DEF: CISO Global Seeks Shareholder Nod for Major Capital Boost

CISO Global, Inc. is seeking stockholder approval for significant equity plan expansion, a $15 million preferred stock issuance to B. Riley, and a substantial increase in authorized common stock.

Summary

• CISO Global, Inc. will hold its Annual Meeting of Stockholders on December 10, 2025, to vote on six key proposals.
• The company proposes to elect five directors: David G. Jemmett, Phillip Balatsos, Mohsen (Michael) Khorassani, Andrew Hancox, and Andrew K. McCain.
• Stockholders will vote on ratifying Semple, Marchal & Cooper, LLP as the independent registered public accountant for fiscal year 2025.
• An amendment to the 2023 Equity Incentive Plan is proposed to increase the number of shares available for issuance by 10,000,000, citing insufficient current reserves (577,856 shares as of November 7, 2025) for talent recruitment and retention.
• The company seeks authorization for the issuance of common stock upon conversion of up to $15.0 million of Series B Preferred Stock to B. Riley Principal Capital, LLC, as per a September 24, 2025 agreement.
• This B. Riley agreement could lead to the issuance of up to 39,062,500 common shares if the full $15.0 million is converted at the minimum conversion price of $0.40 per share, significantly exceeding Nasdaq's 19.99% Exchange Cap (6,821,115 shares as of September 24, 2025).
• A proposal to increase authorized common stock from 300,000,000 to 1,300,000,000 shares is on the agenda, aimed at providing flexibility for future financing, equity compensation, and strategic transactions, including a digital asset treasury strategy.
• The company also seeks approval for an adjournment of the Annual Meeting if necessary to secure a quorum or sufficient votes for the equity plan amendment, B. Riley issuance, and authorized stock increase proposals.
• As of November 7, 2025, there were 44,046,343 shares of common stock outstanding and 55,390,764 shares on a fully diluted basis.
• Executive compensation for 2024 included salaries of $339,295 for CEO David G. Jemmett, $295,255 for CFO Debra L. Smith, and $295,255 for Interim COO Kyle J. Young, with no stock or option awards for the CEO in 2024.
• Accrued but unpaid bonuses from 2023 totaled $187,500 for Mr. Jemmett, $114,375 for Ms. Smith, and $142,500 for Mr. Young, with additional accrued but unpaid salaries for 2024.
• Related party transactions include consulting fees of $180,000 paid to former director Stephen Scott in 2024 and $2,283,995 received from Hensley Beverage Company (affiliated with director Andrew K. McCain) for managed services in 2024.
• A $5,000,000 convertible note issued to Hensley & Company in March 2023 was exchanged for Series A Preferred Stock in August 2025, which was then converted to common stock on November 6, 2025.

Sentiment

Score: 3

Explanation: The filing indicates a company in need of significant capital, resorting to highly dilutive financing methods (B. Riley preferred equity, massive authorized share increase) and showing signs of financial strain (unpaid executive compensation). While the proactive pursuit of capital is a positive, the terms and scale of potential dilution are highly unfavorable for existing common shareholders, suggesting a challenging financial position.

Positives

• The company is proactively seeking capital and flexibility for future growth and strategic initiatives through the B. Riley agreement and authorized stock increase.
• The proposed increase in the 2023 Equity Incentive Plan aims to attract and retain high-quality talent, which is crucial for business execution.
• The Board of Directors has a strong independent component, with four out of five directors deemed independent, and all Audit, Compensation, and Nominating & Corporate Governance Committees consisting entirely of independent directors.
• The Audit Committee members are considered financial experts, enhancing financial oversight.
• The company has established robust corporate governance policies, including an Insider Trading Policy, Director and Officer Prohibited Trading Activities, and a Clawback Policy adopted in November 2023.

