Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 10, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-41227 | |
Entity Registrant Name | CISO GLOBAL, INC. | |
Entity Central Index Key | 0001777319 | |
Entity Tax Identification Number | 83-4210278 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 6900 E. Camelback Road | |
Entity Address, Address Line Two | Suite 900 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85251 | |
City Area Code | (480) | |
Local Phone Number | 389-3444 | |
Title of 12(b) Security | Common Stock, $0.00001 par value | |
Trading Symbol | CISO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 154,676,477 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 3,823,735 | $ 1,833,163 |
Accounts receivable, net | 6,068,161 | 7,862,297 |
Inventory | 19,106 | 11,803 |
Prepaid cost of revenue | 2,482,217 | 2,634,667 |
Prepaid expenses and other current assets | 2,259,517 | 1,724,650 |
Contract asset | 412,131 | 332,215 |
Total Current Assets | 15,064,867 | 14,398,795 |
Property and equipment, net | 4,740,070 | 4,680,495 |
Right of use asset, net | 961,037 | 255,687 |
Intangible assets, net | 4,830,163 | 8,475,229 |
Goodwill | 58,491,954 | 76,664,017 |
Other assets | 23,500 | 22,592 |
Total Assets | 84,111,591 | 104,496,815 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 10,755,449 | 8,310,337 |
Deferred revenue | 4,139,513 | 4,472,140 |
Lease liability | 194,070 | 121,731 |
Loans payable | 4,517,971 | 7,758,831 |
Convertible notes payable | 2,050,000 | 2,550,000 |
Total Current Liabilities | 21,657,003 | 23,213,039 |
Long-term Liabilities: | ||
Loans payable, net of current portion | 4,118,806 | 4,243,802 |
Convertible notes payable, related party | $ 5,000,000 | |
Notes Payable, Noncurrent, Related and Nonrelated Party Status [Extensible Enumeration] | Related Party [Member] | Related Party [Member] |
Lease liability, net of current portion | $ 788,359 | $ 159,205 |
Deferred tax liability | 435,678 | |
Total Liabilities | 31,564,168 | 28,051,724 |
Commitments and Contingencies | ||
Stockholders’ Equity: | ||
Common stock, $.00001 par value; 300,000,000 shares authorized; 154,176,477 and 146,395,807 issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 1,541 | 1,464 |
Preferred stock, $.00001 par value; 50,000,000 shares authorized; 0 shares issued and outstanding on March 31, 2023 and December 31, 2022, respectively | ||
Additional paid-in capital | 162,075,966 | 153,168,984 |
Accumulated translation adjustment | 3,099,209 | 1,062,247 |
Accumulated deficit | (112,629,293) | (77,787,604) |
Total Stockholders’ Equity | 52,547,423 | 76,445,091 |
Total Liabilities and Stockholders’ Equity | $ 84,111,591 | $ 104,496,815 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares outstanding | 154,176,477 | 146,395,807 |
Common stock, shares issued | 154,176,477 | 146,395,807 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue: | ||
Total revenue | $ 13,726,681 | $ 9,329,410 |
Cost of revenue: | ||
Total cost of revenue | 13,327,597 | 9,280,694 |
Total gross profit | 399,084 | 48,716 |
Operating expenses: | ||
Professional fees | 1,677,387 | 623,061 |
Advertising and marketing | 115,394 | 155,341 |
Selling, general and administrative | 9,508,766 | 4,616,373 |
Stock based compensation | 3,628,975 | 2,565,510 |
Impairment of goodwill | 20,199,368 | |
Total operating expenses | 35,129,890 | 7,960,285 |
Loss from operations | (34,730,806) | (7,911,569) |
Other income (expense): | ||
Other income (expense) | (156,420) | 12,543 |
Interest expense, net | (390,141) | (43,585) |
Total other income (expense) | (546,561) | (31,042) |
Loss before income taxes | (35,277,367) | (7,942,611) |
Benefit from income taxes | (435,678) | |
Net loss | (34,841,689) | (7,942,611) |
Foreign currency translation adjustment | 2,036,962 | 902,441 |
Comprehensive loss | $ (32,804,727) | $ (7,040,170) |
Net loss per common share - basic and diluted | $ (0.24) | $ (0.06) |
Weighted average shares outstanding - basic | 147,801,797 | 133,983,960 |
Weighted average shares outstanding - diluted | 147,801,797 | 133,983,960 |
Security Managed Services [Member] | ||
Revenue: | ||
Total revenue | $ 11,766,133 | $ 8,052,225 |
Cost of revenue: | ||
Total cost of revenue | 5,560,563 | 2,602,924 |
Professional Services [Member] | ||
Revenue: | ||
Total revenue | 1,960,548 | 1,277,185 |
Cost of revenue: | ||
Total cost of revenue | 198,293 | 110,337 |
Cost of Payroll [Member] | ||
Cost of revenue: | ||
Total cost of revenue | 5,800,657 | 4,445,850 |
Stock-based Compensation [Member] | ||
Cost of revenue: | ||
Total cost of revenue | $ 1,768,084 | $ 2,121,583 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2021 | $ 1,258 | $ 69,309,369 | $ (44,012,422) | $ 25,298,205 | ||
Balance, shares at Dec. 31, 2021 | 125,852,971 | |||||
Stock based compensation - stock options | 4,687,093 | 4,687,093 | ||||
Exercise of options | $ 1 | 37,999 | 38,000 | |||
Exercise of options, shares | 100,000 | |||||
Foreign currency translation | 902,441 | 902,441 | ||||
Net loss | (7,942,611) | (7,942,611) | ||||
Stock based compensation - common stock | 79,949 | 79,949 | ||||
Stock based compensation - common stock, shares | 39,000 | |||||
Stock issued for cash in public offering | $ 21 | 9,470,979 | 9,471,000 | |||
Stock issued for cash in public offering, shares | 2,060,000 | |||||
Stock issued for True Digital acquisition | $ 74 | 34,726,306 | 34,726,380 | |||
Stock issued for True Digital acquisition, shares | 7,406,100 | |||||
Balance at Mar. 31, 2022 | $ 1,354 | 118,311,695 | 902,441 | (51,955,033) | 67,260,457 | |
Balance, shares at Mar. 31, 2022 | 135,458,071 | |||||
Balance at Dec. 31, 2022 | $ 1,464 | 153,168,984 | 1,062,247 | (77,787,604) | 76,445,091 | |
Balance, shares at Dec. 31, 2022 | 146,395,807 | |||||
Stock based compensation - stock options | 5,272,059 | 5,272,059 | ||||
Stock issued for cash | $ 67 | 3,143,080 | 3,143,147 | |||
Stock issued for cash, shares | 6,739,853 | |||||
Exercise of options | $ 10 | 491,843 | $ 491,853 | |||
Exercise of options, shares | 1,040,817 | 1,040,817 | ||||
Foreign currency translation | 2,036,962 | $ 2,036,962 | ||||
Net loss | (34,841,689) | (34,841,689) | ||||
Balance at Mar. 31, 2023 | $ 1,541 | $ 162,075,966 | $ 3,099,209 | $ (112,629,293) | $ 52,547,423 | |
Balance, shares at Mar. 31, 2023 | 154,176,477 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (34,841,689) | $ (7,942,611) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation - stock options | 5,272,059 | 4,687,093 |
Stock based compensation - common stock | 125,000 | 79,949 |
Depreciation and amortization | 1,050,193 | 458,988 |
Right of use amortization | 28,432 | 45,387 |
Settlement liability | (470,000) | |
Other | 18,431 | (22,289) |
Impairment of intangible assets | 3,116,039 | |
Impairment of goodwill | 20,199,368 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 1,974,401 | 397,548 |
Inventory | (6,382) | (522,342) |
Contract assets | (79,916) | (86,811) |
Prepaids and other current assets | (144,410) | (865,483) |
Accounts payable and accrued expenses | 1,723,688 | 1,133,313 |
Deferred revenue | (546,086) | 91,463 |
Net cash used in operating activities | (2,110,872) | (3,015,795) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (182,839) | (103,858) |
Cash paid for acquisitions, net | (4,917,768) | |
Net cash used in by investing activities | (182,839) | (5,021,626) |
Cash flows from financing activities: | ||
Proceeds from sale of common stock | 3,143,147 | 9,471,000 |
Proceeds from stock option exercise | 491,853 | 38,000 |
Proceeds from loan payable | 2,000,000 | |
Proceeds from convertible notes payable, related party | 5,000,000 | |
Proceeds from line of credit | 32,517 | 86,585 |
Payment on line of credit | (61,673) | |
Payment on loans payable | (5,779,547) | (458,719) |
Payment on notes payable, related party | (125,861) | |
Payment of convertible note payable | (500,000) | |
Payment of debt issuance cost | (87,500) | |
Net cash provided by financing activities | 4,238,797 | 9,011,005 |
Effect of exchange rates on cash and cash equivalents | 45,486 | 164,288 |
Net increase in cash and cash equivalents | 1,990,572 | 1,137,872 |
Cash and cash equivalents - beginning of the period | 1,833,163 | 2,725,035 |
Cash and cash equivalents - end of the period | 3,823,735 | 3,862,907 |
Cash paid for: | ||
Interest | 349,107 | 36,069 |
Income taxes | ||
Supplemental disclosure of non-cash transactions: | ||
Operating lease assets obtained in exchange for operating lease obligations | 733,782 | |
Common stock issued in True Digital acquisition | $ 34,726,380 |
ORGANIZATION OF BUSINESS AND GO
ORGANIZATION OF BUSINESS AND GOING CONCERN | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION OF BUSINESS AND GOING CONCERN | NOTE 1 – ORGANIZATION OF BUSINESS AND GOING CONCERN Description of the Business We are a cybersecurity and compliance company comprised of highly trained and seasoned security professionals who work with clients to improve their cybersecurity posture. We provide a full range of cybersecurity consulting and related services, encompassing strategy and risk, cyber defense operations, architecture and engineering, and readiness and resiliency. Our services include secured managed services, compliance services, security operations center (“SOC”) services, virtual Chief Information Security Officer (“vCISO”) services, incident response, digital forensics, technical assessments, and cybersecurity training. We believe that culture is the foundation of every successful cybersecurity and compliance program. To deliver that outcome, we deliver a holistic solution that provides these services in a unified way from a dedicated team of subject matter experts. In contrast to the majority of cybersecurity firms that are focused on a specific technology or service, we seek to differentiate ourselves by remaining technology agnostic, focusing on aggregating teams of highly sought-after practitioners. We continually seek to identify and acquire cybersecurity talent to expand our service scope and geographical coverage to provide the best possible service for our clients. We believe that bringing together a world-class team of technological experts with multi-faceted expertise in the critical aspects of cybersecurity is key to providing technology to our clients in a business environment that are experiencing challenges attracting and retaining cybersecurity talent, thereby setting us apart from competitors and in-house security teams. Our goal is to create a culture of security and to help quantify, define, and capture a return on investment from information technology and cybersecurity spending. Our brand rallies around the battle cry: “Cyber security is a Culture, not a Product.” Basis of Presentation Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include our accounts and the accounts of our subsidiaries. All material intercompany accounts and transactions have been eliminated. Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for the interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2023. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2022. Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the three months ended March 31, 2023, we incurred a net loss of $ 34,841,689 2,110,872 15,064,867 21,657,003 6,592,136 3,823,735 Based on our current business plan, we believe our cash balance as of the date of this filing, together with anticipated revenues, will be sufficient to meet our anticipated cash requirement for the near term. However, there can be no assurance that the current business plan will be achievable. Such conditions raise substantial doubts about our ability to continue as a going concern for one year from the date the unaudited condensed consolidated financial statements are issued. Our existence is dependent upon our ability to develop profitable operations. We are devoting substantially all of our efforts to developing our business, reducing overhead costs, and raising capital, although there can be no assurance that our efforts will be successful. No assurance can be given that our actions will result in profitable operations or the resolution of liquidity problems. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result should we be unable to continue as a going concern. In order to improve our liquidity, in addition to a planned reduction in overhead costs, we are actively pursuing additional debt and/or equity financing through discussions with investment bankers and private investors. There can be no assurance that we will be successful in our efforts to secure additional financing. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should we be unable to continue as a going concern. Reclassifications Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation. Use of Estimates GAAP requires management to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements. We periodically evaluate our estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results could materially differ. We believe the critical accounting policies discussed below affects our more significant judgments and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements. Significant estimates include the allowance for doubtful accounts, the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, the estimated fair value of assets acquired, liabilities assumed and stock issued in business combinations, and assumptions used in the Black-Scholes option pricing model, such as expected volatility, risk-free interest rate, share price, and expected dividend rate. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Our revenue is derived from two major types of services to clients: security managed services and professional services. With respect to security managed services, we provide culture education and enablement, tools and technology provisioning, data and privacy monitoring, regulations and compliance monitoring, remote infrastructure administration, and cybersecurity services, including, but not limited to, antivirus and patch management. With respect to professional services, we provide cybersecurity consulting, compliance auditing, vulnerability assessment and penetration testing, and disaster recovery and data backup solutions. Our revenue is categorized and disaggregated as reflected in our unaudited condensed consolidated statement of operations as follows: Security Managed Services Security managed services revenue primarily consists of compliance, security managed services, SOC managed services, and vCISO. We considered these services to be a single performance obligation, and revenue is recognized as services and materials are provided to the customer. Professional Services Professional services revenue primarily consists of technical assessments, incident response and forensics, training, and other cybersecurity services. We considered these services to be a single performance obligation, and revenue is recognized in the period in which the performance obligations are satisfied. Accounts Receivable Accounts receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts. We periodically assess our accounts and other receivables for collectability on a specific identification basis. We provide for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. Payments are generally due within 30 days of invoice. We write off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of March 31, 2023 and December 31, 2022, our allowance for doubtful accounts was $ 199,945 270,011 Inventory Inventory consists of computer equipment for sale to customers. Inventory is measured using the first-in, first-out method and stated at lower of cost or net realizable value as of March 31, 2023 and December 31, 2022. The value of inventories is reduced for excess and obsolete inventories. We monitor inventory to identify events that would require impairment due to obsolete inventory and adjust the value of inventory when required. We recorded no Net Loss per Common Share Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. For dilutive securities, all outstanding options are considered potentially outstanding common stock. The dilutive effect, if any, of stock options is calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, the options and shares issuable upon conversion thereof have been excluded from our computation of net loss per common share for the three months ended March 31, 2023 and 2022. The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to our net loss position even though the exercise price could be less than the average market price of the common shares: SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE March 31, 2023 December 31, 2022 Stock options 32,265,543 36,397,521 Warrant 144,200 144,200 Convertible debt 4,497,385 430,718 Total 36,907,128 36,972,439 Deferred Revenue Deferred revenue primarily consists of billings or payments received from customers in advance of revenue recognized for the services provided to our customers or annual licenses and is recognized as services are performed or ratably over the life of the license. We generally invoice customers in advance or in milestone-based installments. Deferred revenue of $ 1,709,844 D eferred revenue consisted of the following: SCHEDULE OF DEFERRED REVENUE March 31, 2023 December 31, 2022 Security managed services $ 3,204,553 $ 3,609,087 Professional services 934,960 863,053 Total deferred revenue $ 4,139,513 $ 4,472,140 Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities, including tax loss and credit carry forwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We utilize ASC 740, Income Taxes For uncertain tax positions that meet a “more likely than not” threshold, we recognize the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. Our practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when a determination is made that such expense is likely. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS March 31, 2023 December 31, 2022 Prepaid expenses $ 1,137,213 $ 987,651 Prepaid taxes 1,036,618 572,645 Prepaid insurance 85,686 164,354 Total prepaid expenses and other current assets $ 2,259,517 $ 1,724,650 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT March 31, 2023 December 31, 2022 Computer equipment $ 1,353,901 $ 1,264,713 Building 1,910,137 1,776,040 Leasehold improvements 580,871 541,647 Vehicles 37,273 28,229 Furniture and fixtures 155,286 151,142 Software 1,830,191 1,667,283 Property and equipment gross 5,867,659 5,429,054 Less: accumulated depreciation (1,127,589 ) (748,559 ) Property and equipment, net $ 4,740,070 $ 4,680,495 Total depreciation expense was $ 305,705 154,074 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | NOTE 5 – INTANGIBLE ASSETS AND GOODWILL Goodwill During the quarterly period ended March 31, 2023, our share price reduction was determined to be an indicator of impairment under ASC 350 of our two reporting units, United States and Latin America. We performed an ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value. The valuation limitation from our recent share price decline caused us to perform an interim goodwill impairment test as of March 31, 2023. Based on the results of this testing, we recorded an $ 15,445,981 4,753,387 As part of our quantitative testing process for goodwill of the reporting units, we estimated fair values using a revenue multiple analysis, a form of the income approach, from the perspective of a market participant. Significant assumptions used in the revenue multiple approach are revenue growth rates and revenue multiples of key comparable companies within our industry. The terminal business value is determined by applying the long-term growth rate to the latest year for which a forecast exists. The following table summarizes the changes in goodwill during the three months ended March 31, 2023: SCHEDULE OF CHANGES IN GOODWILL Balance December 31, 2022 $ 76,664,017 Impairment ) Foreign currency translation adjustment 2,027,305 Ending balance, March 31, 2023 $ 58,491,954 The remaining balance of goodwill for the reporting units continue to be at risk for future impairment. There continues to be uncertainty surrounding the factors impacting our business, and a sustained downturn, significantly extended recovery or a change in long-term revenue growth or profitability for our reporting units could increase the likelihood of an additional future impairment. Additionally, changes in market participant assumptions