S-1/A: CISO Global Registers 39M Shares for B. Riley Resale

CISO Global, Inc. filed an S-1/A registration statement for the resale of up to 39,062,500 shares of common stock by B. Riley Principal Capital, LLC, stemming from a $15 million Series B Preferred Stock purchase agreement.

Summary

• CISO Global, Inc. (the Company) filed an S-1/A to register for resale up to 39,062,500 shares of common stock.
• These shares are issuable upon conversion of 15,625 shares of Series B Convertible Preferred Stock.
• The Series B Preferred Stock is being issued to B. Riley Principal Capital, LLC (Selling Stockholder) under a Preferred Equity Purchase Agreement dated September 24, 2025.
• The Company has the right, but not the obligation, to sell up to $15.0 million of Series B Preferred Stock to B. Riley over an 18-month period, commencing September 24, 2025.
• Proceeds from the sale of Series B Preferred Stock to the Company will be used for working capital, general corporate purposes, and payment of debt obligations.
• The Company will not receive any proceeds from the resale of common stock by the Selling Stockholder.
• The initial purchase of Series B Preferred Stock by B. Riley will be for $2.3 million, with subsequent purchases in increments of $100,000, up to $500,000 weekly.
• Conversion of Series B Preferred Stock into common stock is subject to a minimum conversion price of $0.40 per share and certain beneficial ownership and exchange cap limitations (19.99% of outstanding common stock without stockholder approval).
• B. Riley Securities, Inc. (BRS), an affiliate of B. Riley, acted as placement agent and will receive a 3.5% placement fee on the Series B Preferred Stock issued, plus up to $125,000 in legal fees.
• Seaport Global Securities LLC was engaged as a qualified independent underwriter due to the conflict of interest with BRS, receiving a $50,000 fee.

Sentiment

Score: 4

Explanation: The filing outlines a capital raise mechanism that could provide up to $15 million, which is positive for liquidity and debt management. However, the potential for substantial dilution (up to 113% of current outstanding shares) and the conditional nature of accessing the funds (minimum trading price, volume limitations) introduce significant risks. The conflict of interest with the placement agent further tempers the enthusiasm.

Positives

• The Company has the potential to raise up to $15.0 million in gross proceeds from the sale of Series B Preferred Stock, which can be used for working capital, general corporate purposes, and debt obligations.
• The capital raise mechanism provides a structured way to secure financing over an 18-month period.
• The Company's business strategy focuses on addressing the cybersecurity industry's supply and demand imbalance by attracting and retaining top talent through acquisitions, direct hiring, and employee incentivization.
• CISO Global emphasizes a technology-agnostic approach and proprietary software to enhance threat visibility and accelerate incident response, aiming to deliver unparalleled value to clients.

Negatives

• The potential for substantial dilution to existing common stockholders is significant, with up to 39,062,500 new shares potentially issued, representing approximately 113% of current outstanding shares if converted at the minimum price of $0.40 per share.
• The Company's ability to access the full $15.0 million in proceeds is conditional on meeting minimum trading price and trading volume requirements, which may limit access to funds when needed.
• The Company is restricted from entering into other variable rate transactions without B. Riley's prior written consent while the Purchase Agreement is in effect.
• An obligation to pay $1.0 million in liquidated damages exists if the Company terminates the Purchase Agreement prior to its expiration.
• The Company may be required to redeem Series B Preferred Stock in certain circumstances (e.g., delisting from Nasdaq, conversion limitations, sustained low stock price), which could adversely affect liquidity and financial condition.
• A conflict of interest exists because B. Riley Securities, Inc. (placement agent) is an affiliate of B. Riley Principal Capital, LLC (selling stockholder), necessitating a qualified independent underwriter.

Risks

• The Company's ability to direct B. Riley to purchase shares of Series B Preferred Stock is subject to minimum trading price and trading volume requirements, which may limit access to needed proceeds and adversely affect liquidity.
• Management will have broad discretion over the use of the net proceeds from the sale of Series B Preferred Stock, and there is no assurance the proceeds will be invested successfully.
• The issuance of Series B Preferred Stock and subsequent conversion into common stock could significantly increase the total number of shares outstanding, causing substantial dilution to existing stockholders.
• Substantial future sales or other issuances of common stock, including conversions of Series B Preferred Stock, could depress the market price of common stock.
• Future equity offerings and other issuances of securities may result in further dilution to stockholders and could be at prices lower than the current offering.
• The Company may be obligated to redeem shares of Series B Preferred Stock under certain conditions, which could adversely affect liquidity and financial condition and limit the ability to pursue other business opportunities.
• The offering involves a conflict of interest under FINRA rules due to the affiliation between the placement agent and the selling stockholder, despite the participation of a qualified independent underwriter.