Negatives

• The significant potential dilution from the B. Riley Preferred Equity Purchase Agreement, where B. Riley could beneficially own approximately 47% of outstanding shares on a pro forma basis if the full $15.0 million is converted at the minimum conversion price of $0.40 per share, poses a substantial risk to existing common stockholders.
• The need for a massive increase in authorized common stock from 300,000,000 to 1,300,000,000 shares suggests a high likelihood of future dilutive equity raises.
• Accrued but unpaid bonuses from 2023 for the CEO ($187,500), CFO ($114,375), and Interim COO ($142,500), along with accrued but unpaid salaries for 2024, indicate potential cash flow constraints or financial challenges.
• The B. Riley agreement includes a restriction on the company from effecting any Variable Rate Transaction without B. Riley's prior written consent, potentially limiting future financing flexibility.
• The company has agreed not to issue common stock or equivalents until October 23, 2025, which could restrict immediate capital-raising options outside the B. Riley agreement.

Risks

• Significant dilution of existing common stockholders' voting power and economic rights due to the potential issuance of up to 39,062,500 shares of common stock from the B. Riley Preferred Equity Purchase Agreement.
• Further dilution from the proposed increase in authorized common stock (from 300 million to 1.3 billion shares) and the expansion of the 2023 Equity Incentive Plan by 10 million shares.
• Failure to obtain stockholder approval for the B. Riley Issuance Proposal could force the company to seek alternative, potentially less favorable, financing sooner.
• The B. Riley agreement's beneficial ownership limitation (9.99%) means B. Riley can sell shares and acquire more, leading to continuous market overhang and potential downward pressure on the stock price.
• Reliance on equity financing, as indicated by the proposals, may expose the company to market volatility and the risk of issuing shares at unfavorable prices.
• The company faces operational, economic, financial, legal, regulatory, and competitive risks inherent in its business, as acknowledged in the risk oversight section.

Future Outlook

The company's future outlook is focused on securing capital and maintaining flexibility for strategic growth. The proposed equity plan expansion aims to ensure the ability to recruit and retain talent. The B. Riley Preferred Equity Purchase Agreement provides a source of capital for working capital, general corporate purposes, and debt obligations over an 18-month period. The significant increase in authorized common stock is intended to enable timely advantage of market conditions and favorable financing and strategic opportunities, including potential M&A and a digital asset treasury strategy, without the need for frequent stockholder meetings.

Management Comments

• Our Board of Directors believes our equity compensation program is well-managed, reasonable, and within market norms with the addition of the new shares.
• Management will be most aligned with stockholders if the grants represent meaningful equity-based compensation.
• Our Board of Directors has determined that the Purchase Agreement with B. Riley is in the best interests of us and our stockholders because the right to sell shares of Series B Preferred Stock to B. Riley provides us with a reliable source of capital and the ability to access that capital when and as needed.
• Our Board of Directors believes it is in our best interests to increase the number of authorized shares of common stock in order to give us greater flexibility in considering and planning for future corporate needs.

Industry Context

The cybersecurity sector is dynamic and competitive, requiring continuous investment in talent and technology. CISO Global's proposals for expanding its equity incentive plan and increasing authorized shares reflect a common industry need to attract and retain skilled professionals and to maintain financial flexibility for strategic growth, including potential M&A. The pursuit of a 'digital asset treasury strategy' suggests an interest in emerging financial technologies, which could be a differentiator or a new area of risk. The reliance on dilutive financing, however, may indicate challenges in securing less dilutive capital in the current market environment for a company of its size and stage.

Comparison to Industry Standards

• The proposed 1.04% dilution from the 2023 Equity Incentive Plan increase is stated to be 'less than the median of similarly situated companies,' suggesting the company believes its equity compensation program remains competitive and reasonable relative to peers in the cybersecurity or technology sector.
• The terms of the B. Riley Preferred Equity Purchase Agreement, particularly the minimum conversion price of $0.40 and the potential for B. Riley to own up to 47% of the company on a pro forma basis (before beneficial ownership limitations), appear to be on the less favorable end for existing common shareholders compared to typical institutional equity investments, often seen in companies facing significant capital needs or with lower market valuations. Specific comparable companies or projects are not mentioned in the filing to provide a direct benchmark.
• The substantial increase in authorized common stock from 300 million to 1.3 billion shares is a significant move, often seen in growth-oriented companies preparing for multiple rounds of financing, large acquisitions, or stock splits. The scale of this increase should be compared to the market capitalization and growth trajectory of similar-stage companies in the cybersecurity industry to assess its appropriateness and potential dilutive impact.