or further share price reductions could increase the likelihood of further future impairment. Intangible Assets We performed an interim impairment test of our intangible assets based upon the conditions that precipitated the interim goodwill impairment test described above. Based on the results of this testing, we recorded pre-tax non-cash impairment charges totaling $ 3,116,039 Fair values used in testing for potential impairment of our intangible assets are calculated using a discounted cash flows method by applying estimated cash flows from our forecasted revenue and expenses of the business that utilize those assets. The assumed cash flows from this calculation are discounted at a rate based on a market participant discount rate. There is uncertainty surrounding the revenue growth factors for these assets and a change in the long-term revenue growth rate or increase in the discount rate assumption could increase the likelihood of a future impairment. Following the recognition of the impairment losses, the affected assets had an aggregate carrying value of $ 576,001 Intangible assets, net are summarized as follows: SUMMARY OF IDENTIFIABLE INTANGIBLE ASSETS Gross Carrying Amount Accumulated Amortization Net Carrying Amount March 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Tradenames – trademarks $ 4,095,754 $ (1,584,604 ) $ 2,511,150 Customer base 1,157,163 (603,461 ) 553,702 Non-compete agreements 707,835 (521,316 ) 186,519 Intellectual property/technology 2,329,507 (750,715 ) 1,578,792 Intangible Asset $ 8,290,259 $ (3,460,096 ) $ 4,830,163 Gross Carrying Amount Accumulated Amortization Net Carrying Amount December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Tradenames – trademarks $ 4,744,409 $ (1,167,476 ) $ 3,576,933 Customer base 2,949,143 (449,565 ) 2,499,578 Non-compete agreements 796,583 (436,611 ) 359,972 Intellectual property/technology 2,659,391 (620,645 ) 2,038,746 Intangible Asset $ 11,149,526 $ (2,674,297 ) $ 8,475,229 The weighted average remaining useful life of identifiable amortizable intangible assets remaining is 3.49 Amortization of identifiable intangible assets for the three months ended March 31, 2023 and 2022 was $ 747,172 304,914 Based on the balance of intangible assets at March 31, 2023, expected future amortization expense is as follows: SCHEDULE OF FUTURE AMORTIZATION EXPENSE 2023 (remainder of) $ 1,302,853 2024 1,240,000 2025 1,043,231 2026 964,336 2027 279,743 Future Amortization Expense $ 4,830,163 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following amounts: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES March 31, 2023 December 31, 2022 Accounts payable $ 6,725,778 $ 5,267,492 Accrued payroll and bonuses 1,839,065 1,274,919 Accrued expenses 1,874,543 1,296,382 Accrued commissions 105,149 305,768 Accrued interest 210,914 165,776 Total accounts payable and accrued expenses $ 10,755,449 $ 8,310,337 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Note 7 – RELATED PARTY TRANSACTIONS Independent Consulting Agreement with Stephen Scott In August 2020, we entered into an Independent Consulting Agreement with Stephen Scott, a director of our company, with respect to advisory and consulting services relating to our strategic and business development and sales and marketing. Mr. Scott receives a consulting fee of $ 11,500 34,500 34,500 Managed Services Agreement with Hensley Beverage Company – Related Party In July 2021, we entered into a 1-year Managed Services Agreement with Hensley Beverage Company to provide secured managed services. We also may be engaged by Hensley Beverage Company from time to time to provide other related services outside the scope of the Managed Services Agreement. While the agreement provides for a term through December 31, 2021, the agreement will continue until terminated by either party. For the three months ended March 31, 2023 and 2022, we received $ 212,006 166,388 145,627 15,737 Convertible Note Payable with Hensley & Company In March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $ 5,000,000 10.00 March 20, 2025 1.20 13,888 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | Note 8 – STOCKHOLDERS’ EQUITY Options We granted stock options vesting solely upon the continued service of the recipient. We recognize the accounting grant date fair value of equity-based awards as compensation expense over the required service period of each award. The following table summarizes stock option activity: SCHEDULE OF STOCK OPTIONS ACTIVITY Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2023 36,397,521 $ 2.45 - - Granted - - - - Exercised (1,040,817 ) 0.48 - - Expired or cancelled (3,091,161 ) 3.26 - - Outstanding at March 31, 2023 32,265,543 $ 2.43 5.12 $ 38,249,342 Exercisable at March 31, 2023 20,869,071 $ 1.69 3.62 $ 35,143,051 Total compensation expense related to the options was $ 5,272,059 4,687,093 39,593,463 2.19 Warrant Activity Summary The following table summarizes warrant activity: SCHEDULE OF STOCK WARRANT ACTIVITY Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2023 144,200 $ 5.00 4.06 - Granted - - - - Exercised - - - - Expired or cancelled - - - - Outstanding at March 31, 2023 144,200 $ 5.00 3.76 $ - Exercisable at March 31, 2023 144,200 $ 5.00 3.76 $ - |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES Legal Claims There are no material pending legal proceedings in which we or any of our subsidiaries are a party or in which any of our directors, officers or affiliates, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us Indirect Taxes We are subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which we conduct business. Laws and regulations attempting to subject commerce conducted over the Internet to various indirect taxes are becoming more prevalent, both in the U.S. and internationally, and may impose additional burdens on us in the future. Increased regulation could negatively affect our business directly, as well as the business of our customers. Taxing authorities may impose indirect taxes on the Internet-related revenue we generated based on regulations currently being applied to similar, but not directly comparable industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. In addition, domestic and international indirect taxation laws are complex and subject to change. We may be audited in the future, which could result in changes to our indirect tax estimates. We continually evaluate those jurisdictions in which nexus exists, and believe we maintain adequate indirect tax accruals. As of March 31, 2023 and December 31, 2022, our accrual for estimated indirect tax liabilities was $ 202,529 409,187 |
LOANS PAYABLE AND LINES OF CRED
LOANS PAYABLE AND LINES OF CREDIT | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE AND LINES OF CREDIT | NOTE 10 – LOANS PAYABLE AND LINES OF CREDIT Loans Payable Loans payable was as follows: SCHEDULE OF LOAN PAYABLE Interest Rate Maturities March 31, 2023 December 31, 2022 Term loans (US dollar denominated) 5.00 155.11 % 2023 2027 $ 2,214,841 $ 5,461,520 Term loans (Chilean peso denominated) 3.48 7.14 % 2023 2029 6,421,936 6,541,113 8,636,777 12,002,633 Less, current portion (4,517,971 ) (7,758,831 ) Long term loans payable $ 4,118,806 $ 4,243,802 In June 2022, we entered into a bridge loan, secured by substantially all of our assets, in the principal amount of $ 5,000,000 4.00 December 14, 2022 4.00 7.50 116,667 Various subsidiaries in the United States are borrowers under certain term loans. These term loans require monthly principal and interest payments. These term loans are secured by various assets owned by our subsidiaries. We recorded aggregate interest expense on these term loans of $ 6,222 zero 10.80 Our Latin America subsidiaries are the borrowers under certain term loans denominated in Chilean Pesos. These term loans require monthly principal and interest payments. These term loans are secured by various assets owned by our subsidiaries. We recorded aggregate interest expense on these term loans of $ 135,916 zero 10.90 In March 2023, we entered into a Cash Advance Agreement, pursuant to which we received gross proceeds of $ 2,000,000 87,500 99,398 2,870,000 155.11 86,528 Convertible Notes Payable In October 2021, we issued a convertible note to Neil Stinchcombe in the principal amount of $ 1,500,000 5.00 January 27, 2022 5.00 October 27, 2022 500,000 1,000,000 137,757 119,007 18,750 18,493 In June 2022, we issued an unsecured convertible note in the principal amount of $ 1,000,000 5.00 7.83 The outstanding principal of this note can be redeemed at any time by us or at maturity at 105% 12,500 41,667 In March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $ 5,000,000 10.00 March 20, 2025 1.20 13,888 Future minimum payments under the above loans payable and convertible notes payable due as of March 31, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT 2023 (remainder of) $ 6,165,617 2024 1,679,548 2025 6,346,031 2026 596,496 2027 328,864 Thereafter 654,596 Total future minimum payments 15,771,152 Less: discount (84,375 ) Total 15,686,777 Less: current (6,567,971 ) Long term debt, net of current portion $ 9,118,806 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
LEASES | NOTE 11 – LEASES We have entered into various non-cancellable operating lease agreements for certain offices. These leases currently have lease periods expiring between 2023 and 2028. The lease agreements may include one or more options to renew. Renewals were not assumed in our determination of the lease term unless the renewals were deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease costs, weighted-average lease term, and discount rates are detailed below. When measuring lease liabilities for leases that were classified as operating leases, we discounted lease payments using our estimated incremental borrowing rate at commencement date of each lease. The weighted average incremental borrowing rate applied was 9.78 4.34 Operating leases are included in the unaudited condensed consolidated balance sheets as follows: SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION Classification March 31, 2023 December 31, 2022 Lease assets Operating lease cost ROU assets Assets $ 961,037 $ 255,687 Total lease assets $ 961,037 $ 255,687 Lease liabilities Operating lease liabilities, current Current liabilities $ 194,070 $ 121,731 Operating lease liabilities, non-current Liabilities 788,359 159,205 Total lease liabilities $ 982,429 $ 280,936 The components of lease costs, which are included in income from operations in our unaudited condensed consolidated statements of operations, were as follows: SCHEDULE OF LEASE COST 2023 2022 Three Months Ended March 31, 2023 2022 Leases costs Operating lease costs $ 35,714 $ 158,041 Short term lease cost 30,054 - Total lease costs $ 65,768 $ 158,041 Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended March 31, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES Fiscal Year Operating Leases 2023 (remainder of) $ 234,924 2024 294,383 2025 252,513 2026 199,177 2027 205,145 Thereafter 51,661 Total future minimum lease payments 1,237,803 Amount representing interest (255,374 ) Present value of net future minimum lease payments $ 982,429 |
