CYCU 10-Q

Cycurion, Inc. (CYCU)

10-Q 2026-08-14 For: 2026-06-30

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Added on August 14, 2026

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Cycurion, Inc.
(Exact name of registrant as specified in its charter)
Delaware						86-3720717
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1640 Boro Place, Suite 420C, McLean, VA						22102
(Address of principal executive office)						(Zip Code)

(888) 341-6680
Registrant’s telephone number, including the area code)


Table of Contents to Second Quarter 2026 Form 10-Q
	Special Note Regarding Forward-Looking Statements	3
Part I - FINANCIAL INFORMATION		4
Item 1.	Financial Statement - (Unaudited)	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations and Comprehensive (Loss)/Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Changes in Stockholders’ Equity	7
	Notes to the Unaudited Consolidated Financial Statements	8
	1. Organization and Description of Business	8
	2. Significant Accounting Policies	11
	3. Revenue Recognition	13
	4. Accounts Receivable, Net	15
	5. Software Development Costs	15
	6. Business Combination	16
	7. Goodwill	20
	8. Bank Loans	21
	9. Loans Payable	22
	10. Convertible Notes	24
	11. Promissory Notes	25
	12. Subordinated Convertible Promissory Notes	26
	13. Factoring Liability	26
	14. Equity	26
	15. Concentrations, Risks and Uncertainties	39
	16. Related Party Transactions	40
	17. Earnings Per Share	41
	18. Commitments and Contingencies	42
	19. Supplemental Cash Flow Information	48
	20. Subsequent Events	48
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
	General and Business Overview	50
	Financial Overview	53
	Results of Operations	53
	Liquidity and Capital Resources	54
	Critical Accounting Policies and Estimates	56
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56
Item 4.	Controls and Procedures	56
PART II - OTHER INFORMATION		57
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3.	Defaults upon Senior Securities	57
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	58
Item 6.	Exhibits	58
	SIGNATURES	59


