: Andrew K. McCain Title: Director Date: March 31, 2025 By: /s/ Phillip Balatsos Name: Phillip Balatsos Title: Director Date: March 31, 2025 By: /s/ Mohsen (Michael) Khorassani Name: Mohsen (Michael) Khorassani Title: Director Date: March 31, 2025 By: /s/ Andrew Hancox Name: Andrew Hancox Title: Director Date: March 31, 2025 - 51 - CISO GLOBAL, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 AND 2023 TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # 178 ) F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # 3172) F-3 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets as of December 31, 2024 and 2023 F-5 Consolidated Statements of Operations and Comprehensive Loss For the Years Ended December 31, 2024 and 2023 F-6 Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2024 and 2023 F-7 Consolidated Statements of Cash Flows For the Years Ended December 31, 2024 and 2023 F-8 Notes to Consolidated Financial Statements For the Years Ended December 31, 2024 and 2023 F-9 F- 1 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders of CISO Global, Inc. and Subsidiaries Scottsdale, Arizona Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of CISO Global, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2024 and 2023, 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. We did not audit the combined financial statements of the Company’s wholly-owned “South American Subsidiaries,” which include the consolidated balance sheet of Arkavia Networks SpA. and its wholly-owned subsidiaries Arkavia Networks Limitada and Arkavia Networks, as of December 31, 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the 6 months and the year ended July 1, 2024 (the date of disposition) and December 31, 2023, respectively; the combined balance sheet 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) as of December 31, 2023 and the related combined statements of operations, stockholder’s equity, and cash flows for the 6 months and year ended July 1, 2024 (the date of disposition) and December 31, 2023, respectively; and the combined balance sheet 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, 2023 and the related combined statements of operations, stockholders’ equity, and cash flows for the 6 months and year ended July 1, 2024 (the date of disposition) and December 31, 2023, respectively; and the related notes (collectively “combined financial statements”). The combined financial statements of the South American Subsidiaries reflect total assets of $21.9 million at December 31, 2023, and total revenues of $8.4 million and $23.1 million for the 6 months ended July 1, 2024 (the date of disposition) and the year ended December 31, 2023, respectively. 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. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed 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. Management’s 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We 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 consolidated 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. As part 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. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Semple, Marchal & Cooper, LLP Certified Public Accountants We have served as the Company’s auditor since 2019. Phoenix, Arizona March 31, 2025 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F- 3 F- 4 CISO GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2024 2023 ASSETS Current Assets: Cash and cash equivalents $ 992,589 $ 241,643 Accounts receivable, net 1,837,521 2,800,209 Prepaid cost of revenue 334,143 244,698 Prepaid expenses and other current assets 137,725 205,919 Contract asset 179,093 197,656 Assets of business held for sale - 22,600,715 Total Current Assets 3,481,071 26,290,840 Property and equipment, net 730,511 1,052,637 Right of use asset, net 537,173 762,228 Intangible assets, net 1,802,214 3,546,580 Goodwill 19,900,550 19,900,550 Prepaid cost of revenue, net of current portion 73,021 32,375 Other assets 129,916 70,173 Total Assets $ 26,654,456 $ 51,655,383 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable and accrued expenses $ 9,635,086 $ 7,597,469 Deferred revenue 1,365,315 1,371,637 Lease liability 170,289 219,342 Loans payable 2,674,090 1,856,245 Line of credit 1,957,938 - Derivative liability 2,102,927 - Convertible notes payable 2,050,002 2,050,000 Convertible notes payable, related party 5,000,000 - Convertible notes payable 5,000,000 - Liabilities of business held for sale - 16,666,096 Total Current Liabilities 24,955,647 29,760,789 Long-term Liabilities: Deferred revenue, net of current portion 84,403 84,294 Loans payable, net of current portion 37,272 74,542 Convertible notes payable, related party - 5,000,000 Lease liability, net of current portion 428,070 596,307 Total Liabilities 25,505,392 35,515,932 Commitments and Contingencies - - Stockholders’ Equity: Common stock, $ .00001 par value; 300,000,000 shares authorized; 11,821,866 and 11,949,959 issued and outstanding at December 31, 2024 and December 31, 2023, respectively 123 119 Preferred stock, $ .00001 par value; 50,000,000 shares authorized; 0 shares issued and outstanding on December 31, 2024 and December 31, 2023, respectively - - Additional paid-in capital 183,707,063 172,837,842 Treasury stock, at cost ( 502,137 and zero shares) ( 290,737 ) - Accumulated translation adjustment ( 4,779 ) 1,320,177 Accumulated deficit ( 182,262,606 ) ( 158,018,687 ) Total Stockholders’ Equity 1,149,064 16,139,451 Total Liabilities and Stockholders’ Equity $ 26,654,456 $ 51,655,383 The accompanying footnotes are an integral part of these consolidated financial statements. F- 5 CISO GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Year Ended December 31, 2024 December 31, 2023 Revenue: Security managed services $ 27,759,209 $ 30,309,510 Professional services 2,550,677 3,631,629 Cybersecurity software 440,809 - Total revenue 30,750,695 33,941,139 Cost of revenue: Security managed services 9,296,185 9,951,160 Professional services 465,952 594,248 Cybersecurity software 119,900 - Cost of payroll 12,023,206 15,992,060 Stock based compensation 4,337,807 4,823,829 Total cost of revenue 26,243,050 31,361,297 Total gross profit 4,507,645 2,579,842 Operating expenses: Professional fees 1,339,010 3,210,625 Advertising and marketing - 449,231 Selling, general and administrative 13,081,606 18,237,796 Stock based compensation 4,676,664 7,712,671 Impairment of goodwill - 35,933,364 Total operating expenses 19,097,280 65,543,687 Loss from operations ( 14,589,635 ) ( 62,963,845 ) Other income (expense): Other income (expense) ( 116,061 ) 245,920 Loss on issuance of convertible notes ( 1,022,650 ) - Change in fair value of derivative liability ( 593,083 ) - Interest expense, net ( 3,584,172 ) ( 2,266,573 ) Total other income (expense) ( 5,315,966 ) ( 2,020,653 ) Loss from continuing operations before income taxes ( 19,905,601 ) ( 64,984,498 ) Benefit from income taxes - - Loss from continuing operations ( 19,905,601 ) ( 64,984,498 ) Loss from discontinued operations, net of income taxes (1) ( 4,338,318 ) ( 15,246,585 ) Net Loss ( 24,243,919 ) ( 80,231,083 ) Foreign currency translation adjustment ( 4,779 ) 257,930 Comprehensive loss $ ( 24,248,698 ) $ ( 79,973,153 ) Net loss per common share - basic and diluted: Continuing operations $ ( 1.67 ) $ ( 5.85 ) Discontinued operations ( 0.36 ) ( 1.37 ) $ ( 2.03 ) $ ( 7.22 ) Weighted average shares outstanding - basic 11,956,137 11,117,316 Weighted average shares outstanding - diluted 11,956,137 11,117,316 (1) Includes recognized loss on disposal of $ 3,189,232 . The accompanying footnotes are an integral part of these consolidated financial statements. F- 6 CISO GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (NOTE 3) Shares Amount Shares Amount Capital Stock Gain/(Loss) Deficit Total Accumulated Additional Other Common Stock Preferred Stock Paid-in Treasury Comprehensive Accumulated Shares Amount Shares Amount Capital Stock Gain/(Loss) Deficit Total Balance at January 1, 2024 11,949,959 $ 119 - $ - $ 172,837,842 $ - $ 1,320,177 $ ( 158,018,687 ) $ 16,139,451 Stock based compensation - stock options - - - - 8,956,571 - - - 8,956,571 Stock based compensation - common stock 100,000 1 - - 57,899 - - - 57,900 Stock issued for cash 126,688 2 - - 154,945 - - - 154,947 Stock issued as lending discount 100,000 1 - - 121,999 - - - 122,000 Stock adjustment after reverse stock split 47,356 - - - - - - - - Relative fair value of warrants issued with convertible notes - - - - 1,249,118 - - - 1,249,118 Warrants issued to convertible notes placement agent - - - - 328,689 - - - 328,689 Repurchase of treasury stock related to disposition of assets - - - - - ( 290,737 ) - - ( 290,737 ) Foreign currency translation - - - - - - ( 4,779 ) - ( 4,779 ) Reclassification of foreign currency translation to net loss - - - - - - ( 1,320,177 ) - ( 1,320,177 ) Net loss - - - - - - - ( 24,243,919 ) ( 24,243,919 ) Balance at December 31, 2024 12,324,003 $ 123 - $ - $ 183,707,063 $ ( 290,737 ) $ ( 4,779 ) $ ( 182,262,606 ) $ 1,149,064 Balance at January 1, 2023 9,697,921 $ 97 - $ - $ 153,170,351 $ - $ 1,062,247 $ ( 77,787,604 ) $ 76,445,091 Balance 9,697,921 $ 97 - $ - $ 153,170,351 $ - $ 1,062,247 $ ( 77,787,604 ) $ 76,445,091 Stock based compensation - stock options - - - - 11,469,667 - - - 11,469,667 Stock based compensation - common stock 233,333 2 - - 733,498 - - - 733,500 Stock issued for cash 1,782,658 18 - - 6,655,475 - - - 6,655,493 Exercise of options 69,378 1 - - 491,852 - - - 491,853 Stock issued for SB Cyber acquisition 33,335 - - - 99,000 - - - 99,000 Stock issued as lending discount 133,334 1 217,999 - - - 218,000 Foreign currency translation - - - - - - 257,930 - 257,930 Net loss - - - - - - - ( 80,231,083 ) ( 80,231,083 ) Balance at December 31, 2023 11,949,959 $ 119 - $ - $ 172,837,842 $ - $ 1,320,177 $ ( 158,018,687 ) $ 16,139,451 Balance 11,949,959 $ 119 - $ - $ 172,837,842 $ - $ 1,320,177 $ ( 158,018,687 ) $ 16,139,451 The accompanying footnotes are an integral part of these consolidated financial statements. F- 7 CISO GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS December 31, 2024 December 31, 2023 Cash flows from operating activities: Net loss $ ( 24,243,919 ) $ ( 80,231,083 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation - stock options 8,956,571 11,469,667 Stock based compensation - common stock 57,900 733,500 Depreciation and amortization 2,420,602 3,144,047 Right of use amortization 285,270 227,241 Other 481,787 200,317 Impairment of intangible assets - 3,116,039 Impairment of goodwill - 45,194,717 Loss on disposal 3,189,232 - Change in fair value of derivative liability 593,083 - Loss on issuance of convertible notes 1,022,650 - Changes in operating assets and liabilities: Accounts receivable 2,423,144 2,085,883 Inventory 161,586 ( 217,664 ) Contract assets 18,563 134,559 Prepaids and other current assets 72,234 ( 493,328 ) Accounts payable and accrued expenses 605,524 8,125,856 Lease liability ( 277,505 ) ( 199,069 ) Deferred revenue 391,572 789,206 Net cash used in operating activities ( 3,841,706 ) ( 5,920,112 ) Cash flows from investing activities: Cash acquired in acquisitions, net - 30,430 Proceeds from the sale of property and equipment - 23,041 Purchases of property and equipment ( 83,095 ) ( 213,629 ) Net cash used in investing activities ( 83,095 ) ( 160,158 ) Cash flows from financing activities: Proceeds from sale of common stock 154,947 6,655,493 Proceeds from stock option exercise - 491,853 Proceeds from loan payable 6,073,823 6,852,408 Proceeds from convertible notes payable, related party - 5,000,000 Proceeds from convertible note payable 2,500,000 2,050,000 Proceeds from lines of credit 2,989,589 264,723 Payment on lines of credit ( 1,067,713 ) ( 261,591 ) Payment on loans payable ( 6,157,484 ) ( 12,118,340 ) Payment of convertible note payable - ( 2,550,000 ) Payment of debt issuance cost ( 579,000 ) ( 191,500 ) Net cash provided by financing activities 3,914,162 6,193,046 Effect of exchange rates on cash and cash equivalents ( 59,214 ) ( 883,497 ) Net decrease in cash and cash equivalents ( 69,853 ) ( 770,721 ) Cash and cash equivalents - beginning of the period 1,062,442 1,833,163 Cash and cash equivalents - end of the period $ 992,589 $ 1,062,442 Reconciliation of cash and cash equivalents to the condensed consolidated financial statements Cash from continuing operations $ 992,589 $ 241,643 Cash from discontinued operations - 820,799 Total cash and cash equivalents, end of period $ 992,589 $ 1,062,442 Supplemental cash flow information: Cash paid for: Interest $ 2,722,007 $ 2,376,477 Income taxes $ - $ - Supplemental disclosure of non-cash transactions: Operating lease assets obtained in exchange for operating lease obligations $ 60,215 $ 733,782 Common stock issued in SB Cyber acquisition $ - $ 99,000 Common stock issued as a lending discount $ 122,000 $ 218,000 The accompanying footnotes are an integral part of these consolidated financial statements. F- 8 CISO GLOBAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS Unless otherwise indicated or the context requires otherwise, the terms ““we,” “us,” “our,” and “our company” refer to CISO Global, Inc., a Delaware corporation (“CISO Global”), and our wholly owned subsidiaries. All dollar amounts are expressed in United States dollars. Nature of the Business We are a cybersecurity, compliance, and software company comprised of highly trained and seasoned security professionals who work with clients to enhance or create a better cyber posture in their organization. We provide a full range of cybersecurity consulting, related services, and cybersecurity software, encompassing all four pillars of proprietary software stack, compliance, cybersecurity, and organizational culture. Our services include managed security, compliance services, security operations center (“SOC”) services, virtual Chief Information Security Officer (“vCISO”) services, incident response, certified forensics, technical assessments, and cybersecurity training. We believe that culture is the foundation of every successful cybersecurity and compliance program. To deliver that outcome, we developed our unique offering of MCCP+ (“Managed Compliance & Cybersecurity Provider + Culture”), which is a holistic solution that provides all four of these pillars under one roof from a dedicated team of subject matter experts. In contrast to the majority of cybersecurity firms that are focused on a specific technology or service, we seek to differentiate ourselves by remaining technology agnostic, focusing on accumulating highly sought-after topic experts. We continually seek to identify and acquire cybersecurity talent to expand our service scope and geographical coverage to provide the best possible service for our clients. We believe that bringing together a world-class team of technological experts with multi-faceted expertise in the critical aspects of cybersecurity is key to providing technology agnostic solutions to our clients in a business environment that has suffered from a chronic lack of highly skilled professionals, thereby setting us apart from competitors and in-house security teams. Our goal is to create a culture of security and to help quantify, define, and capture a return on investment from information technology and cybersecurity spending. NOTE 2 – LIQUIDITY AND GOING CONCERN CONSIDERATIONS The 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 However, due to losses incurred, substantial doubt about the Company’s ability to continue as a going concern exists. 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 of operations to grow revenues and decrease expenses. However, we may be unable to access further equity or debt financing when needed. As such, there can be no assurance that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The ability for us to continue as a going concern is dependent upon our ability to successfully accomplish the plan described in the Growth Strategy paragraph and eventually attain 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. F- 9 NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding our consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of our management, who is responsible for their integrity and objectivity. Reverse Stock Split On February 29, 2024, our board of directors approved a 1-for-15 reverse stock split of our common stock. The record date for the reverse stock split was the close of business on March 7, 2024, with share distribution occurring on March 8, 2024. As a result of the reverse stock split, stockholders received one share of CISO Global, Inc. common stock, par value $ 0.00001 , for each 15 shares they held as of the record date. All share and per share amounts have been retroactively restated for the effects of this reverse stock split. Common stock underlying our outstanding warrants, convertible notes, and options have been adjusted, and the conversion and exercise prices have also been adjusted. Consolidation The consolidated financial statements include the accounts of our company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Prior Period Reclassifications Reclassification of certain immaterial prior period amounts have been made to conform to the current period presentation. Use of Estimates Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. We believe the following critical accounting policies affect our more material judgments and estimates used in the preparation of the accompanying consolidated financial statements. Material 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. Revenue Our revenue is derived from three major types of services to clients: security managed services, professional services, and cybersecurity software. With respect to security managed services, we provide culture education and enablement, tools and technology provisioning, data and privacy monitoring, regulations and compliance monitoring, remote infrastructure administration, and cybersecurity services, including, but not limited to, antivirus and patch management. With respect to professional services, we provide cybersecurity consulting, compliance auditing, vulnerability assessment and penetration testing, disaster recovery and data backup solutions. With respect to cybersecurity software, we provide a comprehensive suite of proactive cybersecurity software solutions designed to protect organizations from evolving cyber threats. Their offerings encompass advanced threat detection, proactive monitoring, and robust risk management to ensure enterprise security and compliance. Our revenue is categorized and disaggregated as reflected in our consolidated statements of operations and comprehensive loss, as follows: Security Managed Services Security managed services revenue primarily consists of risk compliance, cyber defense operations, and secured managed services. We consider these services to be a single performance obligation, and revenue is recognized as services and materials are provided to the customer. Professional Services Professional services revenue primarily consists of security testing and training, and incident response and digital forensics. We consider these services to be a single performance obligation, and revenue is recognized in the period in which the performance obligations are satisfied. Cybersecurity Software Cybersecurity software revenue primarily consists of our internally developed cybersecurity software designed to provide a security management platform, protect users from untrusted and malicious online threats, provide proactive security monitoring, and deliver continuous security assessments. We consider these services to be a single performance obligation, and revenue is recognized in the period in which the performance obligations are satisfied. F- 10 Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Accounts Receivable Accounts receivable are generally unsecured, non-interest bearing and reported at their outstanding unpaid principal balances, net of allowances for credit losses. We provide for allowances for credit losses 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. We write off accounts receivable against the allowance for credit losses when a balance is determined to be uncollectible. As of December 31, 2024 and 2023, our allowance for credit losses was $ 124,434 and $ 219,141 , respectively. Prepaid cost of revenue Prepaid 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. Property and Equipment Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally between three and five years . Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. Long-Lived and Finite-Lived Intangible Assets Finite-lived intangible assets are amortized over the following estimated useful lives: SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS Tradenames – trademarks 2 - 5 years Customer base 3 - 10 years Non-compete agreements 2 - 5 years Intellectual property/technology 3 - 10 years Our finite lived intangible assets are amortized on a straight-line basis. We annually evaluate the estimate remaining useful lives of our intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization. We review long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. During the year ended December 31, 2024, we did not record a loss on impairment. During the year ended December 31, 2023, we recognized losses on impairment of intangible assets of $ 3,116,039 , which is included in loss from discontinued operations on our statement of operations . Goodwill and other intangible assets Goodwill 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. We 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. As of December 31, 2024, we believe such assets are recoverable; however, there can be no assurance these assets will not be impaired in future periods. Any future impairment charges could adversely impact our results of operations. During the year ended December 31, 2023, we recognized losses on impairment of goodwill of $ 45,194,717 , of which $ 9,261,353 is included in loss from discontinued operations in our statement of operations. F- 11 Advertising and Marketing Costs We expense advertising and marketing costs as they are incurred. Advertising and marketing expenses were zero and $ 449,231 for the years ended December 31, 2024 and 2023, respectively, and are recorded in operating expenses on the consolidated statements of operations. Fair Value Measurements As defined in ASC 820, Fair Value Measurements and Disclosures , fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies, and similar techniques. Fair Value of Financial Instruments The carrying value of cash, accounts receivable, accounts payable and accrued expenses, and other current liabilities approximate their fair values using Level 3 inputs, based on the short-term maturity of these instruments. The carrying amount of loans and 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. Net Loss per Common Share Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. All outstanding options are considered potentially outstanding common stock. The dilutive effect, if any, of stock options is calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, the options and shares issuable upon conversion have been excluded from our computation of net loss per common share for the years ended December 31, 2024 and 2023. F- 12 On March 8, 2024, we filed an amendment to our certificate of incorporation to effectuate a 1-for-15 reverse stock split . Our shares of outstanding common stock and earnings per share calculation have been retroactively restated for all periods presented. The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to our net loss position even though the exercise price could be less than the average market price of the common shares: SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE December 31, 2024 December 31, 2023 Stock options 1,523,691 2,105,168 Warrants 6,774,559 49,614 Convertible debt 1,966,353 846,122 Total 10,264,603 3,000,904 Stock-Based Compensation We 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 and nonemployees, in the consolidated statements of operations. For stock options issued to employees and members of our Board of Directors for their services, we estimate the grant date fair value of each option using the Black-Scholes-Merton option pricing model. The use of the Black-Scholes-Merton option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates, and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, we recognize stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred. We used the average of historical share prices of our common stock to calculate volatility for use in the Black-Scholes-Merton option pricing model. We 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. New shares are issued upon the exercise of stock options. Derivatives We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815 “Derivatives and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Deferred Revenue Deferred revenue primarily consists of billings or payments received from customers in advance of revenue recognized for the services provided to our customers or annual licenses and is recognized as services are performed or ratably over the life of the license. We generally invoice customers in advance or in milestone-based installments. D eferred revenue consisted of the following: SCHEDULE OF DEFERRED REVENUE December 31, 2024 December 31, 2023 Current: Security managed services $ 461,599 $ 578,941 Professional services 631,241 792,696 Cybersecurity software 272,475 - Total deferred revenue - current $ 1,365,315 $ 1,371,637 Long-term: Security managed services $ 84,403 $ 84,294 Total deferred revenue – long term $ 84,403 $ 84,294 F- 13 The decrease in the deferred revenue balance is primarily driven by payments received in advance of satisfying our performance obligations, offset by $ 1,598,670 of revenue recognized during 2024, which was included in the deferred revenue balance as of December 31, 2023. The deferred revenue balance as of December 31, 2024 represents our remaining performance obligations that will be recognized as revenue over the period in which the performance obligations are satisfied, and is expected to be recognized in revenue as follows: SCHEDULE OF PERFORMANCE OBLIGATIONS EXPECTED TO RECOGNIZED REVENUE 2025 2026 2027 2028 2029 Total Security managed services $ 461,599 $ 50,731 $ 25,297 $ 5,289 $ 3,086 $ 546,002 Professional services 631,241 - - - - 631,241 Cybersecurity software 272,475 - - - - 272,475 Total deferred revenue $ 1,365,315 $ 50,731 $ 25,297 $ 5,289 $ 3,086 $ 1,449,718 Foreign Currency Our functional and reporting currency is the U.S. dollar. For certain of our foreign subsidiaries whose functional currency were other than the U.S. dollar, we translated revenue and expense transactions at average exchange rates. We translated assets and liabilities at period-end exchange rates and include foreign currency translation gains and losses as a component of accumulated other comprehensive income. Leases Leases in which our company is the lessee are comprised of our corporate office and one additional office, which is immaterial to our operations. All of the leases are classified as operating leases. Our office spaces have a remaining weighted average term of 3.22 years. Right-of-use (“ROU”) assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that we will exercise that option. In 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. See Note 14 – Leases for further discussion, including the impact on our consolidated financial statements and related disclosures. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We utilize ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. We account for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. At December 31, 2024 and 2023, our net deferred tax asset has been fully reserved. F- 14 For uncertain tax positions that meet a “more likely than not” threshold, we recognize the benefit of uncertain tax positions in the consolidated financial statements. Our practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations when a determination is made that such expense is likely. Emerging Growth Company Status We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. We expect to use the extended transition period for any new or revised accounting standards during the period which we remain an emerging growth company. Recently Issued Accounting Standards In December 2023, the FASB issued Accounting Standards Update, or ASU, 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” or ASU 2023-09. ASU 2023-09 requires additional disaggregated disclosures on an entity’s effective tax rate reconciliation and additional details on income taxes paid. ASU 2023-09 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted. We do not expect the adoption of ASU 2023-09 to have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses ASU 2024-03 is effective prospectively to financial statements issued for reporting period after the effective date or retrospectively to any or all prior periods presented in the financial statements, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. Adoption of this guidance will result in additional disclosures, but we do not expect the adoption of ASU 2024-03 will impact our consolidated financial position, results of operations or cash flows. In November 2024, the FASB issued ASU 2024-04, Debt (Subtopic 470-20): Debt with Conversion and Other Options. ASU 2024-04 clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06. We do not expect the adoption of ASU 2024-04 to have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” or ASU 2023-07. ASU 2023-07 enhances the disclosures required for reportable segments on an annual and interim basis. ASU 2023-07 is effective on a retrospective basis for annual periods beginning after December 15, 2023, for interim periods within fiscal years beginning after December 15, 2024. We adopted ASU 2023-07 for the fiscal year-ended December 31, 2024. The additional disclosure requirements of ASU 2023-07 did not have a material impact on our consolidated financial statements. F- 15 NOTE 4 – DISPOSITIONS Latin America On July 1, 2024, we entered into a Stock Purchase Agreement with Southford Equities, Inc. (the “Arkavia SPA”) to sell 100 % of the outstanding shares of our wholly owned subsidiary Ocean Point Equities, Inc. in exchange for 194,267 shares of our common stock owned by the owners of Southford Equities, Inc. and nominal cash consideration ($ 1.00 dollar). On July 1, 2024, we entered into a Stock Purchase Agreement with CT Group, LP, Datadeck LP, Woodface, LP, VMT Technologies, LP and Quijote Ventures, LP (the “CUATROi SPA”) to sell 100 % of the outstanding shares of our wholly owned subsidiaries Servicios Informaticos CUATROi SpA, Comercializadora CUATROi SpA, CUATROi Peru, SAC, and CUATROi SAS in exchange for 135,795 shares of our common stock owned by the owners of CT Group, LP, Datadeck LP, Woodface, LP, VMT Technologies, LP and Quijote Ventures, LP and nominal cash consideration ($ 5.00 dollars). On July 1, 2024, we entered into a Stock Purchase Agreement with Itada Equities, Inc. (the “NLT SPA”) to sell 100 % of the outstanding shares of our wholly owned subsidiaries NLT Networks, S.P.A., NLT Technologias, Limitada, NLT Servicios Profesionales, S.P.A. and White and Blue Solutions LLC. in exchange for 172,075 shares of our common stock owned by the owners of Itada Equities, Inc. and nominal cash consideration ($ 1.00 dollar). We committed to a formal plan to sell our former Latin America subsidiaries to focus on our U.S.-based operations and development and marketing of our internally developed cybersecurity software. The operating results of our former Latin America subsidiaries are reported within discontinued operations on our condensed consolidated statements of operation through July 1, 2024. As a result of the sale, we recorded a loss from discontinued operations of $ 4,338,318 , which includes the release of associated accumulated translation adjustment from the net assets disposed of. The table below provides the total revenue and loss of the discontinued operations presented in our statements of operations. SCHEDULE OF DISCONTINUED OPERATIONS BALANCE SHEETS AND INCOME STATEMENT 2024 2023 Year Ended December 31 2024 2023 Revenue $ 8,387,171 $ 23,117,618 Cost of revenue 7,092,426 19,647,926 Operating expenses 2,097,362 18,277,551 Other expense 346,469 874,404 Loss from discontinued operations before income taxes ( 1,149,086 ) ( 15,682,263 ) Benefit from income taxes - 435,678 Loss on disposal, net of tax ( 3,189,232 ) - Loss from discontinued operations $ ( 4,338,318 ) $ ( 15,246,585 ) Cash flows from operating activities of discontinued operations was $ 223,831 and $ 3,283,088 for the years ended December 31, 2024 and 2023, respectively. Cash used in investing activities of discontinued operations was $ 83,095 and $ 69,865 for the years ended December 31, 2024 and 2023, respectively. vCISO In September 2024, we entered into an Intellectual Property Purchase Agreement pursuant to which we sold our wholly owned subsidiary vCISO, LLC. (“vCISO”), for cash proceeds of $ 1,000,000 . vCISO owns substantially all of our internally developed intellectual property currently marketed to our customers and also being developed for future deployment. As a condition of closing the Intellectual Property Purchase Agreement, we concurrently entered into a License-Back and Buy-Back Agreement which provides us with a perpetual, transferable and royalty-free license to use the intellectual property rights to sell such software to our customers. The license was exclusive for our use for the initial six months of the agreement. In exchange for these rights, we agreed to continue development of the intellectual property at our own cost. We also retained the right to buy back the intellectual property at a price of $ 1,500,000 , if repurchased within six months from the date of the agreement, $ 1,750,000 if repurchased within six to twelve months, or at an agreed upon purchase price if repurchased after twelve months. Upon execution of this divestiture, we did not have financial means nor the intent to execute the Buy-Back Agreement. F- 16 In November 2024, certain prospective investors required us, as a condition of securing their investment, to have direct and full ownership of the intellectual property disposed of when we sold vCISO. As a result, we entered into an Intellectual Property Buy-Back Purchase Agreement in which we reacquired vCISO and all intellectual property we previously owned, in exchange for a Promissory Note with a principal amount of $ 1,020,000 . vCISO did not hold any assets or liabilities reported in our consolidated financial statements at the time of disposal, as a result, we initially recorded a $ 1,000,000 gain on the disposition of vCISO. The repurchase of vCISO would result in the recognition of an asset on our consolidated balance sheet. The economic substance of these two transactions resulted in us receiving $ 1,000,000 of cash in exchange for a Promissory Note. Due to the close proximity in execution of these agreement, the second which was not previously contemplated, and their economic substance for the year-ended December 31, 2024, we netted the previously recorded gain on the sale of vCISO in the repurchase transaction to make our consolidated financial statements reflect the ultimate economics of these transactions. NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, 2024 December 31, 2023 Prepaid expenses $ 97,706 $ 146,521 Prepaid insurance 40,019 59,398 Total prepaid expenses and other current assets $ 137,725 $ 205,919 NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT December 31, 2024 December 31, 2023 Computer equipment $ 414,214 $ 414,214 Leasehold improvements 25,791 25,791 Furniture and fixtures 75,698 75,698 Software 879,642 879,642 Property and equipment gross 1,395,345 1,395,345 Less: accumulated depreciation ( 664,834 ) ( 342,708 ) Property and equipment, net $ 730,511 $ 1,052,637 Total depreciation expense was $ 322,126 and $ 263,770 for the years ended December 31, 2024 and 2023, respectively. NOTE 7 – INTANGIBLE ASSETS AND GOODWILL Goodwill The following table summarizes the changes in goodwill during the years ended December 31, 2024 and 2023, respectively: SCHEDULE OF CHANGES IN GOODWILL Balance as of December 31, 2022 Goodwill $ 71,525,609 Accumulated impairment losses ( 15,691,695 ) 55,833,914 Impairment losses ( 35,933,364 ) Balance as of December 31, 2023 Goodwill 71,525,609 Accumulated impairment losses ( 51,625,059 ) 19,900,550 Balance as of December 31, 2024 Goodwill 71,525,609 Accumulated impairment losses ( 51,625,059 ) $ 19,900,550 F- 17 Intangible Assets Intangible assets, net are summarized as follows: SUMMARY OF INTANGIBLE ASSETS Gross Carrying Amount Accumulated Amortization Net Carrying Amount December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Tradenames – trademarks $ 3,835,981 $ ( 3,123,766 ) $ 712,215 Customer base 572,048 ( 319,587 ) 252,461 Non-compete agreements 487,400 ( 484,120 ) 3,280 Intellectual property/technology 2,455,879 ( 1,621,621 ) 834,258 Intangible Asset $ 7,351,308 $ ( 5,549,094 ) $ 1,802,214 Gross Carrying Amount Accumulated Amortization Net Carrying Amount December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Tradenames – trademarks $ 3,835,981 $ ( 2,138,946 ) $ 1,697,035 Customer base 572,048 ( 245,357 ) 326,691 Non-compete agreements 487,400 ( 450,181 ) 37,219 Intellectual property/technology 2,455,879 ( 970,244 ) 1,485,635 Intangible Asset $ 7,351,308 $ ( 3,804,728 ) $ 3,546,580 Amortization expense of identifiable intangible assets was $ 1,744,366 and $ 1,809,687 , for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the weighted-average remaining amortization period for intangible assets was 2.28 years. Based on the balance of intangibles assets at December 31, 2024, expected future amortization expense is as follows: SCHEDULE OF FUTURE AMORTIZATION EXPENSE 2025 $ 921,139 2026 709,464 2027 73,211 2028 49,200 2029 49,200 Future Amortization Expense $ 1,802,214 NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following amounts: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES December 31, 2024 December 31, 2023 Accounts payable $ 6,109,150 $ 4,766,294 Accrued payroll and bonuses 750,410 1,167,804 Accrued expenses 1,477,846 1,032,270 Accrued commissions 37,847 100,000 Indirect taxes payable 32,959 53,277 Accrued interest 1,226,874 477,824 Total accounts payable and accrued expenses $ 9,635,086 $ 7,597,469 F- 18 Note 9 - RELATED PARTY TRANSACTIONS Independent Consulting Agreement with Stephen Scott In August 2020, we entered into an Independent Consulting Agreement with Stephen Scott, a significant stockholder due to his beneficial ownership, with respect to advisory and consulting services relating to our strategic and business development, and sales and marketing. Mr. Scott received a consulting fee of $ 11,500 per month for such services until July 2023. In July 2023, we entered into an Independent Consulting Agreement with Mr. Scott, as amended in July 2024, to provide, on a non-exclusive basis, advisory and consulting services relating to our strategic and business development, intellectual property development, banking relationships, and strategic mergers and acquisitions for a period of one year. Mr. Scott will receive a consulting fee of $ 15,000 per month for such services under the terms of this agreement. During the years ended December 31, 2024 and 2023, we paid consulting fees to Mr. Scott in the amounts of $ 180,000 and $ 159,000 , respectively. Convertible Note Payable – Related Party In March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $ 5,000,000 bearing an interest rate of 10.00 % per annum. The principal amount, together with accrued and unpaid interest is due on March 20, 2025 . At any time prior to or on the maturity date, Hensley & Company is 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 $ 18.00 per share. During the years ended December 31, 2024 and 2023, we recorded interest expense of $ 500,000 and $ 388,888 , respectively. Accrued interest as of December 31, 2024 and 2023 was $ 888,888 and $ 388,888 , respectively. Mr. McCain, a director of our company, is President and Chief Executive Officer of Hensley & Company. Managed Services Agreement with Hensley Beverage Company – Related Party In July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company, an entity affiliated with Mr. McCain, a 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, 2024 and 2023, we received $ 2,283,995 and $ 1,417,398 , respectively from Hensley Beverage Company for contracted services and had an outstanding receivable balance of zero and $ 152,213 as of December 31, 2024 and 2023, respectively. The payments received during the year ended December 31, 2024 included payments for future services, of which $ 191,633 remains outstanding at December 31, 2024. Note 10 - STOCKHOLDERS’ EQUITY Our 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. Equity Transactions During the years ended December 31, 2024 and 2023, we issued an aggregate of 126,688 and 1,782,658 shares of common stock to investors for cash proceeds of $ 154,947 and $ 6,682,198 , respectively. During the years ended December 31, 2024 and 2023, we issued an aggregate of 200,000 and 366,667 shares of common stock, respectively, to consultants, lenders, and vendors for services rendered. On December 10, 2024, we issued warrants to the Purchasers and the Placement Agent of the Securities Purchase Agreement to purchase 6,500,000 shares and 224,945 shares of our common stock, respectively. The warrants issued to the Purchasers and Placement Agent are exercisable for a period of five years from the date of issuance with an exercise price of $ 1.00 per share and $ 1.66 per share, respectively. F- 19 The following table summarizes warrant activity: SCHEDULE OF STOCK WARRANT ACTIVITY Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2023 9,614 $ 75.00 4.01 $ - Granted 40,000 3.75 5.00 - Exercised - - - - Expired or cancelled - - - - Outstanding at December 31, 2023 49,614 $ 17.56 4.12 - Granted 6,724,945 2.88 5.00 - Exercised - - - - Expired or cancelled - - - - Outstanding at December 31, 2024 6,774,559 $ 2.98 4.93 $ 3,993,200 Exercisable at December 31, 2024 6,774,559 $ 2.98 4.93 $ 3,993,200 Note 11 – STOCK-BASED COMPENSATION 2023 Equity Incentive Plan Our 2023 Equity Incentive Plan (the “2023 Plan”), which replaced our 2019 Equity Incentive Plan (the “2019 Plan”), became effective on September 13, 2023. As of December 31, 2024, 4,814,330 shares were available for issuance under the 2023 Plan. Equity Plan Activity In applying the Black-Scholes option pricing model to stock options granted, we used the following assumptions: SCHEDULE OF BLACK-SCHOLES STOCK OPTIONS GRANTED For the Year Ended For the Year Ended December 31, 2024 December 31, 2023 Risk-free interest rate 3.78 % - 4.23 % 3.46 % - 4.79 % Contractual term (years) 10.00 5.00 – 10.00 Expected volatility 96.30 % – 96.65 % 94.58 % - 136.47 % Expected dividend yield - % - % The following table summarizes stock option activity: SCHEDULE OF STOCK OPTION ACTIVITY Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2023 2,426,428 $ 36.73 - $ - Granted 326,512 6.15 - - Exercised ( 69,378 ) 7.18 - - Expired or cancelled ( 578,394 ) 41.56 - - Outstanding at December 31, 2023 2,105,168 31.63 - - Granted 33,953 1.68 - - Exercised - - - - Expired or cancelled ( 615,430 ) 15.29 - - Outstanding at December 31, 2024 1,523,691 $ 37.34 4.43 $ 254,206 Exercisable at December 31, 2024 1,276,126 $ 37.68 3.81 $ 136,815 F- 20 The 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. Total compensation expense related to the options was $ 8,956,571 and $ 11,469,667 for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, there was future compensation expense of $ 6,034,145 with a weighted average recognition period of 0.99 years related to the options. The weighted-average grant-date fair value of options granted during the years 2024 and 2023 was $ 1.34 and $ 2.57 , respectively. The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023, was zero and $ 887,595 , respectively. During the year-ended December 31, 2024, 284,838 options vested, net of forfeitures. NOTE 12 – COMMITMENTS AND CONTINGENCIES Legal Claims From time-to-time, we are a party to litigation and subject to claims, suits, regulatory and government investigation, other proceedings, and consent decrees in the ordinary course of business. We investigate claims as they arise and accrue estimates for resolutions of legal and other contingencies when losses are probable and reasonably estimable. There 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 our voting securities, or security holder is a party adverse to us or has a material interest adverse to us . While the results of such normal course claims and legal proceedings, regardless of the underlying nature of the claims, cannot be predicted with certainty, management believes, based on current knowledge and the likely timing of resolution of various matters, any additional reasonably possible potential losses above the amounts accrued for such matters would not be material. However, the outcome of claims, legals proceedings, or investigations are inherently unpredictable and subject to uncertainty, and may have an adverse effect on us because of defense costs, diversion of management resources, and other factors that are not known to us or cannot be quantified at this time. We may also receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained. The final outcome of any current or future claims or lawsuits could adversely affect our business, financial condition, or results of operations. We periodically evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued or the reasonably possible losses that we have disclosed, and make adjustments as appropriate. Indirect Taxes We are subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which we conduct business. Laws and regulations attempting to subject commerce conducted over the Internet to various indirect taxes are becoming more prevalent, both in the United States and internationally, and may impose additional burdens on us in the future. Increased regulation could negatively affect our business directly, as well as the business of our customers. Taxing authorities may impose indirect taxes on the Internet-related revenue we generated based on regulations currently being applied to similar, but not directly comparable industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. In addition, domestic and international indirect taxation laws are complex and subject to change. We may be audited in the future, which could result in changes to our indirect tax estimates. We continually evaluate those jurisdictions in which nexus exists, and believe we maintain adequate indirect tax accruals. As of December 31, 2024 and 2023, our accrual for estimated indirect tax liabilities was $ 32,959 and $ 53,277 , 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. F- 21 Warranties Our services are generally warranted to deliver and operate in a manner consistent with general industry standards that are reasonably applicable and materially conform with our documentation under normal use and circumstances. We offer a limited warranty to certain customers, subject to certain conditions, to cover certain costs incurred by the customer in case of a security breach. We have entered into an insurance policy to cover our potential liability arising from this limited warranty arrangement. We have not incurred any material costs related to such obligations and have not accrued any liabilities related to such obligations in the consolidated financial statements as of December 31, 2024 and 2023. In addition, we also indemnify certain of our directors and executive officers against certain liabilities that may arise while they are serving in good faith in their company capacities. We maintain director and officer liability insurance coverage that would generally enable us to recover a portion of any future amounts paid. NOTE 13 – LOANS PAYABLE, CONVERTIBLE NOTE PAYABLE AND LINES OF CREDIT Loans Payable Loans payable was as follows: SCHEDULE OF LOAN PAYABLE Effective Interest Rate Maturities December 31, 2024 December 31, 2023 Term loans 3.62 % – 100.00 %+ 2024 - 2027 $ 2,711,362 $ 1,930,787 Less current portion ( 2,674,090 ) ( 1,856,245 ) Long term loans payable $ 37,272 $ 74,542 Term Loans Our subsidiaries 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 $ 4,547 and $ 20,605 for the years ended December 31, 2024 and 2023, respectively. Accrued interest for the loans was zero as of December 31, 2024 and 2023. The aggregate effective interest rate of the terms loans was 3.62 % for the year ended December 31, 2024. In March 2023, we entered into a cash advance agreement, 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 called for us to remit aggregate weekly payments of $ 99,398 until such time as we had repaid $ 2,870,000 . This cash advance agreement was secured by the accounts receivable of us and our wholly owned subsidiaries, Talatek, LLC and True Digital Security, Inc. This loan was repaid in full in 2023. We recorded interest expense of $ 978,833 for the year ended December 31, 2023. In August 2023, we entered into a second cash advance agreement, pursuant to which we received gross proceeds of $ 2,000,000 and paid $ 50,000 in upfront fees. The terms of the second cash advance agreement called for us to remit weekly payments of $ 80,588 until such time as we had repaid $ 2,740,000 . This cash advance agreement was secured by the accounts receivable of us and our wholly owned subsidiaries, Talatek, LLC and True Digital Security, Inc. This loan was repaid in full in 2023. We recorded interest expense of $ 468,707 for the year ended December 31, 2023. In November 2023, we entered into a business loan and security agreement, pursuant to which we obtained a loan with a principal amount of $ 2,200,000 and paid an origination fee of $ 44,000 . The business loan bears interest at a rate of 53.44 % per annum and is payable in 52 weekly installments of $ 53,731 . The business loan is secured by all of the assets of our US subsidiaries. The proceeds of the loan were used to repay in full the amount owned under our cash advance agreements that we entered into in March and August 2023. For the years ended December 31, 2024 and 2023, we recorded interest expense of $ 564,529 and $ 200,881 , respectively. F- 22 In connection with the business loan, we entered into a fee agreement pursuant to which we issued 133,334 shares of our common stock as partial consideration for the lender to enter into the business loan and extend credit to us. We recorded the issuance of our common stock as a discount to the business loan, which is amortized using the effective interest method over the term of the loan. On March 28, 2024, under a troubled debt restructuring, we entered into a Business Loan and Security Agreement (the “Loan Agreement” with LendSpark Corporation (the “Lender”), pursuant to which we obtained a restructured loan with a principal amount of $ 2,200,000 (the “Restructured Loan”) from the Lender. Pursuant to the Loan Agreement, we paid the Lender a $ 44,000 origination fee. The Restructured Loan bears interest at a rate of 51.73 % per annum and is payable in 52 weekly installments of $ 53,308 , commencing on April 5, 2024. Pursuant to the Loan Agreement, we granted the Lender a security interest in all if our assets and the assets of our U.S. subsidiaries (the “Collateral”) that is secondary to the security interest held by Aion Financial Technologies, Inc. (“Aion”). Upon the occurrence of an event of default, the Lender may, among other things, accelerate the Loan and declare all obligations immediately due and payable or take possession of the Collateral. In connection with the Restructured Loan, we entered into a Fee Agreement (the “Fee Agreement”) with the Lender pursuant to which we issued 100,000 shares of our common stock, as partial consideration for the Lender’s agreement to enter into the Loan Agreement and extend credit to us. The Fee Agreement contains customary representations, warranties, agreements and obligations of the parties. For the year ended December 31, 2024, we recorded interest expense of $ 683,480 . This loan was repaid in full on March 26, 2025. In June 2024, we entered into a Subordinated Business Loan and Security Agreement with Agile Capital Funding, LLC (“Agile”), pursuant to which we obtained a loan with a principal amount of $ 2,000,000 plus an administrative agent fee paid of $ 100,000 . The Subordinated Business Loan was in excess of 100 % per annum and is payable in 30 weekly installments. The first four installments due were $ 75,000 followed by 26 installments of $ 103,154 . For the year ended December 31, 2024, we recorded interest expense of $ 1,026,058 . Pursuant to the Subordinated Business Loan Agreement, we granted Agile a security interest in the Collateral that is tertiary to the security interest held by Aion and LendSpark. Upon the occurrence of an event of default, Agile may, among other things, accelerate the Subordinated Business Loan and declare all obligations immediately due and payable or take possession of the Collateral. We may use proceeds from the Subordinated Business Loan for general corporate purposes, which includes working capital, capital expenditures, and repayment of debt. This loan was repaid in full in February 2025. In November 2024, we entered into a Note Purchase Agreement, pursuant to which we obtained a loan with a principal amount of $ 540,000 and paid an original issue discount of $ 140,000 . The effective interest rate on Note Purchase Agreement exceeded 100 % per annum. This loan matured on January 1, 2025 and was repaid in full.. Line of Credit On January 31, 2024, we entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Aion, pursuant to which we may borrow up to $ 3,500,000 . The amount available for borrowing at any one time is limited to 80 % of our eligible accounts receivable. The Loan and Security Agreement will bear interest at a rate of 19.25 % per annum (based on a 360-day year), payable on the first business day of each month following the accrual thereof. The Loan and Security Agreement, together with accrued and unpaid interest thereon, is due on January 30, 2025 (the “Maturity Date”). Upon providing 30 days written notice we may terminate the Loan and Security Agreement, subject to an early termination fee of $ 35,000 . Upon the occurrence of an “Event of Default” (as defined in the Loan Security Agreement and including the failure to make required payments when due after specified grace periods, certain breaches and certain specified insolvency events), Aion would have the right to accelerate payments due, which from after such acceleration would bear interest at a default rate of 29.25 % per annum. The Loan and Security Agreement is secured by our assets. We used proceeds from the Loan and Security Agreement to repay our business loan entered into November 2023 and may use for general corporate purposes, which includes working capital, capital expenditures, and repayment of debt. For the year ended December 31, 2024, we recorded interest expense of $ 374,521 . Accrued interest as of December 31, 2024 was zero . Convertible Notes Payable In June 2023, we issued an unsecured convertible note in the principal amount of $ 1,050,000 bearing an interest rate of 10.00 % per annum payable monthly. The principal amount, together with accrued and unpaid interest was due on June 7, 2024 . At any time prior to or on the maturity date the holder is permitted to convert all of the outstanding principal amount into 4.20 % of the authorized units of our wholly owned subsidiary vCISO, LLC. We recorded interest expense of $ 61,954 for the year ended December 31, 2023. Accrued interest as of December 31, 2023 was $ 61,954 . F- 23 In June 2024, we entered into Amendment #1 to extend the maturity date of the $ 1,050,000 unsecured convertible note to December 15, 2024. In exchange for an extension of the maturity date, we agreed to repay on September 30, 2024 , all accrued, but unpaid interest as of June 30, 2024 on the convertible note. All remaining accrued, but unpaid interest was due at maturity on December 15, 2024. In December 2024, we entered into Amendment #2 to extend the maturity date of the $ 1,050,000 unsecured convertible note to December 15, 2025. In exchange for the extension of the maturity date, interest beginning from the date of Amendment #2 increased to 12.00 % per annum and $ 25,000 of accrued interest to be repaid on or before December 31, 2024, with remaining accrued interest due on or before March 31, 2025. In March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $ 5,000,000 bearing an interest rate of 10.00 % per annum. The principal amount, together with accrued and unpaid interest is due on March 20, 2025 . At any time prior to or on the maturity date, Hensley & Company is 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 $ 18.00 per share. During the years ended December 31, 2024 and 2023, we recorded interest expense of $ 500,000 and $ 388,888 , respectively. Accrued interest as of December 31, 2024 and 2023 was $ 888,888 and $ 388,888 , respectively. Mr. McCain, a director of our company, is President and Chief Executive Officer of Hensley & Company. In October 2023, we issued an unsecured convertible note in the principal amount of $ 1,000,000 bearing an interest rate of 12.00 % per annum payable monthly. The principal amount, together with accrued and unpaid interest is due on October 12, 2024 . At any time prior to or on the maturity date the holder is permitted to convert all of the outstanding principal amount into shares of our common stock at a conversion price of $ 1.7595 per share. We recorded interest expense of $ 26,983 for the year ended December 31, 2023. Accrued interest as of December 31, 2023 was $ 26,983 . In June 2024, we entered into Amendment #1 to extend the maturity date of the $ 1,000,000 unsecured convertible note to December 15, 2024. In exchange for an extension of the maturity date, we agreed to repay on September 30, 2024 , all accrued, but unpaid interest as of June 30, 2024 on the convertible note. All remaining accrued, but unpaid interest was due at maturity on December 15, 2024. In December 2024, we entered into Amendment #2 to extend the maturity date of the $ 1,000,000 unsecured convertible note to December 15, 2025. In exchange for the extension of the maturity date, interest beginning from the date of Amendment #2 increased to 12.00 % per annum and $ 25,000 of accrued interest to be repaid on or before December 31, 2024, with remaining accrued interest due on or before March 31, 2025. In November 2024, we entered into an Intellectual Property Buy-Back Purchase Agreement (the “Buy-Back Agreement”), pursuant to which we reacquired vCISO, LLC in exchange for a Promissory Note with a face value $ 1,020,000 and bears interest of 8.00 % per annum. The Promissory Note matures in November 2025. We may not prepay any principal amount due under this Promissory Note without the consent of the holder. For the year-ended December 31, 2024, we recorded interest expense of $ 11,136 , and accrued interest as of December 31, 2024 was $ 11,136 . In December 2024, we entered into a Securities Purchase Agreement (the “Agreement”) with several purchasers (the “Purchasers”). Pursuant to the Agreement, the Purchasers agreed to purchase an aggregate of up to $ 8,125,000 , including convertible notes and warrants to purchase our common stock. The convertible notes have a face value of up to $ 8,125,000 and was subject to an original issue discount of 20 %. The convertible notes do not bear a stated rate of interest and mature one year from the date of issuance. The effective interest rate of these convertible notes exceeds 100 % per annum. At any time prior to or on the maturity date, the Purchasers, may in part or in whole convert the outstanding principal amount into shares of our common stock at a Conversion Price equal to 90 % of the lowest volume weighed average price of our common stock during the ten Trading Day period immediately preceding the Conversion Date. At no time shall the Conversion Price be below $ 0.394 per share. The Agreement initially funded us with gross proceeds of $ 3,125,000 . Funding of the remaining $ 5,000,000 was contingent upon the effectiveness of a change in majority of directors of CISO Global, which occurred on January 7, 2025, at which time we received the remaining unfunded amount. We issued 6,500,000 warrants pursuant to the Agreement to purchase shares of our common stock with an exercise price of $ 1.00 per share. We initially recorded these convertible notes at a fair value of zero , recognized the fair value of a derivative liability of $ 1,509,844 , and recorded a loss of $ 1,022,650 upon issuance of the Agreement, as our issuances costs exceeded the fair value of the convertible notes. The allocation of fair value to the convertible notes was made on a relative fair value basis as the free-standing warrants issued in connection with the Agreement are equity classified. We accreted interest expense using the effective interest method over the expected term of the Agreement through December 31, 2024. For the year ended December 31, 2024, we accreted interest expense of $ 2 . F- 24 The conversion feature of the Agreement was determined to be an embedded derivative requiring bifurcation accounting as (1) the feature is not clearly and closely related to the debt host and (2) the feature meets the definition of a derivative under ASC 815 and has been record at fair value on our balance sheet. Subsequent changes in the fair value of embedded derivative flows through the Statements of Operations. The proceeds from the Agreement will be used to repay outstanding principal amounts of short-term indebtedness and for general corporate purposes, which may include working capital, capital expenditures, research and development, acquisitions of additional companies or technologies, and investments. Future minimum payments under the above debt instruments following the year ended December 31, 2024, are as follows: SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT 2025 $ 14,839,458 2026 34,495 2027 3,615 Total future minimum payments 14,877,568 Less: discount ( 3,158,266 ) Total 11,719,302 Less: current ( 11,682,030 ) Long term debt, net $ 37,272 NOTE 14 – LEASES During the years ended December 31, 2024 and 2023, we recognized additional ROU assets and lease liabilities of $ 60,215 and $ 733,782 , 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. When measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using its estimated incremental borrowing rate. The weighted average incremental borrowing rate applied was 11.54 %. As of December 31, 2024, our leases had a remaining weighted average term of 3.22 years. The following table presents net lease cost and other supplemental lease information: SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION Year Ended December 31, 2024 Year Ended December 31, 2023 Lease cost Operating lease cost (cost resulting from lease payments) $ 294,383 $ 270,638 Short term lease cost 32,759 156,828 Net lease cost $ 327,142 $ 427,466 Operating lease – operating cash flows (fixed payments) $ 294,383 $ 270,638 Operating lease – operating cash flows (liability reduction) $ 219,342 $ 199,069 Non-current leases – right of use assets $ 537,173 $ 762,228 Current liabilities – operating lease liabilities $ 170,289 $ 219,342 Non-current liabilities – operating lease liabilities $ 428,070 $ 596,307 Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the year ended December 31, 2024, are as follows: SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES Fiscal Year Operating Leases 2025 $ 217,377 2026 223,177 2027 229,145 2028 51,662 Total future minimum lease payments 721,361 Amount representing interest ( 123,002 ) Present value of net future minimum lease payments $ 598,359 F- 25 NOTE 15 – FAIR VALUE MEASUREMENT The following table sets forth our material liabilities measured and recorded at fair value on a recurring basis: SCHEDULE OF FAIR VALUE MEASUREMENT As of December 31, 2024 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Current liabilities Derivative liability $ - $ - $ 2,102,927 Total liabilities measured at fair value $ - $ - $ 2,102,927 The estimated fair value of the conversion feature of the derivative liability is based on Monte Carlo simulations, a traditional valuation model. The derivative liability component of the convertible notes are classified as Level 3 due to significant unobservable inputs. NOTE 16 – INCOME TAXES No current or deferred income tax benefit or expense was recognized in the years ended December 31, 2024 and 2023. A reconciliation of the statutory federal income tax benefit to actual tax benefit for the years ended December 31, 2024 and 2023 is as follows: SCHEDULE OF STATUTORY FEDERAL INCOME TAX BENEFIT TO ACTUAL TAX BENEFIT Year Ended December 31, 2024 2023 Computed tax benefit at statutory rate 21.00 % 21.00 % Stock-based compensation ( 9.51 )% ( 3.28 )% Change in valuation allowance ( 4.34 )% ( 10.77 )% Return to provision adjustments ( 7.15 )% ( 6.81 )% Other, net - % ( 0.14 )% Effective tax rate 0.00 % 0.00 % The 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, 2024 and 2023: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 Year Ended December 31, 2024 2023 Deferred tax assets: Intangible assets $ 225,497 $ 443,700 Allowance for doubtful accounts 32,230 53,700 Net operating loss carryforwards 10,791,845 8,707,500 Stock-based compensation 12,176,163 9,841,300 Accounts payable and accrued liabilities 432,604 239,800 Goodwill impairment 7,357,100 7,357,100 Other 375,496 100 Total deferred tax assets $ 31,390,935 $ 26,643,200 Valuation allowance ( 31,165,400 ) ( 26,452,500 ) Net deferred income taxes $ 225,535 $ 190,700 Deferred tax liabilities Property and equipment $ ( 84,402 ) $ ( 74,400 ) Prepaid expenses ( 141,133 ) ( 116,300 ) Total deferred tax liabilities ( 225,535 ) ( 190,700 ) Net deferred tax liabilities $ - $ - F- 26 We 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. Accordingly, 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. We have provided a valuation allowance for our net deferred tax assets at December 31, 2024 and 2023, 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, 2024 and 2023, respectively, the valuation allowance increased by $ 4,712,900 and $ 22,344,508 , respectively. As of December 31, 2024, we had approximately $ 42,059,091 of consolidated federal net operating loss carryforwards and $ 39,977,845 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. Utilization 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. It is 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. We 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 2022 and 2021, respectively. We believe 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. As of the date of this filing, we have not filed our 2024 federal and state income tax returns. We expect to file these documents as soon as practicable. NOTE 17 – DEFINED CONTRIBUTION PLAN We sponsor a defined contribution 401(k) plans covering eligible U.S. employees, who may contribute up to 80 % of their compensation, subject to limitations established by the Internal Revenue Code. We matched employee contributions on a discretionary basis in 2023 and amended our plan in 2024 to remove the matching feature. Expenses for our matching contributions were zero and $ 637,365 for the years-ended December 31, 2024 and 2023. NOTE 18 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS Cash Deposits Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Although we deposit cash with multiple banks, these deposits may exceed the amount of insurance provided on such deposits. These deposits may generally be redeemed upon demand and bear minimal risk. Revenue No single customer represented over 10 % of our total revenue for the years ended December 31, 2024 and 2023. F- 27 NOTE 19 – ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents AOCI activity in equity: SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME Foreign Currency Translation Adjustments Total AOCI Balance as of December 31, 2022 $ 1,062,247 $ 1,062,247 Other comprehensive income 257,930 257,930 Amounts reclassified from AOCI - - Balance as of December 31, 2023 1,320,177 1,320,177 Other comprehensive income ( 4,779 ) ( 4,779 ) Amounts reclassified from AOCI ( 1,320,177 ) ( 1,320,177 ) Balance as of December 31, 2024 $ ( 4,779 ) $ ( 4,779 ) NOTE 20 – SEGMENT INFORMATION Our Chief Operating Decision Maker (“CODM”), as of December 31, 2024, was our Chief Executive Officer. Our CODM evaluates the performance of and allocates resources to our segment based on our consolidated net loss and earnings before interest, taxes, depreciation and amortization (Segment EBITDA). Segment EBITDA is defined as segment revenue less operating costs and expenses, excluding depreciation and amortization interest income or expense (net), provision or benefit for income taxes, change in fair value of derivative liabilities, loss on issuance of convertible notes, impairment of goodwill and intangible assets, and stock-based compensation expense. We believe Segment EBITDA serves as a measure that assists our CODM and our investors in comparing our segment performance on a consistent basis. Net loss and Segment EBITDA are used to monitor budgeted versus actual results. Additionally, review of budgeted versus actual results is used in assessing performance of the segment. Our CODM does not use assets by segment to evaluate performance or allocate resources; therefore, we do not provide disclosure of assets by segment. The following table presents our segment information for the periods indicated and, because we currently only have one segment, net loss is identical to the information presented in our “Consolidated Statement of Operations” above: SCHEDULE OF SEGMENT INFORMATION 2024 2023 Year Ended December 31, 2024 2023 Net loss from continuing operations $ ( 19,905,601 ) $ ( 64,984,498 ) Impairment of goodwill - 35,933,364 Impairment of intangible assets - 229,990 Loss on issuance of convertible notes 1,022,650 - Interest expense, net 3,584,172 2,266,573 Depreciation and amortization 2,351,760 2,300,699 Stock-based compensation 9,014,471 12,536,500 Change in fair value of derivative liabilities 593,083 - Segment EBITDA $ ( 3,339,465 ) $ ( 11,717,372 ) NOTE 21 – SUBSEQUENT EVENTS On January 10, 2025, we received a notification letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, since we have not yet held an annual meeting of stockholders within twelve months of the end of its December 31, 2023 fiscal year, we are out of compliance with the Nasdaq rules for continued listing (Listing Rules 5620(a) and 5810(c)(2)(G)). The notification letter has no immediate effect on the listing of our securities on the Nasdaq Capital Market. Under the applicable Nasdaq rules, we had 45 calendar days to submit a plan to regain compliance. If Nasdaq accepted our plan, Nasdaq can grant an exception of up to 180 calendar days from our most recent fiscal year end, or until June 30, 2025, to regain compliance. We filed a definitive proxy statement on March 5, 2025 for an annual meeting to be held on April 25, 2025 to regain compliance with the applicable Nasdaq Listing Rules. On March 25, 2025, we entered into Amendment Number One to the Purchase Agreement with Hensley & Company dba Hensley Beverage Company, a related party, pursuant to which we extended the Maturity Date to March 20, 2026. On January 1, 2025 and March 26, 2025, we repaid in full the outstanding balances of our loans with Agile and LendSpark, respectively, our highest interest rate term loans. F- 28