CONCENTRATION OF CREDIT RISK AN
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS | 3 Months Ended |
Mar. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS | NOTE 12 – CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Although we deposit cash with multiple banks, these deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may generally be redeemed upon demand and bear minimal risk. No single customer represented over 10 |
GEOGRAPHIC INFORMATION
GEOGRAPHIC INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC INFORMATION | NOTE 13 – GEOGRAPHIC INFORMATION Revenue by geography is based on the customer’s billing address and was as follows: SCHEDULE OF REVENUE BY GEOGRAPHY IS BASED ON CUSTOMERS BILLING ADDRESS March 31, 2023 March 31, 2022 U.S. $ 8,600,864 $ 8,406,230 Chile 4,891,318 923,180 All other countries 234,499 - Revenue $ 13,726,681 $ 9,329,410 Property and equipment, net by geography was as follows: SCHEDULE OF PROPERTY AND EQUIPMENT, NET BY GEOGRAPHIC AREAS March 31, 2023 December 31, 2022 U.S. $ 1,184,847 $ 1,198,057 Chile 3,554,089 3,480,911 All other countries 1,134 1,527 Property and equipment net $ 4,740,070 $ 4,680,495 No other international country represented more than 10% of property and equipment, net in any period presented. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE INCOME The following table presents AOCI activity in equity: SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME Foreign Currency Translation Adjustments Total AOCI Balance as of December 31, 2022 $ 1,062,247 $ 1,062,247 Other comprehensive income 2,036,962 2,036,962 Amounts reclassified from AOCI - - Balance as of March 31, 2023 $ 3,099,209 $ 3,099,209 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Unless otherwise indicated or the context requires otherwise, the terms “we,” “us,” “our,” and “our company” refer to CISO Global Inc., a Delaware corporation, and its wholly-owned subsidiaries. Unless otherwise specified, all dollar amounts are expressed in U.S. dollars. First Quarter 2023 Highlights Our operating results for the three months ended March 31, 2023 included the following: ● Total revenue increased by $4.4 million to $13.7 million for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. ● Total gross profit increased to $0.4 million for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. Results of Operations Comparison of the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022 Our financial results for the three months ended March 31, 2023 are summarized as follows in comparison to the three months ended March 31, 2022: Three Months Ended March, 31 2023 2022 Variance Revenue: Security managed services $ 11,766,133 $ 8,052,225 $ 3,713,908 Professional services 1,960,548 1,277,185 683,363 Total revenue 13,726,681 9,329,410 4,397,271 Cost of revenue: Security managed services 5,560,563 2,602,924 2,957,639 Professional services 198,293 110,337 87,956 Cost of payroll 5,800,657 4,445,850 1,354,807 Stock based compensation 1,768,084 2,121,583 (353,499 ) Total cost of revenue 13,327,597 9,280,694 4,046,903 Total gross profit 399,084 48,716 350,368 Operating expenses: Professional fees 1,677,387 623,061 1,054,326 Advertising and marketing 115,394 155,341 (39,947 ) Selling, general, and administrative 9,508,766 4,616,373 4,892,393 Stock-based compensation 3,628,975 2,565,510 1,063,465 Impairment of goodwill 20,199,368 - 20,199,368 Total operating expenses 35,129,890 7,960,285 27,169,605 Loss from operations (34,730,806 ) (7,911,569 ) (26,819,237 ) Other income (expense): Other income (expense) (156,420 ) 12,543 (168,963 ) Interest expense, net (390,141 ) (43,585 ) (346,556 ) Total other income (expense) (546,561 ) (31,042 ) (515,519 ) Loss before income taxes $ (35,277,367 ) $ (7,942,611 ) $ (27,334,756 ) Revenue Security managed services revenue increased by $3,713,908 or 46%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to revenue acquired through our completion of four acquisitions over the last 12 months and new and existing customer revenue growth. Professional services revenue increased by $683,363, or 54%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to revenue acquired through our completion of four acquisitions over the last 12 months and new and existing customer revenue growth. Expenses Cost of Revenue Security managed services cost of revenue increased by $2,957,639, or 114%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to our completion of four acquisitions over the last 12 months. Professional services cost of revenue increased by $87,956, or 80%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, due to our increase in revenue from professional services from four acquisitions completed over the last 12 months. Cost of payroll cost of revenue increased by $1,354,807, or 30%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, due to headcount added primarily through our completion of four acquisitions over the last 12 months. Stock-based compensation expenses decreased by $353,499, or 17%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, due to a decrease in the amount of stock options awarded to our revenue generating employees. Operating Expenses Professional fees increased by $1,054,326, or 169%, for the three months ended March 31, 2023 as compared to three months ended March 31, 2022, due to an increase in accounting, legal, and other professional fees incurred related to our periodic SEC filings and our efforts to raise additional capital. Advertising and marketing expenses decreased by $39,947, or 26%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, due to utilization of more internal marketing resources. Selling, general, and administrative expenses increased by $4,892,393, or 106%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to our analysis of our carrying amount of intangible assets being impaired and headcount added through our completion of four acquisitions over the last 12 months. Stock based compensation expenses increased by $1,063,465, or 41%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, due to an increase in stock options awarded to employees through the completion of four acquisitions in the last 12 months and an increase in headcount in administration positions. Impairment of goodwill increased by $20,199,368, or 100%, for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, due to our analysis of our carrying amount of goodwill being impaired. Liquidity and Capital Resources The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business. For the three months ended March 31, 2023, we incurred a net loss of $34,841,689 and negative cash flows from operations of $2,110,872 and expect to incur further losses through the end of 2023. In the report accompanying our financial statements for the year ended December 31, 2022, our independent auditors stated that our financial statements were prepared assuming that we would continue as a going concern and that they have substantial doubt as to our ability to do so based on our recurring losses from operations and need to raise additional capital. These condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should we be unable to continue as a going concern. As of March 31, 2023, we had $295,351,048 of available funding under our S-3 Registration Statement from which we may issue our securities to fund current and future operations, assuming there is adequate demand for our securities. Working Capital Deficit Our working capital deficit as of Mach 31, 2023, in comparison to our working capital surplus as of December 31, 2022, is summarized as follows: As of March 31, December 31, 2023 2022 Current assets $ 15,064,867 $ 14,398,795 Current liabilities 21,657,003 23,213,039 Working capital deficit $ (6,592,136 ) $ (8,814,244 ) The increase in current assets is primarily due to an increase in cash and cash equivalents and prepaid expenses and other current assets of $1,990,572 and $534,867, respectively, offset by a decrease in accounts receivable of $1,794,136. The decrease in current liabilities is primarily due to the loans payable and convertible notes payable of $3,240,860 and $500,000, respectively, offset by an increase in accounts payable and accrued expenses of $2,445,112. Cash Flows Our cash flows for the three months ended March 31, 2023, in comparison to our cash flows for the three months ended March 31, 2023, can be summarized as follows: Three Months ended March 31, 2023 2022 Net cash used in operating activities $ (2,110,872 ) $ (3,015,795 ) Net cash used in investing activities (182,839 ) (5,021,626 ) Net cash provided by financing activities 4,238,797 9,011,005 Effect of exchange rates on cash and cash equivalents 45,486 164,288 Increase in cash $ 1,990,572 $ 1,137,872 Operating Activities Net cash used in operating activities was $2,110,872 for the three months ended March 31, 2023 and was primarily due to cash used to fund a net loss of $34,841,689, adjusted for non-cash expenses in the aggregate of $29,809,522 and additional cash inflow by changes in the levels of operating assets and liabilities, primarily as a result of an increase in current assets, and accounts payable and accrued expenses. Net cash used in operating activities was $3,015,795 for the three months