	June 30, 2026		December 31, 2025
Assets:
Cash and cash equivalents	$	1,873,287	$	5,255,235
Accounts receivable, net	3,721,520		2,687,479
Prepaid expenses and other current assets	222,886		60,133
Other receivables	133,058		-
Total current assets	5,950,751		8,002,847
Software development costs, net	4,798,981		4,606,981
Goodwill and intangibles	27,617,398		20,842,508
Total non-current assets	32,416,379		25,449,489
Total assets	$	38,367,130	$	33,452,336
Liabilities and Stockholders' Equity:
Liabilities:
Bank loan-revolving credit line	$	2,421,305	$	2,933,396
Loans payable - current portion	269,068		669,693
Factoring liability	1,300,470		1,511,678
Convertible notes	2,686,748		192,897
Promissory notes	1,161,960		2,499,662
Loans payable - related parties	123,650		123,650
Accounts payable	1,290,801		1,314,772
Accrued liabilities	7,613,943		4,228,337
Accrued compensation and benefits	1,063,856		919,825
Accrued interest payable	432,748		1,347,787
Excise tax payable	1,167,173		1,167,173
Total current liabilities	19,531,722		16,908,870
Loans payable - non-current portion	627,010		300,000
Total non-current liabilities	627,010		300,000
Total liabilities	20,158,732		17,208,870
Commitments and contingencies (Note 19)
Stockholders' Equity:
Preferred stock ($0.0001 par value, 20,000,000 shares authorized)
Series A convertible preferred stock ($0.0001 par value, 110,000 shares designated, 0 and 0 issued and outstanding, respectively)	-		-
Series B convertible preferred stock ($0.0001 par value, 3,000 shares designated, 1 and 1 issued and outstanding, respectively)	-		-
Series C convertible preferred stock ($0.0001 par value, 5,000 shares designated, 2,547 and 4,851 issued and outstanding, respectively)	-		-
Series D convertible preferred stock ($0.0001 par value, 6,666,700 shares designated, 150,000 and 150,000 issued and outstanding, respectively)	15		15
Series E convertible preferred stock ($0.0001 par value, 100 shares designated, 51 and 51 issued and outstanding, respectively)	-		-
Series F convertible preferred stock ($0.0001 par value, 10,000 shares designated, 0 and 0 issued and outstanding, respectively)	-		-
Series G convertible preferred stock ($0.0001 par value, 10,000 shares designated, 143 and 143 issued and outstanding, respectively)	-		-
Series H convertible preferred stock ($0.0001 par value, 10,000 shares designated, 1,900 and 0 issued and outstanding, respectively)	-		-
Series I convertible preferred stock ($0.0001 par value, 888,888 shares designated, 888,888 and 0 issued and outstanding, respectively)	89		-
Common stock ($0.0001 par value, 300,000,000 shares authorized, 11,889,767 and 3,642,501 shares issued and outstanding, respectively)	1,189		364
Additional paid in capital	55,545,133		46,979,762
Accumulated deficit	(32,763,317)		(26,879,081)
Total stockholders' equity attributable to Cycurion	22,783,109		20,101,060
Deficit attributable to noncontrolling interests	(4,574,711)		(3,857,594)
Total stockholders' equity	18,208,398		16,243,466
Total liabilities and stockholders’ equity	$	38,367,130	$	33,452,336
See accompanying notes to unaudited consolidated financial statements.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Revenue	$	3,757,076	$	3,887,915	$	7,025,696	$	7,757,965
Cost of revenue	2,663,739		3,651,978		5,244,001		6,844,265
Gross profit	1,093,337		235,937		1,781,695		913,700
Operating expenses:
Selling, general and administrative expenses	2,641,320		2,313,343		5,385,015		2,650,716
Stock compensation expenses	336,722		1,012,443		652,555		1,012,443
Business combination expenses	-		676,228		-		11,114,122
Total operating expenses	2,978,042		4,002,014		6,037,570		14,777,281
Operating loss	(1,884,705)		(3,766,077)		(4,255,875)		(13,863,581)
Other income/(expenses):
Interest income	3,506		-		17,742		-
Interest expense	(227,941)		(615,392)		(432,793)		(794,283)
Loss on debt settlement, net	(1,930,427)		(907,983)		(1,930,427)		(766,330)
Other expense, net	-		(962)		-		(114,706)
Other expenses, net	(2,154,862)		(1,524,337)		(2,345,478)		(1,675,319)
Loss before income taxes	(4,039,567)		(5,290,414)		(6,601,353)		(15,538,900)
Provision for income tax	-		-		-		-
Net loss	(4,039,567)		(5,290,414)		(6,601,353)		(15,538,900)
Less: Net loss attributable to non-controlling interest	283,793		101,659		717,117		101,659
Net loss attributable to Cycurion	$	(3,755,774)	$	(5,188,755)	$	(5,884,236)	$	(15,437,241)

Comprehensive loss	$	(3,755,774)	$	(5,188,755)	$	(5,884,236)	$	(15,437,241)

Loss per share:
Basic	$	(0.41)	$	(4.31)	$	(0.86)	$	(16.55)
Diluted	$	(0.41)	$	(3.38)	$	(0.86)	$	(16.45)
Weighted average shares outstanding:
Basic	9,065,675		1,204,462		6,826,267		932,849
Diluted	9,065,675		1,532,549		6,826,267		936,209
See accompanying notes to unaudited consolidated financial statements.


	For the Six Months Ended June 30,
	2026		2025
Cash flows from operating activities:
Net loss	$	(6,601,353)	$	(15,538,900)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation expenses	652,555		1,284,777
Stock-based compensation - business combination related	-		9,250,000
Amortization of debt discount	1,187		213,036
Depreciation of property and equipment	-		3,489
Amortization of software development costs	-		17,083
Loss on debt settlement, net	1,930,427		766,330
Finance expense	-		100,000
Changes in assets and liabilities:
Accounts receivable, net and other receivables	(1,010,583)		(1,478,433)
Prepaid expenses and other current assets	(61,498)		45,204
Accounts payable and accrued liabilities	(1,221,050)		(738,998)
Accrued compensation and benefits	(111,386)		(17,042)
Accrued interest payable	247,525		(209,668)
Net cash used in operating activities	(6,174,176)		(6,303,122)
Cash flows from investing activities:
Net cash acquired on business combination	208,014		34,983
Capitalized software development costs	(192,000)		(174,000)
Cash withdrawn from Trust Account in connection with redemption	-		1,001,216
Release of Trust Account to Company's bank account	-		833,324
Net cash provided by investing activities	16,014		1,695,523
Cash flows from financing activities:
Proceeds from exercise of warrants	167		3,664,671
Redemption of common stock subject to redemption	-		(1,001,216)
Proceeds from capital raise	3,288,138		265,504
Repayments of revolving line of credit	(512,091)		(12,900)
Repayment of bank borrowings	-		(155,114)
Proceeds from convertible notes payable	-		2,376,500
Proceeds from notes payable	-		513,200
Repayments of notes payable	-		(70,000)
Net cash provided by financing activities	2,776,214		5,580,645
Net (decrease)/increase in cash and cash equivalents	(3,381,948)		973,046
Cash and cash equivalents, beginning of period	5,255,235		40,790
Cash and cash equivalents, end of period	$	1,873,287	$	1,013,836
See accompanying notes to unaudited consolidated financial statements.


	Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Series G Convertible Preferred Stock			Series H Convertible Preferred Stock			Series I Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total		Non- Controlling Interest		Total Stockholders' Equity
	Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)
Balance of December 31, 2025	1	$	-	4,851	$	-	150,000	$	15	51	$	-	143	$	-	-	$	-	-	$	-	3,642,501	$	364	$	46,979,762	$	(26,879,081)	$	20,101,060	$	(3,857,594)	$	16,243,466
Common stock issued for exercise of warrants	-	-		-	-		-	-		-	-		-	-		-	-		-	-		1,670,719	167		-		-		167		-		167
Conversion of Series C Convertible Preferred stock for common stock	-	-		(2,304)	-		-	-		-	-		-	-		-	-		-	-		196,801	20		(20)		-		-		-		-
Net loss	-	-		-	-		-	-		-	-		-	-		-	-		-	-		-	-		-		(2,128,462)		(2,128,462)		(433,324)		(2,561,786)
Balance as of March 31, 2026	1	$	-	2,547	$	-	150,000	$	15	51	$	-	143	$	-	-	$	-	-	$	-	5,510,021	$	551	$	46,979,742	$	(29,007,543)	$	17,972,765	$	(4,290,918)	$	13,681,847
Issuance of Series H convertible preferred stock in exchange of promissory notes	-	-		-	-		-	-		-	-		-	-		1,900	-		-	-		-	-		1,899,945		-		1,899,945		-		1,899,945
Conversion of convertible notes payable to common stock	-	-		-	-		-	-		-	-		-	-		-	-		-	-		531,822	53		443,345		-		443,398		-		443,398
Common stock issued - equity line	-	-		-	-		-	-		-	-		-	-		-	-		-	-		4,930,000	493		3,420,703		-		3,421,196		-		3,421,196
Series I convertible preferred stock issued as part of Secuvant acquisition	-	-		-	-		-	-		-	-		-	-		-	-		888,888	89		-	-		1,999,911		-		2,000,000		-		2,000,000
Common stock issued for settlement of liability	-	-		-	-		-	-		-	-		-	-		-	-		-	-		495,645	50		466,891		-		466,941		-		466,941
Common stock issued to employees	-	-		-	-		-	-		-	-		-	-		-	-		-	-		320,727	32		334,606		-		334,638		-		334,638
Conversion of Series H preferred stock for common stock	-	-		-	-		-	-		-	-		-	-		-	-		-	-		101,552	10		(10)		-		-		-		-
Net loss	-	-		-	-		-	-		-	-		-	-		-	-		-	-		-	-		-		(3,755,774)		(3,755,774)		(283,793)		(4,039,567)
Balance as of June 30, 2026	1	$	—	2,547	$	—	150,000	$	15	51	$	—	143	$	—	1,900	$	—	888,888	$	89	11,889,767	$	1,189	$	55,545,133	$	(32,763,317)	$	22,783,109	$	(4,574,711)	$	18,208,398


