Cycurion, Inc.
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
CYCU$2.47+3.3%Stored close · as of Nov 9, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-04-17.
0001641172-25-005155
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001868419-26-000010
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 155 previous paragraphs and 112 current paragraphs.
6 unchanged; 32 reworded; 71 added; 113 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 11 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (71)
Current report
You should carefully consider the risks and uncertainties described below, together with all of the other information included in this Annual Report on Form 10-K and other documents we file with the SEC. The risks and uncertainties described below are those that we have identified as material to our business, but they are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may adversely affect our business, financial condition, results of operations and prospects. If any of the following risks actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected, in which case the trading price of our common stock could decline and you could lose all or part of your investment.
Current report
We derive a substantial portion of our revenue from a limited number of contracts and clients, and the loss of any significant contract or client relationship could materially reduce our revenue and profitability.
Current report
A significant portion of our revenue is concentrated among a small number of contracts and clients, primarily state and local government agencies including higher education institutions, law enforcement agencies, and municipal transportation authorities. If any significant client were to terminate, reduce the scope of, or fail to renew their contracts with us, or if we were unable to replace expiring contracts with new engagements of comparable scope and value, our revenue could decline significantly. The conclusion of certain key government contracts contributed to a decline in revenue during fiscal year 2025. Our reliance on a concentrated client base means that adverse developments affecting even a single major client—such as a change in that client's leadership, budget priorities, procurement policies, or political environment—could have a disproportionate impact on our financial results.
Current report
Our contracts with state and local government agencies are subject to funding risks, including dependence on federal funding that flows through those agencies, which creates uncertainty in our revenue.
Current report
While the majority of our contracts are with state and local government entities, many of these clients fund their IT and cybersecurity programs in whole or in part with grants, appropriations, or pass-through funding from the federal government. Federal funding for state and local cybersecurity and IT modernization programs is subject to annual congressional appropriations, continuing resolutions, government shutdowns, executive orders, and shifting policy priorities. Reductions or delays in federal funding—whether resulting from budget cuts, sequestration, the activities of cost-reduction initiatives such as the Department of Government Efficiency ("DOGE"), or changes in the political environment—can cause our state and local government clients to delay procurements, reduce contract scope, or cancel projects entirely. We have experienced, and may continue to experience, delays in contract awards and revenue recognition attributable to disruptions in federal funding flows.
Current report
Additionally, state and local governments face their own budgetary pressures, including rising pension obligations, infrastructure costs, and competing spending priorities. Many operate under balanced-budget requirements and may lack the flexibility to sustain IT and cybersecurity spending during periods of fiscal stress. Budget compromises that may be needed for future fiscal years may continue to be extraordinarily difficult given the complicated grassroots political environment, a closely divided Congress, an increasing federal deficit and debt load, and a challenged economy.
Current report
Recent and ongoing federal and state government cost-reduction initiatives may reduce demand for our services and disrupt our contracting pipeline.
Current report
The current federal administration has undertaken significant cost-reduction initiatives, including through DOGE, that have resulted in broad-based cuts to federal contracts, grants, and agency budgets. These initiatives have directly impacted federal cybersecurity and IT spending, including the termination of contracts at the Cybersecurity and Infrastructure Security Agency ("CISA"), reductions in Federal Risk and Authorization Management Program ("FedRAMP") staffing, and disruptions to interagency cybersecurity coordination. Although our contracts are primarily with state and local governments rather than directly with federal agencies, these federal cost-reduction efforts have had, and may continue to have, cascading effects on our business because many of our state and local clients rely on federal pass-through funding. Federal grant programs that historically supported state and local cybersecurity investments have been reduced or placed under review, creating uncertainty for our clients and slowing their procurement timelines.
Current report
Additionally, approximately half of U.S. states have created or proposed their own state-level efficiency initiatives modeled on the federal DOGE program. These state-level cost-reduction efforts could directly impact our existing contracts and our ability to win new engagements at the state and local level. We have experienced, and expect we may continue to experience, delays in our contracting backlog attributable to these budget disruptions, and we can provide no assurance that these delayed contracts will ultimately convert to revenue. There is also the risk that government clients at any level may choose to perform cybersecurity and IT services in-house rather than contracting with outside providers like us, which would further reduce demand for our services.
Current report
The market for cybersecurity and IT services provided to government clients is highly competitive and fragmented. We compete with large, well-established defense and IT contractors, each of which has significantly greater financial, technical, and marketing resources, broader name recognition, and larger installed bases of government contracts and clearances. We also compete with specialized cybersecurity firms, cloud service providers, managed security service providers, and smaller niche contractors. Many of our competitors can offer broader service portfolios, more favorable pricing, and greater capacity to absorb the costs of competitive bidding and contract protests.
Current report
The cybersecurity landscape is constantly changing with increasing scale, frequency, and organization of attacks, requiring constant improvement and timely innovation. We face the risk that our service offerings may not adequately target our clients’ most-needed solutions, may not be cost-effective, or may not be easy to adopt and use. If our competitors introduce new technologies or services that make our product and service offerings less attractive, or if we are unable to anticipate and respond to changes in the threat landscape and client requirements in a timely manner, our competitive position, revenue, and operating results could be materially adversely affected.
Current report
The government contracting process is lengthy, complex, and subject to protest and delay, which makes our revenue difficult to predict.
Current report
The process for obtaining new government contracts and task orders is frequently protracted, involving competitive solicitations, multi-step evaluations, and best-value determinations. Contract award decisions may be delayed by funding uncertainties, changes in agency leadership or priorities, or procurement policy changes. Protests by unsuccessful bidders can delay the start of work by months or result in re-competition of the contract entirely. We may spend considerable cost and management time preparing bids and proposals for contracts that we do not win.
Current report
Government contracts are also frequently structured as indefinite delivery/indefinite quantity ("IDIQ") contracts, General Services Administration Schedule ("GSA") contracts, or blanket purchase agreements, under which the government is not obligated to order any minimum amount of services. We believe our position as a prime contractor under GSA Schedule contracts and other IDIQ contracts is important to our ability to sell our services, but these vehicles require us to compete for each individual task order rather than having a predictable stream of activity. As a result, our contracted backlog may not be a reliable indicator of future revenue. We also experience seasonality in our revenue, as government procurement cycles tend to accelerate near the end of fiscal years, which can cause quarter-to-quarter fluctuations.
Current report
Our government contracts are subject to audit, investigation, modification, and termination by the government, which could result in adverse findings, reduced revenue, or other penalties.