ended March 31, 2022 and was primarily due to cash used to fund a net loss of $7,942,611, adjusted for non-cash expenses in the aggregate of $911,534, partially offset by cash generated by changes in the levels of operating assets and liabilities, primarily as a result of an increase in accounts payable. Investing Activities Net cash used in investing activities of $182,839 for the three months ended March 31, 2023, was due to purchases of property and equipment. Net cash used in investing activities of $5,021,626 for the three months ended March 31, 2022 and was primarily due to net cash paid in the acquisition of True Digital Security, Inc. Financing Activities Net cash provided by financing activities for the three months ended March 31, 2023 was $4,238,797, which was primarily due to cash received from the sale of our common stock of $3,143,147, $1,912,500 in net proceeds from our loan payable, and $5,000,000 in proceeds from a related party convertible note payable, offset by aggregate repayments on loans payable and a convertible note payable of $6,279,547. Net cash provided by financing activities for the three months ended March 31, 2022 was $9,011,055, which was primarily due to cash received from the sale of our common stock in our public offering of $9,521,798. Based on our current business plan, we believe our cash balance as of the date of this filing, together with anticipated revenues, will be sufficient to meet our anticipated cash requirement for the near term. However, there can be no assurance that the current business plan will be achievable. Such conditions raise substantial doubts about our ability to continue as a going concern for one year from the date the condensed consolidated financial statements are issued. Our existence is dependent upon our ability to develop profitable operations. We are devoting substantially all of our efforts to developing our business, reducing overhead costs, and raising capital, although there can be no assurance that our efforts will be successful. No assurance can be given that our actions will result in profitable operations or the resolution of liquidity problems. The accompanying condensed consolidated financial statements do not include any adjustments that might result should we be unable to continue as a going concern. In order to improve our liquidity, in addition to a planned reduction in overhead costs, we are actively pursuing additional debt and/or equity financing through discussions with investment bankers and private investors. There can be no assurance that we will be successful in our efforts to secure additional financing. The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should we be unable to continue as a going concern. Critical Accounting Policies and Estimates Our critical accounting policies are more fully described in the notes to our condensed consolidated financial statements included herein for the quarter ended March 31, 2023 and in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 31, 2023. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Our significant estimates and assumptions include the allowance for doubtful accounts, the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, the estimated fair value of assets acquired, liabilities assumed and stock issued in business combinations, and assumptions used in the Black-Scholes option pricing model, such as expected volatility, risk-free interest rate, share price, and expected dividend rate. Certain of our estimates, including the carrying amount of intangible assets and goodwill, could be affected by external conditions, including those unique to us and general economic conditions. It is reasonably possible that these external factors could have an effect on our estimates and could cause actual results to materially differ from those estimates. Fair Value Measurement The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in the valuation of an asset or liability. It establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below: Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Business Combination We allocate the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred. The allocation of the consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. We include the results of operations of the business that we have acquired in our consolidated results prospectively from the date of acquisition. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss. Intangible Assets Intangible assets are comprised of trademarks, customer bases, non-compete agreements, and intellectual property with original estimated useful lives with a range of 2 to 10 years. Once placed into service, we amortize the cost of intangible assets over their estimated useful lives on a straight-line basis. Goodwill Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually at year end or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment at the reporting level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit. Impairment of Long-Lived Assets We will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. Stock-Based Compensation We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. Awards granted to directors are treated on the same basis as awards granted to employees. Revenue Recognition Our agreements with clients are primarily service contracts that range in duration from a few months to one year. We recognize revenue when control of these services is transferred to the client for an amount, referred to as the transaction price, which reflects the consideration to which we are expected to be entitled in exchange for those goods or services. A contract with a client exists only when: ● the parties to the contract have approved it and are committed to perform their respective obligations; ● we can identify each party’s rights regarding the distinct services to be transferred (“performance obligations”); we can determine the transaction price for the services to be transferred; and ● the contract has commercial substance, and it is probable that we will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the client. For the majority of our contracts, we receive non-refundable upfront payments. We do not adjust the promised amount of consideration for the effects of a significant financing component since we expect, at contract inception, that the period between the time of transfer of the promised goods or services to the client and the time the client pays for these goods or services to be generally one year or less. Our credit terms to clients generally average 30 days, although in some cases payments are required in 15 days. We do not disclose the value of unsatisfied performance obligations for contracts with original expected duration of one year or less. Our revenue is categorized and disaggregated as reflected in our statements of operations as follows: Security Managed Services Security managed services revenue primarily consist of compliance, security managed services, SOC managed services, and vCISO. We consider these services to be a single performance obligation, and revenue is recognized as services and materials are provided to the customer. Professional Services Professional services revenue primarily consists of technical assessments, incident response and forensics, training, and other cybersecurity services. We consider these services to be a single performance obligation, and revenue is recognized in the period in which the performance obligations are satisfied. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. Item 3. Quantitative and Qualitative Disclosures about Market Risk Because we are a smaller reporting company, we are not required to provide the information called for by this Item. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2023, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below. Thus there remains a reasonable possibility that a material misstatement of our interim financial statements will not be prevented or detected on a timely basis. This does not include an evaluation by our registered public accounting firm regarding our internal control over financial reporting. Accordingly, we cannot provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, to allow our principal financial and executive officers to make timely decisions regarding required disclosures as of March 31, 2023. Our management’s evaluation was based on the following material weaknesses in our internal control over financial reporting, which existed as of December 31, 2022 and which continue to exist, as discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022: ● lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely manner; and ● lack of documentation on policies and procedures that are critical to the accomplishment of financial reporting objectives. A material weakness is a control deficiency or combination of control deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. As a company with limited accounting resources, a significant amount of management’s time and attention has been and will be diverted from our business to ensure compliance with these regulatory requirements. Management’s Plan to Remediate the Material Weaknesses We are implementing measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include: ● identifying gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; and ● developing policies and procedures on internal control over financial reporting and monitoring the effectiveness of operations on existing controls and procedures. We will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis, and we are committed to taking further action and implementing additional enhancements or improvements, as necessary and in accordance with financial and budgetary considerations. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2023, other than those noted above, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. PART II – OTHER INFORMATION Item 1. Legal Proceedings We are currently not a party to any material legal proceedings. Item 1A. Risk Factors We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, risk factors that materially affect our business, financial condition, or results of operations. There have been no material changes from the risk factors previously disclosed. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. Item 3. Defaults upon Senior Securities None. Item 4. Mine Safety Disclosures Not Applicable. Item 5. Other Information None. Item 6. Exhibits Incorporated by Reference Exhibit Number Exhibit Description Form Exhibit Filing Date 3.1* Amended and Restated Certificate of Incorporation of the Registrant 3.2 Amended and Restated By-Laws of the Registrant 8-K 3.2 04/10/2023 10.1 Letter Agreement between the Registrant and Neil Stinchcombe 10-K 10.5(a) 03/31/2023 10.2 Purchase Agreement, dated March 20, 2023, between the Registrant and Hensley & Company dba Hensley Beverage Company 8-K 10.1 03/20/2023 10.3 10% Unsecured Convertible Note by the Registrant payable to Hensley & Company, dated March 20, 2023 8-K 10.2 03/20/2023 10.4# Employment Agreement by and between the Registrant and Kyle J. Young 10-K 10.12 03/31/2023 31.1* Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer 31.2* Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer 32.1 Section 1350 Certification of Principal Executive Officer 32.2 Section 1350 Certification of Principal Financial Officer 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) *Filed herewith. #Management contracts and compensatory plans and arrangements. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CISO GLOBAL, INC. By: /s/ David G. Jemmett David G. Jemmett Chief Executive Officer (Principal Executive Officer) Date: May 15, 2023 By: /s/ Debra L. Smith Debra L. Smith Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: May 15, 2023 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Revenue | Revenue Our revenue is derived from two major types of services to clients: security managed services and professional services. With respect to security managed services, we provide culture education and enablement, tools and technology provisioning, data and privacy monitoring, regulations and compliance monitoring, remote infrastructure administration, and cybersecurity services, including, but not limited to, antivirus and patch management. With respect to professional services, we provide cybersecurity consulting, compliance auditing, vulnerability assessment and penetration testing, and disaster recovery and data backup solutions. Our revenue is categorized and disaggregated as reflected in our unaudited condensed consolidated statement of operations as follows: Security Managed Services Security managed services revenue primarily consists of compliance, security managed services, SOC managed services, and vCISO. We considered these services to be a single performance obligation, and revenue is recognized as services and materials are provided to the customer. Professional Services Professional services revenue primarily consists of technical assessments, incident response and forensics, training, and other cybersecurity services. We considered these services to be a single performance obligation, and revenue is recognized in the period in which the performance obligations are satisfied. |
Accounts Receivable | Accounts Receivable Accounts receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts. We periodically assess our accounts and other receivables for collectability on a specific identification basis. We provide for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. Payments are generally due within 30 days of invoice. We write off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of March 31, 2023 and December 31, 2022, our allowance for doubtful accounts was $ 199,945 270,011 |
Inventory | Inventory Inventory consists of computer equipment for sale to customers. Inventory is measured using the first-in, first-out method and stated at lower of cost or net realizable value as of March 31, 2023 and December 31, 2022. The value of inventories is reduced for excess and obsolete inventories. We monitor inventory to identify events that would require impairment due to obsolete inventory and adjust the value of inventory when required. We recorded no |
Net Loss per Common Share | Net Loss per Common Share Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. For dilutive securities, all outstanding options are considered potentially outstanding common stock. The dilutive effect, if any, of stock options is calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, the options and shares issuable upon conversion thereof have been excluded from our computation of net loss per common share for the three months ended March 31, 2023 and 2022. The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to our net loss position even though the exercise price could be less than the average market price of the common shares: SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE March 31, 2023 December 31, 2022 Stock options 32,265,543 36,397,521 Warrant 144,200 144,200 Convertible debt 4,497,385 430,718 Total 36,907,128 36,972,439 |
Deferred Revenue | Deferred Revenue Deferred revenue primarily consists of billings or payments received from customers in advance of revenue recognized for the services provided to our customers or annual licenses and is recognized as services are performed or ratably over the life of the license. We generally invoice customers in advance or in milestone-based installments. Deferred revenue of $ 1,709,844 D eferred revenue consisted of the following: SCHEDULE OF DEFERRED REVENUE March 31, 2023 December 31, 2022 Security managed services $ 3,204,553 $ 3,609,087 Professional services 934,960 863,053 Total deferred revenue $ 4,139,513 $ 4,472,140 |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities, including tax loss and credit carry forwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We utilize ASC 740, Income Taxes For uncertain tax positions that meet a “more likely than not” threshold, we recognize the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. Our practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations when a determination is made that such expense is likely. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE | The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to our net loss position even though the exercise price could be less than the average market price of the common shares: SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE March 31, 2023 December 31, 2022 Stock options 32,265,543 36,397,521 Warrant 144,200 144,200 Convertible debt 4,497,385 430,718 Total 36,907,128 36,972,439 |
SCHEDULE OF DEFERRED REVENUE | D eferred revenue consisted of the following: SCHEDULE OF DEFERRED REVENUE March 31, 2023 December 31, 2022 Security managed services $ 3,204,553 $ 3,609,087 Professional services 934,960 863,053 Total deferred revenue $ 4,139,513 $ 4,472,140 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets consisted of: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS March 31, 2023 December 31, 2022 Prepaid expenses $ 1,137,213 $ 987,651 Prepaid taxes 1,036,618 572,645 Prepaid insurance 85,686 164,354 Total prepaid expenses and other current assets $ 2,259,517 $ 1,724,650 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY AND EQUIPMENT | Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT March 31, 2023 December 31, 2022 Computer equipment $ 1,353,901 $ 1,264,713 Building 1,910,137 1,776,040 Leasehold improvements 580,871 541,647 Vehicles 37,273 28,229 Furniture and fixtures 155,286 151,142 Software 1,830,191 1,667,283 Property and equipment gross 5,867,659 5,429,054 Less: accumulated depreciation (1,127,589 ) (748,559 ) Property and equipment, net $ 4,740,070 $ 4,680,495 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF CHANGES IN GOODWILL | The following table summarizes the changes in goodwill during the three months ended March 31, 2023: SCHEDULE OF CHANGES IN GOODWILL Balance December 31, 2022 $ 76,664,017 Impairment ) Foreign currency translation adjustment 2,027,305 Ending balance, March 31, 2023 $ 58,491,954 |
SUMMARY OF IDENTIFIABLE INTANGIBLE ASSETS | Intangible assets, net are summarized as follows: SUMMARY OF IDENTIFIABLE INTANGIBLE ASSETS Gross Carrying Amount Accumulated Amortization Net Carrying Amount March 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Tradenames – trademarks $ 4,095,754 $ (1,584,604 ) $ 2,511,150 Customer base 1,157,163 (603,461 ) 553,702 Non-compete agreements 707,835 (521,316 ) 186,519 Intellectual property/technology 2,329,507 (750,715 ) 1,578,792 Intangible Asset $ 8,290,259 $ (3,460,096 ) $ 4,830,163 Gross Carrying Amount Accumulated Amortization Net Carrying Amount December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Tradenames – trademarks $ 4,744,409 $ (1,167,476 ) $ 3,576,933 Customer base 2,949,143 (449,565 ) 2,499,578 Non-compete agreements 796,583 (436,611 ) 359,972 Intellectual property/technology 2,659,391 (620,645 ) 2,038,746 Intangible Asset $ 11,149,526 $ (2,674,297 ) $ 8,475,229 |
SCHEDULE OF FUTURE AMORTIZATION EXPENSE | Based on the balance of intangible assets at March 31, 2023, expected future amortization expense is as follows: SCHEDULE OF FUTURE AMORTIZATION EXPENSE 2023 (remainder of) $ 1,302,853 2024 1,240,000 2025 1,043,231 2026 964,336 2027 279,743 Future Amortization Expense $ 4,830,163 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses consisted of the following amounts: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES March 31, 2023 December 31, 2022 Accounts payable $ 6,725,778 $ 5,267,492 Accrued payroll and bonuses 1,839,065 1,274,919 Accrued expenses 1,874,543 1,296,382 Accrued commissions 105,149 305,768 Accrued interest 210,914 165,776 Total accounts payable and accrued expenses $ 10,755,449 $ 8,310,337 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
SCHEDULE OF STOCK OPTIONS ACTIVITY | The following table summarizes stock option activity: SCHEDULE OF STOCK OPTIONS ACTIVITY Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2023 36,397,521 $ 2.45 - - Granted - - - - Exercised (1,040,817 ) 0.48 - - Expired or cancelled (3,091,161 ) 3.26 - - Outstanding at March 31, 2023 32,265,543 $ 2.43 5.12 $ 38,249,342 Exercisable at March 31, 2023 20,869,071 $ 1.69 3.62 $ 35,143,051 |
