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CISO (CISO) - 2024 Q4 - Annual Report
CISOCISO (CISO)2025-03-31 19:46

Financial Performance and Challenges - The company incurred significant operating losses during the years ended December 31, 2024, and December 31, 2023, with limited cash flow, necessitating increased revenue or additional capital to pursue growth opportunities [94]. - As of March 24, 2025, the company maintained cash resources of approximately 250,000,highlightingtheneedforadequatefundingtoachieveprofitabilityandsustainlong−termgrowth[95].−Thecompanyfaceschallengesinmaintainingprofitabilityifrevenuetrendsdonotalignwithcoststructureadjustments,potentiallyleadingtovariabilityinfinancialresults[117].−Theauditor′sopinionraisedsubstantialdoubtaboutthecompany′sabilitytocontinueasagoingconcernduetolossesandnegativecashflowsfromoperations[154].GrowthStrategyandMarketPosition−Thegrowthstrategyfocusesonexpandingtheclientbaseandincreasingconsolidatedrevenuethroughstrategicacquisitionsandseamlessintegrationofcomplementarycybersecurityservices[95].−Thecompanyhasrecentlyacquiredmultiplebusinesses,withastrategydrivenbysuccessfulacquisitionsandintegrationofadditionalbusinesses[109].−Thecompanyplanstofundoperationsthroughacombinationofavailablenetoperatingcashflowsandfuturecapitalraises,whichmayresultindilutionforexistingstockholders[96].−Thecompanyrecognizesthecriticalimportanceofattractingandretainingskilledpersonnel,particularlyinthecybersecuritysector,toexecuteitsgrowthstrategy[105].CompetitionandMarketRisks−Thecompanyfacesintensecompetitionforqualifiedmanagementandpersonnel,whichmayimpactitsabilitytomaintainandgrowclientrelationships[106].−Thecompetitivelandscapeincludessignificantchallenges,withcompetitorshavinggreaterfinancialandoperationalresources,whichcouldleadtolossofcustomersandreducedrevenue[144].−Thebusinessstrategymayimposelimitationsonaccuratelyforecastingfuturerevenueandoperatingresultsduetovariousfactors,includingclientdemandandeconomicconditions[112].SalesandRevenueRecognition−Thecompany’ssalescyclescanbelongandunpredictable,requiringconsiderabletimeandexpenseforsalesefforts[94].−Revenuefromcustomersubscriptionsisrecognizedratablyoverthetermofagreements,typicallyspanningonetothreeyears,whichmeansfluctuationsinnewsalesorrenewalswillnotbeimmediatelyreflectedincurrentrevenue[116].−Thesalescyclesforthecompany′ssolutionsarelongandunpredictable,particularlywithlargeenterprisesandgovernmententities,leadingtochallengesinforecastingrevenueandfinancialresults[119].LegalandRegulatoryRisks−Thecompany’sfutureresultsmaybeaffectedbyvariouslegalandregulatoryproceedings,includingcompliancerisksandcybersecurityregulations[94].−Thecompanymayfaceincreasedlegalandregulatoryrisksasitexpandsoperationsinemergingmarkets,includingcompliancewithanti−corruptionlaws[132].−Increasinglycomplexcybersecurityregulationsmayrequiresubstantialinvestmentstomeetcompliance,potentiallydelayingservicelaunchesandimpactingprofitability[148].EconomicandGeopoliticalFactors−Adverseeconomicconditions,suchasinflationorrecessions,maynegativelyaffectcustomerdemandandoverallbusinessperformance[130].−Theunpredictabilityofmacroeconomicconditionscomplicatesaccurateforecastingandplanningforfuturebusinessactivities[131].−Geopoliticaltensions,includingconflictsinRussiaandUkraine,havecreatedinstabilityinglobalmarkets,whichmaydisruptsupplychainsandreducedemandforproductsandservices[133].StockandMarketPerformance−ThecompanyreceivedanotificationfromNasdaqonMarch29,2023,indicatingthatitscommonstockhadclosedbelow250,000, highlighting the need for adequate funding to achieve profitability and sustain long-term growth [95]. - The company faces challenges in maintaining profitability if revenue trends do not align with cost structure adjustments, potentially leading to variability in financial results [117]. - The auditor's opinion raised substantial doubt about the company's ability to continue as a going concern due to losses and negative cash flows from operations [154]. Growth Strategy and Market Position - The growth strategy focuses on expanding the client base and increasing consolidated revenue through strategic acquisitions and seamless integration of complementary cybersecurity services [95]. - The company has recently acquired multiple businesses, with a strategy driven by successful acquisitions and integration of additional businesses [109]. - The company plans to fund operations through a combination of available net operating cash flows and future capital raises, which may result in dilution for existing stockholders [96]. - The company recognizes the critical importance of attracting and retaining skilled personnel, particularly in the cybersecurity sector, to execute its growth strategy [105]. Competition and Market Risks - The company faces intense competition for qualified management and personnel, which may impact its ability to maintain and grow client relationships [106]. - The competitive landscape includes significant challenges, with competitors having greater financial and operational resources, which could lead to loss of customers and reduced revenue [144]. - The business strategy may impose limitations on accurately forecasting future revenue and operating results due to various factors, including client demand and economic conditions [112]. Sales and Revenue Recognition - The company’s sales cycles can be long and unpredictable, requiring considerable time and expense for sales efforts [94]. - Revenue from customer subscriptions is recognized ratably over the term of agreements, typically spanning one to three years, which means fluctuations in new sales or renewals will not be immediately reflected in current revenue [116]. - The sales cycles for the company's solutions are long and unpredictable, particularly with large enterprises and government entities, leading to challenges in forecasting revenue and financial results [119]. Legal and Regulatory Risks - The company’s future results may be affected by various legal and regulatory proceedings, including compliance risks and cybersecurity regulations [94]. - The company may face increased legal and regulatory risks as it expands operations in emerging markets, including compliance with anti-corruption laws [132]. - Increasingly complex cybersecurity regulations may require substantial investments to meet compliance, potentially delaying service launches and impacting profitability [148]. Economic and Geopolitical Factors - Adverse economic conditions, such as inflation or recessions, may negatively affect customer demand and overall business performance [130]. - The unpredictability of macroeconomic conditions complicates accurate forecasting and planning for future business activities [131]. - Geopolitical tensions, including conflicts in Russia and Ukraine, have created instability in global markets, which may disrupt supply chains and reduce demand for products and services [133]. Stock and Market Performance - The company received a notification from Nasdaq on March 29, 2023, indicating that its common stock had closed below 1.00 per share for 30 consecutive business days, failing to meet the minimum bid price requirement [169]. - Following a reverse stock split on March 8, 2024, the bid price for the common stock increased above $1.00, allowing the company to regain compliance with Nasdaq's bid price requirements [169]. - The market price of the company's common stock is volatile and may fluctuate disproportionately to its operating performance [155]. - The trading price of the common stock is likely to be highly volatile, which could result in significant fluctuations based on market perceptions unrelated to the company's fundamentals [180]. Shareholder and Corporate Governance - The company has never paid cash dividends and does not intend to do so in the foreseeable future, focusing instead on retaining earnings for business development [177]. - The existence of anti-takeover provisions may limit the price investors are willing to pay for shares and deter potential acquirers [158]. - Stockholder activism may disrupt business operations and divert management's attention, potentially leading to lost business opportunities and increased costs [178].