CISO (CISO) - 2024 Q3 - Quarterly Report

Revenue Performance - Total revenue decreased by $2.4 million, or 9.4%, to$ 23.3 million for the nine months ended September 30, 2024, compared to the same period in 2023[126]. - Security managed services revenue decreased by $1.5 million, or 7%, for the nine months ended September 30, 2024, primarily due to lower hardware and software sales[141]. - Professional services revenue decreased by$ 1.2 million, or 40%, for the nine months ended September 30, 2024, primarily due to lower customer projects[141]. - Cybersecurity software revenue increased by $304,727, or 100%, for the nine months ended September 30, 2024, due to the initial launch of new cybersecurity software products[142]. Profitability and Loss - Total gross profit increased to$ 2.7 million for the nine months ended September 30, 2024, up from $1.6 million in the same period in 2023, resulting in a gross profit percentage increase to 11% from 6%[126]. - Net loss from continuing operations improved to$ 12.7 million for the nine months ended September 30, 2024, compared to a net loss of $53.4 million for the same period in 2023[126]. - Loss before income taxes improved by$ 40.3 million, or 73.7%, for the nine months ended September 30, 2024, compared to the same period in 2023[140]. - The company incurred a net loss of $18,723,961 and negative cash flows from operations of$ 3,582,726 for the nine months ended September 30, 2024[152]. Operating Expenses - Total operating expenses decreased significantly by $39.7 million, or 72%, for the nine months ended September 30, 2024, compared to the same period in 2023[140]. - Stock-based compensation expenses decreased by$ 2.8 million, or 44%, for the nine months ended September 30, 2024, compared to the same period in 2023[140]. - Operating expenses, including professional fees, decreased by $1,671,405, or 62%, for the nine months ended September 30, 2024, compared to the same period in 2023[146]. - Advertising and marketing expenses decreased by$ 235,836, or 87%, for the nine months ended September 30, 2024, compared to the same period in 2023[147]. - Selling, general, and administrative expenses decreased by $3,241,943, or 23%, for the nine months ended September 30, 2024, compared to the same period in 2023[148]. - Impairment of goodwill decreased by$ 31,776,820, or 100%, for the nine months ended September 30, 2024, compared to the same period in 2023[151]. Cash Flow and Financing - Net cash used in operating activities was $3,582,726 for the nine months ended September 30, 2024, compared to$ 6,704,498 for the same period in 2023[158]. - Net cash provided by investing activities was $916,905 for the nine months ended September 30, 2024, primarily due to the sale of a subsidiary[159]. - Net cash provided by financing activities was$ 2,105,679 for the nine months ended September 30, 2024, compared to $5,777,702 for the same period in 2023[160]. - As of September 30, 2024, the company had$ 291,190,324 of available funding under its Shelf Registration Statement on Form S-3[153]. Cybersecurity Software - Cybersecurity revenue is derived from internally developed software products including CHECKLIGHT Endpoint Security Monitoring, ARGO Security Management, CISO Edge Cloud Security Platform, DISC Net Gen VPN, and Skanda Breach Assessment Tool[181]. - Revenue recognition for cybersecurity software begins upon provisioning and is recognized ratably over the service period[181]. - The company does not bundle its cybersecurity software with other products, eliminating the need for standalone selling price determination[181]. Market and Risk Disclosures - There are no off-balance sheet arrangements that could materially affect the company's financial condition or results of operations[182]. - As a smaller reporting company, the company is not required to provide detailed market risk disclosures[183].