CYCU 10-K & 10-Q changes, risk factors and insider trading
Cycurion, Inc. (also CYCUW) · Nasdaq · Services-Computer Programming Services · CIK 1868419 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We derive a substantial portion of our revenue from a limited number of contracts and clients, and the loss of any significant contract or client relationship could materially reduce our revenue and profitability.”
New heading “Our contracts with state and local government agencies are subject to funding risks, including dependence on federal funding that flows through those agencies, which creates uncertainty in our revenue.”
New heading “Recent and ongoing federal and state government cost-reduction initiatives may reduce demand for our services and disrupt our contracting pipeline.”
New heading “The competitive landscape for cybersecurity and IT services is intense, and if we do not continue to innovate we may not remain competitive and our revenue and operating results could suffer.”
New heading “The government contracting process is lengthy, complex, and subject to protest and delay, which makes our revenue difficult to predict.”
New heading “Our government contracts are subject to audit, investigation, modification, and termination by the government, which could result in adverse findings, reduced revenue, or other penalties.”
New heading “Risks Related to Cybersecurity and Technology”
New heading “A cybersecurity breach or incident affecting our systems, our clients' systems, or our AI-enhanced ARx platform could damage our reputation, expose us to liability, and undermine the market confidence that is fundamental to our business.”
New heading “The cybersecurity regulatory environment is rapidly evolving, and our failure to comply with new and changing requirements could result in penalties, loss of contracts, and competitive disadvantage.”
New heading “Our AI-enhanced ARx platform and other technology solutions are at an early stage of market adoption, and there is no assurance that these products will achieve broad commercial acceptance.”
New heading “Risks Related to Our Financial Condition and Capital Structure”
New heading “Our level of indebtedness and debt service obligations could adversely affect our financial condition and make it more difficult to fund our operations.”
New heading “Our allocation of capital to cryptocurrency investments involves speculative risk and may not align with the expectations of our shareholders or clients.”
New heading “Our growth strategy depends in part on acquisitions, which involve integration risks, potential liabilities, and the diversion of management's attention, and if we fail to retain existing clients and attract new clients through acquisitions, we may not achieve profitability.”
New heading “Our strategic partnerships and international expansion expose us to a range of business risks and uncertainties.”
New heading “Risks Related to Our Human Capital”
New heading “We rely on personnel with extensive information security expertise, including security-cleared professionals, and the loss of, or our inability to attract and retain, qualified personnel could harm our business.”
New heading “There can be no assurance that our securities will continue to be listed on Nasdaq in the future.”
New heading “If we fail to comply with the continued minimum closing bid requirements of the Nasdaq Global Market or other requirements for continued listing, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.”
New heading “Following the Reverse Stock Split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.”
New heading “A "short squeeze" due to a sudden increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze have led to, and may lead to, extreme price volatility in the price of our common stock.”
New heading “Potential future sales pursuant to registration rights and under Rule 144 may depress the market price for our shares of common stock.”
New heading “You may experience immediate and substantial dilution as a result of an offering by us and any future offering and may experience additional dilution in the future.”
New heading “Risks Related to Legal, Regulatory, and Compliance Matters”
New heading “If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors' views of us, and the value of our common stock.”
New heading “As a provider of cybersecurity services to government clients, we are subject to heightened data protection obligations, and any compliance failure could result in significant penalties and loss of client trust.”
New heading “The Financial Industry Regulatory Authority, Inc. ("FINRA") has adopted sales practice requirements that may also limit a stockholder's ability to buy and sell our common stock.”
New heading “Changes in government contracting regulations, procurement preferences, or small business set-aside policies could reduce our contract opportunities.”
New heading “Accusations of intellectual property infringement by third parties, regardless of accuracy, could result in significant costs and harm our business.”
New heading “Our insurance policies may not adequately protect us from all business risks, leaving us exposed to significant uninsured liabilities.”
New heading “We qualify as an "emerging growth company" and a "smaller reporting company," and if we take advantage of certain exemptions from disclosure requirements, it could make our securities less attractive to investors.”
New heading “Risks Related to Taxation”
New heading “Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.”
New heading “Changes in tax laws or regulations that are applied adversely to us or our customers may materially adversely affect our business, prospects, financial condition and operating results.”
New heading “Our ability to use certain tax attributes may be or become subject to limitation.”
New heading “General Risk Factors”
New heading “Macroeconomic conditions, including inflation, rising interest rates, and economic uncertainty, could adversely affect our business, our clients’ budgets, and our cost structure.”
New heading “If securities or industry analysts do not publish research or reports about us, or publish negative reports, our share price and trading volume could decline.”
Removed heading “Cycurion has a limited operating history upon which you can evaluate our future business and prospects.”
Removed heading “Cycurion has incurred net losses and cannot assure you that it will achieve or maintain profitable operations.”
Removed heading “Cycurion’s level of indebtedness and debt service obligations could adversely affect its financial condition and make it more difficult for management to fund its operations.”
Removed heading “We may issue additional shares of common stock or preferred stock under an employee incentive plan, which would dilute the interest of our stockholders.”
Removed heading “Cycurion’s ability to grow and compete in the future will be adversely affected if adequate capital is not available to it or not available on favorable terms.”
Removed heading “If Cycurion does not continue to innovate and offer solutions and professional services that address the dynamic threat landscape, it may not remain competitive and its revenue and operating results could suffer.”
Removed heading “Cycurion relies on personnel with extensive information security expertise and the loss of, or its inability to attract and retain, qualified personnel in the highly competitive labor market for such expertise could harm its business.”
Removed heading “If Cycurion is unable to hire, retain, train, and motivate qualified personnel and senior management, its business could suffer.”
Removed heading “Cycurion must continually enhance its training, existing solutions and technology tools and develop or acquire new solutions and tools, or it will lose clients and its competitive position will suffer.”
Removed heading “Cycurion faces intense competition in the cybersecurity industry, especially from larger, well-established companies.”
Removed heading “If our products or professional services fail to detect vulnerabilities or identify and respond to cybersecurity incidents, or if our products contain undetected errors or defects, our brand and reputation could be harmed, which could have an adverse effect on our business and results of operations.”
Removed heading “We have recently acquired multiple businesses. Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services. Our ability to grow is limited if we fail to identify and consummate acquisitions.”
Removed heading “We intend to grow our client base significantly through acquisitions of other service providers. If we fail to retain existing clients and attract new clients through acquisitions, we may never achieve profitability.”
Removed heading “As a cybersecurity provider, we are a target of cyber-attacks and other cyber risks that could adversely impact our reputation and operating results.”
Removed heading “The loss of, or a significant reduction, in purchases by any of our larger clients could adversely affect our business and financial results.”
Removed heading “The failure of Congress to approve appropriations bills in a timely manner for the Federal government agencies and departments we support, or the failure of the Administration and Congress to reach an agreement on fiscal issues, could delay and reduce spending, cause us to lose revenue and profit, and affect our cash flow.”
Removed heading “Substantially all of our revenue is generated from contracts with Federal governmental entities.”
Removed heading “Our reliance on U.S. General Services Administration Multiple Award Schedule (“GSA Schedule”) contracts and other Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts creates the risk of volatility in our revenue and profit levels.”
Removed heading “Future acquisitions could disrupt our business and harm our financial condition and operating results.”
Removed heading “Our strategic partnerships expose us to a range of business risks and uncertainties that could have a material adverse impact on our business and financial results.”
Removed heading “We are dependent on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results, and financial condition.”
Removed heading “Accusations against us by third parties of infringement or other violations of their intellectual property rights, regardless of the accuracy of these assertions, could result in significant costs and harm our business and operating results.”
Removed heading “Any material weakness in our internal controls could adversely affect our business.”
Removed heading “We may not be able to manage our growth effectively or improve our operational, financial, and management information systems, which would impair our results of operations.”
Removed heading “We may issue additional shares of Cycurion common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares.”
