CISO Global, Inc.
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
CISO$0.18+12.1%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-16.
0001493152-24-014818
ITEM 1A. RISK FACTORSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001641172-25-001660
ITEM 1A. RISK FACTORSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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Tables are not compared: 10 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
Our growth strategy focuses on expanding our client base and increasing consolidated revenue through strategic acquisitions and seamless integration of businesses offering complementary cybersecurity services. As of December 31, 2024, our business has not yet achieved profitability. To reach profitability and sustain long-term growth, we require adequate funding, significant revenue growth, and continued successful integration of our acquisitions. As of March 24, 2025, we maintained cash resources of approximately $250,000.
Current report
We plan to fund operations through a combination of available net operating cash flows and future capital raises, which may include issuing equity or other securities. This approach may result in dilution for existing stockholders. Any newly issued securities may carry rights, preferences, or privileges that differ from those of our existing common stock.
Current report
We will need to improve the size and capabilities of our organization, and we may experience difficulties in managing this growth.
Current report
As we shift our growth strategy from acquisition-driven expansion to a focus on organic growth, we recognize the importance of effectively integrating and scaling our operations. This transition requires the careful alignment of managerial, operational, sales, marketing, financial, and other key functions across the organization. Successfully managing these dynamics is critical to sustaining our growth trajectory and enhancing long-term stockholder value.
Current report
Our ability to achieve future growth will depend on the following factors:
Current report
We anticipate that these growth initiatives will place increasing demands on our management team, including the need to balance day-to-day operational responsibilities with the strategic oversight required to guide expansion. As our leadership team continues to evolve, limited long-term experience working together may present challenges to operational cohesion.
Current report
Our business is significantly dependent on the continued efforts and abilities of our senior management and executive officers. The loss of services of one or more of these key individuals, or our inability to attract, train, and retain key personnel, could materially disrupt our operations, delay strategic initiatives, and hinder our ability to execute our business plan.
Current report
At present, we do not maintain key man insurance for any members of our senior management or key personnel. The competition for qualified management and personnel, particularly those with specialized expertise in the cybersecurity industry, is intense. If we were to lose the services of any of our key executives, or if we are unable to successfully recruit, retain, and develop personnel with the necessary skills and industry knowledge, our ability to continue executing on our acquisition strategy and service program development could be adversely impacted. Furthermore, such a loss could have a significant effect on our ability to maintain and grow client relationships, which may negatively impact our financial performance and long-term prospects.
Current report
We recognize the critical importance of having a strong and capable leadership team to execute our business strategy. As such, we continue to explore options for mitigating these risks, including potential investments in succession planning and talent development. However, there can be no assurance that we will be successful in securing or retaining the right talent, and any failure to do so may materially affect our ability to achieve our objectives.
Current report
To execute our growth strategy, attracting and retaining highly skilled compliance and cybersecurity experts remains critical. The demand for these professionals is intense, particularly given the global shortage of talent with the technical and strategic expertise required to deliver exceptional services to our clients.
Current report
Our competitors, many with greater resources, also seek to recruit skilled professionals, and compensation packages—particularly stock options and other equity incentives—often play a significant role in attracting candidates. We are mindful of the importance of offering competitive compensation, but recognize that fluctuations in stock value can impact this dynamic. We continually evaluate our compensation strategies to ensure they align with market trends and support our long-term growth objectives.
Current report
Our operating results are subject to a variety of factors that could cause our financial performance to fluctuate significantly. These factors include, but are not limited to, fluctuations in client demand, competitive pricing pressures, debt servicing obligations, and general economic conditions. Our ability to achieve consistent revenue growth is highly dependent on several key elements, including:
Current report
While we have a robust strategy in place to manage and mitigate these risks, there can be no assurance that we will successfully navigate the challenges associated with organic growth. We cannot guarantee that our efforts will result in sustainable revenue growth, improved profitability, or the achievement of long-term financial objectives.
Current report
Our sales cycles are often long and unpredictable, and our sales efforts require significant time, resources, and investment. These factors introduce considerable uncertainty into our ability to forecast revenue and operating results. Specifically:
Current report
Considering these factors, we cannot guarantee that we will successfully close sales in the anticipated timeframes, and the uncertainty surrounding our sales cycle may affect our ability to achieve our revenue and financial objectives.
