CISO Global, Inc. Debt Disclosure

NOTE 13 – DEBT

 

Term Loans

 

In November 2023, we entered into a business loan and security agreement, pursuant to which we obtained a loan with a principal amount of $2,200,000 and paid an origination fee of $44,000. The business loan carried an interest rate of 53.44% per annum and was payable in 52 weekly installments of $53,731. On March 28, 2024, under a troubled debt restructuring, we entered into a Business Loan and Security Agreement (the “Loan Agreement”) with LendSpark Corporation (the “Lender”), pursuant to which we obtained a restructured loan with a principal amount of $2,200,000 (the “Restructured Loan”) from the Lender. In connection with the Restructured Loan, we entered into a Fee Agreement with the Lender, pursuant to which we issued 100,000 shares of our Common Stock, as partial consideration for the Lender’s agreement to enter into the Loan Agreement and extend credit to us. The Restructured Loan bore interest at a rate of 51.73% per annum and was payable in 52 weekly installments of $53,308, commencing on April 5, 2024. We recorded interest expense of $54,561 and $1,179,938 for the years ended December 31, 2025 and 2024, respectively. The Restructured Loan was repaid in full on March 26, 2025.

 

 

In June 2024, we entered into a Subordinated Business Loan and Security Agreement (“Subordinated Business Loan Agreement”) with Agile Capital Funding, LLC (“Agile”), pursuant to which we obtained a loan with a principal amount of $2,000,000 plus an administrative agent fee paid of $100,000 (“Subordinated Business Loan”). The Subordinated Business Loan was in excess of 100% per annum and was payable in 30 weekly installments. The first four installments due were $75,000 followed by 26 installments of $103,154. For the year ended December 31, 2024, we recorded interest expense of $1,026,058. This loan was repaid in full in February 2025.

 

In November 2024, we entered into a Note Purchase Agreement, pursuant to which we obtained a loan with a principal amount of $540,000 and paid an original issue discount of $140,000. The effective interest rate on Note Purchase Agreement exceeded 100% per annum. This loan matured on January 1, 2025, and was repaid in full.

 

In November 2024, we entered into an Intellectual Property Buy-Back Purchase Agreement, pursuant to which we reacquired vCISO, LLC in exchange for a Promissory Note with a face value of $1,020,000 and interest of 8.00% per annum. The Promissory Note was scheduled to mature in November 2025. On August 5, 2025, the Promissory Note together with $15,729 of accrued and unpaid interest were converted to Series A Preferred Stock, and the Promissory Note was fully extinguished. Refer to Note 10, Stockholders’ Equity and Temporary Equity, for further discussion. For the years of December 31, 2025 and 2024, we recorded interest expense of $66,404 and $11,136, respectively. Accrued interest payable as of December 31, 2025 and 2024, was $0 and $11,136, respectively.

 

As of December 31, 2025 and 2024, term loans were comprised of the following:

 SCHEDULE OF TERM LOANS

		Effective Interest Rate		Maturities				December 31, 2025				December 31, 2024
Term loans		4.75% to 6.00	%		2026 - 2027			$	87,588			$	2,711,362
Less: current portion									(83,983	)			(2,674,090	)
Loans payable, net of current portion								$	3,605			$	37,272

 

Line of Credit

 

On January 31, 2024, we entered into a Loan and Security Agreement (the “2024 Loan and Security Agreement”) with Aion, pursuant to which we may borrow up to $3,500,000. The amount available for borrowing at any one time was limited to 80% of our eligible accounts receivable. The 2024 Loan and Security Agreement had an interest rate of 19.25% per annum (based on a 360-day year), payable on the first business day of each month following the accrual thereof. The 2024 Loan and Security Agreement, together with accrued and unpaid interest thereon, was due on January 30, 2025 (the “Maturity Date”).

