CISO Global Inc. (CISO)

Executive Summary / Key Takeaways

• Strategic Pivot to Software-Led Model: CISO Global is undergoing a significant transformation, shifting from a services-heavy model to a software-led, services-backed enterprise, leveraging AI-powered cybersecurity solutions like Checklight, Skanda, and CISO Edge to capture high-growth market opportunities.
• Momentum in Financial Performance: The company demonstrated strong operational improvements in the first half of 2025, achieving 108% gross profit growth and a 56% reduction in loss from operations, signaling progress towards its stated goal of Adjusted EBITDA profitability in 2025.
• Aggressive Debt Restructuring: CISO Global has made substantial strides in strengthening its balance sheet, notably reducing current liabilities by $7.15 million and executing a post-period debt-for-equity exchange of $9.30 million in convertible notes, addressing a critical liquidity concern.
• Expanding Market Reach Through Partnerships: Strategic alliances with Cyber Assurance Group and Financial Independence Group are opening access to an estimated $33 billion addressable market across the SMB, PEO, and financial management sectors, driven by its CyberSimple™ powered by CHECKLIGHT® offering.
• Persistent Liquidity Challenges: Despite recent improvements, the company continues to operate with a working capital deficit and faces a "going concern" qualification, underscoring the ongoing need for successful capital raises and consistent operational execution.

The Crucible of Cyber: CISO Global's Strategic Evolution

CISO Global, Inc. ($CISO) stands at a pivotal juncture, transforming itself from a broad cybersecurity services provider into a focused, software-led enterprise. Founded in 2015, the Scottsdale, Arizona-based company initially built its reputation on a technology-agnostic approach, accumulating highly skilled experts to deliver comprehensive cybersecurity consulting, managed services, and software. This foundational strategy aimed to enhance clients' cyber posture through its unique MCCP (Managed Compliance Cybersecurity Provider Culture) holistic solution, encompassing proprietary software, compliance, cybersecurity, and organizational culture.

The cybersecurity landscape is a dynamic battleground, with evolving threats like ransomware, third-party supply chain attacks, and phishing consistently ranking as top concerns for organizations. Industry trends highlight a growing demand for proactive risk management, with business continuity and disaster recovery emerging as top initiatives for 2025. Cybersecurity budgets are showing consistent year-over-year increases, and the market is increasingly prioritizing security as a strategic business function, adopting zero-trust frameworks, and modernizing legacy systems. This backdrop of escalating cyber threats and increasing investment creates a fertile environment for agile, innovative security providers.

CISO Global's strategic pivot, initiated by divesting its Latin American operations to concentrate on U.S. markets and internally developed software, directly addresses these market dynamics. This shift is designed to leverage higher-margin software revenue and scalable solutions. The company's differentiation lies in its blend of expert-driven services with proprietary, AI-powered technology, aiming to provide comprehensive, yet accessible, solutions to a broad market.

Technological Edge: AI-Powered Defense and Quantifiable Assurance

At the heart of CISO Global's transformation is its suite of AI-powered cybersecurity software, which forms a critical competitive moat. The company's "proprietary software stack" is designed to deliver tangible benefits, moving beyond traditional reactive security measures.

Key technological differentiators include:

• CHECKLIGHT® / CyberSimple™: This flagship product offers "government-grade cybersecurity and the industry’s leading performance warranty, providing up to $1.5M in financial protection." This warranty is a significant, quantifiable benefit, directly addressing client concerns about financial exposure from security breaches and providing a clear competitive advantage in the SMB and financial services markets.
• Skanda: This next-generation penetration testing and security analysis tool leverages AI and machine learning (ML) to provide "continuous, on-demand security assessments." The tangible benefit is a shift from periodic, snapshot assessments to real-time, ongoing vulnerability detection, significantly enhancing cyber resilience and allowing for faster identification and remediation of threats.
• CISO Edge: An AI-driven cloud security solution, CISO Edge delivers "comprehensiv e cloud-first, hybrid, and remote security—ensuring organizations can secure their users, networks, and data anywhere in the world." This addresses the critical need for consistent security across increasingly distributed IT environments, a growing challenge for businesses adopting cloud and remote work models.