Current report
We recognize revenue from customer subscriptions ratably over the term of their agreement, which generally spans one to three years. As a result, a significant portion of the revenue we report in any given period is derived from the recognition of deferred revenue related to agreements entered into in prior periods. This model presents the following risks:
Current report
As a result of these factors, our ability to manage and adjust our operations in response to changes in sales or renewals may be hindered, potentially leading to variability in our financial results from period to period. We may also face challenges in maintaining profitability if revenue trends do not align with our cost structure adjustments.
Current report
Certain of our customer agreements include service level commitments, which specify the availability and performance of our solutions and support services. Failure to meet these commitments could have a material adverse effect on our business. The following outlines key risks associated with our service level commitments:
Current report
Our solutions are subject to warranty claims arising from real or perceived defects or misuse by our customers or third parties. The following risks are associated with potential liability claims:
Current report
We continue to monitor and manage these risks, but there can be no assurance that our efforts will prevent material adverse impacts on our business.
Current report
Our business is subject to various legal and regulatory proceedings, and we face compliance risks in multiple areas, including intellectual property, governmental regulations, and international anti-bribery and anti-corruption laws. These risks may adversely impact our business and financial results. Specifically:
Current report
We may seek to expand our operations in international markets, which may expose us to a variety of risks. Our international business growth is subject to numerous challenges, including:
Current report
Our growth strategy includes expanding operations in emerging markets, particularly in regions such as South America and Europe. While these markets present significant growth opportunities, they also introduce a variety of risks that could adversely affect our business and financial results. The key risks associated with our expansion in emerging markets include:
Current report
Failure to manage political, economic, and regulatory risks in emerging markets could have a material adverse impact on our ability to achieve sales targets, grow our business, and maintain profitability in these regions. The risks associated with expanding into emerging markets may result in unanticipated costs, operational disruptions, or financial losses, which could negatively affect our financial condition, results of operations, cash flows, and stock price.
Current report
Our operations, demand for services, and overall business performance are subject to general macroeconomic conditions, which can fluctuate and present significant risks to our financial performance. Key macroeconomic factors such as higher interest rates, inflation, recessions, or economic slowdowns—whether in the United States or globally—could adversely affect our business operations, customer demand, and financial results. The key risks include the following:
Current report
The unpredictability of macroeconomic conditions makes it difficult to accurately forecast and plan for future business activities. Adverse economic conditions may lead to changes in customer behavior, demand patterns, and spending priorities, all of which could have a negative effect on our ability to achieve growth and maintain profitability. In the event of future economic slowdowns or disruptions, we may face challenges in sustaining growth or expanding our business in the manner anticipated.
Current report
Cybersecurity threats, including cyber-attacks or breaches of our network or IT security, could have a material adverse effect on our operations, financial condition, and reputation. The nature of our business exposes us to various risks related to network security breaches, which could disrupt both our own operations and the operations of our clients. Key risks include the following:
Current report
A security breach, failure to protect sensitive information, or liability arising from a breach could have a material adverse effect on our business, operating results, financial condition, and prospects. We may incur significant legal, remediation, and security costs, and any reputational damage could undermine our business relationships and market position.
Current report
If we fail to fulfill our SLAs, it could result in material financial costs, including penalties, client churn, and reputational damage, which would adversely affect our business, operating results, financial condition, and prospects.
Current report
We provide services in circumstances where insurance or indemnification may not be available or may be insufficient to cover operational risks and other uncertainties that we face. Our existing insurance coverages may not fully protect us against the risks associated with the delivery of our services, and additional insurance may not be available on favorable terms, or at all. The following risks are associated with our insurance coverage:
Current report
The occurrence of claims or liabilities for which we do not have adequate insurance or indemnification could have a material adverse effect on our business, operating results, financial condition, and prospects. Furthermore, the associated reputational risks and management distraction could hinder our ability to maintain growth and profitability.
Current report
Some of our competitors are better positioned to:
Current report
As a result, competition in our industry could lead to several adverse outcomes for our business, including a loss of customers, reduced revenue, increased expenses, or pressure on our margins. These factors could adversely affect our business, financial condition, operating results, and long-term growth prospects.
Current report
Cybersecurity legislation at the federal and state levels continues to evolve as lawmakers respond to the growing threat landscape. Multiple bills and resolutions are currently being considered, which may lead to new regulations, including cybersecurity standards and compliance requirements. Our expansion strategy, which includes acquisitions of other cybersecurity service providers, may be impacted by these regulations. We may be required to dedicate significant resources to ensure our services comply with diverse state-level requirements, potentially delaying service launches or limiting the scope of certain offerings. Non-compliance with these regulations could result in legal actions, increased costs, and operational disruptions, which would negatively impact our financial results.