	Common stock subject to possible redemption			Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Series F Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total		Non- Controlling Interest		Total Stockholders' Equity
	Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)		Shares	Amount ($)
Balance of December 31, 2024	5,796	$	1,917,309	-	$	-	3,000	$	-	4,851	$	-	-	$	-	-	$	-	-	$	-	391,373	$	38	$	6,671,081	$	(3,203,361)	$	3,467,758	$	-	$	3,467,758
Common stock redeemed (Mezzanine Equity)	(3,163)	(1,001,216)		-	-		-	-		-	-		-	-		-	-		-	-		-	-		-		-		-		-		-
Release of common stock subject to redemption	(2,633)	(916,093)		-	-		-	-		-	-		-	-		-	-		-	-		2,654	-		916,093		-		916,093		-		916,093
Series A convertible preferred stock in exchange of Series A Convertible Preferred Stock categorized as liability	-	-		106,816	11		-	-		-	-		-	-		-	-		-	-		-	-		1,391,165		-		1,391,176		-		1,391,176
Series D convertible preferred stock in exchange of convertible notes	-	-		-	-		-	-		-	-		6,666,666	667		-	-		-	-		-	-		3,332,668		-		3,333,335		-		3,333,335
Common stock issued for conversion of Series B and D Convertible Preferred Stock	-	-		-	-		(2,999)	-		-	-		(6,516,666)	(652)		-	-		-	-		420,515	42		610		-		-		-		-
Common stock issued for exercise of warrants	-	-		-	-		-	-		-	-		-	-		-	-		-	-		236,709	24		3,309,897		-		3,309,921		-		3,309,921
Common stock issued for business combination costs	-	-		-	-		-	-		-	-		-	-		-	-		-	-		25,200	3		8,999,997		-		9,000,000		-		9,000,000
Common stock issued for settlement of liability	-	-		-	-		-	-		-	-		-	-		-	-		-	-		2,648	-		945,636		-		945,636		-		945,636
Common stock issued for employment agreement	-	-		-	-		-	-		-	-		-	-		-	-		-	-		16,800	2		249,998		-		250,000		-		250,000
SLG transaction	-	-		-	-		-	-		-	-		-	-		51	-		-	-		17,074	2		509,069		-		509,071		-		509,071
Excise tax liability arising from redemption of Series A shares	-	-		-	-		-	-		-	-		-	-		-	-		-	-		-	-		-		(10,012)		(10,012)		(3,464,218)		(3,474,230)
Net loss	-	-		-	-		-	-		-	-		-	-		-	-		-	-		-	-		-		(10,248,486)		(10,248,486)		-		(10,248,486)
Balance as of March 31, 2025	-	$	-	106,816	$	11	1	$	-	4,851	$	-	150,000	$	15	51	$	-	-	$	-	1,112,973	$	111	$	26,326,214	$	(13,461,859)	$	12,864,492	$	(3,464,218)	$	9,400,274
Series F convertible preferred stock in exchange for convertible notes and promissory notes	-	-		-	-		-	-		-	-		-	-		-	-		3,318	-		-	-		4,183,891		-		4,183,891		-		4,183,891
Common stock issued for exercise of warrants	-	-		-	-		-	-		-	-		-	-		-	-		-	-		107,823	11		354,739		-		354,750		-		354,750
Common stock issued for settlement of liability	-	-		-	-		-	-		-	-		-	-		-	-		-	-		92,152	9		1,028,469		-		1,028,478		-		1,028,478
Common stock issued for employment agreement	-	-		-	-		-	-		-	-		-	-		-	-		-	-		22,964	2		256,297		-		256,299		-		256,299
Common stock issued - equity line	-	-		-	-		-	-		-	-		-	-		-	-		-	-		38,640	4		265,500		-		265,504		-		265,504
SLG transaction	-	-		-	-		-	-		-	-		-	-		-	-		-	-		16,804	2		250,069		-		250,071		-		250,071
Net loss	-	-		-	-		-	-		-	-		-	-		-	-		-	-		-	-				(5,188,755)		(5,188,755)		(101,659)		(5,290,414)
Balance as of June 30, 2025	-	$	—	106,816	$	11	1	$	—	4,851	$	—	150,000	$	15	51	$	—	3,318	$	—	1,391,356	$	139	$	32,665,179	$	(18,650,614)	$	14,014,730	$	(3,565,877)	$	10,448,853


Table 3: Disaggregated Revenue
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Advisory consulting	$	3,569,982	$	3,848,688	$	6,814,752	$	7,684,102
Managed security service practice (MSSP)	183,887		35,555		206,387		67,068
Software as a service (Saas)	3,207		3,672		4,557		6,795
Revenue	$	3,757,076	$	3,887,915	$	7,025,696	$	7,757,965