These technological advancements are central to CISO Global's strategy, enabling it to offer more scalable, efficient, and proactive security solutions. The integration of AI aims to automate and enhance threat detection and response, reducing the reliance on manual processes and potentially improving service delivery margins. For investors, this technological roadmap suggests a pathway to higher average selling prices, lower cost of revenue through automation, and a stronger competitive position in a rapidly evolving market.

Competitive Landscape: A Niche Player in a Giant's Arena

CISO Global operates in a highly competitive cybersecurity market, contending with both established giants and nimble specialists. Its strategy of being "technology agnostic" while accumulating "highly sought-after topic experts" aims to differentiate it from firms focused on single technologies. The company's MCCP model, integrating software, compliance, cybersecurity, and culture, offers a holistic approach that some larger, more fragmented competitors may struggle to match.

Compared to industry leaders like CrowdStrike Holdings, Inc. (CRWD), Palo Alto Networks, Inc. (PANW), Fortinet, Inc. (FTNT), and Check Point Software Technologies Ltd. (CHKP), CISO Global occupies a more specialized niche. While these larger players boast superior scale, extensive R&D budgets, and comprehensive platforms with robust financial performance (e.g., CrowdStrike's 75% gross profit margin, Palo Alto's 75% gross profit margin, Fortinet's 81% gross profit margin, and Check Point's 88% gross profit margin, all significantly higher than CISO's TTM 21.83%), CISO Global's strength lies in its compliance expertise and tailored service delivery. Its focus on data privacy and regulatory compliance monitoring, combined with its unique $1.5 million performance warranty for CHECKLIGHT®, could foster stronger customer loyalty in regulated sectors.

However, CISO's smaller scale presents vulnerabilities. It faces higher customer acquisition costs and potentially lower margins compared to its larger rivals, making it more susceptible to price competition. Technological gaps, particularly in the speed and breadth of advanced threat detection offered by platforms from companies like Palo Alto Networks, could lead to longer response times for CISO's clients. The company's customer concentration, with one customer representing 10% of total revenue in the first half of 2025, also poses a risk. CISO Global must continue to leverage its specialized offerings and strategic partnerships to carve out and defend its market share against these formidable competitors.

Financial Performance: A Turnaround in Progress

The first half of 2025 marked a significant inflection point in CISO Global's financial trajectory, reflecting the early fruits of its strategic pivot. For the six months ended June 30, 2025, the company reported a total gross profit of $3.42 million, a substantial 108% increase compared to $1.64 million in the prior year period. This gross profit expansion was a key driver in reducing the loss from operations by 56%, from $9.14 million in H1 2024 to $4.04 million in H1 2025.

Revenue performance across segments showed mixed results, indicative of the ongoing transition. Security managed services revenue decreased by 12% to $12.49 million, primarily due to "lower annual contract values among newly acquired customers." Professional services revenue also saw a 22% decline to $1.09 million, attributed to "fewer customer projects." In contrast, cybersecurity software revenue surged by 48% to $291,099, driven by "an increase in subscriptions for our Checklight cybersecurity software" and "the initial launch of our suite of internally developed cybersecurity software products." This robust growth in the software segment underscores the strategic importance of the pivot.

Operational efficiency improvements were evident in cost reductions. Cost of payroll decreased by 19% ($1.25 million) for the six months ended June 30, 2025, primarily due to "headcount reductions in 2024." Similarly, selling, general, and administrative expenses decreased by 30% ($2.30 million), reflecting lower compensation, insurance, and lease costs. Notably, advertising and marketing expenses increased by $496,272, signaling a deliberate "investment into marketing efforts initiated in 2025" to support the new software offerings.