Management Changes

Corporate Governance

Related Party Transactions

• Independent Consulting Agreement with Stephen Scott (former director): Paid $180,000 in consulting fees in 2024 and $159,000 in 2023 for advisory services related to strategic and business development, intellectual property, banking, and M&A.
• Managed Services Agreement with Hensley Beverage Company (affiliated with director Andrew K. McCain): Received $2,283,995 in 2024 and $1,417,398 in 2023 for secured managed services.
• Convertible Note Payable with Hensley & Company: Issued a $5,000,000 unsecured convertible note in March 2023 at 10.00% interest. This note was exchanged for 6,180,554 shares of Series A Preferred Stock in August 2025, which were subsequently converted to common stock on November 6, 2025.

Stakeholder Impact

• **Shareholders**: Significant potential dilution from the B. Riley Preferred Equity Purchase Agreement and the proposed increase in authorized common stock could negatively impact the value and voting power of existing common shares. The equity incentive plan expansion also contributes to potential dilution.
• **Employees/Management**: The expansion of the 2023 Equity Incentive Plan is intended to benefit employees and management by providing incentives for recruitment, retention, and performance. However, accrued but unpaid bonuses and salaries for executive officers could signal financial instability, potentially affecting morale or retention.
• **Creditors**: The use of proceeds from the B. Riley agreement for 'payment of debt obligations' could positively impact creditors by improving the company's ability to meet its financial commitments.
• **B. Riley Principal Capital, LLC**: Stands to gain a significant equity stake in the company (potentially up to 47% on a pro forma basis, subject to beneficial ownership limitations) and a 3.5% cash fee for its affiliate, B. Riley Securities, Inc., indicating a favorable arrangement for this investor.
• **Customers**: No direct impact mentioned, but securing capital could enable continued investment in services and operations, indirectly benefiting customers.

Next Steps

• Hold the Annual Meeting of Stockholders on December 10, 2025, to vote on the proposed resolutions.
• If approved, implement the amendment to the 2023 Equity Incentive Plan to increase available shares by 10,000,000.
• If approved, proceed with the issuance of Series B Preferred Stock to B. Riley Principal Capital, LLC, up to $15.0 million, subject to terms and conditions.
• If approved, the Board of Directors will determine the effective date for the increase in authorized common stock from 300 million to 1.3 billion shares, which may occur immediately after the Annual Meeting or within 12 months.
• If stockholder approval for the B. Riley Issuance Proposal is not obtained by September 24, 2026, the company will be required to call a meeting every 90 days thereafter to seek approval.

Key Dates

Recommendation

The filing reveals a company in a challenging financial position, evidenced by significant accrued but unpaid executive compensation and the urgent need for substantial capital. The proposed financing mechanisms, particularly the $15 million preferred equity deal with B. Riley and the massive increase in authorized common stock (from 300 million to 1.3 billion shares), are highly dilutive. The B. Riley agreement, with a minimum conversion price of $0.40 and potential pro forma ownership of up to 47% for B. Riley (even with a 9.99% beneficial ownership cap, B. Riley can sell and re-acquire, leading to continuous dilution), suggests the company is accessing capital on terms highly unfavorable to existing common shareholders. While these measures may provide short-term liquidity, the long-term dilutive impact and the underlying financial distress indicated by unpaid compensation make the stock a strong sell for seasoned investors.

Keywords

CISO Global, DEF 14A, Proxy Statement, Stockholder Meeting, Equity Incentive Plan, Share Dilution, Capital Raise, Preferred Stock, B. Riley, Authorized Shares, Corporate Governance, Executive Compensation, Nasdaq Listing Rules, Cybersecurity, Financial Reporting