Future Outlook

CISO Global's strategy involves continued growth through acquisitions, direct hiring, and employee incentivization to address the cybersecurity talent shortage. The Company aims to be a trusted advisor, providing technology-agnostic solutions and leveraging its proprietary software to enhance client security. The ability to access up to $15.0 million in capital from B. Riley is contingent on market conditions, including minimum stock price and trading volumes, and stockholder approval for certain share issuances. This capital is intended for working capital, general corporate purposes, and debt repayment, supporting the Company's long-term goals of scalable growth and strengthening recurring revenue streams. However, the potential for significant dilution and the conditional nature of funding access are key considerations for future performance.

Management Comments

• Our company is a leading cybersecurity, compliance, and software firm composed of highly trained and seasoned security professionals.
• We collaborate with clients to enhance or establish a stronger cybersecurity posture within their organizations.
• We prioritize identifying, attracting, and retaining top cybersecurity and compliance talent.
• Our strategy includes acquisitions, direct hiring, and employee incentivization through stock options to ensure retention.
• By emphasizing a security-aware workforce culture, we aim to become trusted advisors, providing tailored, product-agnostic cybersecurity solutions that align with our clients' security needs, financial realities, and strategic goals.
• We differentiate ourselves through a technology-agnostic approach and a relentless focus on acquiring high-demand cybersecurity talent, expanding both service capabilities and global reach.
• Our integrated service model enhances revenue capture and operational efficiency, resulting in improved profitability and stronger client retention.
• Our employees are dedicated partners, not consultants, available under recurring monthly contracts.
• Building a world-class technology team with industry-specific expertise remains a cornerstone of our strategy.
• Our goal remains to stay ahead of emerging threats and regulatory changes, ensuring our clients' safety, compliance, and success with our proprietary software serving as a vital tool.

Industry Context

The cybersecurity industry is characterized by a significant supply and demand imbalance for expert professionals, which CISO Global aims to address through its strategy of talent acquisition, direct hiring, and employee incentivization. The company positions itself as a leader by offering comprehensive, technology-agnostic cybersecurity solutions, including compliance consulting, managed services, SOC, vCISO, incident response, and training. Its proprietary CISO software is highlighted as a differentiator, enhancing threat visibility and accelerating incident response in a market facing continuous evolution of threats and regulatory changes.

Corporate Governance

Related Party Transactions

• On August 4, 2025, the Company entered into Exchange Agreements with Hensley & Company, d/b/a Hensley Beverage Company (an entity affiliated with Andrew K. McCain, a director), and J C Associates, Inc. (an entity affiliated with a member of the Company's advisory board).
• Pursuant to these agreements, the affiliated entities exchanged approximately $9,297,894.54 in outstanding convertible notes for an aggregate of 9,297,894 newly authorized shares of Series A Preferred Stock.

Stakeholder Impact

• **Shareholders**: Face significant potential for dilution (up to 113% of current outstanding shares) if the Series B Preferred Stock is fully converted, which could depress the market price of common stock and reduce their proportionate ownership and voting interests.
• **Creditors**: The potential capital raise of up to $15.0 million, with proceeds allocated to debt obligations, could improve the Company's ability to meet its financial commitments, potentially benefiting existing creditors.
• **Employees**: The Company's strategy includes employee incentivization through stock options for retention, indicating a positive impact on employee morale and stability.
• **Customers**: The capital infusion and strategic focus on acquiring top cybersecurity talent and expanding services could lead to enhanced cybersecurity solutions and improved service delivery for customers.
• **B. Riley Principal Capital, LLC**: As the Selling Stockholder, B. Riley stands to gain from the resale of common stock, potentially at market prices, and benefits from the terms of the Preferred Equity Purchase Agreement, including a 4% original issue discount on the Series B Preferred Stock.

Next Steps

• The registration statement needs to become effective for the resale of common stock to commence.
• The Company may, at its sole discretion, direct B. Riley to purchase Series B Preferred Stock over the 18-month period, subject to various conditions.
• The Company must use reasonable best efforts to obtain stockholder approval for issuances exceeding the 19.99% Exchange Cap within 90 days of September 24, 2025, and every 90 days thereafter if not obtained.
• B. Riley Principal Capital, LLC may resell the common stock acquired upon conversion of Series B Preferred Stock from time to time in public or private transactions.

Key Dates

Recommendation

While the potential capital infusion of up to $15 million is a positive for CISO Global's liquidity and debt management, the terms of the Series B Preferred Stock offering present substantial risks. The significant potential for dilution (over 100% of current outstanding shares if fully converted at the minimum price) and the conditional nature of accessing these funds (minimum trading price, volume limitations) create considerable uncertainty for existing shareholders. The conflict of interest with the placement agent, though mitigated by a QIU, adds a layer of complexity. Given the company's stated growth strategy in a high-demand sector, the capital raise is necessary, but the dilutive impact and conditional access warrant a cautious 'hold' rather than a 'buy' or 'sell' until the actual utilization of funds and market reaction to the dilution become clearer. Investors should monitor the stock price performance and the company's ability to meet the conditions for drawing down capital.

Keywords

CISO Global, cybersecurity, equity offering, preferred stock, common stock, B. Riley, dilution, capital raise, SEC filing, S-1/A, risk factors, corporate governance, Nasdaq, private placement, stock incentive plan, warrants, convertible notes