Removed heading “If we are unable continually to add new customer offerings, innovate, and increase efficiencies, our ability to attract new customers may be adversely affected.”
Removed heading “We may fail to consummate some, or all of the assumptions contemplated by the SLG Assignment Agreement.”
Removed heading “Due Diligence may not reveal all issues with respect to SLG.”
Removed heading “We may incur significant unforeseen costs related to our possible assumption of the to-be-assigned SLG agreements, which, if assumed by us, would result in our becoming the prime contractor thereunder, that are the subject of the SLG Assignment Agreement.”
Removed heading “There is no assurance that we will be able to integrate becoming the prime contractor under the to-be-assigned SLG agreements into our business model, which could then result in significant disruption to our business.”
Removed heading “There is no assurance that any or all the counterparties to the to-be-assigned SLG agreements, which, if we are able to assume, would result in our becoming the prime contractor thereunder, will permit such assignment by SLG and assumption by us.”
Removed heading “There is no assurance that the to-be-assigned SLG agreements, which, if assumed by us, would result in our becoming the prime contractor thereunder, will perform as expected.”
Removed heading “Our insurance policies are expensive and protect us only from some business risks, which will leave us exposed to significant uninsured liabilities.”
Removed heading “Cycurion has no current plans to pay dividends on its shares of common stock.”
Removed heading “If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors’ views of us, and, as a result, the value of our common stock.”
Removed heading “We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.”
Removed heading “Cycurion will qualify as an “emerging growth company” within the meaning of the Securities Act, and if it takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make Cycurion’s securities less attractive to investors and may make it more difficult to compare Cycurion’s performance to the performance of other public companies.”
Removed heading “Potential future sales pursuant to registration rights granted by the Company and under Rule 144 may depress the market price for our shares of common stock.”
Removed heading “We face risks related to compliance with corporate governance laws and financial reporting standards.”
Removed heading “There can be no assurance that our common stock will continue to trade on The Nasdaq Global Market or another national securities exchange.”
Removed heading “Nasdaq may delist our securities from trading on its exchange.”
Removed heading “The market price of the Company’s shares of common stock is likely to be highly volatile, and you may lose some or all of your investment.”
Removed heading “Volatility in the Company’s share price could subject the Company to securities class action litigation.”
Removed heading “A “short squeeze” due to a sudden increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze have led to, may be currently leading to, and could again lead to, extreme price volatility in shares of our common stock.”
Removed heading “Increases in market interest rates may cause potential investors to seek higher returns and therefore reduce demand for our common stock, which could result in a decline in our stock price.”
Removed heading “If securities or industry analysts do not publish research or reports about the Company, or publish negative reports, the Company’s share price and trading volume could decline.”
Removed heading “Because the Company does not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain.”
Removed heading “The Company’s share price may fluctuate.”
Removed heading “Cycurion’s business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause Cycurion to incur significant expense, hinder execution of business and growth strategy and impact its stock price.”
Removed heading “The Company’s management team has limited skills related to experience managing a public company.”
Removed heading “Certain recent public offerings of companies with public floats comparable to the public float of Cycurion have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. The Company may experience similar volatility, which may make it difficult for prospective investors to assess the value of its shares of common stock.”
Largest changes
“If our common stock were to be delisted from Nasdaq and become quoted on the over-the-counter market, and if the trading price were below $5.00 per share at the time of delisting, trading in our common stock would be subject to certain rules promulgated under the Exchange Act that require additional disclosure by broker-dealers in connection with trades involving “penny stocks” and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. …”see in full comparison
“Our charter provides that, subject to limited exceptions, any (i) derivative action or proceeding brought on our behalf of under Delaware law, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of Cycurion’s stockholders, (iii) any action asserting a claim against Cycurion or any of its directors, officers or other employees arising pursuant to any provision of the DGCL, the charter or the bylaws of Cycurion (in each case, as may be amended from time to time), (iv) any action asserting a claim against Cycurion …”see in full comparison
“If our common stock were to be delisted from trading on The Nasdaq Global Market and become quoted on the over-the-counter market and, under certain circumstances, if the trading price of our common stock were below $5.00 per share on the date the common stock is delisted, trading in our common stock would also be subject to the requirements of certain rules promulgated under the Exchange Act. …”see in full comparison
“Our business and operating results are sensitive to general macroeconomic conditions. Periods of economic slowdown, recession, or heightened uncertainty may cause government customers to reduce, delay, or reprioritize spending on IT and cybersecurity services, which could result in the reduced demand for our solutions, longer sales cycles, or delays in contract awards and renewals. In addition, inflation has increased, and may continue to increase, our operating costs, particularly labor costs, which represent the largest component of our cost of revenue. …”see in full comparison
“The rules governing management’s assessment of internal control over financial reporting are complex and require significant expenses, documentation, testing, and possible remediation. If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting, the trading price of our common stock may decline, and our ability to obtain additional financing, especially on favorable terms, could be adversely affected. …”see in full comparison
“We identify material weakness in our internal controls, which could affect our ability to provide reliable financial statements and our business decision-making process, could harm our business and operating results, cause investors to lose confidence in our reported financial information, cause the market price of our securities to decrease and harm our ability to obtain additional financing, especially additional financing on favorable terms, could be adversely affected. …”see in full comparison
Full comparison: every changed paragraph (248)
You should carefully consider the risks and uncertainties described below, together with all of the other information included in this Annual Report on Form 10-K and other documents we file with the SEC. The risks and uncertainties described below are those that we have identified as material to our business, but they are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may adversely affect our business, financial condition, results of operations and prospects. If any of the following risks actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected, in which case the trading price of our common stock could decline and you could lose all or part of your investment.
You should carefully consider the risks described
below with respect to an investment in our shares. If any of the following risks actually occur, our business, financial condition, operating
results or cash provided by operations could be materially harmed. As a result, the trading price of our common stock could decline,
and you might lose all or part of your investment. When evaluating an investment in our common stock, you should also refer to the other
information in this Annual Report, including our consolidated financial statements and related notes.
Risks Related to Our Business Generallyand Operations
We derive a substantial portion of our revenue from a limited number of contracts and clients, and the loss of any significant contract or client relationship could materially reduce our revenue and profitability.
A significant portion of our revenue is concentrated among a small number of contracts and clients, primarily state and local government agencies including higher education institutions, law enforcement agencies, and municipal transportation authorities. If any significant client were to terminate, reduce the scope of, or fail to renew their contracts with us, or if we were unable to replace expiring contracts with new engagements of comparable scope and value, our revenue could decline significantly. The conclusion of certain key government contracts contributed to a decline in revenue during fiscal year 2025. Our reliance on a concentrated client base means that adverse developments affecting even a single major client—such as a change in that client's leadership, budget priorities, procurement policies, or political environment—could have a disproportionate impact on our financial results.
Our contracts with state and local government agencies are subject to funding risks, including dependence on federal funding that flows through those agencies, which creates uncertainty in our revenue.
While the majority of our contracts are with state and local government entities, many of these clients fund their IT and cybersecurity programs in whole or in part with grants, appropriations, or pass-through funding from the federal government. Federal funding for state and local cybersecurity and IT modernization programs is subject to annual congressional appropriations, continuing resolutions, government shutdowns, executive orders, and shifting policy priorities. Reductions or delays in federal funding—whether resulting from budget cuts, sequestration, the activities of cost-reduction initiatives such as the Department of Government Efficiency ("DOGE"), or changes in the political environment—can cause our state and local government clients to delay procurements, reduce contract scope, or cancel projects entirely. We have experienced, and may continue to experience, delays in contract awards and revenue recognition attributable to disruptions in federal funding flows.
Additionally, state and local governments face their own budgetary pressures, including rising pension obligations, infrastructure costs, and competing spending priorities. Many operate under balanced-budget requirements and may lack the flexibility to sustain IT and cybersecurity spending during periods of fiscal stress. Budget compromises that may be needed for future fiscal years may continue to be extraordinarily difficult given the complicated grassroots political environment, a closely divided Congress, an increasing federal deficit and debt load, and a challenged economy.
Recent and ongoing federal and state government cost-reduction initiatives may reduce demand for our services and disrupt our contracting pipeline.
The current federal administration has undertaken significant cost-reduction initiatives, including through DOGE, that have resulted in broad-based cuts to federal contracts, grants, and agency budgets. These initiatives have directly impacted federal cybersecurity and IT spending, including the termination of contracts at the Cybersecurity and Infrastructure Security Agency ("CISA"), reductions in Federal Risk and Authorization Management Program ("FedRAMP") staffing, and disruptions to interagency cybersecurity coordination. Although our contracts are primarily with state and local governments rather than directly with federal agencies, these federal cost-reduction efforts have had, and may continue to have, cascading effects on our business because many of our state and local clients rely on federal pass-through funding. Federal grant programs that historically supported state and local cybersecurity investments have been reduced or placed under review, creating uncertainty for our clients and slowing their procurement timelines.
Additionally, approximately half of U.S. states have created or proposed their own state-level efficiency initiatives modeled on the federal DOGE program. These state-level cost-reduction efforts could directly impact our existing contracts and our ability to win new engagements at the state and local level. We have experienced, and expect we may continue to experience, delays in our contracting backlog attributable to these budget disruptions, and we can provide no assurance that these delayed contracts will ultimately convert to revenue. There is also the risk that government clients at any level may choose to perform cybersecurity and IT services in-house rather than contracting with outside providers like us, which would further reduce demand for our services.
The competitive landscape for cybersecurity and IT services is intense, and if we do not continue to innovate we may not remain competitive and our revenue and operating results could suffer.
The market for cybersecurity and IT services provided to government clients is highly competitive and fragmented. We compete with large, well-established defense and IT contractors, each of which has significantly greater financial, technical, and marketing resources, broader name recognition, and larger installed bases of government contracts and clearances. We also compete with specialized cybersecurity firms, cloud service providers, managed security service providers, and smaller niche contractors. Many of our competitors can offer broader service portfolios, more favorable pricing, and greater capacity to absorb the costs of competitive bidding and contract protests.
The cybersecurity landscape is constantly changing with increasing scale, frequency, and organization of attacks, requiring constant improvement and timely innovation. We face the risk that our service offerings may not adequately target our clients’ most-needed solutions, may not be cost-effective, or may not be easy to adopt and use. If our competitors introduce new technologies or services that make our product and service offerings less attractive, or if we are unable to anticipate and respond to changes in the threat landscape and client requirements in a timely manner, our competitive position, revenue, and operating results could be materially adversely affected.
The government contracting process is lengthy, complex, and subject to protest and delay, which makes our revenue difficult to predict.
The process for obtaining new government contracts and task orders is frequently protracted, involving competitive solicitations, multi-step evaluations, and best-value determinations. Contract award decisions may be delayed by funding uncertainties, changes in agency leadership or priorities, or procurement policy changes. Protests by unsuccessful bidders can delay the start of work by months or result in re-competition of the contract entirely. We may spend considerable cost and management time preparing bids and proposals for contracts that we do not win.
Government contracts are also frequently structured as indefinite delivery/indefinite quantity ("IDIQ") contracts, General Services Administration Schedule ("GSA") contracts, or blanket purchase agreements, under which the government is not obligated to order any minimum amount of services. We believe our position as a prime contractor under GSA Schedule contracts and other IDIQ contracts is important to our ability to sell our services, but these vehicles require us to compete for each individual task order rather than having a predictable stream of activity. As a result, our contracted backlog may not be a reliable indicator of future revenue. We also experience seasonality in our revenue, as government procurement cycles tend to accelerate near the end of fiscal years, which can cause quarter-to-quarter fluctuations.
Our government contracts are subject to audit, investigation, modification, and termination by the government, which could result in adverse findings, reduced revenue, or other penalties.
Government contracts are subject to oversight, including audits by government auditors and investigators. Government agencies have the unilateral right to modify, curtail, or terminate our contracts, either for convenience or for cause. If a contract is terminated for convenience, we generally can recover only costs incurred and a reasonable profit on work already performed, but may not recover anticipated profits on unperformed work. If a contract is terminated for cause, we may be required to pay the government for the cost of re-procuring the services, and a termination for cause could harm our reputation and ability to win future contracts.
As a government contractor, we are subject to various laws and regulations governing the formation, administration, and performance of government contracts, including the Federal Acquisition Regulation and its state and local equivalents. Violations of these requirements, including the False Claims Act, could result in civil or criminal penalties, treble damages, contract suspension or debarment, or other remedies that would materially harm our business and reputation. The Department of Justice's Civil Cyber-Fraud Initiative has increased the risk that government contractors may face False Claims Act liability related to cybersecurity compliance, which is particularly relevant given that cybersecurity compliance is itself a core component of our service offerings.
Our operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing, and general economic trends. Our revenue and operating results may fluctuate if our sales targets are not met, new service offerings receive poor client response, or client acquisition costs increase due to competition. In addition, our acquisition strategy may impose additional risks to the predictability of our operating results, as revenue streams may be volatile due to the uncertainty in identifying attractive acquisition candidates and our ability to consummate new acquisitions.
Risks Related to Cybersecurity and Technology
A cybersecurity breach or incident affecting our systems, our clients' systems, or our AI-enhanced ARx platform could damage our reputation, expose us to liability, and undermine the market confidence that is fundamental to our business.
As a cybersecurity provider, our reputation depends on the market’s confidence in the security and reliability of our services and technology. A successful cyberattack against our own systems, the systems we manage for clients, or our AI-enhanced ARx cybersecurity platform could compromise sensitive government data, disrupt client operations, expose us to regulatory penalties and litigation, and cause lasting reputational harm. Because we are in the business of protecting our clients against cyber threats, a security failure affecting our own operations would be particularly damaging to our credibility and competitive position.
Cyberattacks are becoming more frequent, more sophisticated, and more difficult to detect. Threat actors—including nation-state actors, organized criminal groups, and insiders—continue to develop new methods of attack, and there can be no assurance that our defensive measures will be sufficient to prevent all breaches. Additionally, our products may contain undetected errors or defects, may falsely detect vulnerabilities or threats that do not actually exist, or may fail to detect vulnerabilities in our customers’ infrastructure, including due to the constantly evolving techniques used by attackers to access or sabotage data. If we fail to update our solutions in a timely or effective manner to respond to these threats, our customers could experience security breaches. We cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, or that insurance will continue to be available on economically reasonable terms.
The cybersecurity regulatory environment is rapidly evolving, and our failure to comply with new and changing requirements could result in penalties, loss of contracts, and competitive disadvantage.
Our business is subject to a complex and rapidly changing set of cybersecurity regulations and standards at the federal, state, and local levels. Federal requirements include compliance with NIST (defined below) SP 800-171 for protecting Controlled Unclassified Information, the Cybersecurity Maturity Model Certification ("CMMC") program, FedRAMP authorization requirements for cloud-based solutions, and various agency-specific security requirements. State and local governments are also increasingly adopting their own cybersecurity compliance mandates and vendor security assessment programs.
Both as a cybersecurity provider and as a government contractor, we bear a dual compliance burden: we must maintain our own compliance and must also deliver solutions that enable our clients to achieve and maintain theirs. Changes to regulatory requirements require us to invest in updating our internal systems, processes, and solution offerings. These costs can be substantial and may not be fully recoverable under existing contracts. The SEC's cybersecurity disclosure rules, adopted in 2023, require us to disclose material cybersecurity incidents within four business days, and as a cybersecurity company, any such disclosure would be particularly damaging to our market position.
Our AI-enhanced ARx platform and other technology solutions are at an early stage of market adoption, and there is no assurance that these products will achieve broad commercial acceptance.