SCHEDULE OF STOCK WARRANT ACTIVITY | The following table summarizes warrant activity: SCHEDULE OF STOCK WARRANT ACTIVITY Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2023 144,200 $ 5.00 4.06 - Granted - - - - Exercised - - - - Expired or cancelled - - - - Outstanding at March 31, 2023 144,200 $ 5.00 3.76 $ - Exercisable at March 31, 2023 144,200 $ 5.00 3.76 $ - |
LOANS PAYABLE AND LINES OF CR_2
LOANS PAYABLE AND LINES OF CREDIT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF LOAN PAYABLE | Loans payable was as follows: SCHEDULE OF LOAN PAYABLE Interest Rate Maturities March 31, 2023 December 31, 2022 Term loans (US dollar denominated) 5.00 155.11 % 2023 2027 $ 2,214,841 $ 5,461,520 Term loans (Chilean peso denominated) 3.48 7.14 % 2023 2029 6,421,936 6,541,113 8,636,777 12,002,633 Less, current portion (4,517,971 ) (7,758,831 ) Long term loans payable $ 4,118,806 $ 4,243,802 |
SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT | Future minimum payments under the above loans payable and convertible notes payable due as of March 31, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT 2023 (remainder of) $ 6,165,617 2024 1,679,548 2025 6,346,031 2026 596,496 2027 328,864 Thereafter 654,596 Total future minimum payments 15,771,152 Less: discount (84,375 ) Total 15,686,777 Less: current (6,567,971 ) Long term debt, net of current portion $ 9,118,806 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION | Operating leases are included in the unaudited condensed consolidated balance sheets as follows: SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION Classification March 31, 2023 December 31, 2022 Lease assets Operating lease cost ROU assets Assets $ 961,037 $ 255,687 Total lease assets $ 961,037 $ 255,687 Lease liabilities Operating lease liabilities, current Current liabilities $ 194,070 $ 121,731 Operating lease liabilities, non-current Liabilities 788,359 159,205 Total lease liabilities $ 982,429 $ 280,936 |
SCHEDULE OF LEASE COST | The components of lease costs, which are included in income from operations in our unaudited condensed consolidated statements of operations, were as follows: SCHEDULE OF LEASE COST 2023 2022 Three Months Ended March 31, 2023 2022 Leases costs Operating lease costs $ 35,714 $ 158,041 Short term lease cost 30,054 - Total lease costs $ 65,768 $ 158,041 |
SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES | Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended March 31, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES Fiscal Year Operating Leases 2023 (remainder of) $ 234,924 2024 294,383 2025 252,513 2026 199,177 2027 205,145 Thereafter 51,661 Total future minimum lease payments 1,237,803 Amount representing interest (255,374 ) Present value of net future minimum lease payments $ 982,429 |
GEOGRAPHIC INFORMATION (Tables)
GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
SCHEDULE OF REVENUE BY GEOGRAPHY IS BASED ON CUSTOMERS BILLING ADDRESS | Revenue by geography is based on the customer’s billing address and was as follows: SCHEDULE OF REVENUE BY GEOGRAPHY IS BASED ON CUSTOMERS BILLING ADDRESS March 31, 2023 March 31, 2022 U.S. $ 8,600,864 $ 8,406,230 Chile 4,891,318 923,180 All other countries 234,499 - Revenue $ 13,726,681 $ 9,329,410 |
SCHEDULE OF PROPERTY AND EQUIPMENT, NET BY GEOGRAPHIC AREAS | Property and equipment, net by geography was as follows: SCHEDULE OF PROPERTY AND EQUIPMENT, NET BY GEOGRAPHIC AREAS March 31, 2023 December 31, 2022 U.S. $ 1,184,847 $ 1,198,057 Chile 3,554,089 3,480,911 All other countries 1,134 1,527 Property and equipment net $ 4,740,070 $ 4,680,495 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME | The following table presents AOCI activity in equity: SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME Foreign Currency Translation Adjustments Total AOCI Balance as of December 31, 2022 $ 1,062,247 $ 1,062,247 Other comprehensive income 2,036,962 2,036,962 Amounts reclassified from AOCI - - Balance as of March 31, 2023 $ 3,099,209 $ 3,099,209 |
ORGANIZATION OF BUSINESS AND _2
ORGANIZATION OF BUSINESS AND GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ 34,841,689 | $ 7,942,611 | |
Cash flow from operations | 2,110,872 | $ 3,015,795 | |
Current assets | 15,064,867 | $ 14,398,795 | |
Current liabilities | 21,657,003 | 23,213,039 | |
Working capital deficit | 6,592,136 | ||
Cash and cash equivalents | $ 3,823,735 | $ 1,833,163 |
SUMMARY OF SECURITIES EXCLUDED
SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the diluted per share calculation | 36,907,128 | 36,972,439 |
Share-Based Payment Arrangement, Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the diluted per share calculation | 32,265,543 | 36,397,521 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the diluted per share calculation | 144,200 | 144,200 |
Convertible Debt [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the diluted per share calculation | 4,497,385 | 430,718 |
SCHEDULE OF DEFERRED REVENUE (D
SCHEDULE OF DEFERRED REVENUE (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Product Information [Line Items] | ||
Total deferred revenue | $ 4,139,513 | $ 4,472,140 |
Security Managed Services [Member] | ||
Product Information [Line Items] | ||
Total deferred revenue | 3,204,553 | 3,609,087 |
Professional Services [Member] | ||
Product Information [Line Items] | ||
Total deferred revenue | $ 934,960 | $ 863,053 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | |||
Allowances for doubtful accounts | $ 199,945 | $ 270,011 | |
Inventory impairment losses | 0 | $ 0 | |
Deferred revenue | $ 1,709,844 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 1,137,213 | $ 987,651 |
Prepaid taxes | 1,036,618 | 572,645 |
Prepaid insurance | 85,686 | 164,354 |
Total prepaid expenses and other current assets | $ 2,259,517 | $ 1,724,650 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | $ 5,867,659 | $ 5,429,054 |
Less: accumulated depreciation | (1,127,589) | (748,559) |
Property and equipment, net | 4,740,070 | 4,680,495 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 1,353,901 | 1,264,713 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 1,910,137 | 1,776,040 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 580,871 | 541,647 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 37,273 | 28,229 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 155,286 | 151,142 |
Software Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | $ 1,830,191 | $ 1,667,283 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 305,705 | $ 154,074 |
SCHEDULE OF CHANGES IN GOODWILL
SCHEDULE OF CHANGES IN GOODWILL (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance beginning | $ 76,664,017 | |
Goodwill, Impairment Loss | (20,199,368) | |
Foreign currency translation adjustment | 2,027,305 | |
Ending balance | $ 58,491,954 |
SUMMARY OF IDENTIFIABLE INTANGI
SUMMARY OF IDENTIFIABLE INTANGIBLE ASSETS (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 8,290,259 | $ 11,149,526 |
Accumulated Amortization | (3,460,096) | (2,674,297) |
Net Carrying Amount | 4,830,163 | 8,475,229 |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,095,754 | 4,744,409 |
Accumulated Amortization | (1,584,604) | (1,167,476) |
Net Carrying Amount | 2,511,150 | 3,576,933 |
Customer Base [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,157,163 | 2,949,143 |
Accumulated Amortization | (603,461) | (449,565) |
Net Carrying Amount | 553,702 | 2,499,578 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 707,835 | 796,583 |
Accumulated Amortization | (521,316) | (436,611) |
Net Carrying Amount | 186,519 | 359,972 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,329,507 | 2,659,391 |
Accumulated Amortization | (750,715) | (620,645) |
Net Carrying Amount | $ 1,578,792 | $ 2,038,746 |
SCHEDULE OF FUTURE AMORTIZATION
SCHEDULE OF FUTURE AMORTIZATION EXPENSE (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 (remainder of) | $ 1,302,853 | |
2024 | 1,240,000 | |
2025 | 1,043,231 | |
2026 | 964,336 | |
2027 | 279,743 | |
Future Amortization Expense | $ 4,830,163 | $ 8,475,229 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Assets aggregate carrying value | $ 576,001 | |
Pre-tax non-cash impairment charges | $ 3,116,039 | |
Weighted average remaining useful life | 3 years 5 months 26 days | |
Amortization of identifiable intangible assets | $ 747,172 | $ 304,914 |
UNITED STATES | ||
Assets aggregate carrying value | 15,445,981 | |
Latin America [Member] | ||
Assets aggregate carrying value | $ 4,753,387 |
SCHEDULE OF ACCOUNTS PAYABLE AN
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 6,725,778 | $ 5,267,492 |
Accrued payroll and bonuses | 1,839,065 | 1,274,919 |
Accrued expenses | 1,874,543 | 1,296,382 |
Accrued commissions | 105,149 | 305,768 |
Accrued interest | 210,914 | 165,776 |
Total accounts payable and accrued expenses | $ 10,755,449 | $ 8,310,337 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2023 | Aug. 31, 2020 | Mar. 31, 2023 | Mar. 31, 2022 | |
Related Party Transaction [Line Items] | ||||
Consulting fees | $ 1,677,387 | $ 623,061 | ||
Unsecured Debt [Member] | ||||
Related Party Transaction [Line Items] | ||||
Debt instrument face amount | $ 5,000,000 | $ 5,000,000 | ||
Debt instrument interest rate | 10% | 10% | ||
Maturity date | Mar. 20, 2025 | |||
Conversion price | $ 1.20 | $ 1.20 | ||
Accrued interest | $ 13,888 | $ 13,888 | ||
Independent Consulting Agreement [Member] | Stephen Scott [Member] | ||||
Related Party Transaction [Line Items] | ||||
Consulting fees | $ 11,500 | 34,500 | 34,500 | |
One Year Managed Services Agreement [Member] | Hensley Beverage Company [Member] | Related Party [Member] | ||||
Related Party Transaction [Line Items] | ||||
Cash received from related parties | 212,006 | 166,388 | ||
Outstanding receivable related parties | $ 145,627 | $ 145,627 | $ 15,737 |
SCHEDULE OF STOCK OPTIONS ACTIV
SCHEDULE OF STOCK OPTIONS ACTIVITY (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Equity [Abstract] | |
Shares, Outstanding beginning | shares | 36,397,521 |
Weighted Average Exercise Price Outstanding, beginning | $ / shares | $ 2.45 |
Shares, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Shares, Exercised | shares | (1,040,817) |
Weighted Average Exercise Price, Exercised | $ / shares | $ 0.48 |
Shares, Expired or cancelled | shares | (3,091,161) |