 

On April 14, 2025, we entered into a Loan and Security Agreement (the “2025 Loan and Security Agreement”) with Aion to replace the 2024 Loan and Security Agreement, pursuant to which we may borrow up to $3,500,000. The amount available for borrowing at any one time is limited to 85% of our eligible accounts receivable. The 2025 Loan and Security Agreement bears interest at a rate of 18.00% per annum (based on a 360-day year), payable on the first business day of each month following the accrual thereof. The 2025 Loan and Security Agreement, together with accrued and unpaid interest thereon, is due on April 14, 2026 (the “Maturity Date”). Upon providing 30 days written notice we may terminate the 2025 Loan and Security Agreement, subject to an early termination fee of $35,000. Upon the occurrence of an “Event of Default” (as defined in the 2025 Loan Security Agreement and including the failure to make required payments when due after specified grace periods, certain breaches and certain specified insolvency events), Aion would have the right to accelerate payments due, which from after such acceleration would bear interest at a default rate of 29.25% per annum. The 2025 Loan and Security Agreement is secured by our assets.

 

In relation to the Loan and Security Agreements, we recorded interest expense of $308,485 and $374,521 during the years ended December 31, 2025 and 2024, respectively. Accrued interest payable as of December 31, 2025 and 2024 was $1,086 and $0, respectively. As of December 31, 2025 and 2024, the Loan and Security Agreement outstanding balance was $2,172,667 and $1,957,938, respectively.

 

 

Convertible Notes Payable

 

Hensley & Company Convertible Note

 

In March 2023, we issued an unsecured convertible note payable to Hensley & Company in the principal amount of $5,000,000. On March 25, 2025, we entered into Amendment #1 to this convertible note, which extended the maturity date of the convertible note to March 20, 2026. Mr. McCain, a director of our company, is President and Chief Executive Officer of Hensley & Company. On August 5, 2025, the principal amount of $5,000,000, together with $1,180,554 of accrued and unpaid interest payable under the convertible note were converted into shares of Series A Preferred Stock, and the convertible note was fully extinguished. Refer to Note 9, “Related Party Transactions” for further details regarding this convertible note.

 

JC Associates Convertible Notes

 

In June 2023, we issued an unsecured convertible note payable in the principal amount of $1,050,000 bearing an interest rate of 10.00% per annum, payable monthly. The principal amount, together with accrued and unpaid interest, was due on June 7, 2024.

 

In June 2024, we entered into Amendment #1 to extend the maturity date of the $1,050,000 unsecured convertible note payable to December 15, 2024. In exchange for an extension of the maturity date, we agreed to repay on September 30, 2024, all accrued, but unpaid interest as of September 30, 2024 on the convertible note payable. All remaining accrued but unpaid interest was due at maturity on December 15, 2024.

 

In December 2024, we entered into Amendment #2 to extend the maturity date of the $1,050,000 unsecured convertible note payable to December 15, 2025. In exchange for the extension of the maturity date, interest beginning from the date of Amendment #2 increased to 12.00% per annum and $25,000 of accrued interest was to be repaid on or before December 31, 2024, with the remaining accrued interest due on or before March 31, 2025. On August 5, 2025, the principal amount of $1,050,000 convertible note payable together with $16,191 of accrued and unpaid interest payable under the convertible note were converted into Series A Preferred Stock, and the convertible note was fully extinguished. Refer to Note 10, “Stockholders’ Equity and Temporary Equity,” for further discussion. We recorded interest expense of $110,070 and $156,314 for the years ended December 31, 2025 and 2024, respectively. Accrued interest payable as of December 31, 2025 and 2024 was $0 and $163,165, respectively.

 

In October 2023, we issued an unsecured convertible note payable in the principal amount of $1,000,000 bearing an interest rate of 12.00% per annum, payable monthly. The principal amount, together with accrued and unpaid interest was due on October 12, 2024.

 

In June 2024, we entered into Amendment #1 to extend the maturity date of the $1,000,000 unsecured convertible note payable to December 15, 2024. In exchange for an extension of the maturity date, we agreed to repay on September 30, 2024, all accrued, but unpaid interest as of September 30, 2024 on the convertible note payable. All remaining accrued, but unpaid interest was due at maturity on December 15, 2024.

 

In December 2024, we entered into Amendment #2 to extend the maturity date of the $1,000,000 unsecured convertible note payable to December 15, 2025. In exchange for the extension of the maturity date, $25,000 of accrued interest was to be repaid on or before December 31, 2024, with remaining accrued interest due on or before March 31, 2025. On August 5, 2025, the principal amount of $1,000,000 convertible note payable together with $15,420 of accrued and unpaid interest payable under the unsecured convertible note were converted into Series A Preferred Stock, and the unsecured convertible note was fully extinguished. Refer to Note 10, “Stockholders’ Equity and Temporary Equity,” for further discussion. We recorded interest expense of $81,083 and $137,220 for the years ended December 31, 2025 and 2024, respectively. Accrued interest payable as of December 31, 2025 and 2024 was $0 and $164,307, respectively.

 

 

Convertible Notes Payable and Warrants

 

In December 2024, we entered into a Securities Purchase Agreement (the “Agreement”) with several purchasers (the “Purchasers”). Pursuant to the Agreement, the Purchasers agreed to purchase an aggregate of up to $8,125,000 of convertible notes payable and warrants to purchase our Common Stock. The convertible notes payable had a face value of up to $8,125,000 and were subject to an original issue discount of 20%. The convertible notes payable did not bear a stated rate of interest and matured one year from the date of issuance. The effective interest rate of these convertible notes exceeded 100% per annum. At any time prior to or on the maturity date, the Purchasers, could in part or in whole convert the outstanding principal amount into shares of our Common Stock at a conversion price equal to 90% of the lowest volume weighed average price of our Common Stock during the ten trading day period immediately preceding the conversion date. At no time could the conversion price be below $0.394 per share.

 

The Agreement initially funded us with gross proceeds (prior to the 20% original issue discount) of $3,125,000 in December 2024, and the remaining $5,000,000 (prior to the 20% original issue discount) was funded upon the effectiveness of a change in a majority of our directors, which occurred on January 7, 2025. The proceeds from the Agreement were used to repay outstanding principal amounts of short-term indebtedness and for general corporate purposes, which included working capital and research and development. Pursuant to the Agreement we issued warrants to the Purchasers to purchase up to 6,500,000 shares of our Common Stock with an exercise price of $1.00 per share.

 

We recorded these convertible notes payable at fair value and recognized the fair value of the conversion feature as a derivative liability upon each tranche of funding. The allocation of fair value to the convertible notes and warrants was made on a relative fair value basis as the free-standing warrants are equity classified.

 

The conversion feature of the notes payable was determined to be an embedded derivative requiring bifurcation accounting as (1) the feature is not clearly and closely related to the debt host and (2) the feature meets the definition of a derivative under ASC 815. Changes in the fair value of the embedded derivative were recognized in the consolidated statements of operations and comprehensive loss in change in fair value of derivative liability.

 

During the year ended December 31, 2025, $8,125,000 of the convertible notes payable issued under the Agreement were converted into 15,151,706 shares of our Common Stock. We recognized losses on the conversion of the convertible notes of $863,669 for the year ended December 31, 2025, which is the intrinsic value of the shares issued upon conversion. For the year ended December 31, 2025, we recognized interest expense of $7,898,323 related to the accretion of the convertible notes payable and the amortization of debt issuance costs. As of December 31, 2025, no convertible notes payable issued under the Agreement remained outstanding and the derivative liability has been derecognized.

 

At December 31, 2025, the principal payments due under the above term loans and line of credit were as follows:

 SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR LONG TERM DEBT

2026		$	2,256,650
2027			3,605
Total future principal payments			2,260,255
Less: current portion of debt			(2,256,650	)
Debt, net of current portion		$	3,605