Table 4.1: Details of Accounts Receivable, Net
	June 30, 2026		December 31, 2025
Billed accounts receivable	$	2,728,891	$	1,518,937
Billed accounts receivable - factored	1,368,916		1,591,240
Unbilled accounts receivable	18,258		45,325
Allowance for credit losses	(394,545)		(468,023)
Accounts receivable, net	$	3,721,520	$	2,687,479


Table 4.2: Changes in Allowance for Credit Losses
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Balance at beginning of period	$	469,383	$	—	$	468,023	$	—
Recovery of credit losses, net	(74,838)		—		(73,478)		—
Balance at end of period	$	394,545	$	—	$	394,545	$	—


Table 5: Capitalized Software Development Costs
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Capitalized software development costs	$	63,000	$	104,000	$	192,000	$	174,000


Table 6.1: Secuvant Valuation
	Preliminary Allocation of Assets and Liabilities
Cash consideration:
Cash consideration	$	875,000
Estimated additional cash payments - contingent earn-out	623,970
Less: cash acquired	(558,014)
Estimated cash consideration, net of cash acquired	940,956
Noncash consideration:
Series I Convertible Preferred Stock	2,000,000
Estimated common stock consideration - contingent earn-out	2,495,881
Noncash consideration	4,495,881
Total consideration	$	5,436,837
Assets acquired:
Accounts receivable	$	23,458
Prepaid expenses	23,895
Total identified assets acquired	47,353
Liabilities assumed:
Accounts payable	265,294
Deferred revenue	392,471
Loans payable - current portion	4,689
Loans payable - non-current portion	327,010
Total identified liabilities assumed	989,464
Net identifiable liabilities assumed	(942,111)
Goodwill	6,378,948
Net assets acquired	$	5,436,837


Table 6: SLG Valuation
	Initial Allocation of Assets and Liabilities		Adjustments		Final Allocation of Assets and Liabilities as of March 31, 2026
Cash consideration:
Cash consideration	$	2,000,000	$	-	$	2,000,000
Less: cash acquired	(34,983)		-		(34,983)
Cash consideration, net of cash acquired	1,965,017		-		1,965,017
Noncash consideration:
Common stock (1)	254,071		250,071		504,142
Series E Convertible Preferred Stock (2)	255,000		-		255,000
Accounts receivable in Cycurion owing from SLG (3)	10,814,147		-		10,814,147
Noncash consideration	11,323,218		250,071		11,573,289
Total consideration	$	13,288,235	$	250,071	$	13,538,306
Assets acquired:
Accounts receivable	$	3,066,581	$	-	$	3,066,581
Total identified assets acquired	3,066,581		-		3,066,581
Liabilities assumed:
Accounts payable	4,317,052		222,313		4,539,365
Accrued liabilities	10,650		54,209		64,859
Payroll liability	40,642		173,629		214,271
Factoring liability	2,176,922		-		2,176,922
Due to related parties	18,000		-		18,000
Loans payable	625,222		-		625,222
Liabilities to Cycurion	2,982,908		-		2,982,908
Total identified liabilities assumed	10,171,396		450,151		10,621,547
Net identifiable liabilities assumed	(7,104,815)		(450,151)		(7,554,966)
Elimination of inter-company balances	2,982,908		-		2,982,908
Non-controlling interest	(3,464,218)		-		(3,464,218)
Goodwill	13,945,924		700,222		14,646,146
Net assets acquired	$	13,288,235	$	250,071	$	13,538,306


Table 7: Details of Goodwill and Intangibles
	June 30, 2026		December 31, 2025
Axxum	$	5,153,266	$	5,153,266
Cloudburst	1,439,038		1,439,038
SLG	14,646,146		14,250,204
Secuvant (1)	6,378,948		—
Goodwill and intangibles	$	27,617,398	$	20,842,508


Table 9: Details of Loans Payable
	June 30, 2026		December 31, 2025
Loan payable - Cycurion	$	-	$	405,314
Loan payable - SLG	264,379		264,379
Loan payable - Secuvant	132,000		-
Economic injury disaster loan - Cycurion	150,000		150,000
Economic injury disaster loan - SLG	150,000		150,000
Economic injury disaster loan - Secuvant	199,699		-
Total loans payable	896,078		969,693
Less: Current portion of long-term debt	269,068		669,693
Long-term debt	$	627,010	$	300,000


Table 11.2: Details of Promissory Notes
	June 30, 2026				December 31, 2025
	Principal Value		Weighted Average Interest Rate	Maturity (Calendar Year)	Principal Value		Weighted Average Interest Rate	Maturity (Calendar Year)
Note issued in 2017	$	250,000	4.0 %	2020	$	250,000	4.0 %	2020
Note issued in 2020	-		— %	—	300,000		24.0 %	2021
Note issued in 2021	100,000		24.0 %	2022	400,000		24.0 %	2021 - 2022
Notes issued in 2023	-		— %	—	611,111		12.0 %	2023
Notes issued in 2024	319,180		12.3 %	2025	319,180		12.3 %	2025
Notes issued in 2025	492,780		10.4 %	2025 -2026	620,558		12.0 %	2025 -2026
Funded loans payable	1,161,960		10.7 %		2,500,849		14.6 %
Less: Unamortized debt-issuance costs and discounts	-				(1,187)
Total loans payable	$	1,161,960			$	2,499,662


Table 14.1: Details of Warrants
	Number of Warrants	Weighted Average Exercise Price		Weighted Average Life (years)
Outstanding warrants, December 31, 2024	315,028	$	20.64	3.0
Granted	869,992	164.96		4.7
Replacement of old warrants	(315,028)	20.64		2.9
Exercised	(234,831)	14.27		4.3
Outstanding warrants, March 31, 2025	635,161	220.67		4.7
Issued - Prefunded (equity line)	150,000	-		1.0
Exercised - Prefunded (equity line)	(83,333)	-		1.0
Exercised	(23,633)	15.00		5.0
Outstanding warrants, June 30, 2025	678,195	206.15		4.8
Exercised - Prefunded (equity line)	(66,667)	-		1.0
Outstanding warrants, September 30, 2025	611,528	228.62		4.8
Issued - Prefunded (Armistice-Prefunded)	1,670,720	-		1.0
Issued (Armistice)	3,341,439	3.62		5.0
Outstanding warrants, December 31, 2025	5,623,687	27.01		5.0
Exercised - Prefunded (Armistice-Prefunded)	(1,670,720)	-		1.0
Outstanding warrants, June 30, 2026	3,952,967	$	27.01	5.0
Exercisable warrants, June 30, 2026	3,952,967	$	27.01	5.0


Table 15.1: Revenue Concentration by Customer - Based on % of Revenue
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2026			2025			2026			2025
Customer	Amount		%	Amount		%	Amount		%	Amount		%
A	$	1,087,881	29.0%	$	1,138,481	29.3%	$	2,193,362	31.2%	$	2,251,053	29.0%
B	750,717		20.0%	594,460		15.3%	$	1,475,539	21.0%	$	1,158,080	14.9%
C	331,002		8.8%	374,780		9.6%	$	646,243	9.2%	$	861,958	11.1%
D	275,945		7.3%	343,460		8.8%	$	505,838	7.2%	$	732,740	9.4%


Table 15.2: Accounts Receivable Concentration by Customer - Based on % of Accounts Receivable, Net
	June 30, 2026			December 31, 2025
Customer	Amount		%	Amount		%
1	$	1,033,154	27.8%	$	768,954	28.6%
2	$	764,999	20.6%	$	479,151	17.8%
3	$	357,471	9.6%	$	373,236	13.9%


Table 10: Details of Convertible Notes
	Principal Value		Unamortized Discount and Issuance Costs		Convertible Notes Carrying Balance		Weighted Average Interest Rate	Maturity (Calendar Year)
Balance as of December 31, 2024	$	—	$	—	$	—
Issuance	440,217		(53,717)		386,500		18.0%	2026
Amortization	—		4,476		4,476
Balance as of March 31, 2025	440,217		(49,241)		390,976		18.0%	2026
Issuance	2,050,000		(60,000)		1,990,000		15.1%	2026
Conversion to equity	(2,490,217)		82,465		(2,407,752)		18.0%	2026
Amortization	—		26,776		26,776
Balance as of June 30, 2025	—		—		—
Issuance	—		—		—
Balance as of September 30, 2025	—		—		—
Issuance	192,897		—		192,897		12.0%	2027
Balance as of December 31, 2025	192,897		—		192,897		12.0%	2027
Issuance	—		—		—
Balance as of March 31, 2026	192,897		—		192,897		12.0%	2027
Issuance	2,927,355		—		2,927,355		12.0%	2027
Conversion to equity	(433,504)		—		(433,504)		12.0%	2027
Balance as of June 30, 2026	$	2,686,748	$	—	$	2,686,748	12.0%	2027


Table 11.1: Details of Promissory Notes
	Principal Value		Unamortized Discount and Issuance Costs		Promissory Notes Carrying Balance		Weighted Average Interest Rate
Balance as of December 31, 2024	$	2,498,369	$	(11,380)	$	2,486,989	16.6%
Issuance	690,558		(77,358)		613,200		13.5%
Repayment	(20,000)		—		(20,000)		35.0%
Amortization	36,667		21,297		57,964
Balance as of March 31, 2025	3,205,594		(67,441)		3,138,153		15.8%
Conversion to equity	(456,500)		—		(456,500)		24.0%
Repayment	(50,000)		—		(50,000)		24.0%
Amortization	—		37,973		37,973
Balance as of June 30, 2025	2,699,094		(29,468)		2,669,626		14.3%
Repayment	(31,579)		—		(31,579)		12.0%
Amortization	—		20,616		20,616
Balance as of September 30, 2025	2,667,515		(8,852)		2,658,663		14.3%
Conversion to a convertible note	(166,666)		—		(166,666)		10.0%
Amortization	—		7,665		7,665
Balance as of December 31, 2025	2,500,849		(1,187)		2,499,662		14.6%
Amortization	—		1,187		1,187
Balance as of March 31, 2026	2,500,849		—		2,500,849		14.6%
Conversion to convertible notes	(1,338,889)		—		(1,338,889)		18.0%
Balance as of June 30, 2026	$	1,161,960	$	—	$	1,161,960	10.7%


Table 14.2: Details of Common Stock Subject to Possible Redemption
	Number of Shares	Amount
Common stock subject to possible redemption as of December 31, 2024	5,796	$	1,917,309
Less:
Redemption	(3,163)	(1,001,216)
Release of common stock subject to redemption	(2,633)	(916,093)
Common stock subject to possible redemption as of December 31, 2025	-	$	-


Table 16: Details of Loans Payable - Related Party
	June 30, 2026		December 31, 2025		Weighted Average Interest Rate	Maturity (Calendar Year)
Loans issued to a director in 2023	$	103,400	$	103,400	24.0%	2023
Loan issued to a director in 2024	20,250		20,250		24.0%	2025
Funded loans payable - related party principal	123,650		123,650
Less: Unamortized debt-issuance costs and discounts	-		-
Loans payable - related party - current	$	123,650	$	123,650


Table 17.1: Details of Basic and Dilutive Loss Per Share
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Basic net loss per share:
Numerator
Net loss including non-controlling interests	$	(4,039,567)	$	(5,290,414)	$	(6,601,353)	$	(15,538,900)
Less: Net loss attributable to non-controlling interest	(283,793)		(101,659)		(717,117)		(101,659)
Net loss attributable to common stockholders - basic	(3,755,774)		(5,188,755)		(5,884,236)		(15,437,241)
Denominator
Weighted average shares outstanding - basic	9,065,675		1,204,462		6,826,267		932,849
Basic net loss per share attributable to common stockholders	$	(0.41)	$	(4.31)	$	(0.86)	$	(16.55)
Diluted net loss per share:
Numerator
Net loss attributable to common stockholders - basic	$	(3,755,774)	$	(5,188,755)	$	(5,884,236)	$	(15,437,241)
Add: Interest for subordinated convertible promissory note	-		2,500		-		38,333
Net loss attributable to common stockholders - diluted	$	(3,755,774)	$	(5,186,255)	$	(5,884,236)	$	(15,398,908)
Denominator
Weighted average shares outstanding - basic	9,065,675		1,204,462		6,826,267		932,849
Weighted-average effect of potentially dilutive securities:
Conversion of subordinated convertible promissory note	-		57,884		-		3,360
Conversion of Series A Convertible Preferred Stock	-		70,203		-		-
Conversion of Series B Convertible Preferred Stock	-		200,000		-		-
Weighted average shares outstanding - diluted	9,065,675		1,532,549		6,826,267		936,209
Dilutive net loss per share attributable to common stockholders	$	(0.41)	$	(3.38)	$	(0.86)	$	(16.45)