Weighted Average Exercise Price, Expired or cancelled | $ / shares | $ 3.26 |
Shares, Outstanding ending | shares | 32,265,543 |
Weighted Average Exercise Price Outstanding, ending | $ / shares | $ 2.43 |
Weighted average remaining contractual life Outstanding, ending | 5 years 1 month 13 days |
Aggregate intrinsic value outstanding ending | $ | $ 38,249,342 |
Exercisable ending balance, shares | shares | 20,869,071 |
weighted average exercise price, exercisable ending | $ / shares | $ 1.69 |
Weighted average remaining contractual life, exercisable ending | 3 years 7 months 13 days |
Aggregate intrinsic value exercisable ending | $ | $ 35,143,051 |
SCHEDULE OF STOCK WARRANT ACTIV
SCHEDULE OF STOCK WARRANT ACTIVITY (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Equity [Abstract] | |
Number of warrants outstanding, beginning balance | shares | 144,200 |
Weighted average exercise price, outstanding beginning balance | $ / shares | $ 5 |
Weighted average remaining contractual life, outstanding ending | 4 years 21 days |
Aggregate intrinsic value outstanding, beginning | $ | |
Number of warrants, granted | shares | |
Weighted average exercise price, granted | $ / shares | |
Number of warrants, exercised | shares | |
Weighted average exercise price, exercised | $ / shares | |
Number of warrants, expired or cancelled | shares | |
Weighted average exercise price, expired or cancelled | $ / shares | |
Number of warrants outstanding, ending balance | shares | 144,200 |
Weighted average exercise price, outstanding ending balance | $ / shares | $ 5 |
Weighted average remaining contractual life, outstanding ending | 3 years 9 months 3 days |
Aggregate intrinsic value outstanding, ending | $ | |
Number of warrants exercisable, ending balance | shares | 144,200 |
Weighted average exercise price, exercisable ending | $ / shares | $ 5 |
Weighted average remaining contractual life, exercisable ending | 3 years 9 months 3 days |
Aggregate intrinsic value exercisable, ending | $ |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Equity [Abstract] | ||
Stock based compensation | $ 5,272,059 | $ 4,687,093 |
Unrecognized stock-based compensation expense | $ 39,593,463 | |
Unrecognized stock-based compensation expense, recognition period | 2 years 2 months 8 days |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Description for voting securities | beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us | |
Indirect tax liabilities | $ 202,529 | $ 409,187 |
SCHEDULE OF LOAN PAYABLE (Detai
SCHEDULE OF LOAN PAYABLE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | ||
Loans payable | $ 8,636,777 | $ 12,002,633 |
Less current portion | (4,517,971) | (7,758,831) |
Long term loans payable | 4,118,806 | 4,243,802 |
Term Loans One [Member] | ||
Short-Term Debt [Line Items] | ||
Loans payable | $ 2,214,841 | 5,461,520 |
Term Loans One [Member] | Minimum [Member] | ||
Short-Term Debt [Line Items] | ||
Line of credit facility interest rate percentage | 5% | |
Line of credit maturity description | 2023 | |
Term Loans One [Member] | Maximum [Member] | ||
Short-Term Debt [Line Items] | ||
Line of credit facility interest rate percentage | 155.11% | |
Line of credit maturity description | 2027 | |
Term Loans Two [Member] | ||
Short-Term Debt [Line Items] | ||
Loans payable | $ 6,421,936 | $ 6,541,113 |
Term Loans Two [Member] | Minimum [Member] | ||
Short-Term Debt [Line Items] | ||
Line of credit facility interest rate percentage | 3.48% | |
Line of credit maturity description | 2023 | |
Term Loans Two [Member] | Maximum [Member] | ||
Short-Term Debt [Line Items] | ||
Line of credit facility interest rate percentage | 7.14% | |
Line of credit maturity description | 2029 |
SCHEDULE OF FUTURE MINIMUM PAYM
SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT (Details) | Mar. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2023 (remainder of) | $ 6,165,617 |
2024 | 1,679,548 |
2025 | 6,346,031 |
2026 | 596,496 |
2027 | 328,864 |
Thereafter | 654,596 |
Total future minimum payments | 15,771,152 |
Less: discount | (84,375) |
Total | 15,686,777 |
Less: current | (6,567,971) |
Long term debt, net of current portion | $ 9,118,806 |
LOANS PAYABLE AND LINES OF CR_3
LOANS PAYABLE AND LINES OF CREDIT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||
Mar. 10, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | Oct. 31, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Apr. 28, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||||||||
Interest expense | $ 390,141 | $ 43,585 | ||||||
Proceeds from convertable debt | (500,000) | |||||||
Unsecured Debt [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 5,000,000 | $ 5,000,000 | ||||||
Debt instrument interest rate | 10% | 10% | ||||||
Maturity date | Mar. 20, 2025 | |||||||
Interest payable current and noncurrent | $ 13,888 | $ 13,888 | ||||||
Conversion price | $ 1.20 | $ 1.20 | ||||||
Cash Advance Agreement [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest expense | $ 86,528 | |||||||
Aggregate effective interest rate | 155.11% | 155.11% | ||||||
Proceeds from convertable debt | $ 2,000,000 | |||||||
Upfront fees | 87,500 | |||||||
Debt instrument payments | 99,398 | |||||||
Repayments for debt | 2,870,000 | |||||||
Term Loans One [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest expense | $ 6,222 | |||||||
Interest payable current and noncurrent | $ 0 | $ 0 | ||||||
Aggregate effective interest rate | 10.80% | 10.80% | ||||||
Term Loans Two [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest expense | $ 135,916 | |||||||
Interest payable current and noncurrent | $ 0 | $ 0 | ||||||
Aggregate effective interest rate | 10.90% | 10.90% | ||||||
Convertible Note Payable [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 1,000,000 | $ 1,000,000 | ||||||
Convertible Note Payable [Member] | Neil Stinchcombe [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 1,500,000 | |||||||
Debt instrument interest rate | 5% | |||||||
Maturity date | Oct. 27, 2022 | Jan. 27, 2022 | ||||||
Interest expense | 18,750 | $ 18,493 | ||||||
Interest payable current and noncurrent | 137,757 | 137,757 | $ 119,007 | |||||
Conversion price | $ 5 | |||||||
Convertible Note Payable [Member] | Neil Stinchcombe [Member] | Installment One [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | 500,000 | 500,000 | ||||||
Convertible Note Payable [Member] | Neil Stinchcombe [Member] | Installment Two [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 500,000 | |||||||
Convertible Note Payable [Member] | Neil Stinchcombe [Member] | Installment Three [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | 500,000 | 500,000 | ||||||
Unsecured Debt [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 1,000,000 | |||||||
Debt instrument interest rate | 5% | |||||||
Interest expense | 12,500 | |||||||
Interest payable current and noncurrent | $ 41,667 | 41,667 | ||||||
Conversion price | $ 7.83 | |||||||
Debt instrument redemption, description | The outstanding principal of this note can be redeemed at any time by us or at maturity at 105% | |||||||
Bridge Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 5,000,000 | |||||||
Debt instrument interest rate | 4% | |||||||
Maturity date | Dec. 14, 2022 | |||||||
Interest expense | $ 116,667 | |||||||
Bridge Loan [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument interest rate | 4% | |||||||
Bridge Loan [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument interest rate | 7.50% |
SCHEDULE OF LEASE COST AND OTHE
SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Leases | ||
Operating lease cost ROU assets | $ 961,037 | $ 255,687 |
Total lease assets | 961,037 | 255,687 |
Operating lease liabilities, current | 194,070 | 121,731 |
Operating lease liabilities, non-current | 788,359 | 159,205 |
Total lease liabilities | $ 982,429 | $ 280,936 |
SCHEDULE OF LEASE COST (Details
SCHEDULE OF LEASE COST (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases | ||
Operating lease costs | $ 35,714 | $ 158,041 |
Short term lease cost | 30,054 | |
Total lease costs | $ 65,768 | $ 158,041 |
SCHEDULE OF FUTURE MINIMUM UNDE
SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Leases | ||
2023 (remainder of) | $ 234,924 | |
2024 | 294,383 | |
2025 | 252,513 | |
2026 | 199,177 | |
2027 | 205,145 | |
Thereafter | 51,661 | |
Total future minimum lease payments | 1,237,803 | |
Amount representing interest | (255,374) | |
Present value of net future minimum lease payments | $ 982,429 | $ 280,936 |
LEASES (Details Narrative)
LEASES (Details Narrative) | Mar. 31, 2023 |
Leases | |
Weighted average incremental borrowing rate | 9.78% |
Operating lease, weighted average remaining lease term | 4 years 4 months 2 days |
CONCENTRATION OF CREDIT RISK _2
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | No Single Customer [Member] | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 10% |
SCHEDULE OF REVENUE BY GEOGRAPH
SCHEDULE OF REVENUE BY GEOGRAPHY IS BASED ON CUSTOMERS BILLING ADDRESS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | $ 13,726,681 | $ 9,329,410 |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | 8,600,864 | 8,406,230 |
CHILE | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | 4,891,318 | 923,180 |
All Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue | $ 234,499 |
SCHEDULE OF PROPERTY AND EQUI_2
SCHEDULE OF PROPERTY AND EQUIPMENT, NET BY GEOGRAPHIC AREAS (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment net | $ 4,740,070 | $ 4,680,495 |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment net | 1,184,847 | 1,198,057 |
CHILE | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment net | 3,554,089 | 3,480,911 |
All Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment net | $ 1,134 | $ 1,527 |
SCHEDULE OF ACCUMULATED OTHER C
SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Balance as of December 31, 2022 | $ 1,062,247 |
Other comprehensive income | 2,036,962 |
Amounts reclassified from AOCI | |
Balance as of March 31, 2023 | 3,099,209 |
Foreign Currency Gain (Loss) [Member] | |
Balance as of December 31, 2022 | 1,062,247 |
Other comprehensive income | 2,036,962 |
Amounts reclassified from AOCI | |
Balance as of March 31, 2023 | $ 3,099,209 |