Current report
Government contracts are subject to oversight, including audits by government auditors and investigators. Government agencies have the unilateral right to modify, curtail, or terminate our contracts, either for convenience or for cause. If a contract is terminated for convenience, we generally can recover only costs incurred and a reasonable profit on work already performed, but may not recover anticipated profits on unperformed work. If a contract is terminated for cause, we may be required to pay the government for the cost of re-procuring the services, and a termination for cause could harm our reputation and ability to win future contracts.
Current report
As a government contractor, we are subject to various laws and regulations governing the formation, administration, and performance of government contracts, including the Federal Acquisition Regulation and its state and local equivalents. Violations of these requirements, including the False Claims Act, could result in civil or criminal penalties, treble damages, contract suspension or debarment, or other remedies that would materially harm our business and reputation. The Department of Justice's Civil Cyber-Fraud Initiative has increased the risk that government contractors may face False Claims Act liability related to cybersecurity compliance, which is particularly relevant given that cybersecurity compliance is itself a core component of our service offerings.
Current report
A cybersecurity breach or incident affecting our systems, our clients' systems, or our AI-enhanced ARx platform could damage our reputation, expose us to liability, and undermine the market confidence that is fundamental to our business.
Current report
As a cybersecurity provider, our reputation depends on the market’s confidence in the security and reliability of our services and technology. A successful cyberattack against our own systems, the systems we manage for clients, or our AI-enhanced ARx cybersecurity platform could compromise sensitive government data, disrupt client operations, expose us to regulatory penalties and litigation, and cause lasting reputational harm. Because we are in the business of protecting our clients against cyber threats, a security failure affecting our own operations would be particularly damaging to our credibility and competitive position.
Current report
Cyberattacks are becoming more frequent, more sophisticated, and more difficult to detect. Threat actors—including nation-state actors, organized criminal groups, and insiders—continue to develop new methods of attack, and there can be no assurance that our defensive measures will be sufficient to prevent all breaches. Additionally, our products may contain undetected errors or defects, may falsely detect vulnerabilities or threats that do not actually exist, or may fail to detect vulnerabilities in our customers’ infrastructure, including due to the constantly evolving techniques used by attackers to access or sabotage data. If we fail to update our solutions in a timely or effective manner to respond to these threats, our customers could experience security breaches. We cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, or that insurance will continue to be available on economically reasonable terms.
Current report
The cybersecurity regulatory environment is rapidly evolving, and our failure to comply with new and changing requirements could result in penalties, loss of contracts, and competitive disadvantage.
Current report
Our business is subject to a complex and rapidly changing set of cybersecurity regulations and standards at the federal, state, and local levels. Federal requirements include compliance with NIST (defined below) SP 800-171 for protecting Controlled Unclassified Information, the Cybersecurity Maturity Model Certification ("CMMC") program, FedRAMP authorization requirements for cloud-based solutions, and various agency-specific security requirements. State and local governments are also increasingly adopting their own cybersecurity compliance mandates and vendor security assessment programs.
Current report
Both as a cybersecurity provider and as a government contractor, we bear a dual compliance burden: we must maintain our own compliance and must also deliver solutions that enable our clients to achieve and maintain theirs. Changes to regulatory requirements require us to invest in updating our internal systems, processes, and solution offerings. These costs can be substantial and may not be fully recoverable under existing contracts. The SEC's cybersecurity disclosure rules, adopted in 2023, require us to disclose material cybersecurity incidents within four business days, and as a cybersecurity company, any such disclosure would be particularly damaging to our market position.
Current report
Our AI-enhanced ARx platform and other technology solutions are at an early stage of market adoption, and there is no assurance that these products will achieve broad commercial acceptance.
Current report
We are investing in the development and deployment of our AI-enhanced ARx cybersecurity platform and our Cyber Shield Managed Security Services Platform ("MSSP"). These platforms represent a strategic shift toward higher-margin, technology-driven recurring revenue, but they are at an early stage of market adoption. There is no guarantee that government or commercial clients will adopt these platforms at the scale or pace we anticipate, that the platforms will perform as expected in production environments, or that competitors will not introduce superior alternatives. The development and enhancement of these technology platforms require substantial ongoing investment, and if they fail to achieve meaningful market traction, we may not recover our development costs.
Current report
The integration of artificial intelligence into our products and services introduces new categories of risk, including adversarial manipulation of AI models, AI-generated false positives or negatives in threat detection, and the evolving federal and state regulatory landscape governing AI in government operations. Regulatory requirements for AI transparency, bias testing, and explainability are still developing, and future regulations could constrain our product development or require costly modifications to our AI-driven solutions.
Current report
Risks Related to Our Financial Condition and Capital Structure
Current report
If we raise additional funds by selling shares of our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted. We may issue additional shares of Cycurion common stock or other equity securities without stockholder approval in connection with future acquisitions, repayment of outstanding indebtedness, or under the 2025 Equity Incentive Plan. The issuance of additional shares could decrease your proportionate ownership interest, subordinate the rights of holders of common stock if preferred stock is issued with senior rights, or adversely affect the market price of our shares. If we raise additional funds through debt financing, we may have to grant a security interest on our assets, and servicing the interest and principal repayment obligations could divert funds that would otherwise be available to support development of new programs and marketing. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce, or eliminate certain service offerings or future marketing efforts, or reduce or discontinue our operations.
Current report
Our allocation of capital to cryptocurrency investments involves speculative risk and may not align with the expectations of our shareholders or clients.
Current report
Through our subsidiary, Cycurion Crypto, we have allocated capital from our equity line of credit to acquire Bitcoin and Ethereum as long-term holdings. Cryptocurrency markets are extremely volatile and subject to regulatory uncertainty, technological risks, and market manipulation. The value of our cryptocurrency holdings could decline substantially, and such declines would adversely affect our financial condition and results of operations. Our decision to allocate capital to cryptocurrency rather than to our core cybersecurity operations or working capital needs may be viewed unfavorably by investors, analysts, and government clients. There is no assurance that our cryptocurrency strategy will enhance shareholder value.
Current report
Risks Related to Our Growth Strategy and Acquisitions
Current report
Through acquisition of other service providers, we will also inherit an increasingly larger client base, which creates cross-selling and up-selling opportunities but also requires high-quality service and exemplary client management to retain and grow that base. If our marketing and integration efforts do not materialize, we may lose existing clients or fail to obtain new clients. Integration challenges are particularly acute for a company of our size, as we have limited management bandwidth and financial resources to absorb the complexity of multiple simultaneous integration efforts. Any impairment of goodwill or other intangible assets acquired in an acquisition may materially reduce our earnings.
