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Item 1. Financial Statements

2025-11-14 compared with 2025-08-13 · 917 added, 1625 removed, 311 unchanged (89% of the section changed)

Financial Statements

CYCURION, INC.

AND SUBSIDIARIES

BALANCE SHEETS

June 30, 2025

December 31, 2024

CONSOLIDATED BALANCE SHEETS

September 30, 2025 December 31, 2024

Cash and cash equivalents $ 3,652,074 $ 38,742

9 unchanged sentences

Security deposits 10,351 10,351

Goodwill 20,842,508 6,592,304

Investments held in trust account - 1,834,540

Total non-current assets 25,272,840 14,634,497

Total Assets $ 32,309,280 $ 25,562,849

Liabilities, Mezzanine and Stockholders’ Equity:

6 unchanged sentences

Loans payable - related parties 123,650 148,088

Loans payable

Accounts payable 2,508,771 3,578,374

12 unchanged sentences

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

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 A convertible preferred stock ($ 0.0001 par value, 110,000 shares designated, 0 and 0 issued and outstanding, respectively)

Series B convertible preferred stock ($ 0.0001 par value, 3,000 shares designated, 1 and 3,000 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 and 0 issued and outstanding, respectively)

Series E convertible preferred stock ($ 0.0001 par value, 100 shares designated, 51 and 0 issued and outstanding, respectively)

Series F convertible preferred stock ($ 0.0001 par value, 10,000 shares designated, 0 and 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, 300,000,000 shares authorized, 2,662,489 and 353,087 shares issued and outstanding, respectively)

1 unchanged sentence

Accumulated deficit ( 21,773,931 ) ( 3,203,361 )

( 18,650,614 )

( 3,203,361 )

Total stockholders’ equity attributable to Cycurion 19,092,678 3,467,758

Equity attributable to noncontrolling interests

( 3,565,877 )

Deficit attributable to noncontrolling interests ( 3,682,577 ) -

Total stockholders’ equity 15,410,101 3,467,758

Total liabilities and stockholders’ equity $ 32,309,280 $ 25,562,849

See accompanying notes to unaudited consolidated financial statements.

Table of Content s

CYCURION, INC.

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Net revenues $ 3,833,038 $ 4,450,447 $ 11,591,003 $ 13,694,614

Cost of revenues 3,562,559 3,732,431 10,406,824 11,605,722

Gross profit 270,479 718,016 1,184,179 2,088,892

Operating expenses:

Selling, general and administrative expenses 2,719,600 299,233 5,244,323 963,000

Stock compensation expenses 2,082,000 - 3,094,443 10,000

Business combination expenses - - 11,240,114 -

Total operating expenses 4,801,600 299,233 19,578,880 973,000

Operating (loss)/income ( 4,531,121 ) 418,783 ( 18,394,701 ) 1,115,892

( 3,766,077 )

( 13,863,581 )

Interest income 1,770 - 1,770 20,211

Interest expense ( 712,374 ) ( 319,666 ) ( 1,506,657 ) ( 1,033,496 )

Loss on debt settlement, net

Gain on debt settlement, net 2,016,469 - 1,250,139 -

Other (expense)/income ( 14,761 ) 16,976 ( 129,468 ) 7,105

Other expense, net

( 1,524,337 )

( 1,675,319 )

Other income/(expense), net 1,291,104 ( 302,690 ) ( 384,216 ) ( 1,006,180 )

(Loss)/income before income taxes ( 3,240,017 ) 116,093 ( 18,778,917 ) 109,712

( 5,290,414 )

( 15,538,900 )

Provision for income tax - - - -

Net (loss)/income ( 3,240,017 ) 116,093 ( 18,778,917 ) 109,712

( 5,290,414 )

( 15,538,900 )

Net loss attributable to non-controlling interest 116,700 - 218,359 -

Net (loss)/income attributable to Cycurion $ ( 3,123,317 ) $ 116,093 $ ( 18,560,558 ) $ 109,712

$ ( 5,188,755 )

$ ( 15,437,241 )

Comprehensive (loss)/income $ ( 3,123,317 ) $ 116,093 $ ( 18,560,558 ) $ 109,712

$ ( 5,188,755 )

$ ( 15,437,241 )

Earnings per share:

(Loss)/Earnings per share:

Basic $ ( 1.59 ) $ 0.23 $ ( 14.82 ) $ 0.22

Diluted $ ( 1.59 ) $ 0.11 $ ( 14.75 ) $ 0.11

Weighted average shares outstanding:

Basic 1,965,285 498,941 1,252,543 498,941

Diluted 1,968,618 1,119,834 1,255,876 1,095,037

See accompanying notes to unaudited consolidated financial statements.

Table of Content s

CYCURION, INC.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

June 30, 2025

June 30, 2024

For the Six Months Ended

June 30, 2025

June 30, 2024

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30, 2025 September 30, 2024

Cash flows from operating activities:

$ ( 15,538,900 )

Net (loss)/income $ ( 18,778,917 ) $ 109,712

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

Stock-based compensation 3,094,443 10,000

Stock-based compensation - business combination related 9,521,734 -

Amortization of debt discount 234,430 -

1 unchanged sentence

Amortization of software development costs 25,000 -

Loss on debt settlement, net

Gain on debt settlement, net ( 1,250,139 ) -

Finance expense 100,000 -

1 unchanged sentence

Accounts receivable, net and other receivables ( 286,701 ) ( 1,921,546 )

( 1,478,433 )

( 1,267,911 )

Prepaid expenses and other current assets 42,326 2,403

1 unchanged sentence

Net cash used in operating activities ( 8,771,919 ) ( 1,165,585 )

( 6,303,122 )

Cash flows from investing activities:

Cash acquired on acquisition of subsidiary

Cash acquired on business combination 34,983 -

Issuance of promissory notes - ( 354,000 )

Purchase of plant and equipment

Purchase of property and equipment ( 268,000 ) ( 343,001 )

Cash withdrawn from Trust Account in connection with redemption 1,001,216 -

4 unchanged sentences

Redemption of common stock subject to redemption ( 1,001,216 ) -

( 1,001,216 )

Proceeds from private placement - 1,000,000

4 unchanged sentences

Proceeds from notes payable 513,200 215,000

Proceeds from notes payable - related parties - 15,000

Repayments of notes payable - related parties ( 27,500 ) -

Repayments of notes payable ( 101,579 ) -

3 unchanged sentences

Cash and cash equivalents, end of period $ 3,652,074 $ 75,704

See accompanying notes to unaudited financial statements

Table of Content s

CYCURION, INC.

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Paid-In Capital

Accumulated Deficit

Controlling Interest

Stockholders’ Equity

CONSOLIDATED STATEMENTS OF CHANGES IN 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

redemption Series A Convertible

Preferred Stock Series B Convertible

Preferred Stock Series C Convertible

Preferred Stock Series D Convertible Preferred

Stock Series E Convertible

Preferred Stock Series G

Preferred Stock Common Stock Additional

Paid-In Capital Accumulated

Deficit Total Non-

Interest Total

Shares Amount ($) Shares Amount

($) Shares Amount

Balance as of December 31, 2024 5,796 $ 1,917,309 - $ - 3,000 $ - 4,851 $ - - $ - - $ - - $ - 353,087 $ 35 $ 6,671,084 $ ( 3,203,361 ) $ 3,467,758 $ - $ 3,467,758

$ ( 3,203,361 )

Common stock redeemed (Mezzanine Equity) ( 3,163 ) ( 1,001,216 ) - - - - - - - - - - - - - - - - - - -

( 1,001,216 )

Release of common stock subject to redemption ( 2,633 ) ( 916,093 ) - - - - - - - - - - - - 2,633 - 916,093 - 916,093 - 916,093

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 )

Series A convertible preferred stock in exchange of Series A Convertible Preferred Stock categorized as liability - - 106,816 11 - - - - - - - - - - - - 1,391,165 - 1,391,176 - 1,391,176

Series D convertible preferred stock in exchange of convertible notes - - - - - - - - 6,666,666 667 - - - - - - 3,332,668 - 3,333,335 - 3,333,335

Common stock issued for conversion of Series B and D Convertible Preferred Stock - - - - ( 2,999 ) - - - ( 6,516,666 ) ( 652 ) - - - - 417,176 42 610 - - - -

Common stock issued for exercise of warrants - - - - - - - - - - - - - - 234,830 23 3,309,898 - 3,309,921 - 3,309,921

Common stock issued for business combination costs - - - - - - - - - - - - - - 25,000 3 8,999,997 - 9,000,000 - 9,000,000

Common stock issued for settleemnt of liability

Common stock issued for settlement of liability - - - - - - - - - - - - - - 2,627 - 945,636 - 945,636 - 945,636

Common stock issued for employment agreement - - - - - - - - - - - - - - 16,667 2 249,998 - 250,000 - 250,000

Acquisiton of subsidiary

Excise tax liability arising from redemption of Class

( 3,464,218 )

( 3,474,230 )

( 10,248,486 )

SLG transaction - - - - - - - - - - 51 - - - 16,938 2 509,069 - 509,071 - 509,071

Excise tax liability arising from redemption of Class A shares - - - - - - - - - - - - - - - - - ( 10,012 ) ( 10,012 ) ( 3,464,218 ) ( 3,474,230 )

Net loss - - - - - - - - - - - - - - - - - ( 10,248,486 ) ( 10,248,486 ) - ( 10,248,486 )

Balance as of March 31, 2025 - - 106,816 11 1 - 4,851 - 150,000 15 51 - - - 1,068,958 107 26,326,218 ( 13,461,859 ) 12,864,492 ( 3,464,218 ) 9,400,274

( 13,461,859 )

( 3,464,218 )

Series G preferred stock in exchange of convertible

notes and promissory notes

Series G convertible preferred stock in exchange of convertible notes and promissory notes - - - - - - - - - - - - 3,318 - - - 4,183,891 - 4,183,891 - 4,183,891

Common stock issued for exercise of warrants - - - - - - - - - - - - - - 106,968 11 354,739 - 354,750 - 354,750

Common stock issued for settleemnt of liability

Common stock issued for settlement of liability - - - - - - - - - - - - - - 91,420 9 1,028,469 - 1,028,478 - 1,028,478

Common stock issued for employment agreement - - - - - - - - - - - - - - 22,782 2 256,297 - 256,299 - 256,299

Common Stock Issued - Equity Line - - - - - - - - - - - - - - 38,334 4 265,500 - 265,504 - 265,504

Acquisiton of subsidiary

( 5,188,755 )

( 5,188,759 )

( 5,290,414 )

SLG transaction - - - - - - - - - - - - - - 16,671 2 250,069 - 250,071 - 250,071

Net loss - - - - - - - - - - - - - - - - - ( 5,188,755 ) ( 5,188,759 ) ( 101,659 ) ( 5,290,414 )

Balance as of June 30, 2025 - $ - 106,816 $ 11 1 $ - 4,851 $ - 150,000 $ 15 51 $ - 3,318 $ - 1,345,133 $ 135 $ 32,665,183 $ ( 18,650,614 ) $ 14,014,730 $ ( 3,565,877 ) $ 10,448,853

$ ( 18,650,614 )

$ ( 3,565,877 )

Series B Convertible Preferred

Conversion of Series A Convertible Preferred stock for common stock - - ( 106,816 ) ( 11 ) - - - - - - - - - - 161,687 16 390,050 - 390,055 - 390,055

Common stock issued for exercise of warrants - - - - - - - - - - - - - - 66,668 7 193 - 200 - 200

Common stock issued for settlement of liability - - - - - - - - - - - - - - 8,267 - 120,530 - 120,530 - 120,530

Common stock issued for employment agreement - - - - - - - - - - - - - - 200,000 20 2,081,380 - 2,081,400 - 2,081,400

Common Stock Issued - Equity Line - - - - - - - - - - - - - - 880,734 88 5,608,992 5,609,080 5,609,080

Net loss - - - - - - - - - - - - - - - - - ( 3,123,317 ) ( 3,123,317 ) ( 116,700 ) ( 3,240,017 )

Balance as of September 30, 2025 - $ - - $ - 1 $ - 4,851 $ - 150,000 $ 15 51 $ - 3,318 $ - 2,662,489 $ 266 $ 40,866,328 $ ( 21,773,931 ) $ 19,092,678 $ ( 3,682,577 ) $ 15,410,101

See accompanying notes to unaudited financial statements.

Series B Convertible Preferred Stock Common Stock Additional

Capital Accumulated

Deficit Total

Stockholders’

Shares Amount ($) Shares Amount ($)

Balance as of December 31, 2023 2,000 $ 2,000,000 498,941 $ 499 $ 7,678,574 $ ( 4,432,962 ) $ 3,246,111

$ ( 4,432,962 )

Board compensation - - - - 10,000 - 10,000

Net loss - - - - - ( 312,475 ) ( 312,475 )

Balance as of March 31, 2024 2,000 2,000,000 498,941 499 7,688,574 ( 4,745,437 ) 2,943,636

( 4,745,437 )

Series B preferred stock and warrants issued

Net income (loss)

Series B convertible preferred stock and warrants issued 1,000 1,000,000 - - - - -

Net income - - - - - 306,094 306,094

Balance as of June 30, 2024 3,000 $ 3,000,000 498,941 $ 499 $ 7,688,574 $ ( 4,439,343 ) $ 3,249,730

$ ( 4,439,343 )

Net income — — — — — 116,093 116,093

Balance as of September 30, 2024 $ 3,000 $ 3,000,000 $ 498,941 $ 499 $ 7,688,574 $ ( 4,323,250 ) $ 3,365,823

See accompanying notes to unaudited consolidated financial statements.

Table of Content s

CYCURION, INC.

AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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.

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

Cycurion, Inc.

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

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 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.

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.

The Company has two first-tier wholly-owned subsidiaries, Cycurion Sub, Inc.

(formerly Cycurion, Inc., until February 14, 2025) and Cycurion Crypto Inc., a Delaware corporation formed in July 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.

Business Combination

On February 14, 2025, the Company 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.”

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

Series A warrants, 6,000,000

Series B warrants, 7,272,728

Series D warrants , 270,171

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 to Seward & Kissel LLP and

shares of common stock issued to Baker & Hostetler LLP.

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;

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

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 a result of the Business Combination, each common 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 500,000 shares.

Concurrently with the completion of the Business Combination, the Company issued an aggregate of 218,102 shares of common stock, 106,816 shares of Series A convertible preferred stock (“Class A Convertible Preferred Stock”), 3,000 shares of Series B convertible preferred stock (“Class B Convertible Preferred Stock”), 4,851 shares of Series C convertible preferred stock (“Class C Convertible Preferred Stock”), 6,666,666 shares of Series D convertible preferred stock (“Class D Convertible Preferred Stock”), 22,696 Series A warrants, 200,000 Series B warrants, 242,424 Series D warrants , 9,006 common stock warrants, 15,760 shares of common stock issued in connection with the Series D private placement, 16,667 shares of common stock issued to A.G.P./Alliance Global Partners (“A.G.P.”), 8,333 shares of common stock issued to Seward & Kissel LLP and 2,627 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.

Under 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.

While Western was the legal acquirer in the Business Combination, because Cycurion Sub, prior to the Business Combination, was deemed the accounting acquirer, the historical financial statements of Cycurion Sub 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 Cycurion Sub prior to the Business Combination;

(ii) the combined results of Western and Cycurion Sub following the closing of the Business Combination;

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

and (iv) Cycurion’s equity structure for all periods presented.

accordance with the applicable guidance, the equity structure has been retroactively restated in all comparative periods up to the Closing

Date, to reflect the number of shares of the Company’s common stock issued to Predecessor Cycurion common stockholders in connection

with the Business Combination.

As such, the shares and corresponding capital amounts and earnings per share related to Predecessor Cycurion

prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business

accompanying financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”)

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.

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.

Management believes that the valuation and liquidity brought by a public offering of its

securities will allow holders of convertibles notes, and convertible preferred stockholders the mechanism to convert their securities

into common stock that will reduce the Company’s overall leverage and debt service requirement.

If the Company is not able to continue

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

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.

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In accordance with the applicable guidance, the equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock issued to Cycurion Sub common stockholders in connection with the Business Combination.

As such, the shares and corresponding capital amounts and earnings per share related to Cycurion Sub prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination.

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) 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 September 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 nine months ended September 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 September 30, 2025, the Company had an accumulated deficit of $ 21.8 million and a working capital deficit of $ 9.6 million.

In addition, the Company had a net cash outflow of $ 8.8 million from operating activities during the nine months ended September 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.

Management’s 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.

Management believes that the valuation and liquidity brought by a public offering of its securities will allow holders of convertibles notes, and convertible preferred stockholders the mechanism to convert their securities into common stock that will reduce the Company’s overall leverage and debt service requirement.

If the Company is not able to continue generating positive operating cash flows, and raise additional capital, there is the risk that the Company may become insolvent.

Nasdaq Communications

On August 21, 2025, the Company announced that we received formal notification on August 19, 2025 and August 20, 2025 from the Nasdaq Stock Market (“Nasdaq”) regarding its previous deficiencies.

On August 19, 2025, Nasdaq determined that we comply with Nasdaq Listing Rule 5450(b)(1)(A), which requires a minimum of $10,000,000 in stockholders’ equity (“Equity Rule”), based on our Form 10-Q for the period ended June 30, 2025, evidencing stockholders’ equity of $ 10,448,853 .

Reference is made to the April 11, 2025 notification for failure to maintain a minimum market value of listed securities of $50,000,000 over the previous 30 consecutive business days as set forth in Listing Rule 5450(b)(2)(A) (“MVLS Rule”).

As we are in compliance with the Equity Rule, Nasdaq notified us that the matter regarding the MVLS Rule is now closed.

Additionally, on August 20, 2025, we received formal notification from Nasdaq, determining that for the last 10 consecutive business days, from August 5, 2025 to August 18, 2025, our market value of publicly held shares (“MVPHS”) has been $5,000,000 or greater set forth in Nasdaq Listing Rule 5450(b)(1)(C) (“MVPHS Rule”), and that we have regained compliance with the MVPHS Rule.

On October 14, 2025, we received written notice from the staff of Nasdaq Listing Qualifications (the “Staff”) that it has determined to commence proceedings to delist our common stock from the Nasdaq Global Market.

As previously announced in a Current Report filed with the U.S.

Securities and Exchange Commission ("SEC"), on April 15, 2025, the Staff notified the Company on April 9, 2025 that, for the prior 30 consecutive business days, the closing bid price of our common stock had been below the minimum of $1.00 per share required for continued listing on The Nasdaq Global Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

The notification letter stated that we would be afforded 180 calendar days, or until October 6, 2025, to regain compliance.

The Company did not regain compliance with the Bid Price Rule by October 6, 2025, and the listed security was subject to delisting from The Nasdaq Global Market.

On October 20, 2025, the Company submitted its request to the Nasdaq Global Market to appeal the Staff’s determination to a Hearings Panel (the “Panel”) pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series, which stayed the suspension of the Company’s securities and the filing of a Form 25-NSE with the SEC that would remove the Company’s shares of common stock from listing and registration on The Nasdaq Stock Market.

The Company’s hearing was scheduled for November 20, 2025.

On November 11, 2025, the Company announced that it received a letter Nasdaq stating that Nasdaq has determined that the Company has regained compliance with Nasdaq’s Bid Price Rule requirement under Listing Rule 5450(a)(1).

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Company is now in compliance with Nasdaq Global Market’s listing requirements.

Additionally, Nasdaq confirmed that the previously scheduled hearing before the Nasdaq Hearings Panel on November 20, 2025 has been canceled.

The Company’s securities will continue to be listed and traded on The Nasdaq Stock Market without interruption.

Reverse Stock Split

On October 27, 2025, the Company announced a one-for-thirty reverse stock split of the Company’s shares of common stock, par value $ 0.0001 per share (the “Reverse Stock Split”) that took effect with the commencement of business on October 27, 2025.

The Company effected the Reverse Stock Split by filing the Second Amendment to the Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.

The Company’s shares of common stock began trading on a split-adjusted basis on The Nasdaq Global Market, when the market opened on October 27, 2025, under the existing trading symbol “CYCU” and new CUSIP number 95758L305.

As a result of the Reverse Stock Split, every thirty of the Company’s issued shares of common stock was combined into one issued share of common stock, without any change to the par value per share and without any change in the total number of authorized shares of common stock.

The number of outstanding shares of common stock was reduced from approximately 86,533,435 shares to approximately 2,884,447 shares.

All disclosures affected in this report on Form 10-Q, including share counts and warrant counts have been retroactively adjusted to give effect to the Reverse Stock Split.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who otherwise held a fraction of a share of common stock of the Company will receive a cash payment (without interest and subject to withholding taxes, as applicable) in lieu thereof at a price equal to that fraction of a share to which the stockholder would otherwise be entitled, multiplied by the closing price of the Company’s shares on The Nasdaq Global Market on the trading day immediately preceding the effective date of the Reverse Stock Split.

Restricted Cash

In 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 September 30, 2025 there are no amounts in restricted cash.

SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited consolidated condensed financial statements are presented in conformity with generally accepted accounting principles

in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

Accordingly, they do not include

all of the information and footnotes required by GAAP for audited financial statements.

In the opinion of management, the unaudited consolidated

condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement

of the balances and results for the periods presented.

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 SEC

on April 17, 2025.

of Consolidation

financial statements include the accounts of Cycurion, Inc.

(a) Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements for the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S.

GAAP") and pursuant to the rules and regulations of the SEC.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

These financial statements include the accounts of Cycurion, Inc.

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

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

basis for purposes of allocating resources and evaluating financial performance.

Accordingly, we determined we operate in a single reporting

CEO assesses performance and decides how to allocate resources primarily based on consolidated net income, which is reported on our Consolidated

Statements of Operations.

Total assets on the Consolidated Balance Sheets represent our segment assets.

Reclassification

amounts have been reclassified to improve the clarity and comparability of the financial statements.

These reclassifications had no impact

on previously reported total assets, liabilities, equity, net income (loss), or cash flows for any periods presented.

Growth Company

Company is an emerging growth company as defined in Section 102(b)(1) of the Jumpstart Our Business Start-ups Act of 2012 (the “JOBS

Act”) which exempts emerging growth companies from being required to comply with new or revised financial accounting standards

until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a

class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements

that apply to non-emerging growth companies, but any such an election to opt out is irrevocable.

The Company has elected not to opt out

of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for

public or private companies.

The Company, as an emerging growth company, can adopt the new or revised standard at the time private companies

adopt the new or revised standard.

may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company

nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential

differences in accounting standards used.

preparation of financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported

amounts of assets, liabilities, and disclosures regarding contingent liabilities at the date of the financial statements.

These estimates

may affect the reported amounts for certain revenues and expenses incurred during the reporting period;

actual results may materially

differ from these estimates.

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

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.

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

( 1,001,216 )

Release of common stock subject to redemption

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

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

receivable is recognized in the period when the Company has provided services to its customers and when its right to consideration is

unconditional.

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.

The Company maintains an estimated allowance

for credit losses to reduce its accounts receivable to the amount that it believes will be collected.

The Company considers factors in

assessing the collectability of its receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness

and other specific circumstances related to the accounts.

If there is strong evidence indicating that the accounts receivable is likely

to be unrecoverable, the Company also makes specific allowance in the period in which a loss is determined to be probable.

Accounts receivable

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

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

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.

Goodwill is reviewed for impairment annually during the fourth quarter of each fiscal year, or more frequently if impairment indicators

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 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).

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

for long-lived assets

Company annually reviews its long-lived assets for impairment or whenever events or changes in circumstances indicate that the carrying

amount of assets may not be recoverable.

Impairment may be the result of becoming obsolete from a change in the industry or new technologies.

Impairment is present if the carrying amount of an asset is less than its undiscounted cash flows to be generated.

an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value

of the asset.

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Company accounts for borrowings from banks as either current or long-term borrowings.

Origination and closing costs for long term borrowings

are accounted for using the effective interest method and accreted to the Company’s outstanding balances owed over the life of

the long-term loan, and the related interest expense is recognized to the results of operations.

Company adopted ASC Topic 606, Revenue from Contracts with Customers.

Revenue from contracts with customers is recognized using the following

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

form of written contracts with their customers that set forth the sales price, the scope of services to be delivered by professional

technology infrastructure and cyber engineers measured in hours, accompanied by hourly billing rates, and payment terms;

typically, the

performance obligations in the contract are the delivery of service hours;

when the Company has obtained evidence that the service has

been delivered and the performance obligations have been fulfilled, it will record revenue and either recognize an asset such as accounts

receivable or decrease deferred revenue from its liabilities.

has determined that its services business can be segregated into four lines of business.

Each line of business has its own methodology

for recognizing revenue.

Company enters into service agreements with customers that will set forth the responsibilities of both parties, including the type of

service to de delivered, the timing of the delivery of those services, and the associated price per unit for such services.

of measure in the agreement is typically hours.

The advisory consulting services represent a single performance obligation, as they constitute

a series of distinct hourly services that are substantially the same and transferred to the customer over time.

The revenue from advisory

service agreement will also set forth the timing of payments by the customers which is typically between 60 and 90 days from the date

that an invoice is issued to the customer.

The Company issues invoices when management has received acknowledgment from the customer

that it has rendered service as measured in hours to the customer.

As a practical matter, the Company continuously delivers service to

customers, and the customer receives benefits from those services over time.

The revenue advisory consulting is recognized over time

as services are rendered, based on contractual hourly rates, and when the Company has received the aforementioned acknowledgement from

its customers that service has been rendered related to hours accumulated over period of time, such as a week, or two weeks, or a month,

which is determined on a customer by customer basis.

The Company’s contracts do not include terms for returns, or warranties, or

guarantees, or rebates, or discounts on the services rendered.

The company also enters into annual contracts with customers to provide

ongoing advisory and consulting services.

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

Axxum, Cloudburst and Cycurion Innovation.

Additionally, the financial statements include the accounts of SLG Innovation Inc.

(“SLG”) as a result of the master service agreement entered into between the Company and SLG.

The Company has determined that the SLG transaction constitutes a business combination as defined by ASC 805, Business Combinations (“ASC 805”).

ASC 805 establishes principles and requirements as to how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree.

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 and third quarter of 2025.

All significant inter-company balances, fees, and expenses have been eliminated in consolidation.

The accompanying unaudited consolidated 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.

(b) Basis of Presentation for Interim Periods

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Certain information and footnote disclosures normally included for the annual financial statements prepared in accordance with U.S.

GAAP have been omitted for the interim periods presented and accordingly, they do not include all of the information and footnotes required by GAAP for audited financial statements.

Management believes that the unaudited interim financial statements include all adjustments (which are normal and recurring in nature) necessary to present fairly the financial position of the Company and the results of operations and cash flows for the periods presented.

The results of operations for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Seasonal changes, political and other conditions can affect the sales volumes of the Company's products.

Therefore, the financial results for any interim period do not necessarily indicate the expected results for the year.

Certain amounts have been reclassified to improve the clarity and comparability of the financial statements.

These reclassifications had no impact on previously reported total assets, liabilities, equity, net income (loss), or cash flows for any periods presented.

(d) Emerging Growth Company

The Company is an emerging growth company as defined in Section 102(b)(1) of the Jumpstart Our Business Start-ups Act of 2012 (the “JOBS Act”) which exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such an election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies.

The Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

(e) Use of estimates

The preparation of financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures regarding contingent liabilities at the date of the financial statements.

These estimates may affect the reported amounts for certain revenues and expenses incurred during the reporting period;

actual results may materially differ from these estimates.

(f) Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

(g) Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03.

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements – Amendments to Remove References to the Concepts Statements” (“ASU 2024-02”), which contains amendments to the codification to remove references to various

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FASB Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

Generally, ASU 2024-02 is not intended to result in significant accounting changes for most entities.

ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024.

The Company does not expect this update to have a material impact on its financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

REVENUE RECOGNITION

We recognize revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers," as, or when, we satisfy performance obligations under a contract.

We account for a contract when the parties approve the contract and are committed to perform on it, the rights of each party and the payment terms are identified, the contract has commercial substance, and it is probable that we will collect substantially all of the consideration.

A performance obligation is a promise in a contract to transfer a distinct good or service, or a series of distinct goods or services, to a customer.

The transaction price of a contract must be allocated to each performance obligation and recognized as the performance obligation is satisfied.

In most cases, we view our performance obligations as promises to transfer a series of distinct services to our customer that are substantially the same and which have the same pattern of service.

We recognize revenue over the performance period as a customer receives the benefits of our services.

Typically, the performance obligations in the contract are the delivery of service hours.

When the Company has obtained evidence that the service has been delivered and the performance obligations have been fulfilled, it will record revenue and recognize an asset such as accounts receivable.

Advisory Consulting

The Company enters into service agreements with customers that will set forth the responsibilities of both parties, including the type of service to be delivered, the timing of the delivery of those services, and the associated price per unit for such services.

The unit of measure in the agreement is typically hours.

The advisory consulting services represent a single performance obligation, as they constitute a series of distinct hourly services that are substantially the same and transferred to the customer over time.

The revenue from advisory service agreement will also set forth the timing of payments by the customers which is typically between 60 and 90 days from the date that an invoice is issued to the customer.

The Company issues invoices when management has received acknowledgment from the customer that it has rendered service as measured in hours to the customer.

As a practical matter, the Company continuously delivers service to customers, and the customer receives benefits from those services over time.

The revenue advisory consulting is recognized over time as services are rendered, based on contractual hourly rates, and when the Company has received the aforementioned acknowledgement from its customers that service has been rendered related to hours accumulated over period of time, such as a week, or two weeks, or a month, which is determined on a customer-by-customer basis.

The Company’s contracts do not include terms for returns, or warranties, or guarantees, or rebates, or discounts on the services rendered.

The Company also enters into annual contracts with customers to provide ongoing advisory and consulting services.

Services are delivered continuously over the contract term and customers are billed periodically.

The annual service contract represents a single performance obligation because the services are a series of distinct, substantially similar

acts that are inseparable and transferred over time.

The annual service contract represents a single performance obligation because the services are a series of distinct, substantially similar acts that are inseparable and transferred over time.

Revenue is recognized over time straight-line over the contract term.

Security Service Practice (MSSP)

has determined that its managed security service practice is a bundle of cybersecurity software tools, and expert 24x7x365 monitoring

and breach resolution service that is accounted for as a single performance obligation that is delivered over time which is typically

Managed Security Service Practice (MSSP)

Management has determined that its managed security service practice is a bundle of cybersecurity software tools, and expert 24x7x365 monitoring and breach resolution service that is accounted for as a single performance obligation that is delivered over time which is typically a month.

The components of the bundle have individual commercial value.

however, management believes assigning stand-alone value to each

component is impractical because each component would not be able to be fully implemented or utilized if not packaged with the other

However, management believes assigning stand-alone value to each component is impractical because each component would not be able to be fully implemented or utilized if not packaged with the other components.

Therefore, management believes the MSSP can only be sold as a bundle package over time.

At the time that the Company recognizes

revenue it is has either already received funds in advance from its customer, or it is reasonably assured that it will collect funds

from its customer;

in the event that funds that are received in advance, they are accounted for as contract liabilities in the deferred

revenue account until the Company fulfills the performance obligation;

a majority of the Company’s contracts call for the Company

to first deliver service and collect fees thereafter;

the Company typically receives payment for these contracts within thirty to ninety

days of delivery of service.

The Company does not sell monitoring time, security software-tools, and breach resolution as stand-alone

services, as the customer would not receive the benefits of these items if they were not sold as an integrated package.

The cybersecurity

needs to monitor the customer cybersecurity environment regularly, stay up to date on cyberthreats and solutions, maintain its software

tools, and then address threats identified, or rectify situations when customer environments have been breached.

It is not practical

or viable to sell these components separately, as customers expect comprehensive solutions.

While the components are separately identifiable,

management does not believe they could market the components individually.

The Company’s management does not believe their customers

can benefit from the individual components alone, and there are not readily available resources in the market that can be obtained to

make those components viable.

The continuous monitoring allows the Company to identify and either neutralize and or rectify breaches

by having up to the minute first-hand information, and the tools allow the Company to implement solutions rapidly;

the absence all of

the components would render the solutions and service offering significantly devalued and non-competitive in the marketplace.

Company believes MSSP meets the criteria to combine the goods and services under a single performance obligation.

The Company believes

combined integrated solution is delivered continuously over a period of time;

in accordance with the terms of the contract between the

Company and its customers, the Company receives prepayments in advance from its customers, and recognizes those payments to revenues

over a period of time, which is typically each month.

Service Provider (MSP)

Company’s managed service provider (MSP) service offering is the provision of IT infrastructure support to customers, specifically

in the areas of desktop support, on-site troubleshooting, and cloud-based network infrastructure troubleshooting.

This service is accounted

for as a single performance obligation that is delivered over time, which is typically a month;

At the time that the Company recognizes

revenue, it either already received funds in advance from its customer, or it is reasonably assured that it will collect funds from its

in the event that funds that are received in advance, they are accounted for as contract liabilities in the deferred revenue

account until the Company fulfills the performance obligation;

a majority of the Company’s contracts call for the Company to first

deliver service and collect fees thereafter;

the Company typically receives payment for these contracts within thirty to ninety days

of delivery of service.

requires the integration of tools and labor in order for a customer to receive any benefit from the services provided.

The Company refers

to the guidance in ASC 606-10-25-19 to provide an analysis regarding this accounting recognition of this integrated service.

the customer cannot receive any benefit purely from labor or individual software tools as a stand-alone service.

The tools that the Company

deploys require engineers to decipher results and develop solutions to problems during the service period covered in a contract.

components can be separately identified, they must be used in conjunction with each other to serve the Company’s customers.

Company must continuously make available support engineers to customers whenever they need support and troubleshooting.

The service includes

remote resolution of issues or going onsite to customer locations to solve problems.

The Company’s contracts with customers require

the Company to have these resources available during the length of the contract;

therefore, these services are continuously delivered

as a service over time;

At the time that the Company recognizes revenue, it is has either already received funds in advance from its customer or it is reasonably assured that it will collect funds from its customer.

In the event that funds that are received in advance, they are accounted for as contract liabilities in the deferred revenue account until the Company fulfills the performance obligation.

A majority of the Company’s contracts call for the Company to first deliver service and collect fees thereafter.

The Company typically receives payment for these contracts within thirty to ninety days of delivery of service.

The Company does not sell monitoring time, security software-tools, and breach resolution as stand-alone services, as the customer would not receive the benefits of these items if they were not

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sold as an integrated package.

The cybersecurity needs to monitor the customer cybersecurity environment regularly, stay up to date on cyberthreats and solutions, maintain its software tools, and then address threats identified, or rectify situations when customer environments have been breached.

It is not practical or viable to sell these components separately, as customers expect comprehensive solutions.

While the components are separately identifiable, management does not believe they could market the components individually.

The Company’s management does not believe their customers can benefit from the individual components alone, and there are not readily available resources in the market that can be obtained to make those components viable.

The continuous monitoring allows the Company to identify and either neutralize and or rectify breaches by having up to the minute first-hand information, and the tools allow the Company to implement solutions rapidly.

The absence all of the components would render the solutions and service offering significantly devalued and non-competitive in the marketplace.

The Company believes MSSP meets the criteria to combine the goods and services under a single performance obligation.

The Company believes combined integrated solution is delivered continuously over a period of time.

In accordance with the terms of the contract between the Company and its customers, the Company receives prepayments in advance from its customers, and recognizes those payments to revenues over a period of time, which is typically each month.

Managed Service Provider (MSP)

The Company’s managed service provider (MSP) service offering is the provision of IT infrastructure support to customers, specifically in the areas of desktop support, on-site troubleshooting, and cloud-based network infrastructure troubleshooting.

This service is accounted for as a single performance obligation that is delivered over time, which is typically a month;

At the time that the Company recognizes revenue, it either already received funds in advance from its customer, or it is reasonably assured that it will collect funds from its customer.

In the event that funds that are received in advance, they are accounted for as contract liabilities in the deferred revenue account until the Company fulfills the performance obligation.

A majority of the Company’s contracts call for the Company to first deliver service and collect fees thereafter.

The Company typically receives payment for these contracts within thirty to ninety days of delivery of service.

MSP requires the integration of tools and labor in order for a customer to receive any benefit from the services provided.

The Company refers to the guidance in ASC 606-10-25-19 to provide an analysis regarding this accounting recognition of this integrated service.

Under MSP, the customer cannot receive any benefit purely from labor or individual software tools as a stand-alone service.

The tools that the Company deploys require engineers to decipher results and develop solutions to problems during the service period covered in a contract.

While components can be separately identified, they must be used in conjunction with each other to serve the Company’s customers.

The Company must continuously make available support engineers to customers whenever they need support and troubleshooting.

The service includes remote resolution of issues or going onsite to customer locations to solve problems.

The Company’s contracts with customers require the Company to have these resources available during the length of the contract.

Therefore, these services are continuously delivered as a service over time.

Accordingly, the Company recognizes revenue for such MSP contract on a monthly basis.

as a service (SaaS)

has determined that its software as a service is a suite of cybersecurity tools that are delivered either remotely or on customer premises.

Software as a service (SaaS)

Management has determined that its software as a service is a suite of cybersecurity tools that are delivered either remotely or on customer premises.

The service is delivered on a monthly basis.

The cybersecurity tools are typically sold as a package.

however, the individual components

of the suite of tools can either be sold individually or bundled together.

Nevertheless, if they are sold individually, or as a bundle,

they are all delivered over time;

However, the individual components of the suite of tools can either be sold individually or bundled together.

Nevertheless, if they are sold individually, or as a bundle, they are all delivered over time.

Accordingly, the Company recognizes revenue over time, which is typically monthly;

At the time that

the Company recognizes revenue it is has either already received funds in advance from its customer, or it is reasonably assured that

it will collect funds from its customer;

in the event that funds that are received in advance, they are accounted for as contract liabilities

in the deferred revenue account until the Company fulfills the performance obligation ;

a majority of the Company’s contracts call

for the Company to first deliver service and collect fees thereafter;

the Company typically receives payment for these contracts within

thirty to ninety days of delivery of service.

Company’s SaaS is delivered continuously over time;

it is a subscription service where the Company provisions a suite of security

software tools to its customers accessed via the internet that allows the customers to protect themselves from cyber-attacks using multiple

tools within the suite.

At the time that the Company recognizes revenue it is has either already received funds in advance from its customer, or it is reasonably assured that it will collect funds from its customer.

In the event that funds that are received in advance, they are accounted for as contract liabilities in the deferred revenue account until the Company fulfills the performance obligation.

A majority of the Company’s contracts call for the Company to first deliver service and collect fees thereafter.

The Company typically receives payment for these contracts within thirty to ninety days of delivery of service.

The Company’s SaaS is delivered continuously over time.

It is a subscription service where the Company provisions a suite of security software tools to its customers accessed via the internet that allows the customers to protect themselves from cyber-attacks using multiple tools within the suite.

This subscription service is recognized to revenue monthly.

SCHEDULE OF DISAGGREGATED

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Disaggregated Revenue

For the Three Months Ended

For the Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Advisory consulting $ 3,817,911 $ 4,382,982 $ 11,505,113 $ 13,433,256

1 unchanged sentence

Software as a service (Saas) 3,100 3,672 6,795 11,016

of revenue primarily consists of compensation expenses for program personnel, and the fringe benefits associated with this compensation,

subcontractor costs, and other direct expenses incurred to deliver services to customers.

General, and Administrative Expenses

general and administrative expenses are expensed as incurred.

Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.

Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

A valuation allowance

is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize

their benefits, or that future realization is uncertain.

Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”.

is measured as the income or loss available to common stockholders divided by the weighted average number of common shares outstanding

for the period.

Diluted EPS is similar to basic EPS but presents the dilutive effect on a per-share basis of potential common shares

(e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance

date, if later.

Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss

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

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

for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable

that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Comprehensive

income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.

other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income

are required to be reported in a financial statement that is presented with the same prominence as other financial statements.

The Company’s

current component of other comprehensive income includes the foreign currency translation adjustment and unrealized gain or loss.

Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’

specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment

considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant

to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments

are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement”

in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires

the use of professional judgment, was conducted at the time of warrant issuance and as of each subsequent period end date while the instruments

are outstanding.

Management has concluded that the Public Warrants, Private Placement Warrants, and all other warrants issued qualify

for equity accounting treatment.

Issued Accounting Pronouncements

November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic

Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense

categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning

after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently

evaluating the impact of adopting ASU 2024-03.

March 2024, the FASB issued ASU 2024-02 “Codification Improvements – Amendments to Remove References to the Concepts Statements”

(“ASU 2024-02”), which contains amendments to the Codification to remove references to various FASB Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

Generally, ASU 2024-02 is not

intended to result in significant accounting changes for most entities.

ASU 2024-02 is effective for the Company for fiscal years beginning

after December 15, 2024.

The Company does not expect this update to have a material impact on its financial statements.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires, among other

things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid.

The expanded annual disclosures

are effective for our year ending December 31, 2025.

The Company is currently evaluating the impact that ASU 2023-09 will have on the

consolidated financial statements and whether the Company will apply the standard prospectively or retrospectively.

Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will

have a material impact on its financial statements.

Revenue $ 3,833,038 $ 4,450,447 $ 11,591,003 $ 13,694,614

ACCOUNTS RECEIVABLE, NET

OF ACCOUNTS RECEIVABLES, NET

Details of Accounts Receivable, Net

June 30, 2025

December 31, 2024

September 30, 2025 December 31, 2024

Accounts receivable $ 3,432,039 $ 10,353,708

1 unchanged sentence

Accounts receivable, net $ 3,097,054 $ 10,353,708

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

During the three and nine months ended September 30, 2025, the Company recorded $ 0.3 million for provisions for credit losses.

During the three and nine months ended September 30, 2024, the company had record $ 0 for provisions for credit losses.

During both the three and nine months ended September 30, 2025 and 2024, the Company had $ 0 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 )

September 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

Equipment $ - $ - $ - $ 125,546 $ ( 121,869 ) $ 3,677

Furniture and fixtures - - - 26,339 ( 19,396 ) 6,943

1 unchanged sentence

Capital lease - - - 23,004 ( 19,897 ) 3,107

$ ( 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 - - - 13,500 ( 6,906 ) 6,594

Property and equipment, net $ - $ - $ - $ 251,110 $ ( 230,789 ) $ 20,321

During the three and nine months ended September 30, 2025 and 2024, the Company recorded immaterial amounts of depreciation expense in cost of revenue and selling, general and administrative expenses.

Additionally, during the three months ended September 30, 2025, as part of the annual review of property and equipment, the Company disposed of all assets categorized as property and equipment, which were fully depreciated already or had an immaterial acceleration of depreciation and amortization.

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

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

The Company continues to incur 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 September 30, 2025, the SaaS platform is still undergoing development stage and is not ready for external sales.

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

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

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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

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Capitalized software development costs $ 94,000 $ 105,001 $ 268,000 $ 343,001

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

September 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 $ 66,361 $ ( 66,361 ) $ - $ 66,361 $ ( 66,361 ) $ -

Implementation 28,099 ( 28,099 ) - 28,099 ( 28,099 ) -

Intangible assets

$ ( 186,543 )

$ ( 169,460 )

OF INTANGIBLE ASSET AMORTIZATION

Software 100,000 ( 100,000 ) - 100,000 ( 75,000 ) 25,000

Intangible assets, net $ 194,460 $ ( 194,460 ) $ - $ 194,460 $ ( 169,460 ) $ 25,000

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

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Amortization expense, presented in SG&A $ 7,917 $ - $ 25,000 $ -

BUSINESS COMBINATION

Innovation, Inc.

is a technology services firm with operations and client contracts deemed to be strategically complementary to the Company’s existing

business and long-term growth objectives.

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

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.

On May 13, 2021, the Company entered into an

agreement to acquire substantially all of SLG’s assets and certain liabilities, which included a termination right exercisable

at the Company’s sole discretion prior to December 31, 2021.

This agreement was subsequently amended to limit the acquisition to

certain specified assets, primarily identifiable sales contracts.

of December 31, 2024, the refundable deposit had increased to $ 2,000,000 , comprising $ 561,808 in cash advances and loans, $ 20,000 in

due diligence costs, and $ 1,418,192 in accounts receivable.

April 29, 2023, the Company and SLG executed a unidirectional letter of intent (“SLG LOI”), which bound SLG to the transaction

but did not obligate the Company.

The SLG LOI provided that, unless terminated by the Company on or before April 30, 2024, the Company

would proceed to acquire SLG or substantially all of its assets and liabilities through a structure to be finalized.

The agreed-upon

valuation included the $ 2,000,000 receivable, $ 2,136,445 in SLG payables to RCR Technology Corporation (excluding payables incurred within

90 days prior to closing), and 996,355 shares of the Company’s capital stock.

connection with the SLG transaction, the Company also entered into a separate unidirectional letter of intent with RCR (“RCR LOI”)

on April 29, 2023, under which the Company would acquire SLG’s payables owed to RCR, subject to the closing of the SLG transaction.

Consideration for the RCR transaction was to be settled in the form of Company shares, as specified in the RCR LOI.

March 31, 2025, the company entered into a Management Services Agreement and a Release agreement (the “Agreement”) to acquire

certain assets and assumed certain liabilities to acquire 51 % of equity interest in SLG.

The total purchase consideration related to

acquisition of SLG consisted primarily of:

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

Company has determined that the SLG acquisition constitutes a business combination as defined by ASC 805, Business Combinations (“ASC

ASC 805 establishes principles and requirements as to how the acquirer of a business recognizes and measures in its financial

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

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

SLG Innovation, Inc.

SLG is a technology services firm with operations and client contracts deemed to be strategically complementary to the Company’s existing business and long-term growth objectives.

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

On May 13, 2021, the Company entered into an agreement to acquire substantially all of SLG’s assets and certain liabilities, which included a termination right exercisable at the Company’s sole discretion prior to December 31, 2021.

This agreement was subsequently amended to limit the acquisition to certain specified assets, primarily identifiable sales contracts.

As of December 31, 2024, the refundable deposit had increased to $ 2,000,000 , comprising $ 561,808 in cash advances and loans, $ 20,000 in due diligence costs, and $ 1,418,192 in accounts receivable.

On April 29, 2023, the Company and SLG executed a unidirectional letter of intent (“SLG LOI”), which bound SLG to the transaction but did not obligate the Company.

The SLG LOI provided that, unless terminated by the Company on or before April 30, 2024, the Company would proceed to acquire SLG or substantially all of its assets and liabilities through a structure to be finalized.

The agreed-upon valuation included the $ 2,000,000 receivable, $ 2,136,445 in SLG payables to RCR Technology Corporation (excluding payables incurred within 90 days prior to closing), and 33,212 shares of the Company’s capital stock.

In connection with the potential SLG transaction, the Company entered into a separate unidirectional letter of intent with RCR (“RCR LOI”) on April 29, 2023, under which the Company would acquire SLG’s payables owed to RCR, subject to the closing of the potential SLG transaction.

Consideration for the RCR transaction was to be settled in the form of shares of common stock of the Company, as specified in the RCR LOI.

The transaction contemplated by the SLG LOI did not close and the Company does not expect that it will close.

In lieu of such transaction, and consistent with the economic and business relationship between SLG and the Company for more than

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the past two years, on March 31, 2025, the Company and SLG entered into a Management Services Agreement (the “MSA”), pursuant to which SLG memorialized its formal engagement of the Company to provide the Management Services (as defined in the MSA) on the terms and subject to the conditions set forth therein.

The parties agreed that the Company would continue to retain sole and absolute discretion to select its employees and/or independent contractors who would perform and support the Management Services;

provided that the compensation paid to any such persons shall not exceed the compensation that would have been paid to a comparable, unaffiliated third party on a commercial, arms-length basis.

SLG agreed to cooperate in good faith with the Company in furtherance of its continued performance of the Management Services.

In connection with the Management Services to be provided by the Company, SLG agreed to pay a fee equal to SLG’s “operational cash flow” (whether or not the inbound funds included were recognized as revenue under GAAP and whether or not the outbound funds were recognized as expenses under GAAP during the relevant reporting period).

For purposes of the MSA, “operational cash flow” means (i) all cash and cash-equivalencies received by, or on behalf of, SLG from any source for any reason during any reporting period minus (ii) all payments made by, or on behalf of, SLG, all in connection with SLG’s business as historically operated and as managed by the Company in accordance with the provisions of the MSA.

If SLG’s operational cash flow during any reporting period is negative, then the Company reserves the right (in its sole and absolute discretion) to advance funds to SLG in an amount not to exceed such negative cash flow during such period with an interest rate to be determined on a case-by-case basis.

In connection with the execution and delivery of the MSA, the Company and Ed Burns entered into a Release Agreement (the “Burns Release Agreement”), pursuant to which the Company acknowledged that it has provided and will continue to provide certain services to SLG as a subcontractor and Mr.

Burns agreed to release certain claims that he had, has, or may have against the Company or SLG in relation to the terms and conditions of the MSA, the transactions contemplated thereby, or the manner in which the Company and SLG became parties to the MSA, as well as the relationship between the Company and SLG prior to the date of the MSA and the Company issued to Mr.

Burns 33,609 shares of common stock and 51 shares of Series E Convertible Preferred stock with a face value of $ 10,000 and conversion price of $ 1.00 .

The Company offered a substantially equivalent release agreement to the owner of 49 % of the equity of SLG with a percentage-equivalent contingent issuance of common stock and Series E Convertible Preferred Stock.

As of the date of this quarterly report, such other release has not been accepted or executed and delivered.

On March 31, 2025, the company entered into a Management Services Agreement and a Release agreement (the “Agreement”) to gain control of SLG as a Variable Interest Entity ("VIE").

The total purchase consideration for the VIE contractual relationship of SLG consisted primarily of:

(a) prepaid deposit of $ 2,000,000 ;

(b) 33,609 shares of common stock having par value of $ 0.0001 per share;

(d) $ 10,814,147 of accounts receivable in Cycurion owing from SLG

The Company has determined that the SLG transaction constitutes a business combination as defined by ASC 805, Business Combinations (“ASC 805”).

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 business combination 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 transaction date.

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

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SLG Valuation

Initial Allocation of Assets and Liabilities

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

Initial Allocation of Assets and Liabilities Adjustments Estimated Allocation of Assets and Liabilities as of

September 30, 2025

Cash consideration:

4 unchanged sentences

Common stock (1)

Series E preferred stock (2)

254,071 250,071 504,142

Series E Convertible Preferred Stock (2)

255,000 - 255,000

Accounts receivable in Cycurion owing from SLG (3)

10,814,147 - 10,814,147

Noncash consideration 11,323,218 250,071 11,573,289

8 unchanged sentences

Factoring liability 2,176,922 - 2,176,922

Due to related parties 18,000 - 18,000

Loans payable 625,222 - 625,222

2 unchanged sentences

Net identifiable liabilities assumed ( 7,104,815 ) ( 54,209 ) ( 7,159,024 )

( 7,104,815 )

Elimination of inter-company balances 2,982,908 - 2,982,908

Non-controlling interest ( 3,464,218 ) - ( 3,464,218 )

( 3,464,218 )

Goodwill 13,945,924 304,280 14,250,204

Net assets acquired $ 13,288,235 $ 250,071 $ 13,538,306

(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.

of Axxum Technologies, LLC.

November 22, 2017, the Company entered into a share transfer agreement with Axxum and the two prior members of Axxum to purchase 100 %

of the members’ equity interest in the Company in exchange for $ 6,500,000 in cash and $ 500,000 in two subordinated convertible

promissory notes for $ 250,000 each, payable to the two members of Axxum.

(1) Represents the fair value of 33,609 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.

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

(5) Goodwill is calculated as Total Consideration paid less the net assets acquired.

Acquisition of Axxum Technologies, LLC.

On November 22, 2017, the Company entered into a share transfer agreement with Axxum and the two prior members of Axxum to purchase 100 % of the members’ equity interest in the Company in exchange for $ 6,500,000 in cash and $ 500,000 in two subordinated convertible promissory notes for $ 250,000 each, payable to the two members of Axxum.

Accordingly, Axxum became a wholly-owned subsidiary of the Company.

The Company assessed the carrying value of Axxum’s assets and liabilities at the date of acquisition and determined that the carrying

value of those accounts approximated fair value;

the difference between the purchase price paid for the acquisition of Axxum and the

net asset value derived from the assets and liabilities of Axxum at the date of acquisition has been recognized as goodwill.

the purchase costs of $ 6,500,000 in cash, $ 500,000 in promissory notes, and $ 140,005 in capitalized transaction costs, less $ 573,150

in adjustment in working capital that is recoverable from sellers resulted in a total purchase cost of $ 6,566,855 ;

the net asset value

of Axxum at the date of acquisition was $ 1,413,589 ;

accordingly, the Company recognized $ 5,153,266 in goodwill related to the acquisition

of Cloudburst Security, LLC.

April 3, 2019, the Company entered into a membership interest purchase agreement with Cloudburst Security, LLC, a Virginia limited liability

company, and its two equity holders to purchase 100 % of the issued and outstanding units in exchange for $ 500,000 in cash;

$ 540,000 for

a promissory note to one equity holder and $ 360,000 to the other;

and 111,628 and 74,420 shares of the Company’s common stock to

the two equity holders, respectively, on a post-split basis.

The Company assessed the carrying value of Axxum’s assets and liabilities at the date of acquisition and determined that the carrying value of those accounts approximated fair value.

The difference between the purchase price paid for the acquisition of Axxum and the net asset value derived from the assets and liabilities of Axxum at the date of acquisition has been recognized as goodwill.

Accordingly, the purchase costs of $ 6,500,000 in cash, $ 500,000 in promissory notes, and $ 140,005 in capitalized

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transaction costs, less $ 573,150 in adjustment in working capital that is recoverable from sellers resulted in a total purchase cost of $ 6,566,855 .

The net asset value of Axxum at the date of acquisition was $ 1,413,589 .

Accordingly, the Company recognized $ 5,153,266 in goodwill related to the acquisition of Axxum.

Acquisition of Cloudburst Security, LLC.

On April 3, 2019, the Company entered into a membership interest purchase agreement with Cloudburst and its two equity holders to purchase 100 % of the issued and outstanding units in exchange for $ 500,000 in cash;

$ 540,000 for a promissory note to one equity holder and $ 360,000 to the other;

and 111,628 and 74,420 shares of the Company’s common stock to the two equity holders, respectively, on a post-split basis.

Accordingly, Cloudburst became a wholly-owned subsidiary of the Company.

The Company assessed the carrying value of Cloudburst’s assets and liabilities at the date of acquisition and determined that the

carrying value of those accounts approximated fair value;

the difference between the purchase price paid for the acquisition of Cloudburst

and the net asset value derived from the assets and liabilities of Cloudburst at the date of acquisition has been recognized as goodwill.

The purchase costs of $ 500,000 in cash, $ 900,000 in promissory notes, $ 300,000 in 186,048 shares of the Company’s common stock,

$ 1,400,000 in contingent earnout, $ 62,305 in capitalized transaction costs, resulted in a total purchase cost of $ 3,162,305 ;

asset value of Cloudburst at the date of acquisition was $ 323,267 ;

accordingly, the Company recognized $ 2,839,038 in goodwill related

to the acquisition of Cloudburst.

On April 20, 2022, the holders of the (i) $ 900,000 promissory notes and (ii) 186,048 shares of the

Company’s common stock tendered them to the Company for cancellation.

factors to the Company’s assessment of the carrying value of goodwill for both business combinations in accordance to the fair

value hierarchy under the category of level 3 are as follows:

estimation of the growth rate of future incoming and outgoing cash flows,

certain elements that comprise the appropriate weighted average cost of capital, such as the equity of potential market participants

for comparability analysis, and the Company’s sensitivity to outside factors that would lead to variation in the aforementioned

cash flows and weighted average cost of capital.

Company’s management reviewed the performance of Cloudburst and its manager during the year ended December 31, 2020 and determined

that Cloudburst had not met the performance targets set forth at the time of acquisition;

as a result, the manager of Cloudburst was

Management of the Company performed a quantitative analysis of the carrying value of the subsidiary and its related goodwill

by preparing a future discounted cash flow analysis, which included variables such as expectations on future cash flows, calculation

of the cost of capital, and the probability of capturing certain contracts under the framework of Cloudburst being a federal government

approved service provider, and determined that the fair value as of December 31, 2020 was lower than the carrying value that was previously

established at the point of acquisition;

accordingly, during the year ended December 31, 2020, the Company determined that the contingent

earnout should be de-recognized, and written off in its entirety in the amount of $ 1,400,000 to the Company’s result of operations,

and, as a result of the above assessment, the Company recognized an impairment of goodwill in the amount of $ 1,400,000 that was also

recognized to the Company’s results of operations.

The Company’s ending goodwill related to the acquisition of Cloudburst

after recognizing impairment was $ 1,439,038 .

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.

The Company assessed the carrying value of Cloudburst’s assets and liabilities at the date of acquisition and determined that the carrying value of those accounts approximated fair value;

the difference between the purchase price paid for the acquisition of Cloudburst and the net asset value derived from the assets and liabilities of Cloudburst at the date of acquisition has been recognized as goodwill.

The purchase costs of $ 500,000 in cash, $ 900,000 in promissory notes, $ 300,000 in 186,048 shares of the Company’s common stock, $ 1,400,000 in contingent earnout, $ 62,305 in capitalized transaction costs, resulted in a total purchase cost of $ 3,162,305 .

The net asset value of Cloudburst at the date of acquisition was $ 323,267 .

Accordingly, the Company recognized $ 2,839,038 in goodwill related to the acquisition of Cloudburst.

On April 20, 2022, the holders of the (i) $ 900,000 promissory notes and (ii) 186,048 shares of the Company’s common stock tendered them to the Company for cancellation.

Relevant factors to the Company’s assessment of the carrying value of goodwill for both business combinations in accordance to the fair value hierarchy under the category of level 3 are as follows:

estimation of the growth rate of future incoming and outgoing cash flows, certain elements that comprise the appropriate weighted average cost of capital, such as the equity of potential market participants for comparability analysis, and the Company’s sensitivity to outside factors that would lead to variation in the aforementioned cash flows and weighted average cost of capital.

The Company’s management reviewed the performance of Cloudburst and its manager during the year ended December 31, 2020 and determined that Cloudburst had not met the performance targets set forth at the time of acquisition.

As a result, the manager of Cloudburst was dismissed.

Management of the Company performed a quantitative analysis of the carrying value of the subsidiary and its related goodwill by preparing a future discounted cash flow analysis, which included variables such as expectations on future cash flows, calculation of the cost of capital, and the probability of capturing certain contracts under the framework of Cloudburst being a federal government approved service provider, and determined that the fair value as of December 31, 2020 was lower than the carrying value that was previously established at the point of acquisition;

accordingly, during the year ended December 31, 2020, the Company determined that the contingent earnout should be de-recognized, and written off in its entirety in the amount of $ 1,400,000 to the Company’s result of operations, and, as a result of the above assessment, the Company recognized an impairment of goodwill in the amount of $ 1,400,000 that was also recognized to the Company’s results of operations.

The Company’s ending goodwill related to the acquisition of Cloudburst after recognizing impairment was $ 1,439,038 .

SLG Innovation Inc.

Master Service Agreement

The 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 $ 2.0 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

$ 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

common shares to assume SLG’s share-based payment obligations.

acquisition was accounted for as a business combination under ASC 805.

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

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

June 30, 2025

December 31, 2024

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 $ 2.0 million receivable, $ 2.1 million in SLG payables to RCR Technology Corporation, and 33,212 shares of the Company’s capital stock.

On March 31, 2025, the Company finalized the MSA and Burns Release Agreement for SLG.

The total purchase consideration included the $ 2.0 million prepaid deposit, 33,609 shares of common stock (par value $ 0.0001 ), 51 shares of Series E Convertible 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 16,667 shares of common stock to assume SLG’s share-based payment obligations.

The transaction was accounted for as a business combination under ASC 805.

As of the transaction date, the fair value of assets acquired totaled $ 3.1 million, excluding cash of $ 34,983 that was netted against cash consideration paid.

Liabilities assumed amounted to $ 10.2 million, including accounts payable, accrued liabilities, payroll liabilities, and loans.

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recognizing a non-controlling interest of $ 3.5 million, the net assets acquired were negative $ 7.1 million.

The total consideration transferred exceeded the net assets acquired, resulting in the recognition of goodwill amounting to $ 14.3 million.

This goodwill reflects the strategic value of SLG’s operations, expected synergies, and future growth potential.

Details of Goodwill

June 30, 2025

December 31, 2024

loan-revolving credit line

November 22, 2017, Axxum procured from Main Street Bank a revolving line of credit with a maximum of up to $ 1,000,000 , subject to certain

restrictions based on available collateral pledged to the bank in the form of accounts and trade receivables owed by the Company’s

This revolving credit line is available for one year, at which point it may be renewed by Axxum.

Axxum incurred origination

and closing costs for this line of credit in the amount of $ 10,000 , which Axxum has recognized a prepaid expense that will amortize over

one year as interest expense.

The stated rate of interest of the revolving line of credit is the prime rate plus 100 basis points , which,

at the time of the loan, was 4.50 %.

April 18, 2019, Axxum, Cloudburst, and the Company collectively renewed the revolving line of credit with a maximum aggregate principal

sum of $ 2,000,000 with Main Street Bank.

The stated rate of interest of the revolving line of credit increased to 5.75 % at the time of

June 29, 2020 and again on June 30, 2021, the Company amended the revolving line of credit with an extension of the maturity date to

March 31, 2024 .

The stated rate of interest of the revolving line of credit decreased to 5.25 % at the time of the first amendment and

an additional 5 % default interest on the second amendment.

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 $ 3,236,167 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

Main Street Bank in the amount of $ 5,250,000 with an expiration of December 31, 2024 .

The loan is subject to a monthly repayment of principal

in the amount of $ 109,375 .

The loan carries a stated adjustable interest rate of the prime rate plus 200 basis points , which, at the

time of the loan, was 5.50 %.

September 30, 2025 December 31, 2024

Axxum $ 5,153,266 $ 5,153,266

Cloudburst 1,439,038 1,439,038

SLG 14,250,204 -

Goodwill $ 20,842,508 $ 6,592,304

Revolving Line of Credit

On November 22, 2017, Axxum procured from Main Street Bank a revolving line of credit with a maximum of up to $ 1,000,000 ("Revolving Line of Credit"), subject to certain restrictions based on available collateral pledged to the bank in the form of accounts and trade receivables owed by the Company’s customers.

This Revolving Line of Credit is available for one year , at which point it may be renewed by Axxum.

Axxum incurred origination and closing costs for this line of credit in the amount of $ 10,000 , which Axxum has recognized a prepaid expense that will amortize over one year as interest expense.

The stated rate of interest of the Revolving Line of Credit is the prime rate plus 100 basis points, which at the time of the loan, was 4.50 %.

On April 18, 2019, Axxum, Cloudburst, and the Company collectively renewed the Revolving Line of Credit with a maximum aggregate principal sum of $ 2,000,000 with Main Street Bank.

The stated rate of interest of the Revolving Line of Credit increased to 5.75 % at the time of the renewal.

On June 29, 2020 and again on June 30, 2021, the Company amended the Revolving Line of Credit with an extension of the maturity date to March 31, 2024.

The stated rate of interest of the Revolving Line of Credit decreased to 5.25 % at the time of the first amendment and an additional 5 % default interest on the second amendment.

As of September 30, 2025, the stated rate of interest of the Revolving Line of Credit was 8.50 %.

The outstanding balance of the Revolving Line of Credit was $ 3,231,067 and $ 3,249,067 , respectively, as of September 30, 2025 and December 31, 2024.

Loan and Security Agreement

On November 22, 2017, concurrent with the above-mentioned Revolving Line of Credit, Axxum procured a bank term loan from Main Street Bank in the amount of $ 5,250,000 with an expiration of December 31, 2024 (the "Loan and Security Agreement").

The Loan and Security Agreement is subject to a monthly repayment of principal in the amount of $ 109,375 .

The loan carries a stated adjustable interest rate of the prime rate plus 200 basis points, which, at the time of the loan, was 5.50 %.

Axxum incurred closing and origination costs totaling $ 211,729 .

The imputed interest rate after giving effect

for the closing and origination costs was 7.82 %.

is subject to the following affirmative loan covenants:

(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;

The imputed interest rate after giving effect for the closing and origination costs was 7.82 %.

Under the Loan and Security Agreement, Axxum is subject to the following affirmative loan covenants:

(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, 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

as a borrower.

on or after December 31, 2019 but prior to June 30, 2020, minimum tangible net worth (net asset) of $ 1,750,000 ;

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 $ 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 $ 50,000 .

Management conferred with the bank

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

The stated interest rate increased to 6.75 % and the loan covenants remained the same.

June 29, 2020, the Company amended and restated the Loan and Security Agreement by extending the maturity date to March 22, 2024 with

a monthly repayment of principal in the amount of $ 62,500 on or after June 22, 2020.

On June 29, 2020, the Company amended and restated the Loan and Security Agreement ("Amended and Restated Loan and Security Agreement") by extending the maturity date to March 22, 2024 with a monthly repayment of principal in the amount of $ 62,500 on or after June 22, 2020.

The stated interest rate decreased to 6.25 %.

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;

Under the Amended and Restated Loan and Security Agreement, the 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 ;

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 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 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.

The following

pledges of collateral and credit enhancement were made by Axxum and the Company as the sole member of Axxum:

(i) the Company equity ownership

in Axxum and (ii) all of Axxum’s assets, such as accounts, instruments, equipment, fixtures, deposit accounts, letter of credit

rights, and any other assets.

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 .

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

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

As of September 30, 2025 and December 31, 2024, the Company recorded bank loan-current portion of $ 276,012 , net of debt discount of $ 0 and $ 774,095 , net of debt discount of $ 1,097 , respectively.

Pledge agreement

On November 22, 2017, concurrent with Axxum’s procurement of the above-mentioned Revolving Line of Credit and Loan and Security Agreement, Axxum entered into a pledge agreement (the "Pledge Agreement").

The following pledges of collateral and credit enhancement were made by Axxum and the Company as the sole member of Axxum:

(i) the Company equity ownership in Axxum and (ii) all of Axxum’s assets, such as accounts, instruments, equipment, fixtures, deposit accounts, letter of credit rights, and any other assets.

All future debt is subordinated to the bank term loan until the term loan is repaid in full.

Personal guarantees

have also been made by Emmit McHenry, Kurt McHenry, and Alvin McCoy III, as officers and stockholders of the Company in support of the

April 18, 2019, Axxum, Cloudburst, and the Company collectively amended the Pledge Agreement, including the addition of Cloudburst as

Personal guarantees have also been made by Emmit McHenry, Kurt McHenry, and Alvin McCoy III, as officers and stockholders of the Company in support of the term loan.

On April 18, 2019, Axxum, Cloudburst, and the Company collectively amended the Pledge Agreement, including the addition of Cloudburst as a pledgor.

The following pledges of collateral and credit enhancement were made by Axxum, Cloudburst, and the Company:

(i) all of the

equity of Axxum, Cloudburst and each other subsidiary of the Company then owned or hereafter acquired by the Company and (ii) all rights

to which the owner of the pledged equity then or may thereafter become entitled by virtue of owning such pledged equity and being a member

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

(i) all of the equity of Axxum, Cloudburst and each other subsidiary of the Company then owned or hereafter acquired by the Company and (ii) all rights to which the owner of the pledged equity then or may thereafter become entitled by virtue of owning such pledged equity and being a member of Axxum, Cloudburst, and each other subsidiary of the Company.

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LOANS PAYABLE

OF LOAN PAYABLE AND ADVANCES

June 30, 2025

December 31, 2024

Details of Loans Payable

June 30, 2025

December 31, 2024

September 30, 2025 December 31, 2024

Loan payable $ 405,314 $ 405,314

Loan payable - SLG 264,379 -

7 unchanged sentences

Long-term debt $ 295,296 $ 146,798

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 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

July 16, 2020, the Company executed the standard loan documents required for securing loans (the “EIDL Loan - Cycurion”)

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.

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 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.

Under the agreement, the Company

was required to make daily payments.

On March 20, 2023, the Company entered into a receivable purchase agreement (the “RPA Loan”) for cash received of $ 0.3 million, with a specified interest rate of 8.00 %, due January 20, 2024.

The RPA Loan requires weekly payments of $ 15,302 , until $ 0.5 million is repaid.

As of September 30, 2025 and December 31, 2024, the Company recognized a balance owing of $ 0.4 million, respectively, and the loan is in default.

EIDL Cycurion Loan

On July 16, 2020, the Company executed the standard loan documents required for securing loans (the “EIDL Loan - Cycurion”) 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.

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.

EIDL SLG Loan

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

Loan Payable-SLG

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

Under the agreement, the Company was required to make daily payments.

The terms were renegotiated to monthly payments in 2023.

As of June 30, 2025, the balance on the

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

2017, the Company entered into a loan agreement with a third party to provide up to $ 500,000 .

The funds can be requested on an as-needed

basis based on a 10 - 30 % interest rate.

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

As of September 30, 2025, the balance on the loan is $ 264,379 and it is currently in default.

Private Loan payable

In 2017, the Company entered into a loan agreement with a third party to provide up to $ 500,000 .

The funds can be requested on an as-needed basis based on a 10 - 30 % interest rate.

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

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CONVERTIBLE NOTES

OF CONVERTIBLE NOTES

Rollforward of Convertible Notes

Principal Value

Unamortized Discount and Issuance Costs

Convertible Notes Carrying Balance

Weighted Average Interest Rate

Details of Convertible Notes

Principal Value Unamortized Discount and

Issuance Costs Convertible Notes Carrying

Balance Weighted Average Interest Rate Maturity

(Calendar Year)

Balance as of December 31, 2024 - - -

Issuance 440,217 ( 53,717 ) 386,500 18.0 % 2026

Amortization - 4,476 4,476

Balance as of March 31, 2025 $ 440,217 $ ( 49,241 ) $ 390,976 18.0 % 2026

Issuance 2,050,000 ( 60,000 ) 1,990,000 15.1 % 2026

Conversion to equity ( 2,490,217 ) 82,465 ( 2,407,752 ) 18.0 % 2026

( 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.

Amortization - 26,776 26,776

Balance as of September 30, 2025 $ - $ - $ -

On June 30, 2025, the Company converted all outstanding convertible notes to Series G Convertible Preferred Stock.

See Note 15 – Equity.

PROMISSORY NOTES

OF PROMISSORY NOTES

Rollforward of Promissory Notes

Principal Value

Unamortized Discount and Issuance Costs

Convertible Notes Carrying Balance

Weighted Average Interest Rate

Details of Promissory Notes

Principal Value Unamortized Discount and Issuance

Costs Convertible Notes Carrying Balance Weighted Average Interest Rate

Balance as of December 31, 2024 2,498,369 ( 11,380 ) 2,486,989 16.6 %

Issuance 690,558 ( 77,358 ) 613,200 13.5 %

Repayment ( 20,000 ) - ( 20,000 ) 35.0 %

Amortization 36,667 21,297 57,964

Balance as of March 31, 2025 $ 3,205,594 $ ( 67,441 ) $ 3,138,153 15.8 %

Conversion to equity ( 456,500 ) - ( 456,500 ) 24.0 %

Repayment ( 50,000 ) - ( 50,000 ) 24.0 %

Amortization - 37,973 37,973

Balance as of June 30, 2025 $ 2,699,094 $ ( 29,468 ) $ 2,669,626 14.3 %

OF LOANS PAYABLE

June 30, 2025

December 31, 2024

Weighted Average Interest Rate

(Calendar Year)

Repayment ( 31,579 ) - ( 31,579 ) 12.0 %

Amortization - 20,616 20,616

Balance as of September 30, 2025 $ 2,667,515 $ ( 8,852 ) $ 2,658,663 14.3 %

Details of Loans Payable

June 30, 2025

December 31, 2024

Weighted Average Interest Rate

September 30, 2025 December 31, 2024 Weighted Average Interest Rate Maturity

(Calendar Year)

8 unchanged sentences

Total loans payable $ 2,658,663 $ 2,486,989

Convertible Promissory notes payable

March 22, 2022, the Company issued subordinated convertible promissory notes with principal value of $ 526,315 to six investors.

subordinate to bank lender the notes are secured by The Company’s assets.

The Company issued to an independent director a $ 236,842

subordinated convertible note.

The Company issued to an otherwise unaffiliated investors of subordinated convertible notes in principal

amounts of $ 52,631 to three investors, $ 105,263 to a fifth investor and $ 26,315 to a sixth investor.

The notes carry annual interest

rate of 8 % that commenced upon funding date through the date of repayment.

November 22, 2022, the Company issued to three otherwise unaffiliated investors $ 2,777,778 promissory notes, 394,011 common shares and

984,557 warrants for $ 2,500,000 in gross proceeds.

Company entered into the Merger Agreement with Western and Merger Sub, on November 21, 2022, as amended.

As a result of the Business

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

convertibles notes, warrants and shares of common stock.

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

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Subordinated Convertible Promissory notes payable

On March 22, 2022, the Company issued subordinated convertible promissory notes with principal value of $ 526,315 to six investors.

While subordinate to bank lender the notes are secured by The Company’s assets.

The Company issued to an independent director a $ 236,842 subordinated convertible note.

The Company issued to an otherwise unaffiliated investors of subordinated convertible notes in principal amounts of $ 52,631 to three investors, $ 105,263 to a fifth investor and $ 26,315 to a sixth investor.

The notes carry annual interest rate of 8 % that commenced upon funding date through the date of repayment.

On November 22, 2022, the Company issued to three otherwise unaffiliated investors $ 2,777,778 in promissory notes, 13,134 shares of common stock and 32,819 warrants for $ 2,500,000 in gross proceeds.

The Company entered into the Merger Agreement with Western and Merger Sub, on November 21, 2022, as amended.

As a result of the Business Combination, Cycurion raised $ 3,333,335 of debt capital on November 21, 2022, from nine unaffiliated investors who were issued for convertibles notes, warrants and shares of common stock.

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

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

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

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

As a part of this conversion, the Company

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

During the first quarter of 2025, the Company issued shares of preferred stock and warrants in exchange of the outstanding convertible promissory notes which had an aggregate principal amount of $ 3,333,335 and accrued interest of $ 299,259 .

As a part of this conversion, the Company issued 222,222 shares of Series D Convertible Preferred Stock and 242,424 Series D warrants to seven unaffiliated noteholders.

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

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

On July 12, 2022, the Company entered into agreement with a lender, whereby the lender 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 $ 3.0 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 .

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

As of September 30, 2025 the factoring liability was $ 1.7 million.

SERIES A CONVERTIBLE PREFERRED STOCK

of December 31, 2024, the Company had designated 500,000 shares of Series A Convertible Preferred Stock with a par value of $ 0.001 per

The Series A had voting rights on an as-if-converted to common stock basis.

The holders were entitled to a 10 % dividend and convert

at any time into shares of common stock at a ratio of 1 to 25.6938 shares of common stock, subject to adjustment.

a part of the Business Combination with Western, the Company issued 106,816

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

per share (“Class A Convertible Preferred Stock”), in connection with the conversion and settlement of previously

outstanding securities mentioned above.

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, 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

required by law (including without limitation, the GCL) and as expressly provided in this Certificate of Designation.

As long as any

shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the

then-outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to the Preferred

Stock or alter or amend this Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any

manner that adversely affects any rights of the Holders, (c) increase the number of authorized shares of Preferred Stock, or (d) enter

into any agreement with respect to any of the foregoing.

Holders of shares of Cycurion’s Series A Convertible Preferred Stock shall entitled to receive, dividends on shares

of Preferred Stock at the rate of twelve percent ( 12 %) per annum of the per-share Stated Value ($ 1.45 per share).

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

As of December 31, 2024, the Company has authorized 16,667 shares of Series A Convertible Preferred Stock with a par value of $ 0.001 per share.

The Series A Convertible Preferred Stock had voting rights on an as-if-converted to common stock basis.

The holders were entitled to a 12 % dividend and convert at any time into shares of common stock at a ratio of 1 to 25.6938 shares of common stock, subject to adjustment.

As a part of the Business Combination with Western, the Company issued 106,816 shares of Series A Convertible Preferred Stock, par value $ 0.0001 per share, in connection with the conversion and settlement of previously outstanding securities mentioned above.

Refer to Note 16 for the characteristic of newly issued Series A Convertible Preferred stock.

Preferred Stock

The 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.

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

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.

The board of directors is able to determine, with respect to any series

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of preferred stock, designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations, or restrictions thereof, if any.

The 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.

Mezzanine Equity

As of September 30, 2025 and December 31, 2024, there are 0 and 5,796 shares of common stock subject to possible redemption, respectively.

Stockholders’ Equity

Series A Convertible Preferred Stock

The Company has authorized 110,000 shares of Series A Convertible Preferred Stock, par value $ 0.0001 per share.

Voting Rights:

The holders of our Cycurion’s Series A Convertible Preferred Stock 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 A Convertible Preferred Stock.

Dividend Rights:

Holders of shares of our Series A Convertible Preferred Stock shall be entitled to receive dividends at the rate of twelve percent ( 12 %) per annum of the per-share Stated Value ($ 1.45 per share).

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.

No other dividends shall be paid on shares of Preferred Stock.

Shares of Cycurion’s Series A 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 A Convertible Preferred Stock-for-one share of common stock, subject to adjustment.

Holders of shares of Cycurion’s Series A Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up

of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion

an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series A Convertible Preferred

Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient

to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series A 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 in full.

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

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

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

Designation of Preferences, Rights and Limitations for Cycurion’s Series A 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 A Convertible

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

with respect to any of the foregoing.

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, par value $ 0.0001

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

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

Limitations for Cycurion’s Series B Convertible Preferred Stock.

Holders of shares of Cycurion’s Series B Convertible Preferred Stock shall be entitled to receive, and Cycurion shall

pay, dividends on shares of Series B Convertible Preferred Stock (on an as-if-converted-to-Common-Stock basis) to and in the same form

as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.

Shares of Cycurion’s Series B 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 B Convertible Preferred Stock-for-one share of common stock, subject to adjustment.

Holders of shares of Cycurion’s Series B Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up

of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion

an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series B Convertible Preferred

Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient

to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series B 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 in full.

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

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

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

Designation of Preferences, Rights and Limitations for Cycurion’s Series B 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 B Convertible

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

with respect to any of the foregoing.

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, 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

as expressly provided in its Certificate of Designation, as follows.

As long as any shares of our Series C Stock are outstanding, we

shall not, without the affirmative vote of the holders of a majority of the then-outstanding shares of our Series C Stock, (a) alter

or change adversely the powers, preferences, or rights given to our Series C Stock or alter or amend its Certificate of Designation,

(b) amend our Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders

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

to any of the foregoing.

We shall pay dividends on our Series C Stock at the rate of 12 % per annum of the per-share Stated Value ($ 82.46 per share).

The dividends are payable quarterly in arrears not in cash, but in shares of our common stock, calculated for each dividend payment on

an as-if-converted-to-Common-Stock basis.

No other dividends are payable on shares of our Series C Stock.

The shares of our Series C Stock may be converted into shares of our common stock at a ratio of approximately 613 shares

of common stock for every one share of our Series C Stock, or an aggregate of 2,972,320 shares of our common stock, assuming full conversion.

In connection with conversions, each holder of our Series C Stock is subject to a “beneficial ownership limitation” of 4.99%

of the number of shares of our common stock outstanding immediately after giving effect to that conversion, which limitation may be increased

by the holder to not more than 9.99% on 61 days’ advanced notice to us.

Our Series C Stock has a liquidation preference in an amount equal to its per-share Stated Value ($ 82.46 per share),

plus any accrued and unpaid dividends thereon, for each share of our Series C Stock before we can make any distribution or payment to

the holders of our common stock.

If our assets are insufficient to pay in full such liquidation preference, then our entire assets are

to be distributed to the holders of our Series C Stock, ratably distributed among them in accordance with the respective amounts that

would be payable on such shares if all amounts payable thereon were paid in full.

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

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

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

Designation of Preferences, Rights and Limitations for Cycurion’s Series C 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 C Convertible

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

with respect to any of the foregoing.

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, par value $ 0.0001

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

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

Limitations for Cycurion’s Series D Convertible Preferred Stock.

Holders of shares of Cycurion’s Series D Convertible Preferred Stock shall be entitled to receive, and Cycurion shall

pay, dividends on shares of Series D Convertible Preferred Stock (on an as-if-converted-to-Common-Stock basis) to and in the same form

as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.

Shares of Cycurion’s Series D 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 B Convertible Preferred Stock-for-one share of common stock, subject to adjustment.

Holders of shares of Cycurion’s Series D Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up

of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion

an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series D Convertible Preferred

Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient

to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series D 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 in full.

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

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

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

Designation of Preferences, Rights and Limitations for Cycurion’s Series D 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 D Convertible

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

with respect to any of the foregoing.

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.

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, par value $ 0.0001

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

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

Limitations for Cycurion’s Series B Convertible Preferred Stock.

Holders of shares of Cycurion’s Series E Convertible Preferred Stock shall be entitled to receive, and Cycurion shall

pay, dividends on shares of Series E Convertible Preferred Stock (on an as-if-converted-to-Common-Stock basis) to and in the same form

as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.

Shares of Cycurion’s Series E 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 E Convertible Preferred Stock-for-one share of common stock, subject to adjustment.

Holders of shares of Cycurion’s Series E Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up

of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion

an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series E Convertible Preferred

Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient

to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series E 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 in full.

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

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

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

Designation of Preferences, Rights and Limitations for Cycurion’s Series E 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 E Convertible

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

with respect to any of the foregoing.

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.

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

Conversion Rights:

Shares of Cycurion’s Series A 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 A Convertible Preferred Stock-for- one share of common stock, subject to adjustment.

Liquidation Preference:

Holders of shares of Cycurion’s Series A Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series A Convertible Preferred Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series A 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 in full.

Protective Provisions:

As long as any shares of Series A Convertible Preferred Stock are outstanding, Cycurion shall not, without the affirmative vote of the holders of a majority of the then-outstanding shares of Series A Convertible Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to the holders of Series A Convertible Preferred Stock or alter or amend the Certificate of Designation of Preferences, Rights and Limitations for Cycurion’s Series A 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 A Convertible Preferred Stock, (c) increase the number of authorized shares of Series A Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

As part of the Business Combination with Western during the first quarter of calendar year 2025, the Company issued to unaffiliated investors a total of 106,816 preferred shares, which were converted into common stock during the third quarter 2025.

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As of both September 30, 2025 and December 31, 2024, there were 0 Series A Convertible Preferred Stock issued and outstanding.

Series B Convertible Preferred Stock

The Company has authorized 3,000 shares of Series B Convertible Preferred Stock, par value $ 0.0001 per share.

Voting Rights:

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

Dividend Rights:

Holders of our Series B Convertible Preferred Stock shall be entitled to receive dividends (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.

Conversion Rights:

Shares of our Series B Convertible Preferred Stock shall be convertible, at any time and from time to time at the option of the holder thereof, into common stock (subject to certain 4.99% or 9.99% blocker limitations) at the conversion ratio of one share of Series B Convertible Preferred Stock-for- one share of common stock, subject to adjustment.

Liquidation Preference:

Holders of shares of our Series B 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 of Series B Convertible Preferred Stock before any distribution or payment shall be made to the holders of common stock, and, if our assets are insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series B 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 in full.

Protective Provisions:

As long as any shares of Series B Convertible Preferred Stock are outstanding, we will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of Series B Convertible Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to the holders of Series B Convertible Preferred Stock or alter or amend the Certificate of Designation of Preferences, Rights and Limitations for our Series B Convertible Preferred Stock, (b) amend our certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of shares of Series B Convertible Preferred Stock, (c) increase the number of authorized shares of Series B Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

As part of the Business Combination with Western during the first quarter of 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.

During the nine months ended September 30, 2025, a total of 2,999 Series B Convertible Preferred Stock were converted into 199,955 shares of common stock.

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

Series C Convertible Preferred Stock

The Company has authorized 5,000 shares of Series C Convertible Preferred Stock, par value $ 0.0001 per share.

Voting Rights:

The holders of our Series C Convertible Preferred Stock have voting rights on an as-if-converted-to-Common-Stock basis, as required by law, and as expressly provided in its Certificate of Designation, as follows.

As long as any shares of our Series C Convertible Preferred Stock are outstanding, we shall not, without the affirmative vote of the holders of a majority of the then-outstanding shares of our Series C Convertible Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to our Series C Convertible Preferred Stock or alter or amend its Certificate of Designation, (b) amend our Certificate of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of our Series C Convertible Preferred Stock, (c) increase the number of

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authorized shares of our Series C Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

Dividend Rights:

We shall pay dividends on our Series C Convertible Preferred Stock at the rate of 12 % per annum of the per-share Stated Value ($ 82.46 per share).

The dividends are payable quarterly in arrears not in cash, but in shares of our common stock, calculated for each dividend payment on an as-if-converted-to-Common-Stock basis.

No other dividends are payable on shares of our Series C Convertible Preferred Stock.

Conversion Rights:

The shares of our Series C Convertible Preferred Stock may be converted into shares of our common stock at a ratio of approximately 20 shares of common stock for every one share of our Series C Convertible Preferred Stock, or an aggregate of 99,077 shares of our common stock, assuming full conversion.

In connection with conversions, each holder of our Series C Convertible Preferred Stock is subject to a “beneficial ownership limitation” of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to that conversion, which limitation may be increased by the holder to not more than 9.99% on 61 days’ advanced notice to us.

Liquidation Preference:

Our Series C Convertible Preferred Stock has a liquidation preference in an amount equal to its per-share Stated Value ($ 82.46 per share), plus any accrued and unpaid dividends thereon, for each share of our Series C Convertible Preferred Stock before we can make any distribution or payment to the holders of our common stock.

If our assets are insufficient to pay in full such liquidation preference, then our entire assets are to be distributed to the holders of our Series C Convertible Preferred Stock, ratably distributed among them in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.

Protective Provisions:

As long as any shares of Series C Convertible Preferred Stock are outstanding, we will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of Series C Convertible Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to the holders of Series C Convertible Preferred Stock or alter or amend the Certificate of Designation of Preferences, Rights and Limitations for our Series C Convertible Preferred Stock, (b) amend our certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of shares of Series C Convertible Preferred Stock, (c) increase the number of authorized shares of Series C Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

As part of the Business Combination with Western during the first quarter of 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 nine months ended September 30, 2025.

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

Series D Convertible Preferred Stock

The Company has authorized 6,666,700 shares of Series D Convertible Preferred Stock, par value $ 0.0001 per share.

Voting Rights :

Holders of shares of Cycurion’s Series D Convertible Preferred Stock shall not have any voting rights except as required by law (including without limitation, the DGCL) and as expressly provided in the Certificate of Designation of Preferences, Rights and Limitations for Cycurion’s Series D Convertible Preferred Stock.

Dividend Rights :

Holders of shares of Cycurion’s Series D Convertible Preferred Stock shall be entitled to receive, and Cycurion shall pay, dividends on shares of Series D Convertible Preferred Stock (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.

Conversion Rights :

Shares of Cycurion’s Series D 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 D Convertible Preferred Stock-for- one share of common stock, subject to adjustment.

Liquidation Preference :

Holders of shares of Cycurion’s Series D Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion an amount equal to the Stated Value, plus any accrued and unpaid dividends

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thereon, for each share of Series D Convertible Preferred Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series D 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 in full.

Protective Provisions :

As long as any shares of Series D Convertible Preferred Stock are outstanding, Cycurion shall not, without the affirmative vote of the holders of a majority of the then-outstanding shares of Series D Convertible Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to the holders of Series D Convertible Preferred Stock or alter or amend the Certificate of Designation of Preferences, Rights and Limitations for Cycurion’s Series D 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 D Convertible Preferred Stock, (c) increase the number of authorized shares of Series D Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

As part of the Business Combination with 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.

During the three months ended March 31, 2025, a total of 6,516,666 Series D Convertible Preferred Stock were converted into 217,220 shares of common stock.

No conversions occurred during the six months ended September 30, 2025.

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

Series E Convertible Preferred Stock

The Company has authorized 100 shares of Series E Convertible Preferred Stock, par value $ 0.0001 per share.

Voting Rights :

Holders of shares of Cycurion’s Series E 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 Cycurion’s Series E Convertible Preferred Stock.

Dividend Rights :

Holders of shares of Cycurion’s Series E Convertible Preferred Stock shall be entitled to receive, and Cycurion shall pay, dividends on shares of Series E Convertible Preferred Stock (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.

Conversion Rights :

Shares of Cycurion’s Series E 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 E Convertible Preferred Stock-for- one share of common stock, subject to adjustment.

Liquidation Preference :

Holders of shares of Cycurion’s Series E Convertible Preferred Stock, upon any liquidation, dissolution, or winding-up of Cycurion, whether voluntary or involuntary, shall be entitled to receive out of the assets, whether capital or surplus, of Cycurion an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon, for each share of Series E Convertible Preferred Stock before any distribution or payment shall be made to the holders of common stock, and, if the assets of Cycurion shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of shares of Series E 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 in full.

Protective Provisions :

As long as any shares of Series E Convertible Preferred Stock are outstanding, Cycurion shall not, without the affirmative vote of the holders of a majority of the then-outstanding shares of Series E Convertible Preferred Stock, (a) alter or change adversely the powers, preferences, or rights given to the holders of Series E Convertible Preferred Stock or alter or amend the Certificate of Designation of Preferences, Rights and Limitations for Cycurion’s Series E 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 E Convertible Preferred Stock, (c) increase the number of

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authorized shares of Series E Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

As part of the Management Services Agreement and a Release agreement in March 2025 with Ed Burns, 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 September 30, 2025.

Series F Convertible Preferred Stock

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

Voting Rights :

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.

Dividend Rights :

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.

Conversion Rights :

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.

Liquidation Preference :

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 in full.

Protective Provisions :

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.

Series G Convertible Preferred Stock

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

Voting Rights :

Holders of shares of Series G 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.

Dividend Rights :

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.

Conversion Rights :

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 G Convertible Preferred Stock-for- 1,000 shares of common stock, subject to adjustment.

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Liquidation Preference :

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 in full.

Protective Provisions :

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 G 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 G Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

The Company has authorized 300,000,000 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.

• 578,863 shares for conversion of Series A, B and D Convertible Preferred Stock

• 258,464 shares for exercise of other warrant, Warrant A, B and D for $ 3,309,921

• 25,000 shares valued at $ 9,000,000 for business acquisition costs

• 10,894 shares valued at $ 1,193,634 for a settlement of debt of $ 2,925,803 , as a result, the Company recorded loss on settlement of debt of $ 2,174,075 , which is presented on the consolidated statements of operations and the consolidated statements of cash flows within 'gain of debt settlement, net'

• 330,869 shares valued at $ 5,916,777 for an employment agreement

1,008,282 shares valued at $ 764,020 for an acquisition of SLG

• 33,609 shares valued at $ 764,020 for consideration in the Management Services Agreement and a Release agreement with Ed Burns

• 2,633 shares for a release of common stock subject to redemption

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.

As of September 30, 2025 and December 31, 2024, there were 2,662,489 and 353,087 shares of common stock issued and outstanding, respectively.

The 2,662,489 shares of common stock include 33,609 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)

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Details of Warrants

Number of Warrants Weighted Average Exercise Price Weighted Average Life (years)

Outstanding warrants, December 31, 2024 315,028 $ 20.64 3.0

Granted 869,992 164.96 4.7

Replacement of old warrants ( 315,028 ) 20.64 2.9

( 9,450,840 )

( 7,044,917 )

Exercised ( 234,831 ) 14.27 4.3

Outstanding warrants, March 31, 2025 635,161 220.67 4.7

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Exercised - Prefunded (equity line) ( 83,333 ) - 1.0

( 2,500,000 )

Exercised ( 23,633 ) 15.00 5.0

Outstanding warrants, June 30, 2025 678,195 206.15 4.8

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.

Exercised - Prefunded (equity line) ( 66,667 ) - 1.0

Outstanding warrants, September 30, 2025 611,528 228.62 4.8

Exercisable warrants, September 30, 2025 611,528 $ 228.62 4.8

The 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

upon redemption or liquidation.

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

therefore, they should be accounted for as permanent equity.

Public Warrants

As of September 30, 2025 and December 31, 2024, there were 383,333 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.

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

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

• in whole and not in part

1 unchanged sentence

• 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

Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

exercise price and number of shares of common stock issuable on exercise of the Public Warrants may be adjusted in certain circumstances

including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation.

the warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices.

Additionally,

in no event will the Company be required to net cash settle the Public Warrants.

If the Company is unable to complete a Business Combination

within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive

any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside

of the Trust Account with respect to such Public Warrants.

• 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;

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

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

The exercise price and number of shares of common stock issuable on exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation.

However, the warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices.

Additionally, in no event will the Company be required to net cash settle the Public Warrants.

If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants.

Accordingly, the Public Warrants may expire and become worthless.

addition, if (a) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection

with the closing of a Business Combination at an issue price or effective issue price of less than $ 9.20 per share of common stock (with

such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of

any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by them prior

to such issuance), (b) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest

thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions),

and (c) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the

trading day prior to the day on which the Company consummates Business Combination (such price, the “Market Value”) is below

$ 9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115 % of the greater

of (i) the Market Value or (ii) the price at which the Company issues the additional shares of common stock or equity-linked securities.

Placement Warrants

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

In addition, if (a) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $ 9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by them prior to such issuance), (b) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (c) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates Business Combination (such price, the “Market Value”) is below $ 9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115 % of the greater of (i) the Market Value or (ii) the price at which the Company issues the additional shares of common stock or equity-linked securities.

Private Placement Warrants

As of September 30, 2025 and December 31, 2024, there were 12,533 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 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 .

with expiry on August 1, 2028.

April 12, 2024, the Company issued 2,000,000 Series B warrants with an exercise price of $ 0.50 .

The warrants will expire on April 12,

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

the expiry on September 22, 2027.

November 22, 2022, the Company had issued 984,557 warrants with subordinated convertible promissory note at exercise price of $ 1.41 with

the expiry on April 21, 2028.

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 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

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.

Series A Warrants

On November 17, 2017, the Company had issued 44,445 Series A Warrants at exercise price of $ 13.50 with an expiration date of November 22, 2025.

As part of the Business Combination with Western, during the first quarter of 2025, the Company issued to unaffiliated investors a total of 22,696 Series A Warrants in exchange of existing 44,445 Series A Warrants having expiry on February 19, 2029 and exercise price of $ 9.59121

Series B Warrants

On August 1, 2023, the Company issued 133,333 Series B Warrants with an exercise price of $ 15.00 with an expiration date of August 1, 2028.

On April 12, 2024, the Company issued 66,667 Series B Warrants with an exercise price of $ 15.00 with an expiration date of April 12, 2029.

As part of the Business Combination with Western, during the first quarter of 2025, the Company issued to unaffiliated investors a total of 200,000 Series B Warrants in exchange of existing 200,000 Series B Warrants having and expiration date of February 19, 2030 and an exercise price of $ 15.00 .

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Series D Warrants

On March 22, 2022, the Company issued 6,564 Series D Warrants with a subordinated convertible promissory note at an exercise price of $ 42.30 and an expiration date of September 22, 2027.

On November 22, 2022, the Company had issued 32,819 warrants with subordinated convertible promissory note at an exercise price of $ 42.30 and an expiration date of April 21, 2028.

As part of the Business Combination with Western, during the first quarter of 2025, the Company issued to unaffiliated investors a total of 242,424 Series D Warrants in exchange of existing 39,382 Series D Warrants having an exercise price of $ 15.00 and an expiration date of February 19, 2029.

Other Warrants

On March 8, 2022, the Company issued 17,636 warrants to the originators of $ 700,000 of investor notes at exercise price of $ 0.92 with the expiry on March 8, 2026.

As part of the Business Combination with Western, during the first quarter of 2025, the Company issued to unaffiliated investors a total of 9,006 warrants in exchange of existing 17,636 warrants having an expiration date of February 19, 2029 and an exercise price of $ 9.59121

Common Stock Subject to Possible Redemption

The 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.

Details of Common Stock Subject to Possible Redemption

Number of Shares Amount

Common stock subject to possible redemption as of December 31, 2024 5,796 $ 1,917,309

Redemption ( 3,163 ) ( 1,001,216 )

Release of common stock subject to redemption ( 2,633 ) ( 916,093 )

Common stock subject to possible redemption as of September 30, 2025 - $ -

CONCENTRATIONS, RISKS AND UNCERTAINTIES

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

Those deposits are provided protection under FDIC insurance up

to maximum of $ 250,000 .

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

Those deposits are provided protection under FDIC insurance up to maximum of $250,000.

Any deposits in excess of the aforementioned maximum are at risk of loss if those banks become insolvent.

Company is subject to risk borne from credit extended to customers.

Company is subject to interest rate risk when its loans become due and require refinancing or if the prime rate adjusts, as the Company’s

loans are based on adjustable interest rates.

monitors changes in prices levels.

The Company is subject to risk borne from credit extended to customers.

Interest risk

The Company is subject to interest rate risk when its loans become due and require refinancing or if the prime rate adjusts, as the Company’s loans are based on adjustable interest rates.

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Inflation risk

Management monitors changes in prices levels.

Historically, inflation has not materially impacted the Company’s financial statements;

significant increases in the cost of labor that cannot be passed on to the Company’s customers could adversely impact the Company’s

results of operations.

Concentration

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.

however, significant increases in the cost of labor that cannot be passed on to the Company’s customers could adversely impact the Company’s results of operations.

Concentration risks

Revenue Concentration by Customer - Based on % of Revenue

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Customer Amount % Amount % Amount % Amount %

A $ 1,131,581 29.5 % $ 1,183,445 26.6 % $ 3,382,634 29.2 % $ 2,488,622 18.2 %

B 665,813 17.4 % 694,743 15.6 % 2,027,148 17.5 % 2,372,942 17.3 %

C 369,025 9.6 % 614,556 13.8 % 1,101,765 9.5 % 2,206,993 16.1 %

D 315,240 8.2 % 538,251 12.1 % 1,072,194 9.3 % 1,707,290 12.5 %

Accounts Receivable Concentration by Customer - Based on % of Accounts Receivable, Net

September 30, 2025

Customer Amount %

1 $ 768,954 25 %

2 479,151 15 %

3 373,236 12 %

Prior to the Management Services Agreement and a Release agreement with Ed Burns 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 the first quarter of 2025 amounts previously reported.

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

The 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

As of September 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.

There were no assets or liabilities recorded at fair value on a recurring basis as of September 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 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.

Assets 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.

There 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.

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Fair Value Hierarchy - 2024

As of December 31, 2024

Level 1 Level 2 Level 3 Total

Subordinated convertible promissory notes $ - $ - $ 5,490,324 $ 5,490,324

1 unchanged sentence

Total liabilities $ - $ - $ 6,784,441 $ 6,784,441

Warrants $ - $ - $ 2,687,074 $ 2,687,074

Total equity $ - $ - $ 2,687,074 $ 2,687,074

RELATED PARTY TRANSACTIONS

Note – Related Party

September 20, 2024, the Company entered into a promissory note with the Sponsor for $ 230,000 , pursuant to which the Company can borrow

up to an aggregate principal amount of $ 230,000 .

The Promissory Note, with an interest rate of 10 % per annum is payable upon the sooner

of the consummation of the Business Combination with Cycurion.

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 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

the Main Street Bank loan.

purchased an AT&T contract relationship from Archura, LLC, a company owned by Emmit McHenry and Kurt McHenry at the end of 2018.

Promissory Note – Related Party

On September 20, 2024, the Company entered into a promissory note with Western Acquisition Ventures Sponsor, LLC (the "Sponsor") for $ 230,000 , pursuant to which the Company can borrow up to an aggregate principal amount of $ 230,000 .

The Promissory Note, with an interest rate of 10 % per annum is payable upon the sooner of the consummation of the Business Combination with Cycurion.

As of September 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 September 30, 2025.

Personal guarantees were entered by Emmit McHenry, Kurt McHenry, and Alvin McCoy III, as officers and stockholders of the Company in support of the Main Street Bank Loan and Security Agreement.

Axxum purchased an AT&T contract relationship from Archura, LLC, a company owned by Emmit McHenry and Kurt McHenry at the end of 2018.

The contract relationship includes five purchase orders to deliver networking services to AT&T and its clients.

The total sales of

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

The total sales of these five purchase orders were $ 97,658 and $ 119,279 , as of September 30, 2025 and December 31, 2024, respectively.

Loans payable

Details of Loans Payable - Related Party

OF RELATED PARTY TRANSACTIONS

June 30, 2025

December 31, 2024

Weighted Average Interest Rate

September 30, 2025 December 31, 2024 Weighted Average Interest Rate Maturity

(Calendar Year)

4 unchanged sentences

Loans payable - related party - current $ 123,650 $ 148,088

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

During the nine months ended September 30, 2025 and 2024, the Company record amortization of debt discount of $ 3,062 and $ 0 , respectively.

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EARNINGS PER SHARE

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

SCHEDULE OF COMPONENTS OF BASIC AND DILUTED EARNINGS PER SHARE

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

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Basic net (loss)/income per share:

Net (loss)/income including non-controlling interests $ ( 3,240,017 ) $ 116,093 $ ( 18,778,917 ) $ 109,712

$ ( 5,290,418 )

$ ( 15,538,900 )

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

Net loss attributable to non-controlling interest ( 116,700 ) - ( 218,359 ) -

Net (loss)/income attributable to common stockholders - basic ( 3,123,317 ) 116,093 ( 18,560,558 ) 109,712

( 5,188,759 )

( 15,437,241 )

Weighted average shares outstanding - basic 1,965,285 498,941 1,252,543 498,941

2 unchanged sentences

Net (loss)/income attributable to common stockholders - basic $ ( 3,123,317 ) $ 116,093 $ ( 18,560,558 ) $ 109,712

$ ( 5,188,759 )

$ ( 15,437,241 )

Add back interest for subordinated convertible promissory note 2,500 2,500 40,833 7,500

Net (loss)/income attributable to common stockholders - diluted $ ( 3,120,817 ) $ 118,593 $ ( 18,519,725 ) $ 117,212

$ ( 5,186,259 )

$ ( 15,398,908 )

Weighted average shares outstanding - basic 1,965,285 498,941 1,252,543 498,941

Weighted-average effect on of potentially dilutive securities:

Weighted-average effect of potentially dilutive securities:

Conversion of subordinated convertible promissory note 3,333 57,884 3,333 57,884

1 unchanged sentence

Conversion of Series B Convertible Preferred Stock - 200,000 - 175,203

Conversion of convertible preferred stock

Exercise of investor and placement agent warrants - 292,806 - 292,806

2 unchanged sentences

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

For the Three Months Ended For the Nine Months Ended

September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Conversion of Series A Convertible Preferred Stock 151,126 - 114,388 70,203

3 unchanged sentences

Conversion of Series E Convertible Preferred Stock 2 - 1 -

Conversion convertible preferred stock

Exercise of investor and placement agent warrants 613,255 - 491,652 315,028

COMMITMENTS AND CONTINGENCIES

holders of Founder Shares, Private Placement Units, and units that may be issued upon conversion of Working Capital Loans, if any, are

entitled to registration rights pursuant to a registration rights agreement that was signed on the date of the IPO.

These holders will

be entitled to certain demand and “piggyback” registration rights.

However, the registration rights agreement provides that

the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the

applicable lock-up period for the securities to be registered.

The Company will bear the expenses incurred in connection with the filing

of any such registration statements.

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.

Registration Rights

The holders of Founder Shares, Private Placement Units, and units that may be issued upon conversion of working capital loans, if any, are entitled to registration rights pursuant to a registration rights agreement that was signed on the date of the IPO.

These holders will be entitled to certain demand and “piggyback” registration rights.

However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become

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effective until the termination of the applicable lock-up period for the securities to be registered.

The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Business Combination Marketing Agreement

The 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.

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.

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).

Advisory Agreement with A.G.P.

was a financial advisor to both Western in connection with the Business Combination transaction.

Upon the completion of the Business

Combination, A.G.P.:

(i) received a cash fee of $ 500,000 shares of common stock and warrants to purchase 500,000 shares of common stock

at an exercise price of $ 5.00 per share.

Pursuant to the advisory agreement (the “Advisory Agreement”), Western shall pay

Upon the completion of the Business Combination, A.G.P.:

(i) received a cash fee of $ 500,000 shares of common stock and warrants to purchase 16,667 shares of common stock at an exercise price of $ 150.00 per share.

Pursuant to the advisory agreement (the “Advisory Agreement”), Western shall pay A.G.P.

a total transaction fee equal to $ 2,500,000 (the “Transaction Fee”) upon the closing of the Business Combination.

The Transaction Fee will be payable in the form of preferred shares of Cycurion that are convertible into 500,000 shares of common stock

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

of common stock equal to $ 5.00 .

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

cancellation once A.G.P.

The Transaction Fee will be payable in the form of preferred shares of Cycurion that are convertible into 16,667 shares of common stock (such preferred shares or the common stock into which they convert, the “Transaction Fee Shares”), for a price per share of common stock equal to $ 5.00 .

A portion of the Transaction Fee Shares shall be subject to forfeiture and return to the Company for cancellation once A.G.P.

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

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”).

The 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

may convert 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 stock.

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

the Transaction Fee in the form of preferred shares of Cycurion that are convertible into 166,667 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 once A.G.P.

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.

The 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.

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.

Upon 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.

8,333 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.

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Agreements with Seward & Kissel LLP

On 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 8,333 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.

On 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 83,333 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.

The 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 $ 0.0030 .

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.

The 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.

Seward & 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.

In 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.

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 2,627 shares.

Equity Line of Credit

Equity Purchase Agreement

On April 7, 2025 (the “Execution Date”), we entered into the Equity Purchase Agreement with Yield Point NYC LLC ("Yield Point").

Under the Equity Purchase Agreement, we have the right, but not the obligation, to direct Yield Point to purchase up to $ 60.0 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 Yield Point 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 Yield Point 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 Yield Point (which shall not occur at any time that Yield Point holds any of the shares of Put Stock), or (iv) written notice of termination by Yield Point to us pursuant to (the “Commitment Period”).

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During the Commitment Period, we may direct Yield Point to purchase shares of Put Stock by delivering a notice (a “Put Notice”) to Yield Point.

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.

However, such amount may not exceed the Maximum Put Amount (as defined in the Equity Purchase Agreement).

The purchase price to be paid by Yield Point 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 Yield Point'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 Yield Point in cash $ 1.8 million (“Commitment Cash”) or (ii) issue the Pre-Funded Warrant to Yield Point in a form acceptable to Yield Point in its sole discretion and having an exercise price per share of $ 0.0030 , for Yield Point's purchase of shares of common stock (the “Commitment Stock”) having a value of $ 1.8 million 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.

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).

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 Yield Point and irrespective of any termination of the Equity Purchase Agreement.

In 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

The pre-funded warrant with Yield Point (the "Yield Point Pre-Funded Warrant") certifies that, for value received, Yield Point is entitled to be issued up to 150,000 shares of common stock as its commitment fee ("Commitment Fee") and has an initial exercise price of $ 0.003 per share.

The Yield Point Pre-Funded Warrant was offered for the Commitment Fee in connection with the Equity Purchase Agreement for shares of common stock, and provides that the holder may not exercise any portion of the Yield Point 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%, which ownership cap may be increased by the holder up to 9.99% upon 61 days’ prior notice.

The exercise price for each share of common stock underlying the Yield Point Pre-Funded Warrant is $ 0.003 .

The Yield Point Pre-Funded Warrant is immediately exercisable upon issuance and may be exercised at any time until the Pre-Funded Warrant is exercised in full.

A holder of the Yield Point Pre-Funded Warrant may not exercise any portion of the warrants or Yield Point Pre-Funded Warrant, as applicable, to the extent that the holder would own more than 4.99% (or, at the holder’s option upon issuance, 9.99%) of our outstanding common stock immediately after exercise, as such percentage ownership is determined in accordance with the terms of the Yield Point Pre-Funded Warrant.

In lieu of making the cash payment otherwise contemplated to be made to us upon exercise of the Yield Point 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 Yield Point Pre-Funded Warrant.

During the three months and nine months ended September 30, 2025, 83,333 and 150,000 of these shares have been exercised, respectively.

As of September 30, 2025, all Yield Point Pre-Funded Warrants have been exercised.

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 Yield Point (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 Yield Point 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 Yield Point, including, but not limited to, under Rule 415 at then-prevailing market prices (and

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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

August 6, 2024, the Company, Western Acquisition Ventures Sponsor, LLC (the “Sponsor”) and RiverNorth SPAC Arbitrage Fund,

LP (the “RiverNorth”) entered into a non-redemption agreement (the “Non-Redemption Agreement”) whereby the Sponsor

plans to transfer to the Investor 5,000 shares each month over the next three months for agreeing not to redeem the 99,800 that it currently

holds prior to the business combination.

October 9, 2024, the Company, the Sponsor and RiverNorth entered into extended non-redemption agreement whereby the Sponsor plans to

transfer to RiverNorth 5,000 shares each month over the next three months for agreeing not to redeem the 99,800 that it currently holds

prior to the business combination.

December 27, 2023, we entered into an employment agreement with James P.

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.

The Initial Registration Statement and any amendment thereto was declared effective by the SEC in May 2025.

Non-Redemption Agreement

On August 6, 2024, the Company, Western Acquisition Ventures Sponsor, LLC (the “Sponsor”) and RiverNorth SPAC Arbitrage Fund, LP (the “RiverNorth”) entered into a non-redemption agreement (the “Non-Redemption Agreement”) whereby the Sponsor plans to transfer to RiverNorth 167 shares each month over the next three months for agreeing not to redeem the 3,327 that it currently holds prior to the business combination.

On October 9, 2024, the Company, the Sponsor and RiverNorth entered into extended non-redemption agreement whereby the Sponsor plans to transfer to RiverNorth 167 shares each month over the next three months for agreeing not to redeem the 3,327 that it currently holds prior to the business combination.

Employment Agreements

On December 27, 2023, we entered into an employment agreement with James P.

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.

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.

On 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.

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.

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.

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.

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”)

August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law.

The IR Act provides for,

among other things, a new U.S.

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.

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.

Retention Packages

On 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 100,000 shares of Common Stock under the Company’s 2025 Equity Incentive Plan.

Inflation Reduction Act of 2022 (the “IR Act”)

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law.

The IR Act provides for, among other things, a new U.S.

federal 1% excise tax on certain repurchases of stock by publicly traded U.S.

domestic corporations and

domestic corporations and certain U.S.

domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023.

The excise tax is imposed

on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

The amount of the excise tax is generally

1% of the fair market value of the shares repurchased at the time of the repurchase.

However, for purposes of calculating the excise

tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value

of stock repurchases during the same taxable year.

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase.

However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of the

Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the

abuse or avoidance of the excise tax.

redemption or other repurchase that occurs after December 31, 2022, in connection with a business combination, extension vote or otherwise,

may be subject to the excise tax.

Whether and to what extent the Company would be subject to the excise tax in connection with a business

combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions

and repurchases in connection with the business combination, extension or otherwise, (ii) the structure of a business combination, (iii)

the nature and amount of any “PIPE” or other equity issuances in connection with a business combination (or otherwise issued

not in connection with a business combination but issued within the same taxable year of a business combination) and (iv) the content

of regulations and other guidance from the Treasury.

In addition, because the excise tax would be payable by the Company and not by the

redeeming holder, the mechanics of any required payment of the excise tax have not been determined.

The foregoing could cause a reduction

in the cash available on hand to complete a business combination and in the Company’s ability to complete a business combination.

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

Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

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Any redemption or other repurchase that occurs after December 31, 2022, in connection with a business combination, extension vote or otherwise, may be subject to the excise tax.

Whether and to what extent the Company would be subject to the excise tax in connection with a business combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the business combination, extension or otherwise, (ii) the structure of a business combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a business combination (or otherwise issued not in connection with a business combination but issued within the same taxable year of a business combination) and (iv) the content of regulations and other guidance from the Treasury.

In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined.

The foregoing could cause a reduction in the cash available on hand to complete a business combination and in the Company’s ability to complete a business combination.

As of September 30, 2025 and December 31, 2024, the Company’s stockholders have redeemed a total of 380,701 and 377,537 shares of common stock resulting in $ 1.2 million and $ 1.2 million of excise tax liability, calculated as 1% of the value of the shares redeemed, respectively

SUBSEQUENT EVENTS

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 August 13, 2025.

The 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 November 14, 2025.

There are two types of subsequent events:

(i) recognized, or those that provide additional evidence

with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing

consolidated financial statements, and (ii) non-recognized, or those that provide evidence with respect to conditions that did not exist

at the date of the balance sheet but arose subsequent to that date.

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.

(i) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing consolidated financial statements, and (ii) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

On October 1, 2025, the Company fully paid off the term bank loan held with Main Street Bank.

As of September 30, 2025 the principal balance of this loan was $ 276,012 .

As previously announced in a Current Report filed with the U.S.

The notification letter stated that we would be afforded 180 calendar days, or until October 6, 2025, to regain compliance.

The Company did not regain compliance with the Bid Price Rule by October 6, 2025, and the listed security was subject to delisting from The Nasdaq Global Market.

The Company’s hearing was scheduled for November 20, 2025.

The Company effected the Reverse Stock Split by filing the Second Amendment to the Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.

The number of outstanding shares of common stock was reduced from approximately 86,533,435 shares to approximately 2,884,447 shares.

No fractional shares were issued in connection with the Reverse Stock Split.

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The Company is now in compliance with Nasdaq Global Market’s listing requirements.

Additionally, Nasdaq confirmed that the previously scheduled hearing before the Nasdaq Hearings Panel on November 20, 2025 has been canceled.

The Company’s securities will continue to be listed and traded on The Nasdaq Stock Market without interruption.

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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