Cycurion, Inc.
For the period ended Jun 30, 2025. Filed Aug 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 13, 2025
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12. Promissory Notes
- PROMISSORY NOTES
| Table 12.1: Rollforward of Promissory Notes | ||||
|---|---|---|---|---|
| Principal Value | Unamortized Discount and Issuance Costs | Convertible 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% |
| Table 12.2: Details of Loans Payable | ||||
|---|---|---|---|---|
| June 30, 2025 | December 31, 2024 | Weighted Average Interest Rate | Maturity (Calendar Year) | |
| Note issued in 2017 | $250,000 | $250,000 | 4.0% | 2020 |
| Note issued in 2020 | 300,000 | 300,000 | 24.0% | 2021 |
| Note issued in 2021 | 400,000 | 400,000 | 24.0% | 2021 - 2022 |
| Notes issued in 2023 | 611,111 | 1,067,611 | 24.0% | 2023 |
| Notes issued in 2024 | 517,425 | 480,758 | 11.5% | 2025 |
| Notes issued in 2025 | 620,558 | - | 12.0% | 2025 -2026 |
| Funded loans payable | 2,699,094 | 2,498,369 | ||
| Less: Unamortized debt-issuance costs and discounts | (29,468) | (11,380) | ||
| Total loans payable | $2,669,626 | $2,486,989 | ||
Subordinated Convertible Promissory notes payable
On March 22, 2022, the Company issued subordinated convertible promissory notes with principal value of $526,315 to six investors. While subordinate to bank lender the notes are secured by The Company’s assets. The Company issued to an independent director a $236,842 subordinated convertible note. The Company issued to an otherwise unaffiliated investors of subordinated convertible notes in principal amounts of $52,631 to three investors, $105,263 to a fifth investor and $26,315 to a sixth investor. The notes carry annual interest rate of 8% that commenced upon funding date through the date of repayment.
On November 22, 2022, the Company issued to three otherwise unaffiliated investors $2,777,778 promissory notes,394,011 common shares and 984,557 warrants for $2,500,000 in gross proceeds.
The Company entered into the Merger Agreement with Western and Merger Sub, on November 21, 2022, as amended. As a result of the Business Combination, Cycurion raised $3,333,335 of debt capital on November 21, 2022, from nine (9) unaffiliated investors who were issued for convertibles notes, warrants and shares of common stock. The convertible notes had a maturity date of November 21, 2023, and an interest rate of 8%. They were also issued to convert to equity upon completion of the Business Combination between Cycurion and Western.
During the first quarter of calendar year 2025, the Company issued preferred stocks and warrants in exchange of the outstanding convertible promissory notes which had an aggregate principal amount of $3,333,335 and accrued interest of $299,259. As a part of this conversion, the Company issued 6,666,667 shares of Series D Convertible Preferred Stock and 7,272,728 Series D warrants to seven (7) unaffiliated noteholders. As a result, the Company recorded gain on settlement of debt of $299,259, which is presented on the consolidated statements of operations and the consolidated statements of cash flows within ‘Loss on debt settlement, net.
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