Cycurion, Inc. (CYCU) - Form 10-Q Summary
Business Context and Reporting Period
Company: Cycurion, Inc.
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Cycurion provides cybersecurity solutions, risk management, and IT services to federal government agencies and commercial clients. The company operates through subsidiaries including Axxum Technologies, Cloudburst Security, and Secuvant (acquired June 2026). The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 |
Six Months Ended June 30, 2026 |
Six Months Ended June 30, 2025 |
|---|---|---|---|
| Revenue | $3,757,076 | $7,025,696 | $7,757,965 |
| Gross Profit | $1,093,337 | $1,781,695 | $913,700 |
| Gross Margin | 29.1% | 25.4% | 11.8% |
| Operating Loss | $(1,884,705) | $(4,255,875) | $(13,863,581) |
| Net Loss (Attributable to Cycurion) | $(3,755,774) | $(5,884,236) | $(15,437,241) |
| Cash and Cash Equivalents | $1,873,287 (End of Period) | Net cash used in operating activities: $(6,174,176) | |
| Total Debt (Current + Non-Current) | Approx. $8.9M (Loans Payable) + $2.4M (Bank Loan) + $2.7M (Convertible Notes) + $1.2M (Promissory Notes) |
Material Changes vs. Prior Period
- Revenue: Decreased 3.4% quarter-over-quarter and 9.4% year-over-year (six months), primarily due to a delay in the start of a large contract.
- Gross Margin: Significantly improved to 29.1% (Q2 2026) from 6.1% (Q2 2025) due to cost-saving efforts.
- Operating Expenses: Selling, general, and administrative (SG&A) expenses increased to $2.6M (Q2 2026) from $2.3M (Q2 2025) due to public company costs and full consolidation of SLG Innovation, Inc. Stock compensation expenses decreased to $0.3M from $1.0M.
- Debt Settlement: Recognized a $1.9M loss on debt settlement in Q2 2026 (vs. $0.9M in Q2 2025) resulting from converting debt to equity to strengthen the balance sheet.
- Acquisitions: Completed the acquisition of Secuvant, LLC on June 3, 2026, recognizing $6.4M in preliminary goodwill.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern: The filing explicitly states there is substantial doubt regarding the Company's ability to continue as a going concern. As of June 30, 2026, the Company had an accumulated deficit of $32.8M and a working capital deficit of $13.6M. Continued operations depend on raising additional capital and generating positive operating cash flows.
- Nasdaq Compliance: The Company received notice on July 10, 2026, of non-compliance with the $1.00 minimum bid price requirement. A hearing to appeal delisting is scheduled for August 20, 2026. Trading is currently stayed pending the hearing.
- Subsequent Events:
- Issued ~13.95M shares of common stock between July 1 and August 10, 2026, increasing outstanding shares to 25.8M.
- Completed a warrant inducement transaction raising ~$4.5M gross proceeds.
- Secured a new 10-year contract valued at approximately $54.6M (announced July 30, 2026).
- Acquired Kustom Entertainment's video solutions business (closed August 4, 2026).
- Risks: Risks include failure to realize benefits from acquisitions, inability to access capital markets, potential delisting from Nasdaq, and concentration of revenue (Customer A represented 29% of Q2 revenue).
Investor Verification Checklist
- Liquidity Runway: Verify the sufficiency of the $1.9M cash balance against the $13.6M working capital deficit and ongoing burn rate.
- Nasdaq Status: Monitor the outcome of the August 20, 2026, hearing regarding the minimum bid price deficiency.
- Dilution Impact: Assess the impact of the 13.95M shares issued post-period and the warrant inducement transaction on existing shareholders.
- Debt Structure: Review the terms of the $2.7M convertible notes and $1.2M promissory notes, noting the recent trend of converting debt to equity.
- Contract Realization: Confirm the start date and revenue recognition schedule for the newly announced $54.6M contract.