Table 17.2: Details of Potentially Dilutive Effect of Securities Excluded from Dilutive EPS due to Anti-Dilutive Effect
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2026	2025	2026	2025
Conversion of Series A Convertible Preferred Stock	-	152,335	-	115,303
Conversion of Series B Convertible Preferred Stock	1,347	45	1,347	57,054
Conversion of Series C Convertible Preferred Stock	18,925	1,212	21,501	1,212
Conversion of Series D Convertible Preferred Stock	150,000	5,040	150,000	15,386
Conversion of Series E Convertible Preferred Stock	51	2	51	1
Conversion of Series G Convertible Preferred Stock	686,270	-	686,270	-
Conversion of Series H Convertible Preferred Stock	431,982	-	217,184	-
Conversion of Series I Convertible Preferred Stock	121,557,333	-	61,114,460	-
Exercise of investor and placement agent warrants	5,623,687	618,161	5,623,687	495,585


Table 19.1: Supplemental Cash Flow Activity
	For the Six Months Ended June 30,
	2026		2025
Cash paid for interest	$	105,732	$	104,436


Table MD&A 1: Consolidated Results of Operations
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2026			2025			2026			2025
Revenue	$	3,757,076		$	3,887,915		$	7,025,696		$	7,757,965
Cost of revenue	2,663,739			3,651,978			5,244,001			6,844,265
Gross profit	1,093,337			235,937			1,781,695			913,700
Gross margin	29.1		%	6.1		%	25.4		%	11.8		%
Operating expenses:
Selling, general and administrative expenses	2,641,320			2,313,343			5,385,015			2,650,716
Stock compensation expenses	336,722			1,012,443			652,555			1,012,443
Business combination expenses	—			676,228			—			11,114,122
Total operating expenses	2,978,042			4,002,014			6,037,570			14,777,281
Operating loss	(1,884,705)			(3,766,077)			(4,255,875)			(13,863,581)
Interest income	3,506			—			17,742			—
Interest expense	(227,941)			(615,392)			(432,793)			(794,283)
Loss on debt settlement, net	(1,930,427)			(907,983)			(1,930,427)			(766,330)
Other expense	—			(962)			—			(114,706)
Other expense, net	(2,154,862)			(1,524,337)			(2,345,478)			(1,675,319)
Loss before income taxes	(4,039,567)			(5,290,414)			(6,601,353)			(15,538,900)
Provision for income tax	—			—			—			—
Net loss	(4,039,567)			(5,290,414)			(6,601,353)			(15,538,900)
Less: Net loss attributable to non-controlling interest	283,793			101,659			717,117			101,659
Net loss attributable to Cycurion	$	(3,755,774)		$	(5,188,755)		$	(5,884,236)		$	(15,437,241)


Table MD&A 2: Net Changes in Cash and Cash Equivalents
	For the Six Months Ended June 30,
	2026		2025
Net cash used in operating activities	$	(6,174,176)	$	(6,303,122)
Net cash provided by investing activities	16,014		1,695,523
Net cash provided by financing activities	2,776,214		5,580,645
Net (decrease)/increase in cash and cash equivalents	$	(3,381,948)	$	973,046



Exhibit No.		Description of Exhibit
31.1	Ω	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (L. Kevin Kelly, Chief Executive Officer).

31.2	Ω	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (A na Garcia , Chief Financial Officer).

32.1	†	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (L. Kevin Kelly, Chief Executive Officer).

32.2	†	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Ana Garcia, Chief Financial Officer).

101.INS	Ω	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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101.DEF	Ω	XBRL Taxonomy Extension Definition Linkbase.

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104	Ω	Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the inline XBRL document contained in Exhibit 101.


	Ω	Filed herewith
	†	Furnished herewith


Cycurion Inc.

By:	/s/ L. Kevin Kelly	August 14, 2026
	L. Kevin Kelly
	Chief Executive Officer
	(Principal Executive Officer)

	/s/ Ana Garcia	August 14, 2026
By:	Ana Garcia
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)