DEF 14C: Cycurion Stockholders Back Reverse Split, Equity Plan Boost

Cycurion, Inc. stockholders approved a reverse stock split, an increase in authorized common stock, and an expanded equity incentive plan, among other corporate actions, via written consent.

Summary

• Majority stockholders approved eight proposals via written consent on August 28, 2025, with actions expected to be effective on or around September 29, 2025.
• Key approvals include the election of six directors, ratification of WWC, P.C. as the independent auditor for fiscal year 2025, and advisory approval of named executive officer compensation.
• Stockholders approved an amendment to increase the number of authorized shares of Common Stock from 100,000,000 to 300,000,000.
• Approval was granted for one or more reverse stock splits of Common Stock at a ratio ranging from 3:1 to 75:1, and in aggregate not more than 250:1, primarily to maintain Nasdaq listing.
• The number of authorized shares issuable under the 2025 Equity Incentive Plan was increased from 10,000,000 to 25,000,000 shares.
• As of August 13, 2025, 51,700,173 shares of Common Stock and 6,784,551 shares of preferred stock were issued and outstanding, with Majority Consenting Stockholders holding 51.11% of the total voting stock.
• The company reported $17.8 million in revenue for 2025, a 59% adjusted EBITDA increase from 2024, and $69 million in recent contract awards.
• First quarter 2025 saw a 95.4% year-over-year gross profit increase and a 17.5% gross margin improvement.
• Cycurion regained compliance with Nasdaq's Equity Rule (stockholders equity of $10,448,853 as of June 30, 2025) and the Market Value of Publicly Held Shares (MVPHS) Rule ($5,000,000 or greater for 10 consecutive business days) in August 2025.
• An arbitration proceeding with Object3, LLC against subsidiary Cloudburst Security, LLC for approximately $228,000 in unpaid consulting services has been settled.
• The company acquired a 51% equity interest in SLG Innovation Inc. on March 31, 2025, involving a $2 million deposit, 508,141 Common Stock shares, 51 Series E Preferred Stock shares, and $10.8 million in accounts receivable.
• A strategic recapitalization converted $3.2 million in convertible debt into 3,133 shares of Series G Convertible Preferred Stock with various investors.
• Retention packages for CEO L. Kevin Kelly and CFO Alvin McCoy III included the issuance of 3,000,000 shares of Common Stock each on August 4, 2025.

Sentiment

Score: 6

Explanation: The filing presents a mix of positive financial performance and strategic actions (revenue growth, contract wins, debt-to-equity conversion, acquisition) alongside significant corporate actions to address compliance issues (reverse stock split to maintain Nasdaq listing, increased authorized shares for flexibility and potential dilution). The proactive steps to address Nasdaq listing and strengthen the balance sheet are positive, but the need for a reverse split and the potential for dilution introduce caution.

Positives

• Reported strong financial performance with $17.8 million in revenue for 2025 and a 59% adjusted EBITDA increase from 2024.
• Secured substantial new contract awards totaling $69 million.
• Achieved a 95.4% year-over-year gross profit increase and a 17.5% gross margin improvement in the first quarter of 2025.
• Successfully regained compliance with Nasdaq's Equity Rule and Market Value of Publicly Held Shares (MVPHS) Rule.
• Settled a legal proceeding with Object3, LLC against its subsidiary, Cloudburst Security, LLC, for approximately $228,000.
• Completed a strategic recapitalization by converting $3.2 million in convertible debt into preferred equity, strengthening the balance sheet.
• Acquired a 51% equity interest in SLG Innovation Inc., expanding business operations.
• Implemented retention packages for the CEO and CFO, issuing 3,000,000 shares of Common Stock to each, aiming to align leadership interests with long-term shareholder value.

Negatives

• The company's common stock bid price was below $1, triggering a Nasdaq non-compliance notice and necessitating a proposed reverse stock split to avoid delisting.
• The proposed increase in authorized common stock and the expansion of the equity incentive plan introduce significant potential for dilution for existing shareholders.
• A reverse stock split, while necessary for Nasdaq compliance, can be viewed negatively by investors and may not proportionally increase the stock price or improve liquidity.
• All directors and officers were delinquent in making their initial Section 16(a) reports, although some have since filed.

