S-1: Cycurion Registers Shares for Resale, Details $6M Private Placement

Cycurion, Inc. filed an S-1 registration statement for the resale of nearly 5 million common shares by a selling stockholder and outlined a recent $6 million private placement, while reporting significant Q3 2025 net losses and ongoing going concern doubts.

Summary

• Cycurion, Inc. (formerly Western Acquisition Ventures Corp.) filed an S-1 registration statement for the resale of up to 4,972,380 shares of common stock.
• These shares include 1,657,460 shares issuable upon exercise of pre-funded warrants and 3,314,920 shares issuable upon exercise of common stock warrants.
• The securities were issued in a private placement transaction that closed on December 5, 2025, generating approximately $6 million in gross proceeds.
• The company will not receive proceeds from the resale of these shares by the selling stockholder, Armistice Capital Master Fund Ltd., except for amounts received upon the exercise of the warrants.
• A 1-for-30 reverse stock split was effected on October 27, 2025, reducing outstanding shares from approximately 86.5 million to 2.88 million.
• The company regained compliance with Nasdaq's minimum bid price requirement on November 11, 2025, following a delisting notice on October 14, 2025.
• Cycurion reported a net loss of $(18,560,558) for the nine months ended September 30, 2025, compared to a net income of $109,712 for the same period in 2024.
• Revenue for the nine months ended September 30, 2025, decreased by 15.4% to $11,591,003 from $13,694,614 in the prior year, attributed to delayed contract start dates and a focus on more profitable business.
• The company continues to have substantial doubt about its ability to continue as a going concern, with an accumulated deficit of $(21.8) million and a net working capital deficit of $(9.6) million as of September 30, 2025.
• Cycurion Crypto Inc. was formed in July 2025 to manage a crypto treasury, aiming to diversify reserves and align with technology-forward capital markets.
• The company entered into a Management Services Agreement with SLG Innovation, Inc. on March 31, 2025, leading to the consolidation of SLG's financials and recognition of $14.3 million in goodwill.
• An Equity Purchase Agreement with Yield Point NY LLC was signed on April 7, 2025, granting the company the right to direct Yield Point to purchase up to $60 million in common stock.

Sentiment

Score: 3

Explanation: While the company has secured new contracts and completed a private placement, the significant net losses, increased operating expenses, and worsening accumulated deficit and working capital deficit for the nine months ended September 30, 2025, raise substantial going concern doubts. The positive developments are overshadowed by the severe financial deterioration in the most recent reporting period, indicating a challenging financial position despite strategic efforts.

Positives

• Regained compliance with Nasdaq's minimum bid price requirement on November 11, 2025, ensuring continued listing.
• Successfully closed a private placement on December 5, 2025, raising approximately $6 million in gross proceeds.
• Formed Cycurion Crypto Inc. in July 2025 to strategically position the company in the digital asset ecosystem and enhance investor appeal.
• Entered into a Management Services Agreement with SLG Innovation, Inc. on March 31, 2025, consolidating SLG's financials and recognizing $14.3 million in goodwill, indicating strategic value and growth potential.
• Secured new multi-year contracts focused on program management, cybersecurity, and disaster/business continuity with two government clients and one commercial client in March 2025.
• Announced selection as an approved vendor under the Florida State Term Contract for Information Technology Staff Augmentation Services on October 29, 2025.
• SLG Innovation, Inc. was awarded a $1.1 million contract to modernize legacy data systems for a large county-level public guardian office on November 5, 2025.
• Awarded a contract by a telecommunication company to deliver network deployment services for a federal government agency modernization initiative on November 10, 2025.
• Gross profit percentage for the year ended December 31, 2024, improved to 20.5% from 13.7% in 2023.
• Operating income for the year ended December 31, 2024, increased to $2,416,113 from $326,411 in 2023.
• Achieved a net income of $1,229,601 for the year ended December 31, 2024, reversing a net loss of $(2,097,013) in 2023.
• Net cash used in operating activities decreased to $(1,371,281) in 2024 from $(1,987,771) in 2023.
• The board of directors waived Series A Convertible Preferred Stock lock-up restrictions on September 25, 2025, potentially saving $120,000 in annual costs.

Negatives

• Incurred a significant net loss of $(18,560,558) for the nine months ended September 30, 2025, compared to a net income of $109,712 for the same period in 2024.
• Revenue decreased by $2.1 million (15.4%) for the nine months ended September 30, 2025, compared to the same period in 2024.
• Gross profit for the nine months ended September 30, 2025, decreased to $1,184,179 from $2,088,892 in 2024.
• Operating expenses significantly increased to $19,578,880 for the nine months ended September 30, 2025, primarily due to business combination expenses and increased public company costs.
• Net cash used in operating activities increased to $(8,771,919) for the nine months ended September 30, 2025, from $(1,165,585) in the prior year.
• The company has a recurring net working capital deficit of $(9.6) million and an accumulated deficit of $(21.8) million as of September 30, 2025, raising substantial doubt about its ability to continue as a going concern.
• The company has a limited operating history, making it difficult for investors to evaluate future business and prospects.
• High level of indebtedness, approximately $16.9 million as of September 30, 2025, which could adversely affect financial condition and make funding operations more difficult.
• Dependence on a few clients for a large portion of revenue (93% in 2024, 88% in 2023 from top ten customers), posing a concentration risk.
• The Reverse Stock Split may decrease the liquidity of common stock and may not sustain the price increase long-term.
• The market price of common stock is likely to be highly volatile, and investors could lose all or part of their investment.
• Potential future sales of shares by existing stockholders (including those from registration rights) may depress the market price.
• The company's management team has limited experience managing a public company, potentially leading to increased costs and diverted attention.
• The company believes it is, and expects to remain, a United States real property holding corporation, which could subject non-U.S. holders to U.S. federal income tax on gain from stock disposition.

Risks

• Management has broad discretion over the use of private placement proceeds, which may not improve operating results or security value.
• No public market exists for the Pre-Funded Warrants or Warrants, limiting liquidity.
• The company may not receive additional funds from warrant exercises if cashless exercise is used.
• Holders of warrants have no common stockholder rights until exercise, except as specified.
• Reduced reporting requirements as an emerging growth company may make shares less attractive to investors.
• Limited operating history makes future business and prospects difficult to evaluate.
• Incurred net losses and cannot assure future profitability.
• High indebtedness and debt service obligations could adversely affect financial condition.
• Recurring losses, net working capital deficit, and accumulated deficit raise substantial doubt about the ability to continue as a going concern.
• Requires substantial additional funding in the future, which may not be available on acceptable terms or at all, potentially delaying or ceasing operations.
• Inability to innovate and offer solutions addressing the dynamic threat landscape could lead to loss of competitiveness, revenue, and operating results.
• Must continually enhance training, existing solutions, and technology tools, or risk losing clients and competitive position.
• As a cybersecurity provider, the company is a target of cyber-attacks and other cyber risks, which could impact reputation and operating results.
• Future acquisitions could disrupt business and harm financial condition and operating results.
• Immediate and substantial dilution expected from this offering and any future offerings.
• No current plans to pay dividends on common stock.
• Common stock price may be volatile, leading to potential loss of investment.
• Potential future sales under registration rights may depress market price.
• Risks related to compliance with corporate governance laws and financial reporting standards.
• Failure to comply with Nasdaq listing requirements could lead to delisting.
• Market price of common stock is likely to be highly volatile, with potential for short squeezes.
• Management team has limited experience managing a public company.
• Operating as a public company incurs significantly increased costs and requires substantial management time.
• Extreme volatility unrelated to performance may make it difficult for investors to assess stock value.
• Increases in market interest rates may reduce demand for common stock.
• If securities or industry analysts do not publish research or publish negative reports, share price and trading volume could decline.
• Volatility in stock price may subject the company to litigation.
• Future offerings of debt or preferred equity securities could adversely affect common stock price.
• Anti-takeover provisions in charter and bylaws, and Delaware law, could impair takeover attempts.
• Charter's exclusive forum provisions could limit stockholders' ability to obtain a favorable judicial forum.
• Dependence on a few clients for a large portion of revenue.
• Failure of Congress to approve appropriations bills for federal government clients could delay/reduce spending and revenue.
• Reliance on GSA Schedule and IDIQ contracts creates revenue volatility risk.
• Loss of, or inability to attract/retain, qualified cybersecurity personnel could harm business.
• Products/services failing to detect vulnerabilities or containing errors could harm brand/reputation.
• Strategic partnerships expose the company to business risks and uncertainties.
• Inability to continually add new customer offerings, innovate, and increase efficiencies could adversely affect customer attraction.
• The company believes it is, and expects to remain, a United States real property holding corporation, which could subject non-U.S. holders to U.S. federal income tax on gain from stock disposition.
• Excise tax on certain stock buybacks (Inflation Reduction Act of 2022) could reduce cash available for business combinations.

Future Outlook

The company expects to continue incurring significant operating losses for the next few years and will require substantial additional capital to fund its long-term business plan and cybersecurity technology development. Management plans to improve operations to generate positive cash flows and undertake a public offering to raise additional capital, believing this will reduce overall leverage and debt service requirements. The company also aims to expand its market leadership by acquiring new platforms, expanding coverage with existing customers, investing in new technology platforms, and exploring further acquisition opportunities.

Management Comments

• We provide innovative custom solutions for our clients by adapting our knowledge base and government-level experience to create dynamic solutions to best serve our clients information technology (IT) and cybersecurity needs.
• We are committed to surpassing expectations and delivering incomparable value to our clients and partners.
• We pride ourselves on having the capability and resources to successfully implement a management strategy that delivers the solutions you need to stay within budget and on schedule.
• Our growth engine is driven by organic business solutions and strategic acquisitions of cybersecurity services and technology providers.
• Our ability to identify and implement customized solutions is core to driving continued growth.
• Management believes that the valuation and liquidity brought by a public offering of its securities will allow holders of convertibles notes, and convertible preferred stockholders the mechanism to convert their securities into common stock that will reduce the Company’s overall leverage and debt service requirement.
• Management believes failure to complete the SLG transaction is remote.
• Management conferred with the bank regarding the covenants and determined that the Company was in compliance after giving effect to clarification in the definitions and formulas set forth by the bank in regard to the calculation of the above covenants.
• Management believes the carrying values of the above securities approximate their fair values.
• Management has determined that the risk of loss from insolvency by the financial institutions at which it has deposited it funds is insignificant and unlikely; accordingly, the Company has not accrued for any potential losses.
• Management monitors changes in prices levels. Historically, inflation has not materially impacted the Company’s financial statements; however, significant increases in the cost of labor that cannot be passed on to the Company’s customers could adversely impact the Company’s results of operations.

Industry Context

The cybersecurity and IT solutions market is highly fragmented, competitive, and constantly evolving. Cycurion competes with larger, more established companies, facing challenges from declining prices and margins. The company's strategy of organic growth and strategic acquisitions of cybersecurity services and technology providers aligns with the need for continuous innovation in a dynamic threat landscape. The formation of Cycurion Crypto Inc. indicates an intent to position the company within the expanding digital asset ecosystem and blockchain security, reflecting a broader industry trend towards integrating cybersecurity with emerging technologies.

Comparison to Industry Standards

• Our compensation programs are structured to align the interests of our named executive officers with those of our stockholders, fostering a culture of performance, innovation, and long-term value creation.
• To compete in the fast-evolving cybersecurity industry, we offer compensation packages that are competitive with peer companies, including cybersecurity leaders such as Palo Alto Networks, CrowdStrike Holdings Inc., and Fortinet, Inc.
• Our programs balance fixed and variable compensation, including base salaries, annual cash incentives, and long-term equity awards, to attract and retain exceptional leaders capable of navigating complex cyber threats and driving innovation.
• The cybersecurity needs to monitor the customer cybersecurity environment regularly, stay up to date on cyberthreats and solutions, maintain its software tools, and then address threats identified, or rectify situations when customer environments have been breached. It is not practical or viable to sell these components separately, as customers expect comprehensive solutions.
• Our compensation philosophy is rooted in the belief that exceptional leadership drives Cycurion’s ability to innovate, grow and deliver unparalleled value to our clients and stockholders. By aligning executive rewards with measurable outcomes, such as the 95.4% year-over-year gross profit increase in the first quarter of 2025 and a 17.5% gross margin improvement, we reinforce our commitment to building a sustainable, high-performing organization that leads the cybersecurity industry.

Management Changes

Corporate Governance

Legal Proceedings

• Arbitration proceeding initiated by Object3, LLC against Cloudburst Security, LLC for approximately $228,000 for unpaid consulting services, which has been settled.

Related Party Transactions

• Promissory note with Western Acquisition Ventures Sponsor LLC (the Sponsor) for $230,000 (10% interest), payable upon Business Combination.
• Personal guarantees by Emmit McHenry, Kurt McHenry, and Alvin McCoy III (officers and stockholders) for a Main Street Bank loan, with approximately $3 million owed as of December 22, 2025.
• Axxum Technologies LLC purchased an AT&T contract relationship from Archura, LLC (a company owned by Emmit McHenry and Kurt McHenry) at the end of 2018, generating sales of $119,279 in 2024 and $144,820 in 2023.
• Promissory notes issued to a director on April 26, 2023, for $55,000, $27,500, and $20,900.
• Promissory notes issued to a director on June 22, 2023, for $82,500 and $165,000.
• Promissory note issued to a director on July 6, 2023, for $55,000.
• Promissory note issued to a director on July 21, 2023, for $181,500.
• Promissory note issued to an officer on August 24, 2024, for $20,250.
• Promissory notes with Western Acquisition Ventures Corp. (Western) for various amounts, including $200,000 (July 27, 2023), increased to $300,000 (Jan 26, 2024), then $554,269 (May 3, 2024), and additional notes for $210,555.56 (Sep 24, 2024), $55,555.56 (Jan 6, 2025), and $327,777.78 (Jan 24, 2025).
• Founder Shares acquired by the Sponsor and A.G.P./Alliance Global Partners.
• PIPE Subscription Agreement with A.G.P. for $3,760,000.
• Advisory Agreement with A.G.P. for a $2,500,000 transaction fee, payable in preferred shares convertible into common stock.
• Placement Agent Agreement with A.G.P. for a 10.0% cash fee of gross proceeds from the Private Placement and a $500,000 cash fee, plus $60,000 in expenses.
• Revised engagement letter with Seward & Kissel LLP to pay approximately $1.3 million in legal fees in common stock and a pre-funded warrant.
• Agreement with Baker & Hostetler LLP to pay approximately $788,030 in obligations in common stock.
• Lock-up agreements for various preferred stock series, A.G.P., Seward & Kissel LLP, Baker & Hostetler LLP, Founder Shares, and PIPE Shares.
• Non-redemption agreements with Sponsor and RiverNorth SPAC Arbitrage Fund, LP, involving share transfers.
• Employment agreements with L. Kevin Kelly and Alvin McCoy III, including equity compensation.
• Retention packages for L. Kevin Kelly and Alvin McCoy III, issuing 100,000 shares of Common Stock each.
• Promissory note issued to a related party on January 31, 2025, for $125,000.

Stakeholder Impact

• Shareholders: Potential for significant dilution from the current offering and future capital raises. High volatility in stock price and potential for short squeezes could lead to substantial losses. No cash dividends are anticipated. The going concern doubt poses a risk of complete loss of investment if additional funding is not secured.
• Employees: The company's ability to attract and retain qualified cybersecurity personnel is crucial for future performance and growth, especially in a competitive labor market. Compensation and benefits programs are designed to be competitive.
• Customers: The company's ability to innovate and offer effective cybersecurity solutions is critical for retaining existing clients and attracting new ones. Failure to detect vulnerabilities or respond to cyber threats could damage customer trust and lead to loss of business. Concentration of revenue among a few large clients poses a risk if those relationships are lost.
• Creditors: The company's high level of indebtedness and ongoing going concern doubt present risks to creditors, as the ability to service debt obligations depends on future profitability and successful capital raises.
• Regulatory Bodies: The company is subject to extensive federal and state governmental regulation and supervision, including data privacy and security obligations. Compliance failures could lead to liability and reputational harm. Nasdaq listing compliance is a continuous concern.

Next Steps

• Obtain stockholder approval for the issuance of warrants and warrant shares from the December 5, 2025 private placement.
• File a registration statement with the SEC covering the resale of shares from the December 5, 2025 private placement within 20 calendar days of closing (by December 25, 2025).
• Use commercially reasonable efforts to cause the registration statement to be declared effective by the SEC within 60 days following the closing of the private placement (by February 3, 2026).
• Hold a meeting of stockholders on or prior to 90 days following the closing of the private placement (by March 4, 2026) to obtain stockholder approval for warrant issuance. If not obtained, call a meeting every 90 days thereafter.
• Continue to improve operations to generate positive cash flows.
• Seek additional debt or equity financing to continue operations and fund business growth.
• Finalize the initial accounting for the SLG business combination by March 31, 2026.
• Continue to develop and broaden exposure and security solutions, including expanding coverage and entering new contracts.
• Explore additional acquisition opportunities for businesses, technology, AI platforms, and development personnel.

Key Dates

Recommendation

The company faces severe financial challenges, including a substantial net loss of over $18.5 million for the nine months ended September 30, 2025, a worsening accumulated deficit of $21.8 million, and a net working capital deficit of $9.6 million. These factors collectively raise 'substantial doubt' about its ability to continue as a going concern. While recent capital raises and contract wins offer some liquidity and strategic direction, the magnitude of the losses and the ongoing need for significant additional funding indicate a highly precarious financial position. The potential for significant dilution from current and future offerings, coupled with high stock price volatility and the inherent risks of a limited operating history in a competitive industry, make this a high-risk investment. A seasoned investor would likely view the current financial instability and the 'going concern' warning as a strong signal to exit or avoid the stock until a clear path to sustained profitability and financial stability is demonstrated.

Keywords

Cycurion, CYCU, SEC Filing, S-1, Registration Statement, Private Placement, Warrants, Pre-Funded Warrants, Common Stock, Nasdaq, Cybersecurity, IT Services, Managed Security Services, SLG Innovation, Business Combination, Reverse Stock Split, Going Concern, Financial Performance, Risk Factors, Capital Raise, Armistice Capital