Current report
We may become involved in disputes with third parties, which could result in litigation. Whether or not a dispute leads to litigation, significant resources—both management time and financial—may be required to resolve the issue. This could detract from our ability to focus on business operations. Any resolution could involve the payment of damages or other significant costs, and may involve restrictive terms that limit our operational flexibility. Prolonged or unfavorable legal disputes could materially harm our financial condition, profitability, and overall business performance.
Current report
If we incur additional debt to fund operations or acquisitions, we will be subject to debt service obligations, including interest and principal payments. Debt agreements often contain restrictive covenants that may limit our operational flexibility and impose financial constraints. A default under any debt agreement could accelerate repayment and result in a judgment against us, potentially leading to the foreclosure of assets, which would materially adversely affect our business, financial condition, or results of operations.
Current report
The preparation of our financial statements involves the use of estimates, judgments, and assumptions, and our financial statements may be materially affected if our estimates prove to be inaccurate.
Current report
The market price of our common stock may experience significant volatility due to a variety of factors, including, but not limited to:
Current report
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.
Current report
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.
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Removed paragraphs (30)
Previous report
Our growth strategy is based upon increasing the number of our clients and our consolidated revenue by making successful acquisitions and integrating businesses that provide comparable or complementary cyber security services. As of December 31, 2023, our business was not profitable. Without adequate funding, a significant increase in revenue, and continued successful integration of our acquired targets, we may not be able to achieve profitability in the existing lines of business and attract further capital. As of March 31, 2024, we had available cash resources of approximately $1,575,856.
Previous report
We expect to continue to finance our operations with available net operating cash flows and will need to raise additional capital in the future by issuing equity or other forms of securities, which could have significant dilutive impact on the ownership interest of existing stockholders. Furthermore, any newly issued securities could have rights, preferences, and privileges senior to those of our existing common stock.
Previous report
We may have difficulty obtaining additional funds as and when needed, and we may have to accept terms that would adversely affect our stockholders. In addition, any adverse conditions in the credit and equity markets may adversely affect our ability to raise funds when needed. Any failure to achieve adequate funding will delay our acquisition efforts and could lead to abandonment of one or more of our acquisition initiatives, as well as prevent us from responding to competitive pressures or take advantage of unanticipated acquisition opportunities. Any additional equity financing will likely be dilutive to stockholders, and certain types of equity financing, if available, may involve restrictive covenants or other provisions that would limit how we conduct our business or finance our operations.
Previous report
As our acquisition strategies develop, we must carefully integrate managerial, operational, sales, marketing, financial, and other personnel in the expanded organization and manage costs. Future growth will impose significant added responsibilities on members of management, including the following:
Previous report
Our future financial performance and our ability to commercialize our strategic acquisitions will depend, in part, on our ability to effectively manage any future growth. Our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities. This lack of long-term experience working together may adversely impact our senior management team’s ability to effectively manage our business and growth.
Previous report
Our success depends substantially on the efforts and abilities of our senior management and executive officers. We currently do not maintain key man insurance for any of our senior management or key personnel. The competition for qualified management and key personnel is intense. The loss of services of one or more of our key employees, or the inability to hire, train, and retain key personnel, especially executive managers with cybersecurity industry knowledge, could delay the execution of new acquisitions and launch of new service programs, disrupt our business, and interfere with our ability to execute our business plan.
Previous report
To execute our growth strategy, we must continue to attract and retain highly skilled compliance and cybersecurity experts. Competition for these employees is intense, especially for compliance experts and cybersecurity professionals, as there is a global shortage of these professionals who can provide the technical and strategic skills required for us to deliver high levels of services to our clients and potential clients. We may not be successful in attracting and retaining qualified employees. We have from time-to-time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Many of the companies with which we compete for these highly skilled employees have greater resources than we have. In addition, in making employment decisions, particularly in the high-technology industry, job candidates often consider the value of the stock options, restricted stock grants, or other stock-based compensation they are to receive in connection with their employment. Declines in the value of our stock could adversely affect our ability to attract or retain key employees and result in increased employee compensation expenses. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.
Previous report
We intend to grow our client base significantly through acquisitions of other service providers. If we fail to retain existing clients and attract new clients through acquisitions, we may never achieve profitability.
Previous report
Through acquisition of other service providers, we will inherit an increasingly larger client base, which creates cross-selling and up-selling opportunities. We need high-quality service and exemplary client management to retain and grow our client base. We also plan to launch sales and marketing efforts, including trade show appearances, sales demos, and advertising campaigns in various forms to promote our brand name. If our marketing efforts do not materialize, we may lose existing clients or fail to obtain new clients. Our inability to grow sales as we expand in operations may result in continuing losses, and we may not be profitable for an extended period of time. In addition, even if we are able to make future acquisitions, we will incur additional costs to consummate them, which may result in a shortage in our capital resources. We may also incur difficulties in integrating new businesses with our current operations.
Previous report
Our operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing, and general economic trends. Our revenue and operating results may fluctuate if our sales targets are not met, new service offerings receive poor client response, or client acquisition costs increase due to competition. In addition to these factors, our acquisition strategy may impose additional risks to the predictability of our operating results. Revenue streams may be volatile due to the uncertainty in identifying attractive acquisition candidates and our ability to consummate new acquisitions. Unexpected expenses may be incurred during due diligence and post-acquisition. Management intends to manage risk carefully with the acquisitions; however, there can be no assurance that we will be able to identity and consummate acquisitions that improve our results of operations.
Previous report
Our revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our solutions, particularly with respect to large organizations and government entities. For example, in light of current macroeconomic conditions, we have observed a lengthening of the sales cycle for some prospective customers that we attribute to higher cost-consciousness around IT budgets. Customers often view the subscription to our solutions as a significant strategic decision and, as a result, frequently require considerable time to evaluate, test and qualify our solutions prior to entering into or expanding a relationship with us. Large enterprises and government entities in particular, often undertake a significant evaluation process that further lengthens our sales cycle. Our direct sales team develops relationships with our customers, and works with our channel partners on account penetration, account coordination, sales and overall market development. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce a sale. Security solution purchases are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays. As a result, it is difficult to predict whether and when a sale will be completed. The failure of our efforts to secure sales after investing resources in a lengthy sales process would adversely affect our business, operating results and financial condition.
Previous report
We generally recognize revenue from customers ratably over the term of their subscription, which is generally one to three years. As a result, a substantial portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods. Consequently, any increase or decrease in new sales or renewals in any one period will not be immediately reflected in our revenue for that period. Any such change, however, would affect our revenue in future periods. Accordingly, the effect of downturns or upturns in new sales and potential changes in our rate of renewals will not be fully reflected in our operating results until future periods. We may also be unable to timely reduce our cost structure in line with a significant deterioration in sales or renewals that would adversely affect our business, operating results, and financial condition.
Previous report
Certain of our customer agreements contain service level commitments, which contain specifications regarding the availability of our solutions and our support services. Failure of or disruption to our infrastructure or third-party hosting service providers could impact the performance of our solutions and the availability of services to customers. If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our solutions, we may be contractually obligated to provide affected customers with credit, partial refunds or termination rights. To date, there has not been a material failure to meet our service level commitments, and we do not currently have any material liabilities accrued on our consolidated balance sheets for such commitments. Our business, operating results, and financial condition would be adversely affected if we suffer performance issues or downtime that exceeds the service level commitments under our agreements with our customers.
Previous report
We may be subject to liability claims for damages related to errors or defects in our solutions. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our solutions will harm our business and operating results. Although we generally have limitation of liability provisions in our terms and conditions of sale, they may not fully or effectively protect us from claims as a result of federal, state or local laws or ordinances, or unfavorable judicial decisions in the United States or other countries. The sale and support of our solutions also entails the risk of product liability claims. We employ measures in the form of policy and technical controls to limit unauthorized access to our solutions by our employees, customers and third-parties, however, these measures may not fully or effectively protect our solutions from unauthorized access. Additionally, we typically provide indemnification to customers, partners or other third parties we do business with for certain losses suffered or expenses incurred as a result of third-party claims arising from our infringement of a third party’s intellectual property. We also provide unlimited liability for certain breaches of confidentiality, as defined in our master subscription agreement. We also provide limited liability in the event of certain breaches of our master subscription agreement. Certain of these contractual provisions survive termination or expiration of the applicable agreement. To date, we have not incurred any material costs because of such obligations. However, as we continue to grow, indemnification claims against us for the obligations listed will increase. When our customers or other third parties we do business with make intellectual property rights or other indemnification claims against us, we will incur significant legal expenses and may have to pay damages, license fees and/or stop using technology found to be in violation of the third party’s rights. We may also have to seek a license for the technology. Such licenses may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features. We may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our solutions, which could harm our business. Large indemnity obligations, whether for intellectual property or in certain limited circumstances, other claims, would harm our business, operating results and financial condition.