However, the balance sheet still reflects historical challenges. As of June 30, 2025, the company had a working capital deficit of $14.46 million and reported cash used in operations of $5.30 million for the six-month period. Interest expense remained high at $8.95 million, primarily due to the accretion of convertible notes and amortization of debt issuance costs. The change in fair value of derivative liability also impacted results by $5.47 million, stemming from the issuance of convertible notes in late 2024 and early 2025.

Liquidity and Capital Structure Strengthening

CISO Global has taken aggressive steps to address its liquidity and capital structure. Total current liabilities were reduced by $7.15 million to $17.80 million as of June 30, 2025, from $24.96 million at December 31, 2024. This reduction was primarily due to decreases in accounts payable, accrued expenses, and debt obligations, as well as the derecognition of a $2.10 million derivative liability following the conversion of notes.

A significant post-period event further bolstered the balance sheet: on August 4, 2025, the company executed Exchange Agreements to convert approximately $9.30 million of outstanding convertible notes (including principal and accrued interest) into newly authorized Series A Preferred Stock. This move effectively cancelled a substantial portion of its debt, mitigating immediate repayment pressures and strengthening the equity base.

Despite these efforts, the company's 10-Q filing still highlights "substantial doubt about our ability to continue as a going concern" due to historical losses and the working capital deficit. CISO Global's ability to fund ongoing operations remains "highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles." The company has a shelf registration statement on Form S-3, effective July 7, 2025, for potential offerings of up to $100 million in various securities, including an At-the-Market (ATM) sales agreement for up to $10.38 million. However, as a smaller reporting company with a public float below $75 million, it is subject to "baby shelf rules," limiting sales to one-third of its public float over any twelve consecutive months.

Outlook and Strategic Initiatives

CISO Global's forward-looking strategy is firmly rooted in its software-led transformation and expanding market reach. The company has set an ambitious target, expecting "at least $34 million in adjusted EBITDA profitable revenue in 2025." This guidance, combined with the doubling of "2025 anticipated Software Bookings to $10 Million with Nationwide Launch," underscores management's confidence in the new direction, despite the expectation to "incur further losses through the end of 2025" at the net income level.

Strategic partnerships are central to achieving these goals. The alliance with Cyber Assurance Group Inc. to launch CyberSimple targets the "$50 Billion Insurance Market" for small and medium-sized businesses (SMBs), providing a unique blend of AI-powered cybersecurity protection and financial coverage. Further, the alliance with Financial Independence Group (FIG) for CyberSimple™ powered by CHECKLIGHT® opens an "estimated $2 billion market opportunity in the PEO and Financial Management sector." The expansion of CHECKLIGHT® offerings with tailored packages for PEOs and Financial Management companies further broadens the addressable market to an estimated $33 billion.

Operationally, the company continues to emphasize security and trust, as evidenced by its successful completion of a SOC 2 Type II examination for the third consecutive year. CISO Global also plans to "continually seek to identify and acquire cybersecurity talent to expand our service scope and geographical coverage," reinforcing its expert-driven service model. The planned reduction in overhead costs and active pursuit of additional financing are critical components of its liquidity improvement plan.

Conclusion

CISO Global is in the midst of a profound transformation, pivoting towards a software-led, services-backed model that leverages AI-powered cybersecurity solutions to address a rapidly expanding market. The significant improvements in gross profit and reduction in operating losses during the first half of 2025, coupled with aggressive debt restructuring, demonstrate tangible progress in its turnaround story. The company's strategic partnerships and innovative software offerings, like CHECKLIGHT® with its substantial warranty, position it to capture considerable opportunities in the SMB, PEO, and financial management sectors.

However, the investment thesis is not without its complexities. The persistent "going concern" qualification and ongoing need for capital underscore the importance of consistent operational execution and successful financing efforts. While CISO Global faces formidable competition from larger, better-resourced players, its differentiated focus on compliance expertise, holistic MCCP approach, and AI-driven technology provide a unique value proposition. Investors should closely monitor the company's ability to execute its software growth strategy, manage its liquidity, and continue to strengthen its balance sheet as it strives to achieve sustained profitability and unlock its long-term potential in the dynamic cybersecurity market.