Current report
Our future performance depends upon our ability to attract and retain qualified cybersecurity personnel and the continued contribution of our senior management and other qualified personnel. The information technology consulting and cybersecurity industries have highly competitive labor markets, and there is a well-documented nationwide shortage of qualified cybersecurity professionals. This shortage is particularly acute for personnel who hold government security clearances, as the clearance process is lengthy, expensive, and outside of our control, which constrains our ability to staff contracts and scale our operations rapidly in response to new contract awards.
Current report
We compete for talent with larger, better-capitalized firms that can offer higher compensation, more extensive benefits, and broader career advancement opportunities. In order to attract and retain the employees we need, we may need to increase compensation levels, which could adversely affect our operating margins. The loss of the services of our senior management or other key employees for any reason could significantly delay or prevent the achievement of our development and strategic objectives. If any of our executive officers joins a competitor or forms a competing company, we may lose some or all of our customers. We do not maintain key-person life insurance on any of our executive officers.
Current report
Risks Related to Our Securities and Nasdaq Listing
Current report
Our common stock is listed on The Nasdaq Global Market and our warrants are listed on The Nasdaq Capital Market. We have received, and may continue to receive, deficiency notices from Nasdaq related to our failure to timely file periodic reports with the SEC and to meet minimum bid price, market value of listed securities, and market value of publicly held shares requirements. Although we are working to regain compliance with all applicable Nasdaq listing rules, there is no guarantee that we will be able to do so within the required time periods or at all.
Current report
If we fail to comply with the continued minimum closing bid requirements of the Nasdaq Global Market or other requirements for continued listing, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
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Removed paragraphs (113)
Previous report
You should carefully consider the risks described below with respect to an investment in our shares. If any of the following risks actually occur, our business, financial condition, operating results or cash provided by operations could be materially harmed. As a result, the trading price of our common stock could decline, and you might lose all or part of your investment. When evaluating an investment in our common stock, you should also refer to the other information in this Annual Report, including our consolidated financial statements and related notes.
Previous report
Cycurion has a limited operating history upon which you can evaluate our future business and prospects.
Previous report
Cycurion has a limited operating history. It was incorporated in 2017. Since its incorporation, Cycurion has acquired two operating subsidiaries: Axxum in 2017 and Cloudburst in 2019. It also acquired certain technology assets of Sabres in September 2021. Accordingly, Cycurion and its subsidiaries have varying operating histories and, together as a consolidated company, has a limited operating history, which can make it difficult for investors to evaluate Cycurion’s operations and prospects and may increase the risks associated with an investment. There can be no assurance that Cycurion’s business plan can be realized in the manner contemplated, that it will ever realize any significant operating revenues, or that its operations will ever be profitable and, therefore, its stockholders may lose all or a substantial part of their investment.
Previous report
Cycurion has incurred net losses and cannot assure you that it will achieve or maintain profitable operations.
Previous report
Cycurion’s net income was $1,229,601 for the year ended December 31, 2024 and net loss was $(2,097,013) December 31, 2023. Cycurion may continue to incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties, complications, and delays and other unknown events.
Previous report
Cycurion intends to increase its brand awareness, expand the customer base, and expect to continue to invest heavily in its businesses in the foreseeable future as management continues to attempt to expand and grow the core businesses. In addition, Cycurion’s net revenues could be impacted by various factors, including the competitive landscape, customer preferences, and the success of our service offerings.
Previous report
Accordingly, management cannot assure you that Cycurion will achieve sustainable operating profits as it continues to attempt to expand its product and professional service offerings and otherwise implement its growth initiatives. Any failure to achieve and maintain profitability would have a materially adverse effect on Cycurion’s ability to implement its business plan, its results and operations, and its financial condition, and could cause the value of its common stock to decline, resulting in a significant or complete loss of your investment.
Previous report
As of December 31, 2024, Cycurion had approximately $20.2 million of indebtedness and other liabilities outstanding.
Previous report
If we raise additional funds by selling shares of our common stock or other equity-linked securities, the ownership interest of our current stockholders will be diluted. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, or assets or to grant licenses on terms that may not be acceptable to us. If we raise additional funds through debt financing, we may have to grant a security interest on our assets to the future lenders, our debt service costs may be substantial, and the lenders may have a preferential position in connection with any future bankruptcy or liquidation involving the Company.
Previous report
We may issue additional shares of common stock or preferred stock under an employee incentive plan, which would dilute the interest of our stockholders.
Previous report
We may issue a substantial number of additional shares of common or preferred stock under an employee incentive plan. The issuance of additional shares of common or preferred stock:
Previous report
Cycurion’s ability to grow and compete in the future will be adversely affected if adequate capital is not available to it or not available on favorable terms.
Previous report
Cycurion has limited capital resources. To date, it has financed its operations through a mix of equity investments by unaffiliated third parties and bank debt financing and, except in connection with this Offering, it expects to continue to do so in the foreseeable future. Cycurion’s ability to continue its normal and planned operations, to grow its business, and to compete in the cybersecurity industry will depend on the availability of adequate capital.
Previous report
Management cannot assure you that Cycurion will be able to obtain additional financing from those or other sources when or in the amounts needed, on acceptable terms, or at all. If it raises capital through the sale of equity, or securities convertible into equity, that would result in dilution to its then-existing stockholders, which could be significant depending on the price at which it may be able to sell its securities. If Cycurion raises additional capital through the incurrence of additional indebtedness, it would likely become subject to further covenants restricting its business activities, and holders of debt instruments would have rights and privileges senior to those of its then-existing stockholders. In addition, servicing the interest and principal repayment obligations under debt facilities could divert funds that would otherwise be available to support development of new programs and marketing to current and potential new clients. If Cycurion is unable to raise capital when needed or on acceptable terms, it could be forced to delay, reduce, or eliminate certain products or professional service offerings or future marketing efforts, or reduce or discontinue its operations. Any of these events could significantly harm Cycurion’s business, financial condition, and prospects and could cause the value of its common stock to decline, resulting in a significant or complete loss of your investment.
Previous report
Cycurion’s success will depend, in part, on its ability to develop and implement innovative customer solutions and professional services that anticipate and keep pace with rapid and continuing changes in technology, industry standards, and client preferences, as well as continue to attract top talent and expertise in order to develop innovative solution offerings and professional services that are required to keep up with dynamic industry landscapes. Cycurion may not be successful in anticipating or responding to these developments in a timely basis, and its offerings may not be successful in the marketplace. In addition, services, solutions, and technologies developed by its competitors may make its service or solution offerings uncompetitive or obsolete. Any of these circumstances could have a material adverse effect on its ability to obtain and successfully complete important client engagements, which in return would negatively affect revenue and operating results.
Previous report
Cycurion’s future performance depends upon its ability to attract and retain qualified cybersecurity personnel. The information technology consulting and cybersecurity industries have highly competitive labor markets, which depend on technical expertise and experience. In the future, it may be unable to continue to recruit and retain talent. If it is unable to recruit and/or retain talent, it may not be able to expand. Finally, its competitors may offer more competitive compensation packages than it could afford to offer.
Previous report
Cycurion regularly attempts to benchmark its employee and contractor compensation against compensation paid within our industry and, if possible, make annual adjustments to the compensation it pays in order to remain competitive in the market.
Previous report
In order to attract and retain the number of employees Cycurion needs to grow our business, it may need to increase its compensation levels in the future. This could adversely affect its operating margins, which, in turn, could negatively affect its financial condition and operating results.
Previous report
If Cycurion is unable to hire, retain, train, and motivate qualified personnel and senior management, its business could suffer.
Previous report
Cycurion’s future success largely depends upon the continued contribution, attraction, and retention of its senior management and other qualified personnel. If one or more of Cycurion’s executive officers are unable or unwilling to continue in their present positions, it may not be able to replace them readily, if at all. Additionally, it may incur additional expenses to recruit and retain new executive officers. If any of its executive officers joins a competitor or forms a competing company, it may lose some or all of its customers. Finally, it does not maintain “key person” life insurance on any of its executive officers. Because of these factors, the loss of the services of any of these key persons could adversely affect Cycurion’s business, financial condition, and results of operations, and thereby an investment in its common stock.
Previous report
Cycurion must continually enhance its training, existing solutions and technology tools and develop or acquire new solutions and tools, or it will lose clients and its competitive position will suffer.
Previous report
The cybersecurity landscape is constantly changing with increasing scale, frequency, and organization of attacks. Thus, there is a high need for constant improvement and updates in Cycurion’s existing solutions and technologies. Cycurion faces the risks of its services offerings not being adequately competitive, including not being able to: (i) accurately targeting its clients’ and prospective clients’ most-needed solutions (ii) being cost-effective for its clients and prospective clients, and (iii) being easy to use.
Previous report
If Cycurion does not meet its clients’ and prospective clients’ expectations, or adequately mitigate these risks, it risks losing its competitive position and clients, which, in turn, will decrease its operating profits, revenue, and net income.
Previous report
Cycurion faces intense competition in the cybersecurity industry, especially from larger, well-established companies.
Previous report
Cycurion faces significant competition from other cybersecurity companies, especially those companies who are considered the larger and more established entities. Relative to Cycurion, many of these companies have significantly greater financial, technical, marketing, and other resources, longer operating histories, more well-established brand names and business user recognition, larger customer bases, larger and more mature intellectual property portfolios, and more diverse strategic plans and service offerings. Intense competition from these traditional and new cybersecurity companies has led to declining prices and margins for many cybersecurity services, and Cycurion expects this trend to continue as competition intensifies in the future. Any decrease in Cycurion’s pricing or margins, could significantly harm its business, financial condition, and results of operations, resulting in a significant or complete loss of your investment.
Previous report
Further, decreasing prices for such professional services due to high number of entrants has somewhat diminished the competitive advantage that Cycurion has enjoyed as a result of its service pricing. If its competitors implement a similar business model, then Cycurion’s competitive position in the market might be diluted. Should this happen, its ability to acquire and keep customers would be impaired. Cycurion’s competitors may also introduce new technologies or services that could make Cycurion’s product offerings and professional services less attractive to its customers or potential customers. The inability to maintain or improve its competitive standing within the cybersecurity industry could materially adversely affect its business, prospects, financial condition, and results of operations.
Previous report
For all of these reasons, Cycurion may not be able to compete successfully against its current or future competitors or may be required to expend significant resources in order to remain competitive. If Cycurion’s competitors are more successful than Cycurion in developing new product and service offerings or in attracting and retaining customers, Cycurion’s business, financial condition, and results of operations could be adversely affected.
Previous report
If our products or professional services fail to detect vulnerabilities or identify and respond to cybersecurity incidents, or if our products contain undetected errors or defects, our brand and reputation could be harmed, which could have an adverse effect on our business and results of operations.
Previous report
If our products or professional services fail to detect vulnerabilities in our customers’ cybersecurity infrastructure, or if our products or professional services fail to identify and respond to new and increasingly complex methods of cyber-attacks, our business and reputation may suffer. There is no guarantee that our products or professional services will detect all vulnerabilities, especially in light of the rapidly changing security landscape to which we must respond. Additionally, our products may falsely detect vulnerabilities or threats that do not actually exist.
Previous report
Our products may also contain undetected errors or defects. Any errors, defects, disruptions in service, or other performance problems with our products may damage our customers’ businesses and could hurt our reputation. If our products or professional services fail to detect vulnerabilities for any reason, we may incur significant costs, the attention of our key personnel could be diverted, our customers may delay or withhold payment to us or elect not to renew or other significant customer relations problems may arise. We may also be subject to liability claims for damages related to errors or defects in our products. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our products may harm our business and operating results.
Previous report
Many federal, state, and foreign governments have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, and any association of us with such publicity may cause our customers to lose confidence in the effectiveness of our security solutions. An actual or perceived security breach or theft of the sensitive data of one of our customers, regardless of whether the breach is attributable to the failure of our products or professional services, could adversely affect the market’s perception of our offerings and subject us to legal claims.
Previous report
We have recently acquired multiple businesses. Our growth strategy is driven by successful acquisitions and integration of additional businesses that provide comparable or complementary services. Our ability to grow is limited if we fail to identify and consummate acquisitions.
Previous report
We have completed the acquisition of certain complementary businesses, and we intend to consider additional potential strategic transactions, which could involve acquisitions of businesses or assets, joint ventures, or investments in businesses or technologies that expand, complement, or otherwise relate to our business. We may also consider, from time to time, opportunities to engage in joint ventures or other business collaborations with third parties. Should our relationships fail to materialize into significant agreements, or should we fail to work efficiently with these companies, we may lose sales and marketing opportunities and our business, results of operations, and financial condition could be adversely affected.
Previous report
Any business acquisition creates risks such as, among others: (i) the need to integrate and manage the businesses acquired with our own business; (ii) additional demands on our resources, systems, procedures, and controls; (iii) disruption of our ongoing business; and (iv) diversion of management’s attention from other business concerns. Moreover, these transactions could involve: (a) substantial investment of funds or financings by issuance of debt or equity securities; (b) substantial investment with respect to technology transfers and operational integration; and (c) the acquisition or disposition of lines of businesses. Also, such activities could result in one-time charges and expenses and have the potential to either dilute the interests of our existing stockholders or result in the issuance of, or assumption of debt. Such acquisitions, investments, joint ventures, or other business collaborations may involve significant commitments of financial and other resources. Any such activities may not be successful in generating revenue, income, or other returns, and any resources we committed to such activities will not be available to us for other purposes. Moreover, if we are unable to access the capital markets on acceptable terms or at all, we may not be able to consummate acquisitions, or may have to do so on the basis of a less than optimal capital structure. Our inability to take advantage of growth opportunities or address risks associated with acquisitions or investments in businesses may negatively affect our operating results.
Previous report
Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated with any acquisition or investment activity, may materially reduce our earnings. Future acquisitions or joint ventures may not result in their anticipated benefits and we may not be able to properly integrate acquired technologies or businesses with our existing operations or successfully combine personnel and cultures. Failure to do so could deprive us of the intended benefits of those acquisitions.
Previous report
Through acquisition of other service providers, we will inherit an increasingly larger client base, which creates cross-selling and up-selling opportunities. We need high-quality service and exemplary client management to retain and grow our client base. We also plan to launch sales and marketing efforts, and if our marketing efforts do not materialize, we may lose existing clients or fail to obtain new clients. Our inability to grow sales as we expand in operations may result in continuing losses, and we may not be profitable for an extended period of time. In addition, even if we are able to make future acquisitions, we will incur additional costs to consummate them, which may result in a shortage in our capital resources. We may also incur difficulties in integrating new businesses with our current operations.
Previous report
As a cybersecurity provider, we are a target of cyber-attacks and other cyber risks that could adversely impact our reputation and operating results.
Previous report
As a cybersecurity provider, we have been and will likely be a target of cyber-attacks designed to impede the performance of our products, penetrate our network security, or that of our customers, misappropriate proprietary information and/or cause interruptions to our services. If our systems are breached as a result of third-party action, employee error or misconduct, attackers could learn critical information about how our products operate to help protect our customers’ infrastructures from cyber risk, thereby making our customers more vulnerable to cyber-attacks. In addition, if actual or perceived breaches of our network security occur, they could adversely affect the market perception of our products, negatively affecting our reputation, and may expose us to the loss of our proprietary information or information belonging to our customers, investigations or litigation and possible liability, including injunctive relief and monetary damages. Such security breaches could also divert the efforts of our key personnel. In addition, such security breaches could impair our ability to operate our business and provide products and services to our customers. If this happens, our reputation could be harmed, our revenue could decline and our business could suffer.
Previous report
The loss of, or a significant reduction, in purchases by any of our larger clients could adversely affect our business and financial results.
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Reworded paragraphs (32)
Previous wording
If Cycurion does not continue to innovate and offer solutions and professional services that address the dynamic threat landscape, it may not remain competitive and its revenue and operating results could suffer.
Current wording
The competitive landscape for cybersecurity and IT services is intense, and if we do not continue to innovate we may not remain competitive and our revenue and operating results could suffer.
Previous wording
Our operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing, and general economic trends. Our revenue and operating results may fluctuate if our sales targets are not met, new service offerings receive poor client response, or client acquisition costs increase due to competition. In addition to these factors, our acquisition strategy may impose additional risks to the predictability of our operating results. Revenue streams may be volatile due to the uncertainty in identifying attractive acquisition candidates and our ability to consummate new acquisitions. Unexpected expenses may be incurred during due diligence and post-acquisition. Management intends to manage risk carefully with the acquisitions; however, there can be no assurance that we will be able to identity and consummate acquisitions that improve our results of operations.
Current wording
Our operating results are dependent on a variety of factors, including purchasing patterns of our clients, competitive pricing, debt servicing, and general economic trends. Our revenue and operating results may fluctuate if our sales targets are not met, new service offerings receive poor client response, or client acquisition costs increase due to competition. In addition, our acquisition strategy may impose additional risks to the predictability of our operating results, as revenue streams may be volatile due to the uncertainty in identifying attractive acquisition candidates and our ability to consummate new acquisitions.
Previous wording
Significant portions of our services and operations rely on software that is licensed from third-party vendors. The fees associated with these license agreements could increase in future periods, resulting in increased operating expenses. If there are significant changes to the terms and conditions of our license agreements, or if we are unable to renew these license agreements, we may be required to make changes to our vendors or information technology systems. These changes could impact the solutions and services we provide to our clients or the processes we have in place to support our operations, which could have an adverse effect on our business.
Current wording
Significant portions of our services and operations rely on software that is licensed from third-party vendors. The fees associated with these license agreements could increase in future periods, resulting in increased operating expenses. If there are significant changes to the terms and conditions of our license agreements, or if we are unable to renew these license agreements, we may be required to make changes to our vendors or information technology systems that could impact the solutions and services we provide to our clients or the processes we have in place to support our operations.
Previous wording
Cycurion’s recurring losses, net working capital, and accumulated deficit resulting from substantial operating losses have raised substantial doubt regarding its ability to continue as a going concern.
Current wording
Our recurring losses, net working capital deficit, and accumulated deficit have raised substantial doubt regarding our ability to continue as a going concern.
Previous wording
Cycurion had a net working capital deficit of $7.8 million and an accumulated deficit of $3.2 million resulting from net income incurred during the year ended December 31, 2024 and from substantial losses during prior periods. In addition, it had a net cash outflow of $2.0 million from operating activities during the year ended December 31, 2023 and $1.4 million during the year ended December 31, 2024, all of which raise substantial doubt about its ability to continue as a going concern. Although Cycurion was nominally profitable during the 2024 fiscal year, there is no assurance that it will not continue to generate operating losses and consume significant cash resources for the foreseeable future. Without additional financing, these conditions raise substantial doubt about Cycurion’s ability to continue as a going concern, meaning that it may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations. If Cycurion seeks additional financing to fund its business and potential acquisition activities in the future and there remains doubt about its ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. If Cycurion is unable to obtain sufficient funding, its business, prospects, financial condition, and results of operations will be materially and adversely affected, and it may be unable to continue as a going concern. If it is unable to continue as a going concern, it may have to liquidate its assets and may receive less than the value at which those assets are carried on its financial statements; accordingly, it is likely that stockholders will lose all or a part of their investment.
Current wording
Without additional financing, these conditions raise substantial doubt about our ability to continue as a going concern, meaning that we may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations. If we seek additional financing to fund our business and potential acquisition activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. If we are unable to obtain sufficient funding, our business, prospects, financial condition, and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements; accordingly, it is likely that stockholders will lose all or a part of their investment.
Previous wording
Cycurion’s level of indebtedness and debt service obligations could adversely affect its financial condition and make it more difficult for management to fund its operations.
Current wording
Our level of indebtedness and debt service obligations could adversely affect our financial condition and make it more difficult to fund our operations.
Previous wording
Despite the existing level of indebtedness, Cycurion and its subsidiaries may incur additional indebtedness, which could further exacerbate the risks described above.
Current wording
We have significant indebtedness and other liabilities outstanding. This level of indebtedness means that we will need to use a substantial portion of available cash flow to pay interest and principal on existing debt, reducing the amount of money available to finance our operations and other business activities. Our debt level increases our vulnerability to general economic downturns and adverse industry conditions, could limit our flexibility in planning for or reacting to changes in our business, could place us at a competitive disadvantage compared to our competitors that have less debt, and our failure to comply with financial and other restrictive covenants in our debt instruments could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects. Despite the existing level of indebtedness, we and our subsidiaries may incur additional indebtedness, which could further exacerbate these risks.
Previous wording
Our operations have consumed substantial amounts of cash since our inception. As of December 31, 2024, we had an accumulated deficit of $3.2 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Our business will require substantial additional capital for implementation of our long-term business plan and development of cybersecurity technology. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the U.S. As we require additional funds, we may seek to fund our operations through the sale of additional equity securities, debt financing, and/or strategic collaboration agreements. We cannot be sure that additional financing from any of these sources will be available when needed or that, if available, the additional financing will be obtained on favorable terms.
Current wording
Our operations have consumed substantial amounts of cash since our inception. Our business will require substantial additional capital for implementation of our long-term business plan and development of cybersecurity technology. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to the credit and financial markets. We may seek to fund our operations through the sale of additional equity securities, debt financing, and/or strategic collaboration agreements. We cannot be sure that additional financing from any of these sources will be available when needed or that, if available, it will be obtained on favorable terms.
Previous wording
We intend to grow our client base significantly through acquisitions of other service providers. If we fail to retain existing clients and attract new clients through acquisitions, we may never achieve profitability.
Current wording
Our growth strategy depends in part on acquisitions, which involve integration risks, potential liabilities, and the diversion of management's attention, and if we fail to retain existing clients and attract new clients through acquisitions, we may not achieve profitability.
Previous wording
To remain competitive, we have in the past and may in the future seek to acquire additional businesses, products, or technologies. The environment for acquisitions in our industry is very competitive and acquisition candidate purchase prices will likely exceed what we would prefer to pay. We also may not find suitable acquisition candidates, and acquisitions we complete may be unsuccessful.
Current wording
We have completed the acquisition of certain complementary businesses, and we intend to consider additional potential strategic transactions that expand, complement, or otherwise relate to our business. Any business acquisition creates risks such as the need to integrate and manage the acquired business, additional demands on our resources and controls, disruption of our ongoing business, and diversion of management’s attention. The environment for acquisitions in our industry is very competitive and acquisition candidate purchase prices will likely exceed what we would prefer to pay. We may only be able to conduct limited due diligence on an acquired company’s operations or may discover that products or technology acquired were not as capable as we initially assessed. Following an acquisition, we may be subject to unforeseen liabilities arising from the acquired company’s past or present operations that may exceed negotiated warranty and indemnity limitations.
Previous wording
Our strategic partnerships expose us to a range of business risks and uncertainties that could have a material adverse impact on our business and financial results.
Current wording
Our strategic partnerships and international expansion expose us to a range of business risks and uncertainties.
Previous wording
We and our subsidiaries have entered, and intend to continue to enter, into strategic partnerships with third parties to support our future growth plans. We cannot provide any assurance that we will be able to continue to enter into additional strategic partnerships. Strategic partnerships require significant coordination between the parties involved, particularly if a partner requires that we integrate its products with our products. Further, we have invested and will continue to invest significant time, money, and resources to establish and maintain relationships with our strategic partners, but we have no assurance that any particular relationship will continue for any specific period of time, result in new offerings that we can effectively commercialize, or result in enhancements to our existing offerings.
Current wording
We have entered, and intend to continue to enter, into strategic partnerships with third parties to support our future growth plans, including our partnership with LSV-TECH International Consortium to launch our MSSP Cyber Shield platform in Latin America and our collaboration with NACCHO for public health cybersecurity. Strategic partnerships require significant coordination, and we have invested and will continue to invest significant time, money, and resources to establish and maintain these relationships. There is no assurance that any particular relationship will continue, result in new offerings that we can effectively commercialize, or generate meaningful revenue. International expansion exposes us to risks including unfamiliar regulatory environments, foreign exchange fluctuations, geopolitical instability, and the challenges of establishing brand recognition in new geographies.
Previous wording
Cycurion relies on personnel with extensive information security expertise and the loss of, or its inability to attract and retain, qualified personnel in the highly competitive labor market for such expertise could harm its business.
Current wording
We rely on personnel with extensive information security expertise, including security-cleared professionals, and the loss of, or our inability to attract and retain, qualified personnel could harm our business.
Previous wording
Our common stock is listed on The Nasdaq Global Market and our warrants are listed on The Nasdaq Capital Market. Although we met the minimum initial listing standards of Nasdaq for each of our securities, which generally only requires that we meet certain requirements relating to stockholders’ equity, market capitalization, aggregate market value of publicly held shares, and distribution requirements, we cannot assure you that each of our securities will continue to be listed on Nasdaq in the future. The inability to comply with Nasdaq’s continued requirements or standards could result in the delisting of either or both classes of our securities, which could have a material adverse effect on our financial condition and could cause the value of the common stock, or our warrants, to decline.
Current wording
There can be no assurance that our securities will continue to be listed on Nasdaq in the future.
Previous wording
If our common stock were to be delisted from trading on The Nasdaq Global Market and become quoted on the over-the-counter market and, under certain circumstances, if the trading price of our common stock were below $5.00 per share on the date the common stock is delisted, trading in our common stock would also be subject to the requirements of certain rules promulgated under the Exchange Act. These rules require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a “penny stock” and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally institutions. These additional requirements may discourage broker-dealers from effecting transactions in securities that are classified as penny stocks, which could severely limit the market price and liquidity of such securities and the ability of purchasers to sell such securities in the secondary market. A penny stock is defined generally as any non-exchange listed equity security that has a market price of less than $5.00 per share, subject to certain exceptions.
Current wording
If our common stock were to be delisted from Nasdaq and become quoted on the over-the-counter market, and if the trading price were below $5.00 per share at the time of delisting, trading in our common stock would be subject to certain rules promulgated under the Exchange Act that require additional disclosure by broker-dealers in connection with trades involving “penny stocks” and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. These additional requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our common stock. Delisting could also impair our reputation with government clients and partners, who may view our continued listing status as an indicator of financial stability and corporate governance quality, and could trigger defaults or other adverse consequences under our financing agreements.
Previous wording
A “short squeeze” due to a sudden increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze have led to, may be currently leading to, and could again lead to, extreme price volatility in shares of our common stock.
Current wording
A "short squeeze" due to a sudden increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze have led to, and may lead to, extreme price volatility in the price of our common stock.
Previous wording
Cycurion’s business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause Cycurion to incur significant expense, hinder execution of business and growth strategy and impact its stock price.
Current wording
Volatility in the price of our common stock may subject us to securities litigation, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price.
Previous wording
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Volatility in the stock price of our common stock or other reasons may in the future cause it to become the target of securities litigation or stockholder activism. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s and the board of directors’ attention and resources from the Cycurion’s business. Additionally, such securities litigation and stockholder activism could give adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, Cycurion may be required to incur significant legal fees and other expenses related to any securities litigation and activist stockholder matters. Further, its stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism.
Current wording
In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. We may in the future be the target of similar litigation or activism. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources regardless of the outcome. Additionally, such securities litigation and stockholder activism could adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel.
Previous wording
Potential future sales pursuant to registration rights granted by the Company and under Rule 144 may depress the market price for our shares of common stock.
Current wording
Potential future sales pursuant to registration rights and under Rule 144 may depress the market price for our shares of common stock.
Previous wording
The Company has granted a number of its stockholders’ registration rights with respect to their shares of common stock. See the section titled “Registration Rights.” Such future sales of our shares of common stock by our existing stockholders, pursuant to and in accordance with the provisions of any registration statement, may have a depressive effect on the market price of our shares of common stock. Further, in general, under Rule 144 under the Securities Act, a person who has satisfied a minimum holding period of between six months and one-year and any other applicable requirements of Rule 144, may thereafter sell such shares publicly. A significant number of our currently issued and outstanding shares of common stock held by existing stockholders, including officers and directors and other principal stockholders are currently eligible for resale pursuant to and in accordance with the provisions of Rule 144. The possible future sale of our shares by our existing stockholders, pursuant to and in accordance with the provisions of Rule 144, may have a depressive effect on the price of our Shares of common stock in the applicable trading marketplace.
Current wording
We have granted a number of our stockholders registration rights with respect to their shares of common stock. Such future sales by our existing stockholders pursuant to any registration statement, as well as sales by stockholders eligible to sell under Rule 144 under the Securities Act, may have a depressive effect on the market price of our shares. A significant number of our currently outstanding shares held by existing stockholders, including officers, directors, and principal stockholders, are currently or will become eligible for resale, and the possible sale of these shares could further depress the price of our shares in the applicable trading marketplace.
Previous wording
In the future, we may attempt to increase our capital resources by making additional offerings of debt or preferred equity securities, including convertible or non-convertible senior or subordinated notes, convertible or non-convertible preferred stock, medium-term notes and trust preferred securities. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our common stock. In addition, any preferred stock we may issue could have a preference on liquidating distributions or a preference on distribution payments that could limit our ability to make a distribution to the holders of our common stock. Since our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock.
Current wording
In the future, we may attempt to increase our capital resources by making additional offerings of debt or preferred equity securities. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings would receive distributions of our available assets prior to the holders of our common stock. Any preferred stock we may issue could have a preference on liquidating distributions or distribution payments that could limit our ability to make distributions to common stockholders. Since our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict the amount, timing or nature of our future offerings, and our stockholders bear the risk that future offerings may reduce the market price of our common stock.
Previous wording
Pursuant to Section 404 of the Sarbanes-Oxley Act, our management will be required to report upon the effectiveness of our internal control over financial reporting beginning with the annual report for our fiscal year ending December 31, 2024. When and if we are a “large accelerated filer” or an “accelerated filer” and are no longer an “emerging growth company” or “smaller reporting company,” each as defined in the Exchange Act, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. However, for so long as we remain an emerging growth company or smaller reporting company, we intend to take advantage of an exemption available to emerging growth companies and smaller reporting companies from these auditor attestation requirements. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. To comply with the requirements of being a reporting company under the Exchange Act, we will need to upgrade our systems including information technology; implement additional financial and management controls, reporting systems, and procedures; and hire additional accounting and finance staff. If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting, and the trading price of our common stock may decline.
Current wording
Pursuant to Section 404 of the Sarbanes-Oxley Act, our management is required to report upon the effectiveness of our internal control over financial reporting. When and if we are a "large accelerated filer" or an "accelerated filer" and are no longer an "emerging growth company" or "smaller reporting company," our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. However, for so long as we remain an emerging growth company or smaller reporting company, we intend to take advantage of an exemption from these auditor attestation requirements.
Previous wording
We identify material weakness in our internal controls, which could affect our ability to provide reliable financial statements and our business decision-making process, could harm our business and operating results, cause investors to lose confidence in our reported financial information, cause the market price of our securities to decrease and harm our ability to obtain additional financing, especially additional financing on favorable terms, could be adversely affected. In addition, failure to maintain effective internal control over financial reporting could result in investigations or sanctions by regulatory authorities. For a description of our material weaknesses, please see “Item 9A. Controls and Procedures.”
Current wording
The rules governing management’s assessment of internal control over financial reporting are complex and require significant expenses, documentation, testing, and possible remediation. If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting, the trading price of our common stock may decline, and our ability to obtain additional financing, especially on favorable terms, could be adversely affected. Any identified material weakness in our internal controls could affect our ability to provide reliable financial statements and our business decision-making process, and could result in investigations or sanctions by regulatory authorities.
Previous wording
Accusations against us by third parties of infringement or other violations of their intellectual property rights, regardless of the accuracy of these assertions, could result in significant costs and harm our business and operating results.
Current wording
Accusations of intellectual property infringement by third parties, regardless of accuracy, could result in significant costs and harm our business.
Previous wording
We cannot ensure that our professional services and solutions, or the third-party solutions that we offer to our clients, do not infringe on the intellectual property rights of third parties and, in the future, we may have infringement claims asserted against us or against our clients. These claims could harm our reputation, require us to incur significant expenses and monetary liability, and prevent us from offering some of our current professional services or solutions. Legal challenges to our intellectual property rights and claims of intellectual property infringement by third parties could require that we enter into royalty or licensing agreements on less-than-favorable terms. Even if we believe any such challenges or claims are without merit, they can be time-consuming and costly to defend, injure our reputation, and divert management’s attention and resources away from our business. We may need to change our business practices if any of these events were to occur, which may limit our ability to compete effectively and could have an adverse effect on our results of operations.
Current wording
We cannot ensure that our professional services and solutions, or the third-party solutions that we offer to our clients, do not infringe on the intellectual property rights of third parties. Infringement claims, even if without merit, can be time-consuming and costly to defend, injure our reputation, and divert management’s attention and resources away from our business. If we are required to enter into royalty or licensing agreements on less-than-favorable terms or to modify our offerings, our ability to compete effectively could be impaired.
Previous wording
We carry insurance for most categories of risk that our business may encounter; however, we may not have adequate levels of coverage. We currently maintain general liability, property, workers’ compensation, clinical study, products liability and directors’ and officers’ insurance, along with an umbrella policy. We may not be able to maintain existing insurance at current or adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.
Current wording
We carry insurance for most categories of risk that our business may encounter; however, we may not have adequate levels of coverage. We may not be able to maintain existing insurance at current or adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.
Previous wording
Our charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These provisions will include:
Current wording
Our charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices. These provisions include no cumulative voting in the election of directors, the right of our board of directors (the "Board") to fill vacancies, and a prohibition on stockholder action by written consent.
Previous wording
Cycurion may incur significantly increased costs and devote substantial management time as a result of operating as a public company.
Current wording
Our historical management team has limited experience managing a public company, and we may incur significantly increased costs as a result of operating as a public company.
Previous wording
Most members of the Company’s management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. As a public company, the Company is subject to significant obligations relating to reporting, procedures and internal controls, and its management team may not successfully or efficiently manage such obligations. These obligations and scrutiny will require significant attention from the Company’s management and could divert their attention away from the day-to-day management of its business, which could adversely affect its business, financial condition, and results of operations.
Current wording
Our historical management team members have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. As a public company, we are subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations, which could divert attention from the day-to-day management of our business.
Previous wording
As a public company, Cycurion will incur significant costs related to legal, accounting, listing, hiring of external consultants and advisors, and other expenses. For example, it will be subject to the reporting requirements of the Exchange Act and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and Nasdaq, including the establishment and maintenance of effective disclosure and financial controls, changes in corporate governance practices and required filing of annual, quarterly and current reports with respect to its business and results of operations. Cycurion expects that compliance with these requirements will increase its legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, Cycurion expects that management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, the Company expects to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when Cycurion is no longer an emerging growth company. EUDA may also need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and establish an internal audit function.
Current wording
We incur significant costs related to legal, accounting, listing, hiring of external consultants and advisors, and other expenses of being a public company. We are subject to the reporting requirements of the Exchange Act and must comply with the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Act, and SEC and Nasdaq rules, including the establishment and maintenance of effective disclosure and financial controls. We expect that compliance with these requirements will continue to increase our legal and financial compliance costs. Additionally, operating as a public company makes it more expensive to obtain director and officer liability insurance, which could also make it more difficult to attract and retain qualified people to serve on our Board or as executive officers.
Previous wording
Cycurion will qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, Cycurion will be eligible for and intends to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as it continues to be an emerging growth company, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency, and say-on-golden parachute voting requirements, and (c) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements. Cycurion will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period, or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of its predecessor’s IPO. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as Cycurion is an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to opt out of such extended transition period and, therefore, Cycurion may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Investors may find our common stock less attractive because Cycurion will rely on these exemptions, which may result in a less active trading market for our common stock and its price may be more volatile.
Current wording
We qualify as an "emerging growth company" as defined in the Securities Act, as modified by the JOBS Act, and are eligible to take advantage of certain exemptions from various reporting requirements, including the auditor attestation requirements under Section 404(b) of the Sarbanes-Oxley Act, say-on-pay voting requirements, and reduced executive compensation disclosure obligations. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company," which would allow many of the same exemptions. We have elected not to opt out of the extended transition period for complying with new or revised accounting standards. Investors may find our common stock less attractive because we rely on these exemptions, which may result in a less active trading market and more volatile stock price.
Previous wording
If securities or industry analysts do not publish research or reports about the Company, or publish negative reports, the Company’s share price and trading volume could decline.
Current wording
If securities or industry analysts do not publish research or reports about us, or publish negative reports, our share price and trading volume could decline.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Risks Related to Our Business and Operations
Current report — wording carried from elsewhere
We have had a net working capital deficit and an accumulated deficit resulting from net income incurred during certain periods and from substantial losses during prior periods. In addition, we have had net cash outflows from operating activities, all of which raise substantial doubt about our ability to continue as a going concern. Although we were nominally profitable during certain recent fiscal years, there is no assurance that we will not continue to generate operating losses and consume significant cash resources for the foreseeable future.
Current report — wording carried from elsewhere
Future offerings of debt or preferred equity securities could adversely affect the market price of our common stock.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
In addition, we may only be able to conduct limited due diligence on an acquired company’s operations or may discover that the products or technology acquired were not as capable as we thought based upon the initial or limited due diligence. Following an acquisition, we may be subject to unforeseen liabilities arising from an acquired company’s past or present operations and these liabilities may be greater than the warranty and indemnity limitations that we negotiate. Any unforeseen liability that is greater than these warranty and indemnity limitations could have a negative impact on our financial condition.
Previous report — wording carried elsewhere
Any material weakness in our internal controls could adversely affect our business.
Previous report — wording carried elsewhere
Volatility in the price of our common stock may subject us to securities litigation.
Previous report — wording carried elsewhere
As discussed above, the market for our common stock has been characterized recently by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.