Risks

• The proposed Reverse Stock Splits may not sufficiently increase the stock price to regain compliance with Nasdaq's Bid Price Rule or may not be completed before Nasdaq commences delisting procedures.
• The stock price after the Reverse Stock Splits may not increase in the same proportion as the reduction in outstanding shares, potentially reducing the company's overall market capitalization.
• Even if a Reverse Stock Split is implemented, the Common Stock price may decline due to future performance and general industry, market, and economic conditions.
• Failure to meet any of Nasdaq's listing requirements could lead to suspension of trading and delisting proceedings.
• The Reverse Stock Splits may decrease the liquidity of the Common Stock and result in higher transaction costs for investors.
• The effective increase in authorized shares of Common Stock could have anti-takeover implications, potentially deterring changes in control.
• Delisting from Nasdaq may adversely affect the company's ability to raise additional financing, impact investor trading ability, and negatively affect stock value and liquidity.
• Risks associated with the occurrence of any event, change, or other circumstances, including the outcome of any legal proceedings that may be instituted against the company.
• Risk of disruption to current plans and operations.
• The ability to recognize the anticipated benefits of the business and the recently closed de-SPAC transaction may be affected by competition and the ability to grow, manage growth profitably, and retain key employees.
• Costs related to the business.
• Changes in applicable laws or regulations.
• The company's ability to meet future capital requirements, fund operations, and obtain debt and/or equity financing on favorable terms.
• The ability to achieve and sustain profitability of existing lines of business and through wholly-owned subsidiaries.
• The ability to raise sufficient capital to continue to acquire cybersecurity companies.
• The ability to attract and retain qualified cybersecurity talent.
• The ability to successfully execute acquisitions, integrate acquired businesses, and create synergies as a global cybersecurity consolidator.
• The ability to efficiently acquire customers and maintain high client retention rates.
• The ability to attract and retain qualified key technology or management personnel and to expand the management team.
• The ability to stay in compliance with laws and regulations both in the United States and internationally.
• The ability to maintain existing license agreements.
• Estimates regarding expenses, future revenue, capital requirements, and need for additional financing.
• The ability to achieve and maintain profitability in the future.
• Overall financial performance.

Future Outlook

The company aims to continue its growth trajectory, attract and retain top-tier talent, and enhance its market position through innovative cybersecurity and digital infrastructure solutions. It plans to leverage strategic partnerships and potential acquisitions to expand its business. The proposed reverse stock split is a key initiative to maintain Nasdaq listing and potentially improve the marketability and liquidity of its common stock.

Management Comments

• Our compensation philosophy is designed to attract, retain and motivate top-tier talent to drive our mission of delivering innovative cybersecurity and digital infrastructure solutions that safeguard critical assets for our clients in government, healthcare, and corporate sectors.
• We believe our executive compensation programs are structured in the best manner possible to support us and our business objectives.
• 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.

Industry Context

Operating in the rapidly evolving cybersecurity industry, Cycurion focuses on providing solutions to government, healthcare, and corporate sectors. The company positions itself against industry leaders such as Palo Alto Networks, CrowdStrike Holdings Inc., and Fortinet, Inc., emphasizing its AI-enhanced ARx platform and strategic partnerships to drive innovation and expand its client base.

Comparison to Industry Standards

• Compensation packages are competitive with peer companies, including cybersecurity leaders such as Palo Alto Networks, CrowdStrike Holdings Inc., and Fortinet, Inc.

Management Changes

Corporate Governance

Legal Proceedings

• An arbitration proceeding initiated by Object3, LLC against Cloudburst Security, LLC (a wholly-owned subsidiary) on July 29, 2024, for approximately $228,000 in unpaid consulting services, has been settled as of the date of this Information Statement.

Related Party Transactions

• A promissory note with Western Acquisition Ventures Sponsor LLC (the Sponsor) for $230,000 was entered into on September 20, 2024, with the full amount borrowed as of December 31, 2024.
• Emmit McHenry, Kurt McHenry, and Alvin McCoy III provided personal guarantees for a loan from Main Street Bank, with approximately $4 million owed as of September 9, 2025.
• Axxum purchased an AT&T contract relationship from Archura, LLC, a company owned by Emmit McHenry and Kurt McHenry, generating sales of $119,279 in 2024 and $144,820 in 2023.
• Various promissory notes were issued to a director in 2023, totaling $587,400 in principal, with due to related party balances of $148,088 in 2024 and $587,400 in 2023.
• A promissory note in the amount of $20,250 for $15,000 in proceeds was issued to an officer of the company on August 24, 2024.
• Promissory notes between Western Acquisition Ventures Corp. and Cycurion Sub, Inc. (a subsidiary) related to the Business Combination, with Western borrowing $554,269 principal and accruing approximately $21,906 in interest as of September 30, 2024.
• Cycurion Sub, Inc. entered into promissory notes with Western Acquisition Ventures Corp. for $210,555.56 (September 24, 2024), $55,555.56 (January 6, 2025), and $327,777.78 (January 24, 2025).
• The Sponsor acquired 4,312,500 Founder Shares of Western Acquisition Ventures Corp. for $25,000, with subsequent transfers and a reverse stock split affecting ownership.
• The PIPE Subscription Agreement on January 11, 2022, involved Western issuing 376,000 shares of Common Stock and PIPE Warrants to purchase 376,000 shares for an aggregate purchase price of $3,760,000.
• A.G.P./Alliance Global Partners, as a financial advisor, received a $500,000 cash fee and preferred shares convertible into 5,000,000 shares of Common Stock at $0.50 per share (amended from 500,000 shares at $5.00) upon completion of the Business Combination.
• A revised engagement letter with Seward & Kissel LLP on November 27, 2024, stipulated payment of approximately $1.3 million in legal fees and expenses in shares of Common Stock and a pre-funded warrant.
• An agreement with Baker & Hostetler LLP in 2023 involved paying approximately $788,030 of obligations in 78,803 shares of Common Stock at $10.00 per share.

Stakeholder Impact

• **Shareholders**: Face potential dilution from the increase in authorized shares and the expanded equity incentive plan. The proposed reverse stock split aims to maintain Nasdaq listing, which could positively impact marketability, but also carries risks of further price decline and increased transaction costs. Shareholders will receive cash in lieu of fractional shares from the reverse split.
• **Employees**: Benefit from the expanded 2025 Equity Incentive Plan, which provides enhanced opportunities for equity compensation, aiding in attraction and retention of qualified personnel.
• **Management/Directors**: The re-election of the current board members and the retention packages for the CEO and CFO aim to ensure continuity and alignment with long-term company goals. Indemnification agreements provide protection against certain liabilities.
• **Creditors**: The strategic recapitalization, converting $3.2 million in convertible debt to preferred equity, strengthens the company's balance sheet, potentially improving its credit profile.
• **Customers**: The company's focus on innovation, strategic partnerships, and growth in cybersecurity solutions is intended to deliver enhanced value and safeguard critical assets for clients in government, healthcare, and corporate sectors.

Next Steps

• The approved corporate actions are anticipated to be effected on or around September 29, 2025.
• Filing of certificates of amendment with the Secretary of State of Delaware to implement the authorized share increase and reverse stock split.
• Public announcement of the specific reverse stock split ratio chosen by the Board of Directors prior to its effective date.
• Filing a Registration Statement on Form S-8 with the SEC for the additional 15,000,000 shares authorized under the 2025 Equity Incentive Plan.
• The company plans to enter into an exchange agreement with Seward & Kissel LLP to convert the pre-funded warrant into a convertible promissory note.
• Future advisory votes on executive compensation will be conducted annually.

Key Dates

Recommendation

The company demonstrates robust financial performance with substantial revenue growth, increased EBITDA, and significant contract awards, indicating operational strength in the cybersecurity sector. Proactive measures to regain and maintain Nasdaq listing, including a proposed reverse stock split and compliance with equity and MVPHS rules, are crucial for market access and investor confidence. The strategic recapitalization converting debt to equity also strengthens the balance sheet. However, the necessity of a reverse stock split to address a low share price, coupled with the substantial increase in authorized shares and the expansion of the equity incentive plan, introduces significant potential for dilution for existing shareholders. The history of related party transactions also warrants careful monitoring. While the company is taking necessary steps, the inherent risks associated with these actions and the potential for further share price volatility suggest a cautious approach. Investors should monitor the execution of the reverse stock split, the impact of increased authorized shares, and sustained operational performance before making further investment decisions.

Keywords

Cybersecurity, SEC Filing, Corporate Governance, Reverse Stock Split, Equity Incentive Plan, Nasdaq Listing, Authorized Shares, Executive Compensation, Financial Performance, Capital Raise, Preferred Stock, Warrants, Risk Management, Acquisition