What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-06-06 · 1024 added, 802 removed, 912 unchanged (67% of the section changed)

Financial Statements

AND ITS SUBSIDIARIES

AND SUBSIDIARIES

BALANCE SHEETS

Current assets

June 30, 2025

December 31, 2024

Cash and cash equivalents

Restricted cash

3 unchanged sentences

Total current assets

Non-current assets

Deposit for acquisition target

Fixed assets , net

Software development cost

Intangible asset

Property and equipment, net

Software development costs

Intangible assets, net

Security deposits

2 unchanged sentences

Liabilities, Mezzanine and Stockholders’ Equity:

Current liabilities

Bank loan-revolving credit line

3 unchanged sentences

Subordinated convertible promissory notes

Convertible notes

Promissory notes

6 unchanged sentences

Total current liabilities

Long-term loan payable

Series A convertible preferred stock ($ 0.001 par value, 500,000 shares designated, 0 and 345,528 issued and outstanding)

Loans payable - non-current portion

Series A Convertible preferred stock ($ 0.001 par value, 500,000 shares designated, 0 and 345,528 issued and outstanding, respectively)

Total non-current liabilities

5 unchanged sentences

Preferred stock ($ 0.0001 par value, 20,000,000 shares authorized)

Series A convertible preferred stock ($ 1.45 stated value, 110,000 shares designated, 106,816 and 0 issued and outstanding, respectively)

Series B convertible preferred stock ($ 1.00 stated value, 3,000 shares designated, 1 and 3,000 issued and outstanding, respectively)

Series C convertible preferred stock ($ 82.46 stated value, 5,000 shares designated, 4,851 issued and outstanding)

Series D convertible preferred stock ($ 0.50 stated value, 6,666,700 shares designated, 150,000 and 0 issued and outstanding)

Series E convertible preferred stock ($ 10,000 stated value,

100 shares designated, 51 and 0 issued and outstanding)

Series A convertible preferred stock ($ 0.0001

par value , 110,000

shares designated, 106,816

issued and outstanding, respectively)

Series B convertible preferred stock ($ 0.0001

par value , 3,000

shares designated, 1

issued and outstanding, respectively)

Series C convertible preferred stock ($ 0.0001

par value , 5,000

shares designated, 4,851

issued and outstanding)

Series D convertible preferred stock ($ 0.0001

par value , 6,666,700

shares designated, 150,000

issued and outstanding, respectively)

Series E convertible preferred stock ($ 0.0001

par value , 100

shares designated, 51

issued and outstanding, respectively)

Series F convertible preferred stock ($ 0.0001

par value , 10,000

shares designated, 0

issued and outstanding, respectively)

Series G convertible preferred stock ($ 0.0001 par value, 10,000 shares designated, 3,318 and 0 issued and outstanding, respectively)

Preferred stock value

Common stock ($ 0.0001 par value, 100,000,000 shares authorized, 32,068,770 and 10,592,607 shares issued and outstanding)

Common stock ($ 0.0001 par value, 100,000,000 shares authorized, 40,353,983 and 10,592,607 shares issued and outstanding, respectively)

Additional paid in capital

2 unchanged sentences

( 3,203,361 )

Total Stockholders’ Equity of Cycurion

Total stockholders’ equity attributable to Cycurion

Equity attributable to noncontrolling interests

2 unchanged sentences

Total liabilities and stockholders’ equity

accompanying notes to the unaudited consolidated financial statements.

AND ITS SUBSIDIARIES

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three months ended

AND SUBSIDIARIES

STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Cost of revenues

1 unchanged sentence

Selling, general and administrative expenses

Operating income (loss)

( 10,097,505 )

Other income (expenses):

Interest expense

Gain on settlement of debts

Other expense

Other income (expenses)

Income (loss) before income taxes

( 10,248,486 )

Provision before income taxes

Net income (loss)

$ ( 10,248,486 )

$ ( 312,475 )

Comprehensive income attributable to noncontrolling interests

Net comprehensive loss attributed to Cycurion

$ ( 10,248,486 )

$ ( 312,475 )

Comprehensive income (loss)

$ ( 10,248,486 )

$ ( 312,475 )

Net income (loss) per common share

Basic and diluted loss per common share

Diluted loss per common share

Basic and diluted weighted average common shares outstanding

Diluted weighted average common shares outstanding

accompanying notes to the unaudited consolidated financial statements.

AND ITS SUBSIDIARIES

STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Cycurion, Inc.

Stockholders’ Equity

subject to possible

Stockholders’

as of December 31, 2024

$ ( 3,203,361 )

$ 3,467,758.00

stocks redeemed (Mezzanine Equity)

( 1,001,216 )

of common stock subject to redemption

A preferred stock in exchange of Series A Preferre Stock categorized as liability

D preferred stock in exchange of convertible notes

stock issued for conversion of Series B and D Preferred Stock

Operating (loss)/income

( 3,766,077 )

stock issued for exercise of warrants

stock issued for business combination costs

stock issued for settleemnt of liability

stock issued for employment agreement

of subsidiary

( 13,863,581 )

Interest income

Interest expense

Loss on debt settlement, net

Other (expense)/income

Other expense, net

( 1,524,337 )

tax liability arising from redemption of Class A shares

( 1,675,319 )

(Loss)/income before income taxes

( 5,290,414 )

( 15,538,900 )

as of March 31, 2025

Provision for income tax

Net (loss)/income

( 5,290,414 )

( 15,538,900 )

Total Cycurion, Inc.

Stockholders’ Equity

Stockholders’

as of December 31, 2023

Net loss attributable to non-controlling interest

Net (loss)/income attributable to Cycurion

$ ( 5,188,755 )

$ ( 15,437,241 )

as of March 31, 2024

Comprehensive (loss)/income

$ ( 5,188,755 )

$ ( 15,437,241 )

accompanying notes to the unaudited consolidated financial statements.

AND ITS SUBSIDIARIES

Earnings per share:

Weighted average shares outstanding:

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

Three months ended

June 30, 2025

June 30, 2024

For the Six Months Ended

June 30, 2025

June 30, 2024

Cash flows from operating activities:

Net income (loss)

$ ( 15,538,900 )

$ ( 312,475 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation

Amortization of debt discount

Depreciation of fixed assets

Amortization of software development cost

Loss on settlement

Depreciation of property and equipment

Amortization of software development costs

Loss on debt settlement, net

Finance expense

Changes in operating assets and liabilities:

Accounts and other receivables

Changes in assets and liabilities:

Accounts receivable, net and other receivables

( 1,478,433 )

Prepaid and other current assets

Accounts and accrued liabilities

( 1,267,911 )

Prepaid expenses and other current assets

Accounts payable and accrued liabilities

Net cash used in operating activities

2 unchanged sentences

Cash acquired on acquisition of subsidiary

Issuance of promissory notes

Purchase of plant and equipment

1 unchanged sentence

Release of Trust Account to Company’s bank account

Net cash from (used in) investing activities

Net cash provided by/(used in) investing activities

Cash flows from financing activities:

2 unchanged sentences

( 1,001,216 )

Proceeds from private placement

Proceeds from capital raise

Net proceeds from line of credit

Repayment of all bank borrowings

Repayment of bank borrowings

Proceeds from convertible notes payable

1 unchanged sentence

Repayments of notes payable

Net cash provided by (used in) financing activities

Net change in cash and restricted cash

Cash –beginning of period

Cash–end of period

Supplementary cash flow information:

Income taxes paid

Non-cash investing and financing activity

Share exchange of Series A Preferred Stock for reverse acquisition

Series D preferred stock in exchange of convertible notes

Common stock issued for conversion of Series B and D Preferred Stock

Common stock and Series F Preferred Stock issued for acquisition of subsidiary

Excise tax liability arising from redemption of common stock subject to redemption

Net cash provided by financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Paid-In Capital

Accumulated Deficit

Controlling Interest

Stockholders’ Equity

Common stock subject to possible

Series A Convertible Preferred

Series B Convertible Preferred

Series C Convertible Preferred

Series D Convertible Preferred

Series E Convertible Preferred

Preferred Stock

Paid-In Capital

Accumulated Deficit

Controlling Interest

Stockholders’ Equity

Balance as of December 31, 2024

$ ( 3,203,361 )

Common stock redeemed (Mezzanine Equity)

( 1,001,216 )

Release of common stock subject to redemption

accompanying notes to the unaudited consolidated financial statements.

AND ITS SUBSIDIARIES

Series A preferred stock in exchange of Series A Preferre

Stock categorized as liability

Series D preferred stock in exchange of convertible

Common stock issued for conversion of Series B and

D Preferred Stock

( 6,516,666 )

Common stock issued for exercise of warrants

Common stock issued for business combination costs

Common stock issued for settleemnt of liability

Common stock issued for employment agreement

Acquisiton of subsidiary

Excise tax liability arising from redemption of Class

( 3,464,218 )

( 3,474,230 )

( 10,248,486 )

Balance as of March 31, 2025

( 13,461,859 )

( 3,464,218 )

Series G preferred stock in exchange of convertible

notes and promissory notes

Common stock issued for exercise of warrants

Common stock issued for settleemnt of liability

Common stock issued for employment agreement

Common Stock Issued - Equity Line

Acquisiton of subsidiary

( 5,188,755 )

( 5,188,759 )

( 5,290,414 )

Balance as of June 30, 2025

$ ( 18,650,614 )

$ ( 3,565,877 )

Series B Convertible Preferred

Stockholders’

Balance as of December 31, 2023

$ ( 4,432,962 )

Board compensation

Balance as of March 31, 2024

( 4,745,437 )

Series B preferred stock and warrants issued

Net income (loss)

Balance as of June 30, 2024

$ ( 4,439,343 )

AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

of and for the three months ended March 31, 2025 and 2024

ORGANIZATION AND DESCRIPTION OF BUSINESS

1 unchanged sentence

f/k/a Cyber Secure Solutions, Inc.;

the “Company”, “Cycurion”,“we”, “us” or “our”) was incorporated on

October 12, 2017 , in the state of Delaware.

Through its subsidiaries, the Company provides premier information technology security solutions.

The Company continually strives to deliver top-notch services in the areas of risk management, cybersecurity, information assurance,

systems engineering and help desk solutions.

the “Company”, “Cycurion”,

“we”, “us” or “our”) was incorporated on October 12, 2017 , in the state of Delaware.

subsidiaries, the Company provides premier information technology security solutions.

The Company continually strives to deliver

top-notch services in the areas of risk management, cybersecurity, information assurance, systems engineering and help desk

The Company is headquartered in McLean, Virginia.

On July 14, 2020, the Company changed

its corporate name from KAE Holdings, Inc.

On July 14, 2020, the Company changed its corporate name from KAE

Holdings, Inc.

to Cyber Secure Solutions, Inc., and, on February 24, 2021, to Cycurion, Inc.

November 22, 2017, the Company acquired Axxum Technologies, LLC (“Axxum”), a limited liability company organized on December

29, 2006, in the Commonwealth of Virginia.

April 3, 2019, the Company acquired Cloudburst Security, LLC (“Cloudburst”), a limited liability company organized on January

12, 2007, in the Commonwealth of Virginia.

On February 14, 2025, we completed the business combination and transactions (the “Business Combination”)

as set forth in an Agreement and Plan of Merger, dated November 21, 2022, as amended on April 26, 2024, December 31, 2024 and February

13, 2025 (the “Merger Agreement”), by and among Western Acquisition Ventures Corp.

(“Western”), Western Acquisition

Merger Inc., a Delaware corporation and a wholly-owned subsidiary of Western (“Merger Sub”), and Cycurion Sub, Inc., a Delaware

corporation formerly known as Cycurion, Inc.

Company has one first-tier wholly-owned subsidiary, Cycurion Sub, Inc.

(formerly Cycurion, Inc., until February 14, 2025), and three

indirectly wholly-owned second-tier subsidiaries:

(i) Axxum Technologies LLC (“Axxum”), a Virginia limited liability company

formed in December 2006, (ii) Cloudburst Security LLC (“Cloudburst”), a Virginia limited liability company formed in January

2007, and (iii) Cycurion Innovation, Inc., a Delaware corporation formed in September 2021 (“Cycurion Innovation”), in connection

with our acquisition of assets from Sabres Security Ltd.

(“Sabres”), a leading Israeli-based cyber security provider.

February 14, 2025, we completed the business combination and transactions (the “Business Combination”) as set forth in an

Agreement and Plan of Merger, dated November 21, 2022, as amended on April 26, 2024, December 31, 2024 and February 13, 2025 (the “Merger

Agreement”), by and among Western Acquisition Ventures Corp.

(“Western”), Western Acquisition Merger Inc., a Delaware

corporation and a wholly-owned subsidiary of Western (“Merger Sub”), and Cycurion Sub, Inc., a Delaware corporation formerly

known as Cycurion, Inc.

(“Cycurion Sub”).

As contemplated by the Merger Agreement, Merger Sub merged

with and into Cycurion Sub with Cycurion Sub as surviving the merger as a wholly-owned subsidiary of Western.

In addition, in connection

with the consummation of the Business Combination, Western was renamed “Cycurion, Inc.”

As contemplated by the Merger Agreement, Merger Sub merged with and into Cycurion

Sub with Cycurion Sub as surviving the merger as a wholly-owned subsidiary of Western.

In addition, in connection with the consummation

of the Business Combination, Western was renamed “Cycurion, Inc.”

February 14, 2025, the parties completed the Business Combination.

As a result of the Business Combination, each ordinary share of

Cycurion Sub was cancelled and converted into shares of Company common stock, on the terms set forth in the Merger Agreement.

Pursuant to the terms of the Merger Agreement, the aggregate number of shares of Company common stock that was delivered as

consideration in the Business Combination was capped at 15,000,000

Concurrently with the completion of the Business Combination, the Company issued an aggregate of 6,543,073

shares of common stock, 106,816

shares of Series A preferred stock (“Class A Convertible Preferred Stock”), 3,000

shares of Series B preferred stock (“Class B Convertible Preferred Stock”), 4,851

shares of Series C preferred stock (“Class C Convertible Preferred Stock”), 6,666,667

shares of Series D preferred stock (“Class D Convertible Preferred Stock”), 680,875

As a result of the Business Combination, each ordinary share of Cycurion

Sub was cancelled and converted into shares of Company common stock, on the terms set forth in the Merger Agreement.

Pursuant to the

terms of the Merger Agreement, the aggregate number of shares of Company common stock that was delivered as consideration in the Business

Combination was capped at 15,000,000

Series A warrants, 6,000,000

2 unchanged sentences

common stock warrants, 472,813

shares of common stock issued in connection with the Series D private placement, 500,000

shares of common stock issued to A.G.P./Alliance Global Partners (“A.G.P.”), 250,000

shares of common stock issued in connection with the Series

D private placement, 500,000

shares of common stock issued to A.G.P./Alliance Global Partners

(“A.G.P.”), 250,000

shares of common stock issued to Seward & Kissel LLP and

shares of common stock issued to Baker & Hostetler LLP.

The Business Combination has been accounted for as a

reverse recapitalization in accordance with U.S.

GAAP because Cycurion is the operating company and has been determined to be the accounting

acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (“ASC

805”), while Western is a blank check company.

Business Combination has been accounted for as a reverse recapitalization in accordance with U.S.

GAAP because Cycurion is the operating

company and has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards

Codification Topic 805, Business Combinations (“ASC 805”), while Western is a blank check company.

the reverse recapitalization model, the Business Combination was treated as Cycurion issuing equity for the net assets of Western, with

no goodwill or intangible assets recorded.

Western was the legal acquirer in the Business Combination, because Cycurion, prior to the Business Combination (“Predecessor Cycurion”), was deemed the accounting acquirer, the

historical financial statements of Predecessor Cycurion became the historical financial statements of the combined company upon the

consummation of the Business Combination.

As a result, the financial statements reflect (i) the historical operating results of

Predecessor Cycurion prior to the Business Combination;

(ii) the combined results of Western and Predecessor Cycurion following the

closing of the Business Combination;

Western was the legal acquirer in the Business Combination, because Cycurion, prior to the Business Combination (“Predecessor Cycurion”),

was deemed the accounting acquirer, the historical financial statements of Predecessor Cycurion became the historical financial statements

of the combined company upon the consummation of the Business Combination.

As a result, the financial statements reflect (i) the historical

operating results of Predecessor Cycurion prior to the Business Combination;

(ii) the combined results of Western and Predecessor Cycurion

following the closing of the Business Combination;

(iii) the assets and liabilities of Predecessor Cycurion at their historical cost;

7 unchanged sentences

in the United States, which contemplates continuation of the Company on a going concern basis.

The going concern basis assumes that

assets are realized, and liabilities are settled in the ordinary course of business at amounts disclosed in the financial statements.

As of March 31, 2025, there was substantial doubt regarding the Company’s ability to continue as a going concern, as the Company

had a net working capital deficit and an accumulated deficit resulting from substantial losses incurred during the three months ended

March 31, 2025 and from prior periods.

The Company’s ability to continue as a going concern depends upon its ability to market

and sell its products to generate positive operating cash flows.

As of March 31, 2025, the Company had an accumulated deficit of $ 13.4

million and a working capital deficit of $ 15.1 million.

In addition, the Company had a net cash outflow of $ 2.8 million from operating

activities during the three months ended March 31, 2025.

These circumstances continued to give rise to substantial doubt as to whether

the Company will be able to continue as a going concern and did not alleviate the doubt outstanding from 2024.

plan is to continue improve operations to generate positive cash flows and register shares of its common stock in order to undertake

The going concern basis assumes that assets

are realized, and liabilities are settled in the ordinary course of business at amounts disclosed in the financial statements.

June 30, 2025, there was substantial doubt regarding the Company’s ability to continue as a going concern, as the Company had a

net working capital deficit and an accumulated deficit resulting from substantial losses incurred during the three and six months ended

June 30, 2025 and from prior periods.

The Company’s ability to continue as a going concern depends upon its ability to market and

sell its products to generate positive operating cash flows.

As of June 30, 2025, the Company had an accumulated deficit of $ 18.7 million

and a working capital deficit of $ 14.4 million.

In addition, the Company had a net cash outflow of $ 6.3 million from operating activities

during the six months ended June 30, 2025.

These circumstances continued to give rise to substantial doubt as to whether the Company

will be able to continue as a going concern and did not alleviate the doubt outstanding from 2024.

plan is to continue improving operations to generate positive cash flows and register shares of its common stock in order to undertake

a public offering to raise additional capital.

4 unchanged sentences

generating positive operating cash flows, and raise additional capital, there is the risk that the Company may become insolvent.

accordance with the trust agreement between Western and Equiniti Trust Company, LLC, dated January 11, 2022, the Company is

permitted to withdraw interest from the trust account (the “Trust Account”) to pay its tax obligations, including

federal income taxes and state franchise taxes.

The balance of this withdrawal is included in restricted cash in the amount of

$ 0 on the accompanying balance sheet,

representing the amounts available exclusively for payment of current tax liabilities.

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Communications

April 9, 2025, Cycurion received a written notice received from the Listing Qualifications Department of Nasdaq stating that, for the

prior 30 consecutive business days, the closing bid price of the Company’s common stock had been below the minimum of $ 1 per share

required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

The notification letter stated that

the Company would be afforded 180 calendar days (until October 6, 2025) to regain compliance.

In order to regain compliance, the closing

bid price of the Company’s common stock must be at least $ 1 for a minimum of ten consecutive business days.

The notification letter

also stated that, in the event the Company does not regain compliance within the initial 180-day period, the Company may be eligible

for an additional 180-day period.

If the Company is not eligible for the additional 180-day period, or if it appears to the Nasdaq staff

that the Company will not be able to cure the deficiency, the Nasdaq Listing Qualifications Department will provide notice after the

end of the initial 180-day period that the Company’s securities will be subject to delisting.

The Nasdaq notification has no effect

at this time on the listing of the Company’s common stock.

April 11, 2025, we received two letters from the Nasdaq Listing Qualifications Department, each addressing a separate compliance

deficiency of the Company under the Nasdaq Listing Rules.

The first letter from the Nasdaq Listing Qualifications Department

notified us of our non-compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires a company such as ours whose securities are

listed on The Nasdaq Global Market under the “Market Value Standard” to maintain a minimum Market Value of Listed

Securities (an “MVLS”) of $ 50,000,000 .

The deficiency was triggered by our MVLS having closed below the minimum level

for a period of 30 consecutive business days.

Under Nasdaq Listing Rule 5810(c)(3)(C), we are entitled to a 180-day period, ending

on October 8, 2025, to rectify the deficiency.

In order to do so, we must achieve and maintain an MVLS of $ 50,000,000 or more for at

least 10 consecutive business days.

Failure to regain compliance within the 180-day period would result in the delisting of our

securities from Nasdaq, although we would have the right to appeal such a delisting to a Nasdaq hearings panel.

second letter informed us of our deficiency in complying with Nasdaq Listing Rule 5450(b)(2)(C), which requires a minimum Market Value

of Publicly Held Shares (an “MVPHS”) of $ 15,000,000 for continued listing on the Nasdaq Global Market under the “Market

Value Standard”.

This deficiency was caused by our MVPHS having fallen below the minimum threshold for the prior 30 consecutive

business days.

Under Nasdaq Listing Rule 5810(c)(3)(D), we have 180 calendar days, or until October 8, 2025, to regain compliance, which

we can achieve if its MVPHS closes at or above $ 15,000,000 for at least 10 consecutive business days.

Failure to regain compliance within

that 180-day period would result in the delisting of our securities from Nasdaq, subject to our right to appeal to a Nasdaq hearings

May 22, 2025, Cycurion received written notice indicated that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the

“Listing Rule”) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the period ended March 31,

2025 (the “Form 10-Q”), as described more fully in the Company’s Form NT 10-Q Notification of Late Filing (the “Form

NT 10-Q”) filed with the U.S.

Securities and Exchange Commission (“SEC”) on May 15, 2025.

The Listing Rule requires Nasdaq-listed companies to timely file all required periodic

reports with the SEC.

On June 6, 2025, Cycurion filed its Form 10-Q for the period ended March 31, 2025.

accordance with the trust agreement between Western and Equiniti Trust Company, LLC, dated January 11, 2022, the Company is permitted

to withdraw interest from the trust account (the “Trust Account”) to pay its tax obligations, including federal income taxes

and state franchise taxes.

The balance of this withdrawal would be presented in restricted cash, but as of June 30, 2025 there are no

amounts in restricted cash.

SIGNIFICANT ACCOUNTING POLICIES

of Presentation

6 unchanged sentences

of the balances and results for the periods presented.

The interim results for the three months ended March 31, 2025 are not necessarily

The interim results for the three and six months ended June 30, 2025 are not necessarily

indicative of the results to be expected for the year ended December 31, 2025 or for any future interim periods.

accompanying unaudited consolidated condensed financial statements should be read in conjunction with the Company’s audited

financial statements and notes thereto, included in the Annual Report on Form 10-K filed with the U.S.

Securities and Exchange

(“SEC”) on April 17, 2025.

accompanying unaudited consolidated condensed financial statements should be read in conjunction with the Company’s audited financial

statements and notes thereto, included in the Annual Report on Form 10-K filed with the SEC

on April 17, 2025.

of Consolidation

1 unchanged sentence

(f/k/a KAE Holdings, Inc.;

f/k/a Cyber Secure Solutions, Inc.) and its

wholly owned subsidiaries:

Axxum Technologies, LLC (“Axxum”), Cloudburst Security, LLC (“Cloudburst”),

Cycurion Innovation, Inc.

(“Cycurion Innovation”), Western, and SLG Innovation Inc (“SLG”).

All significant inter-company

balances, fees, and expenses have been eliminated in consolidation.

f/k/a Cyber Secure Solutions, Inc.) and its wholly

owned subsidiaries:

Axxum, Cloudburst, Cycurion Innovation and SLG Innovation Inc.

All significant inter-company balances,

fees, and expenses have been eliminated in consolidation.

Chief Executive Officer (“CEO”) is the chief operating decision maker who reviews financial information on a consolidated

30 unchanged sentences

and Cash Equivalents and Restricted Cash

and cash equivalents include cash on hand, deposits in banks, and any investments with maturities with less than three months from

inception to maturity.

The Company’s primary bank deposits are located in the United States.

Those deposits are provided

protection under the Federal Deposit Insurance Corporation (“FDIC”) up to maximum of $ 250,000 .

The amount in excess of the FDIC insurance as of March 31, 2025 was approximately $ 1.6

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.

Company had $ 2,269,195 and $ 38,742 in cash and did not have any cash equivalents as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, the Company also had $ 0 and $ 2,048 of restricted cash, respectively, related to funds withdrawn

from the Trust Account reserved for the payment of income and state franchise taxes.

and cash equivalents include cash on hand, deposits in banks, and any investments with maturities with less than three months from inception

Stock Subject to Possible Redemption

Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC 480.

Shares of common

stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value.

Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of

the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is

classified as temporary equity.

At all other times, common stock is classified as stockholders’ equity.

The Company’s

shares of common stock sold in the initial public offering of Western feature certain redemption rights that are considered to be

outside of the Company’s control and subject to occurrence of uncertain future events.

of March 31, 2025 and December 31, 2024, the value of common stock subject to possible redemption reflected on the balance sheet is reconciled

on the following table:

Shares of common stock

subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value.

Conditionally redeemable

common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption

upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity.

times, common stock is classified as stockholders’ equity.

The Company’s shares of common stock sold in the initial public

offering of Western feature certain redemption rights that are considered to be outside of the Company’s control and subject to

occurrence of uncertain future events.

OF COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION

Rollforward of Common Stock Subject to Possible Redemption

Number of Shares

Common stock subject to possible redemption as of December 31, 2024

1 unchanged sentence

Release of common stock subject to redemption

Common stock subject to possible redemption as of March 31, 2025

Common stock subject to possible redemption as of June 30, 2025

receivable is stated at the original amount less an allowance for credit losses.

1 unchanged sentence

unconditional.

ASC 326 introduces an approach based on expected losses to estimate the allowance for doubtful accounts, which replaces

the previous incurred loss impairment model.

The Company’s estimation of allowance for credit losses considers factors such as

historical credit loss experience, age of receivable balances, subsequent collection, current market conditions, reasonable and supportable

forecasts of future economic conditions.

ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the

previous incurred loss impairment model.

The Company’s estimation of allowance for credit losses considers factors such as historical

credit loss experience, age of receivable balances, subsequent collection, current market conditions, reasonable and supportable forecasts

of future economic conditions.

Company evaluates its accounts receivable for expected credit losses on a regular basis.

8 unchanged sentences

balances are written off after all collection efforts have been exhausted.

Company also assessed the creditworthiness and solvency of its customers as of March 31, 2025 and December 31, 2024 and has

determined that those customers were unlikely not to settle their balances in full;

accordingly, as of March 31, 2025 and December

31, 2024, the Company’s estimated allowance for credit losses was both zero.

Company also assessed the creditworthiness and solvency of its customers as of June 30, 2025 and December 31, 2024 and has determined

that those customers were unlikely not to settle their balances in full;

accordingly, as of June 30, 2025 and December 31, 2024, the

Company’s estimated allowance for credit losses was both zero .

Plant, and Equipment

is carried at cost less accumulated depreciation.

Depreciation is provided over their estimated useful lives, using the straight-line

Estimated useful lives of the equipment are as follows:

OF ESTIMATED USEFUL LIVES OF RELATED ASSETS

cost of maintenance and repairs to fixed assets are charged to expenses as incurred.

and equipment are recorded at cost less accumulated depreciation and amortization.

Depreciation and amortization is recorded over the

assets’ estimated useful lives using the straight-line method, which is 3 three to five years for furniture and equipment, one year for capital leases and three years for software.

improvements are amortized over the shorter of their useful life or the remaining term of the lease.

Repairs and maintenance costs are

expensed as incurred.

represents the excess of the purchase price over the fair value of the net tangible and identifiable assets acquired in a business combination.

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The review of goodwill impairment consists of either using a qualitative approach to determine whether it is more likely than

not that the fair value of the assets is less than their respective carrying values or a one -step quantitative impairment

In performing the qualitative assessment, we consider many factors in evaluating whether the carrying value of goodwill may not

be recoverable.

If, based on the results of the qualitative assessment, it is concluded that it is not more likely than not

that the fair value of a reporting unit exceeds its carrying value, additional quantitative impairment testing is performed.

The quantitative

test requires that the carrying value of each reporting unit be compared with its estimated fair value.

If the carrying value of a reporting

unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill).

Fair value is generally determined using a discounted cash flow analysis.

During the three months ended March 31, 2025 and 2024, no impairment

of goodwill was recognized.

not that the fair value of the assets is less than their respective carrying values or a one-step quantitative impairment test.

In performing

the qualitative assessment, we consider many factors in evaluating whether the carrying value of goodwill may not be recoverable.

based on the results of the qualitative assessment, it is concluded that it is not more likely than not that the fair value of a reporting

unit exceeds its carrying value, additional quantitative impairment testing is performed.

The quantitative test requires that the carrying

value of each reporting unit be compared with its estimated fair value.

If the carrying value of a reporting unit is greater than its

fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill).

Fair value is generally

determined using a discounted cash flow analysis.

During the three and six months ended June 30, 2025 and 2024, no impairment of goodwill

was recognized.

Development Costs

Company is undergoing new Software as a Service (“SaaS”) product development based on an acquired SaaS platform in

previous years, which has not been utilized in its original form.

Cost from the acquired SaaS platform, functionalities and modules

and the redesigned features of the distinct new SaaS product are accounted for under ASC 985-20 (Costs of Software to Be Sold,

Leased, or Marketed).

Development costs were capitalized as “Software Development in Progress” after achieving

technological feasibility.

Company is undergoing new Software as a Service (“SaaS”) product development based on an acquired SaaS platform in previous

years, which has not been utilized in its original form.

Cost from the acquired SaaS platform, functionalities and modules and the redesigned

features of the distinct new SaaS product are accounted for under ASC 985-20 (Costs of Software to Be Sold, Leased, or Marketed).

costs were capitalized as “Software Development in Progress” after achieving technological feasibility.

for long-lived assets

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Revenue from contracts with customers is recognized using the following

the contract(s) with a customer;

the performance obligations in the contract;

the transaction price;

the transaction price to the performance obligations in the contract;

revenue when (or as) the entity satisfies a performance obligation.

Identify the contract(s) with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations

in the contract;

Recognize revenue when (or as) the entity satisfies a performance

applying ASC 606, the Company will recognize revenue when the Company has negotiated and formalized the terms of the transaction in the

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This subscription service is recognized to revenue monthly.

Company’s disaggregated revenues for the three months ended March 31, 2025 and 2024 were as follows:

SCHEDULE OF DISAGGREGATED

Three Months Ended

Disaggregated Revenue

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Advisory consulting

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per share) are excluded from the calculation of diluted EPS.

of March 31, 2025, common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation

was anti-dilutive (see N ote 1 8).

of June 30, 2025, common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation

was anti-dilutive (see Note 19).

and contingencies

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have a material impact on its financial statements.

3 — ACCOUNTS RECEIVABLES

receivables consisted of the following As of March 31, 2025 and December 31, 2024:

SCHEDULE OF ACCOUNTS RECEIVABLES

Gross accounts and other receivables

Allowance for doubtful accounts

Accounts receivables,

the three months ended March 31, 2025 and 2024, the Company have not written off any outstanding receivable.

ACCOUNTS RECEIVABLE, NET

OF ACCOUNTS RECEIVABLES, NET

Details of Accounts Receivable, Net

June 30, 2025

December 31, 2024

Accounts receivable

Allowance for credit losses

Accounts receivable, net

both the three and six months ended June 30, 2025 and 2024, the Company had no write-offs of any outstanding receivables.

PROPERTY AND EQUIPMENT, NET

SCHEDULE OF PROPERTY AND EQUIPMENT, NET

Details of Property and Equipment, Net

June 30, 2025

December 31, 2024

Gross Carrying Amount

Accumulated Depreciation and Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Depreciation and Amortization

Net Carrying Amount

$ ( 124,550 )

$ ( 121,869 )

Furniture and fixtures

Leasehold improvements

Capital lease

$ ( 234,278 )

$ ( 230,789 )

the three and six months ended June 30, 2025 and 2024, the Company recorded immaterial amounts of depreciation expense in cost of revenue

and selling, general and administrative expenses.

SOFTWARE DEVELOPMENT COSTS

2024, the Company reclassed software development costs from property and equipment to software development costs.

The Company continuing

incurs costs to develop new modules, functionalities, and integrations on previous purchased SaaS platform in order to develop a new

product with differentiated offering.

As of June 30, 2025, the SaaS platform is still undergoing development stage and not ready for

external sales.

No amortization has been recorded during the three and six months ended June 30, 2025 and 2024.

2024, the Company reclassed a part of software from property and equipment to software development costs.

SCHEDULE OF SOFTWARE DEVELOPMENT COSTS

Capitalized Software Development Costs

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Capitalized software development costs

INTANGIBLE ASSETS

SCHEDULE OF INTANGIBLE ASSETS

Details of Intangible Assets, Net

June 30, 2025

December 31, 2024

Gross Carrying Amount

Accumulated Depreciation and Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Depreciation and Amortization

Net Carrying Amount

Contractual relationship

Implementation

Intangible assets

$ ( 186,543 )

$ ( 169,460 )

OF INTANGIBLE ASSET AMORTIZATION

Details of Intangible Asset Amortization

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Amortization expense, presented in SG&A

BUSINESS COMBINATION

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As of December 31, 2020, the Company had initiated discussions regarding the potential acquisition

of SLG Innovation, Inc.

(“SLG”) and had advanced a non-refundable deposit of $ 1,401,923 for cash advances, loans, capitalized

of SLG and had advanced a non-refundable deposit of $ 1,401,923 for cash advances, loans, capitalized

transaction costs and accounts receivable arising from prior business dealings with SLG.

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acquisition of SLG consisted primarily of:

prepaid deposit of $ 2,000,000 ;

shares of common stock having par value of $ 0.0001

deposit of $ 2,000,000 ;

(b) 1,008,282

shares of common stock having par value of $ 0.0001 per share;

shares of Series E Preferred stock with a face value of $ 10,000 and conversion price of $ 1.00 ;

(d) $ 10,814,147

of accounts receivable in Cycurion owing from SLG

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statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree.

The assets acquired and liabilities assumed are recognized provisionally in the accompanying consolidated balance

sheets at their estimated fair values as of March 31, 2025.

The initial accounting for the business combination is not complete as the

Company is in the process of obtaining additional information for the valuation of acquired assets and liabilities, if any.

The provisional

amounts are subject to change to the extent that additional information is obtained about the facts and circumstances that existed as

of the acquisition date.

GAAP, the measurement period shall not exceed one year from the acquisition date and the Company will

finalize these amounts no later than March 31, 2026.

The estimated fair values as of the acquisition date are based on information that

existed as of the acquisition date.

During the measurement period the Company may adjust provisional amounts recorded for assets acquired

and liabilities assumed to reflect new information that the Company has subsequently obtained regarding facts and circumstances that existed

as of the acquisition date.

following table summarizes the fair value of cash and non-cash consideration transferred, assets acquired, liabilities assumed as of

the acquisition date, resulting in the bargain purchase gain:

The assets acquired

and liabilities assumed were recognized provisionally in the accompanying consolidated balance sheets at their estimated fair values as

of March 31, 2025, and adjusted in the second quarter of 2025.

The initial accounting for the business combination is not complete as the Company is in the process of obtaining

additional information for the valuation of acquired assets and liabilities, if any.

The provisional amounts are subject to change to

the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date.

GAAP, the measurement period shall not exceed one year from the acquisition date and the Company will finalize these amounts no later

than March 31, 2026.

The estimated fair values as of the acquisition date are based on information that existed as of the acquisition

During the measurement period the Company may adjust provisional amounts recorded for assets acquired and liabilities assumed to

reflect new information that the Company has subsequently obtained regarding facts and circumstances that existed as of the acquisition

The results of operations for SLG are included in the consolidated results of Cycurion, Inc.

starting April 1, 2025.

OF FAIR VALUE OF CONSIDERATION TRANSFERRED ASSETS ACQUIRED LIABILITIES ASSUMED

Valuation as of

March 31, 2025

SLG Valuation

Initial Allocation of Assets and Liabilities

Estimated Allocation of Assets and Liabilities as of June 30, 2025

Cash consideration:

Cash consideration

cash acquired

Cash consideration, net of cash acquired

Noncash consideration:

1 unchanged sentence

Series E preferred stock (2)

Account receivables in Cycurion owing from

Total Noncash Consideration:

Total Consideration

(1) Represents

the fair value of 508,141

common stock issued in the SLG transaction based on the quoted stock price on the date of issuance.

(2) Represents the

fair value of the Series E Convertible Preferred Stock as is converted to common stock based on the quoted price common stock on the date of issuance.

Represents the fair value of the accounts receivable

in Cycurion owing from SLG.

Valuation as of

March 31, 2025

Accounts receivable in Cycurion owing from SLG (3)

Noncash consideration

Total consideration

Assets acquired:

Cash and cash equivalents

Accounts receivable

Assets acquired

Labilities assumed

Total identified assets acquired

Liabilities assumed:

Accounts payable

Accrued liability

Accrued liabilities

Payroll liability

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Liabilities to Cycurion

Liabilities assumed

Net liability

Total identified liabilities assumed

Net identifiable liabilities assumed

( 7,104,815 )

Elimination of inter-company balances

Elimination of liabilities in SLG

Elimination balance total

Non-controlling interest

( 3,464,218 )

value of the noncontrolling interest based on NCI’s 49 % interest in the net assets acquired.

( 3,464,218 )

Net assets acquired

(1) Represents

the fair value of 1,008,282 common stock issued in the SLG transaction based on the quoted

stock price on the date of issuance.

(2) Represents

the fair value of the Series E Convertible Preferred Stock as is converted to common stock

based on the quoted price common stock on the date of issuance.

(3) Represents

the fair value of the accounts receivable in Cycurion owing from SLG.

value of the noncontrolling interest based on NCI’s 49 % interest in the net assets

is calculated as Total Consideration paid less the net assets acquired.

5 — FIXED ASSETS, SOFTWARE DEVELOPMENT COSTS, AND INTANGIBLE ASSET

assets consisted of the following as of March 31, 2025 and December 31, 2024:

OF FIXED ASSETS

Furniture and fixtures

Leasehold improvements

Capital lease

Property plant and equipment, gross

Accumulated depreciation

Furniture and fixtures

Leasehold improvements

Capital lease

Accumulated depreciation

Property plant and equipment, net

the three months ended March 31, 2025 and 2024, the Company recorded depreciation expenses in cost of revenue of $ 1,709 and $ 733 , respectively,

and selling, general and administrative expenses of 1,709 and $ 1,464 , respectively.

development costs consisted of the following as of March 31, 2025 and December 31, 2024:

SCHEDULE OF SOFTWARE DEVELOPMENT COSTS

Software development cost

the three months ended March 31, 2025 and 2024, the Company incurred software development costs of $ 70,000 and $ 105,000 , respectively.

2024, the Company reclassed software development costs from fixed asset to software development costs.

The Company continuing incurs

costs to develop new modules, functionalities, and integrations on previous purchased SaaS platform in order to develop a new product

with differentiated offering.

As of March 31, 2025, the SaaS platform is still undergoing development stage and not ready for external

No amortization has been recorded during the three months ended March 31, 2025 and 2024.

2024, the Company reclassed a part of software from fixed asset to software development costs.

assets consisted of the following as of March 31, 2025 and December 31, 2024:

SCHEDULE OF INTANGIBLE ASSETS

Contractual relationship

Implementation

Intangible assets, gross

Accumulated amortization

Contractual relationship

Implementation

Accumulated amortization

Intangible assets, net

the three months ended March 31, 2025 and 2024, the Company recorded amortization expenses in selling, general and administrative expenses

of $ 8,333 and $ 0 , respectively.

of Axxum Technologies, LLC.

52 unchanged sentences

of SLG Innovation Inc.

Company initiated discussions to acquire SLG in late 2020, advancing an initial non-refundable deposit

of $ 1.4 million for loans, capitalized transaction costs, and accounts receivable.

By December 31, 2024, this deposit had increased to

On May 13, 2021, the Company entered into an agreement to acquire substantially all of SLG’s assets and certain liabilities,

later amended to focus on specific sales contracts.

A unidirectional letter of intent (LOI) was executed on April 29, 2023, binding SLG

to the transaction while allowing the Company the option to proceed.

The LOI contemplated a structure involving the $ 2 million receivable,

$ 2.1 million in SLG payables to RCR Technology Corporation, and 996,355 shares of the Company’s capital stock.

March 31, 2025, the Company finalized an agreement to acquire 51 %

equity interest in SLG.

Company initiated discussions to acquire SLG in late 2020, advancing an initial non-refundable deposit of $ 1.4 million for loans, capitalized

transaction costs, and accounts receivable.

By December 31, 2024, this deposit had increased to $ 2 million.

On May 13, 2021, the Company

entered into an agreement to acquire substantially all of SLG’s assets and certain liabilities, later amended to focus on specific

sales contracts.

A unidirectional letter of intent (LOI) was executed on April 29, 2023, binding SLG to the transaction while allowing

the Company the option to proceed.

The LOI contemplated a structure involving the $ 2 million receivable, $ 2.1 million in SLG payables

to RCR Technology Corporation, and 996,355 shares of the Company’s capital stock.

March 31, 2025, the Company finalized an agreement to acquire 51 % equity interest in SLG.

The total purchase consideration included the

million prepaid deposit, 508,141

shares of common stock (par value $ 0.0001 ), 51

shares of Series E Preferred Stock (face value $ 10,000

each, conversion price $ 1.00 )

and $ 10,814,147 of accounts receivable in Cycurion owing from SLG.

$ 2 million prepaid deposit, 1,008,282 shares of common stock (par value $ 0.0001 ), 51 shares of Series E Preferred Stock (face value $ 10,000

each, conversion price $ 1.00 ) and $ 10,814,147 of accounts receivable in Cycurion owing from SLG.

Additionally, the Company issued 500,000

2 unchanged sentences

As of the acquisition date, the fair value of assets acquired

totaled $ 3,101,564 , including $ 34,983 in cash and $ 3,066,581 in accounts receivable.

Liabilities assumed amounted to $ 10,171,396 , including

accounts payable, accrued liabilities, payroll liabilities, and loans.

After recognizing a non-controlling interest of $ 3,464,218 , the

net assets acquired were negative $ 7,069,832 million.

The total consideration transferred exceeded the net assets acquired, resulting

in the recognition of goodwill amounting to $ 13,945,924 .

This goodwill reflects the strategic value of SLG’s operations,

expected synergies, and future growth potential.

totaled $ 3,066,581 , excluding cash of $ 34,983 that was netted against cash consideration paid.

Liabilities assumed amounted to $ 10,171,396 ,

including accounts payable, accrued liabilities, payroll liabilities, and loans.

After recognizing a non-controlling interest of $ 3,464,218 ,

the net assets acquired were negative $ 7,104,815 .

The total consideration transferred exceeded the net assets acquired, resulting in

the recognition of goodwill amounting to $ 14,195,995 .

This goodwill reflects the strategic value of SLG’s operations, expected

synergies, and future growth potential.

SCHEDULE OF GOODWILL

Total Goodwill

7 — BANK LOANS

June 30, 2025

December 31, 2024

Details of Goodwill

June 30, 2025

December 31, 2024

loan-revolving credit line

14 unchanged sentences

an additional 5 % default interest on the second amendment.

of March 31, 2025, the stated rate of interest of the revolving line of credit was 8.50 %.

of June 30, 2025, the stated rate of interest of the revolving line of credit was 8.50 %.

The outstanding balance of the line of credit

was $ 3,239,767 and $ 3,249,067 , respectively, as of March 31, 2025 and December 31, 2024.

was $ 3,236,167 and $ 3,249,067 , respectively, as of June 30, 2025 and December 31, 2024.

term loan Concurrent with Axxum’s procurement of the above-mentioned revolving credit line, Axxum also procured a term loan from

8 unchanged sentences

is subject to the following affirmative loan covenants:

on or after December 31, 2017 but prior to June 30, 2018, minimum tangible net worth (net liability) of $2,250,000;

on or after June

30, 2018 but prior to June 30, 2019, minimum tangible net worth (net liability) of $1,250,000;

on or after June 30, 2019 but prior

to December 31, 2019, minimum tangible net worth (net liability) of $950,000;

(i) on or after December 31, 2017 but prior to June 30, 2018, minimum tangible

net worth (net liability) of $2,250,000;

on or after June 30, 2018 but prior to June 30, 2019, minimum tangible net worth (net liability)

of $1,250,000;

on or after June 30, 2019 but prior to December 31, 2019, minimum tangible net worth (net liability) of $950,000;

after December 31, 2019 but prior to June 30, 2020, minimum tangible net worth (net asset) of $1750,000;

on or after June 30, 2020 but

prior to December 31, 2020, minimum tangible net worth (net asset) of $2,500,000;

on or after December 31, 2020 but prior to June 30,

2021, minimum tangible net worth (net asset) of $3,000,000;

on or after June 30, 2020 but prior to December 31, 2020, minimum

tangible net worth (net asset) of $2,500,000;

on or after December 31, 2020 but prior to June 30, 2021, minimum tangible net worth

(net asset) of $3,000,000;

on or after June 30, 2021 but prior to December 31, 2021, minimum tangible net worth (net asset) of

on or after December 31, 2021, minimum tangible net worth (net asset) of $5,000,000, (ii) interest coverage ratios must

be greater than 1.25-to-1, measured on quarterly basis, using a rolling four-quarter basis, beginning with the fiscal quarter ending

December 31, 2017, (iii) the Company and Axxum must achieve minimum consolidated earnings before tax interest, tax, depreciation

and amortization of (“EBITDA”) greater than $300,000 per quarter, and (iv)

annual capital expenditures must be less than $50,000.

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.

on or after June 30, 2021 but prior to December 31, 2021, minimum tangible

net worth (net asset) of $3,500,000;

on or after December 31, 2021, minimum tangible net worth (net asset) of $5,000,000, (ii) interest

coverage ratios must be greater than 1.25-to-1, measured on quarterly basis, using a rolling four-quarter basis, beginning with the fiscal

quarter ending December 31, 2017, (iii) the Company and Axxum must achieve minimum consolidated earnings before tax interest, tax, depreciation

and amortization of (“EBITDA”) greater than $300,000 per quarter, and (iv) annual capital expenditures must be less than

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.

April 18, 2019, Axxum, Cloudburst, and the Company collectively amended the Loan and Security Agreement, including the addition of Cloudburst

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loan covenants were replaced as follows:

(i) on or after June 30, 2020 but prior to December 31, 2020, minimum tangible net worth (net

liability) of $2,750,000;

on or after December 31, 2020 but prior to June 30, 2021, minimum tangible net worth (net liability) of $2,250,000;

on or after June 30, 2021 but prior to December 31, 2021, minimum tangible net worth (net liability) of $1,750,000;

December 31, 2020 but prior to June 30, 2021, minimum tangible net worth (net liability) of $2,250,000;

on or after June 30, 2021

but prior to December 31, 2021, minimum tangible net worth (net liability) of $1,750,000;

on or after December 31, 2021, but prior

to June 30, 2022, minimum tangible net worth (net liability) of $1,250,000;

on or after June 30, 2022 but prior to December 31,

2022, minimum tangible net worth (net asset) of $500,000;

on or after December

31, 2021, but prior to June 30, 2022, minimum tangible net worth (net liability) of $1,250,000;

on or after June 30, 2022 but prior to

December 31, 2022, minimum tangible net worth (net asset) of $500,000;

on or after December 31, 2022, but prior to June 30, 2023, minimum

tangible net worth (net asset) of $1,250,000;

on or after June 30, 2023 but prior to December 31, 2023, minimum tangible net worth

(net asset) of $2,000,000;

on or after December 31, 2023, minimum tangible net worth (net asset) of $2,500,000, (ii) interest

coverage ratios must be greater than 1.20-to-1, measured on quarterly basis, using a rolling four-quarter basis, beginning with the

fiscal quarter ending June 30, 2020 (iii) the Company must achieve minimum consolidated EBITDA greater than $300,000 per quarter,

and (iv) annual capital expenditures must be less than $50,000.

of March 31, 2025, the stated rate of interest of the loan was 9.5 %.

on or after June 30, 2023 but prior to December 31, 2023, minimum tangible net worth (net

asset) of $2,000,000;

on or after December 31, 2023, minimum tangible net worth (net asset) of $2,500,000, (ii) interest coverage ratios

must be greater than 1.20-to-1, measured on quarterly basis, using a rolling four-quarter basis, beginning with the fiscal quarter ending

June 30, 2020 (iii) the Company must achieve minimum consolidated EBITDA greater than $300,000 per quarter, and (iv) annual capital expenditures

must be less than $50,000.

of June 30, 2025, the stated rate of interest of the loan was 9.5 %.

Company has categorized balances due within one operating period as current and those payments due after one operating period as long-term.

As of March 31, 2025 and December 31, 2024, the Company recorded bank loan-current portion of $ 770,078 , net of debt discount of $ 0 and

$ 774,095 , net of debt discount of $ 1,097 and bank loan-long term portion of $ 0 , net of debt discount of $ 0 and $ 0 , and net of debt discount

of $ 0 and, respectively.

As of June 30, 2025 and December 31, 2024, the Company recorded bank loan-current portion of $ 620,078 ,

net of debt discount of $ 0

and $ 774,095 ,

net of debt discount of $ 1,097 .

with Axxum’s procurement of the above-mentioned revolving credit line and loan, Axxum entered into a Pledge Agreement.

13 unchanged sentences

of Axxum, Cloudburst, and each other subsidiary of the Company.

the three months ended March 31, 2025 and 2024, the Company record amortization of discount of $ 1,097 and $ 0 , respectively.

LOANS PAYABLE

following table summarizes the components of the Company’s loans payable and advances as of March 31, 2025 and December 31, 2024:

OF LOAN PAYABLE AND ADVANCES

June 30, 2025

December 31, 2024

Details of Loans Payable

June 30, 2025

December 31, 2024

Loan payable - SLG

EIDL Cycurion Loan

EIDL SLG Loan

Economic injury disaster loan - Cycurion

Economic injury disaster loan - SLG

Private loan payable

Total face value

Unamortized discount

Funded loans Payable

Unamortized debt-issuance costs and discounts

Total loans payable

Current portion of loans payable and advances

Long-term portion of loans payable and advances

March 20, 2023, the Company entered into a receivable purchase agreement (the “RPA Loan”) for case received of $ 339,500 ,

Current portion of long-term debt

Long-term debt

March 20, 2023, the Company entered into a receivable purchase agreement (the “RPA Loan”) for cash received of $ 339,500 ,

with a specified interest rate of 8.00 %, due January 20, 2024.

The RPA Loan requires weekly payments of $ 15,302 , until $ 489,650 is repaid.

As of March 31, 2025 and December 31, 2024, the Company recognized a balance owing of $ 405,314 , respectively, and the loan is in default.

As of June 30, 2025 and December 31, 2024, the Company recognized a balance owing of $ 405,314 , respectively, and the loan is in default.

Cycurion Loan

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offered by the U.S.

Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan

(“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business.

principal amount of the EIDL Cycurion Loan is $ 150,000 ,

with proceeds to be used for working capital purposes.

Interest accrues at the rate of 3.75 %

per annum and will accrue from the date of the EIDL Cycurion Loan.

Installment payments, including principal and interest, are due

monthly beginning July 16, 2021 (twelve months from the date of the EIDL Cycurion Loan) in the amount of $ 731 .

The balance of principal and interest is payable 30

years from the date of the EIDL Cycurion Loan.

The Company recorded note payable as $ 3,202

of loan payable under current liability as of March 31, 2025 and $ 295,296

and $ 146,798

of long-term loan payable, respectively, as of March 31, 2025 and December 31, 2024.

September 30, 2020, the Company executed the standard loan documents required for securing loans (the “EIDL SLG Loan”)

offered by the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on the Company’s

The principal amount of the EIDL SLG Loan is $ 150,000 ,

with the proceeds to be used for working capital purposes.

Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”)

assistance program in light of the impact of the COVID-19 pandemic on the Company’s business.

The principal amount of the EIDL

Cycurion Loan is $ 150,000 , with proceeds to be used for working capital purposes.

Interest accrues at the rate of 3.75 % per annum and

will accrue from the date of the EIDL Cycurion Loan.

Installment payments, including principal and interest, are due monthly beginning

July 16, 2021 (twelve months from the date of the EIDL Cycurion Loan) in the amount of $ 731 .

The balance of principal and interest is

payable 30 years from the date of the EIDL Cycurion Loan.

The Company recorded note payable as $ 3,202 of loan payable under current liability

as of June 30, 2025 and $ 295,296 and $ 146,798 of long-term loan payable, respectively, as of June 30, 2025 and December 31, 2024.

September 30, 2020, the Company executed the standard loan documents required for securing loans (the “EIDL SLG Loan”) offered

by the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on the Company’s business.

The principal

amount of the EIDL SLG Loan is $ 150,000 , with the proceeds to be used for working capital purposes.

Interest accrues at the rate of 3.75 %

per annum and will accrue from the date of the EIDL SLG Loan.

Installment payments, including principal and interest, are due

monthly beginning January 1, 2023 in the amount of $ 731 .

The balance of principal and interest is payable 30

years from the date of the EIDL SLG Loan (June 30, 2050).

As of March 31, 2025, the balance of the EIDLSLG Loan including interest

is $ 157,220 .

Installment payments, including principal and interest, are due monthly

beginning January 1, 2023 in the amount of $ 731 .

The balance of principal and interest is payable 30 years from the date of the EIDL

SLG Loan (June 30, 2050).

As of June 30, 2025, the balance of the EIDL SLG Loan including interest is $ 157,220 .

2022 and 2023, the Company entered into non-recourse agreements with a lender to sell future receipts.

2 unchanged sentences

The terms were renegotiated to monthly payments in 2023.

As of March 31, 2025, the balance on the

As of June 30, 2025, the balance on the

loan is $ 264,379 and it is currently in default.

2 unchanged sentences

basis based on a 10 - 30 % interest rate.

As of March 31, 2025, the balance on the loan is $ 203,623 and is currently in default.

As of June 30, 2025, the balance on the loan is $ 203,623 and is currently in default.

CONVERTIBLE NOTES

OF CONVERTIBLE NOTES

Rollforward of Convertible Notes

Principal Value

Unamortized Discount and Issuance Costs

Convertible Notes Carrying Balance

Weighted Average Interest Rate

(Calendar Year)

Balance as of December 31, 2024

Balance as of March 31, 2025

Conversion to equity

( 2,490,217 )

( 2,407,752 )

Balance as of June 30, 2025

June 30, 2025, the Company converted all outstanding convertible notes to Series F preferred stock.

See Note 15 – Equity.

PROMISSORY NOTES

following table summarizes the components of the Company’s promissory notes of March 31, 2025 and December 31, 2024:

OF PROMISSORY NOTES

Rollforward of Promissory Notes

Principal Value

Unamortized Discount and Issuance Costs

Convertible Notes Carrying Balance

Weighted Average Interest Rate

Balance as of December 31, 2024

Balance as of March 31, 2025

Conversion to equity

Balance as of June 30, 2025

OF LOANS PAYABLE

June 30, 2025

December 31, 2024

Weighted Average Interest Rate

(Calendar Year)

Details of Loans Payable

June 30, 2025

December 31, 2024

Weighted Average Interest Rate

(Calendar Year)

Note issued in 2017

Notes issued prior to 2021

Note issued in 2020

Note issued in 2021

Notes issued in 2023

1 unchanged sentence

Notes issued in 2025

Total face value

Unamortized discount and issuance costs

Total notes payable

the three months ended March 31, 2025, the Company issued promissory notes in the amount of $ 690,558 , for $ 513,200 in proceeds to unaffiliated

investors and for $ 100,000 to be released from the binding term sheet with a future equity line to an unaffiliated investor, and the

Company repaid a promissory note of $ 20,000 .

the three months ended March 31, 2025 and 2024, the Company record amortization of debt discount of $ 56,061 and $ 0 , respectively.

Funded loans payable

Unamortized debt-issuance costs and discounts

Total loans payable

Convertible Promissory notes payable

11 unchanged sentences

As a result of the Business

Combination, Cycurion raised $ 3,333,335

of debt capital on November 21, 2022, from nine (9) unaffiliated investors who were issued for convertibles notes, warrants and

shares of common stock.

The convertible notes had a maturity date of November 21, 2023, and an interest rate of 8 %.

Combination, Cycurion raised $ 3,333,335 of debt capital on November 21, 2022, from nine (9) unaffiliated investors who were issued for

convertibles notes, warrants and shares of common stock.

The convertible notes had a maturity date of November 21, 2023, and an interest

They were also issued to convert to equity upon completion of the Business Combination between Cycurion and Western.

the three months ended March 31, 2025, the Company issued preferred stocks and warrants in exchange of the outstanding convertible promissory

the first quarter of calendar year 2025, the Company issued preferred stocks and warrants in exchange of the outstanding convertible promissory

notes which had an aggregate principal amount of $ 3,333,335 and accrued interest of $ 299,259 .

1 unchanged sentence

issued 6,666,667 shares of Series D Convertible Preferred Stock and 7,272,728 Series D warrants to seven (7) unaffiliated noteholders.

As a result, the Company recorded gain on settlement of debt of $ 299,259 .

of March 31, 2025 and December 31, 2024, the Company had outstanding convertible promissory notes of $ 0 $ 3,333,335 respectively.

10 – CONVERTIBLE NOTES

following table summarizes the components of the Company’s convertible notes of March 31, 2025 and December 31, 2024:

OF CONVERTIBLE NOTES

(Calendar year)

Notes issued in 2025

Total face value

Unamortized discount and issuance costs

Total notes payable

the three months ended March 31, 2025, the Company issued convertible notes in the amount of $ 440,217 for $ 386,500 in proceeds to three

unaffiliated investors.

The notes have a term of one ( 1 ) year from issuance and carry annual interest rate of 18 % that commenced upon

funding date through the date of repayment.

The notes have a conversion price of $ 1.75 per share.

the three months ended March 31, 2025 and 2024, the Company record amortization of debt discount of $ 4,476 and $ 0 , respectively.

As a result, the Company recorded gain on settlement of debt of $ 299,259 , which is presented on the consolidated statements of operations and the consolidated statements of cash flows within ‘Loss on debt settlement, net.

FACTORING LIABILITY

July 12, 2022, the Company entered into agreement with a lender Factor A, whereby the Factor A would loan proceeds against certain

accounts receivable up to 90 %

of the total value of the invoice, which is paid to the Company in the form of a cash advance.

A factoring cost of 1.5 %

is applied for days 1-30 after the loan is funded, and an additional 0.5 %

fee charge is applied for each additional 10 days period thereafter.

The maximum facility is $ 3

pursuant to ASC 860-20-55-24, the Company recognized a factoring liability to the lenders until the accounts receivable are collected.

As of March 31, 2025, the factoring liability was $ 2,176,922 .

July 12, 2022, the Company entered into agreement with a lender Factor A, whereby the Factor A would loan proceeds against certain accounts

receivable up to 90 % of the total value of the invoice, which is paid to the Company in the form of a cash advance.

A factoring cost

of 1.5 % is applied for days 1-30 after the loan is funded, and an additional 0.5 % fee charge is applied for each additional 10 days period

The maximum facility is $ 3.0 million.

pursuant to ASC 860-20-55-24, the Company recognized a factoring liability to the lenders until the accounts receivables are collected.

As of June 30, 2025, the factoring liability was $ 2,309,160 .

SERIES A CONVERTIBLE PREFERRED STOCK

7 unchanged sentences

outstanding securities mentioned above.

Refer Note 13 for the characteristic of newly issued Series A Convertible Preferred stock.

Company has authorized 20,000,000 shares of preferred stock, par value of $ 0.0001 per share, issuable from time to time in one

or more series.

of March 31, 2025 and December 31, 2024, there are 0 and 173,879 shares of common stock subject to possible redemption, respectively.

Refer to Note to 15 for the characteristic of newly issued Series A Convertible Preferred

Company has authorized 20,000,000 shares of preferred stock, par value of $ 0.0001 per share, issuable from time to time in one or more

Second Amended and Restated Certificate of Incorporation authorizes the board of directors to establish one or more series of preferred

Unless required by law or by any stock exchange, and subject to the terms of the Second Amended and Restated Certificate of Incorporation,

the authorized shares of preferred stock will be available for issuance without further action by holders of common stock.

of directors is able to determine, with respect to any series of preferred stock, designations, powers, preferences and relative, participating,

optional or other rights, if any, and the qualifications, limitations, or restrictions thereof, if any.

Company could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition

attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests or in which the

stockholders might receive a premium over the market price of the common stock.

Additionally, the issuance of preferred stock may adversely

affect the rights of stockholders by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating

the rights of stockholders to distributions upon a liquidation, dissolution or winding up, or other event.

As a result of these or other

factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.

of June 30, 2025 and December 31, 2024, there are zero and 173,879 shares of common stock subject to possible redemption, respectively.

Stockholders’

A Convertible Preferred Stock

Company has designated 110,000 shares of Series A Convertible Preferred Stock with a stated value of $ 1.45 per share.

Company has designated 110,000

shares of Series A Convertible Preferred Stock, par value $ 0.0001

The holders of our Cycurion’s Series A Stock have voting rights on an as-if-converted-to-Common-Stock basis, and as

28 unchanged sentences

with respect to any of the foregoing.

part of the acquisition of Western during the three months ended March 31 2025, the Company issued to unaffiliated investors a total

preferred shares.

of March 31, 2025 and December 31, 2024, there were 106,816 and 0 of Series A Convertible Preferred Stock issued and outstanding, respectively.

part of the acquisition of Western during the first quarter of calendar year 2025, the Company issued to unaffiliated investors

a total of zero and 106,816 preferred shares, respectively.

of June 30, 2025 and December 31, 2024, there were 106,816 and zero of Series A Convertible Preferred Stock issued and outstanding, respectively.

B Convertible Preferred Stock

Company has designated 3,000 shares of Series B Convertible Preferred Stock with a stated value of $ 1.00 per share.

Company has designated 3,000

shares of Series B Convertible Preferred Stock, par value $ 0.0001

Holders of shares of Cycurion’s Series B Convertible Preferred Stock shall not have any voting rights except as required

21 unchanged sentences

with respect to any of the foregoing.

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued to unaffiliated investors a total of

3,000 preferred shares of series B Convertible Preferred Stock in exchange of existing 3,000 Series B Convertible Preferred Stock.

the three months ended as of March 31, 2025, a total of 2,999 Series B Convertible Preferred Stock were converted into 5,998,653 shares

of common stock.

of March 31, 2025 and December 31, 2024, there were 1 and 3,000 shares of Series B Convertible Preferred Stock issued and outstanding,

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total

of 3,000 preferred shares of series B Convertible Preferred Stock in exchange of existing 3,000 Series B Convertible Preferred Stock.

the six months ended June 30, 2025, a total of 2,999 Series B Convertible Preferred Stock were converted into 5,998,653 shares of common

of June 30, 2025 and December 31, 2024, there were 1 and 3,000 shares of Series B Convertible Preferred Stock issued and outstanding,

respectively.

C Convertible Preferred Stock

Company has designated 5,000 shares of Series C Convertible Preferred Stock with a stated value of $ 82.46 per share.

Company has designated 5,000

shares of Series C Convertible Preferred Stock, par value $ 0.0001

The holders of our Series C Stock have voting rights on an as-if-converted-to-Common-Stock basis, as required by law, and

28 unchanged sentences

with respect to any of the foregoing.

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued a total of 4,851 preferred shares of

series C Convertible Preferred Stock in exchange of existing 1,356,586 shares of Cycruion common stock and 406,969 Warrants.

of March 31, 2025 and December 31, 2024, there were 4,851 shares of Series C Convertible Preferred Stock issued and outstanding.

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued a total of 4,851 preferred shares

of series C Convertible Preferred Stock in exchange of existing 1,356,586 shares of Cycurion common stock and 406,969 Warrants.

No conversions

occurred during the three months ended June 30, 2025.

of June 30, 2025 and December 31, 2024, there were 4,851 shares of Series C Convertible Preferred Stock issued and outstanding.

D Convertible Preferred Stock

Company has designated 6,666,700 shares of Series B Convertible Preferred Stock with a stated value of $ 0.50 per share.

Company has designated 6,666,700

shares of Series B Convertible Preferred Stock, par value $ 0.0001

Holders of shares of Cycurion’s Series D Convertible Preferred Stock shall not have any voting rights except as required

21 unchanged sentences

with respect to any of the foregoing.

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued to unaffiliated investors a total of

6,666,666 preferred shares of series D Convertible Preferred Stock.

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total

of 6,666,666 preferred shares of series D Convertible Preferred Stock.

the three months ended as of March 31, 2025, a total of 6,516,666 Series D Convertible Preferred Stock were converted into 6,516,666

shares of common stock.

of March 31, 2025 and December 31, 2024, there were 150,000 and 0 shares of Series D Convertible Preferred Stock issued and outstanding,

No conversions occurred during the three months ended June 30, 2025.

of June 30, 2025 and December 31, 2024, there were 150,000 and 0 shares of Series D Convertible Preferred Stock issued and outstanding,

respectively.

E Convertible Preferred Stock

Company has designated 100 shares of Series E Convertible Preferred Stock with a stated value of $ 10,000 per share.

Company has designated 100

shares of Series E Convertible Preferred Stock, par value $ 0.0001

Holders of shares of Cycurion’s Series E Convertible Preferred Stock shall not have any voting rights except as required

21 unchanged sentences

with respect to any of the foregoing.

part of the acquisition of SLG Innovation, during the three months ended March 31 2025, the Company issued to the majority shareholder

part of the acquisition of SLG Innovation, during the first quarter of calendar year 2025, the Company issued to the majority shareholder

a total of 51 preferred shares of series E Convertible Preferred Stock as consideration for the transaction.

No issuances occurred during

the three months ended June 30, 2025.

F Convertible Preferred Stock

Company has designated 10,000 shares of our Series F Convertible Preferred Stock, par value $ 0.0001 per share.

Holders of shares of our Series F Convertible Preferred Stock shall have voting rights on an as-if-converted-to-Common-Stock

basis and as required by law (including without limitation, the DGCL) and as expressly provided in the Certificate of Designation of

Preferences, Rights and Limitations for our Series F Convertible Preferred Stock.

Holders of shares of our Series F Convertible Preferred Stock shall be entitled to receive, and we shall pay, dividends on

shares of our Series F Convertible Preferred Stock at the rate of twelve percent ( 12 %) per annum of the $ 0.0001 per-share Stated Value

of the Series F Convertible Preferred Stock.

The dividends shall be paid payable quarterly in arrears in shares of Common Stock, calculated

for each dividend payment on an as-if-converted-to-Common-Stock basis.

Shares of our Series F Convertible Preferred Stock shall be convertible, at any time and from time to time at the option

of the holder thereof, into shares of Common Stock (subject to certain 4.99% or 9.99% blocker limitations) at the conversion ratio of

one share of Series F Convertible Preferred Stock-for-1,000 shares of Common Stock, subject to adjustment.

Holders of shares of our Series F Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up, whether

voluntary or involuntary , shall be entitled to receive out of the assets, whether capital or surplus, an amount equal to the Stated

Value, plus any accrued and unpaid dividends thereon, for each share Series F Convertible Preferred Stock before any distribution or

payment shall be made to the holders of Common Stock, and, if the assets shall be insufficient to pay in full such amounts, then the

entire assets to be distributed to the holders of shares of our Series F Convertible Preferred Stock shall be ratably distributed among

them in accordance with the respective amounts that would have been payable on such shares if all amounts payable thereon had been paid

As long as any shares of Series F Convertible Preferred Stock are outstanding, we shall not, without the affirmative

vote of the holders of a majority of the then-outstanding shares of Series F Convertible Preferred Stock, (a) alter or change adversely

the powers, preferences, or rights given to the holders of Series F Convertible Preferred Stock or alter or amend the Certificate of

Designation of Preferences, Rights and Limitations for our Series F Convertible Preferred Stock, (b) amend its certificate of incorporation

or other charter documents in any manner that adversely affects any rights of the holders of shares of Series F Convertible Preferred

Stock, (c) increase the number of authorized shares of Series F Convertible Preferred Stock, or (d) enter into any agreement with respect

to any of the foregoing.

G Convertible Preferred Stock

Company has designated 10,000 shares of our Series G Convertible Preferred Stock, par value $ 0.0001 per share.

Holders of shares of our Series F Convertible Preferred Stock shall have voting rights on an as-if-converted-to-Common-Stock

basis and as required by law (including without limitation, the DGCL) and as expressly provided in the Certificate of Designation of

Preferences, Rights and Limitations for our Series G Convertible Preferred Stock.

Holders of shares of our Series G Convertible Preferred Stock shall be entitled to receive, and we shall pay, dividends on

shares of our Series G Convertible Preferred Stock at the rate of twelve percent ( 12 %) per annum of the $ 0.0001 per-share Stated Value

of the Series G Convertible Preferred Stock.

The dividends shall be paid payable quarterly in arrears in shares of Common Stock, calculated

for each dividend payment on an as-if-converted-to-Common-Stock basis.

Shares of our Series G Convertible Preferred Stock shall be convertible, at any time and from time to time at the option

of the holder thereof, into shares of Common Stock (subject to certain 4.99% or 9.99% blocker limitations) at the conversion ratio of

one share of Series F Convertible Preferred Stock-for-1,000 shares of Common Stock, subject to adjustment.

Holders of shares of our Series G Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up, whether

voluntary or involuntary , shall be entitled to receive out of the assets, whether capital or surplus, an amount equal to the Stated

Value, plus any accrued and unpaid dividends thereon, for each share Series G Convertible Preferred Stock before any distribution or

payment shall be made to the holders of Common Stock, and, if the assets shall be insufficient to pay in full such amounts, then the

entire assets to be distributed to the holders of shares of our Series G Convertible Preferred Stock shall be ratably distributed among

them in accordance with the respective amounts that would have been payable on such shares if all amounts payable thereon had been paid

As long as any shares of Series G Convertible Preferred Stock are outstanding, we shall not, without the affirmative

vote of the holders of a majority of the then-outstanding shares of Series G Convertible Preferred Stock, (a) alter or change adversely

the powers, preferences, or rights given to the holders of Series G Convertible Preferred Stock or alter or amend the Certificate of

Designation of Preferences, Rights and Limitations for our Series F Convertible Preferred Stock, (b) amend its certificate of incorporation

or other charter documents in any manner that adversely affects any rights of the holders of shares of Series G Convertible Preferred

Stock, (c) increase the number of authorized shares of Series F Convertible Preferred Stock, or (d) enter into any agreement with respect

to any of the foregoing.

Company has authorized 100,000,000 shares of common stock, par value of $ 0.0001 per share.

Each share of common stock entitles the

holder to one vote, in person or proxy, on any matter on which an action of the stockholders of the Company is sought.

shares for conversion of series B and D convertible preferred stock.

shares for exercise of other warrant, Warrant A, B and D for $ 3,309,921

shares valued at $ 9,000,000 for business acquisition costs

shares valued at $ 945,628 for a settlement of debt of $ 788,803 , as a result, the Company recorded loss on settlement of debt of $ 157,606

Each share of common stock entitles the holder

to one vote, in person or proxy, on any matter on which an action of the stockholders of the Company is sought.

12,515,319 shares for conversion of Series B Convertible Preferred Stock and D Convertible Preferred Stock

7,044,917 shares for exercise of other warrant, Warrant A,

B and D for $ 3,309,921

750,000 shares valued at $ 9,000,000 for business acquisition

78,803 shares valued at $ 945,628 for a settlement of debt of

$ 788,803 , as a result, the Company recorded loss on settlement of debt of $ 157,606 , which is presented on the consolidated statements of operations and the consolidated statements of cashflows within in 'loss of debt

settlement, net

3,926,072 shares valued at $ 3,834,777 for an employment agreement

1 unchanged sentence

78,983 shares for a release of common stock subject to redemption

of March 31, 2025 and December 31, 2024, there were 32,068,770

and 10,592,607

shares of common stock issued and outstanding, respectively.

The 32,068,770

shares of common stock include 624,864 shares of common stock to be issued to SLG and under certain equity plans.

of March 31, 2025 and December 31, 2024, there were 11,500,000 public warrants (“Public Warrants”) outstanding.

The Company accounts for the Public Warrants

as equity instruments.

The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination

or (b) 12 months from the closing of the initial public offering.

No warrants will be exercisable for cash unless the Company has an effective and current

registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to

such shares of common stock.

Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable

upon exercise of the Public Warrants is not effective within a specified period following the consummation of a Business Combination,

warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have

failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section

3(a)(9) of the Securities Act, provided that such exemption is available.

If neither that exemption nor another exemption is available,

holders will not be able to exercise their warrants on a cashless basis.

of June 30, 2025 and December 31, 2024, there were 40,353,983 and 10,592,607 shares of common stock issued and outstanding, respectively.

The 40,353,983 shares of common stock include 624,864 shares of common stock to be issued to SLG and under certain equity plans.

SCHEDULE OF WARRANTS ACTIVITY

Rollforward of all Warrants

Number of Warrants

Weighted Average Exercise Price

Weighted Average Life (years)

Outstanding warrants, December 31, 2024

Replacement of old warrants

( 9,450,840 )

( 7,044,917 )

Outstanding warrants, March 31, 2024

Issued - Prefunded (equity line)

Exercised - Prefunded (equity line)

( 2,500,000 )

Outstanding warrants, June 30, 2025

Exercisable warrants, June 30, 2025

Company has accounted for the issuance of common stock and warrants issued for cash proceeds in the private placements as equity instruments.

Management believes that the warrants are indexed to and are settled in the Company’s own common stock;

therefore, they should

be accounted for as permanent equity.

of June 30, 2025 and December 31, 2024, there were 11,500,000 public warrants (“Public Warrants”) outstanding.

accounts for the Public Warrants as equity instruments.

The Public Warrants will become exercisable on the later of (a) 30 days after

the completion of a Business Combination or (b) 12 months from the closing of the initial public offering.

No warrants will be exercisable

for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise

of the warrants and a current prospectus relating to such shares of common stock.

Notwithstanding the foregoing, if a registration statement

covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified period following

the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and

during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless

basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.

that exemption nor another exemption is available, holders will not be able to exercise their warrants on a cashless basis.

Public Warrants will expire on February 14, 2030, five years after the completion of the Business Combination with Cycurion or earlier

1 unchanged sentence

the Public Warrants become exercisable, the Company may redeem the Public Warrants:

whole and not in part;

a price of $ 0.01 per Public Warrant;

not less than 30 days’ prior written notice of redemption;

and only if, the reported last sale price of the shares of common stock equals or exceeds $ 18.00 per share (as adjusted for stock

splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing

at any time after the Public Warrants become exercisable and ending on the third business day prior to the notice of redemption to

warrant holders;

and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the Public

in whole and not in part

at a price of $ 0.01 per Public Warrant;

upon not less than 30 days’ prior written notice of redemption;

if, and only if, the reported last sale price of the shares

of common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations),

for any 20 trading days within a 30 trading day period commencing at any time after the Public Warrants become exercisable and ending

on the third business day prior to the notice of redemption to warrant holders;

if, and only if, there is a current registration statement

in effect with respect to the shares of common stock underlying the Public Warrants.

the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the

21 unchanged sentences

Placement Warrants

of March 31, 2025 and December 31, 2024, there were 376,000

private placement warrants (“Private Placement Warrants”) outstanding.

The Company accounts for the Private Placement

Warrants as equity instruments.

The Private Placement Warrants sold in the private placement are identical to the Public Warrants

underlying the Units sold in the IPO, except that such warrants, and the shares of common stock issuable upon the exercise of such

warrants, will not be transferable, assignable, or salable until after February 14, 2025, the date of completion of a Business

Combination, subject to certain limited exceptions.

of June 30, 2025 and December 31, 2024, there were 376,000 private placement warrants (“Private Placement Warrants”) outstanding.

The Company accounts for the Private Placement Warrants as equity instruments.

The Private Placement Warrants sold in the private placement

are identical to the Public Warrants underlying the Units sold in the IPO, except that such warrants, and the shares of common stock

issuable upon the exercise of such warrants, will not be transferable, assignable, or salable until after February 14, 2025, the date

of completion of a Business Combination, subject to certain limited exceptions.

November 17, 2017, the Company had issued 1,333,336 Series A warrants at exercise price of $ 0.45 with expiry on November 22, 2025.

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued to unaffiliated investors a total of

680,875 series A warrants in exchange of existing 1,333,336 series A warrants having expiry on February 19, 2029 and exercise price of

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total

of 680,875 series A warrants in exchange of existing 1,333,336 series A warrants having expiry on February 19, 2029 and exercise price

of $ 0.319707

August 1, 2023, the Company had issued 4,000,000 Series B warrants with an exercise price of $ 0.50 .

2 unchanged sentences

The warrants will expire on April 12,

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued to unaffiliated investors a total of

6,000,000 series B warrants in exchange of existing 6,000,000 series B warrants having expiry on February 19, 2030 and exercise price

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total

of 6,000,000 series B warrants in exchange of existing 6,000,000 series B warrants having expiry on February 19, 2030 and exercise price

March 22, 2022, the Company had issued 196,911 warrants with subordinated convertible promissory note at exercise price of $ 1.41 with

2 unchanged sentences

the expiry on April 21, 2028.

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued to unaffiliated investors a total of

7,272,728 series D warrants in exchange of existing 1,181,468 series D warrants having expiry on February 19, 2029 and exercise price

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total

of 7,272,728 series D warrants in exchange of existing 1,181,468 series D warrants having expiry on February 19, 2029 and exercise price

March 8, 2022, the Company had issued 529,067 warrants to the originators of $ 700,000 of investor notes at exercise price of $ 0.92 with

the expiry on March 8, 2026.

part of the acquisition of Western, during the three months ended March 31 2025, the Company issued to unaffiliated investors a total of

270,171 warrants in exchange of existing 529,067 warrants having expiry on February 19, 2029 and exercise price of $ 0.319707

summary of activity for all warrants during the three months ended March 31, 2025 as follows:

SCHEDULE OF WARRANTS ACTIVITY

Weighted Average

Exercise Price

Outstanding, December 31, 2024

Replacement of old warrants

( 9,450,840 )

( 7,044,917 )

Outstanding, March 31, 2025

Exercisable, March 31, 2025

Company has accounted for the issuance of common stock and warrants issued for cash proceeds in the private placements as equity instruments.

Management believes that the warrants are indexed to and are settled in the Company’s own common stock;

therefore, they should

be accounted for as permanent equity.

14 — LEASE COMMITMENTS

the acquisition of Cloudburst, the Company entered into a new non-cancelable operating lease agreement with Scandium, LLC, for the lease

of a new floor in the same building as it had occupied.

This new lease agreement commenced on December 1, 2019 and expires in 48 months.

The monthly rent for the first year was $ 10,351 , the second year was $ 10,687 , the third year was $ 11,035 , and the fourth year was $ 11,393 .

The agreement calls for a security deposit of $ 10,351 .

As of March 31, 2025, and December 31, 2024, the Company does not have leases.

Company recognized total lease expense of $ 0 , for the three months ended March 31, 2025 and 2024, primarily related to operating rent

lease costs paid to lessors.

part of the acquisition of Western, during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total

of 270,171 warrants in exchange of existing 529,067 warrants having expiry on February 19, 2029 and exercise price of $ 0.319707

CONCENTRATIONS, RISKS AND UNCERTAINTIES

Company’s primary bank deposits are located in the United States.

10 unchanged sentences

Concentration

following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenues for the three

months ended March 31, 2025 and 2024.

Accordingly, there was a concentration of risk in demand for the Company’s services.

SCHEDULE OF CONCENTRATION RISKS

For the three months ended March 31,

Accounts receivable

At December 31,

16 — FINANCIAL INSTRUMENTS

Company classified the following securities as financial instruments:

OF CONCENTRATION RISKS

Revenue Concentration by Customer - Greater than 10% of Revenue

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Accounts Receivable Concentration by Customer - Greater than 10% of Accounts Receivable

June 30, 2025

to the acquisition of SLG on March 31, 2025, the company had combined all SLG customers as one customer for purposes of customer

concentration disclosures due to the nature of the relationship.

Once the acquisition was complete, the company has re-evaluated

this disclosure to break out all SLG customers individually, therefore the amounts reported above are not comparable to Q1 2025

amounts previously reported.

As of December 31, 2024, no individual customer accounts receivable balances were 10% or greater than the total account receivable balance.

FAIR VALUE DISCLOSURES

Company estimates the fair value of its debt by discounting the future cash flows of each instrument using estimated market rates of

debt instruments with similar maturities and credit profiles.

These inputs are classified as Level 3 within the fair value hierarchy.

As of June 30, 2025 and December 31, 2024, the carrying value reported in the consolidated balance sheet for the Company’s notes payable

approximated its fair value.

were no assets or liabilities recorded at fair value on a recurring basis as of June 30, 2025.

As of December 31, 2024 the Company had

recorded liabilities at fair value on a recurring basis for subordinated convertible promissory notes and series A convertible preferred

stock and equity warrants at fair value on a recurring basis.

The subordinated convertible promissory notes carry an interest rate that

is indicative of the Company’s overall borrowing cost and the length of time until maturity is not expected to significantly impact

The convertible preferred stock, which is akin to debt, has been discounted to its presented carrying value in accordance

with the debt discounts and redemption premiums recognized.

and liabilities that are measured at fair value on a non-recurring basis include intangible assets and goodwill.

These items are recognized

at fair value when they are considered to be impaired.

were no fair value adjustments for assets and liabilities measured on a non-recurring basis.

The Company discloses fair value information

about financial instruments for which it is practicable to estimate that value.

SCHEDULE OF FINANCIAL INSTRUMENTS

March 31, 2025

Subordinated convertible promissory notes

December 31, 2024

Fair Value Hierarchy - 2024

As of December 31, 2024

Subordinated convertible promissory notes

Series A convertible preferred stock

believes the carrying values of the above securities approximate their fair values.

The subordinated convertible promissory notes carry

an interest rate that is indicative of the Company’s overall borrowing cost and the length of time until maturity is not expected

to significantly impact their value.

The convertible preferred stock, which is akin to debt, has been discounted to its presented carrying

value in accordance with the debt discounts and redemption premiums recognized.

Total liabilities

RELATED PARTY TRANSACTIONS

4 unchanged sentences

of the consummation of the Business Combination with Cycurion.

As of March 31, 2025, the Company had borrowed the full $ 230,000 and nothing

As of June 30, 2025, the Company had borrowed the full $ 230,000 and nothing

was available for withdrawal.

The Company deemed the interest on the loan to be immaterial and as such did not record any interest relating

to the note as of March 31, 2025.

to the note as of June 30, 2025.

guarantees were entered by Emmit McHenry, Kurt McHenry, and Alvin McCoy III, as officers and stockholders of the Company in support of

3 unchanged sentences

The total sales of

these five purchase orders were $ 20,614.95 and $ 119,279 , as of March 31, 2025 and December 31, 2024, respectively.

following table summarizes the components of the Company’s loans payable related parties as of March 31, 2025 and December 31,

these five purchase orders were $ 83,790 and $ 119,279 , as of June 30, 2025 and December 31, 2024, respectively.

Details of Loans Payable - Related Party

OF RELATED PARTY TRANSACTIONS

June 30, 2025

December 31, 2024

Weighted Average Interest Rate

(Calendar Year)

1 unchanged sentence

Loan to a director issued in 2024

Total face value

Unamortized discount and issuance costs

Total loans payable related parties

Loans payable - current

Loans payable - non-current

the three months ended March 31, 2025 and 2024, the Company record amortization of debt discount of $ 1,313 and $ 0 , respectively.

Funded loans payable - related party principal

Unamortized debt-issuance costs and discounts

Loans payable - related party - current

the six months ended June 30, 2025 and 2024, the Company record amortization of debt discount of $ 2,285 and $ 0 , respectively.

EARNINGS PER SHARE

components of basic and diluted Earnings Per Share (“EPS”) were as follows:

Details of Basic and Dilutive (Loss)/Earnings Per Share

SCHEDULE OF COMPONENTS OF BASIC AND DILUTED EARNINGS PER SHARE

Three months ended

Basic Loss per Share Numerator

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Basic net (loss)/income per share:

Net (loss)/income including non-controlling interests

$ ( 5,290,418 )

$ ( 15,538,900 )

Loss Available to Common Stockholders

Net (loss)/income attributable to non-controlling interest

Net (loss)/income attributable to common stockholders - basic

( 5,188,759 )

Diluted Loss per Share Numerator

( 15,437,241 )

Weighted average shares outstanding - basic

Basic net (loss)/income per share attributable to common stockholders

Diluted net (loss)/income per share:

Net (loss)/income attributable to common stockholders - basic

$ ( 5,188,759 )

$ ( 15,437,241 )

Add back interest for subordinated convertible promissory note

Loss Available to Common Stockholders on Converted Basis

Net (loss)/income attributable to common stockholders - diluted

$ ( 5,186,259 )

$ ( 15,398,908 )

Original Shares:

Basic Weighted Average Shares Outstanding

Dilutive Shares:

Additions from Potential Events

Weighted average shares outstanding - basic

Weighted-average effect on of potentially dilutive securities:

Conversion of subordinated convertible promissory note

1 unchanged sentence

Conversion of series B convertible preferred stock

Conversion of convertible preferred stock

Exercise of investor and placement agent warrants

Weighted average shares outstanding - diluted

Dilutive net (loss)/income per share attributable to common stockholders

Details of Potentially Dilutive Effect of Securities Excluded from Dilutive EPS due to Anti-Dilutive Effect

OF DILUTIVE EFFECT OF SECURITIES EXCLUDED FROM DILUTIVE EPS DUE TO ANTI-DILUTIVE EFFECT

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Conversion of series A convertible preferred stock

Conversion of series B convertible preferred stock

Conversion of series C convertible preferred stock

1 unchanged sentence

Conversion of series E convertible preferred stock

- Conversion of Convertible Preferred Stock

Conversion convertible preferred stock

Exercise of investor and placement agent warrants

Diluted Weighted Average Shares Outstanding:

Loss per Share

COMMITMENTS AND CONTINGENCIES

9 unchanged sentences

Combination Marketing Agreement

Company entered into a business combination marketing agreement on January 11, 2022 (the “Business Combination Marketing

Agreement”) with Alliance Global Partners/A.G.P.

Company entered into a business combination marketing agreement on January 11, 2022 (the “Business Combination Marketing Agreement”)

with Alliance Global Partners/A.G.P.

(“A.G.P.”) whereby A.G.P.

is to act as an advisor in

connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential

Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in

purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining

stockholders’ approval for a Business Combination, and assist the Company with its press releases and public filings in

connection with a Business Combination.

is to act as an advisor in connection with a Business Combination

to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’

attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection

with a Business Combination, assist the Company in obtaining stockholders’ approval for a Business Combination, and assist the

Company with its press releases and public filings in connection with a Business Combination.

The Company was to pay A.G.P.

a fee for such marketing services upon the consummation of a

Business Combination in an amount equal to 4.5 %

of the gross proceeds of the IPO, or $ 5,175,000

in the aggregate (exclusive of any applicable finders’ fees that might become payable).

The Business Combination Marketing

Agreement will be terminated upon entry into the Advisory Agreement (described below).

such marketing services upon the consummation of a Business Combination in an amount equal to 4.5 % of the gross proceeds of the IPO,

or $ 5,175,000 in the aggregate (exclusive of any applicable finders’ fees that might become payable).

The Business Combination

Marketing Agreement will be terminated upon entry into the Advisory Agreement (described below).

Agreement with A.G.P.

12 unchanged sentences

converts and sells Transaction Fee Shares generating sales proceeds (excluding commissions) of $ 2,500,000 .

Agreements with Seward & Kissel LLP

November 27, 2024, we entered into a revised engagement

letter (the “Revised Engagement Letter”) with Seward & Kissel LLP (“Seward & Kissel”), pursuant to which

Western and Cycurion agreed to pay approximately $ 1.3 million of its outstanding legal fees and expenses (“Legal Fees”) in

shares of common stock in connection with the Business Combination.

Following the closing of the Business Combination on February 14,

2025 and in connection with the Revised Engagement Letter, we issued to Seward & Kissel 250,000 shares of common stock and a pre-funded

warrant that is exercisable for approximately $ 1.3 million in shares of common stock (the “Seward & Kissel Pre-Funded Warrant”);

provided that once the net proceeds from the sale of the shares equals the Legal Fees, the remaining shares of common stock, including

such common stock exercisable under the Seward & Kissel Pre-Funded Warrant, shall be returned to the Cycurion.

We plan to enter into

an exchange agreement with Seward & Kissel to exchange the Seward & Kissel Pre-Funded Warrant for a convertible promissory note

that is convertible into such number of shares equal to the Legal Fees.

Agreement with Baker & Hostetler LLP

In 2023, Western agreed to pay approximately $ 788,030

of its obligations to its counsel, Baker Hostetler LLP, in shares of common stock following the Business Combination, which will be issued

at a price per share equal to $ 10.00 , or 78,803 shares.

Equity Line of Credit

Equity Purchase Agreement

On April 7, 2025 (the “Execution Date”),

we entered into the Equity Purchase Agreement with the Investor.

Under the Equity Purchase Agreement, we have the right, but not the obligation,

to direct the Investor to purchase up to $ 60 million (the “Maximum Commitment Amount”) in shares of our common stock upon

satisfaction of certain terms and conditions contained in the Equity Purchase Agreement, including, without limitation, an effective registration

statement filed with the SEC registering the resale of the shares of Put Stock (defined below) and the shares of Commitment Stock (defined

below) and additional shares to be sold to the Investor from time to time under the Equity Purchase Agreement.

The term of the Equity

Purchase Agreement began on the Execution Date and ends on the earlier of (i) the date on which the Investor shall have purchased shares

of common stock issued, or that we shall be entitled to issue, per any applicable Put Notice in accordance with the terms and conditions

of the Equity Purchase Agreement (the “Put Stock”) equal to the Maximum Commitment Amount, (ii) the date that is twelve (12)

months from the date the registration statement is declared effective, (iii) written notice of termination by us to the Investor (which

shall not occur at any time that the Investor holds any of the shares of Put Stock), or (iv) written notice of termination by the Investor

to us pursuant to (the “Commitment Period”).

During the Commitment Period, we may direct the Investor

to purchase shares of Put Stock by delivering a notice (a “Put Notice”) to the Investor.

We shall, in our sole discretion,

select the number of shares of Put Stock requested in each Put Notice.

However, such amount may not exceed the Maximum Put Amount (as

defined in the Equity Purchase Agreement).

The purchase price to be paid by the Investor for the shares of Put Stock will be ninety percent

(90%) of the lowest trade of the common stock on the Principal Market during the Valuation Period (as defined in the Equity Purchase Agreement).

In consideration for the Investor’s execution

and delivery of, and performance under the Equity Purchase Agreement, on the Execution Date, we, in our discretion, either were to (i)

pay to the Investor in cash $ 1,800,000 (“Commitment Cash”) or (ii) issue the Pre-Funded Warrant to the Investor in a form

acceptable to the Investor in its sole discretion and having an exercise price per share of $ 0.0001 , for the Investor’s purchase

of shares of common stock (the “Commitment Stock”) having a value of $ 1,800,000 based on closing price of the common stock

on April 6, 2025.

Transaction Fee Shares shall be subject to a lock-up ending on the earlier of (i) the date on which 75 % of the outstanding Series B Convertible

Preferred Stock is converted into shares of the Combined Company’s common stock and (ii) three months from February 14, 2025, which

was the closing date of the de-SPAC (the “Lock-Up Termination Date”).

After the Lock-Up Termination Date, A.G.P.

the Transaction Fee Shares and sell them subject to a leak-out provision that limits A.G.P.’s sales of Transaction Fee Shares on

any given date to 10 % of the cumulative trading volume of the common stock for such date (including pre-market, market and post-market

trading) as reported by Bloomberg, LP.

This restriction shall remain in effect beginning on the Lock-Up Termination Date and ending on

the date on which 100 % of the Series B Convertible Preferred Stock outstanding as of the closing is converted into shares of our common

parties amended the Advisory Agreement (the “Amended Advisory Agreement”), pursuant to which Western shall pay A.G.P.

Transaction Fee in the form of preferred shares of Cycurion that are convertible into 5,000,000 shares of common stock (such preferred

shares or the common stock into which they convert, the “Amended Transaction Fee Shares”), for a price per share of common

stock of $ 0.50 .

A portion of the Amended Transaction Fee Shares shall be subject to forfeiture and return to the Company for cancellation

converts and sells Transaction Fee Shares generating sales proceeds (excluding commissions) of $ 2,500,000 .

Amended Transaction Fee Shares shall be subject to a lock-up ending on the earlier of (i) the date on which 75 % of the outstanding Series

B Convertible Preferred Stock is converted into shares of the Combined Company’s common stock and (ii) six months from the Lock-Up

Termination Date.

After the Lock-Up Termination Date, A.G.P.

may convert the Amended Transaction Fee Shares and sell them subject to

a leak-out provision that limits A.G.P.’s sales of Amended Transaction Fee Shares on any given date to 10 % of the cumulative trading

volume of the common stock for such date (including pre-market, market and post-market trading) as reported by Bloomberg, LP.

This restriction

shall remain in effect beginning on the Lock-Up Termination Date and ending on the date on which 100 % of the Series B Convertible Preferred

Stock outstanding as of the closing is converted into shares of our common stock.

the execution of the Advisory Agreement, the Business Combination Marketing Agreement, dated January 11, 2022, between Western and A.G.P.

in which Western and Cycurion Sub caused the combined company to issue to A.G.P.

250,000 shares of common stock of the combined company

in full satisfaction of the fees, was terminated, and such shares of common stock extinguished in their entirety.

with Seward & Kissel LLP

November 27, 2024, we entered into a revised engagement letter (the “Revised Engagement Letter”) with Seward & Kissel

LLP (“Seward & Kissel”), pursuant to which Western and Cycurion agreed to pay approximately $ 1.3 million of its outstanding

legal fees and expenses (“Legal Fees”) in shares of common stock in connection with the Business Combination.

Following the

closing of the Business Combination on February 14, 2025 and in connection with the Revised Engagement Letter, we issued to Seward &

Kissel 250,000 shares of common stock and a pre-funded warrant that is exercisable for approximately $ 1.3 million in shares of common

stock (the “Seward & Kissel Pre-Funded Warrant”);

provided that once the net proceeds from the sale of the shares equals

the Legal Fees, the remaining shares of common stock, including such common stock exercisable under the Seward & Kissel Pre-Funded

Warrant, shall be returned to the Cycurion.

We plan to enter into an exchange agreement with Seward & Kissel to exchange the

Seward & Kissel Pre-Funded Warrant for a convertible promissory note that is convertible into such number of shares equal to the

February 14, 2025, Cycurion entered into pre-funded warrant with Seward & Kissel Pre-Funded Warrant that is exercisable for approximately

$ 1.3 million in shares of Common Stock, or up to 2,500,000 shares of Common Stock;

provided that once the net proceeds from the sale

of the shares equals the $ 1.3 million in Legal, the remaining shares of Common Stock, including such Common Stock exercisable under the

Seward & Kissel Pre-Funded Warrant, shall be returned to Cycurion.

Seward & Kissel Pre-Funded Warrant provides that the holder may not exercise any portion of the Seward & Kissel Pre-Funded Warrant

to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 4.99% upon 61 days’

prior notice.

The exercise price for each share of Common Stock underlying the Seward & Kissel Pre-Funded Warrant is $ 0.0001 .

Seward & Kissel Pre-Funded Warrant is immediately exercisable upon issuance and may be exercised at any time until the Seward &

Kissel Pre-Funded Warrant is exercised in full.

& Kissel LLP may not exercise any portion of the warrants or Seward & Kissel Pre-Funded Warrant, as applicable, to the extent

that the holder would own more than 4.99% of our outstanding Common Stock immediately after exercise, as such percentage ownership is

determined in accordance with the terms of the Seward & Kissel Pre-Funded Warrant.

lieu of making the cash payment otherwise contemplated to be made to us upon exercise of the Seward & Kissel Pre-Funded Warrant in

payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the

net number of shares of our Common Stock determined according to a formula set forth in the Seward & Kissel Pre-Funded Warrant.

with Baker & Hostetler LLP

2023, Western agreed to pay approximately $ 788,030 of its obligations to its counsel, Baker Hostetler LLP, in shares of common stock

following the Business Combination, which will be issued at a price per share equal to $ 10.00 , or 78,803 shares.

Line of Credit

Purchase Agreement

April 7, 2025 (the “Execution Date”), we entered into the Equity Purchase Agreement with the Investor.

Under the Equity Purchase

Agreement, we have the right, but not the obligation, to direct the Investor to purchase up to $ 60 million (the “Maximum Commitment

Amount”) in shares of our common stock upon satisfaction of certain terms and conditions contained in the Equity Purchase Agreement,

including, without limitation, an effective registration statement filed with the SEC registering the resale of the shares of Put Stock

(defined below) and the shares of Commitment Stock (defined below) and additional shares to be sold to the Investor from time to time

under the Equity Purchase Agreement.

The term of the Equity Purchase Agreement began on the Execution Date and ends on the earlier of

(i) the date on which the Investor shall have purchased shares of common stock issued, or that we shall be entitled to issue, per any

applicable Put Notice in accordance with the terms and conditions of the Equity Purchase Agreement (the “Put Stock”) equal

to the Maximum Commitment Amount, (ii) the date that is twelve (12) months from the date the registration statement is declared effective,

(iii) written notice of termination by us to the Investor (which shall not occur at any time that the Investor holds any of the shares

of Put Stock), or (iv) written notice of termination by the Investor to us pursuant to (the “Commitment Period”).

the Commitment Period, we may direct the Investor to purchase shares of Put Stock by delivering a notice (a “Put Notice”)

to the Investor.

We shall, in our sole discretion, select the number of shares of Put Stock requested in each Put Notice.

However, such

amount may not exceed the Maximum Put Amount (as defined in the Equity Purchase Agreement).

The purchase price to be paid by the Investor

for the shares of Put Stock will be ninety percent (90%) of the lowest trade of the common stock on the Principal Market during the Valuation

Period (as defined in the Equity Purchase Agreement).

consideration for the Investor’s execution and delivery of, and performance under the Equity Purchase Agreement, on the Execution

Date, we, in our discretion, either were to (i) pay to the Investor in cash $ 1,800,000 (“Commitment Cash”) or (ii) issue

the Pre-Funded Warrant to the Investor in a form acceptable to the Investor in its sole discretion and having an exercise price per share

of $ 0.0001 , for the Investor’s purchase of shares of common stock (the “Commitment Stock”) having a value of $ 1,800,000

based on closing price of the common stock on April 6, 2025.

We chose to issue the Pre-Funded Warrant.

All of the shares of Commitment Stock were fully earned as of the Execution

Date, and the issuance of the shares of Commitment Stock is not contingent upon any other event or condition, including, without limitation,

the effectiveness of the Initial Registration Statement (defined below) or our submission of a Put Notice to the Investor and irrespective

of any termination of the Equity Purchase Agreement.

Under the Equity Purchase Agreement, we are obligated

to file with the SEC, on or before May 7, 2025, a registration statement on Form S-1 (the “Initial Registration Statement”)

covering only the resale of the shares of Put Stock and Commitment Stock and is to use our best efforts to have the Initial Registration

declared no later than July 7, 2025.

Pre-Funded Warrant

The Pre-Funded Warrant certifies that, for value received,

the Investor is entitled to be issued up to 4,500,000 shares of common stock as its Commitment Fee and has an initial exercise price of

$ 0.0001 per share.

The Pre-Funded Warrant may not be exercised if the aggregate number of shares of the common stock beneficially owned

by the holder would exceed 4.99% immediately after exercise thereof, which ownership cap may be increased by the holder up to 9.99% upon

61 days’ prior notice (the “Beneficial Ownership Limitation”).

Registration Rights Agreement

On April 7, 2025 (the “RRA Execution Date”),

in connection with the Equity Purchase Agreement, we entered into a registration rights agreement with the Investor (the “Registration

Rights Agreement”), pursuant to which we shall, by May 7, 2025, file with the SEC the Initial Registration Statement covering the

maximum number of (i) shares of Commitment Stock, (ii) shares of Put Stock, which have been, or which may, from time to time be issued,

including without limitation all of the shares of common stock which have been issued or will be issued to the Investor under the Equity

Purchase Agreement (without regard to any limitation or restriction on purchases), and (iii) any and all shares of capital stock issued

or issuable with respect to the Put Stock, Commitment Stock, and the Equity Purchase Agreement as a result of any stock split, combination,

stock dividend, recapitalization, exchange, or similar event, or otherwise, without regard to any limitation on purchases under the Equity

Purchase Agreement (the “Registrable Securities”), as shall be permitted to be included thereon in accordance with applicable

SEC rules, regulations, and interpretations so as to permit the resale of the Registrable Securities by the Investor, including, but

not limited to, under Rule 415 at then-prevailing market prices (and not fixed prices).

The Initial Registration Statement shall register

only Registrable Securities.

We shall use our commercial best efforts to have the Initial Registration Statement and any amendment thereto

declared effective by the SEC at the earliest possible date, but in no event later than July 7, 2025.

All of the shares of Commitment

Stock were fully earned as of the Execution Date, and the issuance of the shares of Commitment Stock is not contingent upon any other

event or condition, including, without limitation, the effectiveness of the Initial Registration Statement (defined below) or our submission

of a Put Notice to the Investor and irrespective of any termination of the Equity Purchase Agreement.

accordance with the Equity Purchase Agreement, a registration statement on Form S-1 (the “Initial Registration Statement”)

covering only the resale of the shares of Put Stock and Commitment Stock was filed with the SEC on May 7, 2025.

Pre-Funded Warrant certifies that, for value received, the Investor is entitled to be issued up to 4,500,000 shares of common stock as

its Commitment Fee and has an initial exercise price of $ 0.0001 per share.

The Pre-Funded Warrant may not be exercised if the aggregate

number of shares of the common stock beneficially owned by the holder would exceed 4.99% immediately after exercise thereof, which ownership

cap may be increased by the holder up to 9.99% upon 61 days’ prior notice (the “Beneficial Ownership Limitation”).

During the three months and six months ended June 30, 2025, 2,500,000 of these shares have been exercised, with a remaining unexercised

2,000,000 shares.

Rights Agreement

April 7, 2025 (the “RRA Execution Date”), in connection with the Equity Purchase Agreement, we entered into a registration

rights agreement with the Investor (the “Registration Rights Agreement”), pursuant to which we shall, by May 7, 2025, file

with the SEC the Initial Registration Statement covering the maximum number of (i) shares of Commitment Stock, (ii) shares of Put Stock,

which have been, or which may, from time to time be issued, including without limitation all of the shares of common stock which have

been issued or will be issued to the Investor under the Equity Purchase Agreement (without regard to any limitation or restriction on

purchases), and (iii) any and all shares of capital stock issued or issuable with respect to the Put Stock, Commitment Stock, and the

Equity Purchase Agreement as a result of any stock split, combination, stock dividend, recapitalization, exchange, or similar event,

or otherwise, without regard to any limitation on purchases under the Equity Purchase Agreement (the “Registrable Securities”),

as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations, and interpretations so as to permit

the resale of the Registrable Securities by the Investor, including, but not limited to, under Rule 415 at then-prevailing market prices

(and not fixed prices).

The Initial Registration Statement shall register only Registrable Securities.

We shall use our commercial best

efforts to have the Initial Registration Statement and any amendment thereto declared effective by the SEC at the earliest possible date,

but in no event later than July 7, 2025.

Non-Redemption

8 unchanged sentences

McCormick whereby the Company agreed to pay a total of $ 125,000

of total compensation annually, including $ 40,000 in

cash and $ 85,000

in stock payment.

On October 30, 2024, we entered into an amendment to the employment agreement with James P.

McCormick whereby the

Company agreed to pay total compensation of $ 200,000 ,

including $ 40,000 in cash at the closing of the

Business Combination and the remaining $ 160,000

in cash from the proceeds that the Company receives from any capital raising transaction following the closing of the Business

Combination, including the proceeds from an equity line of credit to be entered into by and among the Company, Cycurion and the

investors named therein;

provided that the Company shall only be obligated to apply up to 15 %

of the proceeds from each capital raise until Mr.

McCormick’s compensation of $ 200,000

has been paid in full.

On December 1, 2024, Cycurion and L.

Chief Executive Officer, entered into an employment agreement on a two-year term, commencing on December 1, 2024 and ending on December

of total compensation annually, including $ 40,000 in cash and $ 85,000 in stock payment.

On October 30, 2024, we entered into an amendment

to the employment agreement with James P.

McCormick whereby the Company agreed to pay total compensation of $ 200,000 , including $ 40,000

in cash at the closing of the Business Combination and the remaining $ 160,000 in cash from the proceeds that the Company receives from

any capital raising transaction following the closing of the Business Combination, including the proceeds from an equity line of credit

to be entered into by and among the Company, Cycurion and the investors named therein;

provided that the Company shall only be obligated

to apply up to 15 % of the proceeds from each capital raise until Mr.

McCormick’s compensation of $ 200,000 has been paid in full.

December 1, 2024, Cycurion and L.

Kevin Kelly, Chief Executive Officer, entered into an employment agreement on a two-year term, commencing

on December 1, 2024 and ending on December 1, 2026.

During the employment period, Mr.

Kelly will receive an annual base salary of $ 325,000 , and equity compensation of $ 500,000 of

Company common stock in the first year of the employment agreement, payable quarterly.

Kelly is eligible for a performance bonus based

on the Company’s results.

The targeted performance bonus is $ 325,000 for year-one, and the performance bonus will increase for subsequent

years based on future financial and non-financial results.

On January 1, 2025, Cycurion and Alvin McCoy,

III, Chief Financial Officer, entered into an employment agreement on a two-year term, commencing on January 1, 2025 and ending on

December 31, 2026.

Kelly will receive an annual base salary of $ 325,000 ,

and equity compensation of $ 500,000 of Company common stock in the first year of the employment agreement, payable quarterly.

is eligible for a performance bonus based on the Company’s results.

The targeted performance bonus is $ 325,000 for year-one, and

the performance bonus will increase for subsequent years based on future financial and non-financial results

January 1, 2025, Cycurion and Alvin McCoy, III, Chief Financial Officer, entered into an employment agreement on a two-year term, commencing

on January 1, 2025 and ending on December 31, 2026.

During the employment period, Mr.

McCoy, III will receive an annual base salary of $ 325,000 and equity

compensation of $ 500,000 of Company stock in the first year of the employment agreement, payable quarterly.

McCoy, III is

eligible for a performance bonus based on the Company’s performance.

McCoy, III will receive an annual base salary of

$ 325,000 and equity compensation of $ 500,000 of Company stock in the first year of the employment agreement, payable quarterly.

III is eligible for a performance bonus based on the Company’s performance.

The targeted performance bonus is $ 325,000 for year-one,

and the performance bonus will increase for subsequent years based on future financial and non-financial results.

June 16, 2025, the Board of Directors approved a retention package for L.

Kevin Kelly, Chief Executive Officer, and Alvin McCoy III,

Chief Financial Officer, and issued each officer 3,000,000 shares of Common Stock under the Company’s 2025 Equity Incentive Plan.

Reduction Act of 2022 (the “IR Act”)

28 unchanged sentences

in the cash available on hand to complete a business combination and in the Company’s ability to complete a business combination.

of March 31, 2025 and December 31, 2024, the Company’s stockholders have redeemed a total of 11,421,017 and 11,326,121 shares of

of June 30, 2025 and December 31, 2024, the Company’s stockholders have redeemed a total of 11,421,017 and 11,326,121 shares of

common stock resulting in $ 1,167,174 and $ 1,157,161 of excise tax liability, calculated as 1% of the value of the shares redeemed, respectively

1 unchanged sentence

Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued which

is up to and through June 5, 2025.

is up to and through August 13, 2025.

There are two types of subsequent events:

3 unchanged sentences

at the date of the balance sheet but arose subsequent to that date.

April 7, 2025, Cycurion entered into an equity purchase agreement with Yield Point NY LLC whereby the Company has the right, but not

the obligation, to direct the investor to purchase up to $ 60,000,000 .

April 8, 2025, Cycurion announced an expanded partnership with Journal Technologies.

Together, the companies have been awarded a $ 22

million multi-year contract to deliver a criminal justice case management system to a state police agency.

April 9, 2025, Cycurion increased the size of its board of directors through the appointment of Irving Minnaker.

April 9, 2025, Cycurion received written notice received from the Listing Qualifications Department of Nasdaq stating that, for the prior

30 consecutive business days, the closing bid price of the Company’s common stock had been below the minimum of $ 1 per share required

for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

The notification letter stated that the Company

would be afforded 180 calendar days (until October 6, 2025) to regain compliance.

In order to regain compliance, the closing bid price

of the Company’s common stock must be at least $ 1 for a minimum of ten consecutive business days.

The notification letter also

stated that, in the event the Company does not regain compliance within the initial 180-day period, the Company may be eligible for an

additional 180-day period.

If the Company is not eligible for the additional 180-day period, or if it appears to the Nasdaq staff that

the Company will not be able to cure the deficiency, the Nasdaq Listing Qualifications Department will provide notice after the end of

the initial 180-day period that the Company’s securities will be subject to delisting.

The Nasdaq notification has no effect at

this time on the listing of the Company’s common stock.

April 11, 2025, we received two letters from the Nasdaq Listing Qualifications Department, each addressing a separate compliance deficiency

of the Company under the Nasdaq Listing Rules.

The first letter from the Nasdaq Listing Qualifications Department notified us of our

non-compliance with Nasdaq Listing Rule 5450(b)(2)(A), which requires a company such as ours whose securities are listed on The Nasdaq

Global Market under the “Market Value Standard” to maintain a minimum Market Value of Listed Securities (an “MVLS”)

of $ 50,000,000 .

The deficiency was triggered by our MVLS having closed below the minimum level for a period of 30 consecutive business

Under Nasdaq Listing Rule 5810(c)(3)(C), we are entitled to a 180-day period, ending on October, 2025, to rectify the deficiency.

In order to do so, we must achieve and maintain an MVLS of $ 50,000,000 or more for at least 10 consecutive business days.

regain compliance within the 180-day period would result in the delisting of our securities from Nasdaq, although we would have the right

to appeal such a delisting to a Nasdaq hearings panel.

second letter informed us of our deficiency in complying with Nasdaq Listing Rule 5450(b)(2)(C), which requires a minimum Market Value

of Publicly Held Shares (an “MVPHS”) of $ 15,000,000 for continued listing on the Nasdaq Global Market under the “Market

Value Standard”.

This deficiency was caused by our MVPHS having fallen below the minimum threshold for the prior 30 consecutive

business days.

Under Nasdaq Listing Rule 5810(c)(3)(D), we have 180 calendar days, or until October 8, 2025, to regain compliance, which

we can achieve if its MVPHS closes at or above $ 15,000,000 for at least 10 consecutive business days.

Failure to regain compliance within

that 180-day period would result in the delisting of our securities from Nasdaq, subject to our right to appeal to a Nasdaq hearings

On April 29, 2025, Cycurion issued a press release

announcing that the Company has been awarded a $ 6 million contract by a major municipal agency.

May 22, 2025, Cycurion received written notice indicated that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the

“Listing Rule”) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the period ended March 31,

2025 (the “Form 10-Q”), as described more fully in the Company’s Form NT 10-Q Notification of Late Filing (the “Form

NT 10-Q”) filed with the SEC on May 15, 2025.

The Listing Rule requires

Nasdaq-listed companies to timely file all required periodic reports with the SEC.

Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Global Select Market.

accordance with Nasdaq’s listing rules, the Company has 60 calendar days after the Notice to submit a plan to regain compliance

with the Listing Rule.

Pursuant to the Notice, following receipt of such plan, Nasdaq may grant an extension of up to 180 calendar days

from the Form 10-Q’s due date, or until November 17, 2025, for the Company to regain compliance.

The Company intends to take the

necessary steps to regain compliance with Nasdaq’s listing rules as soon as practicable.

April 1 to May 30, 2025, otherwise unaffiliated persons converted 2,999.3 shares of the Company’s Series B Preferred Stock into

5,998,653 shares of the Company’s common stock and 150,000 shares of the Company’s Series D Preferred Stock into 150,000

shares of the Company’s common stock.

April 1 to May 30, 2025, otherwise unaffiliated persons exercised 694,530 Series A warrants for the purchase of 694,530 shares of the

Company’s common stock;

2,400,000 Series B warrants for the purchase of 4,800,000 shares of the Company’s common stock;

Series D warrants for the purchase of 8,764,066 shares of the Company’s common stock for gross proceeds of approximately $ 3.5 million.

the month of July 2025, all remaining 2,000,000 pre-funded warrants referenced in Note 20 related to the equity line were exercised for

a total of $ 200 in proceeds.

Additionally, during the same period, the Company utilized the equity line to sell 3,072,054 shares for

proceeds, net fees of $ 919,527 .

July 2025, the Company issued 6,000,000 shares of common stock to executives as part of compensation packages.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements