Cycurion, Inc. (CYCU) 2025 Form 10-K Summary
Business Context and Reporting Period
This filing covers the fiscal year ended December 31, 2025. Cycurion, Inc. is a cybersecurity and AI-powered IT solutions provider serving federal, state, and local government agencies, as well as commercial clients. The year was defined by the completion of a business combination with Western Acquisition Ventures Corp. (a de-SPAC transaction) on February 14, 2025, and the consolidation of SLG Innovation, Inc. as a Variable Interest Entity (VIE) effective April 1, 2025. The company operates through subsidiaries including Axxum Technologies, Cloudburst Security, and Cycurion Innovation.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Net Revenues | $15.13 million | $17.77 million |
| Gross Profit | $1.61 million | $3.63 million |
| Gross Margin | 10.7% | 20.5% |
| Operating Loss | $(23.41) million | $2.42 million (Income) |
| Net Loss | $(24.06) million | $1.23 million (Income) |
| Cash and Cash Equivalents | $5.26 million | $0.04 million |
| Working Capital | Deficit of $8.9 million | Deficit of $7.8 million |
| Accumulated Deficit | $(26.88) million | $(3.20) million |
| Backlog | $80.0 million | $16.0 million |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 14.8% to $15.13 million, attributed to delayed start dates on federal, state, and local contracts and a strategic focus on more profitable business lines.
- Margin Compression: Gross margin dropped from 20.5% to 10.7% due to the mix of services and the inclusion of SLG operations.
- Operating Expenses Surge: Total operating expenses jumped from $1.22 million to $25.03 million. This was driven primarily by $11.87 million in business combination expenses and a significant increase in stock-based compensation ($3.90 million vs. $10,000 in 2024).
- Debt Settlement Gain: The company recorded a $1.22 million gain on debt settlement due to converting debt to equity instruments at a lower fair market value.
- Backlog Growth: Committed backlog increased significantly to $80.0 million from $16.0 million, reflecting new contract awards and the SLG integration.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Warning: The independent auditor has issued a "Substantial Doubt" opinion regarding the company's ability to continue as a going concern due to recurring losses, a working capital deficit, and negative operating cash flows of $12.1 million in 2025. Management plans to rely on additional financing and equity raises to sustain operations.
- Nasdaq Compliance: The company faced delisting proceedings due to a failure to meet the $1.00 minimum bid price. It executed a 1-for-30 reverse stock split in October 2025 and regained compliance with Nasdaq listing requirements in November 2025.
- Strategic Recapitalization: The company converted approximately $3.2 million of convertible indebtedness into Series G Convertible Preferred Stock to strengthen its balance sheet.
- Unusual Items:
- Cryptocurrency Holdings: The company formed a subsidiary, Cycurion Crypto, to hold Bitcoin and Ethereum, introducing speculative risk.
- Stock Dividend: A special dividend of $500,000 in common stock was distributed to shareholders in December 2025.
- Acquisition Activity: Subsequent to year-end, the company announced a Memorandum of Understanding to acquire the video-solutions division of Kustom Entertainment, Inc.
- Risks: Key risks include high client concentration (top 4 customers accounted for 64.5% of revenue), dependence on government funding which is subject to budget cuts, and the need for continuous capital raising.
Investor Verification Checklist
- Liquidity Runway: Verify the sufficiency of the $5.26 million cash balance against the $12.1 million annual operating cash burn and upcoming debt obligations.
- Debt Covenants: Review the status of the Main Street Bank revolving line of credit and term loan, specifically regarding compliance with tangible net worth and EBITDA covenants.
- Backlog Conversion: Assess the likelihood of converting the $80 million backlog into revenue given the cited delays in government contract start dates.
- Equity Dilution: Monitor the impact of the 1-for-30 reverse stock split and the potential dilution from the $60 million equity line of credit with Yield Point and the Armistice Capital private placement.
- SLG Integration: Confirm the financial performance and integration status of SLG Innovation, Inc., which now represents a majority of revenues but was consolidated as a VIE with negative net assets.