We are investing in the development and deployment of our AI-enhanced ARx cybersecurity platform and our Cyber Shield Managed Security Services Platform ("MSSP"). These platforms represent a strategic shift toward higher-margin, technology-driven recurring revenue, but they are at an early stage of market adoption. There is no guarantee that government or commercial clients will adopt these platforms at the scale or pace we anticipate, that the platforms will perform as expected in production environments, or that competitors will not introduce superior alternatives. The development and enhancement of these technology platforms require substantial ongoing investment, and if they fail to achieve meaningful market traction, we may not recover our development costs.
The integration of artificial intelligence into our products and services introduces new categories of risk, including adversarial manipulation of AI models, AI-generated false positives or negatives in threat detection, and the evolving federal and state regulatory landscape governing AI in government operations. Regulatory requirements for AI transparency, bias testing, and explainability are still developing, and future regulations could constrain our product development or require costly modifications to our AI-driven solutions.
Significant portions of our services and operations rely on software that is licensed from third-party vendors. The fees associated with these license agreements could increase in future periods, resulting in increased operating expenses. If there are significant changes to the terms and conditions of our license agreements, or if we are unable to renew these license agreements, we may be required to make changes to our vendors or information technology systems that could impact the solutions and services we provide to our clients or the processes we have in place to support our operations.
Risks Related to Our Financial Condition and Capital Structure
Cycurion has a limited operating history upon
which you can evaluate our future business and prospects.
Cycurion has a limited operating history. It was
incorporated in 2017. Since its incorporation, Cycurion has acquired two operating subsidiaries: Axxum in 2017 and Cloudburst in 2019.
It also acquired certain technology assets of Sabres in September 2021. Accordingly, Cycurion and its subsidiaries have varying operating
histories and, together as a consolidated company, has a limited operating history, which can make it difficult for investors to evaluate
Cycurion’s operations and prospects and may increase the risks associated with an investment. There can be no assurance that Cycurion’s
business plan can be realized in the manner contemplated, that it will ever realize any significant operating revenues, or that its operations
will ever be profitable and, therefore, its stockholders may lose all or a substantial part of their investment.
Cycurion has incurred net losses and cannot
assure you that it will achieve or maintain profitable operations.
Cycurion’s net income was $1,229,601 for the year ended December 31, 2024 and net loss
was $(2,097,013) December 31, 2023. Cycurion may continue to incur significant losses in the future for a number of reasons, including
unforeseen expenses, difficulties, complications, and delays and other unknown events.
Cycurion intends to increase its brand awareness,
expand the customer base, and expect to continue to invest heavily in its businesses in the foreseeable future as management continues
to attempt to expand and grow the core businesses. In addition, Cycurion’s net revenues could be impacted by various factors, including
the competitive landscape, customer preferences, and the success of our service offerings.
Accordingly, management cannot assure you that Cycurion
will achieve sustainable operating profits as it continues to attempt to expand its product and professional service offerings and otherwise
implement its growth initiatives. Any failure to achieve and maintain profitability would have a materially adverse effect on Cycurion’s
ability to implement its business plan, its results and operations, and its financial condition, and could cause the value of its common
stock to decline, resulting in a significant or complete loss of your investment.
Cycurion’s level of indebtedness and
debt service obligations could adversely affect its financial condition and make it more difficult for management to fund its operations.
As of December 31, 2024, Cycurion had approximately
$20.2 million of indebtedness and other liabilities outstanding.
Despite the existing level of indebtedness, Cycurion
and its subsidiaries may incur additional indebtedness, which could further exacerbate the risks described above.
Cycurion’sOur recurring losses, net working
capital, capital deficit, and accumulated deficit resulting from substantial operating losses have raised substantial doubt regarding itsour ability to continue
as a going concern.
We have had a net working capital deficit and an accumulated deficit resulting from net income incurred during certain periods and from substantial losses during prior periods. In addition, we have had net cash outflows from operating activities, all of which raise substantial doubt about our ability to continue as a going concern. Although we were nominally profitable during certain recent fiscal years, there is no assurance that we will not continue to generate operating losses and consume significant cash resources for the foreseeable future.
Cycurion had a net working capital deficit of $7.8
million and an accumulated deficit of $3.2 million resulting from net income incurred during the year ended December 31, 2024 and from
substantial losses during prior periods. In addition, it had a net cash outflow of $2.0 million from operating activities during the
year ended December 31, 2023 and $1.4 million during the year ended December 31, 2024, all of which raise substantial doubt about its
ability to continue as a going concern. Although Cycurion was nominally profitable during the 2024 fiscal year, there is no assurance
that it will not continue to generate operating losses and consume significant cash resources for the foreseeable future. Without additional
financing, these conditions raise substantial doubt about Cycurion’sour ability to continue as a going concern, meaning that itwe may
be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations.
If Cycurionwe seeksseek additional financing to fund itsour business and potential acquisition activities in the future and there remains doubt
about itsour ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding
on commercially reasonable terms or at all. If Cycurionwe isare unable to obtain sufficient funding, itsour business, prospects, financial condition,
and results of operations will be materially and adversely affected, and itwe may be unable to continue as a going concern. If itwe isare unable
to continue as a going concern, itwe may have to liquidate itsour assets and may receive less than the value at which those assets are carried
on itsour financial statements; accordingly, it is likely that stockholders will lose all or a part of their investment.
Our level of indebtedness and debt service obligations could adversely affect our financial condition and make it more difficult to fund our operations.
We have significant indebtedness and other liabilities outstanding. This level of indebtedness means that we will need to use a substantial portion of available cash flow to pay interest and principal on existing debt, reducing the amount of money available to finance our operations and other business activities. Our debt level increases our vulnerability to general economic downturns and adverse industry conditions, could limit our flexibility in planning for or reacting to changes in our business, could place us at a competitive disadvantage compared to our competitors that have less debt, and our failure to comply with financial and other restrictive covenants in our debt instruments could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects. Despite the existing level of indebtedness, we and our subsidiaries may incur additional indebtedness, which could further exacerbate these risks.
Our operations have consumed substantial amounts
of cash since our inception. As of December 31, 2024, we had an accumulated deficit of $3.2 million. We expect to continue to incur significant
expenses and increasing operating losses for the foreseeable future. Our business will require substantial additional capital for implementation
of our long-term business plan and development of cybersecurity technology. Our ability to raise additional funds may be adversely impacted
by potential worsening global economic conditions and the recent disruptions to, and volatility in,to the credit and financial markets
inmarkets. the U.S. As we require additional funds, weWe may seek to fund our operations through the sale of additional equity securities, debt
financing, and/or strategic collaboration agreements. We cannot be sure that additional financing from any of these sources will be available
when needed or that, if available, the additional financingit will be obtained on favorable terms.
If we raise additional funds by selling shares of our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted. We may issue additional shares of Cycurion common stock or other equity securities without stockholder approval in connection with future acquisitions, repayment of outstanding indebtedness, or under the 2025 Equity Incentive Plan. The issuance of additional shares could decrease your proportionate ownership interest, subordinate the rights of holders of common stock if preferred stock is issued with senior rights, or adversely affect the market price of our shares. If we raise additional funds through debt financing, we may have to grant a security interest on our assets, and servicing the interest and principal repayment obligations could divert funds that would otherwise be available to support development of new programs and marketing. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce, or eliminate certain service offerings or future marketing efforts, or reduce or discontinue our operations.
Our allocation of capital to cryptocurrency investments involves speculative risk and may not align with the expectations of our shareholders or clients.
Through our subsidiary, Cycurion Crypto, we have allocated capital from our equity line of credit to acquire Bitcoin and Ethereum as long-term holdings. Cryptocurrency markets are extremely volatile and subject to regulatory uncertainty, technological risks, and market manipulation. The value of our cryptocurrency holdings could decline substantially, and such declines would adversely affect our financial condition and results of operations. Our decision to allocate capital to cryptocurrency rather than to our core cybersecurity operations or working capital needs may be viewed unfavorably by investors, analysts, and government clients. There is no assurance that our cryptocurrency strategy will enhance shareholder value.
If we raise additional funds by selling shares of
our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted. We may seek to
access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional
capital at that time. If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing
arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, or assets or
to grant licenses on terms that may not be acceptable to us. If we raise additional funds through debt financing, we may have to grant
a security interest on our assets to the future lenders, our debt service costs may be substantial, and the lenders may have a preferential
position in connection with any future bankruptcy or liquidation involving the Company.
We may issue additional shares of common stock
or preferred stock under an employee incentive plan, which would dilute the interest of our stockholders.
We may issue a substantial number of additional shares
of common or preferred stock under an employee incentive plan. The issuance of additional shares of common or preferred stock:
Cycurion’s ability to grow and compete
in the future will be adversely affected if adequate capital is not available to it or not available on favorable terms.
Cycurion has limited capital resources. To date,
it has financed its operations through a mix of equity investments by unaffiliated third parties and bank debt financing and, except
in connection with this Offering, it expects to continue to do so in the foreseeable future. Cycurion’s ability to continue its
normal and planned operations, to grow its business, and to compete in the cybersecurity industry will depend on the availability of
adequate capital.
Management cannot assure you that Cycurion will be
able to obtain additional financing from those or other sources when or in the amounts needed, on acceptable terms, or at all. If it
raises capital through the sale of equity, or securities convertible into equity, that would result in dilution to its then-existing
stockholders, which could be significant depending on the price at which it may be able to sell its securities. If Cycurion raises additional
capital through the incurrence of additional indebtedness, it would likely become subject to further covenants restricting its business
activities, and holders of debt instruments would have rights and privileges senior to those of its then-existing stockholders. In addition,
servicing the interest and principal repayment obligations under debt facilities could divert funds that would otherwise be available
to support development of new programs and marketing to current and potential new clients. If Cycurion is unable to raise capital when
needed or on acceptable terms, it could be forced to delay, reduce, or eliminate certain products or professional service offerings or
future marketing efforts, or reduce or discontinue its operations. Any of these events could significantly harm Cycurion’s business,
financial condition, and prospects and could cause the value of its common stock to decline, resulting in a significant or complete loss
of your investment.
If Cycurion does not continue to innovate and
offer solutions and professional services that address the dynamic threat landscape, it may not remain competitive and its revenue and
operating results could suffer.
Cycurion’s success will depend, in part, on
its ability to develop and implement innovative customer solutions and professional services that anticipate and keep pace with rapid
and continuing changes in technology, industry standards, and client preferences, as well as continue to attract top talent and expertise
in order to develop innovative solution offerings and professional services that are required to keep up with dynamic industry landscapes.
Cycurion may not be successful in anticipating or responding to these developments in a timely basis, and its offerings may not be successful
in the marketplace. In addition, services, solutions, and technologies developed by its competitors may make its service or solution
offerings uncompetitive or obsolete. Any of these circumstances could have a material adverse effect on its ability to obtain and successfully
complete important client engagements, which in return would negatively affect revenue and operating results.
Cycurion relies on personnel with extensive
information security expertise and the loss of, or its inability to attract and retain, qualified personnel in the highly competitive
labor market for such expertise could harm its business.
Management's Discussion & Analysis (MD&A)
New heading “General and Business Overview”
New heading “Cycurion Crypto Inc.”
New heading “Financial Overview”
New heading “Results of Operations”
New heading “Stock compensation expenses”
New heading “Interest expense”
New heading “Gain on debt settlement, net”
New heading “Net Cash Used In Operating Activities”
New heading “Net Cash Provided By/(Used In) Investing Activities”
New heading “Net Cash Provided by Financing Activities”
New heading “Goodwill and Other Long-Lived Assets”
Removed heading “Throughout this section, unless otherwise noted, “we,” “our,” “us,” “Cycurion” and the “Company” refer to Cycurion, Inc.”
Removed heading “Management’s plans and basis of presentation:”
Removed heading “Subcontractor — Prime contractor relationship”
Removed heading “SLG Acquisition Agreement”
Removed heading “Sabres SaaS Asset Purchase”
Removed heading “Results of Operations for the years ended December 31, 2024 and 2023”
Removed heading “Research and Development”
Removed heading “Operating Activities”
Removed heading “Financing Activities”
Removed heading “Revenue Recognition”
Removed heading “Stock-based compensation”
Removed heading “Fair Value of Common Stock”
Removed heading “Recent accounting pronouncements”
Largest changes
see in full comparisonWe have incurred operating losses since inception through the end of our 2023 fiscal year, having had negative cash flow from operations. As of December 31, 2024, we had an accumulated deficit of approximately $3,203,361, an improvement compared to our accumulated deficit of approximately $4,432,962 at December 31, 2023. The decline was the result of net profits of $1,229,601 incurred during our fiscal year 2024.Furthermore, we expectpossible,continued, significant operating losses for the next few years. We also utilized cash in operations of approximately$1,371,281$12.1inmillion for thetwelve monthsyear ended December 31, 2025. As of December 31, 2025, we had unrestricted cash of approximately $5.3 million, an increase of $5.2 million from approximately $38,742 as of December 31, 2024. As of December 31,2024,2025,weourhadtotalunrestrictedassetscashincreasedofto approximately$40.7thousand,$33.5a decrease of $567 thousandmillion from approximately$607$25.6thousandmillionat December 31, 2023. Asas of December 31, 2024,our total assets increased to approximately $25.7 million from approximately $20.8 million at December 31, 2023,primarily due toa $3.2 million increaseincreases inour accounts receivable and $1.8 million increase in investments held in trust.goodwill. Based on our current capital resources as of December 31,2024,2025, including our unrestricted cash and accountsreceivablereceivable,(net)of$10.3$7.9 million, we expect to be able to continue our operations for a minimum of 12 months as of the date ofthesethisfinancialannualstatements.report. Nevertheless, our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient, consistent cash flow from operations to meet the expected growth in our obligations. Wehave added the following table that provides aging analysis of our accounts receivable. We provided an analysis of the accounts receivable for the years ending 2023 and 2024. As the company has broadened its business customer base, the nature of the payment and cash receipt cycle has change. Many of the corporate customers have longer payment terms. We expect that this trendintend to continueastowe acquireseek additionalcommercialdebtcustomers.or equity financing to continue our operations.
“Determining the fair value of a reporting unit requires management's judgment and involves the use of significant estimates and assumptions, including forecasted revenue, operating margins, capital expenditures, and selection and use of an appropriate discount rate commensurate with the risk inherent in each of our reporting units' current business models. We utilize the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate. …”see in full comparison
“In testing goodwill for impairment, we first assess the qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, after the assessment, we determine that an impairment indicator exists, we perform the quantitative goodwill impairment test. The Company performs the quantitative goodwill impairment test by calculating the fair value of the reporting unit and comparing it to its respective carrying value including goodwill. …”see in full comparison
“Goodwill is not amortized, but rather tested for potential impairment as of December 31 each year. The goodwill impairment test is performed at the reporting unit level, which is only one for our company. Accounting requirements provide that a reporting entity may perform an optional qualitative assessment on an annual basis to determine whether events occurred or circumstances changed that would more likely than not reduce the fair value of a reporting unit below its carrying amount. …”see in full comparison
“In performing the qualitative assessment, we consider many factors in evaluating whether the carrying value of goodwill may not be recoverable, including an analysis of the firm’s contract backlog and sales pipeline. While the contract backlog is confirmed contractual wins, the sales pipeline is evaluated by management to determine the uncertainty of the pipeline. Each potential contractual win is assigned a probability of win score to address the potential uncertainty. Thus, it provides a conservative estimate of any future contractual wins. …”see in full comparison
Full comparison: every changed paragraph (111)
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together with our audited consolidated financial statements and the related notes thereto for the fiscal years ended December 31, 2025 and 2024, included in Item 8. Financial Statements and Supplementary Data.
Throughout this
section, unless otherwise noted, “we,” “our,” “us,” “Cycurion” and the “Company”
refer to Cycurion, Inc.
You
should read the followingThe discussion ofbelow contains management's comments on our financialbusiness conditionstrategy and resultsoutlook, of operations in conjunction with our financial statements
and thesuch notesdiscussions includedcontain elsewhereforward-looking instatements. this annual report. The following discussion containsThese forward-looking statements thatreflect the expectations, beliefs, plans, and objectives of management about future financial performance and assumptions underlying management's judgment concerning the matters discussed, and accordingly involve certain
risksestimates, assumptions, judgments, and uncertainties. Our actual results could differ materially from those discussed in thesethe statements.forward-looking statements, and the discussion below is not necessarily indicative of future results. Factors that could cause
or contribute to theseany differences includeinclude, but are not limited to, those discussed below and elsewhere in this annualAnnual report,Report on Form 10-K, particularly underin the"Item “1A. Risk
Factors”" and “Disclosurein "Special Note Regarding Forward-Looking Statements”" sections.at the beginning of this Form 10-K.
General and Business Overview
Management’s
plans and basis of presentation:
We
were originally incorporated in Delaware in 2017 as KAE Holdings, Inc,Inc., under the laws of the State of Delaware in 2017, with the purpose of acquiring and holding operating entities in the cybersecurity industry. On July 14, 2020, we changed our corporate name from KAE Holdings, Inc. to Cyber Secure Solutions, Inc., and, on February 24, 2021, to Cycurion, Inc.
We have two first-tier wholly-owned subsidiaries, Cycurion Sub, Inc. (formerly Cycurion, Inc., until February 14, 2025) and Cycurion Crypto, a Delaware corporation formed in July 2025, and three indirectly wholly-owned second-tier subsidiaries: (i) Axxum, a Virginia limited liability company formed in December 2006, (ii) Cloudburst, a Virginia limited liability company formed in January 2007, and (iii) Cycurion Innovation, Inc., a Delaware corporation formed in September 2021, in connection with our acquisition of assets from Sabres, a leading Israeli-based cybersecurity provider.
Effective
July 14, 2020, we changed our corporate name from KAE Holdings, Inc. to Cyber Secure Solutions, Inc., and, on April 24, 2021, to Cycurion,
Inc. On February 14, 2025, the date of closing of our de-SPAC transaction, we merged into Western Acquisition Ventures
Corp. and changed that company’s name to Cycurion, Inc.
Our
Business
For a description of our Business, please see “Item 1. Business.”
OurWe own our operating subsidiaries are wholly owned bythrough Cycurion Sub., Inc., a Delaware
corporation that, until the closing date of the de-SPAC, was known as “"Cycurion, Inc.”" We continue to conduct our business
through the three below-described entities, which are now indirectly wholly-owned second-tier subsidiaries by virtue of the recent closing
of the de-SPAC transaction.
Cycurion Crypto Inc.
Our direct wholly-owned subsidiary, Cycurion Crypto, a Delaware corporation, was formed in July 2025 as part of our strategic initiative to position the Company within the expanding digital asset ecosystem and will manage a crypto treasury.
Axxum’s
information security focus produces several key benefits:
Cycurion
Innovation, Inc. was formed in connection with our acquisition of assets
from Sabres, a leading Israeli-based cyber securitycybersecurity provider. It operates our Cycurion Security Platform’s line of products allows
our customers to improve their cyber posture with its MDP SaaS platform. This platform efficiently bundles and easily implements the external
protection of a Web Application Firewall (WAF) and the internal protection of Bot Mitigation. Bot Mitigation is the reduction of risk
to applications, Application Program Interfaces ("APIs"), and backend services from malicious bot traffic that fuels common automated attacks,
such as Distributed Denial of Service (DDoS)DoS campaigns and vulnerability probing. The costs of single-layer security can be measured in
terms of money, time, and risk, as well as the damage wrought by a data breach, which millions of businesses experience each year. Through
this interaction of the WAF and Bot Mitigation, the MDP is able to reinforce these layers of security and generate new security layers
in real time in response to emerging threats. This process is directed by our Cycurion Security Platform’sPlatform's proprietary, cloud-based
artificial intelligence (“AI”) algorithm. Crucially, the AI underpinning the MDP platform is constantly evolving to counter
new threats. Through a crowdsourcing process, the cloud-based MDP learns from every threat to any protected application and uses that
newly acquired knowledge to protect all MDP clients better.
Subcontractor
— Prime contractor relationship
Master Service Agreement with SLG Innovation, Inc.
We
are currently a subcontractor for several keystone contracts held by SLG. The SLG team has an average of over 25 years of experience
in the development, planning, implementation, and management of information systems. SLG’sSLG's leadership team offers years of combined
success in answering the needs of government agencies and healthcare organizations across the country.
As
a result of the strong technical skills and experience of the cyber teams at Cycurion and its subsidiaries, SLG Innovation entered into
a Master Services Agreement ("MSA") with Axxum Technologies to provide services to SLG customers. The MSA is task order driven and the
number of task orders is modified periodically depending on actual customer requirements for IT and Cybersecuritycybersecurity services. Over the
last three years, Axxum Technologies has assisted SLG Innovation in growing its revenue and customer base. As a result, SLG Innovation
now represents a majority of Cycurion revenues.
SLG
Acquisition Agreement
Our
revenues from SLG in our 2024 and 2023 fiscal years were $14,703,887 and $13,837,042, respectively. The types of agreements to which
SLG is a party are discussed under the heading “Our Business — Key Clients and Historical Performance.” From
our perspective, a major benefit to us of the potential transaction contemplated by the SLG Term Sheet, as described below, would be
that we could “piggyback” on SLG’s historical relationships with the various contracting governmental agencies in our
bidding on future potential agreements. It is axiomatic in the governmental contracting arena in which we are involved that past performance
on customer assignments as the prime contractor is one of the more important qualifications in competing for new opportunities within
the federal government. We believe that our acquisition of SLG, if that transaction is closed by us, would yield such “past performance”
qualifications.
On
April 25, 2023, Cycurion Sub executed a Term Sheet with SLG (the “SLG Term
Sheet”), pursuant to which SLG agreed to be acquired by Cycurion Sub. The Term Sheet contained all of the material terms and conditions
of two proposed interrelated transactions to be memorialized by the SLG Acquisition Agreeement. To effectuate the two transactions contemplated
by the SLG Term Sheet, Cycurion Sub will form two subsidiaries, which, upon formation, will initially be wholly owned by Cycurion Sub.
If, when, and as the transactions contemplated by the SLG Term Sheet are consummated, SLG would merge with and into one of the subsidiaries
and survive, thereby becoming a wholly-owned subsidiary of Cycurion Sub. Because certain of the agreements to which SLG is the prime contractor
require that the majority owner of the prime contractor be a resident of the City of Chicago or of Cook County (depending on the contract),
contemporaneously with the consummation of the first of the two transactions, (i) SLG will divest itself of those agreements with the
residency requirements, (ii) the second newly formed subsidiary will assume those agreements, (iii) Mr. Ed Burns will become the owner
of a 51% interest in that newly formed subsidiary, and (iv) we will enter into a Management Agreement with that subsidiary, the economic
terms and management/ control terms of which are intended to be the equivalent of complete ownership of that the 49% owned subsidiary.
Mr. Ed Burns is currently the 51% owner of SLG and a resident of the City of Chicago. The SLG Term Sheet provides that, if, when, and
as the transactions contemplated thereby are consummated, the two current owners of SLG will be issued an aggregate of 996,355 shares
of Cycurion common stock.
SLG is fully bound by the terms and provisions of the SLG Term Sheet and
the related Management Agreement structure, although Cycurion Sub is permitted to terminate the SLG Term Sheet and to abandon the transactions
contemplated thereby any time for any reason or for no reason prior to April 11, 2025, with no further obligations on Cycurion Sub’s
part. As of the date of this Annual Report, although we reserve the right to modify the terms and provisions of the SLG Acquisition Agreement,
we do not currently expect to terminate it and currently expect to close the transactions contemplated during our current fiscal quarter.
Substantially all of the agreements to which SLG is a party have a provision that provides the counterparty to such agreement with a right
to approve an assignment or change in control of SLG prior to its effectiveness. If an approval is not forthcoming, then the provisions
of the SLG Acquisition Agreement permit us to excise that specific agreement. Upon such occurrence, we reserve that right to reduce the
consideration that we would otherwise tender to the equity owners of SLG.
As
amended by the parties, initially effective as of November 29, 2023 and
subsequently effective as of April 29, 2024, August 16, 2024 and December 31, 2024, the SLG Term Sheet expires on the soonest of (i) closing
of the transactions contemplated thereby, (ii) April 11, 2025, if the transactions contemplated thereby have not closed by then, (iii)
Cycurion Sub’s termination thereof, and (iv) the mutual termination by all of the parties thereto. Notwithstanding anything to the
contrary contained therein, Cycurion Sub may terminate its obligations under the SLG Term Sheet and the transactions contemplated hereby
for any reason or for no reason without any further obligations and without any liability at any time through and including April 11,
2025. The SLG Term Sheet, as amended, consensually superseded, as noted therein, Cycurion Sub’s previous “unidirectional”
agreements with SLG.
The foregoing brief summary description of certain terms and provisions
of (i) the SLG Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of the SLG Term
Sheet, a copy of which is attached to this Annual Report as Exhibit 10.12, (ii) the SLG Term Sheet Amendments, a copy of each of which
is attached to this Annual Report as Exhibit 10.12a, Exhibit 10.12b, Exhibit 10.12c, and Exhibit 10.12d, and (iii) the SLG Management
Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the SLG Term Sheet, a copy
of which is attached to this Annual Report as Exhibit 10.12e. Readers are encouraged to read those Exhibits in full for a more comprehensive
understanding of the transaction contemplated by the SLG Term Sheet.
RCR
Technology Corporation (“"RCR”") performs certain services for SLG in its role as an SLG subcontractor and, in that
context, became a creditor of SLG. In connection with the transactions contemplated by the term sheet with SLG (the "SLG Term Sheet,Sheet"), on April 25, 2023, Cycurion
Sub and RCR also entered into a term sheet (the “"RCR Term Sheet”") for a distinct, but related transaction. The RCR Term
Sheet contemplates a transaction, pursuant to which RCR will sell to Cycurion all of the accounts receivable of SLG in favor of RCR (but
for those accounts that are less than 90 days old as of the date of consummation of the contemplated transaction). The consummation of
the transactions contemplated by the RCR Term Sheet is contingent upon the consummation of the transactions contemplated by the SLG Term
Sheet. Nevertheless,We as a result of our entry into the SLG Management Agreement
with SLG, we still currently intend to consummateconsummated the transactions contemplated by the RCR Term Sheet inon September 25, 2025. Cycurion issued 248,006 shares of common stock to RCR as a result of the first halfconsummation of ourthe current
fiscaltransaction year.contemplated Theby the RCR Term Sheet providespursuant that, if, when, and asto the transactionsSecurities contemplatedPurchase therebyAgreement, aredated consummated,September RCR25, will be issued
shares of our common stock.2025.
Further,
as amended by the parties, initially effective as of November 29, 2023, and subsequently effective as of April 29, 2024, August 16, 2024
and December 31, 2024, the RCR Term Sheet expires on the soonest of (i) closing of the transactions contemplated thereby, (ii) April
11, 2025, if the transactions contemplated thereby have not closed by then, (iii) Cycurion’s termination thereof, and (iv) the
mutual termination by all of the parties thereto. Notwithstanding anything to the contrary contained therein, Cycurion may terminate
its obligations under the RCR Term Sheet and the transactions contemplated hereby for any reason or for no reason without any further
obligations and without any liability at any time through and including April 11, 2025. As of the date of this Annual Report, we do not currently expect to terminate the
transactions contemplated by the RCR Term Sheet, as amended, and currently expect to close the transactions in the first half of our current
fiscal year.
The foregoing brief summary description of certain terms and provisions
of the RCR Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of the RCR Term Sheet,
a copy of which is attachedfiled as an exhibit to this Annual Report on Form 10-K as Exhibit 10.13 and the full text of the RCR Term Sheet Amendments,amendments, a copy of each
of which are attachedfiled as an exhibit to this Annual Report on Form 10-K as Exhibit 10.13a, 10.13b10.13b, 10.13c and 10.13c.10.13d. Readers are encouraged to read those Exhibits in full
for a more comprehensive understanding of the transaction contemplated by the RCR Term Sheet.
Sabres
SaaS Asset Purchase
On
August 17,September 30, 2021, we enteredacquired into an asset purchase agreement to acquire
certain technology assets of Sabres, a leading Israeli-based cyber securitycybersecurity provider. As part of the asset purchase agreement, we acquired
Multi-Dimensional Protection,Protection Web("MDP"), Application FirewallWAF and Bot Mitigation SaaS platforms, and their associated intellectual property.
The transaction closed on September 30, 2021, and we have integrated the SaaS platforms into our existing services offerings.
Our
Cycurion Security Platform’sPlatform's (formerly Sabres’Sabres') line of products allows our customers to improve their cyber posture with
its MDP SaaS platform. This platform efficiently bundles and easily implements the external protection of a Web Application Firewall
(WAF) and the internal protection of Bot Mitigation. Bot Mitigation is the reduction of risk to applications, Application Program Interfaces
(APIs),APIs, and backend services from malicious bot traffic that fuels common automated attacks, such as DistributedDoS Denial of Service (DDoS)
campaigns and vulnerability probing. The costs of single-layer security can be measured in terms of money, time, and risk, as well as
the damage wrought by a data breach, which millions of businesses experience each year. Through this interaction of the WAF and Bot Mitigation,
the MDP is able to reinforce these layers of security and generate new security layers in real time in response to emerging threats.
This process is directed by our Cycurion Security Platform’sPlatform's (formerly Sabres') proprietary, cloud-based AI algorithm. We do not have AI processing in the production version of the software. That version is in the testing and evaluation phase. Crucially, the AI underpinning
the MDP platform is constantly evolving to counter new threats. Through a crowdsourcing process, the cloud-based MDP learns from every
threat to any protected application and uses that newly acquired knowledge to protect all MDP clients better.
Our
Cycurion Security Platform’sPlatform's (formerly Sabres’Sabres') line of products provides solutions for substantially all web application
security needs. These products provide solutions, whether a client is in need of a web application firewall to comply with regulations
and ensure it has a first line of defense against the hazards that the internet can present or is in need of enterprise-level products
that empower Security Operations Center (SOC) teams and security management. Our Cycurion Security Platform’sPlatform's constantly survey
a client’sclient's data to detect security issues in need of attention, send automatic updates, and provide the client with a complete
database of rules and threats.
We
have integrated the technology assets that we acquired from Sabres (which now constitutes our Cycurion Security Platform) into our Managed
Security Services Practice. We believe that the platform will enhance our service offerings and assist with the expansion of our commercial
business. The Sabres platform will be managed by ourOur dedicated support team, andteam will manage the Sabres platform, provide real time reporting, response to security
incidents, and will manage all data privacy needs from a single SIEMsecurity information and event management SaaS platform dashboard.
Financial Overview
A number of factors have contributed to our fiscal year 2025 results of operations, the most significant of which are described below. More details on these changes are presented below within our "Results of Operations" section.
•The execution of the SLG Innovation Inc. transaction.
•The completion of the business combination with Western Acquisition Ventures Corp.
Results of Operations
Results
of Operations for the years ended December 31, 2024 and 2023
Revenues for the year ended December 31, 2025 decreased $2.6 or 14.8% compared to the year ended December 31, 2024. We attribute this decrease in the revenues in 2025 compared to 2024 to delayed start dates of new federal, state and local contracts and the company’s focus on more profitable business.
Revenues
decreased $1,578,723 (8.16%) to $17,771,485 for the year ended December 31, 2024, as compared to $19,350,208 for the year ended December
31, 2023.
This
decrease in the revenues for the year ended December 31, 2024 is attributed to the conclusion of key contracts with the federal government
and state and local agencies, partially offset by new business segments and contracts.
Cost
of Revenuerevenues
The cost of revenue for the year ended December 31, 2025, was approximately $13.5 million, compared to $14.1 million for the year ended December 31, 2024. The cost of revenue is driven by the costs incurred while delivering services to our customers, therefore the decrease in costs is due to the decrease in revenues.
The
cost of revenue for the year ended December 31, 2024, was approximately $14,136,742, nearly all of which is related to costs incurred
while delivering services to our customers and expansion of our employee base to address our business growth. Conversely, the cost of
revenue for the year ended December 31, 2023, was approximately $16,707,148, nearly all of which is related to costs incurred while
servicing our contracts, including contractual and servicing obligations with our employees and contractors. This $2,570,406 (15.39%)
decrease in the cost of revenues is directly attributable to lower contractor-related expenses.
Research
and Development
We
did not have any Research and Development expenses for the years ended December 31, 2024 and December 31, 2023.
Selling,
General general and Administrativeadministrative expenses
Our selling, general and administrative ("SG&A") expenses increased in 2025 compared to 2024 due to additional expenses being recognized in 2025 due to increased costs associated with being a publicly traded company and the addition key individuals for the company's growth strategy.
Stock compensation expenses
Stock compensation expenses increased in 2025 compared to 2024 as a result of new compensation agreements with executives.
Selling,
general and administrative (“SG&A”) expenses decreased by $1,098,019 (47.40%) to $1,218,630 for the year ended
December 31, 2024, compared to $2,316,649 for the year ended December 31, 2023, respectively. This improvement was primarily due to reduced
legal, administrative, and consulting fees in the 2024 fiscal year.
Interest
andBusiness Othercombination Expenseexpenses
Business combination expenses in 2025 are a result of the business combination with Western.
Interest
and other expense was approximately $(1,186,512) and $(2,419,637) for the years ended December 31, 2024 and 2023, respectively. These
expenses for the year ended December 31, 2024 include $1,209,502 in interest-related expenses and losses, related to the payment of our
bank instrument, and other loan obligations. This $1,233,125 (50.96%) decrease of interest and other expenses is primarily due to reduced
or renegotiated interest expenses in the 2024 fiscal year.
Cash
Flows
Operating
Activities
For
the year ended December 31, 2024, net cash used by operating activities was $1,371,281, which included $1,229,601 in net profits, $3,238,749
increase in accounts receivable, $253,902 decrease in deferred revenue, and $908,854 increase in accounts and other payables. We also
incurred a marginal $6,566 non-cash adjustment to the amortization of debt discount.
For
the year ended December 31, 2023, net cash used in operating activities was $1,987,771, which included $2,097,013 in net losses,
$4,636,805 increase in accounts receivable, $242,099 increase in deferred revenue, and $3,105,223 increase in accounts and other payables.
We also incurred a $1,094,131 non-cash adjustment to the amortization of debt discount.
Investing
ActivitiesInterest income
What changed in the latest 10-Q
Risk Factors
New heading “We may not realize all of the anticipated benefits of any of our pending acquisitions.”
New heading “If we fail to comply with the continued minimum closing bid requirements of the Nasdaq Global Market or other requirements for continued listing, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.”
Largest changes
“If we fail to comply with the continued minimum closing bid requirements of the Nasdaq Global Market or other requirements for continued listing, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.”see in full comparison
“On July 22, 2026, the Company announced it requested a hearing before the Panel to appeal the delisting determination the Company received on July 10, 2026, relating to the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(1). The hearing has been scheduled for August 20, 2026. If the Panel decides to delist our stock the liquidity of our shares of common stock would be adversely impacted, potentially resulting in even lower bid prices for our shares of common stock, and make it more difficult for us to obtain financing through the sale of our shares of common stock.”see in full comparison
“There is a risk that some or all of the expected benefits of any pending transactions and acquisitions may fail to materialize or may not occur within the time periods anticipated. …”see in full comparison
“We may not realize all of the anticipated benefits of any of our pending acquisitions.”see in full comparison
“Our common stock is listed for trading on the Nasdaq Global Market. We must satisfy Nasdaq continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days. If a company's common stock trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to it, advising that it has been afforded a "compliance period" of 180 calendar days to regain compliance with the applicable requirements. …”see in full comparison
“Failure to realize all anticipated benefits of the pending transactions may impact the financial performance of the Company, the price of the Company's common Stock and the ability of the Company to pay dividends on its common stock.”see in full comparison
Full comparison: every changed paragraph (7)
We may not realize all of the anticipated benefits of any of our pending acquisitions.
There is a risk that some or all of the expected benefits of any pending transactions and acquisitions may fail to materialize or may not occur within the time periods anticipated. The realization of such benefits may be affected by a number of factors, many of which are beyond the control of the Company, including, but not limited to, the strength or weakness of the economy and competitive factors in the areas where the Company and other parties in the pending acquisitions or transactions do business, the effects of competition in the markets in which the Company or other parties operate, and the impact of changes in the laws and regulations regulating or affecting domestic or foreign operations. The past financial performance of each of the Company and any potential acquisition may not be indicative of their future financial performance. Realization of the anticipated benefits in pending acquisitions and transactions will depend, in part, on the combined company's ability to successfully integrate the Company's and any acquired businesses. The Company will be required to devote significant management attention and resources to integrating any acquired business's practices. The diversion of management's attention and any delays or difficulties encountered in connection with the pending acquisitions and the coordination of operations could have an adverse effect on the business, financial results, financial condition or the share price of the Company. The coordination process may also result in additional and unforeseen expenses.
Failure to realize all anticipated benefits of the pending transactions may impact the financial performance of the Company, the price of the Company's common Stock and the ability of the Company to pay dividends on its common stock.
If we fail to comply with the continued minimum closing bid requirements of the Nasdaq Global Market or other requirements for continued listing, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is listed for trading on the Nasdaq Global Market. We must satisfy Nasdaq continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days. If a company's common stock trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to it, advising that it has been afforded a "compliance period" of 180 calendar days to regain compliance with the applicable requirements. Thereafter, if such a company does not regain compliance with the bid price requirement, a second 180-day compliance period may be available.
On July 22, 2026, the Company announced it requested a hearing before the Panel to appeal the delisting determination the Company received on July 10, 2026, relating to the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(1). The hearing has been scheduled for August 20, 2026. If the Panel decides to delist our stock the liquidity of our shares of common stock would be adversely impacted, potentially resulting in even lower bid prices for our shares of common stock, and make it more difficult for us to obtain financing through the sale of our shares of common stock.
There were no material changes during the three months ended March 31, 2026 to the risk factors previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March 31, 2026.
Management's Discussion & Analysis (MD&A)
Not available: the section could not be located automatically in one of the filings (non-standard layout or incorporated by reference). See the original filing. Open the filing on SEC.gov.
CYCU insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-28 | Kelly Leo Kevin |
Gift | 8,742 | — | — |
| 2026-08-19 | Kelly Leo Kevin |
Gift | 3,073 | — | — |
| 2026-07-29 | Kelly Leo Kevin |
Grant/award | 100,200 | — | — |
| 2026-05-01 | Kelly Leo Kevin |
Grant/award | 3,527 | — | — |
| 2026-04-26 | Kelly Leo Kevin |
Grant/award | 36,564 | — | — |
| 2025-12-26 | Kelly Leo Kevin |
Grant/award | 157 | — | — |
| 2025-12-09 | Kelly Leo Kevin |
Grant/award | 7,102 | — | — |
Well-known investors holding CYCU (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 250,000 | $4.4K | 0.0% | No change |