Previous report
We may be subject to various legal and regulatory proceedings, and are subject to certain legal compliance risks in the areas of intellectual property, governmental regulation, U.S. Foreign Corrupt Practices Act, and related anti-bribery and anti-corruption regulations. The outcome of any such legal proceedings may differ from our expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict. Various factors or developments can lead us to change current estimates of liabilities and related insurance requirements where applicable, or make such estimates for matters previously not susceptible of reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments, or changes in applicable law. A future adverse ruling, settlement, or unfavorable development could result in future charges that could have a material adverse effect on our results of operations or cash flows in any particular period.
Previous report
We operate internationally, and our growth strategy depends in part on our ability to expand our operations in foreign markets, including by way of acquisitions. International operations and business expansion plans are subject to numerous risks, including the following:
Previous report
Our growth strategy depends in part on our ability to expand our operations in emerging markets, including, among others, countries in South America, and Europe. However, some emerging markets have greater political, economic and currency volatility and greater vulnerability to infrastructure and labor disruptions than more established markets. In many countries, particularly those with emerging economies, engaging in business practices prohibited by laws and regulations with extraterritorial reach, such as the Foreign Corrupt Practices Act of 1977 and the U.K. Bribery Act, or local anti-bribery laws may be more common. These laws generally prohibit companies and their employees, contractors or agents from making improper payments to government officials, including in connection with obtaining permits or engaging in other actions necessary to do business. Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our reputation, financial condition, results of operations and stock price. Failure to manage political, economic and regulatory risks in emerging markets could adversely affect our sales, financial condition, results of operations, cash flows and stock price.
Previous report
General macro-economic conditions, such as a rise in interest rates, inflation in the cost of goods and services including labor, a recession or an economic slowdown in the United States or internationally, could adversely affect demand for our services and make it difficult to accurately forecast and plan our future business activities. For example, U.S. and global markets have been experiencing volatility and disruption due to interest rate and inflation increases, such as higher inflation rates in the U.S., which rose in the second half of 2021 and have remained above the Federal Reserve’s inflation target, as well as the continued escalation of geopolitical tensions, including those as a result of the conflicts between Russia and Ukraine and in the Middle East. We have experienced and continue to experience inflationary pressures in certain areas of our business. Although our business has not yet been materially negatively impacted by such inflationary pressures, we cannot be certain that neither we nor our customers will be materially impacted by continued pressures. To the extent conditions in the domestic and global economy change, our business could be harmed as current and potential customers may reduce or postpone spending or choose not to purchase our services or products, which they may consider discretionary. If our customers face decreased consumer demand, increased regulatory burdens or more limited access to international markets, we may face a decline in demand for our products and services, and our operating results could be adversely impacted.
Previous report
To the extent conditions in the domestic and global economy change, our business could be harmed as current and potential customers may reduce or postpone spending or choose not to purchase or renew our services, which they may consider discretionary. If our customers face decreased consumer demand, increased regulatory burdens, or more limited access to international markets, we may face a decline in the demand for our services and our operating results could be adversely impacted.
Previous report
Uncertain and adverse economic conditions may also lead to a decline in the ability of our customers to use or access credit, which could adversely affect our business. In addition, changing economic conditions may also adversely affect third parties with which we have entered into relationships and upon which we depend in order to grow our business. As a result, we may be unable to continue to grow in the event of future economic slowdowns.
Previous report
Cyber-attacks or other breaches of network or IT security may cause equipment failures or disrupt the systems and operations of us and our clients. The potential liabilities associated with these events could exceed the insurance coverage we or our clients maintain, if any. An inability to operate as a result of such events, even for a limited period of time, may result in significant expenses or loss of market share to other competitors in the market we serve. In addition, a failure to protect our, or our client’s, enterprises, networks, privacy of customer, and employee confidential data against breaches of network or IT security could result in damage to our reputation. To date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, resulted in a material adverse effect on our business, operating results, or financial condition.
