Cycurion, Inc. 10-K Summary: Fiscal Year Ended December 31, 2024
Business Context and Reporting Period
This Annual Report on Form 10-K covers the fiscal year ended December 31, 2024, for Cycurion, Inc. (the "Company"). The Company provides cybersecurity solutions, including consulting, managed IT, and managed security services, primarily to federal government agencies and commercial clients. On February 14, 2025, the Company completed a de-SPAC business combination with Western Acquisition Ventures Corp., resulting in the Company's common stock beginning to trade on The Nasdaq Global Market under the symbol "CYCU" on February 18, 2025. The Company operates through wholly-owned subsidiaries Axxum Technologies LLC, Cloudburst Security LLC, and Cycurion Innovation, Inc.
Key Financial Metrics
| Metric | 2024 | 2023 |
|---|---|---|
| Revenue | $17,771,485 | $19,350,208 |
| Gross Profit | $3,634,743 | $2,643,060 |
| Gross Margin | 20.5% | 13.7% |
| Operating Income | $2,416,113 | $326,411 |
| Net Income (Loss) | $1,229,601 | $(2,097,013) |
| Net Cash Used in Operating Activities | $(1,371,281) | $(1,987,771) |
| Cash and Cash Equivalents (End of Period) | $38,742 | $607,869 |
| Total Debt and Liabilities | $20,177,782 | $15,549,088 |
| Working Capital Deficit | $(7.8 million) | N/A |
Material Changes Versus Prior Period
- Revenue Decline: Revenue decreased by 8.2% to $17.8 million, attributed to the conclusion of key contracts with federal and state agencies, partially offset by new business segments.
- Profitability Turnaround: The Company reported a net income of $1.2 million in 2024, reversing a net loss of $2.1 million in 2023. This was driven by a significant reduction in Selling, General, and Administrative (SG&A) expenses (down 47.4%) and Interest and Other Expenses (down 51.0%).
- Margin Expansion: Gross margin improved from 13.7% to 20.5%, and operating margin expanded from 1.7% to 13.6% due to lower contractor-related expenses and reduced legal/consulting fees.
- Cash Flow: Despite net income, the Company utilized $1.4 million in cash from operating activities, primarily due to a $3.2 million increase in accounts receivable.
Guidance, Outlook, Risks, and Contingencies
Going Concern: The Company's independent auditors have issued an opinion with an emphasis of matter regarding substantial doubt about the Company's ability to continue as a going concern. This is due to a working capital deficit of $7.8 million, an accumulated deficit of $3.2 million, and a history of negative operating cash flows. Management plans to raise additional capital through equity or debt financing to sustain operations.
Nasdaq Compliance: As of April 2025, the Company received notices from Nasdaq regarding non-compliance with listing standards, specifically the minimum bid price ($1.00), Market Value of Listed Securities ($50 million), and Market Value of Publicly Held Shares ($15 million). The Company has 180 days to regain compliance or face potential delisting.
Acquisitions and Partnerships: The Company is pursuing the acquisition of SLG Innovation, Inc. (SLG) and the purchase of SLG's accounts receivable from RCR Technology Corporation. These transactions are contingent on counterparty approvals and are expected to close in the first half of 2025. Recent developments include new multi-year contracts totaling $22 million with Journal Technologies and a strategic partnership with CentralSquare Technologies.
Internal Controls: Management identified material weaknesses in internal control over financial reporting, specifically regarding insufficient written documentation of policies and inadequate segregation of duties. Remediation is planned for the fiscal year ending December 31, 2025.
Investor Verification Checklist
- Liquidity Position: Verify the Company's ability to secure the substantial additional funding required to address the $7.8 million working capital deficit and avoid insolvency.
- Nasdaq Delisting Risk: Monitor the Company's progress in meeting the $1.00 minimum bid price and market value requirements within the 180-day cure period to avoid delisting.
- Customer Concentration: Note that the ten largest customers accounted for 93% of 2024 revenue, with one customer (SLG) representing approximately 83% of total revenue.
- Debt Obligations: Review the terms of approximately $20.2 million in indebtedness and liabilities, including subordinated convertible notes and bank loans, to assess refinancing risks.
- Acquisition Execution: Confirm the status of the SLG and RCR transactions, as their failure to close could impact future revenue projections and integration plans.