Previous report
Security threats to our own IT infrastructure may affect our clients indirectly. A party who is able to compromise the security measures on our networks or the security of our infrastructure could misappropriate our proprietary information or the personal information of our clients, cause interruptions or malfunctions in our operations or our clients’ operations, or damage our computers or systems and those of our clients. As security is a primary competitive factor in our industry, such a compromise could be particularly harmful to our brand and reputation. We may be required to expend significant resources to protect against such threats or to alleviate problems caused by breaches in security. As techniques used to breach security change frequently, and are generally not recognized until launched against a target, we may not be able to implement security measures in a timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented. If we are unable to protect sensitive information, our clients or governmental authorities could question the adequacy of our threat mitigation and detection processes and procedures. Any breaches that may occur could expose us to increased risk of lawsuits, regulatory penalties, loss of existing or potential customers, harm to our reputation, and increases in our security costs, which may not be fully insured or indemnified by other means. Additionally, breaches of our, or our clients’, systems could similarly result in a loss of confidence in our services or damage to our brand and reputation. Occurrence of any of these events could have a material adverse effect on our business, financial condition, operating results, or prospects.
Previous report
Because our services are aimed at protecting clients from, and limiting the impact of, critical business interruptions and losses related to cyber-attacks, if our client’s experience losses related to cyber-attacks that result in lost profits or other indirect or consequential damages to our clients, our clients may expose us to lawsuits. Our service agreements with our clients typically contain provisions limiting our liability. However, we cannot provide assurances that a court would enforce any contractual limitations on our liability. The outcome of any such lawsuit would depend on the specific facts of the case and any legal and policy considerations that we may not be able to mitigate. In such cases, we could be liable for substantial damage awards that may exceed our liability insurance coverage by unknown but significant amounts, which could materially impair our financial condition.
Previous report
We provide services in circumstances where insurance or indemnification may not be available to us. Our existing insurance coverages may not be sufficient or additional insurance may not be available to protect us against operational risks and other uncertainties that we face. Liabilities or claims arising from our services in excess of any indemnity or insurance coverage (or for which indemnity or insurance coverage is not available or is not obtained) could harm our financial condition, cash flows, and operating results. Any claim, even if fully covered or insured, could negatively affect our reputation in the marketplace and make it more difficult for us to compete effectively. The defense of such claims may be costly and time-consuming and could divert the attention of management.
Previous report
Many of these companies have significantly greater financial, technical, marketing, and other resources than we do and may be better positioned to acquire, offer, and service complementary products and technologies. These companies and alliances resulting from possible combinations may create more compelling product and service offerings; be able to offer greater pricing flexibility than we can; or engage in business practices that make it more difficult for us to compete effectively, including on the basis of sales and marketing programs (such as providing greater incentives to our channel partners to sell a competitor’s product), technology, or product functionality. Competition could result in, among other things, a substantial loss of customers, reduction in revenue, or increase in expenses, which could materially adversely affect our business, financial condition, results of operations, or prospects.
Previous report
Federal and state legislatures continue to advance policy proposals in recent years to address cyber threats directed at governments and private businesses. As threats continue to evolve and expand and as the pace of new technologies accelerates, legislatures are making cybersecurity measures a high priority. At the federal and state level, hundreds of bills or resolutions have been introduced and considered that deal significantly with cybersecurity. These proposals are at multiple stages of development and may shape out new standards concerning different areas. Our business expansion strategy focuses on accretive acquisitions of other cybersecurity service providers in the top thirty U.S. markets to achieve greater service coverage. The complex regulatory environment in each state may require us to dedicate additional resource to ensure our service scope and service quality are in compliance with the standards enacted in each state we operate business in. We may incur additional legal and compliance costs, and our service scope may be restrained due to compliance requirements. This will cause a delay in our service launch and negatively impact our operating results. We may also face litigations if we fail to respond accordingly to these regulatory measures in certain states.
Previous report
We may become subject to disputes with third parties from time to time. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention and financial resources to its resolution (through litigation, settlement, or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business.
Previous report
If we incur additional debt for operations or acquisitions, a portion of our cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair our operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of our stockholders. A judgment creditor would have the right to foreclose on any of our assets resulting in a material adverse effect on our business, operating results, or financial condition.
Previous report
Our stock price may experience substantial volatility as a result of a number of factors, including, among others:
Previous report
(1) Share price adjusted to reflect a 1-for-15 reverse stock split that occurred on March 8, 2024.
Reworded paragraphs (19)
Previous wording
We will need to raise capital in order to realize our business plan and growth strategy, the failure of which could adversely impact our operations.
Current wording
We will need to raise capital to realize our business plan and growth strategy, the failure of which could adversely impact our operations.
Previous wording
We depend on independent contractors to provide certain services for which we do not have the expertise internally. Any compromise in the service quality may delay our business processes and cause economic los****s.
Current wording
We depend on independent contractors to provide certain services for which we do not have the expertise internally. Any compromise in the service quality may delay our business processes and cause economic loss.
Previous wording
We have recently acquired multiple businesses. Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services. Our ability to grow is limited if we fail to identify and consummate acquisitions.
Current wording
We have recently acquired multiple businesses. Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services.
Previous wording
We have completed the acquisition of certain complementary businesses, and we intend to consider additional potential strategic transactions, which could involve acquisitions of businesses or assets, joint ventures, or investments in businesses or technologies that expand, complement, or otherwise relate to our business. We may also consider, from time to time, opportunities to engage in joint ventures or other business collaborations with third parties. Should our relationships fail to materialize into significant agreements, or should we fail to work efficiently with these companies, we may lose sales and marketing opportunities and our business, results of operations, and financial condition could be adversely affected.
Current wording
We have completed the acquisition and integration of several complementary businesses, and we intend to consider opportune additional potential strategic transactions that enhance stockholder value, which could involve acquisitions of businesses or assets, joint ventures, or investments in businesses or technologies that expand, complement, or otherwise relate to our business. We may also consider, from time to time, opportunities to engage in joint ventures or other business collaborations with third parties. Should our relationships fail to materialize into significant agreements, or should we fail to work efficiently with these companies, we may lose sales and marketing opportunities and our business, results of operations, and financial condition could be adversely affected.
Previous wording
Our business strategy may impose limitations in our ability to accurately forecast future revenue and operating results.
Current wording
Our business strategy may impose limitations on our ability to accurately forecast future revenue and operating results.
Previous wording
We are subject to risks from operating internationally.
Current wording
We may be subject to risks from operating internationally.
Previous wording
Any of these factors could have a material adverse effect on our reputation, financial condition, results of operations and stock price.
Current wording
Any of these factors could have a material adverse effect on our reputation, financial condition, results of operations, and stock price. The risks associated with operating internationally are inherent and may increase as we expand into new markets.
Previous wording
Adverse economic conditions in the United States and international economies may adversely impact our business operating units.
Current wording
Adverse economic conditions in the United States may adversely impact our business and operating results.
Previous wording
We have service level agreements with many of our managed services clients under which we guarantee specified levels of service availability. These arrangements require us to estimate the level of service we will provide. If we fail to meet our service level obligations under these agreements, we may be subject to penalties, which could result in higher than expected costs, and we may lose clients, which could lead to decreased revenue and decreased gross and operating margins. If we fail to meet our service level obligations under these agreements, our reputation may suffer as a result.
Current wording
We have entered into service level agreements (“SLAs”) with many of our managed services clients, under which we guarantee specified levels of service availability. These arrangements require us to estimate and meet service delivery standards, including uptime and system performance, to ensure client satisfaction. The following risks are associated with these SLAs:
Previous wording
Our current and potential competitors vary by size, service offerings, and geographic location. Competitors include technology companies, consulting companies, telecommunication companies, technology resellers, hardware and software companies, and others. Many of our competitors have entrenched relationships in particular industries or have gained a reputation for expertise in a specific sector of the cybersecurity market, including services, software, and hardware. Primary competitive factors in our market include security, reliability and functionality; customer service and technical expertise; reputation and brand recognition; financial strength; breadth of products and services offered; price; and scalability. Many of our current and potential competitors have substantially greater financial, technical, and marketing resources; more diversified product and service offerings; larger customer bases; longer operating histories; greater brand recognition; and more established relationships in the industry than we do. As a result, some of these competitors may be able to:
Current wording
Our business operates in a highly competitive landscape, and our current and potential competitors vary significantly by size, service offerings, and geographic location. Our competitors include technology companies, consulting firms, telecommunication companies, technology resellers, hardware and software providers, and other entities. Many of these competitors have established relationships within specific industries or have developed a reputation for expertise in particular sectors of the cybersecurity market, including services, software, and hardware.
Previous wording
We rely on trade secrets to protect intellectual property, proprietary technology, and processes, which we have or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior technology. The protection of intellectual property and/or proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. We may also be subject to claims by other parties regarding the use of intellectual property, technology information, and data, which may be deemed proprietary to others.
Current wording
We rely on trade secrets to protect our intellectual property, proprietary technology, and processes, which we have developed or may develop in the future. However, there can be no assurance that confidentiality obligations will always be honored or that others will not independently develop similar or superior technology. The protection of intellectual property and proprietary technology through trade secret claims has become increasingly contentious, with more companies pursuing litigation to protect their rights or for competitive reasons, even when the claims may be unsubstantiated. The prosecution or defense of intellectual property claims can be costly and unpredictable, particularly given the evolving legal landscape. We may also face claims from other parties alleging infringement on their intellectual property or technology, which could adversely affect our business.
Previous wording
The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors or its committees or as our executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in governance and reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the timing of these costs. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action and potentially civil litigation.
Current wording
The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors or its committees or as our executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in governance and reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the timing of these costs. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, other regulatory action, and potentially civil litigation.
Previous wording
We had an aggregate of 11,949,959 issued and outstanding shares of common stock as of December 31, 2023. Approximately 4,303,871 shares were in street name. The remainder of the outstanding shares may be sold, subject to certain volume limitations, pursuant to Rule 144 or other available exemptions. Also, in the future, we may issue additional securities in connection with financings and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding stock. Due to these factors, sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.
Current wording
We had an aggregate of 11,821,866 issued and outstanding shares of common stock as of December 31, 2024. Approximately 4,838,618 shares were in street name. The remainder of the outstanding shares may be sold, subject to certain volume limitations, pursuant to Rule 144 or other available exemptions. Also, in the future, we may issue additional securities in connection with financings and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding stock. Due to these factors, sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.
Previous wording
If we issue additional shares in the future, it will result in the dilution of our existing stockholders.
Current wording
If we issue additional shares in the future, it will result in a dilution of our existing stockholders.
Previous wording
Our current directors and executive officers, and a former director beneficially own approximately 51.90% of our outstanding capital stock. By virtue of these holdings, they effectively control the election of the members of our Board of Directors, our management, and our affairs and may prevent us from consummating corporate transactions such as mergers, consolidations, or the sale of all or substantially all of our assets that may be favorable from our standpoint or that of our other stockholders.
Current wording
Our current directors and executive officers, and a former director beneficially own approximately 31.55% of our outstanding capital stock. By virtue of these holdings, they effectively control the election of the members of our Board of Directors, our management, and our affairs and may prevent us from consummating corporate transactions such as mergers, consolidations, or the sale of all or substantially all of our assets that may be favorable from our standpoint or that of our other stockholders.
Previous wording
Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that a reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.
Current wording
Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that our reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.
Previous wording
Our business could be negatively impacted by shareholder activism.
Current wording
Our business could be negatively impacted by stockholder activism.
Previous wording
In recent years, shareholder activists have become involved in numerous public companies. Shareholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of companies. Shareholder activists have also become increasingly concerned with companies’ efforts with respect to environmental, sustainability and governance standards. Responding to actions by activist shareholders, such as requests for special meetings, potential nominations of candidates for election to our Board of Directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business and divert the attention of management and employees. In addition, any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could negatively impact our business. Shareholder activism could result in substantial costs. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business.
Current wording
In recent years, stockholder activists have become involved in numerous public companies. Stockholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of companies. Stockholder activists have also become increasingly concerned with companies’ efforts with respect to environmental, sustainability and governance standards. Responding to actions by activist stockholder, such as requests for special meetings, potential nominations of candidates for election to our Board of Directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business and divert the attention of management and employees. In addition, any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could negatively impact our business. Stockholder activism could result in substantial costs. In addition, actions of activist stockholder may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business.
Previous wording
The trading price of our common stock is likely to be highly volatile and these fluctuations could cause you to lose all or part of your investment in our common stock. Since shares of our common stock were sold in our initial public offering (IPO) in January 2021 at a price of $75.00(1) per share, the reported high and low sales prices of our common stock have ranged from $1.12(1) to $138.15(1) per share through March 31, 2024. Factors that may cause the market price of our common stock to fluctuate include:
Current wording
The trading price of our common stock is likely to be highly volatile and these fluctuations could cause you to lose all or part of your investment in our common stock. Since shares of our common stock were sold in our initial public offering (IPO) in January 2022 at a price of $75.00 per share, the reported high and low sales prices of our common stock ranged from $0.26 to $138.15 per share through March 24, 2025. Factors that may cause the market price of our common stock to fluctuate include:
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Primary factors influencing competition in our market include security, reliability, and functionality; customer service and technical expertise; reputation and brand recognition; financial strength; the breadth of products and services offered; price; and scalability. However, many of our competitors possess substantial advantages in these areas, including the following: